News Column

Court Ruling Lets the Sun Shine in Iowa

April 12, 2013
Rooftop solar array (file photo)
Rooftop solar array (file photo)

Renewable energy providers and advocates are chiming in and phones are ringing at Eagle Point Solar in Dubuque. Congratulations are in order.

In a ruling released this week, Polk County District Court Judge Carla Schemmel said selling electricity to the city of Dubuque via a third-party power purchase agreement does not mean Eagle Point Solar is a public utility or an electric utility. The court reversed an Iowa Utilities Board ruling last year that affirmed Alliant Energy's contention the deal constituted a breach of its protected service territory.

"Eagle Point Solar is not a public utility," said Barry Shear, company president. "We had a great case, and we had a great case in front of the Iowa Utilities Board, but they decided to take the utility's position. We have

10,000 megawatts of wind power in this state. There is no reason we can't do the same thing with solar, and there is every reason to believe in 20 years we can exceed that."

Third-party renewable energy deals are important to tax-exempt entities such as municipalities, school districts and nonprofits. Since they are not eligible for federal and state incentives, a third party, often a bank, underwrites the deal and takes advantage of the tax incentives reducing project costs.

"If it's not appealed, this ruling opens the door significantly to solar in Iowa," said Josh Mandelbaum, staff attorney at the Environmental Law & Policy Center in Des Moines, who filed a petition on behalf of Eagle Point Solar in the case. "In states where solar is growing fastest, as much as 70 percent of all projects have been done through third-party ownership - not just power purchase agreements but also through third-party lease arrangements. This puts Iowa on the map when the national industry looks where next to invest."

Alliant Energy Spokesman Justin Foss said the company is examining the decision and trying to determine if any future action is needed.

"We're still trying to figure out what it means," Foss said. "What we know, is this order only applies to that one installation on that one building in Dubuque. It is not a broad order or a policy change overall. It only applies to this one instance."

While the court emphasized "its determination is limited to these parties, this PPA and the particular facts and circumstances of the case before it," the ruling does legitimize third-party power purchase agreements in the state. Iowa had been one of 22 states where no legislation or court ruling addressed the issue.

"This is a reversal and a repudiation of that whole theory that it makes you a public utility," Shear said. "It means these deals can go forward."

The dispute began in July 2011 when the Dubuque City Council approved a third-party power purchase agreement with Eagle Point Solar to install a solar array on the roof of the Municipal Services building, with Dubuque Bank & Trust as the owner, or third party. The deal was based on the city purchasing electricity produced by the solar panels. In August 2011, Alliant Energy notified the city and Eagle Point Solar that it believed the contract violated Iowa law. Since Eagle Point owned the production system, Alliant argued it met the definition of a public utility and infringed on its territory.

In January 2012, Shear sought a ruling from the Iowa Utilities Board and in April 2012, the board issued its decision in favor of Alliant. Shear appealed for judicial review in May.

In her ruling stating the arrangement did not make Eagle Point a public or electric utility, Schemmel said the Iowa Utilities Board applied an incorrect legal standard.

"The power purchase agreement is intended and designed to increase opportunities for financing the proposed renewable energy project by reducing transaction costs and expenses," Schemmel wrote. "This is not only consistent with the legislative purposes of promoting economical, efficient and adequate electric service to the public, but furthers it."

Source: Copyright Telegraph-Herald (Dubuque, IA)

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