A scrappy solar developer took utility regulators to court and won
David Hommrich started his battle against multiple Goliaths — two Pennsylvania utilities and the state itself — seven years ago.
It has been at least that long since he has gotten paid anything for the electricity a bunch of his solar panels in Washington County have pumped onto the local grid.
“That particular project — it’s nothing but a money pit,” Mr. Hommrich said of his company’s inaugural solar farm.
He started his Green Tree-based company Sunrise Energy LLC after a 2004 state law gave customers the right to deduct the energy produced by their small alternative energy projects from their electric bill. If, at the end of the year, they produced more than what they used, the utility would pay the customers for those kilowatts at the same rate it charges for generation. The practice is called net metering and it underpinned Mr. Hommrich’s business model. Given that his solar farm had very little of its own energy demand, virtually all of the power produced by it would come back as cash from the utility, he reasoned.
For four years, that’s exactly what happened. Then, in 2014, West Penn Power, the utility that was receiving the power from Mr. Hommrich’s
solar panels, stopped paying, claiming it had done so in error for years.
It was around that time the Pennsylvania Public Utility Commission, which was tasked with settling technical standards for net metering, began debating whether customers without an independent load — such as a house or business — should be allowed to net meter or be considered a merchant generator, like a power plant, and be ineligible for the practice.
When the PUC codified those rules, Mr. Hommrich promptly sued the agency. He represented himself, learned how to write a legal brief and argued the PUC was wielding authority it didn’t have.
On Feb. 17, the Pennsylvania Supreme Court agreed with him in a decision that has set the Pennsylvania solar community abuzz.
“The court basically said, their opinion doesn’t count,” Mr. Hommrich said of the regulatory agency.
Although Mr. Hommrich and others in the state learned to play by the PUC’s rules by building barns or outbuildings next to new solar projects to serve as an independent load, he was delighted to be vindicated.
“That’s seven years of this industry driving with its brakes on,” he said. “Imagine what’ll be able to
happen now.”
That’s exactly what solar advocates have been doing, said Sharon Pillar, director of the Hill District-based Pennsylvania Solar Center, which helps others go solar.
“It’s a pretty big deal and I think it opens up a lot of doors for some developers,” Ms. Pillar said, although she cautioned that everyone is still trying to figure out how.
Edward Johnstonbaugh, a Penn State Extension educator who focuses on alternative energy development, said the PUC rules “had a chilling effect” and especially discouraged the development of nonprofit or municipal energy systems that could have benefited communities, as well as projects that could have been built in marginal farm fields or on reclaimed strip mines.
Already this year, he has spoken with groups interested in developing projects on those kinds of sites.
Ron Celentano, president of the Pennsylvania Solar and Storage Industries Association, said he heard from a solar installer just last week who was told by the utility that the electric load at his site didn’t qualify for the project he wants to install.
“That was based on the previous regulation,” he said. “Now it has been overruled, he should be able to go ahead and do what he was planning to do.”
But Mr. Celentano didn’t envision the ruling having a major impact on the development of solar systems that are designed just to generate power to sell to the grid, like Mr. Hommrich’s, because the best rate can only be recovered for offsetting the same customer’s electricity demand.
The law also still requires a net-metered solar project and its associated home or building be located on properties within two miles of each other and have the same owner on the account.
Jillian Kirn, an environmental and energy attorney in the Philadelphia office of Greenberg Traurig, said the courts made clear in their rulings that the purpose of the state’s alternative energy law is “to encourage the development of energy generated from renewable and environmentally beneficial sources,” as the Commonwealth Court wrote last year. The PUC’s restrictions ran contrary to that purpose, the court said.
The PUC may eventually take steps to fill some gaps in the rules left by the provisions that were struck down, she said. “If the PUC attempts to align its new definitions with this purpose then I think we can anticipate a greater increase in the number of projects eligible for net metering in the coming years,” she said.
Pennsylvania Public Utility Commission spokesman Nils Hagen-Frederiksen said the commission “respects the decision of the Pennsylvania Supreme Court and will continue enforcement of the PUC’s regulations related to the Alternative Energy Portfolio Standards Act, absent the definitions that have been invalidated by the court.”
“This change went into effect immediately,” he said.
Mr. Hommrich, who has projects throughout the state, is thrilled to go back to court in Washington County, where his lawsuit against West Penn Power may turn on the ruling from the Supreme Court. He estimated he has lost between $90,000 and $100,000 a year since West Penn Power stopped net metering payments in 2014.
West Penn Power spokesman Todd Meyers said the company doesn’t comment on active litigation. Mr. Hommrich withdrew his lawsuit against another utility, PPL, shortly after it was filed.