US Supreme Court To Hear SolarCity Anti-Trust Case

Tesla is no shrinking violet when it comes to promoting its various businesses, and that means being proactive in pursuing legal remedies when necessary. It is suing the great state of Michigan, claiming its franchise dealer law prohibiting Tesla from marketing its cars directly to customers in the Wolverine State is prohibited by the US Constitution. While that legal action is wending its way through the courts, SolarCity, the rooftop solar division of Tesla, is also pursuing legal action against the Salt River Project, the utility company that supplies electricity to the Phoenix, Arizona area.

That suit claims that SLP’s fees assessed against customers with rooftop solar systems are in violation of federal antitrust laws. SLP, not surprisingly, vigorously disputes that allegation. The utility raises an argument that is familiar by now to many of those who follow developments in the field of renewable energy. It says people who put solar panels on their roof get an unfair advantage over other customers because they avoid paying their fair share to maintain the utility grid — all those poles, wires, substations, and transformers that are needed to transmit electricity from where it is normally created to where it is used.

In 2016, SLP proposed new fees for its customers with rooftop solar systems, fees that were approved by the Arizona Corporations Commission. SolarCity claims those fees add about $600 a year to the bills of customers with rooftop solar systems. It alleges the fees are an illegal attempt to limit competition and are therefore prohibited by antitrust laws.

“Because solar customers are unable to completely disconnect from SRP’s grid — they still need power in the evening hours and at other times when their energy demands exceed what their solar energy systems produce — they cannot escape SRP’s penalty,” lawyers for SolarCity contend. In support of their argument, they point out that the new fees amount to a 65% rate increase for solar companies, compared to a 3.9% increase for non-solar customers. “Customers recognize that SRP’s new pricing plan leaves them with no choice: After the effective date of SRP’s new plan, applications for distributed solar energy systems in SRP’s territory fell by 96 percent,” the lawsuit states.

SLP claims it is not subject to antitrust law because it is a quasi-public corporation whose policies and pricing structure must be approved by state regulators. “We would argue that ours is a statutory pricing process and that the courts have no business setting rates,” claims SRP spokesperson Scott Harelson. SLP lost that argument at the trial court level but appealed. In June, the 9th Circuit Court of Appeals upheld the lower court. SLP has now appealed that ruling to the US Supreme Court.

The Court is not required to hear every appeal filed. Litigants only get their cases heard by petitioning for a Writ of Certiorari. The Latin root of “certiorari” is the same as for the word “certain.” Certiorari quite literally is a way for the highest court to make certain that justice was served by a lower court’s ruling. It has total control over which petitions it accepts. Most are denied. Typically, it only takes cases which have significant national implications.

The SolarCity litigation could have many ramifications for situations in which state boards oversee the operation of businesses that benefit from a government sponsored monopoly. As reported by The Hill, the Supreme Court agreed last week to hear SLP’s appeal, which suggests several members of the Court have reservations about the 9th Circuit’s ruling. Usually, it takes about a year before a case accepted for review gets heard and a decision is handed down.

One of the mantras of conservatives reactionaries today is that government should not be in the business of picking winners and losers in the commercial sphere. Yet in practice, that shibboleth is just a smokescreen to allow for the the free and unfettered exercise of naked political power and the US Supreme Court is the most political court in the nation. If SolarCity is successful, it will be responsible for writing new law — just one more way Elon Musk and Tesla are disrupting conventional thinking. But it is likely to get a chilly reception from most of the conservative wing of the Court.