Nevada Supreme Court to decide whether net metering issue will make Nov. 8 ballot

But first rooftop solar advocates must convince the Nevada Supreme Court that a referendum to restore net metering to the more economically viable rate structure in place in 2015 has a legal right to a spot on the Nov. 8 general election ballot.

The Supreme Court will hear oral arguments on that question Friday and will likely rule shortly thereafter.

If the court rules in favor of the measure — backed by the Bring Back Solar Alliance and funded by the rooftop solar company SolarCity — voters, not state utility regulators or the Legislature, will decide how net metering should continue to evolve in Nevada.

“We just want the people of Nevada to have a say on this issue, and we hope they’ll be given that chance,” said Chandler Sherman, the deputy campaign manager for the Bring Back Solar Alliance who is on loan from SolarCity. “A favorable ruling from the Supreme Court would just open a pathway to let voters weigh in on an issue that the public has been very engaged in.”

A QUESTION FOR THE COURT

The issue before the Supreme Court is arcane but important.

The measure’s backers put it on the ballot as a referendum on legislation passed by state lawmakers in 2015. Senate Bill 374 asked the Nevada Public Utilities Commission to perform a cost of service study to determine whether regular ratepayers of NV Energy, doing business as Nevada Power in Southern Nevada, were subsidizing rooftop solar customers.

The PUC performed that review and determined there was a subsidy of $16 million a year. The PUC then adopted a new rate class that reduced the credit for the excess electricity generated by rooftop solar customers. The monthly fixed service charge was also increased. The rate changes took effect Jan. 1 and are being phased in over 12 years.

Rooftop solar advocates cite recent studies that show there is no such subsidy. Rather, rooftop solar provides benefits to all utility customers, according to two reports — one from the Brookings Institution and one from SolarCity and the Natural Resources Defense Council.

The controversial decision, which generated huge turnouts at the PUC hearings, has effectively brought rooftop solar to a dead stop in Nevada. Major companies, including SolarCity and Sunrun, left the state; hundreds of jobs disappeared.

The referendum seeks to repeal sections of the bill that led to the new rate class decision by the PUC.

But Nevada Power, which has contributed more than $1.4 million to Citizens for Solar and Energy Fairness, a political action committee formed to fight the referendum, challenged the measure’s validity in Carson City District Court.

District Judge James Russell determined that the rooftop solar group should have filed an initiative petition instead. An initiative is used to ask voters to approve a new law rather than weigh in on an existing one.

The difference is that the referendum, if approved, would take effect immediately and couldn’t be changed by lawmakers for three years.

An initiative petition would have to first go to the Legislature in 2017. If lawmakers rejected the proposal, it would go to voters in 2018, delaying by years any effort to restore the original net metering rates.

A recent Supreme Court decision in another case involving another referendum, this one on the new commerce tax approved by the 2015 Legislature, would appear to lend support for the pro-solar group’s appeal.

The commerce tax referendum didn’t proceed because of unrelated issues, but the court rejected a challenge that it was not a proper referendum. The court said that the “Nevada Constitution requires no particular form for a referendum petition, except that it include the full text of the proposed measure … ”

A NEED FOR VOTER EDUCATION

If the court upholds the measure as a referendum, those on both sides of the question will have a lot of work to do to educate voters on what to do in the voting booth.

If voters want to restore net metering and undo the higher rates for rooftop solar customers, they need to vote no on Question 5.

Essentially, a “no” vote would invalidate the new rates approved by the PUC. Net metering would be able to proceed based on prior rates, without any artificial cap on participation.

Nevada voters who don’t want the original net metering rates restored, will need to vote yes on Question 5 to uphold what the PUC did in 2015.

Referendums are rare in Nevada. The last time the referendum process was used was in 1990, to maintain Nevada’s current laws regarding abortion. The measure passed.

A BOOM HALTED

Nevada had the third-largest number of solar jobs among all states in 2015 and the most solar jobs per capita, a report released earlier this year by the national group the Solar Foundation shows.

Nevada had 8,764 solar jobs in 2015, with the vast majority, 8,285 jobs, in solar installation, the report said.

But no more.

About 30,000 homeowners and small businesses signed up for net metering through 2015 when the tax incentives and credits made financial sense to do so. But with the new rates in 2016, only a handful of applications have been received to install systems.

NV Energy reported 1,368 applications in December, but only 69 in January. As of June, the number had dwindled to 18.

There is an effort underway to ask the Legislature next year to “grandfather” the rooftop solar customers who installed systems before this year in under the original, more favorable rates.

Gov. Brian Sandoval supports the grandfathering proposal, as does NV Energy and the solar industry. The PUC opted not to grandfather in the original net metering customers.

This proposed legislation would become moot if the referendum ends up on the ballot and is approved by voters.

The new net metering rates in Southern Nevada reduced the credit per kilowatt hour from about 11 cents to 9 cents; the credit would end up at just over 2 cents by 2028. The monthly fixed charge for solar customers also increased from $12.75 to $17.90 a month and eventually will reach $38.51 on Jan. 1, 2028.

While supporting the grandfathering proposal, the Bring Back Solar Alliance has noted that any such action would do nothing to restore the rooftop solar industry in Nevada going forward.

That is why the group decided to pursue the referendum. More than twice the number of signatures needed were collected to put it on the ballot.

The No Solar Tax political action committee, fighting for the referendum, has received nearly $2.5 million in funding, all from SolarCity.

Contact Sean Whaley at swhaley@reviewjournal.com or 775-461-3820. Follow @seanw801 on Twitter.