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November/December 2019 Issue

Also in this issue: "You're Picking on Me!" When is Selective Prosecution Unconstitutional?     |     Seventh Circuit Upholds Ordinances Regulating the Size and Location of Signs

Eagle Point Solar Case Dismissed by Circuit Court

The Dane County Circuit Court has granted a motion of the Public Service Commission of Wisconsin (PSCW) to dismiss an action filed by Eagle Point Solar (EPS). EPS’s complaint had sought declaratory judgment and injunctive relief from the court to confirm the legality of a Solar Services Agreement (SSA), under which EPS had contracted to develop about one megawatt of solar generation for the City of Milwaukee on seven city-owned properties.  The SSA provided for co-ownership of the solar installation, with the City of Milwaukee owning approximately 20% of the facilities using a combination of FOCUS on Energy and City funding sources. 

EPS filed the circuit court action in response to a PSCW order issued in May of 2019. That order did two things. First, it denied a request by EPS to rule on whether EPS had impermissibly acted as a public utility when it entered into the SSA with Milwaukee, which is a customer of Wisconsin Electric Power Company (WEPCo), to provide solar energy. In the PSCW’s view, determining EPS’s status as a public utility was more properly within the scope of state lawmakers to decide. 

Second, the PSCW set for hearing the separate but related issue of whether WEPCo had acted improperly when it denied EPS’s request to interconnect the solar generation facilities EPS had proposed to build for Milwaukee. WEPCo’s denial of the interconnection request had been largely based on its assertion that EPS was improperly acting as a public utility when it entered into the SSA with Milwaukee.

The circuit court’s dismissal of the EPS request for declaratory and injunctive relief was grounded on the court’s discretion to defer to the PSCW as the agency with primary jurisdiction in utility matters, and to require EPS to exhaust its administrative remedies by participating in the interconnection request denial proceeding at the PSCW. The circuit court also cited EPS’s failure to state a claim upon which relief can be granted given the absence of a reviewable agency decision.

The EPS case has been closely watched by utilities and renewable energy advocates, as well as by local governments and school groups who have relied on so-called “third party” deals to develop local solar generation projects. SSAs and similar contractual structures have been used by such tax exempt entities to enable them to take advantage of federal investment tax credits by partnering with other parties who can utilize the tax credits.

In the absence of an appeal, further clarity on the issue will likely be left to the legislature.  In the interim, local governments interested in developing large scale solar facilities should review tariff options available through their incumbent utilities (MLN, September, 2019: “Local Governments Buy In to Large Scale Solar Projects”).

This newsletter is published and distributed for informational pur- poses only. It does not offer legal advice with respect to particular situations, and does not purport to be a complete treatment of the legal issues surrounding any topic. Because your situation may differ from those described in this Newsletter, you should not rely solely on this information in making legal decisions.

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