Iowa Supreme Court upholds third-party solar PPA

Birmingham, Alabama (Platts)--11 Jul 2014 603 pm EDT/2203 GMT

The Iowa Supreme Court has agreed that a solar company with a behind-the-meter generation project is not an electric utility and can sell the output of the system under a power purchase agreement.

The 4-2 ruling affirms a lower court's decision to overrule the Iowa Utilities Board's determination that Eagle Point Solar would be acting as a public utility under a plan to develop the project on a building owned by the city of Dubuque and sell the power to the city.

"The court is following the mainstream approach. It is saying that such an arrangement should be an option for customers," Nathaniel Baer, energy program director at the Iowa Environmental Council, said in an interview.

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Eagle Point Solar, a division of SZ Enterprises, proposed designing, building and operating the system for the city under the PPA. It also would finance the project. At the end of the contract term, the city would take ownership of the project.

The city would purchase all of the output of the system, but would need to continue buying power from Interstate Power and Light to meet the full requirements of the building.

"We reject the approach of the IUB in this case. Instead, we conclude that the proper test is to examine the facts of a particular transaction on a case-by-case basis to determine whether the transaction cries out for public regulation," the Supreme Court said in its decision, released Friday.

Iowa law requires regulated electric utilities to have programs to encourage the use of energy efficiency and renewable energy sources, the Supreme Court said.

"Third-party PPAs like the one proposed by Eagle Point actually further one of the goals of regulated electric companies, namely, the use of energy efficiency and renewable energy sources," the opinion said.

Eagle Point did not return a request for comment Friday.

--Mary Powers,
--Edited by Keiron Greenhalgh,

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