Solarcity lawsuit against Arizona utility to go forward

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Of all the U.S. utilities that have imposed charges on PV system owners who participate in net metering, two can be singled out for implementing the most regressive and damaging policies changes for the growth of the solar market: We Energies in Wisconsin, and Salt River Project (SRP) in Arizona.

Last week a judge in Wisconsin struck down the demand charge imposed by We Energies and approved by state regulators, and a legal challenge against SRP’s fees is also moving forward.

On October 27, a federal court judge in Arizona ruled that SolarCity’s legal challenge to SRP’s new rate structure for PV system owners in its service area can proceed, overriding a request by SRP to block the suit.

In doing so, the judge threw out SolarCity’s claims for monetary damages, as well as other non-monetary relief measures. However, the core of the suit remains, which is based on SolarCity’s claim that Salt River Project maintains a monopoly on electricity delivery, and has acted illegally and anti-competitively to maintain that monopoly.

In February, SRP approved a new rate structure for PV system owners which included a monthly demand charge of US$9.25 per kW of capacity in the customer’s PV system. Under the new structure the average compensation for electricity generated under net metering was also reduced from the retail rate of around $0.09 to $0.05 per kWh.

SolarCity estimates that these new charges reduced the market for solar in its SRP’s service area by around 95%. GTM Research’s estimate of market decline is less drastic, however Solar Analyst Cory Honeyman estimates that quarterly installation volumes more than halved in SRP territories after the pipeline of projects under the previous net metering rules depleted.

In terms of the court case, SRP says that SolarCity faces an uphill battle. “SolarCity would have to show that SRP acted for anti-competitive reasons in adopting its current rate structure and that it lacked any reasonable business justification for the current rate plans,” SRP Media Relations Manager Scott Harelson told pv magazine.

However, SolarCity appears to be unduanted. “We look forward to showing that utilities cannot exploit their monopoly power to try to eliminate competition from rooftop solar,” explained SolarCity Public Affairs Manager Nate Watters.

Unlike the We Energies case and most other battles over net metering, these charges were not approved in state regulatory proceedings and thus could not be challenged in that venue. Salt River Project is a publicly-owned utility with an elected board, and is not regulated at the state level in the same way that investor-owned utilities are.

It is also interesting to note that SRP’s moves to shut down distributed solar do not mean that the utility is uninterested in solar technology. In July the company broke ground on a 45 MW PV plant in Florence, Arizona.