A flareup over solar panels is growing between electricity regulators, who say that consumers need more protection, and the upstart solar industry, who say those efforts are just a move by utilities to stunt their growth.
Advocates of more rules, including traditional electric companies, point to instances in which third-party solar installers have signed unwitting customers to 20-year contracts that include an annual escalation in electricity rates higher than U.S. Energy Information Administration projections.
|'Solar is like any other industry of its size where there are bound to be a few bad apples.'|
For example, Summerlin Energy told would-be customers that they would save money with the Las Vegas-based solar installer because power rates were due for a 10-percent increase each year. Historical EIA data show, however, a 2.3 percent bump between 1993 and 2013. It forecast a 2.1 percent yearly increase from 2014 to 2033.
Third-party solar financing is buoyed by a 30 percent federal tax credit, which expires at the end of 2016. The installation company collects that credit in exchange for signing up customers for long-term contracts.
Even solar champions outside the industry have pointed to potential problems in the emerging and booming third-party solar field, which accounts for two-thirds of installations.
"Clearly there are some evidentiary points that would suggest that people have entered into contracts I wouldn't have entered into as a consumer, so it does raise the question," said Elias Hinckley, who heads the energy practice at Sullivan & Worcester LLP.
Allegations of predatory pricing have trickled their way up to Congress, with several lawmakers pressing federal agencies about their ability to protect consumers.
Arizona has taken the lead. Democrats and Republicans from the state's congressional delegation have questioned regulators about consumer protections. The Grand Canyon State's attorney general in February settled with a solar firm for fraudulent claims about anticipated power rate increases, and state legislation has been filed on the issue. Washington state is also jumping into the fray. Lawmakers there have floated a trio of bills that would clarify that the state's utility commission has the right to protect consumers regarding third-party solar leases.
"These are important questions because essentially the consumer protection standards are embedded into the contract and the contract may or may not be beneficial to the consumer," said Tyson Slocum, energy director with consumer watchdog group Public Citizen. "There's a big war going on between the incumbent utilities and third-party providers."
The spat between solar and regulated electric utilities — which are given a territorial monopoly in exchange for regulatory approval to raise rates — has been brewing as solar gains a foothold in the power market. Solar power provided just 0.4 percent of the nation's electricity as of November 2014 according to the EIA, but it has grown in recent years and has significantly penetrated the Southwest.
"Absolutely, I think this is not the last we're going to hear about this. Any time someone can identify those singular examples that they can point out as a fear tactic you can slow down penetration," Hinckley said.
Solar advocates note there already are 29 consumer protection laws and agencies that apply to the rooftop solar industry, including the Consumer Financial Protection Bureau and the Federal Trade Commission.
"I certainly would challenge anyone to articulate why those laws are not adequate," said Bryan Miller, vice president of public policy with SunRun and co-chairman of the the Alliance for Solar Choice.
Solar boosters also say any attempt to strengthen regulation is a strategy to hurt the competition.
"It is important to distinguish between legitimate issues among solar customers, which we take very seriously, and the efforts of government-regulated monopoly utilities to eliminate any market choice for Americans. Rooftop solar is the most free market development in the history of U.S. electricity," said Will Craven, director of public affairs with leading solar firm SolarCity.
Solar proponents also note that one of the letters sent by Arizona lawmakers largely mirrors a draft memo from a lobbyist representing Arizona Public Service, an electric utility that has previously waged battles against solar power.
Slocum, however, said state utility regulators could be the proper venue for addressing the issue, as solar companies are effectively acting like utilities by signing up customers for power and controlling the generation of that electricity.
"Essentially, SolarCity is positioning itself to be the largest utility in America," Slocum said. "So you do have to regulate them, and it makes perfect sense to regulate them through the existing utility regulatory structure."
Solar proponents blame a few bad actors for the predatory pricing and argue new regulations are unnecessary and could be too broad, potentially stomping out a burgeoning industry.
"We obviously don't condone any behavior that runs afoul of the law and we've heard some instances of states wanting to bring stronger consumer protection laws. Solar is like any other industry of its size where there are bound to be a few bad apples," said Tom Kimbis, general counsel with the Solar Energy Industries Association.
This article was originally published at 5 a.m. and has been updated.