Alabama solar fee lawsuit moves forward in federal court

A federal lawsuit challenging the fees levied on people who install solar panels on their homes will move forward, after a judge in Montgomery denied a motion to dismiss the case.

“Solar energy offers a unique opportunity for residents of Alabama to take control of their energy costs, reduce their carbon footprints, and contribute to a cleaner environment,” said Madison Naves, communications coordinator with GASP, one of the plaintiffs. “Unfortunately, however, the Alabama Public Service Commission has signed off on Alabama Power’s punitive charges that are stifling the growth of rooftop solar across Alabama Power’s territory.”

In 2021, plaintiffs, including the environmental group GASP, sued the Alabama Public Service Commission in the U.S. District Court for the Middle District of Alabama. Alabama Power later joined the case as an intervenor defendant.

The plaintiffs argued that the PSC violated federal energy laws by allowing Alabama Power to charge fees to people who use solar panels.

Alabama Power and the PSC had asked for the case to be dismissed, arguing that the court did not have jurisdiction and that the plaintiffs did not make a claim for which relief can be granted.

But U.S. District Judge Myron Thompson ruled against the defendants on Monday, arguing that the court does have standing to adjudicate claims made under the Public Utility Regulatory Policies Act (PURPA), a federal law designed to encourage renewable energy use.

“This case is about alleged price discrimination against small-scale solar-power production in Alabama. But the merits of that issue are not the focus of this opinion,” Thompson wrote in his opinion. “Based on the well-pleaded allegations in the complaint, the court currently finds that it has jurisdiction over the plaintiffs’ three claims under PURPA.”

A representative for the PSC declined to comment. A representative for Alabama Power did not respond to a request for comment.

Alabama Power customers who use solar panels—or any other type of additional, non-emergency power generating source—are charged a fee based on the capacity of their system. The utility previously told AL.com that this fee is necessary to cover the cost of providing backup power to those customers.

But the plaintiffs argue that these fees are discriminatory and unfair, and that they’ve discouraged solar panel use in Alabama.

“As a result, Alabama, despite its abundance of sunshine, lags almost every other state in the U.S. in customer-sited solar deployment,” the plaintiffs said in an amended legal filing in 2023.

In 2020, the PSC allowed Alabama Power to continue charging the “solar fee” and approved an increase from $5 per kilowatt per month to $5.41 per kilowatt per month. The plaintiffs then appealed to the Federal Energy Regulatory Commission (FERC) to end the fee. FERC declined to act in 2021, allowing plaintiffs to sue.

Alabama lags behind some neighboring states in solar power use. As of the second quarter of 2024, 0.85% of the state’s electricity is generated from solar power, according to the Solar Energy Industries Association. In Georgia, 6.21% of the state’s electricity is generated from solar, and in Florida, 7.65% of the state’s electricity is solar.

The Southern Environmental Law Center represents GASP, as well as plaintiffs Mark Johnston and Teresa Thorne. The other two plaintiffs, James Bankston and Ralph Pfeiffer, are represented by Birmingham law firm Ragsdale, LLC. An attorney for Bankston and Pfeiffer did not respond to a request for comment.

Alabama Power is represented by Balch & Bingham.