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Can the Government Take Away Solar Tax Credits?

By Lisa M. Schaffer, Esq. on September 26, 2018 | Last updated on March 21, 2019

Maine's Public Utilities Company (MPUC) is attempting to limit solar credit offered to people using solar panels on their homes to reduce their energy bills. Solar Advocates claim this is unfair. Perhaps. But is it illegal?

Lawsuit Remanded From Maine Supreme Court

Environmental groups have filed a new state lawsuit against the MPUC claiming that the benefits promised to solar panel installers can't be taken away simply because the public utilities company has created a new rule.

People add solar panels to their homes, with the plan of sending to the power grid any energy it collects but doesn't use. This process is known as "net metering." The MPUC recently ruled that it is raising the cost of connecting to the power grid, thereby effectively taking away solar credits. Solar panels installed before the rule came into effect in March 2018 are grandfathered in at full credit, but the exemption will expire in fifteen years.

This lawsuit claims that the MPUC violated state law by implementing this new rule. Though the issue was recently brought before the Maine Supreme Court by the environmental groups, that court said this MPUC matter was out of its jurisdiction, and remanded the case back to the lower court.

Phasing Out Economic Incentives -- a Common Practice

Though environmental groups claim that that the MPUC can't take a credit it has already granted, truthfully, agencies do this all the time, under the guise of incentive programs. Does that make it legal? Not necessarily. Policy-makers generally only have two ways to influence changed consumer behavior: prohibitive rules and economic incentives. (Parents, does this sound familiar?) Economic incentives are traditionally phased out after the desired change in behavior has been seen. For instance, Tesla and GM have received tax incentives for producing EV cars, but that will soon be extinguished because they have produced the maximum amount of cars. California is curtailing its use of carpool clean-air stickers by expiring the ones that were issued prior to 2017. The concept here is that enough people have bought plug-in hybrid or electric vehicles, and that now the clean-air stickers are leading to an overcrowding in the carpool lanes, there is a diminished need for boosting the intended consumer behavior.

As for solar panels, the industry has seen tremendous growth, not only because of the incentive programs, but also because of general interest, increased technology, and decreased costs. In fact, in the last ten years, the revenues in the industry has skyrocketed, from $42 million in 2007 to $210 million in 2017. Today, about 25% of total new power plant capacity installed comes from solar, generating about the same capacity as 50 commercial nuclear generators. The industry has definitely taken off, and regulators may be ready to tackle other, currently more pressing, environmental issues.

As for the MPUC case, environmentalists have filed their lawsuit, and the issues will be judged on their merits. If you feel that a local government agency is treating you unfairly, contact a government agency and programs lawyer near you. An attorney can listen to your claims and offer you the best legal advise for your situation.

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