Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) have come to a settlement agreement with Wal-Mart East and Sam’s East over the utility’s calculation of charges under the Green Source Advantage Program and Rider (GSA).
GSA was established in response to North Carolina’s 2017 Competitive Energy Solutions law. The program is designed to allow nonresidential customers of DEP/DEC with over 1MW peak demand at a single location or 5MW peak demand over multiple locations to purchase renewable energy and thus Renewable Energy Credits (RECs) from local power plants. The plan outlines a total reserve of 600MW, 250MW of which are allotted for these large nonresidential customers. The other 350MW are distributed between 250MW for the University of North Carolina system and 100MW for major military installations.
On February 23 Wal-Mart and Sam’s filed a petition protesting the credit calculation Duke used to determine RECs in GSA. Initially, the GSA Bill Credit was modeled as “Equal to the capacity-weighted average price of all proposals selected in the competitive procurement of renewable energy program request for proposal… minus the forecasted cost of RECs to be received by the GSA Customer participating in the Program.” Wal-Mart argued that the design was too costly for companies with larger MW procurement and refused to participate in the program as it stood entirely.
What Wal-Mart argued for, and was able to achieve in the settlement, was a re-design of the bill credit model, based on “An hourly, day-ahead projection determined by DEC or DEP.” This hourly rate is determined by Marginal Energy Cost per kilowatt-hour (MENERGY) and Tiered Capacity Charge per kilowatt-hour (CAP). CAP is only applied when the ratio of hourly generation/hourly demand is greater than 1.15, meaning when the GSA participating company supplier is producing 115% of the GSA participating company’s demand.
The logic behind this structure is that combining day-ahead pricing, procurement of local solar production and battery storage allows a customer like Wal-Mart to fully optimize their energy bill.
The settlement, however, does not eliminate the previous capacity-weighted average credit calculation, it just adds the day-ahead calculation model as an option. A third option, called “Self-Supply” available to participating companies allows them to negotiate directly on price terms with renewable energy suppliers, ultimately selecting themselves which renewable energy facility they will have DEP/DEC procure the energy from.
The settlement can be seen as a win for both sides, as it allows Wal-Mart to feasibly establish a system to fully optimize their energy bill, while allowing Duke to maintain one of the largest utilizers of commercial rooftop solar in the state. The settlement must still be approved by the North Carolina Utilities Commission before it goes into effect.
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