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NC appeals court rules against NC WARN in Greensboro solar power case

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NC WARN installed a 5.25-kilowatt solar system on the roof of Faith Community Church and sold it the electricity as part of a leasing agreement. The state appeals court ruled NC WARN can’t sell the power because it in doing so it is acting as a public utility. (Photo: NC WARN)

The nonprofit environmental group NC WARN [2]was acting as a public utility when it provided solar power to a Greensboro church, the NC Appellate Court ruled 2-1 today.

The decision favored Duke Energy, Dominion Energy and the NC Public Utilities Commission public staff, which had argued that NC WARN’s financial arrangement was infringing on the utility companies’ regulated monopoly.

Judges Hunter Murphy and Donna Stroud concurred on the ruling; Judge Chris Dillon dissented.

As Policy Watch reported in March [3] during the original court hearing, NC WARN had entered into a “power purchase agreement” with Faith Community Church in Greensboro. The church leases a solar power system from the nonprofit by paying 5 cents a kilowatt hour for solar-generated electricity.

NC WARN stopped selling power to the church while the court weighed its decision.

“In this case, NC WARN was clearly and unlawfully acting as a public utility without following the rules of being a public utility,” said Duke Energy spokesman Randy Wheeless.

Jim Warn, executive director of NC WARN, said third-party financing arrangements such as this one are ‘in the public interest and are in accord with state policy promoting clean, affordable energy.”

The question before the court was whether NC WARN produced electricity for “the public” in doing so for the church. State statute doesn’t allow third parties to sell electricity to the public because it infringes on the regulated monopoly that is in place. However, House Bill 589 [4], recently passed by the legislature, does allow for limited third-party leasing [5], which had previously been illegal.

Judge Murphy, wrote the majority opinion, stated that if NC WARN were allowed to generate and sell electricity to “cherry-picked nonprofit organizations” in North Carolina, “that activity stands to upset the balance of the marketplace.”

“Specifically,” Murphy went on, “such a stamp of approval by this court would open the door for other organizations like NC WARN to offer similar arrangements” to other nonprofits or commercial enterprises. That “would jeopardize regulation of the industry itself.”

Judge Dillon, though, disagreed. He wrote that NC WARN wasn’t acting as a public utility because one church doesn’t meet the definition of “public.” Nor does the nonprofit’s financial arrangement of leasing the system — basing it on a kilowatt hour basis rather than a flat monthly rate, Dillon wrote.

He compared the NC WARN arrangement with a hardware store that rented a portable generator based on the power it used rather than only a daily rate.

The NC WARN viewed its appeal as a test case, Warn said, “a challenge to Duke Energy’s blockade against competition from companies that install solar systems on rooftops with little or no up-front cost to the customer. Such financing arrangements have been a key to the growth of rooftop solar in many other states.”

Warn said the organization is “strongly considering” appealing the case to the North Carolina Supreme Court.  

NC WARN Appeals Court [6] by Lisa Sorg [7] on Scribd