A narrow complaint to a federal energy commission could have wide implications for the solar industry and the electric grid — both in North Carolina, where it originated, as well as nationwide.
At issue is a unique planning scheme that’s been years in the making. Duke Energy, the state’s predominant utility, is moving to proactively upgrade poles and wires to create room for prospective solar farms. Rather than making improvements pegged to specific projects and then charging solar developers for the full cost, as it did in the past, the company is now building in anticipation of future grid needs and spreading the costs among all customers.
In recent years, state regulators have pushed Duke to take this approach to alleviate grid congestion. The company is thought to be the first utility in the country to address local transmission needs in this way, even though it is far from the only one with a long backlog of projects waiting to plug into the grid.
But one set of Duke customers isn’t happy. North Carolina’s electric member cooperatives, which buy most of their power wholesale from the utility, filed a complaint with the Federal Energy Regulatory Commission in February over four grid projects. They argue that the cost of the upgrades — $57 million, in this case — should not be distributed evenly among all customers. Instead, they want solar developers to pay half the total cost.
Many observers believe the protest is on shaky legal ground. Yet FERC is chaired by an appointee of President Donald Trump, who is known to attack renewable energy regardless of the law. The commission is expected to make a decision by the fall, and if it rules in the co-ops’ favor, experts say the ripple effects could be dire.
For one, the solar projects banking on the four grid upgrades could falter if they are forced to bear millions of dollars in new expenses. A ruling for the plaintiffs could also send Duke back to its old transmission planning method — a strategy criticized as costly, ineffective, and hostile to new solar.
“It would be hugely disruptive to the solar industry, but also to the development of the transmission system in the Carolinas more generally,” said Ben Snowden of Fox Rothschild LLP, an attorney for solar developers who isn’t directly involved in the case. “It would be a huge mess.”
What’s more, a decision for the co-ops could set the stage for federal meddling in local grid planning.
“Better-planned transmission will save ratepayers money while providing a more reliable grid,” said Chris Carmody, executive director of the Carolinas Clean Energy Business Association. “This complaint could establish precedent for expensive slowdowns and federal interference in state decision-making.”
How Duke’s grid-planning approach has shifted
Duke’s current approach to network upgrades arose because the old one was failing.
As North Carolina policymakers passed laws to speed the clean energy transition in the 2000s and 2010s, Duke was flooded with requests from developers looking to bring large-scale solar arrays online.
To accommodate these projects, the utility sometimes had to replace lines, poles, and other infrastructure. Whenever that was the case, Duke sought to charge 100% of those costs directly to solar developers. Some paid up and connected to the grid, but others balked and withdrew or were delayed indefinitely.
“Every project was studied, one after the other, and the first project to trigger an upgrade was assigned the entire cost of that upgrade,” Snowden said, even if the improvement made way for lots of other projects to interconnect, too.
“The part of Duke’s system that was most conducive to solar got to the point where it was — in Duke’s view — pretty much at capacity,” he said. Any new generator — solar or otherwise — that sought to interconnect in that area would be tagged with tens or hundreds of millions of dollars of upgrades. “The queue got clogged, and it was stuck for a couple of years.”
Over time, the logjam contributed to a slowdown in renewables. New large-scale solar installations plummeted in 2022, according to data from the Solar Energy Industries Association, falling to about 200 megawatts from a peak in 2017 of nearly 1.2 gigawatts.
The most congested areas on the grid became known collectively as the “Red Zone.” Duke, developers, and other parties deemed over a dozen projects — to upgrade lines, replace poles, and make other improvements — necessary. But the disrepair endured because no one could pay for them.
Then, in 2022, the North Carolina Utilities Commission began to turn the ship. The commission ruled that Red Zone upgrades were “appropriate” and “reasonable.” The projects would enable over 3.7 gigawatts of solar to connect to the grid, commissioners said, while providing “operation and resiliency benefits.”
Crucially, regulators also laid the groundwork for upgrade costs to be shared by all customers, instead of paid for by developers alone. Finally, the commission noted flaws in Duke’s transmission planning strategy and urged the company to “engage with stakeholders” to improve its process.
The company did just that, workshopping the Red Zone projects with interested parties and setting up a scheme to identify future grid needs that would provide multiple benefits.
“Duke — pulled kicking and screaming — has made pretty big strides on modernizing its transmission planning,” said Nick Guidi, senior attorney at the Southern Environmental Law Center. “Kudos to Duke for adopting that process.”
“The tip of an iceberg” on grid complaints
Duke didn’t respond to a request for comment for this story. But the company told FERC that the four contested upgrades were on the original Red Zone list and had been extensively vetted by a range of parties — including the state’s member cooperatives.
The Red Zone projects, Duke wrote, “were identified through years of collaborative local transmission planning … and selected because they provide broad, system‑wide reliability, resiliency, and economic benefits that far exceed their costs.”
The company also noted the projects will “help reduce overall power costs for all users” and even facilitate new gas generation in which the co-ops have partial ownership.
A spokesperson for the North Carolina Electric Membership Corporation, the association of 25 rural co-ops bringing the challenge against Duke, declined to speak to Canary Media for this story.
The co-ops’ complaint doesn’t make clear why they chose to object to the four improvement projects in question — two in Erwin, halfway between Raleigh and Fayetteville; one in Sanford, in the state’s dead center; and one in Camden, just west of the Outer Banks.
But their protest repeatedly states that the improvements are “proactive solar upgrades” that primarily help solar companies. A follow-up filing dismisses systemwide reliability and other benefits asserted by Duke as a “barrel of red herrings.”
The $57 million that Duke has assigned to customers for the four upgrades is a “simple unfairness,” the complaint says. Customers should bear only half those costs, and the co-ops’ share should be reduced from $802,000 per year to $401,000. The rest, they argue, should be borne by solar developers, the projects’ “primary beneficiaries.”
“That’s a really faulty premise,” Snowden said. “That’s like saying that the water pipes that run down my street are for the benefit of the people who sell me water.”
What’s more, clean energy and consumer advocates say, the proactive nature of the Red Zone projects is a good thing — unlike Duke’s old “Whac-A-Mole” approach — and their price tag is appropriately rolled into the transmission fees the utility charges its customers.
“You have to spread the costs out across the broader grid,” said Guidi of the Southern Environmental Law Center, “because they provide benefits to the broader grid.”
Perhaps the $401,000 in savings would trickle down to the co-ops’ 1 million metered customers, representing 2.8 million North Carolinians. But, Guidi said, “It would be a drop in the bucket.”
The impact could be more acute for solar companies, which tend to operate on thin margins. The extra costs could conceivably cause developers relying on the four upgrades to withdraw, Snowden said. However, he added, “I think the bigger danger is: Do you undermine Duke’s willingness to continue with proactive transmission planning?”
The complaint is the first of its kind, making its outlook murky.
“It’s a very big swing from a legal standpoint,” Snowden said. “There are some very serious questions about the relief that they’re seeking, including whether FERC has the jurisdiction to provide this relief at all.”
The five-member commission still contains three appointees from former President Joe Biden, and Trump’s choice for chair is generally considered qualified and conventional.
But when disputes over renewable energy reach a body even remotely touched by the president, all bets are off.
“They’re trying to identify these four lines as solar lines,” Guidi said. “Whether that’s their belief, or whether they are trying to play to a federal administration generally not friendly to solar, that is seen throughout their complaint.”
Furthermore, the petition clearly signals that more challenges could be on the way to Red Zone improvements, as it calls the four upgrade projects “the tip of an iceberg.”
“This is just the start,” Guidi said. “I don’t think they expect it to end here.”
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