Duke Energy’s (s DUK) Carolinas subsidy will renege on its proposed $50 million solar rooftop program unless North Carolina utility regulators remove restrictions on how it can pay for the project, the Charlotte Business Journal reports.
The energy company, which gets 70 percent of its power from coal, had planned to recover costs for the project through rate hikes. But that scheme screeched to a halt earlier this month after the North Carolina Utilities Commission ruled that Duke could get 10 MW of solar power at lower cost from third-party providers than if it owns the photovoltaic systems itself. As a result, the regulators decided, it would be unreasonable for Duke to recoup the entire cost of the project through rate “riders.”
Now Duke is saying delayed cost recovery could force it to violate federal accounting rules governing the company’s use of energy-investment tax credits — including $125 million slated for an 825-MW coal plant, according to the Business Journal. In other words, it will have a hard time investing in coal power if it can’t gouge customers for solar.
All of this began last spring with a pledge from Duke to invest $100 million in solar rooftops, both commercial and residential, in North Carolina. The state had passed a new requirement for utilities to generate 12.5 percent of their energy from renewable sources by 2021, with standards phasing in next year. Duke Energy Carolinas said it would build and operate a 20-MW distributed solar power project to get started. It cut the plan to 10 MW and $50 million after public advocates protested utility ownership as anticompetitive.
The company wants out of not only the rooftop project, but also the requirement to start generating solar energy next year. The massive $173 million solar farm being built by SunEdison — the company that undercut Duke’s proposed rate hike — which the utility has contracted to supply 21.5 MW, won’t come online (with a minimum 16 MW) until the end of 2010.