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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