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Why SolarCity Plans to Ditch Nevada

December 24, 2015, 8:23 PM UTC

The largest solar installer in the U.S., SolarCity, said on Wednesday that it will stop selling and installing solar panels on rooftops across Nevada after the state’s regulator approved a new plan to add fees and lower compensation for owners of home and commercial solar systems.

SolarCity’s (SCTY) CEO Lyndon Rive called the new changes, which would take effect Jan. 1,, and would retroactively apply to the state’s 12,000 solar owners, “unethical, unprecedented, and possibly unlawful.” Rive said the Nevada Public Utility Commission’s decision would “damage the state’s economy, and jeopardize thousands of jobs.”

The state regulator’s decision is the latest move in the complicated landscape of how utilities, and the states they operate in, are adjusting to the emergence of solar panels on the rooftops of their customers. Utilities, like Nevada’s NV Energy, argue that solar customers aren’t paying their fair share for upkeep of the power grid, and have benefited from overly high compensation for the solar electricity they produce.

Other utilities like Arizona’s Salt River Project have approved similar extra fees for solar customers, but Nevada’s decision to apply fees retroactively is unprecedented.

WATCH: SolarCity’s launches a new solar panel

The solar industry has aggressively fought these fees. Earlier this year, SolarCity sued Salt River Project, calling those added fees an attempt to maintain an energy monopoly in the state and unfairly block competition.

The solar industry says that Nevada’s Gov. Brian Sandoval and the Nevada Public Utility Commission are creating an unfair advantage for the state’s utility, NV Energy, which is owned by Warren Buffett’s Berkshire Hathaway Energy.

SolarCity isn’t the only company pushing back against Nevada’s move. The second largest U.S. solar installer, Vivint Solar, said earlier this week that it, too, would halt operations in the state if the new tariff was approved.

Solar installer SunRun (RUN) recently sued Gov. Sandoval for refusing to provide records of communication between NV Energy employees, lobbyists, Gov. Sandoval and his staff, including current Public Utilities Commission Chairman Paul Thomsen.

Gov. Sandoval responded to the criticism from the solar industry by saying the solar companies “have attempted to pressure my office to improperly influence the PUC’s independent decision making process and resorted to bullying tactics such as threatening mass layoffs of Nevadans.” He said Nevada needs to “strike a balance between helping to develop the solar industry which I believe has tremendous potential while ensuring just and reasonable energy rates for all Nevadans.”

SolarCity is run by Lyndon Rive and his brother Peter Rive, along with their cousin, entrepreneur Elon Musk, who is chairman of SolarCity as well as the CEO of electric car company Tesla Motors (TSLA). Tesla received a large incentive package from Nevada to build its battery factory in the state.

Nevada has recently emerged as a state that has promoted new energy technologies.