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06.28.2018 North Carolina Utilities Commission Approves Duke Energy’s Pro Forma PPA for Tranche 1 CPRE RFP Solicitation By: Bradley J. Nowak, Robert F. Riley & Jennifer A. Morgan

On June 25, 2018, the North Carolina Utilities Commission (the “Commission”) issued an order (the “Order”) approving Duke Energy’s revised pro forma power purchase agreement (“PPA”) for use in the first solicitation under Duke Energy’s competitive procurement of renewable energy program (the “CPRE Program”).  With the Commission’s Order, Duke Energy has cleared the regulatory hurdle necessary to proceed in issuing its Tranche 1 CPRE RFP solicitation, which is expected to occur on July 10, 2018.

Background

The Commission previously approved Duke’s pro forma PPA for use in the Tranche 1 solicitation on February 21, 2018 and directed that Duke continue discussions regarding the pro forma PPA with interested parties, including the North Carolina Energy Business Alliance (“NCCEBA”), the North Carolina Sustainable Energy Association (“NCSEA”) and Public Staff.  Following the Commission’s February 21 order, the Independent Administrator of the CPRE Program, Accion Group LLC, posted on its website various documents and information for use in the Tranche 1 CPRE RFP solicitation, including the revised pro forma PPA and other agreements Duke proposes to use in connection with the CPRE Program, including (i) the Build Transfer Agreement, (ii) the Engineering, Procurement and Construction Agreement, and (iii) the Asset Purchase Agreement (collectively, the “Self-Developed and Asset Acquisition Contracts”).

On May 25, 2018, NCCEBA and NCSEA filed a joint motion requesting that the Commission (i) direct Duke and the Independent Administrator to remove the recently added terms and conditions relating to energy storage requirements and protocols from the revised pro forma PPA; (ii) require Duke to file the final Tranche 1 pro forma PPA for Commission approval (with an opportunity for interested parties to comment on such changes), and (iii) require Duke to file the Self-Developed and Asset Acquisition Contracts for Commission approval (with an opportunity for interested parties to comment on such contracts).

NCUC Order

In its June 25 Order, the Commission denied NCCEBA and NCSEA’s joint motion.  The Commission determined that “Duke has complied with the pre-solicitation filing and information sharing requirements of G.S. 62-110.8 and Commission Rule R8-71(f)(1).”  The Commission therefore concluded that there was insufficient cause to grant NCCEBA and NCSEA’s requested relief.  Accordingly, the Commission accepted and approved Duke’s revised pro forma PPA filed with the Commission on June 8, 2018 for use in the Tranche 1 CPRE RFP Solicitation.

Next Steps

The June 25 Order approval clears the way for Duke Energy to issue its Tranche 1 CPRE RFP solicitation in July. 

Although the Commission did not grant the relief requested in NCCEBA and NCSEA’s joint motion, the Commission indicated that NCCEBA and NCSEA’s objections “focused the Commission’s attention on the timing of the CPRE Program filings in relation to the conclusion of Tranche 1 CPRE RFP Solicitation.”  These objections, along with Public Staff comments, convinced the Commission to include an additional reporting requirement at the close of the contracting period for the Tranche 1 CPRE RFP Solicitation.

The Commission has required that Duke file a new report to include:  (i) the statements required by Commission Rule R8-71(f)(3)(v); (ii) a comparison of the proposals selected and the proposal that resulted in contracts actually being executed; (iii) a list of each market participant who sponsored a winning proposal, but did not execute a contract with Duke, and (iv) all information available to Duke and the Independent Administrator that reflects the reasons for the market participant failing to execute the contract.  Finally, the report is also required to address “whether the timing of the Tranche 2 CPRE RFP Solicitation, and subsequent tranches, should be adjusted to facilitate the Commission’s consideration of the contents of the report prior to the 30-day deadline for the filing the pro forma CPRE PPA preceding the Tranche 2 CPRE RFP Solicitation.”

For more information concerning the CPRE Program, please contact Brad Nowak, Bob Riley or Jennifer Morgan.

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