As the spotlight on solar power grows brighter, We Energies has agreed to drop a proposal to bill homeowners and small businesses an added charge on those that generate their own power from solar systems.

The Milwaukee-based utility and Renew Wisconsin said Monday they had reached a settlement over the surcharge that We Energies asked for as part of a larger rate case that is now before state utility regulators.

Solar advocates saw the charge as an impediment to building more small-scale renewable energy, while We Energies maintained that customers with solar panels weren’t paying their share of utilities’ fixed costs to deliver electricity.

The agreement comes as the price of solar power and solar systems are declining and, more broadly, large-scale renewable energy increasingly is being embraced by utilities, including We Energies.

Other power companies nationally have sought similar charges. In Michigan and Iowa, regulators have recently rejected the fees on customers with solar panels.

As part of the agreement, Madison-based Renew, a nonprofit that advocates for more electricity from wind and solar, has agreed to support We Energies’ plans for a utility-scale solar project.

Details have not been announced. The company’s parent, WEC Energy Group, says it wants to reduce carbon emissions by 80% from 2005 by 2050.

In the rate case before the Public Service Commission, We Energies had been seeking a $3.53 a month surcharge for each kilowatt of electricity that a homeowner or small business generates.

Companies and government units with larger systems were not part of the proposal.

On average, the charge for these smaller users would have totaled $15.88 a month — or nearly $191 a year for more than 400 customers and small businesses with solar at the end of 2018.

Costs would likely have been higher for those building new systems, which tend to be larger and more efficient.

On top of that charge, customers with solar panels would still pay the fixed charge other residential customers pay. That is currently $16 a month, or $192 a year.

Despite the agreement, the “fairness issue remains,” said Brendan Conway, a spokesman for the utility.

He said the larger issue is how to account for less revenue from an anticipated increase in small-scale renewable power.

“What is the best solution so that it is fair to all customers?” Conway said.

Tyler Huebner, executive director of Renew, said his group was pleased with the agreement. “It will help return certainty back to customers who are looking at solar, and the industry that is in business to provide these solar energy solutions,” he said.

Tom Content, executive director of the Citizens’ Utility Board, said his group had concerns about the surcharge and the impact on customers who invest in such systems.

His group still has issues with We Energies on several fronts over the utility's rate proposals, including what he said is a double-digit increase for residential customers over the next two years.