Third-party, or not so third party?

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Utilities don’t like being told that they have to buy power from certain projects. And they really don’t like being told that they have to buy this power at a given rate – even if it is the rate that they would otherwise pay for electricity.

So as can be expected, ever since falling costs for solar have made the Public Utilities Regulatory Policy Act of 1978 (PURPA) a means for solar developers to acquire must-take, fixed-price contracts, utilities have been waging war against the law.

PURPA is a federal law, but much of the implementation happens at the state level, where utilities working with regulators who at times have shown clear bias have worked to make the policy useless by either setting rates too low or shortening contract lengths.

These utilities have won in state after state, eviscerating the policy in many formerly big PURPA markets like North Carolina. But sometimes they lose, such as in South Carolina, where the recently passed Energy Freedom Act promises to revive the implementation of PURPA through measures to enhance transparency and oversight in setting rates to be paid to developers, accompanied by minimum contract lengths for legacy projects.

 

Web of connections

This should explain why in South Carolina, solar advocates are deeply concerned that the state’s Public Service Commission (PSC) has chosen a third-party advisor which has deep ties to the state’s utilities.

On Monday, both the South Carolina Solar Business Alliance and Southern Alliance for Clean Energy sent letters calling on the PSC to cancel its contract with Pegasus Global Holdings, a Washington State-based energy consultancy, citing its ties to the both Duke Energy and Dominion, and the anti-solar Edison Electric Institute (EEI), the national trade organization for utilities..

And in doing so, the two organizations found more than a few connections involving Pegasus’ leadership. As it turns out:

  • Duke has been a client of Pegasus on multiple projects
  • Pegasus majority owner and Board Chair Patricia Galloway was a member of the board of SCANA Corporation (recently acquired by Dominion) until January 1 of this year
  • Pegasus is an associate member of the EEI
  • Pegasus President and CEO William Riggins serves on EEI’s legal committee
  • Pegasus Board Patricia Galloway has given testimony on behalf of Duke Energy before Indiana regulators

The letters cite the Energy Freedom Act’s requirement that the PSC engage an “independent third party” to submit a report, with “independent” conclusions, which they say is not possible given Pegasus’ ties to Duke and SCANA. Furthermore, Southern Alliance for Clean Energy alleges that the “key personnel” identified by Pegasus to consult on the avoided cost calculations “lack experience” on avoided cost issues, and hadn’t self-identified as experts on the topic.

A letter submitted by South Carolina Solar Business Association’s lawyers on behalf of Johnson Development Associates sums it up nicely:

Due to the time constraints of the Act JDA requests that the Commission immediately disqualify Pegasus from acting as the Commission’s independent third party expert in these proceedings and expeditiously retain a qualified independent third party as required by the Act.

It remains to be seen how the PSC will respond, but one thing is for certain: For policies like PURPA, the devil is always in the details.