Ameren Missouri and Kansas City Power and Light (KCPL), Missouri’s two dominant electric utilities, have trouble with math, according to a lawsuit filed by Missourians “aggrieved” by the companies’ solar rebate calculations.

The plaintiffs asked the Cole County Circuit Court to stop the Missouri Public Service Commission (PSC) from granting recent requests by Ameren, KCPL, and KCPL subsidiary Greater Missouri Operations (GMO) to end all solar rebate payments. Save Our Lawfully Authorized Rebates (SOLAR) and the Missouri Coalition for the Environment (MCE) alleged that:

1. Payment of solar rebates is required by the state’s renewables mandate.
2. Arguments against paying rebates are based on assumptions in their Integrated Resource Plans of future expenditures for renewables that wrongly deplete the funds available.
3. A PSC validation of the utilities’ method of calculating solar rebate caps would be “unreasonable, arbitrary and capricious.” 

The Circuit Court has instructed the PSC “to refrain from further action” until the lawsuit is resolved and rejected the PSC’s effort to undo that decision.

Constrained from commenting on the litigation, Ameren offered only an email statement that it was reviewing the lawsuit. The KCPL companies did not return phone and email queries.

The Backstory

Missouri’s 2008 voter-approved Proposition C instituted a 15% renewables by 2021 mandate for the state's investor-owned utilities (IOUs), with a carve-out requiring 0.3% of the state’s 2021 IOU-provided power to come from solar. It also required IOUs to provide rebates of $2 per watt for customer-sited solar but allowed termination of the rebates if compliance increased retail electricity rates by more than 1% in any year. 

By last year, solar installations were increasing in Missouri at 300% per month and the utilities were slowing their responses to rebate applications, according to interviewed installers.

In private meetings, participants said, the utilities expressed concern about the growing cost of the program. The utilities basically implied the rebates were too costly and if the solar industry did not compromise on a long-term phase out, they would find a way to terminate them abruptly, explained Renew Missouri Director P.J. Wilson.  

Abrupt termination would be a disaster for installers, said Wilson, who co-wrote the 2008 ballot measure and has negotiated with Missouri IOUs and policy makers since 2006. Under that pressure, the solar industry agreed to a seven year phase out with annual decreases in the rebate amount, Wilson added.

Efforts to get utility accounts of the negotiations went unanswered.

The Law and the Negotiations

With House Bill 142, the phase out agreement became statutory. It was scheduled for implementation at the end of August 2013. But in July, KCPL announced it had miscalculated and was already near the rebate cap. In October, it filed a 60-day notice with the PSC for termination of the program.

Emergency meetings followed. Solar industry participants felt, according to plaintiff’s attorney Stephen Jeffery, “like there was a gun at their head.”

Ameren stipulated to a $91.5 million total future expenditure for solar rebates and KCPL and GMO stipulated to $50 million more. The Missouri Solar Energy Industries Association (MOSEIA) and partner stakeholders acceded to what they thought was the best bargain they could get.

All three companies have now indicated those funds will soon be expended, leaving the solar industry with no rebates. Then there was another turn of events.

“During the negotiations on H.B. 142, the utilities were on record that there were adequate funds under the 1% cap for the rebate step down program,” explained Jeffery. “Six weeks later, the utilities announced they had miscalculated, gone far past the 1% cap, and asked the PSC to allow them to stop paying rebates.”

Shortly after PSC approval of the utilities’ stipulations, Jeffery said, “they said the $141 million was used up and filed with the PSC to terminate all rebates.” This year, in other PSC filings, “the utilities revealed they had miscalculated again and were nowhere near the 1% cap,” Jeffery concluded.

Jeffery's clients hope the lawsuit will lead to new rebates while the utilities want their now-spent stipulated expenditures to stand.

The Cap and the Math

“We are reviewing the arguments in this lawsuit against how the 1% cap on solar rebates was calculated,” Ameren VP Warren Wood told Utility Dive in an email statement.

The method for calculating the cap “became a scapegoat,” Wilson commented. “If a political gorilla doesn’t want to do something, they can point at perceived flaws and say that is why they are not complying.”

Proposition C was “based on language and concepts that seemed to be working well in Colorado and other states,” Wilson added. “It’s not like Ameren would be happy to comply if the wording was different. They just don’t want to do renewables.”

“The level of subsidies being paid to a small percentage of our customers is approaching $100 million and these subsidies will result in higher rates for all of our customers,” Wood countered. “This rate impact cap was included in the authorizing statute to protect customers.”

The utilities have a legitimate fear, Wilson acknowledged. With rebates, net metered solar was growing so rapidly that utility officers worried about having to explain sudden increased expenditures that compromised profitability to shareholders. “But I have rarely known these utilities to negotiate in good faith,” he added. “And it is hard to believe they are that bad at math.”

“It is unfortunate,” Wood’s statement read, "to now have groups objecting to a unanimously supported settlement between a broad group of stakeholders, including solar industry representatives.”

“None of the plaintiffs was a party to the stipulations,” Jeffery argued. “This is a group of people affected by the termination of the solar rebate programs trying to lift the veil of secrecy and show the commission’s approval of the stipulations was based on creative accounting.”