To be, or not to be – a solar facility or a utility?

Iowa solar contractor Eagle Point Solar is suing Wisconsin utility WE Energies for blocking its solar lease with the City of Milwaukee, stating that it would make the contractor an electric utility. The contractor contends that a private agreement does not denote public sale of electricity.

May 30, 2019 John Fitzgerald Weaver

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Somewhere in a warehouse in downtown Milwaukee, solar panels sat for a year while a contractor fought an electric utility that suggested a solar lease of a rooftop system meant said solar company was actually a fully formed public utility. The solar company asked the Wisconsin Public Service Commission (PSC) for some clarity, some common sense maybe. The PSC punted, by a vote of 2-1, saying this is the job of the legislature to decide.

Commissioner Mike Huebsch, who was appointed by former Governor Scott Walker (R), said to local reporters that a free market argument is appealing in general – but isn’t relevant to this case.

We don’t have a free market in the energy sector. Wisconsin is still a vertically integrated, not free-market, state.

Now, Eagle Point Solar is taking the case to court and on Tuesday filed with the Dane County court against the Wisconsin PSC, naming the three commissions, as well Wisconsin Electric Power Company (WE Energies).

Eagle Point Solar and CEO Barry Shear (left) contends that prior case law from 1911 and 1924 says that no entity is “public” unless it sells to “the public”, suggesting that selling to a single private entity does not make one an electric utility to be regulated as such.

In the 1911 case, Cawker v. Meyer, the Court explained that by passing the public-utilities statutes, the Legislature had not “sought to regulate” “the furnishing of heat, light, or power to tenants or, incidentally, to a few neighbors.”

Following cases, such as in Schumacher v. Railroad Commission the Court held that “a group of neighbors who . . . co-operated to build a line to supply themselves with electric current” did not constitute a “public utility”, and referenced the Cawker precedence set.

The company has filed such a case in Iowa, that got to the state’s Supreme Court and won.

The lease agreement stated that Eagle Point would own 80% project and the city the remainder. Eagle Point would install and manage the system in a 25 year agreement. The city would have the option to buy out the project after seven years. The city would be buying the electricity generated by the system. Per the filing, the system will export no excess electricity to the power grid.

Sunrun Inc., whose fixed price solar lease broke the flood gates in Florida and which has very similar law case law on the topic, has recently submitted a petition to the PSC to allow it to offer residential solar leases at a fixed price. WE Energies has yet to take a position on Sunrun’s petition with the PSC.

WE Energies, the same company that wants to tax your solar installation about 24%, has recently launched its own solar lease program, where it will pay companies for the use of their rooftop space to install solar power. The Solar Now program will:

Spend $8 million in year one, and $128 million over 30 years
install 35 megawatts, with 10 megawatts set aside for government and nonprofits
provide 20-year lease agreements

PSC Chairwoman Rebecca Valcq said she could find no legal justification for WE Energies to block the city’s connection request and argued that third-party ownership is nothing more than a financing tool, much like a retail store offering payment plans on portable generators.

Commissioner Ellen Nowak was quoted as stating, “Utilities are granted exclusive access to territory in exchange for regulation.”

The City of Milwaukee has recently contracted with Eagle Point to install the solar panels on three libraries at a cost of $419,000.

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