As we have previously reported, one of the many incentives available for on-site renewable energy projects are solar rebates adopted by initiative petition on November 4, 2008 as a part of Missouri’s Renewable Energy Standard, which we noted were held unconstitutional by a Circuit Court in Cole County.  Well . . . let’s just say its been a busy month in the Cole County courthouse and, long-story short, the solar rebate program is now lawful but will likely change in the near future.

Several public utility companies and a coalition of ratepayers filed suit against the Missouri Public Service Commission (“PSC”) to enjoin the effectiveness of administrative rules enforcing Missouri’s Renewable Energy Standard.  Specifically, the Missouri utility companies challenged provisions in 4 CSR 240-20.100 relating to implementation of the 1% renewable mandate cost cap (See § 393.1030.2(1)) and the limitation of the use of “renewable energy credits” to in-state renewable energy services (See § 393.1030.1).

Missouri utility companies, such as AmerenUE and Kansas City Power & Light, did not seek to invalidate the solar rebates but rather to challenge the implementation of the 1% renewable mandate cost cap and the in-state Renewable Energy Credit requirement.  However, the Missouri Retailer’s Association intervened and argued that the solar rebates were a taking under the Missouri Constitution.

In an order dated June 29, 2011, Judge Green agreed that the solar rebates were a taking because there was a distinct lack of public consideration for the $2 rebate given to utility companies:

"[The solar rebate] adds nothing to the statutory scheme, other than a requirement for the utility to make a gratuitous payment of ratepayer-provided funds to certain customers.  It does not advance the public purpose – charging utilities’ energy portfolios – by one kilowatt.  Utilities remain free to construct their own solar facilities, or satisfy their obligation by purchasing solar renewable energy credits on the open market.  Moreover, the customers who benefit from the rebates are not obligated to sell solar energy or renewable energy credits from the “rebate” property to the utility."

In an interesting turn of events, Judge Green set aside his order on July 28, 2011 stating “affected electric utilities that are currently obligated to pay solar rebates pursuant to a tariff approved by the [PSC] should continue to pay the rebates in accordance with their respective tariffs.”

The Kansas City Star further quotes the director of the Missouri Retail Association, David Overfelt, as stating “[t]there are no further plans to go further” with the suit.  So, for now, the solar rebates previously granted to businesses such as Walsh & Associates remain in place and several Missouri utility companies are again offering the solar rebate to its customers who install permanent solar energy systems on their property.  The DSIRE has a great overview of the program requirements for each utility company for those who are interested in participating.

Renew Missouri has pledged to take this issue and the challenge to PSC’s administrative rules before Missouri voters again in 2012.  The General Assembly, currently mired special session focused on economic development incentives, may decide to take back up renewable energy legislation that died last session.  Regardless, expect to see significant renewable energy reforms in the coming year which will certainly affect the cost/benefit analysis for renewable energy projects.

What do you think: is the solar rebate program an unlawful taking of public funds for a private purpose?