Environmental groups argued at the state Court of Appeals Wednesday that North Carolina regulators erred when they approved new rules and rates for rooftop solar installations and that the changes hurt the state's solar industry.
Duke Energy had sought to lower what solar customers get paid for excess electricity sent to the power grid — what's known as "net metering." It also wanted to charge solar owners a new $10 monthly fee. Regulators agreed, and the new rules took effect Oct. 1 for new solar installations.
But two weeks later, environmental groups appealed. The Environmental Working Group, NC WARN and other groups argue that the North Carolina Utilities Commission violated state law by not conducting an independent study of rooftop solar's costs and benefits.
Instead, regulators improperly used Duke Energy's own internal study, said lawyer Matthew Quinn, representing the environmental groups.
"Our position is that when we use the word investigation, it can't be (that) Duke investigates itself. It can't be the fox guarding the henhouse," Quinn told the three-judge panel Wednesday.
Quinn said that was the intent of the General Assembly when it passed House Bill 589 in 2017, which required regulators to update rooftop solar rules. Quinn said former state Rep. John Szoka, a Republican from Cumberland County and the bill's lead author, didn't want "the utility to determine whether net-energy metering is good or bad."
But lawyers for the Utilities Commission and Duke defended the process.
"The General Assembly did not explicitly require the commission to conduct an investigation prior to its establishment of these net metering rates," said Robert Josey, a lawyer for the North Carolina Utilities Commission public staff, which represents customers.
And even if an investigation is required, Josey argued that the commission's process of accepting and reviewing Duke's proposed changes satisfies the law.
Duke Energy argues that the previous rates unfairly subsidized solar owners at other customers' expense. Duke lawyer Ashley Cooper noted that the changes were supported by a range of organizations and solar installers, which reached a compromise with Duke on the new rules last year.
Duke Energy had about 43,000 solar net-metering customers statewide as of last fall. Existing customers can remain under the old rules until 2027, including receiving bill credits equal to whatever they pay for electricity.
In a press conference after the court hearing, Bryce Bruncati of Raleigh-based 8MSolar said his company is already seeing a big drop in demand for rooftop solar installations.
"Since October 1, when net metering was no longer an option for solar customers … we saw on the residential side, a 40-50% decrease in new people signing up to go solar. So that's a pretty significant drop off in your busiest time of the year," Bruncati said.
Regulators also have approved similar changes in rooftop solar for businesses, Bruncati said, and "the impact was even more drastic: I would say 75-80%."
Jim Warren, of NC WARN, said the rules changes hurt North Carolina's efforts to shift to renewable energy.
"This attack is the worst possible move during an accelerating climate crisis, and in particular, for the people that are already being harmed so, so badly by climate change," Warren said.
A ruling on the appeal could take months.
