Workers install solar power modules for producing electricity on the roof of a house on October 15, 2011 in Wessling, Germany. A federal judge last week denied a motion from the Alabama Public Service Commission to dismiss a lawsuit over fees charged for rooftop solar panels in the state. (Alexandra Beier/Getty Images)
A lawsuit challenging a charge assessed to rooftop solar panel owners will continue and has the potential to expand renewable energy adoption in Alabama.
A federal judge last week denied a motion from the Alabama Public Service Commission, backed by Alabama Power, to dismiss the lawsuit, brought by Birmingham-based nonprofit Gasp Inc. and foru plaintiffs.
Should plaintiffs prevail, advocates hope that it will mean solar power use will catch up with other states.
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“You could look at differences between a state like Alabama and a state like South Carolina, very similar politically, very similar in the economic background and makeup, and very similar in our population,” said Daniel Tait, executive director for Energy Alabama, which advocates for increased renewable energy adoption in the state but is not involved in the lawsuit. “And the difference between how much solar is online in Alabama versus South Carolina is drastic, that is essentially because they don’t have a tax like this, and they don’t have unfair programs to participate in.”
The Public Service Commission and Alabama Power both declined comment, citing the ongoing litigation.
Alabama ranks near the bottom in terms of renewable energy adoption, even when compared to other states with a similar demographic and political composition, but has incentives meant to encourage the adoption of solar energy.
“There is currently little customer-sited, small-scale (less than 1 megawatt) solar generating capacity, such as residential rooftop solar panels, in the state,” the EIA said.
In Texas, another conservative state, solar accounted for about 6% of the state’s net electricity generation.
While Texas and states such as Arizona and Kansas had fees as of 2019, Alabama’s was the largest at the time, according to NPR.
In 2012, the Alabama Public Service Commission allowed Alabama Power to impose a “Capacity Reservation Charge” for households and businesses that installed solar rooftop panels.
The charge was initially $5 for every kilowatt of solar power generated at the location, but that has since been increased to $5.41, which, for a site with a 5kW solar array, would cost an additional $25 per month, or $300 annually, roughly $9,000 during the 30-year expected lifespan of the system.
The additional charges reduce the overall return in benefits from rooftop solar panels, which is meant to reduce the amount of energy they obtain from the electrical grid maintained by Alabama Power, thereby reducing costs.
Alabama Power argued that it pays for the system that connects households with rooftop solar panels to the electric grid. The company supports the residential and business customers by providing electricity at times when their solar systems are unable to generate electricity, such as times of heavy cloud cover when the sun is hidden.
The plaintiffs in the lawsuit allege that the PSC failed to implement the 1978 Public Utilities Regulatory Policies Act of 1978 (PURPA), a federal law that gives the Federal Energy Regulation Commision (FERC) the power to enforce rules. According to the complaint, FERC’s regulations stipulate that the rates that electric utility companies charge to residential and business customers cannot be discriminatory and must be tied to the amount that it costs to provide electricity to a facility.
The additional charge increases the price that households and businesses must pay to receive power, the complaint alleges, even though it costs the utility company less to service those same locations because they have an alternative source of power.
“If this tax goes away, you will see a huge jump in the amount of people who go solar because it will make it more economical to go solar than ever before, and there will be a lot of people who that makes economic sense to do immediately,” Tait said.
The PSC argued in its filing that a federal court does not have jurisdiction and that the state court would be the proper venue for the case. However, U.S. District Judge Myron Thompson ruled that the court had jurisdiction under PURPA, which allows individuals and businesses to challenge state regulatory agency rules if the state agency is not enforcing Federal Energy Regulatory Commission (FERC) rules.
“Put differently, federal courts have jurisdiction over challenges to state regulatory rules that are unlawful as written, not rules that are lawful but applied unlawfully to individual customers,” Thompson wrote.
The PSC argued that federal courts cannot decide on the prices that utilities may charge out of concerns that federal courts are setting rates.
The judge disagreed with the PSC based on precedent.
“As the Tenth Circuit observed, ‘[I]f a supervisor establishes guidelines and tells an employee under supervision to implement them (picture here a doctor-nurse, architect-draftsman, judge-clerk situation), and due to a good-faith misunderstanding the employees fails to take the designated action despite making a reasonable attempt to do so, it can hardly be said that the employee has implemented the guideline action,’” Thompson wrote.
The judge’s ruling allows the case to move forward in federal court to decide the case on its merits.
“We will continue our efforts to require the Commission to follow the law and not allow Alabama Power to unfairly charge customers who invest in solar,” said Christina Tidwell, a senior attorney in Southern Environmental Law Center, which is representing the plaintiffs, in a statement Thursday. “For over ten years Alabama Power has charged residential solar customers this unjustified fee, which significantly erodes customers’ expected savings and makes it impractical to invest in solar power.”
The SELC, along with an Alabama-based law firm, is representing several individuals and a nonprofit, GASP, Inc., a nonprofit based in Birmingham, interested in investing in solar rooftop panels to reduce their electricity bills and be more environmentally friendly.
“Since 2013, Alabama Power’s monthly fee has limited the ability of Alabama homeowners and businesses to use solar power on their properties to reduce their electric bills,” Tidwell stated in an emailed response Tuesday. “This is one of the highest backup fees of any regulated utility nationwide and is a barrier to expanding rooftop solar in the state. The charges are stifling the growth of rooftop solar across the state. Alabama, despite its abundance of sunshine, lags almost every other state in the country in rooftop solar deployment.”
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