Judge overturns PSC OK of lease deal for home solar system, dealing setback to home solar industry
A Dane County judge's ruling that a Stevens Point family's agreement to buy power via a lease from a rooftop solar company is inconsistent with state law has dealt a blow to a statewide push to allow more flexible financing options for rooftop solar projects.
Circuit Judge Frank Remington found state regulators incorrectly interpreted Wisconsin law governing public utilities when approving the project, and returned the issue to the Wisconsin Public Service Commission for further review.
Approved last year by the PSC, the project involved the family contracting with Amherst-based Northwind Solar to install a rooftop solar array that it would own and lease to the homeowners, who would be the sole users of the electricity it generated. Any surplus electricity would have been sold to Wisconsin Public Service Corp., which provides electricity to the home.
The arrangement, referred to as third-party financing, involves a property owner contracting with a company to install solar and pay for the system over time through either a lease agreement or by paying for power at an agreed rate. Advocates say the financing tool can put solar power within reach of low- or moderate-income families and nonprofits that otherwise would not be able to finance a solar project because of large upfront costs.
The judge's decision, finding that the arrangement is inconsistent with state utility law, is a setback for advocates who had hoped the PSC's decision would open a pathway for third-party financing of additional projects in Wisconsin, said Josh Stolzenburg, director of marketing strategy for Northwind.
"It was disappointing," he said. "Just the fact that now this mechanism, which is just basically a financing mechanism, an alternative to getting a home equity line of credit or a personal loan, is not available to homeowners, especially for low-income earners."
The family in the end did not go through with the project, but the PSC decision remained hotly contested by the state's electric utilities, which oppose any erosion of the rules establishing and protecting their regulated monopolies. They argued that third-party financing would allow solar companies to provide the same services as utilities without having to follow the rules that regulate utility operations and protect consumers.
The case turned on the state's definition of a public utility as any company or other entity that provides power, light, heat, gas or water services to the public.
At issue was whether North Wind would be acting as a utility by installing and owning solar panels that would provide electricity to a single residential customer. Vote Solar, a national membership organization that represented the family in PSC proceedings, initially sought a ruling that would have more broadly authorized third-party arrangements in the state.
PSC commissioners instead focused solely on the individual project, ruling that the one-to-one arrangement with Northwind would not violate the law's prohibition on unregulated entities providing electrical service to "the public."
The judge found that reasoning convoluted and at odds with legal precedent. Remington wrote that the PSC's narrow interpretation failed to consider what Northwind does as a solar-installation business.
"We’re pleased with the decision of the court affirming our position that if you provide energy to the public, either directly or indirectly, you must be regulated as a public utility. It's the correct interpretation of the statute,” said Bill Skewes, executive director of the Wisconsin Utilities Association.
Brad Klein, senior attorney for the Environmental Law & Policy Center, said the organization is "closely reviewing the ruling and considering next steps to ensure Wisconsin families have the freedom to fund solar.”
More: Not interested in rooftop solar? Here's how Wisconsinites can tap clean power on the cheap.
Third-party financing is allowed in at least 29 states, according to the NC Clean Energy Technology Center at North Carolina State University, and accounts for more than half of all rooftop solar projects in some states.
Chelsea Chandler, climate, energy and air program director for Clean Wisconsin, said the decision returns third-party party financing to limbo in Wisconsin, where some utilities have allowed it on a case-by-case basis and others oppose it in all forms.
"With the recent vote solar case, we thought we had at least a little bit more clarity on the family being able to pursue this financing option," Chandler said. "It's unfortunate because, in this kind of gray area, that is definitely serving to suppress more people using this tool, because you can never be sure if one utility thinks that arrangement is fine."
Chandler said a prohibition on third-party financing not only prevents people with modest means from adopting solar power, but also stands as a roadblock to meeting the state's goal of eliminating carbon emissions by 2050. Rooftop solar will need to be an important part of the mix needed to meet that goal, Chandler said.
"Solar is a clean source of energy, it's a cheap source of energy, and there is a ton of untapped potential still in Wisconsin," Chandler said.
This article originally appeared on Milwaukee Journal Sentinel: Judge finds PSC's OK of rooftop solar system lease at odds with state law
