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Salt River Project, Solar City resolve lawsuit over solar customer rates

Salt River Project and Tesla Inc. subsidiary SolarCity Corp have resolved a 2015 lawsuit by the solar firm challenging Salt River Project's rates for distributed solar customers.

Salt River Project, or SRP, in a March 21 press release said the final agreement follows terms set in memorandum of understanding announced earlier this month. Under the agreement, SRP will start two programs and purchase a battery storage system from Tesla and Tesla will drop its lawsuit.

Per the agreement, SRP will purchase a 25-MW battery storage system from Tesla to be installed at SRP's gas-fired Agua Fria Generating Station in Peoria, Ariz. The storage system will have the capacity to provide up to 100 MWh of energy and will be installed and brought online between January and March of 2021.

SRP also will start a three-year pilot price plan program for solar and nonsolar customers that, in certain circumstances, will limit the effect of an unusual demand spike on billing. The pilot program will help inform potential future modification to the design of the price plan, SRP said.

The public power utility also will initiate a customer storage incentive program, which will provide incentives to SRP's customers towards the purchase of qualifying home energy storage systems.

The customer storage incentive program will be available for up to 4,500 SRP customers on a first-come, first-served basis during a 36-month period, starting in May. The program will provide an incentive of up to $1,800 for residential customers who purchase and install qualifying battery storage systems, including Tesla Powerwall battery products.

SRP said 20 Tesla Powerwall 2 home battery systems will be part of the research project, and SRP and Tesla will hold two workshops in the future to share lessons learned and results.

The U.S. Supreme Court was scheduled to hear oral arguments on April 17 about SRP's contention that as a governmental entity it is immune from SolarCity's antitrust suit, but SRP and Tesla on March 20 filed a stipulation to dismiss the case.

SRP raised rates for new solar customers in early 2015 with a demand charge in the range of $60 per month along with a separate service charge. SolarCity sued SRP claiming the rates were discriminatory and designed to keep competing distributed solar resources from competing for a share of the energy market in its territory.

SRP argued solar customers were responsible for shifting millions of dollars in grid costs to nonsolar customers.