Energy group sues utility regulators over solar-financing policies

A renewable-energy advocacy group filed a lawsuit against Wisconsin regulators on Thursday over current legal guidance that seems to prevent third-party financing of solar projects, an arrangement that allows developers to directly rent solar arrays to homeowners and businesses.

Proponents of third-party financing say it makes solar technology affordable to people who can’t pay for the necessary equipment up front. But the arrangement exists in a legal gray area in Wisconsin because, under state law, only utilities have authority to sell electricity to residents and businesses.

The Midwest Renewable Energy Association, a Stevens Point-based nonprofit, sued the Wisconsin Public Service Commission, arguing the regulator’s rules unlawfully prevent anyone except utilities from selling solar equipment to customers.  The group’s lawsuit was filed in Portage County Circuit Court.

The lawsuit is the latest foray in a dispute over third-party solar financing in Wisconsin. We Energies is separately challenging a deal the Iowa developer Eagle Point Solar reached to place solar arrays on six buildings owned by the city of Milwaukee. The PSC, which is considering the newest case, solicited comments on third-party financing earlier this week and could issue a decision as early as this spring.

“Families, businesses, schools, and churches want to innovate and invest in advanced clean energy, but Wisconsin’s electric utilities are using faulty PSC guidance to strengthen their monopoly control and reduce options for electricity ratepayers,” said Nick Hylla, MREA executive director.

According to its lawsuit, MREA was essentially forced by the PSC’s third-party generation rules to back away from a solar project it had planned for Milwaukee Public Schools. The organization had been seeking to place three 20-kilowatt solar systems on schools in the district.

The arrays would have been installed and maintained under a so-called Power Purchase Agreement, or PPA, and would have charged a fee for energy generated by the solar panels.

The arrangement is similar to one that Eagle Point Solar and the city of Milwaukee entered into three years ago, allowing the placement of 1.1 megawatts of solar generation on city-owned buildings. Utility We Energies, however, refused to connect the solar panels and offered to sell the city solar power through its own program instead.

Brendan Conway, a spokesman for the utility, said any entity that sells power to customers should be considered a public utility under state law.

“In Eagle Point’s case, because we already provide retail electric service to the city, Wisconsin law prohibits Eagle Point from doing so,” Conway said in a statement. “Not only is the agreement illegal, it shifts costs to customers who are paying for the infrastructure that provides service when needed and would allow some customers to benefit from our system without paying for a portion of it.”

Hylla said Thursday that the group’s lawsuit is challenging “illegal” PSC guidance documents that allow We Energies to argue that third-party generation isn’t permitted by state law.

“We can’t move forward with the program because we feel the threat of litigation,” Hylla said. “Even though we know it’s legal, we have to be sued and bear the expense of that.”

Hylla said he isn’t confident state regulators really will reach a decision on this dispute by spring. PSC Commissioner Tyler Huebner, an appointee of Gov. Tony Evers, recused himself from the discussion because of his previous work advocating for third-party generation.

That’s leaves a possibility the commission could deadlock on the issue. PSC Chair Rebecca Valcq, another Evers appointee, might support third-party generation while the third commissioner — Ellen Nowak, who was appointed to the panel by former Gov. Scott Walker — is opposed to it, Hylla said.

“The commission shouldn’t have the power to seesaw this issue when it’s plainly legal by state law,” he said. Follow @natebeck9