PUBLIC COMMENT ENDED
Duke Energy
Solar Net Metering Case
This Summer
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Case #2023-00413Duke Energy filed a rate case requesting changes to their net metering tariff. Their proposed “NM II” tariff would change the amount customers receive for excess energy supplied to the utility, reducing compensation to about $0.057 per kWh. They would also change how solar generation is “netted”: instead of netting generation and consumption at the end of the month and then billing or crediting the customer for their “net” usage, as presently happens under traditional net metering (NM I), Duke proposes to compensate customers at the reduced export rate (( $0.057 per kWh) for all energy that is exported to the grid at any time.
We are awaiting the Public Service Commission's decision in this case. We'll update you as soon as we know more. In the meantime, stay tuned for Duke's Integrated Resource Plan which should be filed late this Summer.
What is an Integrated Resource Plan?The Integrated Resource Plan (IRP) is a blueprint for our electric utilities for the next 15 years. If taken seriously, it can help our utilities make smart decisions. Unfortunately, our electric utilities don't always consider what is most important to customers when making their plans. |
Background on Pending Net Metering Case
TL/DR: See Sample Talking Points for your public comment below
Duke is requesting a change to the accounting process for determining how much rooftop solar customers pay on their monthly bills.
They are requesting a change from “monthly netting” (traditional compensation where credits for excess electric generation are accrued on a monthly basis after netting against energy delivered to the customer) to “instantaneous” or “two channel billing”. This greatly reduces the value of electricity generated from rooftop solar by crediting each kWh generated that is not immediately used in real-time at the “avoided cost” rate instead of letting the customer “settle-up” at the end of the month. This not only reduces the value of rooftop solar and makes it less economical for people to install rooftop solar, but it also has a huge impact on the rooftop solar industry as well. Two channel billing is much harder to explain to people and to calculate return-on-investment. It makes it more difficult for installers to correctly size an installation to achieve greatest financial return or to fully offset a customer’s annual electric energy cost.
For example, under two channel billing with low compensation value, a solar array installed on a working class family home, where the occupants are away from home much of the daylight hours and use more electricity at night, can have a substantially lower savings than the same solar array installed on a retired couple’s home that is occupied much of the daylight hours, and thus tends to use more electricity during the daytime. Additionally, under two channel billing with low compensation value, a customer is incentivized to keep their solar system size much smaller than would be needed to meet their annual electricity use, since to do otherwise (install a system large enough to make the building net zero) would likely result in a much larger percentage of generation being compensated at reduced value.
Duke is also proposing changes to the calculation that is used to determine the value of rooftop solar
Duke’s proposed compensation rate fails to fully account for several benefits and avoided costs that result from rooftop solar. For example, customer generated solar does not have to be transmitted from far power plants, and makes minimal use of the utility’s distribution system. A customer-generator’s generation (in excess of their real time use) is fed through that customer-generator’s own Duke Energy service delivery transformer and may only utilize one or two power poles worth of power lines to arrive at the closest neighbor’s load, thus reducing at that moment the overall circuit load from Duke Energy’s substation serving that neighborhood. This reduces some of the needs for future investments in transmission and distribution capacity. Duke fails to account for these avoided costs. Their proposal also does not adequately account for avoided carbon costs and other environmental compliance costs that result from displacing fossil fuel generated energy. Finally their proposal does not account for the extensive economic development and jobs benefits that can result from a strong rooftop solar industry. These benefits exceed the jobs benefits from utility scale solar. The commission has stated that all of these factors should be taken into account in developing the appropriate credit for customer generated energy.
Approaching the 1% threshold
Duke is also indicating to the commission that rooftop solar generation is nearing 1% of their total energy production. According to Kentucky law, when an electric utility reaches 1% rooftop solar “penetration” the utility is no longer required to offer new net metering agreements. Duke has indicated that they may make unspecified changes when this threshold is met. Duke should acknowledge that rooftop solar systems are very valuable to the utility and all customers, that the 1% threshold is arbitrary, and that therefore they will continue to offer net metering service to customers well beyond the 1% threshold. A public affirmation of this and the market certainty it would provide is crucial for the solar businesses operating in Duke Kentucky’s territory, and is essential for enabling more customers to access the benefits of solar energy.
Duke is requesting a change to the accounting process for determining how much rooftop solar customers pay on their monthly bills.
They are requesting a change from “monthly netting” (traditional compensation where credits for excess electric generation are accrued on a monthly basis after netting against energy delivered to the customer) to “instantaneous” or “two channel billing”. This greatly reduces the value of electricity generated from rooftop solar by crediting each kWh generated that is not immediately used in real-time at the “avoided cost” rate instead of letting the customer “settle-up” at the end of the month. This not only reduces the value of rooftop solar and makes it less economical for people to install rooftop solar, but it also has a huge impact on the rooftop solar industry as well. Two channel billing is much harder to explain to people and to calculate return-on-investment. It makes it more difficult for installers to correctly size an installation to achieve greatest financial return or to fully offset a customer’s annual electric energy cost.
For example, under two channel billing with low compensation value, a solar array installed on a working class family home, where the occupants are away from home much of the daylight hours and use more electricity at night, can have a substantially lower savings than the same solar array installed on a retired couple’s home that is occupied much of the daylight hours, and thus tends to use more electricity during the daytime. Additionally, under two channel billing with low compensation value, a customer is incentivized to keep their solar system size much smaller than would be needed to meet their annual electricity use, since to do otherwise (install a system large enough to make the building net zero) would likely result in a much larger percentage of generation being compensated at reduced value.
Duke is also proposing changes to the calculation that is used to determine the value of rooftop solar
Duke’s proposed compensation rate fails to fully account for several benefits and avoided costs that result from rooftop solar. For example, customer generated solar does not have to be transmitted from far power plants, and makes minimal use of the utility’s distribution system. A customer-generator’s generation (in excess of their real time use) is fed through that customer-generator’s own Duke Energy service delivery transformer and may only utilize one or two power poles worth of power lines to arrive at the closest neighbor’s load, thus reducing at that moment the overall circuit load from Duke Energy’s substation serving that neighborhood. This reduces some of the needs for future investments in transmission and distribution capacity. Duke fails to account for these avoided costs. Their proposal also does not adequately account for avoided carbon costs and other environmental compliance costs that result from displacing fossil fuel generated energy. Finally their proposal does not account for the extensive economic development and jobs benefits that can result from a strong rooftop solar industry. These benefits exceed the jobs benefits from utility scale solar. The commission has stated that all of these factors should be taken into account in developing the appropriate credit for customer generated energy.
Approaching the 1% threshold
Duke is also indicating to the commission that rooftop solar generation is nearing 1% of their total energy production. According to Kentucky law, when an electric utility reaches 1% rooftop solar “penetration” the utility is no longer required to offer new net metering agreements. Duke has indicated that they may make unspecified changes when this threshold is met. Duke should acknowledge that rooftop solar systems are very valuable to the utility and all customers, that the 1% threshold is arbitrary, and that therefore they will continue to offer net metering service to customers well beyond the 1% threshold. A public affirmation of this and the market certainty it would provide is crucial for the solar businesses operating in Duke Kentucky’s territory, and is essential for enabling more customers to access the benefits of solar energy.
What is Net Metering?
Net Metering is a way to compensate rooftop solar users for the extra electricity they put onto the grid. When the sun is shining you may produce more energy than you need for your home. "Net metering" keeps track of the extra electricity that you put onto the grid (that the energy company can redistribute to your neighbors for free) and gives you credit towards pulling electricity off the grid when your panels aren't producing.
We used to have a 1:1 net metering compensation rate, meaning for every extra KW/hr you put onto the grid you could pull an equal amount off the grid at a later time. Electric utilities lobbied to change that compensation rate and now each utility has different ways of crediting you for your extra rooftop solar.
We used to have a 1:1 net metering compensation rate, meaning for every extra KW/hr you put onto the grid you could pull an equal amount off the grid at a later time. Electric utilities lobbied to change that compensation rate and now each utility has different ways of crediting you for your extra rooftop solar.