Polk County District Court Reversed a Decision by the Iowa Utilities Board
Monday, April 29, 2013
On March 29, 2013, the Polk County District Court reversed a decision by the Iowa Utilities Board ("IUB") determining that a proposed "third-party" power purchase agreement for the sale by a solar energy developer to the owner of a city-owned building in Dubuque, Iowa, of electricity generated by a solar array constructed on the roof of the building rendered the developer a regulated public utility and violated the exclusive electric service territory rights of Interstate Light and Power Company ("IPL"). As a result of this district court decision, Iowa became that 23rd state to allow solar energy developers to offer this type of financing option without becoming a regulated public utility.
As background, Eagle Point Solar is in the business of providing design, installation, maintenance, monitoring, operational and financing services with respect to solar electric generation systems in Iowa. The City of Dubuque was interested in pursuing the development of a renewable energy resource in the form of an on-site solar power system to satisfy a portion of the electric power needs of a single city building. Dubuque sought to enter into a long-term financing agreement with Eagle Point Solar to accomplish that goal. Eagle Point proposed to finance, install, own, operate, and maintain the solar system and charge the City on a cents-per-kWh basis for the electric output. Under the proposed power purchase agreement, Eagle Point Solar would be entitled to the incentives associated with the solar power system, including tax credits and accelerated depreciation, and would credit Dubuque with one-third of any revenues received from the sale of the credits. The city-owned building is located within the exclusive electric service territory of IPL. The building would continue to remain connected to the electric grid and Dubuque would continue to purchase electricity from IPL to satisfy some of the electric energy needs of the building.
Eagle Point Solar petitioned the IUB for a declaratory order determining that under Iowa law Eagle Point Solar was neither a "public utility" subject to regulation by the IUB under Iowa law nor an "electric utility" subject to the exclusive service territory provisions of Iowa law. On April 12, 2012, the IUB issued an order finding that Eagle Point Solar would be a "public utility" subject to regulation by the IUB and an "electric utility" subject to the exclusive service territory provisions of Iowa law. Based on these findings, the IUB order declared that Eagle Point Solar would be prohibited by Iowa law from offering the services described in its petition.
On appeal, the district court held that the IUB erred by applying an incorrect legal standard in determining whether Eagle Point Solar would be a "public utility" under Iowa law. The court went on to hold:
"Applying the correct legal standard as set forth in [the] Northern [Natural case] and subsequent relevant cases cited herein, the Court concludes Eagle Point does not provide electricity ‘to the public’ and thus is not a ‘public utility’ as defined [by Iowa law]. The Court further concludes Eagle Point [Solar] is not an ’electric utility’ as defined [by Iowa law], and thus is not prohibited from serving, offering to serve, or constructing facilities to serve the [city-owned building] located in IPL’s exclusive electric service territory."
BrownWinick attorney Philip Stoffregen argued the case before the district court on behalf of Eagle Point Solar. Mr. Stoffregen and BrownWinick attorney James Pray researched and drafted the briefs filed with the district court.