Duke defends push for shorter PURPA contracts in North Carolina

Dive Brief:

Duke is continuing its push to shorten the lengths of power contracts it must offer small renewables facilities under the federal Public Utility Regulatory Policies Act (PURPA), but a solar developer in North Carolina says five years would be too short to attract project financing, Charlotte Business Journal reports.
Duke claims customers will overpay by about $1 billion over the next 12 years due to PURPA contracts, which ensure small developers can find a buyer for their renewable generation. According to Duke, the declining cost of gas has dropped its avoided cost to just $35/MWh—while it pays $55/MWh to $85/MWh to solar developers.
Cypress Creek Renewables in January told the N.C. Utilities Commission that Duke's decision to reduce contract lengths from 15 years to five was unilateral and would not provide sufficient certainty to win over financial backers.

Dive Insight:

Duke Energy's proposed five-year contracts comply with PURPA, the utility told North Carolina regulators last week, as the law does not specify the duration of a long-term contract and other states have approved shorter agreements. But Cypress Creek has replied the shorter contracts will not give smaller developers needed certainty.

The company has about 800 MW of solar in the state, and more than 2,000 MW more in development, saying five-year contracts are insufficient for larger projects to find funding. According to Charlotte Business Journal, Duke will not negotiate longer power purchase agreements for six Cypress Creek projects, which amount to more than 400 MW of solar capacity.

The North Carolina Utilities Commission has planned an April hearing to consider changing Duke's avoided cost rates. Regulators set those rates every two years, and Duke has been pushing for changes to how the state administers PURPA, which the utility says leaves customers paying more than they should. Duke wants a reduction in the size of PURPA-qualifying projects and the contract length.

Last summer, the utility made an arrangement allowing 3,300 MW of proposed solar projects pending in the state to connect to the grid. Duke had earlier argued they could interfere with the system's ability to provide power to retail load customers, but was later able to work out an agreement with solar companies allowing their projects to move forward, while giving Duke the authority to disconnect them from the grid.