Throwing Shade: The Case Against Judicial Interference With Solar Net Metering Policies

• Date: 01 October 2016

10-2016 NEWS & ANALYSIS 46 ELR 10873

Throwing Shade:

The Case Against

Judicial

Interference

With Solar Net

Metering Policies

by Megan McLean

Megan McLean holds a 2016 J.D. from Vanderbilt Law

School. is Article won the Environmental Law Institute’s

2015-2016 Beveridge & Diamond Constitutional

Environmental Law Writing Competition.

Summary

Electric utilities are increasingly invoking the tak-

ings clause, general notions of fairness, and fears of

a “death spiral” in their attempts to erode the e-

cacy of net metering policies. is Article considers

each of these arguments and concludes they are best

addressed through the political process, as courts

applying the takings clause are ill-equipped to address

the minutiae of the ratemaking process. reats of

takings litigation only serve to push risk-averse regula-

tors to create inecient outcomes. Moreover, threats

of heightened scrutiny under a deregulatory takings

theory or the U.S. Supreme Court’s recent Horne deci-

sion are unlikely to be successful as a matter of law.

Moreover, they are ill-advised and inappropriate as a

matter of policy.

Across the country, there is a growing interest in

using rooftop solar panels and other small-scale,

on-site renewable power sources k nown as distrib-

uted generation (DG). To encourage investment in DG,

43 states, t he District of Columbia, and four U.S. terri-

tories have adopted net metering policies.1 Net metering

policies have positive environmental impacts, increase grid

security, reduce peak energy loads, and lessen stress on the

electric grid.2

However, utilities around the country are balking at

net metering policies and lobbying ratemakers to impose

special fees and limitations on these policies to slow the

pace of distributed solar growth. Arizona Public Service

Company (APS) asked Arizona regulators to allow the

utility to impose fees of up to $100 per month on DG

customers.3 Utilities have also lobbied for similar fees in

Georgia, Idaho, Utah, Vermont, Virginia, and Wiscon-

sin.4 Utilities have found some traction with ratema kers

in several of these states. A 2014 assessment by the North

Carolina Clean Energy Technology Center found that 16

states with net metering policies were considering or enact-

ing changes to DG rates.5

In Arizona, the Public Utility Commission (PUC)

recently approved a $0.70 per-kilowatt charge on DG

service customers.6 e Commission also specied that

such fees could increase at a ny time, creating uncertainty

for people considering investing in rooftop solar panels.7

ese new policies have already been shown to chill invest-

ment in DG. e number of rooftop sola r installat ions in

the aected territory in the rst quarter of 2015 decreased

40% from 2014.8 Meanwhile, utilities in t he state con-

tinue to push the PUC to increase the  xed charge from

$0.70 to $3.00.9

1. J B. E  ., E, E,   E: C-

  M 842 (5th ed. forthcoming). Net metering is a billing

mechanism that credits a customer-generator for excess electricity exported

onto the electricity grid, making DG economically viable for a lot more

customers.

2. See generally U.S. D’  E, T P B  D-

 G  R-R I T M I T

E (2007), available at https://www.ferc.gov/legal/fed-sta/exp-

study.pdf.

3. Troy A. Rule, , 6 S D J. C

C  E L. 115, 121 (2015).

4. Id. at 121-22.

5. Id.

6. Id. at 122.

7. Id.

8. Press Release, Sierra Club, Solar Installations Drop After APS Assesses Charge

to Solar Customers (Apr. 14, 2014), available at http://content.sierraclub.org/

press-releases/201 4/04/solar-installations- drop-after-aps-assesses-ch arge-

solar-customers.

9. Harman K. Trabish, -

, UD (June 1, 2015), http://www.utility-

dive.com/news/whats-solar-wort h-inside-arizona-utilities-push-to-reform-

net-metering-r/399706/.

Copyright © 2016 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.