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Antitrust suit can proceed against SRP over charges to solar customers

A federal appeals court said Monday that SRP customers who also have solar panels at their homes can pursue an antitrust claim against the utility for a policy of charging them more than other customers.

The decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals reversed a lower court ruling that had thrown out the case, which claimed the higher fees were aimed at stifling competition from renewable energy.

Advocates for the customers welcomed the ruling as a win for “everyday people” like William Ellis, the lead plaintiff in the suit.

“These are everyday people like Mr. Ellis, who just wants to put rooftop solar on his house to get clean energy,” said Jean Su, an attorney for the Center for Biological Diversity, which supported the customers’ suit.

Su said Monday’s decision could set an important precedent against utility companies that “attack” solar customers.

But a spokesperson for SRP said in an emailed statement that the utility is confident its 2015 price structure, which sparked the suit, will be upheld and that the company will “ultimately prevail in this matter.”

“SRP believes that the few remaining claims in the plaintiff’s allegations are without merit,” said the statement from spokesperson Scott Harelson.

Harelson said SRP updated its pricing plan in 2019, and the company invited the plaintiffs to engage in discussions on the changes, but they “chose not to participate.”

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SRP has about 1 million customers in Arizona, according to the court decision, which said that the utility at one time encouraged its customers to invest in solar systems for their homes. But that changed in 2014, when the company announced a new pricing plan that included the E-27 plan, which charged higher rates for customers who installed their own solar systems after December 2014.

The plan, adopted by SRP’s board in February 2015, raised rates for non-solar customers by 3.9% while customers with solar systems were subject to rate increases as high as 65%.

Ellis and three other customers with solar panels on their homes sued, claiming the policy violated state law, their constitutional right to equal protection and antitrust law by using SRP’s position to eliminate competition from renewable energy resources.

“The E-27 price plan makes it impossible for solar customers to obtain any viable return on a solar energy system investment, thereby eliminating any competition from solar energy,” Ellis charged, according to Monday’s ruling. Instead, customers would be forced to “obtain their electrical power needs exclusively from SRP,” the suit claimed.

But a district court dismissed the suit in January 2020, finding, among other things, that Ellis failed to show an antitrust injury, and that SRP is exempt from having to pay damages under the Local Government Antitrust Act. The judge said the E-27 plan actually encouraged competition “in alternative energy investment by allowing for new market entrants with its higher prices.”

While the appeals court affirmed some of the lower court’s ruling, it disagreed on the question of antitrust injury, saying Ellis had shown enough to make the claim.

“He was ‘directly and economically hurt by’ SRP’s exclusionary pricing scheme, which is aimed at suppressing competition by discouraging customers from installing solar-energy systems,” Circuit Judge Eric D. Miller wrote in the appellate court’s decision.

The Local Government Antitrust Act does protect SRP from antitrust damages, but the utility is still subject to providing declaratory and injunctive relief, Miller wrote.

The appeals court also rejected the lower court’s claim that the plaintiffs did not file their suit in time. It said Ellis and two other plaintiffs had met the deadline and could proceed with their equal protection claim – although Miller stressed that “it remains disputed whether the bills issued to Ellis are in fact unlawful,” a decision the lower court will have to make.

Hart Robinovitch, lead attorney for the plaintiffs, said the team is “pleased with the 9th Circuit’s decision” to uphold their antitrust and equal protection claims. Su said the case “really embodies what the values of antitrust law were in the first place … to protect our democracy.”

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But Robinovitch was disappointed that the appeals court upheld a finding that the plaintiffs could not file a class-action suit because they failed to meet a state law requiring that they cite a “specific amount” of money that would settle the case for the entire class. He said the plaintiffs will continue to pursue that claim.

“It really is not possible for a consumer in the place of Mr. Ellis to give a realistic settlement demand pre-filing,” Robinovitch said. “It just invites a pick-off attempt that makes sure that this case would never get heard.”

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Dennis Schoeder/Department of Energy

SRP customers who installed solar panels on their homes filed an antitrust lawsuit against the utility after it began charging them more than other customers – a suit that can proceed, an appeals court said Monday. In this 2011 file photo, an engineer installs solar panels at a Colorado testing facility.