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UPDATED: Iowa Supreme Court rules in favor of Eagle Point Solar

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Posted: Friday, July 11, 2014 1:00 pm

The Iowa Supreme Court ruled today that a local solar energy company did not act as a public utility when it attempted to enter a third-party power purchase agreement with the city of Dubuque.

In a split decision, the court ruled, 4-2, with one abstention, in favor of Eagle Point Solar, filing as SZ Enterprises, against the Iowa Utilities Board. The court found that the power purchase agreement (PPA) didn’t infringe on Alliant Energy’s exclusive operating area.

“The problem for the IUB … is that it has not offered a clear explanation as to why Eagle Point should be considered an electric utility even if it is not a public utility,” Justice Brent Appel wrote in a majority opinion.

Industry experts have predicted the case could help efforts to further establish solar power as a viable alternative energy source. But a spokesman for Alliant Energy warned the decision could have a long-term impact on customers’ electricity bills.

Under the PPA, Eagle Point Solar installed PV solar panels on the city-owned Municipal Services Building. Energy harvested through the panels was then sold to the city, through a third party, and used to power some building operations.

Though the solar energy did not pass through Alliant meters, Alliant officials claimed the PPA violated terms of the company’s exclusive operating rights agreement. The Iowa Utilities Board agreed, and shot down the PPA in 2012. A Polk county district court judge reversed the ruling a year later.

Both sides met before the Supreme Court in January.

The board argued the Iowa Legislature gave it authority to make such decisions, and claimed that allowing PPAs will lead to increased costs that will be passed on to consumers. Attorneys for Eagle Point Solar argued that the board made its decision without proper justification.

Eagle Point Solar President and CEO Barry Shear did not immediately return a call for comment.

In a dissenting opinion, Justices Edward Mansfield and Thomas Waterman argued the majority opinion is “a good case study on the limits of judicial competence, and why the legislature wanted us to defer, in large part, to the regulatory agency.”

Alliant spokesman Justin Foss said the ruling won’t impact the company’s dedication to supporting renewable energy. More than 670 Alliant customers in Iowa are generating renewable energy, either through solar power or another source, he said.

However, if PPAs become prevalent, it could create a financial strain that might have to be passed to the consumer, according to Foss.

“The financing model, and the rate model, that Iowa utilities use is that the costs for the entire system are divided out among all the kilowatt hours that the customers use," he said.

A customer’s bill not only covers generation costs, but employee and infrastructure expenses as well.

“When people use less of those energy units, you have a smaller pool by which to divide all of those costs for the power pole, for the power line, for the power plant, for the employee,” Foss said.

The IUB is in the midst of a study of energy generation throughout the state, Foss said. As technology has changed dramatically over the past decade or so, there may be more efficient ways to approach energy generation, Foss said.

The Supreme Court’s decision will likely be considered during the IUB study, Foss said.

With the PPA nixed, the city has been leasing the solar equipment and owns the electricity it produces. City officials now have the option to reinstate the PPA.

No city of Dubuque officials were available Friday to comment. According to Public Information Officer Randy Gehl, solar panels on the Municipal Services Center saved the city $5,104.52 in 2013.

ORIGINAL STORY:

The Iowa Supreme Court has ruled that a local solar energy company did not act as a public utility when it attempted to enter a third-party power purchase agreement with the city of Dubuque.

In a split decision, the court ruled, 4-2, with one abstention, in favor of Eagle Point Solar, filing as SZ Enterprises, against the Iowa Utilities Board. The court found that the PPA didn’t infringe on Alliant Energy’s exclusive operating area.

Under the PPA, Eagle Point Solar would have installed PV solar panels on a city-owned building. Energy harvested through the panels would be sold to the city, through a third party, and used to power some building operations.

Though the solar energy would not have passed through Alliant meters, Alliant officials claimed the PPA violated terms of the company’s exclusive operating rights agreement. The Iowa Utilities Board agreed, and shot down the PPA in 2012. A Polk county district court judge reversed the ruling a year later.

Both sides met before the Supreme Court in January.

The board argued the legislature gave it authority to make such decisions, and claimed that allowing PPAs will lead to increased costs that will be passed on to consumers. Attorneys for Eagle Point Solar argued that the board made its decision without proper justification.

In a dissenting opinion, Justices Edward Mansfield and Thomas Waterman argued the majority opinion is “a good case study on the limits of judicial competence and why the legislature wanted us to defer, in large part, to the regulatory agency.”

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