Jul 16 - McClatchy-Tribune Regional News - Gail Kinsey Hill The Oregonian, Portland, Ore.

Solar electric projects chilled by legal questions could heat up again soon.

Last month, in a petition to Oregon utility regulators, Pacific Power questioned a popular financing arrangement that allowed outside investors to tap into lucrative tax breaks by building solar projects for cities, counties and other public entities. The action essentially iced 20 commercial projects throughout the state.

But renewable-energy advocates say they're heartened by recent developments in the case. If the upcoming decision falls their way, as they now expect, these projects could get the green light by month's end.

"We're very hopeful," said Suzanne Leta Liou, a policy analyst with Renewable Northwest Project, a clean-energy advocacy group.

Solar advocates have found encouragement in a final series of briefs filed with the Public Utility Commission. Legal arguments from the commission staff, the Oregon Department of Energy and the Oregon Department of Transportation all interpreted the law in ways that would give the projects the go-ahead. So did arguments from numerous consumer and clean-energy interest groups.

Another good sign, advocates said, came earlier this week when the PUC called off a key hearing set for Thursday.

"If the commission was inclined to disagree, it would have scheduled that hearing," said Jack Isselmann, an attorney advising Renewable Northwest Project. "There's reason to be cautiously optimistic."

PUC Chairman Lee Beyer cautioned against jumping to conclusions.

"All it means is that all parties did a good job of putting their positions in writing," he said.

Beyer said he could not comment on the case while a decision is pending.

The ice cubes started flying last month when Pacific Power questioned a popular financing arrangement used by cities, counties, schools and nonprofits.

These public entities don't produce any income and can't take advantage of the state and federal tax breaks that have fueled the state's solar boom. The answer has been to hook up with outside investors, such as Honeywell Energy Services, which build the projects, sell the power to the city or county under long-term contracts and then use the tax breaks.

Pacific Power officials said they weren't opposed to the projects but questioned whether Honeywell might not be a quasi-utility and, therefore, subject to further regulation and fees. It also questioned whether those involved in the third-party deals could plug into the grid under net metering laws and get credit from the utility for the solar energy that's generated.

"All we want is clarity," said Pacific Power spokesman Art Sasse, miffed by the anger that has been directed toward the utility as the case has become public. "We want to make sure that we're not in violation of any rule or statute and that our customers are protected."

About 80 percent of the commercial solar projects set for construction this year rely on these third-party deals, according to the Energy Trust of Oregon.

That's 22 projects, with a combined capacity of 13 megawatts, more than twice the amount of solar installed in the state to date.