THE BLOG
07/08/2016 06:36 pm ET Updated Jul 09, 2017

Protecting Consumers: Making the Solar Industry a Safe and Fair Marketplace

A national look at the consumer protection issues raised by the rapidly growing use of rooftop solar panels just happened, when the Federal Trade Commission (FTC) convened a Workshop on this and other solar energy related issues in Washington DC on June 21st. This event was solid evidence that, while solar energy plays an increasingly important role in meeting our Country's energy and environmental goals, rooftop solar panel installations still present significant consumer protection problems. The FTC materials for the Workshop acknowledged that "A well-functioning marketplace requires that consumers have access to the information necessary to weigh the financial costs and benefits of the various options for installing solar PV." I could not agree more.

In many states, consumers have expressed concern over unclear and, in some instances, dishonest sales tactics used by some companies leasing solar products. In fact, the FTC asked in their public notice for the Workshop, "Do consumers understand the payments they will make for solar PV panels and electricity, based on whether and how they finance or lease a system, or obtain a power purchase agreement? Do consumers understand whether their payments may escalate under some agreements?" Many times, the unfortunate answer has been "No".

For example, the energy cost savings that some rooftop solar companies claim in their sales pitches are often higher than the actual savings because their assumptions used highly inflated electricity cost projections. In some cases, due to automatic escalation terms embedded in solar leases, families end up paying more for their solar energy than they would have paid traditional energy companies at the meter rate. What's more, customers may not realize that their payments could double over the life of the lease and also don't know what interest rate they are paying, even though these kinds of requirements are clearly on the table when leasing a car for a much shorter-term.

In Arizona, where the sun is a virtually omnipresent resource, some 'bad actor' rooftop solar companies have run the gamut of consumer offenses from failure to install solar systems after a deposit was accepted, to making illegal phone solicitations of 'Do Not Call' subscribers, to overstating the savings from solar.

In March, the FTC filed a federal court action alleging that 1.3 million people on the "Do Not Call" list were subjected to illegal telemarketing on behalf of a group of solar companies. Robo calls made statements such as: "This is an urgent call about your energy bill," and "stop the 14% increase coming soon." If a consumer responded, they were transferred to a telemarketer for solar panels. This is one example among many of misleading advertising, harassing sales tactics, inaccurate information, undisclosed fees, faulty installations, and other consumer complaints. Addressing these consumer problems forthrightly will allow the solar industry to grow on a foundation of satisfied consumers.

A particularly vivid example of the exaggerated savings tactic comes from a local news outlet in Georgia which recorded on video a rooftop solar salesman making extravagant promises to customers and greatly overstating the annual savings from installing a solar system. A company in Louisiana misled consumers by overstating energy cost savings, failing to install the solar equipment on time, and violating state license requirements for solar panel installers. Solar consumers should not have to navigate in this kind of treacherous, "buyer beware" landscape.

Consumer groups have been stepping in to express concerns. Over two years ago, the National Association of State Utility Consumer Advocates (NASUCA) i9ssued a comprehensive resolution on rooftop solar installations, noting that there were widespread "(f)raudulent and deceptive business practices by DG providers, such as misrepresentation of the potential energy output of the DG system, exaggeration of the value of the DG system, and withholding information or misleading customers regarding information related to property repairs or upgrades necessary for installation of the DG system."

Fortunately, regulators and policymakers are also taking action to protect consumers. State attorneys general in Arizona, Connecticut, Mississippi, Massachusetts, Louisiana and Vermont have issued advice to consumers outlining how to make knowledgeable rooftop solar decisions and warning them about deceptive and sometimes outright fraudulent sales practices by some companies. Even the solar industry's leading voice in Washington has attempted to reign in bad actors by publishing a consumer guide. The guide is a good place to start, but would be better with some enforcement mechanisms.

As a former state attorney general, consumer advocacy is in my DNA. I am glad to see the FTC and state officials moving in tandem to make consumers more aware of hazards associated with solar installations, especially with leasing rooftop solar units. With our Nation's increasing interest in a solar future, consumers should be making informed choices, not being rushed into such an important and costly decision without knowing all the facts and all the options. The FTC Workshop provided a safe place for valid questions and honest answers. It is the kind of forum that could well lead to solar energy options that are fair and transparent for consumers - that's a goal I hope we achieve soon.