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Wisconsin regulators again declined to say Thursday whether companies other than monopoly utilities can own and operate rooftop solar panels but agreed to investigate whether the state’s largest utility can legally block a deal between one such company and the city of Milwaukee.

The case involves Eagle Point Solar, which won a contract to install 1.1 megawatts of solar panels on seven municipal buildings and lease them to the city.

We Energies, the city’s utility, blocked the deal and instead suggested the city participate in its own rooftop solar program.

Led by the conservative majority, the Public Service Commission declined Eagle Point’s request to declare its agreement with the city does not make the company a public utility subject to regulation.

The commission did, however, agree to hold a hearing on whether We Energies can legally refuse to connect the solar panels.

Chairwoman Rebecca Valcq said she could find no legal justification for We Energies to block the city’s connection request and argued that third-party ownership is nothing more than a financing tool, much like a retail store offering payment plans on portable generators.

“Are we going to find that Home Depot is providing electricity?” she asked. “I don’t believe we as regulators should interfere with the operation of free markets. I don’t think we should seek to protect utilities from that free market.”

Commissioner Ellen Nowak, who was returned to her job this week by a Supreme Court ruling, argued it’s not the commission’s role to meddle with the law, which she said protects utilities from competition.

“We’ve said numerous times it’s not our lane,” she said. “Utilities are granted exclusive access to territory in exchange for regulation.”

Commissioner Mike Huebsch, the other Republican appointee, said the free market argument is appealing but not applicable.

“We don’t have a free market in the energy sector,” he said. “Wisconsin is still a vertically integrated, not free-market, state.”

But Huebsch said he needs more information to decide if We Energies has the right to stop the city’s project and persuaded Valcq to open a hearing on that issue.

Eagle Point Solar owner Barry Shear, who won a similar fight before the Iowa Supreme Court, said he looks forward to making his case before the PSC, but he expects the issue will wind up in the courts regardless of who wins.

We Energies spokesman Brendan Conway said the company was pleased the commission declined to rule on third-party ownership and would provide any additional information asked for during hearings on Eagle Point’s connection request.

Lack of clarity

While Wisconsin law says that public utilities are subject to regulation by the PSC, the definition is ambiguous: Any entity providing “heat, light, water or power … to or for the public.”

Utilities and renewable energy advocates disagree on what “the public” actually means and whether it should apply to an agreement between two parties.

“You’re not a public utility if you have one customer,” Shear said. “I’m not selling energy to the public. I’m selling energy to a customer.”

We Energies has argued the questions should be decided by the Legislature.

Thursday marked the third time in six months the commission has dodged the ownership question.

‘Everybody’s waiting’

In December, over the objection of renewable energy and consumer protection groups, the PSC authorized We Energies to install up to 35 megawatts of solar panels on its customers’ property. That program allows the utility to own the solar panels and the electricity, while customers receive monthly lease payments.

Alliant Energy has requested permission for an almost identical program.

Shear estimates he’s lost about $500,000 on the Milwaukee deal and said the case has stalled similar arrangements throughout the state.

“What We Energies did has chilled every third-party municipal solar deal that we were aware of,” he said. “Everybody’s waiting for this to be resolved.”

A wide array of interest groups — including the city of Milwaukee, clean energy advocates, the League of Wisconsin Municipalities and the Wisconsin Association of School Boards — filed comments in support of Eagle Point’s petition.

Third-party funds

Renewable energy advocates say the ability to lease solar arrays will speed the adoption and make the technology available to residents who don’t have thousands of dollars to pay up front as well as local governments, schools and nonprofit organizations that can’t benefit from federal tax credits.

About 80 percent of residential systems are purchased with third-party financing in states like Arizona, Colorado and California, which have long allowed it, according to the Center for the New Energy Economy at Colorado State University.

Earlier this year the Republican-controlled Arkansas legislature passed a bill authorizing third-party ownership, joining at least 26 other states with similar laws, according to the center.

Shear said he understands that utilities are trying to protect their revenue, but the country is in the midst of an economic and environmental transformation they can’t stop.

“I’d rather be on my side of this than We Energies,” he said. “We have a very good case, but we have to win it.”

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Data journalist for the Wisconsin State Journal. Covers energy and transportation, among other things. Rhymes with Lubbock. Contact him at 608-252-6146.