## Facts

- A nonprofit organization (NC WARN) contracted with a Greensboro church to install, own, and operate an on-site solar system on the church’s property.
- Under the agreement, NC WARN would produce electricity and charge the church for each kilowatt-hour (kWh) consumed, rather than charging a fixed lease or financing payment.
- The church was located within Duke Energy’s exclusive electric service territory established under North Carolina’s regulated service-area scheme.
- NC WARN sought a declaratory ruling that this arrangement did not make it a “public utility” under N.C. Gen. Stat. § 62-3(23)a.
- The North Carolina Utilities Commission concluded that NC WARN was furnishing electricity “to or for the public for compensation” in an exclusive territory without the required authorization.
- The Commission ordered NC WARN to cease and desist, assessed civil penalties, and permitted partial mitigation through payments directed to the church instead of the State.
- NC WARN appealed the Commission’s order to the North Carolina Court of Appeals.

## Issues

1. Whether selling electricity by the kWh from an on-site solar facility to a single end-use customer constitutes operating as a “public utility” under N.C. Gen. Stat. § 62-3(23)a.
2. Whether furnishing electricity to a single customer under a private contract can qualify as furnishing electricity “to or for the public for compensation.”
3. Whether the Utilities Commission acted within its statutory authority in issuing a cease-and-desist order and imposing civil penalties (including a mitigation structure).

## Decision

- The Court of Appeals affirmed the Utilities Commission’s order.
- The court held NC WARN’s kWh-based PPA constituted furnishing electricity “to or for the public for compensation,” making NC WARN a public utility subject to regulation.
- The court held “to or for the public” does not require service to the public at large; service can be “public” when it is the type of retail electric service traditionally provided by regulated utilities within an exclusive territory.
- The court upheld the Commission’s cease-and-desist directive and civil penalties, finding the remedial measures within the Commission’s statutory authority and not arbitrary or capricious.
- The Supreme Court of North Carolina later affirmed the decision per curiam.

## Legal Principles

- An entity that owns or operates facilities generating electricity and sells electricity as a commodity (priced per kWh) to an end user for compensation may be deemed a “public utility,” even if it serves only one customer.
- “To or for the public” in the public-utility definition may be satisfied by service to a limited class or a single customer when the transaction is functionally equivalent to retail electric service typically provided under a regulated franchise.
- Distinctions may turn on transaction structure: a lease or financing arrangement for equipment may differ legally from a contract that is framed and priced as the sale of electricity.
- North Carolina’s exclusive-territory and regulated-monopoly framework supports treating unauthorized retail electricity sales within an assigned territory as conduct subject to Commission enforcement.
- Courts reviewing Commission decisions defer to reasonable agency interpretations within the agency’s delegated authority and uphold penalties that are authorized by statute and supported by findings, including findings of knowing noncompliance.

## Conclusion

The court upheld the Utilities Commission’s determination that a third-party solar power purchase agreement selling electricity by the kWh to a single church within an incumbent utility’s exclusive territory constituted unauthorized public-utility activity, and it sustained the Commission’s cease-and-desist order and civil penalties.


State ex rel. Utils. Comm’n v. N.C. Waste Awareness & Reduction Network, 805 S.E.2d 712 (N.C. Ct. App. 2017)