The U.S. Supreme Court on Dec. 1 agreed to hear Salt River Project's appeal of a lower court ruling that the quasi-governmental utility is not immune from antitrust suits related to the setting of prices for customers.
Tesla Inc. subsidiary SolarCity Corp. sued Salt River Project, or SRP, in early 2015, asserting that Arizona's second-largest electric utility imposed anti-competitive rates for new solar rooftop customers that made the price of installations prohibitively expensive. SRP approved a new pricing plan on Feb. 26, 2015, designed to punish customers who choose to go solar, SolarCity asserted.
After the U.S. District Court for the District of Arizona rejected SRP's motion to dismiss the case based the immunity doctrine — which insulates states, and in some instances their subdivisions, from federal antitrust liability when they regulate prices in a local industry or otherwise limit competition — the utility turned to the U.S. Court of Appeals for the 9th Circuit. But the appellate court subsequently dismissed the appeal for lack of jurisdiction, so SRP took its case to the high court.
SRP spokesman Scott Harelson said the utility is pleased the Supreme Court has taken the case, because state-action immunity is important to cities, counties and other public entities across the country, including special purpose districts such as SRP.
"Appellate courts have been divided over how the immunity should be applied when private parties such as SolarCity use the antitrust laws to challenge actions by public entities to carry out state policy," Harelson said. "The state-action immunity doctrine is rooted in decades of Supreme Court precedent. As applied in this case, the doctrine leaves utility ratemaking to publicly elected officials rather than private litigation and bars SolarCity from challenging the ratemaking decisions of SRP's elected board."
SRP's rate increase for new solar customers in early 2015 was very controversial. Hundreds of people jammed the SRP board offices in protest of what SolarCity called the highest solar charges in the nation. For new solar customers, a demand charge averaging in the range of $60 per month was imposed along with a separate service charge.
SolarCity said its sales dropped precipitously as a result. Nowhere had the battle over net-metered, distributed solar been more fierce than in Arizona, where the state's three largest utility companies took steps to rein in credits to solar customers.
SolarCity and other solar companies fought bitterly for years with Pinnacle West Capital Corp. subsidiary Arizona Public Service Co., SRP's neighbor. The distributed solar interests finally reached a settlement with Arizona Public Service in August with rates for exported energy for new customers to gradually decline based on a rolling historical five-year weighted average cost of grid-scale photovoltaic facilities.
