Appellate Court Decides in Favor of Duke in Rooftop Solar Case

In a split decision, the North Carolina Court of Appeals affirmed a decision of the North Carolina Utility Commission that an advocacy group has infringed on Duke Energy’s state-sanctioned monopoly on the sale of electricity.

The September 19 decision concerns an agreement between the North Carolina Waste Awareness and Reduction Network (NC WARN) and a Greensboro, North Carolina church. Under a December 2014 agreement with the church, NC WARN supplied the church with solar panels, which the church was paying for by purchasing the electricity the panels produced.

The judgment explains: “Under the Agreement, the solar panels would ‘remain the property of NC WARN’ and the Agreement did not ‘constitute a contract to sell or lease’ the solar panels to the Church. In exchange, the Church agreed to compensate NC WARN based on the amount of ‘electricity produced by the system’ at a rate of $0.05 per kWh.”

In June 2015 NC WARN approached the commission, requesting a declaratory ruling that its actions would not cause it to be classified as a public utility. The commission disagreed, concluding that the arrangement with the church would constitute a public utility and would result in a violation of the Public Utilities Act.

Duke and the commission argued that by selling electricity, NC WARN was acting illegally as a public utility. “In addition, the Commission ordered that NC WARN refund its charges to the Church and pay a fine of $200 for each day that NC WARN provided electric service to the Church through the solar panel system,” the judgment says. NC WARN appealed the commission’s order.

The case was heard by the court of appeals in late 2016. “We agree and conclude that NC WARN is acting as a ‘public utility’ by operating its system of solar panels for the Church on the Church’s property,” two of the three judges on the appeals court panel wrote into the judgment. “In the present case, there is no doubt that NC WARN owns and operates equipment (a system of solar panels) which produces electricity and that NC WARN receives compensation from the Church in exchange for the electricity produced by the system. The dispute here is whether NC WARN is producing electricity ‘for the public,’ therefore, making it a ‘public utility.’”

While the majority of the judges ruled that “a person might still be offering his services to the ‘public’ even when he serves only a selected class of persons,” a third judge disagreed with the ruling.

Appellate Judge Chris Dillon said in a dissenting opinion that NC WARN is not acting a public utility “because the solar panel system at issue is not serving ‘the public,’ but rather is designed to generate power for a single customer (the ‘Church’) from the Church’s property.”

Dillon went on to note that never before in North Carolina has equipment designed to generate power for a single customer from that customer’s property been considered a “public utility.”

The dissent further argues that if the agreement were structured differently, there would be no case at all. According to Dillion, if NC WARN charged the church a flat monthly fee instead of a fee based on the use of the product the arrangement would be no different than a homeowner renting a generator from a hardware store for a daily rate. “Such [usage-based] billing is a logical method by which private parties should be free to contract to account for wear and tear on the system itself.”

NC WARN is currently considering appealing the ruling to the North Carolina Supreme Court. The group states in a press release that “Third-party sales such as this one are in the public interest and are in accord with the NC General Assembly’s declared policy ‘to encourage private investment in the development of renewable energy’,” and further notes that “Such financing arrangements have been a key to the growth of rooftop solar in many other states.”

Abby L. Harvey is a POWER reporter.