By Amanda Durish Cook

The head of a small Iowa solar developer is prepping for a second state supreme court battle over his ability to supply electricity in a state without retail choice — after winning a similar fight in his home state.

Dubuque-based Eagle Point Solar is suing the Wisconsin Public Service Commission and We Energies to compel the utility to connect its planned, third-party rooftop solar projects for the city of Milwaukee (30701). The lawsuit may also clarify rules on what constitutes a public utility in the state.

Eagle Point CEO Barry Shear wants solar developers to be able to own projects that generate electricity for individual customers in a regulated utility’s footprint. The lawsuit cites We Energies’ refusal to honor Eagle Point’s services agreement with Milwaukee to install 1.1 MW worth of solar generation on seven city-owned buildings: three libraries, two public works buildings, a police station and a garage. We Energies refused to connect the solar projects at the distribution level, claiming sole domain over Milwaukee as an electric customer.

“We Energies is saying that a [power purchase agreement] is nothing but selling energy in their service territories. … Their position is it’s an illegal transaction even though there’s no law against it,” Shear said in an interview with RTO Insider.

Eagle Point filed the suit in Dane County Circuit Court in late May after the Wisconsin PSC voted 2-1 against hearing the matter. The commission said the dispute was better left to the state’s legislature because it triggered questions about what defines a utility. Eagle Point filed an unsuccessful appeal with the PSC in spring.

As of July 9, We Energies had not filed its response to the suit.

The agreement would have divided project ownership 80% to Eagle Point and 20% to the city, with the option for the city to purchase the full project over time. Milwaukee has since pared down the solar project to three buildings that it will self-finance, though Eagle Point could still strike a deal on the remaining buildings.

Renewable energy tax credits, like the 30% investment tax credit, are inaccessible to nonprofits and cities such as Milwaukee, which instead rely on third-party providers to attain passed-through savings.

Eagle Point has completed more than 700 solar installations totaling 17 MW. Fighting for access to a regulated utility’s territory isn’t new turf for Shear, who prevailed at the Iowa Supreme Court in a similar 2014 conflict with Alliant Energy.

While 26 states explicitly allow third-party solar power purchase agreements, Wisconsin is one of 15 states that have not clarified whether they allow such third-party solar arrangements, according to the North Carolina Clean Energy Technology Center.

Utility, Defined?

The case could force that clarification in Wisconsin — and a more strongly defined concept of a “public utility.”

But We Energies spokesperson Brendan Conway said the law is already clear — entities cannot sell electricity to We Energies customers without first registering as a public utility.

“In Eagle Point’s case, because we already provide retail electric service to the city, Wisconsin law prohibits Eagle Point from doing so. Not only is the agreement illegal, it shifts costs to customers who are paying for the infrastructure that provides service when needed and would allow some customers to benefit from our system without paying for a portion of it,” Conway said in an emailed statement to RTO Insider.

“There is no requirement under Wisconsin law that Wisconsin Electric interconnect the facilities owned by a third party who intends to provide electric service to a retail customer already served by Wisconsin Electric,” We Energies argued in the PSC case in December.

The Sierra Club has long encouraged Wisconsin to clear up energy law so that third-party PPAs are explicitly allowed. The move would help expand clean and renewable energy use, the nonprofit claims.

100-Year-plus Case Law

Eagle Point acknowledges that only “public utilities” can sell power to the general public but claims it’s perfectly legal for it to generate for a “restricted class” of customer.

Eagle Point’s Shear is drawing on Wisconsin law and a 1911 case in which a landlord built an exclusive steam plant for tenants’ and neighbors’ use and was not deemed a public utility.

“Offering service `to or for the public’ means generating power `intended for and open to the use of all the members of the public who may require it,” the company said. “The `public’ means the public at large, not a limited subset of the public that stands in a special contractual relationship with the facility owner. By passing statutes that regulate public utilities, the Wisconsin Legislature never intended to regulate sales of electricity that serve a `limited’ or `restricted’ class of customers.”

Shear also cites a 1924 ruling in which a group of neighbors formed a co-op to construct a power line; a 1932 case over a dam Ford Motor Co. built to power an assembly plant; and another landlord case in 1967 — none of which was deemed a public utility.

Eagle Point also points out that no excess electricity would flow back onto the grid, nor would the solar arrays use We Energies’ distribution lines or other equipment to transport power.

Shear said the 1911 case has been upheld many times. “I think we have some pretty strong case law behind us,” Shear said. “The legal work has already essentially been done: If you have a single customer, you’re not a public utility.”

Shear said he considers his Wisconsin suit stronger than his Iowa case because his home state didn’t have any decided cases on what constitutes a public utility.

Eagle Point also says its situation “parallels” that of a medical center that the Wisconsin PSC recently ruled could generate its own power through a subsidiary thermal company.

A representative of the Wisconsin PSC has said the agency cannot comment on pending litigation.

Unlike a regulated utility, one solar agreement with the city of Milwaukee won’t make Eagle Point a “natural monopoly,” the lawsuit argues.

Shear is also confident that Milwaukee will be perceived by the courts as a customer, not the public, despite it being a municipality.

“The city of Milwaukee is a single customer. … I’m not selling to the public. There’s a pretty clear distinction there. I’m just making this technology available to everyone in a commercially reasonable way.”

When the deal was scuttled, Shear said he was six months’ deep into engineering work and meetings with the city and We Energies engineers.

“I purchased well over $1 million [of] equipment,” he said. “I had committed my capacity to this. I wasn’t working on other projects.”

In total, Shear estimates he lost about a half-million dollars on the project. He also said Eagle Point missed out on a 2018 grant that would have been awarded had the project been completed by December as originally scheduled.

Shear said he’s fighting We Energies’ position to help cities access increasingly inexpensive renewable energy and meet carbon reduction goals.

“I want to resolve this because this has chilled dozens of municipal solar deals across Wisconsin,” Shear said.

Changing Energy Landscape

Shear says utilities are going to have to accept those in their service territories gaining the ability to generate their own electricity.

“This is a big deal. We Energies has to adapt and grow their business model to expect that their customers are going to be able to produce their own energy. That’s the way it is from here on out,” Shear said.

“They don’t own the sun,” he added after a beat.

Shear expects the battle will eventually reach the Wisconsin Supreme Court.

“My operating presumption is and always has been that it’s going to end up at the state Supreme Court. … While I don’t speak for We Energies, I can’t see them giving up. I’m not giving up either.”