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PUC Finds That Solar Lease, PPA Providers Are Not Competitive Retail Electric Suppliers Nor Utilities Subject to PUC Regulation

January 18, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

The New Hampshire PUC issued a declaratory ruling finding that third party providers offering solar power purchase agreements or solar leases to customers are not competitive electric power suppliers (retail suppliers) nor public utilities as defined by statute and PUC rules.

Such a declaratory order had been sought by Vivint Solar

The PUC noted that under RSA 362:2, the term "public utility" is defined to include, "every corporation, ... owning, operating or managing any plant or equipment or any part of the same ... for the manufacture or furnishing of light, heat, sewage disposal, power or water for the public, or in the generation, transmission or sale of electricity ultimately sold to the public ..."

"This broad statutory definition has been interpreted by the New Hampshire Supreme Court with a focus on the 'distinguishing characteristic' of a public utility that it furnishes service to the 'undifferentiated public' without discrimination," the PUC noted

"We agree with Vivint that its relationship with its customers is 'sufficiently discrete as to distinguish the recipient [of its services] from other members of the relevant public," the PUC said.

"Vivint’s PPAs provide for sales of electricity from Systems installed, owned, and operated by Vivint or its affiliates on the customer’s premises and behind the customer’s retail electric meter, and these Systems are not sized in excess of the customer’s on-site electricity consumption. Vivint agrees to contract with its PPA customers based on a combination of individualized factors, including property ownership and accessibility, creditworthiness and other underwriting requirements, and such physical and safety criteria as roof condition, solar insolation, and electrical distribution system requirements. Vivint does not intend, nor is it able, to offer or furnish its services to customers that do not meet those factors and criteria. The conditional nature and relative complexity of Vivint’s relationships with its customers goes well beyond that of the standard relationship between a public utility and its customers. We therefore find that, in entering into and performing its PPAs and Solar Leases, Vivint would not be selling electricity to or for the 'public' within the meaning of RSA 362:2," the PUC said

As to whether solar providers would fall within the definition of a retail electric supplier, the PUC said that, under the Commission’s rules as currently in effect, a competitive electric power supplier (CEPS) is defined in Puc 2002.05 as any person or entity, that sells or offers to sell electricity to retail customers in this state. The term does not include any utility or any municipal or county corporation operating within its corporate limits or submetering at campgrounds as described in RSA 362:3-a.

"At first blush, this definition seems broad enough to encompass the activities undertaken by Vivint and similar solar energy companies in connection with their PPAs. We agree with Vivint and Staff, however, that this definition should not be read in isolation but in the context of the overall purpose and effect of the Puc 2000 rules as read in the entirety," the PUC said

"[T]he Puc 2000 rules seem designed to cover a business model in which a CEPS sells full requirements electricity service to retail customers that is delivered through the utility transmission and distribution system to the customers’ retail electric meters, for which service the customers are usually invoiced through utility billing systems. In essence, the overall design and many specific provisions of the rules appear to have little or no relevance to the business model of Vivint and other third party System owners. The rules seem intended to regulate a set of relationships and related transactions that is quite different from those undertaken in the context of customer-sited, behind-the-meter, distributed generation development involving sales of electricity directly to the host customers pursuant to the terms and conditions of PPAs," the PUC said

"We therefore find that, based on the relevant facts and an appropriate integrated interpretation of the Puc 2000 rules, neither Vivint nor its affiliates should be deemed a CEPS as defined in Puc 2002.05, nor regulated as such by the Commission," the PUC said

The PUC also said that such solar providers are not subject to provisions of the Limited Electrical Energy Producers Act (LEEPA) under RSA 362-A:2-a.

Under RSA 362-A:1-a, a LPEE [limited producer of electrical energy] is defined to include the owner or operator of a facility with a total capacity of not more than 5 MW that produces electricity solely by the use of renewable energy resources.

"Although Vivint and other third party System owners may meet the LEEPA definition of a LPEE, this does not compel a finding that their PPA or Solar Lease transactions would be subject to the limited retail sales provisions of RSA 362-A:2-a," the PUC said

"We interpret the retail sales provisions of LEEPA as applicable to sales of electricity off-site from the generation facilities owned by the LPEE. Such off-site retail sales may be made to a customer immediately adjacent to the generation site with no need for utility wheeling arrangements, or to a customer at a location which requires wheeling across the utility transmission and distribution system," the PUC said

Though Vivint has sought the declaratory order with respect to residential service, the PUC said that its analysis and conclusions would not be different if the relevant customers were non-residential, assuming that the solar systems were installed on the customers’ premises behind the utility retail electric meter, were sized no larger than necessary to meet the customers’ reasonably anticipated electric consumption, and involved sales of electricity directly to the host customer or leases of the installed systems to the host customer.

Docket DE 15-303

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