US tax authority to investigate residential solar tariffs

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A formal review of Value of Solar Tariffs (VOSTs) is due to be conducted by the IRS in the US, which will include an assessment of the impact of the scheme for compensating residential PV owners for their excess electricity.

Advocacy group The Alliance for Solar Choice (TASC), yesterday claimed that due to a request being filed by a homeowner in Austin, Texas, the USA’s tax authority will examine the scheme in detail.

VOSTs are in theory designed to calculate how much should be paid for solar-generated electricity, including factors such as environmental impact and value to the grid and society, rather than making calculations based on the retail rate of electricity. Austin has had a VOST in place since October 2012, the first such scheme in the USA.

The downstream group broadly supports the continued use of net metering (NEM) schemes over VOSTs for American homes. Among TASC’s criticisms is the fact that VOSTs are left up to utilities to decide whether to adopt instead of NEM, with the utility able to set and review the prices paid. TASC also claims value of solar tariffs could jeopardise the 30% ITC tax credit status of solar systems, and says the IRS investigation is likely to have an impact in national leading markets including California and New York.

Analyst John Farrell of the Institute for Local Self Reliance in Minnesota previously told PV Tech that in theory, VOSTs could help ease tensions between utilities and solar groups, due to their methods of calculation. He agreed with TASC however, that the prerogative given to utilities to choose between NEM and VOST schemes was one of a number of causes for concern.

TASC has often been outspoken on a number of topics relating to perceived ongoing tensions between downstream solar and utilities in the USA, often drawing attention to big money media campaigns, some paid for by utility-funded lobby groups to discredit solar.

TASC claimed yesterday that “utilities support VOSTs over the widely effective net metering policy”, although for the time being 43 US states currently have net metering in place.

Their stand on the issue drew criticism from Karl Rabago, a lawyer and energy consultant who was partly responsible for drawing up the original VOST for Austin. Tweeting yesterday, Rabago, a self-described “free market Green” said TASC had got its “facts very wrong” on VOSTs.

Rabago also worked on developing the Minnesota scheme. In an interview with regional publication MidWestern Energy News, Rabago praised the “transparent” process by which the value of solar tariff had been deliberated on there and in Austin.

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