Regulated Utilities and Solar Energy: A Legal-Economic Analysis of the Major Issues Affecting the Solar Commercialization Effort

The reaction of public utilities to the addition (and competitive) sources of energy supplied by solar technologies will have a significant impact on the commercialization of solar energy. Decentralized applications of solar energy need utility-produced power to back up the energy produced by solar means. The cost and availability of this power will largely determine the acceptance of solar energy. There are three legal issues surrounding the role of utilities in the solar commercialization effort: (1) the extent to which utilities may own, sell, lease, finance, or service solar devices for utility customers; (2) the degree to which solar-powered utilities may be able to compete with existing utilities; and (3) the degree to which various utility rate structures will be allowed to penalize decentralized solar users. The impact of state constitutional and statutory provisions upon these issues is examined, along with relevant federal constitutional doctrines. Finally, the statutes of the National Energy Act, many of which specifically address the above issues, are discussed.