To Corvallis officials, the pitch from SunEnergy Power Corp. was just too good to pass up.

The Bend company would build a 13-acre solar array at the city’s wastewater-treatment plant at its own expense, then sell the electricity to the city at competitive rates. SunEnergy would recover much of its costs by taking advantage of tax credits the city can’t directly access. And any excess energy from the 2 megawatt project would be sold to Pacific Power under the state’s net metering rules, which allow electricity to flow back and forth on the grid between utilities and customers that generate their own power.

“It’s a pretty good deal,” said Corvallis Public Works Director Steve Rogers. “We would agree to buy green power, and it would provide about 55 percent of the electricity to power the wastewater-treatment plant.”

It’s one of dozens of solar power projects sprouting up around the state that pair third party developers with nontaxed entities such as cities, counties, school districts and universities.

But for the moment, at least, this green energy boom is being overshadowed by Pacific Power’s parent company, PacifiCorp. In a joint filing with energy developer Honeywell, PacifiCorp has asked the Oregon Public Utility Commission for a declaratory ruling spelling out the rights and responsibilities of all parties in these three-way generating arrangements.

Solar energy advocates have rushed to intervene in the case, saying it could hand the state’s budding solar power industry a major setback.

“We are seeing Oregon solar energy markets really start to grow rapidly,” said Suzanne Leta Liou of the Renewable Northwest Project, a nonprofit advocacy group. “We are deeply concerned that, by raising these questions, the growth that we’ve seen will freeze entirely.”

According to Liou, an adverse ruling by the PUC could derail more than 30 solar projects around the state, including the one planned for the Corvallis wastewater-treatment plant and several in the works at Oregon State University.

“We’re in the same boat as everyone else,” said Brandon Trelstad, OSU’s sustainability coordinator. “If the PUC rules in favor of Pacific Power, we won’t be able to do those projects.”

Government at all levels is encouraging solar power development with financial incentives designed to bring down the cost of installing photovoltaic panels. In Oregon, businesses can get a 50 percent tax credit plus a rebate from the Oregon Energy Trust of $1-$1.50 per watt of generating capacity.

There’s also a 30 percent federal tax credit.

“When they all work together, it makes solar very cost-effective — especially if you don’t have to pay all of it upfront,” said Renewable Northwest’s Liou.

But the clock is ticking on these incentives. Projects built this year must be completed and certified by Dec. 31 to qualify for assistance, and the federal tax credit is slated to shrink to just 10 percent at year end.

PacifiCorp and Honeywell have asked for an expedited ruling from the PUC, and the regulatory agency hopes to reach a decision by the end of this month. In the meantime, work has ground to a halt on most third party-financed solar projects around the state, and the delay is making developers nervous.

“It just strikes those of us in the industry as a little strange that they would come at this so late in the year, when it could jeopardize the tax credits,” said Dennis Wilde of Gerding Edlen Sustainable Solutions, which has contracts to build half a dozen solar projects at college campuses around the state, including OSU.

“We don’t have a lot of freeboard in terms of time.”

Both PacifiCorp and Honeywell say they anticipate a ruling that will allow these projects to go forward — they just want the PUC to clear up some questions about the law.

The questions arose after the city of Pendleton partnered with Honeywell to build a pair of solar installations with plans to sell the excess electricity to the incumbent utility, Pacific Power.

“What threw everything into the great unknown was when the city said, ‘We’re going to do net metering — however, a third party is going to be the owner,’” said Art Sasse, a spokesman for PacifiCorp. “The law covers owners of solar facilities. It doesn’t speak to third party developers.”

The filing raises a number of questions, but the most crucial ones are these:

• Is a third party solar developer a customer-generator or an electric service supplier?

• If it’s a supplier, do the net metering rules apply?

“We need clear rules and guidelines,” Sasse said. “If we don’t have them, everybody gets into trouble.”

Sasse points out that Pacific Power is already involved in several solar generating projects and that a new state law requires that 25 percent of the utility’s capacity come from renewable sources by 2025.

“The best outcome for us is clarity,” he said, “(and) the best outcome for solar power is clarity.”

But critics of the filing — which range from small solar developers to environmental groups to Portland General Electric — argue that PacifiCorp could have sought a legislative fix that would have cleared up any uncertainties without disrupting current renewable energy projects.

“There are some legitimate issues that need to be resolved in regards to this arrangement, (but) this is not the way I would have preferred to resolve them,” said Scott Winkels, a lobbyist for the League of Oregon Cities.

“If the PUC were to rule that a third party is a utility or an electric service provider, it’s going to damage their ability to finance these projects,” Winkels added. “It’s going to put the brakes on solar power production in this state by at least a year.”

Gerding Edlen’s Wilde paints an even gloomier picture. An adverse ruling by the utility commissioners, he said, “would pretty much kill the industry.”

Still, with so much momentum behind the push to develop renewable energy sources, he’s confident that solar power will have its time to shine in Oregon.

“There have been attempts before in other states to derail net metering, and they’ve all failed,” Wilde said. “We’re hoping that will be true here.”

Bennett Hall can be reached at 758-9529 or bennett.hall@lee.net.