Wyoming Supreme Court sides with small-scale solar users

The Wyoming Supreme Court on Friday affirmed a decades-old state law that incentivizes homes and small businesses to produce solar electricity — a critical win for those who have already invested in small solar arrays and those hoping to take advantage of federal solar energy programs coming down the pike, proponents say.

The Wyoming Public Service Commission erred when it approved a request by High Plains Power to shift from an annual to a monthly compensation scheme with customers who intermittently contribute their excess solar-generated electricity back to the utility, the court’s 17-page decision states.

The court rejected High Plains Power’s plan to compensate solar users for their excess power at a monthly wholesale rate rather than the higher retail rate, erasing the state’s intention to incentivize homeowners and small businesses to invest in their own small solar arrays.

Solar users who supply power to the grid use a bi-directional meter to measure energy pulled from the utility as well as excess energy delivered to their utility system, and they are credited for that extra power through a process called net-metering.

“How ‘credit or compensation’ is valued each month is central to this appeal,” the court said. The court agreed with the petitioner in the case, Sheridan-based landowner advocacy group Powder River Basin Resource Council, which argued that small solar array customers “invested in net-metering systems with the understanding the Legislature incentivized them to do so by offering credit or compensation at retail, not lower, rates.”

The Public Service Commission must now reconsider the monthly tariff it approved for High Plains and potentially two other electric co-ops in the state that were not part of the lawsuit, which will likely result in a refund to their net-metering customers.

“We are grateful that the terms on which we chose to make an investment in a solar system will be maintained,” High Plains Power net-metering customer Elizabeth Aranow said in a prepared statement, via the resource council. “We hope that the rooftop solar industry will continue to grow, providing more jobs and more distributed electricity.”

How it works

In Wyoming, basic net-metering laws apply to residential and small business customers with 25-kilowatt or smaller solar arrays. According to state statute, qualifying residential and small business net-metering customers must be credited for the excess power they generate, but don’t use, and supply back into the system for other customers to use.

For example, if a customer uses 1,000 kilowatt hours in a month, but generates 1,200 kilowatt hours during the same period, sending 200 kilowatt hours of electricity back into the system, the utility must credit that customer for 200 kilowatt hours in the next monthly billing cycle. That kilowatt hour-for-kilowatt-hour exchange occurs at the retail rate. Unused credits rollover month-to-month.

But, to disincentivize net-metering customers from vastly overbuilding a personal solar array to game the system, any leftover credits at the end of the year are paid out to the customer at the utility’s lower wholesale rate. The compensation method struck down by the Wyoming Supreme Court allowed High Plains Power to bypass month-to-month kilowatt-hour credits at the retail rate and instead compensate customers each month at the wholesale rate. That resulted in a major reduction in overall compensation to net-metering customers, according to the resource council.

“If left to stand, it would have paved the path for other electric utilities to enact similar policies rendering customers’ solar investments much less economic and gravely threatening Wyoming’s growing solar industry,” Powder River Basin Resource Council Board Member and home solar owner Bob LeResche said in a prepared statement.

“Personal solar doesn’t earn you money, it just saves you money,” Lander-based home solar company Creative Energies Solar co-founder Scott Kane told WyoFile.

Net-metering opposition

The Legislature has repeatedly considered reforming the state’s net-metering law in response to claims that customers without personal solar arrays are forced to subsidize those who can afford to invest in home solar. Most recently, the Joint Minerals, Business and Economic Development Interim Committee discussed a draft measure in July but declined to move the measure forward. Regulated utilities, member-owned co-ops and others, supported the measure.

Mike Nasi, an attorney for Texas-based firm Jackson Walker, helps direct Wyoming’s Energy Policy Network — a group that advocates for the continued use of coal , including through litigation against proposed coal plant closures in other states. He said Minerals Committee Co-chair Rep. Donald Burkhart Jr. (R-Rawlins) asked him to testify on the proposed measure.

He noted that several states have already restricted net-metering compensation without the consequence of disincentivizing customers from installing solar systems to save money.

“There is a rising movement in our country of civil rights groups complaining about lower income folks in our world being asked to cross-subsidize stuff that only rich people can afford,” Nasi told committee members. “And I don’t fault anybody for putting solar on their roof. But the people who can’t afford to buy rooftop solar are subsidizing it already. Anybody who pays taxes already subsidizes solar panels to a great extent.”

Home solar users and other proponents of Wyoming’s current net-metering law spoke against the measure, saying many people chose to invest in home solar based on Wyoming’s long-established net-metering law. Several pointed to a 2022 analysis of net-metering in Wyoming — paid for by home solar energy proponents — that suggests any customer-to-customer subsidization occuring in Wyoming is so small it’s difficult to measure, given the small amount of home and small business solar generation.

“In every instance, [proposed legislation] meant to handicap the small-scale solar industry has come and gone without success,” said Devon Brubaker, Director of the Southwest Wyoming Regional Airport in Rock Springs, which utilizes solar energy. “It begs the question, why do we keep coming back to the subject that is not an issue when the state faces so many other critical, time-sensitive issues?”

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