Distributed Energy Resources

SRP, Tesla take first step to resolve SolarCity lawsuit

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Tesla and Salt River Project Agricultural Improvement and Power District (SRP) have taken the first step toward resolving a 2015 lawsuit filed against SRP by SolarCity, a Tesla subsidiary.

They have agreed to a memorandum of understanding, which is expected to form the basis of a final resolution, SRP said in a March 7 news release.

SRP said that the resolution is expected to include the following elements:

  • SRP will purchase a 25 megawatt/100 megawatt-hour battery energy storage system from Tesla, at market pricing, which will be installed at SRP’s Agua Fria Generating Station in Glendale, Ariz.
  • SRP will initiate a three-year pilot program for solar and non-solar customers on its E-27 price plan that, in specified circumstances, will limit the effect of an unusual demand spike on billing. The temporary pilot may help inform potential future modifications to the design of the E-27 price plan.
  • SRP will initiate a Consumer Storage Incentive Program, which will provide incentives to SRP’s customers toward the purchase of qualifying home energy storage systems.

Program details

SRP said that the Agua Fria Generating Station provides an optimal location for a Tesla utility-scale battery storage system. The battery will be brought online between January 2021 and March 2021.

SRP will also provide an incentive of up to $1,800 ($150 per DC-kWh) for residential customers who purchase and install qualifying battery storage systems, including Tesla Powerwall battery products. The incentive will be available for up to 4,500 SRP customers on a first-come first-served basis during a 36-month period, beginning in May 2018.

The research project will include 20 Tesla Powerwall 2 home batteries, and SRP and Tesla will hold two workshops to share lessons learned and results from SRP’s research.

“The research project simply refers to SRP using the data we will collect from the installation of residential battery storage – including Tesla Powerwall products – to gain a better understanding of how such technology impacts the grid so we can perhaps enhance the experience going forward,” said Scott Harelson, manager of media relations, at SRP.

SRP will also study how battery storage can enhance residential use of rooftop solar technology.

SRP will create and recommend a new Demand Excursion Pilot Program for up to 10,000 customers, at their option, beginning with the May 2018 billing cycle that includes a modified demand charge calculation. 

For the pilot rider, the billing demand is the maximum 30-minute integrated kilowatt demand occurring during the on-peak periods of the billing cycle, with the exception that the billing demand cannot be more than three kW higher than the maximum on-peak billing demand incurred in the previous 12 billing cycles.

Details on lawsuit

In the underlying lawsuit, SolarCity asserted that retail rate design changes adopted by SRP had an anticompetitive effect on SolarCity’s rooftop solar operations in Salt River’s territory and violated federal and state antitrust laws.

Salt River moved to dismiss the suit on several grounds, including that SolarCity’s antitrust claims were barred by the state action immunity doctrine, which insulates states against antitrust claims for actions taken in their sovereign capacity.

Supreme Court agreed to hear SRP appeal

The U.S. Supreme Court on Dec. 1 agreed to hear an appeal brought by SRP in the case.

The crux of the matter before the high court will be the question of whether Salt River can immediately appeal a federal district court’s denial of Salt River’s motion to dismiss SolarCity’s suit on “state action immunity” grounds prior to completion of district court litigation.

Salt River is a political subdivision of the state of Arizona, and, among other activities, it provides retail electric service to customers in metropolitan Phoenix.

The Court is scheduled to hear oral arguments in the case on March 19, 2018, with a decision expected by July 2018.

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