The Oklahoma Bar Journal May 2024

One reason fewer companies that provide third-party financing options exist in Oklahoma is a lack of clarity in the law on this topic. Third-party financing companies do not want to be accused of being a “utility” in the eyes of the law. At one time, interpretation of the Retail Electric Supplier Certified Territory Act (RESCTA) varied on this question of whether customers were permitted to enter agreements such as PPAs and leases with an entity other than the utility. This is because RESCTA gives retail electric suppliers exclusive rights to “furnish retail electric service” to customers within a certified terri tory. 12 By definition, “retail electric supplier” is “any person, firm, cor poration, association or cooperative corporation, exclusive of municipal corporations or beneficial trusts thereof, engaged in the furnish ing of retail electric service.” 13 The debate was whether a company that offers to lease or sell rooftop solar systems to individuals as described above was “furnishing retail electric service” in violation of state statute. In 2018, the attor ney general said ... it depends. 14 AG Opinion 2018-5 distinguished that in incorporated areas, PPAs and leases are both permitted, while in unincorporated areas, PPAs are prohibited, and only leases are permitted. In my experience, this helped to clarify some market con fusion, but since the clarity came in the form of an attorney general’s opinion and not through statute, some companies that specialize in these financing mechanisms have been loath to invest in the state for fear of running afoul of RESCTA. A lack of clarity has resulted in fewer options for Oklahomans interested in using financing to install solar.

solar depend on location, such as the state, municipality and utility where the system will be located. Regardless of location, customers installing solar can benefit from a 30% federal tax credit; however, there are no other state, municipal or utility-level credits or rebates currently available in Oklahoma law. In other states where credits, refunds or rebates exist at the state and local levels, there are unsur prisingly higher levels of solar installed, which demonstrates how a lack of these incentives in Oklahoma is another barrier to more solar development. To offer a general example, while an invest ment in a rooftop solar installation can typically pencil out in around five to 10 years, not everyone interested in this investment has the upfront capital. 11 Therefore, those looking to deploy solar on their roof must have financing options. People with equity in their homes or those with good credit could take advantage of a home equity loan or line of credit, but these options are not available to everyone.

Third-party financing is a com monly used tool for consumers who lack the upfront funds necessary for solar installation. But when a third party finances a solar sys tem, which ultimately provides the customer with electricity, it must be determined under Oklahoma law whether that company is behaving as a utility to be regulated. Third party financing comes in the form of power purchase agreements (PPAs) or solar leases. PPAs allow com panies to install and own rooftop solar equipment, and the customer pays for the output generated by the system. Leases allow a company to install but own the rooftop solar equipment and lease that equip ment and the power it produces to the customer on whose roof it is installed. Having more options in the market for financing provides more people of varying income levels an opportunity to finance solar. A shortage of companies pro viding these financing mechanisms means less competition and higher rates, which serves as an additional barrier to the development of more solar energy in Oklahoma.

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

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THE OKLAHOMA BAR JOURNAL