Rooftop solar sales tactics draw scrutinyLamont Wood | Aug 07, 2015
Finger-pointing. Frenzied sales tactics. Consumer complaints that have reached the federal level. Lobbyists helpfully writing letters for congressmen. In some industries these elements may constitute another day at the office, but in the world of residential rooftop solar panel installers, they may also be artifacts of an industry racing toward a cliff marked "no more subsidies." Basically, in November four Democratic members of Congress sent a letter to the head of the Consumer Financial Protection Bureau complaining about the sales tactics being used by rooftop solar installers, especially when they involve third-party leasing arrangements. Under such arrangements the homeowner does not own the solar panels and gets them installed with no money down. In return the homeowner contracts to buy the power the panels generate from the installer - perhaps for decades. All federal and state subsidies go to the installer. The letter expressed concerns that third-party leasing arrangements were being oversold and asked a numbered list of questions about what the bureau was doing to protect consumers. Then, in December, 12 Republican congressmen signed a curiously similar letter (albeit with five numbered questions instead of the Democrats' four) to the head of the Federal Trade Commission. As for who they are talking about, Marita Noon, head of the Citizens' Alliance for Responsible Energy (whose "Solar Power in the US" brochure discusses some of the problems) says the three leading rooftop solar installers that rely on third-party leasing are SolarCity of San Mateo, California; Sunrun of San Francisco, and Sungevity of Oakland. Sungevity did not respond to requests for comment. SolarCity and Sunrun insisted on deferring to an organization called The Alliance for Solar Choice (TASC) to speak for them. The TASC spokesperson, Kim Sanders, was elsewhere listed as a Sunrun manager. "APS, one of the most anti-solar utilities in the country, was caught drafting the congressmen's letters attacking solar leasing," Sanders said. "It's part of the utilities' national campaign to eliminate competition." (APS used to be called Arizona Public Service, and is the largest electric utility in sun-drenched Arizona.) Sanders would not otherwise speak on the record. An APS spokesman did not deny the letter-writing. "Of course we provide input to members of Congress who are investigating customer complaints about rooftop solar leases," said Jim McDonald, spokesman for APS. "These are our customers, and standing up on behalf of our customers is not 'anti-solar.'" There was more behind the letters than lobbying, indicated Jeff Small, legislative director in the office of Rep. Paul Gosar, R-Arizona, from whose office the Republican version of the letter originated. "We probably got seven to 10 direct complaints to our office - which is a decent number considering that most folks typically contact the Better Business Bureau or their state attorney general's office, etc.," he said. "The solar people are causing their own problems - they are not being fanned by the utilities," said Noon. "This is not a smokescreen put out by the utilities; these are real customers that have real issues," agreed Austin-based energy consultant Sheri Givens, former head of the Texas Office of Public Utility Counsel. "I have examined sample leases from the rooftop solar installers," said Givens. "As an attorney I still found them hard to understand. There was fine print that put a lot of responsibility on the homeowner." The problem most often cited with the leases is that they usually run 20 years, while the average American moves every eight years. If a house with leased solar panels on its roof is sold, the new owner usually has to have a good enough credit score to take over the lease, Givens noted. Otherwise, the seller will have to buy out the lease. Alternatively, the original owners might take the panels with them and reinstall them on their new homes, but only within the same utility area. "No one tells them where to file complaints so they often go to the Better Business Bureau to get resolution," Givens added. "You see complaints about faulty installation, misrepresentation, missing schedules, and aggressive sales tactics. Sometimes they get resolution, but the results are spotty at best." (Incidentally, the BBB site showed that, as of late June, 190 complaints had been closed against SolarCity in the previous three years, and there were four customer reviews, all negative. There were 94 closed complaints against Sunrun, and one negative review. There were 12 closed complaints against Sungevity and no reviews.) Meanwhile, the contracts often have escalation clauses that increase the price charged to the buyer for the power produced by the panels, every year, for the life of the contract, Givens noted. "The clauses are in the range of 4 to 6 percent annually, but the predicted yearly increase in grid power ranges from 0.5 to 1.5 percent," Givens said. "There (also) is a potential for an increase in insurance costs," added Noon. "You have to maintain the panels, even though you don't own them. And the salespeople inflate the potential savings. "These things happen in any industry, but states are scaling back their solar subsidies to save money, and federal solar subsidies are going away at the end of 2016. That's fueling the fire to make sales now," Noon said. After the subsidies are gone, "We will see firms that cannot stay in business without subsidies go away. But the survivors will be in a sustainable market economy," she predicted. As for the impact of the letter-writing, "We don't comment on our communications with Congress, but we have launched no actions against rooftop solar installers," noted Mitch Katz, FTC spokesman. Yet Katz also pointed out that the FTC added a page to its consumer information site in June, titled "Solar Power for Your Home." It discuses various aspects of residential solar power and steps to take when considering such a project, with an emphasis on buyer self-education. It mentions third-party leasing and power-purchase agreements, and what details a buyer should look for in a contract. It specifically warns a buyer to look for provisions in the contract that would affect his or her ability to sell the house later. It also has advice on where to lodge a complaint. ==================================================================== Source list: Kim Sanders, The Alliance for Solar Choice, 415-580-6870, ksanders@sunrun.com Marita Noon, Citizens' Alliance for Responsible Energy, 505-239-8998 Jeff Small, legislative director for Rep. Paul Gosar, 202-225-2315, jeff.small@mail.house.gov Jim McDonald, spokesman, Arizona Public Service, 602-321-3738 Mitch Katz, spokesman, Federal Trade Commission, 202-326-2180, mkatz@ftc.gov Sheri Givens, Givens Consulting LLC, sheri@givensenergy.com, 512-417-5753
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