IMPERIAL - Antonio Ortiz, the Imperial Irrigation District’s government affairs officer, gave an update on a lawsuit filed by the District against Riverside County’s Ordinance 943, a mandate telling the District what to pay Riverside residents for rooftop solar over-generation. Ortiz gave his report during the Wednesday, July 25 regular board meeting.
Over a year ago, on March 7, 2017, the Riverside County Board of Supervisors directed its staff to propose an ordinance to require the IID to reinstitute the net energy metering solar tariff for their customers living in the unincorporated areas of Riverside County. That area includes close to 22,000 households and businesses.
Ortega said IID sent representatives to Riverside to argue the ordinance would be contrary to state law. The California legislature, moved by residential solar developers, required utilities, including the IID, to offer net energy metering solar tariffs, until the megawatts reimbursed was equivalent to five percent of that utility’s peak load. Under the law, utilities were mandated to pay rooftop solar homeowners retail for their over-generated electricity instead of buying it back at wholesale prices.
The IID met the State requirement in the first quarter of 2016, according to Ortega, and voluntarily extended the net energy metering solar payback to additional applicants until the utility exceeded the state mandate.
After the program was fulfilled, the IID board adopted a successor solar tariff, net energy billing, with the difference being the retail buyback rate. Since changing to net energy billing, IID customers have installed close to 900 solar systems, he said.
IID officials said it appeared Riverside had discontinued its ordinance, until a residential solar developer promised Riverside County they would pay all court costs if the ordinance was challenged. Riverside County then unanimously adopted Ordinance No. 943. In response, the IID filed a Petition for Writ of Mandate July 13 asking the Superior Court for an order to stop the enforcement of the ordinance and ultimately rescind it altogether.
Because the IID’s power rates charged to customers is one of the lowest in the State, the retail price is also lower to buy back the over-generated power produced by solar rooftop panels.
Riverside solar companies have said the 22,000 houses in IID’s electrical grid cannot have solar panels because the price does not pencil out to pay for the installation. That is why the Riverside County Board of Supervisors mandated the IID pay at the higher retail rate charged by the other electrical company in the area.
IID General Manager Kevin Kelley said Riverside is encroaching on the District's rate setting. He reminded board members that embedded in the Riverside ordinance are criminal sanctions if it is not followed.
Maria Severson, outside counsel for the District, agreed the ordinance was unusual with one government entity dictating to another. It gives the IID 90 days to comply or they would be subject to escalating criminal penalties, starting with a misdemeanor and adding fines and penalties.
Besides Riverside dictating how much the district pays for over-generation of electricity, if too many people participate, it affects the whole IID grid and the ability to distribute energy, Kelley added. The IID is forced to pay retail in buying back the unused energy, even though it could buy energy cheaper on the open market or generate their own, he explained.
The ordinance is unlawful, Severson told the board. Once the state has occupied a field of law, enacted law, she said, Net Energy Metering does not allow counties or other public entities to enact laws to re-regulate a State law, because it has already been regulated by the State.
Also, before Riverside docketed the ordinance, they admitted they entered into an indemnification agreement between the solar developer, Energy Alliance, and the county.
“The agreement was signed in early June by the County chair, and what you have is a for-profit company,” Severson said. “A developer, with a potential market of 22,000 homes to sell solar panels to, is proposing the ordinance and has told the county that if you get sued, if this is challenged, we will pay for it, don’t worry about it. Under the laws of California, that is a question of whether that is lawful.”
Kelley said in addition to the potential unlawfulness of the ordinance, the courts should not allow the two valleys to fight over IID’s rate structure. Solar power companies say that with IID’s low rate for over-generation, it does not pencil out for homeowners to install solar panels.
Ortega mentioned the solar developer’s business model does not succeed without government aid, in this case, it would be payments by the IID equaling what the higher charging Southern Edison pays. Ortega called it "welfare."
“What makes this especially bad,” said Ortega, “you are giving aid to an area and companies that need it least. Usually welfare is to those that have the need. But it shifts from a poor community paying welfare to a rich community.”
IID Director Bruce Kuhn said he had asked the solar company if they could make a profit without a subsidized contract. They answered in the negative, he said.
“You should get into another line of business,” Kuhn said he advised them.
Ortega said the recently imposed tariffs on imported solar panels are going to raise developers' costs even more, and they would then require higher subsidies.
“The federal and state government handed out many incentives and subsidies to get renewable energy companies launched,” Ortega said. “And they have stayed dependent on those handout models. “
“This is not what IID would have chosen,” Kelley concluded. “This is not the outcome we hoped for a year ago. Now that we are here. But as the board, you have no choice but to stick up for the ratepayers as a whole.”