A landmark case for solar

SolarCity sues Arizona utility over solar anti-competitive practices

The solar financier and installer chaired by Elon Musk, SolarCity, has filed a lawsuit in Arizona federal court claiming that the Arizona utility Salt River Project is using anti-competitive practices to maintain a monopoly around energy and solar power and unfairly block competition.

Last week the board of directors of Salt River Project approved a new monthly average $50 “demand charge” fee for solar customers that live in the utility’s footprint. The charge is based on their peak energy use, and all solar customers would have to pay the fee even if the amount of solar energy that they produce on their roofs offsets the amount of energy they take from the grid. Most solar panel rooftop systems aren’t connected to batteries, so solar customers still use grid power at night or during non-sunny days.

SolarCity panels on a Walmart, courtesy of SolarCity.
SolarCity panels on a Walmart, courtesy of SolarCity.

The utility says the new monthly fee is fair because it needs to maintain the grid for these solar customers even if they are paying the utility less for energy. SRP says solar customers have a unique relationship with the grid and are actually shifting grid maintenance costs onto non-solar customers.

SRP is hiking rates minimally for all of its customers due to take place in April. Without new charges SRP says it is projected to deliver a net loss of $46 million for the fiscal year that begins in May. SolarCity says in its lawsuit that SRP actually has over $100 million in profits from its electricity generation from last year but that it is structured to shift that profit to subsidize its partner’s water customers in the region.

Solar customers in SRP’s footprint that signed solar contracts before SRP’s proposal was first introduced in December can keep their current rates and will be “grandfathered” in. SolarCity notes in its lawsuit that these customers are already “essentially lost to SRP for significant portions of their electricity purchases.”

SolarCity solar panels.
SolarCity solar panels.

SolarCity sells solar rooftop systems that enable customers to generate their own electricity, and thus buy much less energy from the power grid run by utilities like SRP. SolarCity says the actions that SRP is taking are meant to stifle competition, and act as a monopolist.

SolarCity says the fee, which could around be $600 per year, “eliminates the economic value to customers of generating their own power.” SolarCity says that after the utility’s plan was suggested in December, applications for solar panel systems in SRP’s territory dropped by a dramatic 96 percent.

SolarCity says in its suit:

[blockquote person=”” attribution=””]Given the sheer magnitude of the increases for new distributed solar customers, it is clear that the purpose of the SEPPs [SRP’s new fees] is not to recoup reasonable grid-related costs from distributed solar customers, but to prevent competition from SolarCity (and other providers of distributed solar) by punishing customers who deal with such competitors with higher prices on the remainder of any power that those customers continue to purchase from SRP.[/blockquote]

Salt River Project previously incentivized its customers to adopt solar systems (for example it voluntarily adopted net metering), says the SolarCity lawsuit, and SRP has also agreed to buy solar power from several large utility-scale projects being built in Arizona. SolarCity says SRP is trying to maintain customers to buy that centralized solar power, instead of creating their own on their roofs.

SolarCity says it has 7,000 customers in SRP’s footprint and before SRP suggested its new rate plan in December it was averaging 400 customer sign ups per month in the area. SRP has over 900,000 customers and is one of the largest utilities in the U.S.

SolarCity claims SRP is violating the monopoly and restraint-of-trade provisions of the Sherman Act, as well as Clayton Act rules against exclusive dealing. The suit also includes state antitrust claims as well as tort claims to the effect SRP has wrongfully interfered with SolarCity’s business.

SolarCity is seeking both an injunction and money damages.

The entire lawsuit is here:

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17 Responses to “SolarCity sues Arizona utility over solar anti-competitive practices”

  1. Since this is a new charge just for solar customers, that means that old customers have been paying to maintain the grid just with their per-kWh pricing. So solar customers should not have to pay any more than the per-kWh pricing either–they are helping to maintain the grid at a smaller scale. That is, if every customer went solar, the local utility would be able to greatly scale back its operations and therefore incur only a fraction of the maintenance costs it now has.

    At MOST, the utility should be required to charge solar customers a lower per-kWh price for the small amount they use (in addition to a small grid maintenance fee), since they should now take out the grid maintenance costs that their regular customers pay as part of the per-kWh price. With this new scheme, solar customers are charged TWICE for grid maintenance and at an obviously inflated price.

  2. In New York, I have to by law, be connected to the grid. Are there areas in the country who allow you to go off the grid? If so, the electric company has no way to charge you. I predicted this exact scenario one year ago when I signed up and had solar installed. I hope the solar customers will join Solar City in the lawsuit, or start their own class action.

  3. Let’s be fair! I’d be glad to pay a fair share of the grid costs if the regular rate payers would pay their fair share of the $300 to 500 billion dollars (Harvard Medical study) in annual deleterious health effects caused by burning coal in this country. Not to mention potential climate change costs, or nuclear decommissioning costs. How about all the savings created by solar when SRP doesn’t have to build new power plants to handle a growing electrical load? Give me a break. SolarCity is right to call this anti-competitive.

  4. Marc Gholston

    Well until the actual discovery and disclosure happens customers and legislators will then see there is no rhyme, reason, or concept behind SRP rates other than when they get satisfactory numbers to fit at managements discretion those are the numbers they run with. Accounting books and data matching is Kabuki Theater at best.

  5. SRP includes the majority of the cost of the power plants as part of the grid. They want to make sure your paying for the power plants you are not using with solar. It has nothing to do with the grid. Almost no one who has solar and is connected to the grid has an actual issue with helping pay for the grid. Simply get a true cost of the maintenance of the grid only and split it among ALL grid connected customers. SRP wants you to also pay for their power plants. It is simply their attempt to maintain the monopoly they have had over the last 80+ years.

  6. William House

    …which is why PUBLIC utilities in our prosperous past were REGULATED FOR THE PUBLIC GOOD before Ronald Reagan and the Republican Privatized Destruction of our Middle Class Standard of Living.



      • Well, at least we have a chance with the government. We can vote for those people in government positions. The government is *us*.

        We have no chance at all with private groups. They are not accountable to the public.

  7. We could still be using Thomas Edison’s Nickel-Iron-{Potassium/Sodium}Hydroxide batteries, which were still used in NYC (the ORIGINAL ONES! I’ve read) until the ’70s. Heard of AC/DC radios? That’s part of why!
    The Chinese are selling them, and a retiring friend was setting them up for his remote horse ranch in CA.

  8. exhibit44

    The fee should be sized, not based on how much revenue has been lost, but by how much fixed maintenance costs are. That can be ascertained from historical
    figures.. The fee should be further discounted by investment outlays that won’t need to be made in future due to the slower rate of future grid growth. With more local generation, fewer lines and substations will need upgrading.

    • William House

      Right, Solar reduces the need for infrastructure and reduces energy loss due to transmission lines.

      Tesla’s new Whole-House battery backups will help free us from the Dirty Energy Criminal Enterprise Monopoly.

      Dirty Energy is SO Last Century!

  9. Fennec

    If I were a solar city customer, this would just prompt me to get more solar panels and a battery bank and disconnect from the grid completely.

    It will be very interesting once most houses are generating their own solar power, neighbourhoods can balance power amongst themselves, and neubouring neighbourhoods can provide emergency power in the event of local outages or failures (which would almost never happen if everyone has their own power).

    And if the Sun disappears, I think we have more to worry about than charging our house’s battery banks! :D

    • Ray Boggs

      @ Fennec Li-ion batteries for residential storage purposes in the US are still far too expensive when compared to today’s electric rates. L-ion batteries won’t make sense at least until the end of the decade. (The only state where it might make sense today is California and that’s only because of it’s limited time $1,620 per kWh advanced battery technology rebate.

      • Fennec

        Tesla Gigafactory will reduce costs and hopefully spur fits of research.

        In any case for solar it is probably better to use lead acid batteries still. You can buy 20 kWH worth of LA batteries for a thousand dollars or so. But li-ion is definitely preferable for energy density and little to no maintenance…