Milwaukee pushes back against We Energies’ monopoly

Like many utilities these days, We Energies does not seem to mind large-scale renewable energy, which allows it to continue to invest in transmission and distribution infrastructure. But when we get to distributed solar – particularly behind-the-meter solar that is not owned by the utility – this is an entirely different matter.

Last week the Milwaukee Common Council’s Public Works Committee advanced a resolution to authorize the city to hire a contractor for the installation of 210 kW of solar on three city libraries. This itself would be unremarkable in another city; however this is a scaled-back version of the plan, given that We Energies has previous flexed its legal muscles to stop the city from entering into a 1.1 MW power purchase agreement (PPA) with a solar developer.

The claim that We Energies has made is that such PPAs with non-utility entities are illegal. The same argument has been made in Florida, where legal uncertainty around power contracts kept third-party solar developers out of the state for years.

We Energies has offered for the city to install solar through its Solar Now program, where the city would lease the rooftop to We Energies, and the systems would be connected in front of the meter and would not reduce the building’s electricity load.

A fight over monopoly power

The fight between Milwaukee and We Energies is an echo of fights that have gone on throughout the United States between homeowners and businesses and the utilities that serve them; a fight over who gets to own and benefit from distributed generation located at homes and businesses.

And while utilities have often tried to claw back more revenue, lower the valuation of the electricity that their customers produce on their roofs and/or kill the rooftop solar market through regressive rate structures, We Energies’ position – that third-party solar is illegal under Wisconsin law – is a more extreme step.

As covered by Midwest Energy News, Common Council members have accused We Energies of misrepresenting the law. An analysis by Energy and Policy Institute notes that Wisconsin is one of 15 states where third-party contracts are in a “legal gray area”.

Such third-party solar contracts are particularly important for non-profit agencies, churches and government entities as they do not pay taxes and thus cannot benefit from the big federal incentive for solar PV, the Investment Tax Credit (ITC). But private developers can access the ITC, and by doing so can offer the electricity for a lower price.

And regardless of whose interpretation of the law is correct, the implications of We Energies’ position for customer ownership of solar is less defensible given the mechanics of solar PV.

There is a better argument that utilities are bearing some level of burden with rooftop PV on homes, as without a battery system most of the time the electricity generated during the week is going to feed other consumers rather than the residents of that home. However, for a business or an institution like a library, which has substantial daytime electric demand, the implications of We Energies’ argument is that these institutions – including the city government – are not allowed to work with third-party entities to supply their own electricity.

It remains to be seen if We Energies will allow the city to install and own its own solar, but the fight over utility monopoly power isn’t going away any time soon.