Appeals court ruling opens door to sue electric utilities over rooftop solar charges under antitrust law

Diving Brief:

  • Arizona’s Salt River Project (SRP) could be held liable for antitrust violations, customers say, when it raised electricity rates for customers with rooftop solar panels, according to a decision of the 9th Circuit Court of Appeals published on Monday.
  • According to the decision, because the electric utility sets its own electricity rates, it does not benefit from the legal protections enjoyed by regulated entities. The decision to raise rates after its own failed attempt to enter the solar market is cause for antitrust litigation even though the rooftop solar market has continued to thrive, the court said.

  • The decision could set an important precedent for other lawsuits involving rooftop solar, according to Court Rich, an attorney specializing in energy and regulatory law and co-founder of the Rose Law Group in Arizona. However, the ruling can only apply to state-owned utilities that do not respond to regulatory commissions, given the specifics of the case.

Overview of the dive:

According to the 9th Circuit Court of Appeals, utilities with the legal authority to set their own rates cannot be exempt from antitrust litigation if they use that authority to price competing out-of-market services.

A panel of court judges ruled Monday that a case against Salt River Project in Arizona could proceed despite its initial rejection by a lower court. The previous court ruled that although SRP was the subject of antitrust litigation, customers who sued the utility failed to establish that SRP’s decision to raise rates in 2015 harmed the solar industry. But after reviewing the facts of the case, the 9th Circuit Court of Appeals concluded that there were sufficient grounds for the case to proceed.

The court dismissed a defense raised by SRP, which argued that its actions did not violate antitrust law because the rooftop solar industry is thriving in Arizona despite rising rates. Writing for the court, Judge Eric D. Miller noted that SRP’s decision to raise rates could represent “coercive activity” designed to make independent solar systems unprofitable – activity that could warrant litigation. And because SRP’s board of directors is not subject to oversight by the Arizona Corporation Commission, state law that protects regulated utilities from antitrust litigation does not apply to SRP, a concluded Miller.

Miller also noted that SRP previously created financial incentives for customers who install solar panels. However, these incentives were removed and tariffs were raised after SRP’s own attempts to enter the solar market failed.

The ruling, however, upheld the previous court’s finding that local government antitrust law shields SRP from federal antitrust damages — a positive outcome from SRP’s perspective.

“Regarding the few remaining applications that have been referred to the judge [Susan] Brnovich [of the Arizona district court] for further proceedings, SRP is confident that the actions of the SRP Board of Directors…will be determined to have been considered and adopted rationally, and not in violation of any law or statute,” said SRP spokesman Scott Harelson said in a statement, “SRP believes that the few remaining claims in Plaintiff’s allegations are without merit and that SRP will ultimately prevail in this case.”

But whether or not they prevail in the long run, the 9th Circuit’s ruling could set an important precedent for future cases, according to Rich.

“It’s been pretty obvious for a decade now that utilities are ganging up on rooftop solar,” Rich said. “If that’s not antitrust, I don’t know what is. This ruling makes it easier to get a remedy and hopefully make utilities think twice about their monopolistic actions.”

But because the court said its decision was up to SRP’s pricing authority, Rich said, the outcome of the case may not apply to investor-owned utilities subject to regulatory oversight.

The Arizona decision follows a decision in another Indiana rooftop solar case, where the Indiana Court of Appeals ruled that Southern Indiana Gas and Electric Company, a subsidiary of CenterPoint Energy, had violated state law when transitioning from net metering to instant clearing. The new method for calculating utility customer bills, according to the court, did not comply with state law. In Indiana, regulated utilities are required to bill customers based on the difference between the amount of energy consumed and the amount of energy delivered to the grid.

“CenterPoint Energy believes it is important to right-size the payment made to customers who return power to the grid to balance the interests of customers who own generation and those who do not,” the gatekeeper said. company spokesperson, Alyssia Oshodi, in a statement responding to the court ruling. “CenterPoint Energy EDG Tariff [Excess Distrubed Generation] replaced a payment structure that caused customers without their own generation to subsidize customers with generation, even though all customers continue to rely on CenterPoint Energy’s infrastructure. »

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