Utilities tend not to be big fans of rooftop solar, which eats into their revenues by reducing customer reliance on the power grid. A new Ohio lawsuit spotlights the tension between utilities and customers over the clean-energy technology.

The case deals with a monthly charge imposed by the city of Bowling Green’s municipal utility on its few customers with solar panels on their rooftops. Customers who use batteries to store surplus solar power pay even more.

Residents Leatra Harper and Steven Jansto claim the charge, which for them amounts to roughly $56 per month, is an unlawful ​“tax or penalty.” When combined with the city’s partial payment for power fed back into the grid, it almost doubles the payback period for their $37,000 solar system, the couple said.

The city argues the fee is needed to make sure other customers don’t subsidize those with rooftop solar. As households that produce some of their own electricity buy less from the utility, they pay less for fixed costs built into its retail rates, such as staffing, grid equipment, and maintenance. The utility would then look to other customers to make up the difference.

The situation echoes ​“cost-shift” arguments that have dogged rooftop solar around the nation. It could also be a preview of a statewide battle to come as the Public Utilities Commission of Ohio gears up to review and revise its net-metering rules, which determine how solar owners are compensated for the energy they send to the grid. Municipal utilities like Bowling Green are not subject to these rules, but the dynamics around the fairness of rooftop solar rates are similar in either case.

For their part, Harper and Jansto installed rooftop solar panels and battery storage at their home in 2019 and 2020 with hopes of lowering their electric bills and cutting their carbon footprint. The investment will eventually pay for itself because they now buy less electricity from the utility while getting some credit for excess fed back to the grid.

“We could get to near net-zero with a cost up front, but with a payback,” said Harper, who is managing director of the FreshWater Accountability Project, an environmental group. 

Residential solar doesn’t just help those who invest in it.

“Rooftop solar helps to provide electricity locally. It reduces overall demand,” said Mryia Williams, Ohio program director for the nonprofit group Solar United Neighbors. That means less wasted energy because the power doesn’t need to travel as far as imported electrons, and it lowers stress on the transmission system as climate change exacerbates extreme weather and energy demand grows.

Energy fed into the grid from homeowners’ renewable energy systems can save other customers money, too.

“The highest demand periods on the grid tend to coincide with times when residential solar power is producing at its peak,” said Tony Dutzik, an associate director and senior policy analyst for the Frontier Group, a sustainability-focused think tank. ​“Those tend to be the times that utilities spend the most money to provide power for their customers.”

The health and environmental benefits of rooftop solar are ​“pretty obvious,” especially when excess energy offsets purchases from inefficient gas-fueled peaker plants, Dutzik continued. Less consumption of fossil fuels lowers greenhouse gas emissions and other pollution that is linked to multiple illnesses and more than 8 million deaths per year worldwide — problems that could worsen in the U.S. as the Trump administration rolls back climate policy.

What’s fair?

Policymakers have ​“oftentimes undervalued the benefits that rooftop solar can bring, and when you fail to really account for the benefits, you tend to wind up in the situation where people think it’s not fair,” Dutzik said.

Along those lines, Brian O’Connell, utilities director for Bowling Green, said via email that the city adopted its $4-per-kilowatt monthly charge for installed renewable capacity ​“to ensure rooftop solar customers were paying for the electric service they were receiving, and that the rooftop solar customers were not being subsidized by non-solar customers.”

The rationale resembles an argument promoted by ALEC, the American Legislative Exchange Council, since 2014. The Center for Media and Democracy has long criticized the group for coddling the fossil-fuel industry while working to suppress the vote and stifle dissent.

Consumer advocates and some academics have made similar cases in California, whose solar capacity leads the nation for both rooftop and overall.

But Harper and Jansto were surprised when they learned Bowling Green adopted its ​“Rider E” charge roughly six months after work on their home’s renewable energy system wrapped up.

The utility had seemed friendly toward solar: Its website touts the significant share of its power that comes from renewables. Yet while the city aims to reduce greenhouse gas emissions, it does have a long-term ​“take-or-pay” contract to get about half of its electricity from the Prairie State coal plant in Illinois.

Legal and constitutional claims in the couple’s Sept. 19 complaint include unlawful and irrational discrimination. The City of Bowling Green filed its answer on Oct. 14, denying liability and asserting governmental immunity and other defenses.

O’Connell said the $4/​kW rate for the charge resulted from a cost-of-service analysis by the municipal utility’s consultant, Sawvel & Associates. The city charges a general retail rate of about 13 cents per kilowatt-hour for any electricity it sells to customers. However, it credits rooftop solar owners just 7.5 cents per kilowatt-hour for whatever they supply to the grid.

O’Connell responded to Canary Media’s request for information about how the Rider E rate was calculated by sharing two spreadsheets. Each lists total savings or costs for the utility from a rooftop solar customer’s energy production, including what the utility saves by not paying other sources for capacity, transmission, and wholesale energy when customers feed excess power onto the grid.

But the documents don’t detail how the utility spends the solar surcharge. It’s unclear whether the rooftop solar fees are helping pay for the Prairie State coal plant: O’Connell’s response to Canary Media’s question merely noted the city still has to purchase energy from the electric market.

Harper and Jansto’s case will move through legal motions and pretrial fact-finding, called discovery, during the coming months. Meanwhile, advocates worry about the broader questions the case raises.

“We can look at it both ways with who’s supporting whom whenever rooftop solar is installed,” said Williams of Solar United Neighbors. In her view, ​“it’s hard to believe that it’s some sort of subsidized rate,” especially if solar customers get only partial credit for letting others use their excess energy.

Ultimately, Dutzik said, rate systems still should not discourage people from investing in renewable energy for their homes. Indeed, if high fees delay recovery of investments for too long, ​“fewer people are going to get solar,” Dutzik said. ​“And that is going to drive up costs for other consumers.”