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Duke Energy rebuffs complaints over solar contracts in South Carolina

Duke Energy Corp.'s electric utilities in South Carolina largely rebuffed complaints from solar developers that they have not complied with state and federal regulations for power sales contracts.

Duke Energy Carolinas LLC and Duke Energy Progress LLC argue in an Oct. 16 filing with the Public Service Commission of South Carolina that they have "fully satisfied their obligations" under the federal Public Utility Regulatory Policies Act, or PURPA, as well as other state and federal precedent, by offering to purchase the output of the developers' proposed projects, which total more than 1,150 MW of new solar capacity, through five-year terms at forecast avoided cost rates.

The developers, in their August complaint filed with the PSC, contend that the Duke Energy utilities have refused to enter into power purchase agreements longer than five years for qualifying facilities under PURPA that are not eligible for standard offer rates and contracts. The standard contract offer for qualifying facilities is capped at 2 MW in South Carolina.

"PURPA obligates Duke to offer complainants PPAs of sufficient duration to allow 'reasonable opportunities to attract capital from potential investors,'" the complaint states. "A PPA with a duration not longer than five years does not provide solar [qualifying facilities] reasonable opportunities to attract capital."

In a dispute mimicking an earlier battle in North Carolina, Duke Energy has acknowledged and defended the push for shorter contracts.

"A five-year term appropriately balances PURPA's goals of encouraging the development of cogeneration and small power production generating facilities, while protecting the companies' customers from the greater risk of overpayment associated with longer contract terms," Duke Energy wrote in its answer to the complaint. "Complainants have presented no evidence to the contrary."

The Duke Energy utilities are asking regulators to dismiss the complaint and find that the PPAs offered to the developers are "commercially reasonable and consistent" with PURPA regulations as implemented by the state.

Solar policy reform in North Carolina includes changes to the mandatory purchase of energy and capacity from qualifying solar facilities under PURPA. These changes include capping eligibility for the standard avoided cost tariff utilities must offer under PURPA at 1 MW instead of 5 MW and reducing the maximum standard qualifying facility contract term to 10 years from 15 years.

A Duke Energy spokesman said in September that there is no legislative push by the company for solar policy reform in South Carolina. He added that solar developers in South Carolina can bid into a competitive process for large projects under North Carolina policy reform since it incorporates Duke Energy's service territories in both states. (South Carolina PSC Docket No. 2017-281-E)