Client installed a 500 kW solar array expecting to cut their Duke Energy bill in half. Instead, their bill only dropped 20% because Duke applied a "standby service charge" of $6.50/kW on the full capacity of the solar system. That's $3,250/month in standby charges that mostly offset the solar savings. The client is furious and asking me if this is right.
Standby charges eating solar savings
Unfortunately, standby charges on distributed generation are legitimate in many tariffs. The utility's argument is that they must maintain generation and transmission capacity to serve the customer when the solar isn't producing. Whether the specific charge is correctly calculated depends on the tariff. Check a few things: is the standby rate per kW of solar capacity or per kW of contracted demand? Is there a seasonal difference? And critically, does the tariff offer a partial standby option where the customer can elect standby on only a portion of their load?
Standby charges are one of the most controversial areas in solar billing. They're often legitimate but the calculation is frequently wrong. Check the tariff carefully for the standby rate level and the capacity basis. Some tariffs calculate standby on the nameplate capacity of the solar system while others calculate it on the customer's supplemental demand (the demand they draw from the grid). Those are very different numbers. If the tariff uses supplemental demand and Duke is charging on nameplate capacity, you have a finding.
Checked — the tariff says standby is based on "supplemental service demand" not solar nameplate. Duke is charging on the 500 kW solar capacity. Actual supplemental demand is around 280 kW. The standby charge should be $1,820/month, not $3,250. That's $1,430/month in overcharges. Filing the claim. Client will be relieved.