COLUMBIA, SC — Considered one of the nation’s least-friendly states for solar energy, South Carolina is preparing for a fight over long-standing rules that utilities have used to block the expansion of sun power across the Palmetto State.

Rep. James Smith, D-Richland, introduced a bill Thursday that lets solar energy companies install low-cost sun panels for homeowners – without having to go through the lengthy and expensive process of being declared utilities.

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Traditional power companies argue that solar companies are in effect utilities when they install sun panels on people’s roofs and sell the power back to the individual homeowners. And they say SC law supports that perspective.

Those arguments have discouraged solar companies that offer affordable sun panels from opening in South Carolina, even as sun power flourishes in other states with less intense sunlight.

In 2011, a small New England company’s plan to provide free solar panels to dozens of churches, charities and schools across the state collapsed after SCE&G complained to the state Public Service Commission that the firm was acting as a utility, The State newspaper reported.

“My hope is we can get this bill passed and see things improve,” Smith said. “Right now, South Carolina is a wasteland for solar. Nothing is going on.”

If approved by the Legislature, Smith’s initiative would mark a significant change in state policy and is projected to lower the cost of installing solar panels for property owners across South Carolina.

Making energy from the sun costs little or nothing each month, but many people don’t install panels on their roofs because the initial upfront costs of solar energy systems are too high. Panels can easily cost more than $20,000 to install.

The bill, however, drew a cool response Thursday from the state’s influential power companies, which are concerned about lost revenues and tying in more solar energy to their utility grid. They have said solar power can’t be relied on when it is dark or rainy, even though few in the U.S. use solar power exclusively, choosing instead to combine it with traditional power.

Spokespeople for SCE&G and state-owned Santee Cooper said the idea of letting solar companies operate under new rules needs closer scrutiny. Under existing state law, utilities such as SCE&G have exclusive rights to sell power in designated territories without competition.

“The best course of action is to study the issue throughout 2013,” SCE&G spokesman Robert Yanity said. “We think it would be important for that to happen before any legislation is enacted.”

The bill introduced Thursday would let solar companies sell power generated on homes, churches and businesses back to the property owners. In turn, those customers would see lower monthly power bills, proponents say. The bill limits the number of customers a solar panel company could have.

The bill is similar to laws in other parts of the U.S., particularly in the West and New England, that allow solar companies to help people install panels on their roofs at low costs.

Environmentalists and sun power advocates said solar energy does not produce pollution or greenhouse gases that contribute to global warming – problems long associated with coal-fired power plants.

And, they said, solar panels can be a cheap way to power people’s homes.

“We’re not creating utilities with this legislation, we’re just meeting individual customer demands,” said Ryan Black, a lobbyist with the SC Coastal Conservation League, a leading advocate of solar and wind energy. “This allows a financial transaction to shift the burden from the customer” to a solar company.

Grant Reeves, senior vice president for the InterTech Group in North Charleston, said his company is looking to begin providing low-cost solar panels in South Carolina, but needs the legislation to pass first.

Solar companies, such as the one Reeves wants to launch, help people finance solar panels at rates that can also save property owners money on their monthly power bills. The deals are considered better than traditional bank loans. The companies make the bulk of their money by drawing down on federal tax credits, meaning they can charge a modest amount to homeowners for the energy produced by solar panels.