A Carson City judge ruled to disqualify a ballot measure that would restore more generous rates for rooftop solar customers, a setback for solar advocates who had been aggressively campaigning for it.
In a case that represented a proxy fight between NV Energy and SolarCity, Judge James Russell sided Monday with a political action committee backed by NV Energy and undisclosed consumer groups.
The group argued that the measure, floated by SolarCity and several local companies, did not meet the requirements of a referendum because it sought to remove certain sections of a law rather than the full law. Russell said his ruling was not about the merits of solar but about what he saw as the flawed framing of the measure.
On behalf of solar companies led by SolarCity, No Solar Tax PAC filed the proposed referendum in January. After today's ruling, the group plans to file an appeal with the Nevada Supreme Court.
Russell, who stayed his ruling, said the No Solar Tax PAC can start the process of gathering signatures required for the petition.
If successful, the measure would undo a controversial Public Utilities Commission decision to increase bills for customers and create an uncapped market for rooftop solar under more generous rates. To qualify for the ballot, organizers of the measure must collect more than 55,000 signatures by mid-June and win the appeal.
Lawyers for the NV Energy-backed PAC -- the Citizens for Solar and Energy Fairness -- argued that the measure had been improperly classified as a referendum to avoid legislative approval.
A spokesman for the legal challenge called the ruling a victory for ratepayers but acknowledged that more legal wrangling lies ahead.
"We know this fight is not over," said Danny Thompson, who is also the executive secretary treasurer of the Nevada State AFL-CIO.
He said his PAC plans to announce other supporters in its coalition soon but that the alliance includes senior and consumer groups.
Russell's ruling Monday afternoon dealt a blow to the solar industry, which had spent the past two months actively rallying support around the referendum. It formed a group called the Bring Back Solar Alliance, which spent about $250,000 on ads in February.
"We respect the court's decision today, and will follow the court's guidance to file an initiative petition to bring solar back to Nevada," said Chandler Sherman, a Bring Back Solar spokesperson.
No Solar Tax PAC plans to introduce a ballot initiative soon in case the Nevada Supreme Court upholds the lower court's ruling.
The legal fight is the latest in an ongoing battle between NV Energy and the solar industry after a controversial regulatory ruling last year. In December, the utilities commission tripled a fixed fee for solar customers and slashed the value of credits they could earn for generating excess electricity under net metering.
Its decision largely mirrored proposals supported by the utility but was quickly condemned by solar companies, who pulled some operations here, arguing that rooftop solar was no longer viable.
Another alliance of solar advocates is challenging the ruling in court. Some have asked legislators to convene a special session.
Utility regulators argued the new rates, implemented over the next 12 years, were necessary to accurately account for the cost of serving solar customers. They also said that their decision adhered to legislation that gave the commission authority to set new rates.
The referendum would repeal sections of that legislation, a move that would effectively restore the prior rates, organizers said.
In court documents, a lawyer for the No Solar Tax PAC defended the referendum, arguing that the Nevada Constitution allows such petitions to change the meaning of policies and sections of law.