One year after the Iowa Supreme Court upheld the legality of third-party solar projects, the installer who brought that case has filed a complaint with the Iowa Utilities Board alleging that Interstate Power and Light has undermined the intent of the court’s decision. The complaint, filed on Friday, claims that the Interstate Power and Light’s policy also violates Iowa law, as well as the regulations of the state’s utilities board and the Federal Energy Regulatory Commission.
Eagle Point Solar, based in Dubuque, Ia., claims that Interstate – also known as Alliant Energy – effectively has “unilaterally” altered its system of tariffs in ways that effectively make third-party solar projects financially unfeasible.
At issue, basically, is whether municipalities, schools and universities and not-for-profits can find an economical way to install solar arrays, given that their tax-exempt status means they cannot directly collect the state and federal solar tax credits that substantially reduce the cost of solar panels.
“This is a different flavor of the same fight,” said Eagle Point president Barry Shear, alluding to the legal contest that culminated in the Iowa Supreme Court’s ruling last summer that opened the way for third-party financing of solar arrays.
“They have now come up with a theory as to why my court case is not germane. Alliant is saying, ‘You can file for a (power-purchase agreement), but you can’t have the economics you need to make the deal viable.”
This second round of Eagle Point’s dispute with Alliant derives from a project Eagle Point has been planning for the city of Asbury. Shear’s company was intending to install solar panels on five city-owned structures. The largest array by far was planned for the roof of the wastewater-treatment plant. Eagle Point intended to construct a 356-kilowatt array, large enough to offset about 90 percent of the building’s annual energy use. It would require the ability to net meter, getting paid for energy sent back to the grid.
The treatment plant’s solar array would have paid off in a couple of ways. Not only would the building generate most of the energy it needed, but by greatly reducing what it needed to buy from Alliant, it would have moved from one rate classification to a much cheaper one.
As a member of the “large general service” rate class, the wastewater treatment plant currently has to pay a “demand” rate, a fee imposed each month that bears no relationship to how much energy the building consumes that month. The demand rate, which accounts for at least one-third of the total bill, is a fixed monthly charge based on the greatest amount of power a customer has required during a brief period – say 15 minutes – during the preceding year. Because utilities must be prepared for big loads on hot summer afternoons, for example, they charge large users a fee based on the most power they occasionally use.
Because it would have drastically reduced the amount of power Asbury needed to buy from Alliant in order to treat its wastewater, Eagle Point’s plan could have terminated the costly demand rate. Offsetting 90 percent of the building’s power use would have required the capacity to net meter and to essentially set aside credit for excess power during high production times of year, then draw on that pool during times of low production and higher use.
“The city council and the mayor want this project,” Shear said. “And now Alliant is saying, ‘We are not going to give you the economics you need to do this project.’ ”
The utility refused to allow the wastewater treatment plant to send excess power to Alliant’s system and earn an equivalent credit for future power needs. The utility maintains that a customer that buys power from a third-party – whether a solar installer or a private equity investor – and then sends it to Alliant when the panels are producing more energy than the building requires is “reselling” energy, and thereby violating Alliant’s state-granted monopoly on providing electrical service within its territory.
When contacted, a spokesman for Alliant said the company had not had enough time to study the complaint, and consequently could not comment on it.
In the complaint, Eagle Point asks the state utility regulator to issue a ruling that:
* energy flowing to Alliant from a renewable-energy producer financed by a third-party power-purchase agreement does not constitute a “resale” of energy
* the City of Asbury, and other similarly-situated customers may net meter even when they are billed as “large general service” customers that must pay a demand rate
* Alliant must change its tariff to allow Asbury and other “large general service” customers to move more easily and quickly to a “general service” customer class, in which they would not have to pay a demand fee each month
The complaint also urges the Iowa Utilities Board to act quickly.
“Time is of the essence as the federal solar tax credits are currently set to expire in 2016, and (Alliant’s) actions are keeping many otherwise viable projects from moving forward while the clock on the federal tax credits keeps ticking,” the complaint says.