City of Farmington settles lawsuit over FEUS solar power fees

John R. Moses
Farmington Daily Times

FARMINGTON – While a solar power advocacy group called the move a concession, the City of Farmington characterized its settlement of a lawsuit over standby service fees charged to solar customers as a decision based upon a new rate structure adopted this month.

The Residential Standby Service Rider was canceled July 1. Ratepayers covered in the suit will receive almost $20,000 from the utility as part of the settlement to recoup the fees they paid.

“The new rate structure is more understandable and less susceptible to purposeful mischaracterization as a discriminatory ‘solar tax,’” the city said in a prepared statement.

The settlement came after the Farmington Electric Utility System won a short-lived victory in a federal court that dismissed a lawsuit brought by the group Vote Solar and 11 FEUS customers who have solar systems installed. The matter was before an appeals court, which rejected a lower-court finding that the case went to the wrong court, when the settlement deal was inked.

“That decision was still pending, and FEUS believes we would have prevailed once again in the legal challenge,” the city said in its statement. “However, in the end, Farmington agreed to settle the case to end the litigation because it adopted a new distributed generation solar rate structure.”

Solar power advocates call it a victory

Vote Solar’s Regional Communications Associate Emerald Sage said via email that, “organizations like Vote Solar were instrumental in the successful campaign for the Community Solar Act. Now a year after the passage, solar was under attack in Farmington. However, clean energy persevered.”

The lawsuit in the United Stated District Court for New Mexico was filed back in August of 2019. It opposed charges FEUS placed on customers who installed solar panels, imposing a standby service fee in case the utility had to cover electricity demands should those panels not be able to provide power.

The district court found in February of 2020 that the suit should have been filed in state court, but that decision was reversed in June of 2021.

“In response, FEUS suspended and eventually withdrew the solar charge for current and future users, and further agreed to refund the plaintiffs a total of $20,000 from the illegal solar charge,” Vote Solar said in a statement about the settlement released on July 26.

FEUS, however, maintains that the charges were never illegal. Despite the settlement, the city has not changed its position on the issue.

“The FEUS policy position remains that solar customers should not be financially subsidized by non-solar customers,” the city’s statement said. “It's simply a matter of fairness to all our customers. We understand that subsidy is a desirable effect and one championed by the national solar lobby group Vote Solar, who appears to have financed the lawsuit against Farmington.”

Sage, of Vote Solar, referred the question of financing of the legal proceeding to one of the organization's regulatory experts, who did not call with comment before press time.

The city also maintained in its statement that it is friendly to solar energy users.

“The City of Farmington electric system welcomes solar customers with open arms and will continue to provide a fair and level playing field for all customers,” the statement said. “We are pleased that, generally speaking, our actual local solar customers voiced support for the new, more clearly understandable rate structure that went into effect July 1, 2022.”

FEUS materials provided by the city via email July 28 discuss a rate calculator the city created to help new solar customers gauge costs and savings.

"This helps customers see what their bill could be if they were to install energy efficiency products in their home or if they want to research possible benefits of installing solar," the email said. "It will help the customer sanity check what a solar installer may be providing them as benefits, so they can analyze and consider their options related to the large investment."

FEUS plaintiffs speak out

Some customers who joined the suit shared their perspectives in the Vote Solar news release.

“It’s too bad that we had to sue Farmington to convince it to stop charging illegal fees to all customers who install solar,” said Farmington solar customer David Fosdeck. “Now that the city finally reversed course after 5 years and agreed to refund the illegal charges it collected, more folks in the community will be able to generate their own energy from the sun.”

Mike Eisenfeld. Energy and Climate Program Manager at San Juan Citizens Alliance, was also a plaintiff.

“I invested in solar because I’ve seen how relying on fossil fuels has polluted this community’s air and brought worsening droughts and more intense wildfires to this region,” said Eisenfeld, who is a FEUS customer and owns a solar array. “Thanks to Earthjustice taking our case, my neighbors can now make the same choice without paying discriminatory fees. It’s unfortunate that Farmington incurred over $600,000 in legal fees trying to defend their indefensible solar fees. That money would have been better spent on innovative renewable energy projects for the community.”

Eisenfeld told the Daily Times via email that Farmington’s newly adopted rate structure “restricts commercial solar and the new rates do not have the standby rider.”

He said he thinks the City of Farmington “would have lost in court if the case proceeded after they voluntarily rescinded it.”

He also noted that while the plaintiffs will be refunded on the solar tax, he thinks “all other solar customers should be compensated.”