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On-Site Solar Could Spawn Tax Consequences

Linda Hardesty

tax energy manageUtilities across the country are lobbying for Value of Solar Tariffs (VOSTs), which might trigger a requirement for solar owners to pay taxes on the income from selling their excess solar power to the local utility, according to The Alliance for Solar Choice (TASC).

When discussing whether VOSTs are a sale that results in taxes, Edison Electric Institute’s General Counsel Edward Comer stated, “If (the utility is) required to purchase the power, I think legally there’s a sale.”

Speaking at an Arizona Corporation Commission solar workshop recently, Comer also said that solar owners might face these taxes even if the utility provides a credit via net metering to the customer rather than a payment. “I don’t think that there’s really a distinction whether a utility pays through a credit or a payment,” said Comer.

In March, Minnesota utility regulators said they will allow state investor-owned utilities two options for paying solar customers for unused electricity they contribute to the grid: Utilities can either pay the retail electricity rate; or they can voluntarily apply to use a new “value-of-solar” formula.

According to TASC, other utilities from Arizona, to California, to New York now want VOSTs, as well. TASC questions whether utilities want solar owners to be penalized with taxes in order to slow the onslaught of solar generation, which could threaten utilities’ business model.

Photo: Tax Time via Shutterstock



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