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Does The Sunshine State Discriminate Against Solar Power?

This article is more than 8 years old.

Does the law of Florida discriminate against solar power companies? The short answer is “yes.” The long answer is also “yes,” but with the caveat that consumers – as opposed to solar companies – are the true victims.

Florida prohibits retail sales of electricity by anyone other than government-sanctioned utility companies. The prohibition does not extend to leasing generating equipment because leases do not involve the sale of electricity.

In any event, consumers in Florida cannot buy electricity from non-utility power companies. At the same time, non-utility power companies, including rooftop solar companies, cannot sell power to retail customers in Florida. The prohibition applies regardless of the technology used to generate electricity. Unless the utility is the seller, consumers are just as prohibited from buying electricity generated with diesel fuel as they are from buying power generated from sunlight.

Only state-sanctioned utility companies are allowed to sell electricity to retail customers in the state of Florida. This has been the law of the land in the Sunshine State for more than quarter century.

In 1988, the Florida Public Service Commission (FPSC) held that anyone who sells electricity to even a single person in Florida is a public utility subject to state utility regulation. Later in the same year, the Florida Supreme Court upheld the FPSC’s legal prohibition on non-utility electricity sales in PW Ventures, Inc. v. Katie Nichols.

Here is what happened in that case. PW Ventures, a joint venture between Combustion Engineering and the utility holding company now known as NextEra Energy , proposed to build, own and operate a natural gas plant in Palm Beach County. The gas plant would have sold all of the electricity and thermal energy it generated to Pratt and Whitney under a long-term contract (i.e., power purchase agreement). PW Ventures sought a declaratory statement from the FPSC prior to building the plant to ensure that it would not be subject to regulation as a public utility under Florida law. The FPSC ruled that the proposed contract between PW Ventures and Pratt and Whitney would make PW Ventures into a public utility.

“The intent [of the statutory definition of ‘public utility’ in Florida] was to promote and protect the public interest by authorizing electric utilities to provide electricity in a given area, free of competition, but subject to a pervasive regulation,” the FPSC stated. “Unlimited and unfettered competition . . . is contrary to that intent.”

Considering that Florida laws prohibit non-utility sales of electricity, amending the state’s constitution is one avenue of legal recourse open to those who disagree with the law.

This is the primary reason why Floridians for Solar Choice (FLSC) is backing a constitutional amendment that would remove the legal prohibition on non-utility retail sales of electricity. In a recent memorandum addressed to the Financial Impact Estimating Conference, FLSC explains the rationale like so:

[U]nder current law, any person or entity that owns a solar electric generating facility, such as an array of photo-voltaic solar panels, may not sell the electricity to another person, such as another homeowner, without coming under the full rate setting and service jurisdiction of the PSC and without being subject to existing PSC-enforced monopolies within established electric utility service territory. The exercise of rate, service, and territorial jurisdiction is intended to govern monopoly utilities with centralized power generation and sprawling networks of transmission and distribution power lines, and to prevent the uneconomic duplication of facilities. But the regulations also serve as a barrier in Florida to sales of locally generated solar electricity and to the use of Power Purchase Agreements, which are well-known small scale solar financing arrangements used in other states.

In a recent blog post, James Taylor, a fellow Forbes contributor, attacked FLSC’s effort to amend Florida’s constitution. According to Taylor, rather than preventing discrimination against solar, “the proposed Florida constitutional amendment mandates discrimination in favor of solar power and against all other sources of electricity.”

I disagree with this assessment, but not because I think Taylor is technically wrong. After all, the first sentence of the proposed amendment states that “[i]t shall be the policy of the state to encourage and promote local small-scale solar generated electricity production and to enhance the availability of solar power to customers.”

Aside from this sentence, which seems less provocative when read in context, the amendment seems tailored to preventing discrimination against solar. Nonetheless, the first sentence of the amendment says what it says. This makes it difficult to persuade people with partisan leanings why they should resist interpreting the amendment through the lens of ideology.

Dismissing the solar amendment as a stealth strategy for favoring solar at the expense of other generating technologies misses the vital point. In the big picture, I would argue that the solar amendment has about as much to do with solar as the Boston Tea Party had to do with tea.

If it succeeds, the solar amendment will open the door to competition and consumer choice in a state and an industry where those values have been relentlessly and ruthlessly suppressed.