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Commission Clears up Solar Uncertainties
July 31, 2008 (2008-021) (DR-40)
Contacts: Lee Beyer, Chairman, 503 378-6611; Ray Baum, Commissioner, 503 378-6611; John Savage, Commissioner, 503 378-6611; Bob Valdez, Public Affairs Specialist, 503 378-8962
Salem, Ore. Today the Oregon Public Utility Commission lifted a cloud of uncertainty over solar energy projects for cities, counties and other public bodies.
The Commission decided that a third-party financing model for building and operating solar facilities on premises belonging to utility customers does not run afoul of state laws or Commission rules.
The status of third-party ownership of solar projects was brought into question earlier this year when PacifiCorp and Honeywell asked the Commission for a declaratory ruling that spells out the rights and responsibilities of all parties in three-way generating agreements that are commonly used for solar projects throughout Oregon.
“After review, we find these types of arrangements are consistent with existing laws and rules, but are also in keeping with the legislature’s intent of encouraging development of renewable energy projects,” Commission Chairman Lee Beyer said.
The financial structure for such projects enables Honeywell and other third-party financers to qualify for federal and state tax credits that are not available to cities, counties and other public bodies.
Beyer added, “This examination is productive because it lays to rest questions that had led to a lot of uncertainty about third-party financing arrangements.”
Renewable advocates had feared the challenge could have brought a halt to solar projects. At this time Congress has not extended the federal 30% investment tax credit beyond 2008. In order to qualify, solar projects must be generating energy by the end of the year.
Under such arrangements, the investor pays the up-front costs of solar generating facilities, and retains ownership and benefits from subsidies. The owner investor sells the energy to its customer. The customer, in turn, enters into an agreement with an electric utility regulated by the Commission, such as PacifiCorp and Portland General Electric to use energy from the facility to reduce the amount of energy it would otherwise buy from the utility. This is known as net metering. This type of arrangement is designed to make solar energy more affordable for public bodies that themselves cannot take advantage of existing tax credits.
Interest in the issue was high with testimony submitted to the Commission by 18 interested groups.
Link to Commission order.
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