Quite a big deal for US solar policy, solar companies, and even many current solar PV system owners, a solar advocacy organization that is defending net metering in Arizona has discovered that feed-in tariffs and value of solar tariffs come with some unwanted tax consequences for solar PV system owners (the beneficiaries of said tariffs).

A representative of Sunrun wrote to me, “A memo from the top national law firm (Skadden, Arps, Slate, Meagher & Flom LLP) reveals that solar Feed-in-Tariffs (FITs) and Value of Solar Tariffs (VOSTs) have major hidden tax implications for consumers.”

As I wrote in our previous article, Sunrun is firmly opposed to FiTs and VOSTs as opposed to net metering for other reasons. This clearly amplifies its opposition to those alternative policies.

Here are more details on the tax news from the Sunrun rep:

  • The memo explains:
    • FITs and VOSTs make residential solar customers ineligible for a 30% federal tax credit toward their rooftop installations
    • The payments a consumer receives for solar power generated under these arrangements will likely be considered taxable gross income.
    • This is true even when the compensation to the homeowner is a credit rather than a payment
  • This affects thousands of customers in FIT programs across the country, including ratepayers of the Los Angeles Department of Water and Power (LADWP), Sacramento Municipal Utilities District (SMUD), and the City of Palo Alto.
  • The memo was filed in Arizona by TASC (The Alliance for Solar Choice) in response to a proposal Arizona Public Service submitted with a suggested FIT arrangement for replacing net metering.

“We didn’t want to have to file, but felt it was imperative given the implications of these hidden taxes for consumers nationwide,” Bryan Miller, President of TASC and Vice President of Public Policy & Power Markets at Sunrun, states.

“Utility opposition to net metering and their efforts to shift away from NEM toward a FIT is not new. Utilities should be ashamed of pushing a policy that imposes more taxation on customers.”