Last year, Louisiana passed a law instituting a renewable energy credit for solar energy systems. The law was aimed at increasing the use of alternative energy sources and generating jobs in the state. However, solar installers and businesses that sell and service solar equipment claim that the law is unconstitutional and violates several state and federal laws.
The law provides a cash rebate for homeowners who buy and install solar energy equipment; the rebate reduces their electricity bills. The rebate is adjusted each year and starts at $5 per month for the first 500 kilowatts, with a maximum of $2,500 per year.
Critics of the law say that it unfairly benefits homeowners who can afford the equipment and installs, while not addressing the needs of low-income homeowners and renters who cannot afford or install solar energy systems. They also claim that the law does not provide a sufficient amount of rebates to cover the cost of the systems, and that it is too easy for some homeowners and businesses to qualify for the rebate.
Who Enacted The Law?
The solar energy law was proposed by Representative Joseph Lopinto, a Democrat from Jefferson Parish, and signed into law by Governor John Bel Edwards, also a Democrat. Lopinto is a member of the state legislature’s Energy Committee and the Natural Resources and Environmental Affairs Committee (NRECA).
NRECA is a committee that oversees energy policy, and it is chaired by Edwards. Lopinto also co-chairs the committee along with state Senator J.P. Williams, a Republican from Baton Rouge.
The proposal for the law originated in the legislature, and Lopinto and other legislators have argued that it was necessary to extend the benefits of the program to more people. Lopinto has stated that solar energy can play an important role in reducing Louisiana’s emissions, and he has touted the benefits of solar for both homeowners and businesses.
In arguing for the law, NRECA cited several benefits that it said would result from the law. Among other things, the committee said that the law would bring new jobs to Louisiana, especially in the solar installation sector, and decrease the state’s energy costs. It also argued that the law would help homeowners save money on their electricity bills and decrease their dependence on fossil fuels. The law was first reported in the news last year, but its full details have only recently been made public.
Challenges To The Law
Several parties have filed lawsuits against the solar energy law, all of which claim that it is unconstitutional. Leading lawsuit is Abt Associates Inc., an engineering firm that specializes in designing power systems for residential and commercial buildings. Abt was one of the first companies to install a solar energy system in Louisiana, and it serves as the leader of a group of plaintiffs that filed the lawsuit in January 2018.
The lawsuit contends that the law does not provide a legal basis for the Louisiana Public Service Commission (LPSC) to offer tax credits for solar energy systems, and it argues that since the commission does not regulate the generation or sales of electricity, it has no authority to offer the tax credit. The lawsuit adds that the commission is also not authorized to provide a tax credit for the purchase of solar equipment, only for the installation and operation of a solar system. The plaintiffs further argue that the law violates the Uniformity Clause of the Louisiana Constitution, which requires that all laws be of equal application. They also claim that the law violates the Equal Protection Clause of the federal constitution, which prohibits states from treating different classes of people differently under the law.
How Does It Work?
According to the complaint, the solar energy law sets a July 1, 2018, as the effective date for the law. The law provides a rebate for homeowners who buy and install solar equipment on their property between July 1, 2018, and December 31, 2019. The rebate begins at $5 per month for the first 500 kilowatts of installed capacity, with a maximum of $2,500 per year in rebate funds available.
To be eligible for the rebate, the homeowners must purchase a solar system that meets certain specifications, including using approved panels and having a capacity of no less than 600 watts. They also need to provide evidence that the solar system is actively producing power.
The law provides for three ways in which the rebates can be paid:
- The first $5,000 in annual rebates can be paid in a single payment during the year ending December 31, 2021.
- An additional $5,000 in annual rebates can be paid in a single payment during the year ending December 31, 2022.
- And the final $10,000 in annual rebates can be paid in a single payment during the year ending December 31, 2023.
The law also places limits on how the rebate can be used. For instance, the owner of a home with an installed capacity of 600 kilowatts or more can only claim the rebate for the portion of the system that is installed on the property, and they cannot claim any other expenses related to the installation. Additionally, the rebates may not be transferred to another person or property. Finally, the law allows LPSC to audit any rebate claim to ensure that it is in compliance with the law’s terms. Audits are limited to the veracity of the claim and supporting documentation, and they cannot modify or increase the amount of the rebate. Audits are limited to one per year, and they must be conducted by September 30, 2021.
Impact Of The Law
According to the complaint, the plaintiffs in the Abt lawsuit are owners of about 100 single-family homes in New Orleans, Kenner, and Baton Rouge, with a collective total installed capacity of about 1.1 million kilowatts. They claim that the law will have a substantial adverse effect on their businesses and properties. They also argue that the law will harm the public by creating shortages in the supply of qualified contractors and resulting in higher prices for electricity.
The plaintiffs argue, based on the law’s terms, that they will suffer substantial economic harm because they cannot recover the cost of the installed equipment, and they will have to pass along the increased cost of electricity to their customers. In addition, since customers are their source of income, the increased costs will have a substantial negative impact on their businesses. Finally, the plaintiffs claim that without the tax credit, they will not be able to afford to purchase the equipment that they need to continue providing energy to their customers, which in turn will cause them to go out of business.
The Louisiana Attorney General’s Office, which is defending the law in the Abt lawsuit, has stated that it does not comment on pending litigation. According to the complaint, the office has yet to file a response to the lawsuit.
Several other parties have also sued to block the law, and the lawsuits have been consolidated into one case. Among the plaintiffs are four community banks, nine electric co-ops, two wind power companies, the City of New Orleans, and others. Several of these plaintiff are represented by Abt.
The lawsuit, filed in January 2018, contends that the law is unconstitutional on several grounds and violates several state and federal laws. It argues that the law does not provide sufficient due process, equal protection, and uniformity guarantees for its implementation. The plaintiffs also claim that the law favors certain businesses and homeowners over others, thereby violating the Equal Privileges and Immunities Clause of the Louisiana Constitution. Finally, the law is alleged to be vague and overbroad, in that it fails to provide adequate information about how it will be implemented and enforced.
As more details about the law have become available, others have begun implementing it. For example, in compliance with the law, Abt has begun offering solar energy systems to homeowners in Louisiana. The firm adds that since the law favors solar energy, it expects to be able to provide more systems to homeowners in the state. Additionally, Abt installed a solar energy system in February 2018 at the Baton Rouge Country Club, which is owned by the city. Baton Rouge is one of the first cities in Louisiana to have adopted the law, and it has begun offering solar energy system installation and operation tax credits to its residents. The system at the country club will provide the city with electricity and save it money on its energy bill, which amounts to an economic boost for the city.
However, not all parties supporting the law have emerged unscathed from the litigation. Several parties have been ordered by the courts to pay legal fees and costs associated with the lawsuits. Among these plaintiffs are solar manufacturers and trade associations that claimed that the law would hurt their businesses. Furthermore, several parties that the courts ordered to pay legal fees include those that were plaintiffs in the lawsuits, not defendants. According to media reports, these fees and costs will range from about $125,000 to more than $500,000.