It is nothing if not a masterful sleight of hand. Two months after reaching a deal with solar advocates to extend net metering in the South Carolina service area of Duke Energy Carolinas to March 2019 – and concurrent with a billion dollar green bond offering – Duke is proposing the highest fixed charges on residential customers in the nation, which could stop rooftop solar in its tracks.
The company’s plans to raise rates by around 10% are also buried in an extensive grid modernization program that it is proposing. But even this 10% may be a bit of a distraction; as Duke’s biggest changes to its rates would not be the absolute value, but a change in the way that they are calculated so as to massively increase fixed charges.
Increasing fixed charges has been a tactic of utilities to claw back more revenue from their customers who install solar and/or to kill rooftop solar markets outright. What these charges mean under net metering is that when customers install solar they can only eliminate so much of their electric bill, as even if they wipe out their total usage the basic monthly charges remain. This in turn weakens the economics of rooftop solar and lengthens payback times of systems.
And it has never been done this boldly to date. The changes to residential fixed charges for Progress and Duke Energy Carolinas would represent 220% and 238% increases, to $28 and $29 per month. According to a tweet by EQ Research
If approved, the fixed charges could be the highest in the USA of all investor-owned utilities, according to our research.
And EQ would know, as the company produces the most careful, in-depth research on how utility rate affect distributed energy of any organization known to pv magazine, including a quarterly review of utility rate cases.
These are only slightly offset by a change in energy charges in the territory of Duke Energy Carolinas which would slightly incentivize those customers who use less than 1000 kilowatt-hours per month.
In its testimony, Duke officials offered a bland excuse for this. “The unit cost study indicates that it is appropriate to raise the basic facilities charge to better reflect all customer-related costs,” stated Duke Energy Director, Southeast Pricing & Regulatory Solutions Michael J. Pirro in his testimony.
This proposed increase is likely to be sharply contested before the South Carolina Public Utilities Commission. Not only are rooftop solar advocates opposed to such charges, but so are ratepayer advocates, as higher fixed charges disproportionately affect low-income customers.
And even if Duke does not get this massive increase, they could still win. As documented in EQ Research’s latest report, even though utilities don’t usually get the fixed charge increases they want, this tactic is slowly ratcheting up fixed charges across the nation.