Regulators in North Carolina have refused an advocacy group's request to allow for third-party solar ownership in the state, and hit the organization with a $60,000 fine.

NC WARN, a nonprofit environmental group, filed a petition with the North Carolina Utilities Commission (NCUC) last June seeking approval for selling solar power to the Faith Community Church in Greensboro. The nonprofit built a rooftop solar project on the church last year as an act of civil disobedience designed to test a state law prohibiting the direct sale of electricity from any entity other than the utility. The 5.25-kilowatt array was offered with a three-year PPA at roughly half the price of retail electricity.

Duke Energy, the dominant utility in the state, argues that the project is illegal and that the NCUC does not have the authority to allow for third-party sales.

NC WARN insists that the funding arrangement is consistent with state energy policy and with the constitutional ban of monopolies. NC WARN says it is not acting as a public utility; rather, it is providing a financing service on the church's side of the meter. The group claims this type of no-money-down solar financing has widespread support among churches, businesses, homes and other customers.

SolarCity and the nonprofit NC Interfaith Power & Light, represented by Southern Environmental Law Center, are intervenors in the case in favor of third-party ownership.

On Friday, the NCUC issued an order stating "there is no provision in the Public Utilities Act that expressly authorizes the Commission to allow third-party sales of Commission-regulated electric utility services to the public for compensation."

Duke cheered the decision. “It was clear NC WARN was acting like a public utility while ignoring all the rules to properly do so. We’re pleased the NCUC denied the organization’s request," said Randy Wheeless, Duke Energy spokesperson.

In addition to refusing the petition, regulators levied a $60,000 fine against NC WARN for selling power to Faith Community Church, but "suspended" the fine if the group stops selling power and agrees to meet other conditions.

Jim Warren, director of NC WARN, said the terms of the suspension are still unclear. He also pledged further action.

"This case is going to court," said Warren, in a statement. "In other states, regulators or courts have agreed that third-party financing of rooftop solar is permissible and in the public interest."

"In this case, the NCUC declined to hold a hearing over the nine months since the case began despite widespread public interest and engagement among the faith community and the national solar industry," he added.

North Carolina is one of four states in the country -- along with Florida, Oklahoma and Kentucky -- where third-party entities are restricted from selling electricity directly to customers. A bill that would enable third-party financing in North Carolina was introduced in the general assembly last year but died in committee.

In Florida, a campaign seeking approval of third-party-owned solar in the Sunshine State failed to gain a slot on the 2016 ballot. Meanwhile, Georgia and South Carolina recently modified their laws to allow third-party sales. These developments show that the U.S. remains a mixed market for pure-play rooftop firms like SolarCity, Sunrun and Vivint Solar.