IOWA CITY, Iowa (AP) — Solar energy companies can legally sell power directly to customers, the Iowa Supreme Court ruled Friday in a boost to the small but growing source of renewable energy.
The ruling will likely expedite the adoption of rooftop solar power generating systems — particularly by cities, schools and nonprofit groups — that can reduce users' energy costs and their impact on the environment. It also puts Iowa in line with about two dozen other states that allow so-called power purchase agreements, at a time when state leaders are hoping to expand solar energy production.
"This is an important milestone for solar energy in Iowa," said Rhone Resch, president of the Solar Energy Industries Association in Washington. "It undoubtedly will help to jump-start solar installations across the state."
At issue was whether Eagle Point Solar could enter into an agreement with Dubuque to install solar panels at a city building. Under the arrangement, the city would purchase power generated from its rooftop from Eagle Point, which would own and maintain the panels for a period of time before the city gained ownership.
Such agreements allow entities that don't pay taxes — including governments and nonprofits — to take advantage of generous federal tax breaks designed to promote solar energy. They allow users to avoid the expensive initial costs of installation, and let solar companies recoup their investments by bringing in revenue from energy sales. Dubuque-based Eagle Point and other companies plan to market similar agreements statewide after Friday's ruling.
Alliant Energy and other utilities had argued that the agreements were illegal. They claimed solar companies could not sell power to customers under Iowa law, which grants regulated utilities the exclusive right to customers in their service territories in exchange for providing affordable electricity to all. Allowing such agreements, the companies warned, could lead to higher rates for customers to make up for lost business.
The Iowa Utilities Board, which regulates utilities, agreed. The board had ruled that Eagle Point Solar would be acting as a "public utility" by selling power to Dubuque, which wasn't allowed, and could take away customers from Alliant. Eagle Point and other solar advocates appealed, and a judge overturned the board's decision last year.