Duke Energy proposes changes to net metering in North Carolina
Updated
Duke Energy proposes several updates to solar net metering for North Carolina customers that would cut their solar savings. Image source: Renewable Energy World
Duke Energy reached an agreement with North Carolina solar installers to push-off implementing the proposed net metering changes until 2026, upon Commission approval.
Net metering currently serves as one of the main sources of electric bill savings for Duke Energy and Duke Energy Progress solar customers in North Carolina. However, this could all change in the near future, as the local utility proposed several updates to its net metering program during the last quarter of 2021 to the North Carolina Utilities Commision.
The proposal introduced a handful of updates to existing rates, fees, and Time of Use periods. If approved, the changes could affect customers in North Carolina under Duke Energy and Duke Energy Progress, as well as new applications submitted on or after January 1, 2023.
Here’s what you need to know about Duke Energy’s proposed updates to solar net metering, how the transition could negatively influence the future of solar in North Carolina, and what the options are for solar homeowners in the Tar Heel State.
Duke Energy’s current net metering program
Right now, both Duke Energy and Duke Energy Progress offer solar net metering, or simply 'net metering', at the full retail rate.
This means solar homeowners who send the excess electricity their systems generate back to the utility receive a credit that is worth the retail value of energy, which is between $0.05 and $0.20 per kWh (in these service territories, the full retail rate is based on Time of Use and critical-peak pricing, which fluctuates, depending on the time of day and time of year).
Under the current program, excess energy generated by your solar panels can be applied to your next month’s electricity bill as a credit. Any unused credit goes back to the utility on May 31st for the current year and cannot be rolled over.
Net metering is not the only way customers can save on their solar installation; solar owners in North Carolina can reduce costs for their system via the 26% federal tax credit, state rebates, and property tax exemptions, as well.
Duke Energy’s proposed changes to solar compensation and net metering
Duke Energy is proposing changes to net metering rates, the Time of Use schedule, introducing a smart thermostat incentive, and implementing various new fees.
Net metering rates
Net metering under the current full retail rate translates to credits of $0.05 and $0.20 per kWh, depending on the Time of Use schedule. For example, 5 kWh of excess solar power sent to the grid during an off-peak period at the full retail rate would be worth approximately $0.26 in credits.
The proposal calls for crediting solar homeowners at the avoided cost rate, instead of the full retail rate, which will result in lower bill credits for homeowners. Under the proposed rate of $0.03 per kWh, customers would only receive $0.15 in net metering credits for the same period. That’s a pretty big difference!
The credits will still be used to offset future monthly electric bills and will be issued at the end of the month. However, any unused credits go back to Duke Energy every May 31st and the credits are reset to zero. In other words, any unused credits will not be paid out to the homeowner.
Time of Use schedule
Duke Energy proposed a new Time of Use schedule for peak and discount periods. Peak periods refer to times when projected electricity demand is high, resulting in higher costs, while discount periods refer to times when projected electricity demand is low, resulting in lower costs.
Time of Use rates adhere to specific pricing based on the time of day or night. The changes cater to new ways customers are consuming electricity at home, such as charging electric vehicles at night and using smart appliances.
This table shows the proposed Time of Use schedule:
It is important to note that net metering credits are the same for all Time of Use periods. It does not matter when you send excess solar power back to the grid, you would only receive $0.03 per kWh in credits, regardless of the time of day.
Duke Energy net metering customers are also entitled to a nighttime discount period under the proposal that is designated for charging electric vehicles overnight. Depending on the Time of Use schedule, the discount period lasts between two and four hours.
Smart thermostat incentive
A cumulative $0.39/Watt incentive is available for homeowners using smart thermostats. They will receive a one-time bill credit of $75 at the start of the program and a $25 credit after 12 months, which will be awarded annually.
New fees and charges
1. Non-bypassable charges
The first type of fee proposed by Duke Energy includes non-bypassable charges. Applicable to all net metering customers, this mandatory monthly fee acts like a “service charge” from the utility. Net metering credits cannot be used to offset non-bypassable charges.
The non-bypassable charge amounts to $0.36 per rated kW of the system for Duke Energy customers. Duke Energy Progress customers must adhere to a rate of $0.44 per rated kW.
To put this fee into perspective, a Duke Energy customer equipped with a 6 kW rated system would pay $2.16 every month. Duke Energy Progress customers would pay $2.64 per month for the same system.
Non-bypassable charges cover costs related to infrastructure, storm recovery, and cyber security.
2. Monthly minimum bill
Under the proposal, all Duke Energy customers with net metering must pay a monthly minimum bill when the "Basic Customer Charge" and “Customer and Distribution Energy Charges” are less than $22. For Duke Energy Progress customers, the monthly minimum bill is $28.
The payments go to recovery costs for the infrastructure that handles net metering. It is important to point out that net metering credits cannot offset these monthly costs, either.
3. Monthly grid access fee
The monthly grid access fee functions like a service charge for homeowners with large solar systems - they only apply to system capacities exceeding 15 kW. According to the proposal, large solar system owners are the focus of these fees because they are able to save a decent amount on their monthly power bills.
So if your solar panel system is larger than 15 kW, you must pay a grid access fee every month under the proposal.
The monthly grid access rates are different for Duke Energy and Duke Energy Progress net metering customers:
- Duke Energy customers: $2.05/kW
- Duke Energy Progress customers: $1.50/kW
To give you an idea of how this fee works, let’s say a Duke Energy customer would pay a monthly grid access fee of $4.10 for a 17 kW system. Duke Energy Progress customers would pay $3.00 for the same system.
However, this fee won’t affect most residential solar installations; the average system capacity for homeowners in North Carolina is 10.8 kW.
Transitioning to the new net metering program
The good news is customers who are already on Duke’s current net metering plan can stay on it until January 1, 2027.
After January 1, 2027, existing net metering customers have one of two options. They can either switch to the new proposed rate plan or stay on their existing net metering plan, but with three additional provisions. These new provisions include:
- All net excess energy will be credited at the end of the month at the avoided cost rate
- A monthly minimum bill equal to the Basic Customer Charge, plus an additional $10
- Monthly non-bypassable charges will be added to the bill
By December 31, 2037, all solar customers must be on the residential solar choice plan.
How will the proposal affect North Carolina homeowners and the local solar industry?
North Carolina homeowners
North Carolina homeowners would be saving less under the new proposal, compared to the current net metering program, which credits them at full retail rate. Their solar panel payback period would be extended, as well. Plus, with the utility’s solar rebate expiring on December 31, 2022, fewer homeowners might consider going solar if these changes are implemented.
Another not-so-great part of the proposal involves the new fees. We’d like to emphasize again that these fees cannot be offset by net metering credits. However, it is possible to avoid the monthly grid access fee, so long as your system is less than 15 kW.
If the new rates and fees make net metering with Duke Energy less appealing for you, an option worth exploring is Dominion North Carolina Power. The local utility services North Carolina residents and offers a net metering program at the full retail rate.
Switching utility providers is a simple process and only takes a few days to complete, depending on your agreement with Duke Energy. Before switching over, you first need to check if your location can be serviced by Dominion North Carolina Power. Switching utility providers would result in different electricity rates and benefits. You may also lose some features and perks from Duke Energy that are unavailable with Dominion North Carolina Power.
Local solar industry
The proposal indicates the changes are in line with the state’s goal to cut carbon emissions by 70% by 2030. So far, the document has received “overwhelming support” from stakeholders, clean energy groups, and the State of North Carolina.
The proposed changes should not hurt Duke Energy and Duke Energy Progress in the long term, though the updates will likely receive mixed reactions from existing customers who prefer straightforward net metering at the full retail rate.
As mentioned above, people who aren’t fond of the updates could switch over to other local utility providers with net metering. If this trend catches on, we could see a more competitive solar industry in North Carolina moving forward.
Final thoughts
Could you, would you, and should you stay with your net metering plan under Duke Energy or Duke Energy Progress?
Well, time will tell. With the proposed net metering changes, solar rebate expiring, and additional fees, customers will be looking for ways to ease the costs of their solar installation. One of the ways to do so could be exploring going with another utility, like Dominion North Carolina Power.
The changes to net metering are less favorable than the current program in our view. However, there are new perks for using smart thermostats and charging electric vehicles at night that mildly ease the negative effects of the updated rates and additional fees.
If Duke Energy can justify these updates and reassure customers via a reliable, seamless experience with the grid (most of the proposed fees and charges go to infrastructure), then the transition to the new net metering program could be a smooth process.
For now, it is too early to tell how things will go, as the proposal is still under approval.
Key takeaways
- Duke Energy proposed updates to its net metering program in North Carolina.
- The changes focus on new (lower) net metering rates, Time of Use periods, fees and charges, as well as a transition plan for current solar net metering customers. Customers stand to save less with solar if the proposal passes.
- The proposal supports the state’s goal to cut carbon emissions by 70% by 2030.
- All eyes are set on what will happen to the proposal, which is currently in the hands of the North Carolina Utilities Commission.
Michael Cheng
Content writer
Michael is a content writer at SolarReviews. He has more than six years of experience in industrial manufacturing and legal documentation, covering electrical safety, large-scale infrastructure and maritime legislation.