NCSEA works daily to help make tomorrow’s utility a reality
today. Our regulatory team puts this mission into practice at the NC Utilities
Commission, where the team regularly presents persuasive evidence and
high-caliber written arguments that affect sustainable energy policy action.
The team’s June 22 avoided cost comments, which ask the NCUC
to reconsider the rates Duke Energy Carolinas, Duke Energy Progress and
Dominion North Carolina Power proposed in March, represent one of the team’s
deepest dives to date into avoided cost rates.
What is an avoided cost and what is an
avoided cost rate? When developers build qualifying facilities ("QFs”),
like solar farms and biomass plants, they enable utilities to avoid the costs
of building and operating a utility-owned power plant. Under federal law, these
avoided costs determine how much QFs should be paid for the electricity they
sell into the North Carolina grid. When avoided cost rates are set correctly, the
amount the utility pays for renewable power purchased from QFs does not
increase customers’ bills at all because the money paid to QFs would have been
spent anyway on conventional power. Avoided cost rates play a key role in the
continued development of North Carolina’s renewable energy industry. Like tax credits
and North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard
(REPS), fair avoided cost policy allows renewable energy to penetrate North
Carolina’s otherwise highly regulated, limited energy market. The NC Utilities
Commission reviews the utilities’ suggested changes to the rates every two
The regulatory team’s deep analysis of the utilities’ proposed
rates resulted in the filing of 80+ pages of initial comments asking for rates to be set higher and for fair power purchase
contract terms. Several industry players
have indicated that NCSEA’s comments are helping set a new bar for avoided cost
engagement both in and outside of our state. NCSEA, which brought in a
consulting economist and an extended legal team for the analysis, certainly understands
their importance: put simply, these rates directly impact how much renewable
energy project developers get paid for the electricity they sell to the
utilities. And when those rates aren’t fair, the businesses and their projects
(and the associated economic development) will go elsewhere.
The utilities and the Public Staff will reply to NCSEA’s
initial comments in filings to be made by July 27.
North Carolina’s avoided cost policy has been instrumental
in making our state a national leader in clean energy development. By
advocating for fair avoided cost rates, NCSEA’s regulatory team is working to
ensure that progress continues for the clean energy businesses and employees that are driving the
state’s $4.8 billion clean energy industry.