This is part one of a three-part series discussing “solar wars.” There will be three battles in this war: net-metering, tariff reform, and grid defection. This will have short and long term impacts on the solar industry, and it is expected to drive innovation.

9th Circuit ruling allows solar company to sue SRP

An Arizona utility can’t escape being sued for anti-trust violations for the rates it sets solely because it’s a quasi-governmental entity, at least not now — if ever, a federal appeals court ruled Monday.

The 9th Circuit Court of Appeals rejected arguments by attorneys for Salt River Project that SolarCity cannot challenge its pricing system. The appellate judges said they have no authority to consider the finding of a trial judge in Phoenix who said the challenge should be allowed to go ahead.

While Monday’s ruling is specific to SRP and its claims of immunity from suit, the implications could be broader.

Unless overturned on appeal, it means SRP ultimately could have to defend in court the rates it charges customers who want to generate their own electricity.

That could lead to rulings on how broad is the ability of utilities, all of which are monopolies, to set rates in a way that could harm other companies. And that, in turn, could impact efforts by other Arizona utilities to increase costs to solar customers.

SRP spokesman Scott Harelson said an appeal is possible.

“We would argue that ours is a statutory pricing process and that the courts have no business setting rates,” he said. But Harelson said if the case goes to court, the company believes its rate structure — and the additional charges imposed on solar customers — can be justified.

That’s the same argument that is being advanced by utilities like Tucson Electric Power and UniSource Energy which have pending rate hike requests.

Arizona Public Service has reached a settlement with SolarCity and other solar companies. But that deal is contingent on review by a hearing officer and final approval by the Arizona Corporation Commission.

Central to the debate is whether customers who install their own rooftop solar units and generate some of their own power are effectively being subsidized by others.

Attorneys for SolarCity contend SRP’s new pricing plan approved last year amounts to a “substantial penalty” on customers.

“Because solar customers are unable to completely disconnect from SRP’s grid — they still need power in the evening hours and at other times when their energy demands exceed what their solar energy systems produce — they cannot escape SRP’s penalty,” the lawsuit contends.

That penalty, according to SolarCity lawyers, is about $600 a year, an increase of about 65 percent over prior rate plans. That compares with an average 3.9 percent increase for residential customers who buy all their power from SRP.

“Customers recognize that SRP’s new pricing plan leaves them with no choice: After the effective date of SRP’s new plan, applications for distributed solar energy systems in SRP’s territory fell by 96 percent,” the lawsuit states.

All that, the lawyers contend, are part of SRP’s illegal efforts to eliminate competition and violate anti-trust laws.

SRP, for its part, contends the fact that the rates were approved by its governing board precludes the SolarCity lawsuit. Its attorneys said there was the legally required notice and comment period, public hearings, a board vote and an opportunity to challenge the board’s decision in state court, something SolarCity chose not to do.

Beyond that, Harelson said SolarCity can’t rely on antitrust claims. He said those laws “generally let businesses set their prices in a way that allows them to recover their costs, without regard to the impact of those prices on companies like SolarCity.”

That contention, Harelson said, is backed by the policies adopted by the Arizona Corporation Commission — which regulates utilities other than SRP — which concluded that utilities should be able to recover the cost of serving any particular group “and avoid shifting costs from solar customers to the rest of the customer base.” But the exact amount of what that figure is has to be decided on a case-by-case basis.

June 12, 2017

By: Howard Fischer, Capitol Media Services

Arizona still a power in solar power, despite other states’ gains

These projects could have a large effect on the Arizona economy, said Auriane Koster, a solar expert with the Julie Ann Wrigley Global Institute of Sustainability. The development of the solar industry in the state has the potential to attract and keep a skilled workforce.

“A private investor coming in and doing a large solar plant is going to increase the economy in the state. That brings in more money in the state. It provides jobs,” she said.

Nearly 7,000 people in Arizona were employed in a range of solar industry jobs in 2015, according to a jobs census produced by the Solar Foundation. It’s a factor that Vasari Energy considered when deciding to move to Gila Bend, said Vasari Executive Vice President Sam Lipman.

“We also have to look at what we give back to the community with these projects. Obviously being a solar company, we look at things a little differently,” he said.

Besides the environmental benefits, the solar industry “can provide some high-paying construction jobs and good revenue to an area that is relatively remote.”

Once online, the planned Vasari plant could produce 140 megawatts of electricity for homes across the state from Gila Bend, a town that encourages energy companies to build solar plants through special zoning rules.

It would not be the largest solar energy producer in the state, but by solar-production standards the Vasari plant would be relatively large, according to the Arizona Corporation Commission. Solar-panel plants typically produce between one and 50 megawatts of power.

By comparison, Arizona’s fossil-fuel power plants are capable of producing between 200 and 2,000 megawatts. The Palo Verde Nuclear Generating Station can produce 3,937 megawatts of electricity, a commission spokeswoman said.

But in addition to its environmental and economic impacts, solar power boasts another benefit: When energy consumption is at its highest, so is its power source, the sun.

“It really helps in that solar is a peak-power fuel, so the highest, most costly part of energy (consumption) is during the daytime, the utility has to go out and buy power,” Lipman said. “If they have a ready source of daytime peak power it gives them more reliability.”

The more sunlight the panels collect during those hours, the more energy the plant can provide to utilities when customers need it the most.

Gallagher said utility companies in Arizona are becoming more comfortable with the idea of buying solar energy from large-scale solar projects to meet Arizona’s renewable portfolio standard. Arizona pledged 15 percent of energy generation would be renewable by 2025.

Will Trumping Obama’s Interior Department Help Solar?

December 20, 2016

By Andrew C. Bell

 

 

The solar industry is large enough to seek U.S. Department of the Interior (Interior) regulatory relief, irrespective of any debate over climate change.
The President-elect is skeptical of anthropogenic climate change. He made clear on the campaign trail that he intends to roll back regulations affecting domestic oil and gas and coal production on public lands. But Mr. Trump has also evinced a more pragmatic, market-based “all of the above” approach to energy. Preserving and creating jobs appear to be some of his highest priorities. At 300,000 jobs to date, the solar industry is large enough to seek and possibly obtain regulatory relief in stride with more traditional resource extraction industries, irrespective of any debate over climate change.

Many Obama Administration initiatives will be reviewed by the Trump Administration to “identify and eliminate unnecessary regulations that kill jobs and bloat government.” This article shows how Interior initiatives focusing on the solar industry may be modified as part of the Trump Administration’s broader effort to reduce regulation in general.

Landscape-Scale Strategies

The concept of landscape-scale public land planning has been a hallmark of Interior Secretary Jewell’s tenure. But developers across many industries believe Interior has used the concept to sharply restrict multiple-uses of public lands.

The new Administration will likely take a long and critical look at Interior’s landscape-level efforts. Chief among these will be Interior’s 67 million-acre Federal Sage-Grouse Strategy, which is currently subject to eight pending legal challenges. Bureau of Land Management’s (BLM) “BLM Planning 2.0” rule, which seeks to update BLM’s planning regulations with landscape-scale concepts, is another example. The new Administration’s scrutiny of these planning efforts could extend to recent large-scale planning initiatives focusing on renewable energy.

Western Solar Plan

Interior’s six-state, 100-million-acre 2012 Western Solar Plan is one such plan. While presented as a planning initiative designed to encourage utility-scale solar energy, many in the industry view the massive series of land use plan amendments (LUPAs) as a hindrance, in no small part because the plan removed 79 million acres of BLM lands from development. The plan did set aside a quarter million acres as preferential solar zones, but the best management practices imposed on those zones have often been viewed as much more restrictive than would otherwise be the case.

When the oil and gas, mining and agribusiness industries seek relief from the new Administration for the Federal Sage-Grouse Strategy, the solar industry could collaborate to gain an audience over the Western Solar Plan as well. There is a reasonable chance of revision because the Western Solar Plan can be modified administratively by a series of LUPAs instead of by formal rulemaking under the Administrative Procedure Act or by act of Congress.

Desert Renewable Energy Conservation Plan (“DRECP”)

The DRECP is a 22.5-million-acre LUPA that covers most of the southern quarter of the state of California, including some of the best solar and wind energy resources in the state. Initially presented as a tool for streamlining endangered species permitting for wind and solar projects on public and private lands, the DRECP has received a cold reception, with California counties notably refusing to sign on to the private lands segment of the plan.

BLM nevertheless pressed forward in September 2016 by adopting the plan insofar as it applied to BLM lands. That decision designated roughly 6.5 million acres of lands as off limits to any form of development. The DRECP process reduced California BLM lands open to solar development under the Western Solar Plan by more than 50 percent, with further restrictions imposed on the remaining acres. While all indications point to a Trump Administration that will not favor renewable energy development over fossil fuels, landscape-level LUPAs like the DRECP risk modification if they are perceived to limit economic growth through unnecessary regulation.

Migratory Bird Treaty Act

On May 26, 2015, US Fish and Wildlife Service (FWS) published a Notice of Intent outlining a proposal for a rule requiring a multi-layered permitting program under the Migratory Bird Treaty Act (MBTA). The permitting program would regulate private activities that inadvertently injure or kill members of most bird species in the U.S.

The program would affect a wide range of industries and activities, reaching well beyond the renewable energy and oil and gas sectors that have been the subject of enforcement actions over the last several years. If finalized, the proposal almost certainly would draw legal challenges from industry stakeholders. No progress has been made since the initial announcement, however. The Trump Administration is unlikely to take the process any further.

MBTA enforcement may also be influenced by the new Administration. FWS has relied on Court of Appeal decisions in the 2nd and 10th Circuits to enforce (or threaten to enforce) the MBTA’s strict criminal liability provisions against multiple wind and oil and gas facilities, sometimes resulting in multi-million-dollar settlements.

However, the 5th, 8th and 9th Circuits have disagreed with this interpretation, holding that the MBTA applies to purposeful activities only (such as unlicensed hunting) and does not apply to unintentional “take” of migratory birds. The Interior Secretary under the Trump Administration could rely on the 5th, 8th and 9th Circuit court precedents to issue a regulation, or at a minimum, an internal policy memorandum, that prohibits enforcement of the MBTA against non-purposeful forms of take.

This could help the solar industry. In June 2016, Region 8 of FWS released a draft bird and bat conservation strategy template that replicates similar guidance for the wind industry by recommending significant monitoring burdens for all photovoltaic facilities over 20 MW. While not mandatory, FWS would exercise “prosecutorial discretion” over enforcement of the MBTA in exchange for compliance with the guidance. Region 8 has indicated the draft template could be replicated nationally.

Industry members have opposed the draft, in no small part because of a lack of conclusive data showing a “lake effect” that causes disproportionate avian mortalities at PV projects.

FWS Region 8 lies within the 9th Circuit. If the Trump Administration eases enforcement of the MBTA, it would be a small step to extend its directive to Region 8’s proposed guidance as well.

Wind and Solar Competitive Leasing Rule

On Nov. 10, Interior released a final rule to establish a framework for the designation of preferred designated leasing areas (DLAs) for wind and solar projects that would be subject to competitive leasing rather than the current first-in-time, first-in-right regime.

The rule would also codify certain wind and solar bonding, rental, megawatt capacity fee, and pre-application policies implemented by BLM for the past five years without formal rulemaking. The solar and wind industries have strenuously opposed the rule.

Whether the competitive leasing concept remains will likely depend on whether the Trump Administration decides to alter the analogous competitive leasing regime applied to public land oil and gas leases for the past 30 years. The top-down DLA zoning concept might strike a Trump Administration as contrary to a market-based approach. The megawatt capacity fee may be perceived as an illicit tax outside Interior’s statutory mandate.

However, the final rule likely will be published in the Federal Register before Dec. 22, 2016 and therefore take effect before the President-elect is sworn in. If that is the case, rescinding or modifying the competitive leasing rule would require a new rulemaking. The formal rulemaking process may handicap efforts to modify a rule that focuses almost exclusively on renewable energy facilities.

Conclusion

There is little doubt Interior will place greater emphasis on the consumptive use of resources under the Trump Administration. In addition to reducing restrictions on fossil-fuel development, President-elect Trump’s focus on creating jobs and reducing regulation in general could extend regulatory change to the solar industry as well, irrespective of climate change persuasions.

Lead image credit: Bureau of Land Management Oregon and Washington | Flickr