Riverside County, Calif., Sued Over Solar Fee

Published March 14, 2012

Two solar energy trade groups are suing Riverside County, California over a new surcharge on large solar power projects. The surcharge is an annual fee of $450 per acre on large-scale solar projects. 

Fee vs. Tax

The Large-Scale Solar Association (LSA) and the California Independent Energy Producers Association (IEP) filed suit on Feb. 3 in Riverside County’s Desert Judicial District. The trade groups argue Board Policy B-29, often referred to as the “Sun Tax,” violates tax-hiking restrictions contained in Proposition 26 and fails to conform to the California Mitigation Fee Act.

“The Sun Tax not only discourages the development of solar energy projects in Riverside County—it does so by violating the California Constitution,” said Shannon Eddy, executive director of the LSA, in a press statement. 

Central to the lawsuit is the assertion the surcharge is a tax rather than a fee. Proposition 26, which clarifies the differences between new taxes and new fees, requires all new taxes be approved by a two-thirds majority vote. According to Prop 26, a fee is collected for a specific purpose related to the surcharge, while a tax is a more general collection of revenue.  

“A charge by a governmental entity that is not associated with a specific service provided is a tax,” said Jan Smutny-Jones, executive director of the IEP. 

According to the trade groups, Riverside County has attempted to distinguish its policy from a tax by characterizing it as an impact fee designed to compensate the county for any environmental and financial effects of solar development. However, the California Mitigation Fee Act prevents the county from charging a fee unless there’s a connection to actual impacts. 

“The county has never shown a connection between the fee and actual impacts,” said Eddy, noting the money raised would go directly to the Board’s general fund rather than to alleviate impacts.  

Concern for Environment, Economy

The surcharge, officially called Policy B-29, was passed by the Board unanimously on Nov. 8. County supervisors declined to comment for this story, citing the ongoing litigation. However, supervisors in the past have argued the county deserves compensation for having solar power providers develop large swaths of the county with land-intensive solar panels. Supervisors have pointed out solar power projects have negative environmental consequences that may need to be addressed, and that developing land for solar power means precluding other potential uses of the land.  

The IEP doesn’t expect a lengthy trial, according to Smutny-Jones, because it should be a “straightforward case.”

The county has yet to formally respond to the lawsuit. 

“We want the court to find that the county policy is unconstitutional under California law,” said Smutny-Jones. “The underlying logic of the county’s policy could apply to a broad array of other types of generators, or even different industries.”

Solar Producers Reconsider Projects

Smutny-Jones said the fee is causing unexpected financial burdens on solar power producers and has already caused one provider to halt plans for a solar project. 

“Projects currently in the advanced siting or construction process did not factor in these fees when they bid their projects. This is obviously a significant challenge for them. One large developer has abandoned its project due to a number of economic problems,” Smutny-Jones said. 

Solar Raises Electricity Costs

Daniel Simmons, director of regulatory and state affairs at the Institute for Energy Research, said the cancellation of solar power projects will benefit electricity consumers. 

“Solar power generation creates substantial negative environmental impacts, and it is [reasonable] for local governments to be concerned about the impacts of large-scale solar energy,” Simmons said. 

“With or without additional taxes or fees, solar is wildly uneconomic,” Simmons explained. “Photovoltaic solar is nearly 5 times more expensive than new natural gas electricity generation, and thermal solar is nearly 10 times more expensive than natural gas. Those higher prices are passed down to consumers directly through higher power bills and indirectly through higher priced goods and services.”

“Consumers lose when solar power projects go online,” said Simmons. 

Alyssa Carducci ([email protected]) writes from Tampa, Florida.