SolarCity Lawsuit Alleges Arizona Utility’s Fee Hurts Solar

SolarCity Corp., the biggest U.S. rooftop solar installer, sued Salt River Project, alleging the Tempe, Arizona-based utility’s new pricing policy will “punish customers who choose to go solar.”

SolarCity said the pricing plan adopted Feb. 26 imposes unfair fees on SRP customers who generate their own power, and represents anti-competitive behavior, according to a statement Tuesday.

The dispute is part of a growing conflict between companies like San Mateo, California-based SolarCity that install residential solar systems and utilities that see rooftop panels as a threat to revenue.

“Just because you’ve decided to go solar, now you will pay a substantial additional penalty for having made that choice,” Fred Norton, SolarCity’s associate general counsel, said in a telephone interview. “That’s discriminatory and unfair.”

People with solar systems typically send the output to the grid and get a credit on their monthly power bills, reducing the amount of electricity purchased from the local utilities. Adding a fee offsets the economic benefit to the customer, SolarCity said in a blog post on its website.

Pricing Plan

Under the new pricing plan, customers who don’t produce their own power will have a minimum monthly charge of $20. For people who generate electricity, from systems such as rooftop solar panels, the minimum will be $32.44, and heavy users will incur a higher basic charge.

Solar customers also face a demand charge, ranging from about $30 in winter months to $125 in the summer that non-solar customers don’t have to pay, according to the complaint filed Monday in federal court in Phoenix. The new pricing takes effect in April and will apply to to people who installed generating systems after Dec. 8.

SRP said that under the new plan, most customers would end up paying about the same amount as they did with the prior arrangement. For example, a customer who paid $170 before installing solar was paying a $20 minimum charge and $150 for electricity. Now, that same person would pay a $32.44 minimum, a demand charge of about $73 and then $65 for energy, according to John Tucker, SRP’s manager of pricing design.

“An average solar customer saves about $100 a month when he installs solar,” Tucker said. “What we’re trying to do with the price plan is to just equalize his bill reduction with the cost reduction we incur.”

SRP’s fee has already affected SolarCity’s business since it was proposed in December. In the prior six months, the company was installing on average 400 systems a month in the utility’s service area. New applications have plunged 96 percent since December, the company said. SolarCity has more than 7,000 customers in SRP’s service area.

The case is SolarCity Corp. v. Salt River Project Agricultural Improvement and Power District, U.S. District Court, District of Arizona (Phoenix).

Copyright 2015 Bloomberg

Lead image: Gavel via Shutterstock

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