Appeals court ruling could bring Phoenix solar market back to life

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Four customers suing Arizona utility Salt River Project (SRP) over its anti-solar rate “adequately allege antitrust injury,” said the U.S. Ninth Circuit Court of Appeals in a ruling on Monday. Now the U.S. district court that had originally dismissed the lawsuit must take up the case anew, which could result in an end to the anti-solar rate.

Halting the anti-solar rate could revive the rooftop solar market in the Phoenix area, where SRP serves about one million households.

Four SRP customers with rooftop solar had sued the utility in federal district court after their bills went up an average of $600 a year, which they claimed unlawfully discriminated against customers who added rooftop solar. When the district court dismissed the case, the four plaintiffs appealed.

“Applications for solar-energy systems in SRP territory decreased by between 50 and 96 percent” after the anti-solar rate went into effect in 2015, the appeals court noted.

If the district court grants injunctive relief on the plaintiffs’ federal antitrust claims, that could mean halting the discriminatory rate structure immediately, “which could have the effect of allowing rooftop solar to flourish in SRP territory,” said Jean Su, an attorney and director of the Center for Biological Diversity’s Energy Justice Program. The Center had filed a “friend of the court” brief in the case along with four other groups.

Because SRP was established as an agricultural improvement district and is thus a subdivision of the state, the appeals court ruled that SRP is exempt from damage claims under antitrust law.

The appeals court’s antitrust ruling hinges on two factors specific to SRP and Arizona. First, SRP does not file its rates with a regulatory agency for approval, so the “filed rate doctrine” that “prohibits individuals from asserting civil antitrust challenges to an entity’s agency-approved rates,” did not apply, the court said.

Second, Arizona law promotes competition in the retail electricity market, the appeals court found. If Arizona law instead aimed to displace such competition, the court said that SRP, as a political subdivision of the State of Arizona, could be entitled to “state-action immunity.”

Su explained that although anti-solar rates that gain approval from state-appointed utility commissions “are largely protected from antitrust claims, under both the file-rate doctrine and state-action immunity defenses,” other public power providers like SRP “may not be able to use those defenses, particularly if the anti-solar rates contradict state policy as was the case for SRP.”

The appeals court also ordered the lower court to rule on plaintiffs’ federal equal protection claims, finding that those claims were filed on a timely basis.

The appeals court upheld the lower court’s dismissal of plaintiffs’ claims under state law, as it found the plaintiffs did not meet Arizona’s notice-of-claim statute.

The U.S. Department of Justice had also filed a “friend of the court” brief in the case. The appeals court’s decision is available here.

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