Iowa Supreme Court Decision is Good News for Solar Power Companies

by Henry Kaplan | Jul 14, 2014 |

 

As solar power grows, our energy system is growing with it. Our energy infrastructure and regulations were all designed with large power plants in mind, power plants that put out megawatts and megawatts of power. But now, solar panels allow homes and businesses to generate renewable energy on a small scale. It’s blurring the line between energy producer and consumer. So should solar panels be treated just like utility-scale power plants?

We’ve seen this question lead to confusion before. Last week, for example, Arizona had to make some decisions about just which solar panels should be given the benefits of small scale renewable energy sources, and which should be treated like larger power plants.

Now in Iowa, the same question has led to a very different result. Whereas Arizona decided that any company that leases solar panels should be treated as a power generator and taxed accordingly, Iowa’s Supreme Court has decided that similar companies should not be treated as a power generator, and therefore aren’t barred from competing with state-granted monopolies.

It’s a complicated case that solar advocates are claiming as a victory.

The court case goes back to an odd workaround that the City of Dubuque came up with to get the most financial benefit out of a rooftop solar system:

As a tax-exempt organization, Dubuque could not use the renewable energy incentives crucial for making renewable energy systems affordable. So, they convinced a local bank to act as a third-party investor that would own the system and sell them the power through a third-party Power Purchase Agreement.

It was this that Alliant Energy, the utility with the government-granted monopoly, objected to. The head of Eagle Point Solar, the solar installer at the center of all of this, explained:

According to Shear, "Alliant is taking the position that by furnishing electricity, I am an electricity provider, triggering their monopoly provisions as a regulated utility." The difference, he said, is that he is not "furnishing electricity to the public for compensation."

After a district court decision in April, the case between Alliant Energy and Eagle Point Solar made its way to the state Supreme Court. The court settled the matter, deciding that Eagle Point Solar and other similar installers aren’t the same as energy utilities, that they aren’t competing with a government-granted monopoly, and that they therefore can make these sorts of power purchase agreements.

By giving these smaller companies the OK to make power purchase agreements, the court has essentially opened up a new business model for solar power in the state, making Iowa the 23rd state to do so. And the Des Moines Register reports that the ruling will have an impact on other states as well:

The ruling's effects will reverberate to other Midwestern states, including Wisconsin and Minnesota, said Brad Klein, a Chicago attorney with the Environmental Law and Policy Center. The legality of the agreements in those states remain a gray area that hinders progress on solar projects, he said.

"I think it's one of those policies that's important to really nail down," he said. "We're thrilled about the immediate impact this will have in Iowa, but we're really sort of equally excited about the potential for this opinion to lift that cloud of uncertainty."


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