California Developer Groups Sue Riverside County To Block 'Sun Tax'

Date : 02/06/2012 @ 5:11PM
Source : Dow Jones News
Stock : First Solar, Inc. (FSLR)
Quote : 71.09  -0.91 (-1.26%) @ 5:43PM

California Developer Groups Sue Riverside County To Block 'Sun Tax'

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Two groups representing California power-plant developers are suing Riverside County over a new fee on solar farms that the groups call a "sun tax," which they say is unconstitutional.

The Independent Energy Producers Association and the Large-Scale Solar Association filed the lawsuit Friday in state Superior Court in Indio, Calif., and served legal papers to the county on Monday.

In June, the county, which stretches more than 7,000 square miles across the arid, sunny Mojave Desert, proposed levying a new fee on large solar farms under development within county limits. Four months later, the county board of supervisors approved a fee of $450 an acre for solar-power plants.

Developers and renewable energy supporters have bristled at the fee, which they say could throw a wrench in some developers' plans and could drive others away from the county.

Solar-power development in California has boomed over the last few years, driven by a law that requires utilities to use solar, wind or other renewable power sources for a third of the electricity they sell by 2020.

"Companies are trying to develop these projects with certain assumptions and this tax is not one of them," said Jan Smutny-Jones, the Independent Energy Producers Association's executive director.

The lawsuit argues that the county's solar fee is actually a tax and that it can't be imposed without a two-thirds majority vote by voters, under California law.

The county's solar fee directly affected two solar-power plants developed by First Solar Inc. (FSLR) and Germany-based Solar Millennium AG (S2M.XE). Both companies reached separate agreements with the county over the solar fee. The companies also obtained federal loan guarantees for their projects.

First Solar won a $1.5 billion loan guarantee for its project, which it will build using its own solar panels. First Solar, which sold the project to NextEra Energy Inc. (NEE) and General Electric Co. (GE) in September, has estimated that the project will employ 630 people.

Solar Millennium, which had planned to use a new solar-thermal technology for its project, rejected its loan guarantee and has been trying to sell the project along with three others.

Smutny-Jones said the lawsuit will apply to "everything else going forward."

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;

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