Wisconsin regulators punt on solar-energy question: Are renewable developers utilities?

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The Wisconsin Public Service Commission punted last week again on a question that’s front-of-mind for solar advocates in the state: Is a private company that owns and operates solar service in effect a public utility?

It’s a question that arose last year when the city of Milwaukee enlisted the Iowa-based company Eagle Point Solar to install 1.1 megawatts of solar power atop seven municipal buildings in the city. The company began work on that project in the fall after winning a contract through competitive bidding.

The deal quickly drew opposition from We Energies, a public utility that serves the Milwaukee region, which tried to block the project and offer its own rooftop solar-program as an alternative.

Eagle Point Solar responded by taking the dispute to the public service commission, asking regulators to find that its contract with the city does not make Eagle Point a public utility, as We Energies is contending. The outcome of the debate is critical to solar-energy advocates, who argue that letting companies like Eagle Point Solar pursue their business models will lead to more renewable-energy development in Wisconsin.

But on Thursday, the PSC said it would not rule either way on whether Eagle Point should be considered a utility because of its deal with Milwaukee. Regulators did say, though, that they would rule on the question of whether We Energies can legally refuse to connect the solar panels.

Barry Shear, owner of Eagle Point, said the PSC’s decision wasn’t unexpected. In the end, he said, the dispute will probably have to be resolved in court.

Eagle Point successfully fought a similar battle in Iowa several years ago, winning a decision from the Iowa Supreme Court in 2014 declaring that private operators of solar equipment can’t be considered utilities. Shear said companies like We Energies are threatened by this latest case because an adverse decision would force them to compete with companies like his, instead of holding a monopoly.

“I’m sure that the fossil fuel industry doesn’t think much of electric cars,” he said. “We’re not riding horses to work anymore. They are just going to have to adjust their business model.”

Shear said Eagle Point also incurred steep losses before We Energies put a stop to its project in Milwaukee. He said his company dispatched 20 of its 27 technicians to work on the Milwaukee project last fall, causing it to pass up other projects. Eagle Point had completed design and engineering work when We Energies intervened. Ultimately, Shear said, the legal challenge cost his company about $500,000, dealing it a “major setback.”

The PSC’s decision not to hear arguments over third-party ownership meanwhile marks the third time in six months that the commission has dodged the topic.

Wisconsin law is vague about what constitutes a public utility, defining it as an entity that provides power, water or heat “to or for” the public. PSC commissioner Ellen Nowak, who recently won her job back thanks to a Supreme Court ruling, said it isn’t the PSC’s job to make new laws. And in its opinion published last week, the PSC said questions over third-party ownership were best left up to state lawmakers. PSC Chairperson Rebecca Valcq dissented.

“The Commission felt the legislative process was the more appropriate forum to answer the question,” according to the PSC’s decision.

The decision was welcome to We Energies.

“We are pleased that the commission denied the developer’s request for a declaratory ruling – which is consistent with the commission’s prior rulings on the legal issue of 3rd party ownership,” said Brendan Conway, a We Energies spokesman.

Shear noted that a number of other state supreme court rulings have dealt with the topic of third-party ownership directly and resulted in decisions that could support the arguments of solar developers. The PSC’s indecision could have a chilling effect on solar power throughout the state, he said.

Eagle Point, for instance, recently struck a deal with Sauk County to install solar panels on public buildings. Eagle Point owns the panels and the county pays for their use.

As is happening in Milwaukee, this project fell within the territory of a Wisconsin utility. But the utility in the Sauk County case, Alliant Energy, didn’t contest the deal like We Energies did. Shear said if the PSC, or a court, rules against third-party solar developers, the Sauk County project could be endangered as well.

“If We Energies gets their way, what happens to these existing projects?” Shear said. “Are we going to have to take solar off the roofs of these existing projects?” Follow @natebeck9

Editor’s note: This article has been corrected to remove an erroneous passage stating construction has started on the solar-power systems Eagle Point Solar is installing on Milwaukee municipal buildings. Another sentence was modified to state that solar developers have benefited from decisions handed down by other states’ supreme courts, rather than been the victorious plaintiffs in those cases.