Dive Brief:

• South Carolina regulators voted unanimously on Friday to raise the rate Dominion Energy must pay to independent solar providers in that service territory. 

• The vote reverses a 6-1 decision reached in November that would have had Dominion pay solar providers $21.43/MWh over 10-year contracts. Dominion will now pay between $27.51/MWh and $32.52/MWh, depending on the season and peak level of demand, and the commission is considering longer contract lengths as well.

• Dominion said the decision will raise customers' electric bills, while environmental and solar industry groups say the original ruling would have harmed the state's solar industry, and this reversal is a step in the right direction.

Dive Insight:

South Carolina has a little over 1 GW of solar installed, according to the Solar Energy Industries Association, and determining how to measure its value on the grid is a challenge to state regulators across the country.

Utilities are concerned about the resource's avoided cost of generation being overvalued, saying that overpaying solar providers could lead to unfair rates for customers.

Dominion said it will wait to 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," the utility said in an emailed statement. 

But the original ruling was inconsistent with legislative directives under the state's Energy Freedom Act, a comprehensive solar bill passed last May, according to clean energy groups.

The law "established, among other things, that it is the policy of the state to promote renewable energy," Southern Alliance for Clean Energy (SACE) Solar Program Director Bryan Jacob told Utility Dive. "And then came this administrative ruling that seemed to be in direct conflict with that."

The originally proposed rates would have been some of the lowest in the country, said Jacob, and were borne of undervalued solar energy and capacity calculations combined with a high charge for the cost of integrating the solar onto the grid. The resulting rate would have proven "devastating" to the state's industry, he said.

After initially voting to cut the rates, Commissioner Swain Whitfield filed a motion in favor of the groups' request to revisit the decision, based on testimony filed as part of a petition to rehear the case.

"I have concerns that the solar profile rate must fully compensate solar generators at an appropriate avoided cost," Whitfield wrote in his motion to reconsider, saying the utility should in the future file "a much more detailed and transparent analysis" on the seasonal value of solar.

Environmental groups SACE and the South Carolina Coastal Conservation League, along with business groups Johnson Development Associates and the South Carolina Solar Business Alliance filed two petitions on the case.

Solar offered during the peak of off-season will be priced at $32.52/MWh, while peak on-season solar will be offered at $31.05/MWh. Off-peak, off-season rates will sit at $28.93/MWh, while on-season, off-peak rates will be $27.51/MWh.

A hearing on whether the commission should lengthen contract terms as well will be scheduled in two weeks.

Whitfield also recommended the commission value solar's generation capacity at 11.8%, rather than its previous 4%, which he said appeared to be "more accurately representative of the status of installed and potentially avoided generation" in South Carolina.

Finally, the commission voted to set an interim integration charge at $0.96/MWh until a more accurate rate is settled on through an integration study. Dominion's analysis of the charge "was fairly flawed, top to bottom," Hamilton Davis, director of regulatory affairs at Southern Current, a South Carolina solar development company, said. Developers proposed the $0.96/MWh figure as a "reasonable" price based on the information they had from the docket.

"At the end of the day, this is one of those issues that deserves a lot of additional attention," said Davis.

Environmental groups said this charge is the first of its kind to be imposed by a South Carolina utility and the cost should ideally be $0.

"We had recommended zero until a more appropriate value ... was transparently calculated and could be defended," said Jacob. "The uncertainty around that is a problem for the industry."

Dominion must propose a mitigation measure to lower or eliminate these integration costs within 30 days of the order's filing, the commission ruled.

The commissioners voted 5-0 to adopt the measure, with one commissioner absent and one recusal.

"I found particular enlightenment, perhaps, or at least certainly recognized some strong language in the [testimony filed under the petition] regarding their concerns," Commissioner Florence Belser told the commission before voting.

The previous November ruling also approved lower solar rates for Duke Energy, which this decision does not address. SACE said it will decide whether to file a similar petition on the Duke case by the end of the week.

Because the motion is a reconsideration, there is no concrete deadline for issuing a new order, according to PSC spokesperson Rob Bockman. The rates won't go into effect until the order is officially issued.