Duke: Solar Rooftops Plan in Jeopardy

January 2009 

McClatchy-Tribune Regional News - Bruce Henderson The Charlotte Observer, N.C.

Duke Energy's $50 million solar-rooftops initiative could be
jeopardized by terms of the N.C. Utilities Commission order that
approved it, the company said Thursday.In approving the plan Dec. 31, the commission ruled that Duke
could not recover its full costs under the state's new renewable-energy
portfolio standard. If that stands, Duke now says, it may run afoul of federal
tax law and could cost Duke more than $250 million in tax credits for solar
and other projects.

"That's just a risk that we can't take as a company," Keith
Trent,
Duke's chief strategy and policy officer, said in an interview.
Unless the terms are revised, he added, "we don't really see a pathway that
would work for us in pursuing this program."

Duke has proposed placing solar modules on up to 400 rooftops,
from commercial buildings to homes. The panels would produce 8 megawatts of
electricity, enough to supply about 1,300 homes.

The company says it would be only the nation's second utility
trial of solar "distributed generation" -- small amounts of power produced by
many sources instead of one large power plant. It's a technology that Duke
expects to grow.

The solar-rooftops program would help Duke meet the state
portfolio standard, which requires that utilities obtain a rising percentage
of their power from renewable energy and energy efficiency. Duke is also
seeking to buy electricity produced by larger, ground-based solar arrays.

In a filing late Thursday, Duke asked the Utilities Commission to eliminate the condition limiting its cost recovery under the
renewable-energy standard, or assure the company that it can recover
costs
through a combination of the standard and base rates.

The rooftops program includes a 30 percent federal tax credit
that can be passed on to customers only over the 25-year life of the project,
Duke said. As a result, the program's costs are higher than a third-party
provider could charge.

Because there's no guarantee that it could recover its costs
under the portfolio standard or rates, Duke says, there's a "substantial risk"
of breaking tax law requiring that federal credits be passed to
customers over many years.