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SC regulators reverse course on Dominion's solar contract rates

South Carolina regulators reversed course and raised the solar contract rates Dominion Energy South Carolina must pay to qualifying small power producers.

The Public Service Commission of South Carolina voted 5-0 on Jan. 3 to adopt new "avoided cost" rates for Dominion Energy South Carolina, known legally as Virginia Electric and Power Co.

The move came after solar advocates filed petitions for reconsideration and rehearing as a result of the PSC adopting contract terms in November 2019 that they viewed as "devastatingly low." Solar advocates said those rates "undermine" the South Carolina Energy Freedom Act, which called for the commission to establish new contract terms while increasing the maximum generation capacity of renewable energy facilities that could be interconnected to the grid.

The commission-approved rates in Dominion Energy Inc. subsidiary Dominion Energy South Carolina's service territory were approved in November 2019 at $21.43/MWh for a 10-year contract, according to the Solar Energy Industries Association.

In their petitions, the Southern Coastal Conservation League, Southern Alliance for Clean Energy, South Carolina Solar Business Alliance and real estate developer Johnson Development Associates Inc. asked regulators to reconsider five key issues, including the avoided energy rates and longer contract terms.

The PSC in its Jan. 3 directive adopted avoided energy rates ranging from $27.51/MWh for off-peak energy during peak season to as high as $32.52/MWh for peak energy during the off-peak season.

"We will review the PSC's final order, but the commission's decision to change its ruling on avoided-cost rates means customers unfortunately will have to pay more for their electricity than they would have under the commission's original ruling," Dominion Energy South Carolina spokesperson Ashley Cunningham said in a Jan. 6 email.

Commissioners also granted the request to reconsider the matter of approving power purchase agreements for longer than 10 years.

"I think that we would be in a better place to make a wise and more fully informed decision after hearing additional testimony on this issue," Commissioner Swain Whitfield wrote in his motion. (PSC docket 2019-184-E)

On Jan. 2, the PSC also issued an amended order in the avoided cost rate case involving Duke Energy Corp. subsidiaries Duke Energy Carolinas LLC, or DEC, and Duke Energy Progress LLC, or DEP.

The order appears to uphold the November 2019 directive, which includes 10-year contract terms and implements "solar integration services charges" of $1.10/MWh for developers in DEC's service territory and $2.39/MWh for developers in DEP's service territory. The solar integration charges were set as part of a settlement agreement reached between the Duke Energy utilities and solar advocates.

Independent consultant Power Advisory LLC recommended that the PSC adopt avoided cost rates ranging from $2.60/kWh for summer off-peak energy to $5.04/kWh for winter premium peak energy in DEC's service territory. The consultant recommended that DEP pay avoided cost rates of $2.68/kWh for summer off-peak energy and $3.58/kWh for winter premium peak energy.

It is unclear if the commission will reconsider these rates. (PSC dockets 2019-185-E and 2019-186-E)