Over the past few months a number of Democrats and Republicans Representatives have expressed concern over solar leasing practices. Most recently 12 Republicans wrote a letter to the Federal Trade Commission asking it to investigate whether some solar leasing companies are misleading homeowners into solar contracts by over-promising energy cost savings over the life of the contract.
The letter, sent to the FTC Dec. 12, was led by Arizona Rep. Paul Gosar. In a press release he said: “It has been reported that some companies are using potentially deceptive sales techniques and overstating potential savings in order to get consumers to sign lengthy leases for rooftop solar systems.” He added, “The sales presentations, however, purportedly inflate grid power rates. If these allegations are true, these possibly misleading leases could be a serious threat to consumers as they are tied to our citizens’ homes and have the potential to cause significant harm to the solar industry.”
In solar leasing agreements or power-purchase agreements the rates people pay for the solar modules or the power produced by the solar panels on their homes and buildings are set based on the future anticipated costs of electricity in the region. In some cases the rate might be higher than contemporary utility-based electric costs. But as grid-supplied electric prices are generally expected to rise, the power from the solar array would be less expensive than the grid-supplied power in the future. Gosar and the other signers are concerned that the solar companies, like SolarCity, are over-promising the amount that homeowners will save in the long-term.
Gosar also raised concerns about who the companies are working with. “Even more troubling, one of the largest solar leasing companies has partnered with a strategic sales company that sold large numbers of subprime mortgages to unsuspecting homeowners in the run up to the 2008 financial crisis,” he said.
The letter asked FTC Chairwoman Edith Ramirez to investigate the practices and answer questions about the practices. Among other things the letter asks the FTC if it has received complaints from consumers over solar lease contracts and whether consumers are fully apprised of the costs, benefits and financial risks of solar leases.
The letter from Gosar follows a letter sent to the U.S. Consumer Financial Protection Bureau by four House Democrats in November. In that letter the Democrats from Texas and Arizona asked the Bureau to investigate whether the solar leasing companies were overstating the economic benefits of long-term solar leases.
SolarCity has responded to these claims, explaining that their business is largely word-of-mouth and that they rely on customers’ experiences with SolarCity to help the company gain more customers.
It’s likely an issue that will be heard more in 2015 as more people have solar installed on their homes and workplaces.Tweet