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SOLAR POWER ON THE ROOF AND IN THE NEIGHBORHOOD: RECOMMENDATIONS FOR CONSUMER PROTECTION POLICIES Barbara R. Alexander Consumer Affairs Consultant With the Assistance of Janee Briesemeister Consultant March 2016

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Page 1: FINAL Solar Power Consumer Protection Report Solar Power...allows a comparison of impacts on the customer’s electricity bills and obligations under the applicable financial arrangement

SOLARPOWERONTHEROOFANDINTHENEIGHBORHOOD:

RECOMMENDATIONSFORCONSUMERPROTECTIONPOLICIES

BarbaraR.AlexanderConsumerAffairsConsultant

WiththeAssistanceof

JaneeBriesemeister

Consultant

March2016

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BarbaraR.AlexanderopenedherownconsultingpracticeinMarch1996.From1986-96shewastheDirector,ConsumerAssistanceDivision,attheMainePublicUtilitiesCommission.Ms.AlexanderreceivedherJ.D.fromtheUniversityofMaineSchoolofLawin1976.Herclientsincludenationalandlocalconsumerorganizations,statepublicutilitycommissions,andstateutilitypublicadvocates.Herareasofexpertiseincludeconsumerprotectionstoaccompanytheimplementationofretailelectric,naturalgas,andlocaltelephonecompetition,servicequalityperformancestandardsforelectric,naturalgas,andtelecommunicationsproviders,lowincomeprogramdesignandimplementation,consumerprotectionsassociatedwithpilotandsystem-wideinstallationofadvancedmeteringanddynamicpricingprograms,analysisofutilitycustomerserviceprograms,andresidentialratedesignpolicies.

JaneeBriesemeisterhasmorethan25yearsofexperienceinconsumeradvocacy,policydevelopmentandadvocacyissuecampaignsonthestateandnationallevels,andisnationallyrecognizedasaleadingconsumeradvocateonresidentialutilityissues.From2006-2014Ms.BriesemeisterwasSeniorLegislativeRepresentativeintheDepartmentofStateAdvocacyandStrategyatAARP.AtAARPshewasresponsibleforsupportingtheorganization’sstateofficesonconsumer-orientedlegislativeandregulatoryadvocacyforaffordableutilityservice,includinghomeenergy,telecommunications,waterandwastewater.Ms.Briesemeisterreceivedthe2011AARPLynBodifordAwardforExcellenceinAdvocacy,recognitionfromhercolleaguesnationwideforleadershipoftheorganization’sadvocacyforaffordablehomeutilityservice.AARPisthenation’sleadingadvocacyorganizationforpeopleage50andover.

TheauthorsgratefullyappreciatetheassistanceandsupportforthisReportfromthefollowing:

• RichardBerkley,PublicUtilityLawProjectofNewYork• PaulaCarmody,MarylandOfficeofPeople’sCounsel• LindaConti,ConsumerProtectionDivision,OfficeofMaineAttorneyGeneral• TanyaMcCloskey,PennsylvaniaOfficeofConsumerAdvocate• MarkToneyandMarcelHawiger,TheUtilityReformNetwork(TURN),California

Inaddition,theauthorsthankCarolBiedrzyckiofTexasRatepayersOrganizationtoSaveEnergy(ROSE)inTexasforherassistance.

However,theauthorsremainsolelyresponsibleforthecontentandrecommendationsofthisReport.

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TABLEOFCONTENTSINTRODUCTIONANDEXECUTIVESUMMARY 4

CHAPTERI:THEMARKETFORRESIDENTIALSOLARISGROWING,FUELEDBYNEWFINANCINGOPTIONS........................................................................................................................................................................................7

CHAPTERII:ITISDIFFICULTTOSHOPANDCOMPARECOSTSFORROOFTOPSOLARANDTHEPROJECTEDIMPACTSONARESIDENTIALCUSTOMERELECTRICBILL.......................................................12A. SOLARCOMPANYWEBSITESOFTENMAKEGENERICSTATEMENTSANDDONOTEXPLAINMANYDETAILSOFTHEPROPOSEDTRANSACTION..........................................................................................12B. ITISDIFFICULTFORCUSTOMERSTODETERMINETHEIROVERALLSAVINGSFROMINVESTINGINSOLARPRIORTOENTERINGINTOAPURCHASE,LOAN,LEASEORPPA....................15C. FEDERALANDSTATEINCENTIVESIMPACTCUSTOMERPAYMENTSANDSAVINGSFORSOLAR.....................................................................................................................................................................................17

CHAPTERIII:THECASEFORADOPTINGCONSUMERPROTECTIONSFORSOLARPOWERTRANSACTIONS.......................................................................................................................................................................19A. CUSTOMERCOMPLAINTSANDREVIEWS.....................................................................................................19B. STATEATTORNEYGENERALENFORCEMENTACTIONSANDCIVILSUITS...................................20C. LEGISLATIVEINITIATIVES...................................................................................................................................21D. STATEANDFEDERALGUIDANCEONENVIRONMENTALCLAIMS.....................................................23E. PROPOSALSFORINDUSTRYSELF-REGULATIONAREINSUFFICIENTFORCONSUMERPROTECTION.......................................................................................................................................................................24

CHAPTERIV:RECOMMENDATIONSFORCONSUMERPROTECTIONPOLICIESANDMANDATESFORRESIDENTIALSOLARTRANSACTIONS.........................................................................................................................26A. REGISTRATIONANDLICENSING.......................................................................................................................26B. DISCLOSURES.............................................................................................................................................................28C. CONTRACTTERMS...................................................................................................................................................31D. SALESANDMARKETINGCONDUCT.................................................................................................................35E. ENFORCEMENTANDPENALTIES;CUSTOMERCOMPLAINTS..............................................................36

CHAPTERV:COMMUNITYSOLARPROJECTS:ADDITIONALCONSUMERPROTECTIONS..................37

APPENDIXA:SUMMARYOFSTATEPROPOSEDLEGISLATION(2014-2015)............................................43

APPENDIXB:CRITIQUEOFTHESEIABUSINESSCODEFORSOLARTRANSACTIONSASASUBSTITUTEFORSTATEREGULATORYOVERSIGHTANDSTANDARDS.....................................................46

APPENDIXC:CONSUMEREDUCATIONALMATERIALS.......................................................................................51

ENDNOTES.................................................................................................................................................................................52

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INTRODUCTIONANDEXECUTIVESUMMARY

ThepurposeofthisReportistoaddresstheneedforessentialconsumerprotectionpoliciestogoverntheburgeoningmarketsforresidentialrooftopsolarsystemsandcommunitysolarprojects.

TheU.S.residentialsolarmarkethasexperiencedexplosivegrowthinthelastfive

years,fueledbylowercosts,stateandfederalincentives,andnewfinancingoptions,includingleasesandpurchasedpoweragreements,alsoknownasthird-partyownership.Communitysolar,whereaconsumersubscribestosharesinasolarsystemthatislocatedinaneighborhoodorcommunity,isarelativelynewandgrowingoption.

Consumersmaybeinterestedinsolarpowertohelptheenvironment,orsimplytosavemoneyontheirelectricbills.Whateverthemotivation,itisnoteasytocomparisonshopforsolarpower.Consumerswillbefacedwithcomparingthecostsofoutrightpurchase,apurchasepoweragreement,alease,oraloan.Whetherpurchasedorleased,theconsumerismakingalong-termfinancialcommitmentwiththeexpectationthatsavingsonutilitybillswilloffsetthemonthlycostofthesystem.Achievingthesesavingsinrealityisdependentonavarietyoffactors—includingcontractterms,federal,state,andlocalsubsidies,theestimatedincreaseinthecustomer’scostofelectricity,andtheperformanceofthesolarpanelsthemselves.Itwouldbeeasyforaconsumertobemisledintoapurchasebasedonexaggeratedassumptionsaboutfuturesavings.Indeed,consumercomplaintshavepromptedstatestotakeactioninthecourts,andproposeconsumerprotectionstoaddressactualandpotentialabusesandmisconceptions.

ThisReportdescribesthemarketing,salespractices,disclosures,andcontractualtermsconcerningthecostsandbenefitsofinstallingrooftopsolarsystemsorparticipatingincommunitysolarsystems.Whileseveralexistinglawsandregulationsmaybeapplicabletoresidentialrooftopsolarinstallations,thosepoliciesarenotspecificallytargetedtosolarinstallationsandtheassociatedfinancialtransactions.ThisReportrecommendsthatsolarenergyprovidersthatengageinsales,leasesandpurchasepoweragreements,aswellasthoseofferingcommunitysolarprojects,shouldbesubjecttooversightbyastateagencyandberequiredtoprovideconsumerskeydisclosures,faircontractterms,andbesubjecttopenaltiesforviolatingstatelawsandregulations.

Thepreferredapproachfor

oversightofsolarenergyprovidersofferingresidentialrooftoporcommunitysolarprojectsshouldbeuniformandcomprehensivejurisdictionbythestateutilitycommission,orotherequivalentstateagency.Solarenergybusinessesaremarketingtoresidentialelectricutilitycustomersforaproductthatisinexorablylinkednotonlytothe

ThisReportwillnotaddressissuesgovernedbyhomeconstructioncodesandoversight,northedisclosuresandoversightassociatedwithloansdirectlyprovidedbyfinancialinstitutions.ThisReportshouldbeviewedascomplementarytotheoversightbystateAttorneysGeneralunderastate’sUnfairTradePracticelaws,theFederalTradeCommissionunderthecomparableFederalUnfairTradePracticelaw,andanystateandfederalregulationsthatspecificallyaddressDoortoDoorSalesandTelemarketingSalesactivities.Theseexistingconsumerprotectionpolicies,whilevaluable,arenotcomprehensiveanddonotaddressthespecifictypesoftransactionsandassociateduniquefeaturesforrooftopsolarsystemsorcommunitysolarsystems.

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customer’smonthlyelectricbill(andthepurchaseofwhichmightevenappearontheutility’selectricbillundersomeproposals),butisalsolocatedintheutility’sdistributiongrid.Tosomeextent,utilitycommissionsalreadyregulatesolarpowerwiththeirdetailedpricingdecisionsonnetmeteringandvalueofsolartariffsthatarecrucialtothemarketingclaimsrelatedtoloweringahouseholdelectricbill.Oftenstatepolicyrequiresthestatepublicutilitycommissiontopromotesolarpowerspecificallyaspartoftheefforttoachieverenewableenergyandcarbonemissionreductiongoals.Commissionsthentypicallyrequireutilitiestomakeinvestmentstoaccommodatetheintegrationofdistributedgenerationandsolarenergyfacilities,whetherthroughindividualcustomerrooftopinstallationorlocalcommunitysolarprograms.Thus,itfollowsthatstateutilitycommissionsarethemostlogicalfocustooverseeretailsolarsales,andsuggestionstolimitthejurisdictionofutilityregulatorstoonlyafewtypesofsolartransactionswouldresultinlikelyconfusionbyconsumersastotheirrightsandremedieswhenshoppingforsolarsystems.However,statesmaydecidethatadifferentstateagencyshouldexercisethisoversightandjurisdictionandourrecommendationswouldaccommodateanalternativeapproach.

ThisReportproposesconsumerprotectionsspecifictosolarleaseandsaletransactions,withdisclosuresandcontractualprovisionsthatflowfromthelongstandingconsumerprotectionpoliciesthathavegovernedretailsalesofproductsandservicestoresidentialcustomers.

ThekeyrecommendationssetforthinChapterIVincludethefollowingpolicies:

RegistrationorLicensing;StateAgencyAuthority:Consumersprotectionsarenoteffectiveunlessagovernmentalagencyhastheauthoritytoinvestigatecomplaintsandtakeactionagainstbadactors,andsuchenforcementcannotoccurwithoutregistrationorlicensing.Regulatorsshouldknowhowtocontactauthorizedrepresentatives,investigatethebackgroundofabusiness,andtakeactionagainstaproviderforviolationsofstatelawsandregulations.

Disclosures:ACustomerTemplate:ThisModelwouldnotregulatethefinancialcontentsofthesolarprovider’soffer,butwouldrequireallsolarprovidersmarketingtoresidentialcustomerstousethesametermsanddefinitionsandmaketheiroffersinamannerthatallowsacomparisonofimpactsonthecustomer’selectricitybillsandobligationsundertheapplicablefinancialarrangement.

ContractProvisions:Standardizingcontracttermsanddisclosuresdoesnotinanywayregulateorlimitthepricechargedforasolarlease,purchasepoweragreementorsale.However,certaincontracttermsshouldbespecificallyaddressedand,insomecases,mandatedorprohibitedtopreventunfairdealingandone-sidedbargainsaboutfineprinttermsandconditions.

SalesandMarketingConduct:Consumerprotectionregulationapplicabletoretailsolarprovidersshouldexplicitlyprohibitmisleadinganddeceptivesalesandmarketing

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statementsandreferencethestate’sspecificunfairtradepracticeorgeneralconsumerprotectionlaw.Asellercannotmisrepresentthenatureoftheformalagreementorusestatementsthataredirectlycontradictedbytheformalagreementorcontract.

TermsattheSaleofaproperty:Therehavebeencomplaintsaboutthirdpartyfinancingarrangementsincludingaprovisiongivingthesolarprovider(theownerofthesolarpanelsinseveraltypesoffinancialarrangements)therighttoapproveanewhomeownerbeforetheleasecouldbetransferredtothenewowner.Severalstateshaveaddressedthissituationintheirproposedlegislation,andtherightsandobligationsatthetimeofthesaleofpropertyareakeydisclosureintherecentlyenactedArizonalaw.

EnforcementandPenalties;CustomerComplaints:Theproposedconsumerprotectionscannotbeeffectiveunlessthoseregulationscanbeenforcedandviolatorspenalized.Enforcementrequiresthatanagencyhavetheauthorityandnecessaryresourcestoinvestigatecomplaints,accessthesolarprovider’srecordsdemonstratingcompliancewiththeunderlyingconsumerprotectionandcontractrequirements,takeactionstorevokelicensesorregistration,andassessfinesorpenaltiestoensurecustomersareprotected.

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CHAPTERI:THEMARKETFORRESIDENTIALSOLARISGROWING,FUELEDBYNEWFINANCINGOPTIONS

TheU.S.residentialsolarmarkethasexperiencedexplosivegrowthinthelastfiveyears.Thisgrowthhasbenefitedfromseveralfactors.First,thecostofsolarpowerpanelshasdroppedsignificantlyinrecentyears.1Second,federalandstatesubsidiesandincentiveshavefurtherloweredthenetcosttoconsumers.Finally,thesolarindustryhasdevelopednewfinancingmethods,includingloans,leasesandpurchasedpoweragreements,thatlowertheinitialcosttoresidentialcustomers.Theresultisthatfinancialinvestorshavesupportedthedevelopmentofsolarpowercompanies,theirmarketingandsalesactivitieshaveexpandedtomanystates,andnewindustryentrantshaveproliferated.

Whenacustomerinstallssolarpanelsontheirroof,theyhaveinstalledatiny

generatingplantforelectricity.Theallureofsolartomanycustomersisnotitsinitialcost,whichissignificant,butthepotentialforthecustomertogenerateelectricityandreducetheamountofelectricitypurchasedfromthelocalutilityandcontributetothe“greener”generationofelectricity.But,thatisonlypartofthecustomerbenefits.Thecustomermaygeneratemoreelectricityundercertaintimesofthedayorundercertainweatherconditionsthanthecustomerneedsandsothis“excess”electricityisflowedbackintotheutility’sdistributionsystemandthecustomerispaidforgeneratingthisexcesselectricity.Fromthesolarcustomer’sperspective,theissueiswhetherthereducedusageandthepaymentsforexcessgeneration(theresultingmonthlyelectricbill)offsettheupfrontandmonthlycostsofthesolarinstallation,whetherpurchasedoutright,throughaloan,orleasedfromthesolarcompany.

Themethodormannerinwhichthecustomerispaidforgeneratingexcess

electricitybytheutilityisreferredtoas“netmetering”orthe“valueofsolar.”Themethodologyforcalculatingthevalueandthepaymentstothecustomerforthisexcesselectricityishighlycontroversialmainlybecausetheutilityisallowedtorecoverthecostsofthebillimpactsassociatedwithsolar(i.e.,reducedusageandpaymentsforexcessgeneration)fromothercustomers.Utilityratesareregulatedbythestatepublicutilitycommissionandautilityisallowedtosetratesthatrecoveritsapprovedrevenuerequirement.Asaresult,thereisagrowingconcernabouttheshiftincoststosupporttheelectricitysystemfromsolarcustomerstonon-solarcustomers.2ThisReportdoesnotaddressthisissue,butratherfocusesontheneedforconsumerprotectionpoliciesandprogramsthataddressthemarketing,sales,andcontracttermsassociatedwithresidentialsolarprojects—whetherinstalledonthecustomer’srooforaspartofacommunitysolarprojectfinancedbyagroupofcustomers.Indeed,severalstatesarereconsideringtheirnetmeteringpolices,andsignificantchangeshaverecentlybeenadoptedbyNevadaandHawaii.Appropriatedisclosuresandaccuratesavingscalculationsareallthemoreimportantforconsumersinthischangingmarketplace.

Thesolarindustryconsistsofthreedistinctmarkets:individualcustomerrooftopsolar;utility-ownedsolarpowergeneratingfacilities;andcommunitysolar.Rooftopsolaris,asthenameimplies,typicallyinstalledonanindividualcustomer’sroof.Utility-owned

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solarpowerfacilitiesarelargerarraysofsolarpanelsthatareinstalledonthegroundandformpartoftheutility’sgenerationmixforallitscustomersandtheprudentcostsforthesefacilitiesareincludedinratespaidbyallcustomers.Communitysolarisusuallyinstalledonthegroundandfinancedbyaprivateorpubliclyownedorganizationtoserveagroupofcustomersinaneighborhoodordefinedgeographicarea.Solarpowerisaformof“distributedgeneration”becauseitisaformofgenerationofelectricitythatcanbelocatedthroughoutthedistributionsystemofanelectricutility,verydifferentfromthemoretraditionallargepowerplantsthathavehistoricallybeenusedtoproduceelectricity.ThisReportdoesnotusetheterm“distributedgeneration”becausethatisagenerictermthatcanincludegenerationresourcesotherthansolar.ForeaseofreferencethisReportusestheterm“solarpower”or“solarenergyfacilitiesorsystems.”

Throughtheendof2014,morethan600,000homesandbusinesseshadinstalledon-sitesolar,typicallyontheroof.Theresidentialmarketgrewbymorethan50%annuallyin2012,2013,and2014—atrendthatsomeexpertspredictwillcontinuefor2015and2016.Thesesystemsgenerateapproximatelyone-thirdofthetotalU.S.solarelectricityproduction.Themarketforresidentialsolarisexpandingrapidlyacrossthecountry.Twenty-onestateshavenowaddedmorethan100MWofsolarPV.Yetthetopfivestatesstillaccountfornearlythree-fourthsofcumulativeU.S.PVinstallations,withapproximatelyhalfofallresidentialsolarinstallationsinCalifornia.3Preliminary2015dataconfirmsthesignificantgrowthinresidentialsolarinstallationsby66%comparedto2014andconstitutes29%oftheentireU.S.solarmarket.Actualactivityremainsconcentratedintenstates.4

Homeownerscancontractwithasolarenergycompanytohaveasolarsystem

installedontheirrooftop(orelsewhereontheirproperty).Thehomeownermaybeofferedaloanorthirdpartyownershiparrangementtolowertheinitialinvestmentcostsofthesystem.Althoughrarejustafewyearsago,72percentofresidentialsolarsystemsinstalledin2014werefinancedthroughathird-partyownershipmodel(i.e.,solarleasingorathird-partypowerpurchaseagreement(PPA))5.Whilethird-partyownershiphasbeenontheriseintheresidentialmarket,someanalystspredictitsgrowthwillslowdownandthatfinancingtrendsmayshiftbacktoloanproducts.6

Dependingonthethirdpartyownershipagreement,thesolarcompanywilloftenbe

responsibleforfinancing,permitting,designing,installing,andmaintainingthesolarsystem.Underthetypicalthirdpartyownershipagreement,thehomeowneralsoassignsanytaxincentives,rebatesorotherincentivestothesolarprovider(thethird-partyowner).Theassumptionisthatthesebenefitshavebeenfactoredintothecontractterms.

Thefollowingfinancialarrangementscanbeofferedtoacustomerinterestedin

rooftopsolar,7butnotallsolarcompaniesofferalltheseoptionsandseveraloftheseoptionsarenotavailableinallStatesduetostatelawsthatmayimpacttheabilityofsolarproviderstooffersomeofthesefinancialoptions,particularleasesandPPAs.

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CustomerOwnershipoftheRooftopSolarSystem:CustomerPurchase:Thehomeownerobtainstheirownfinancing(oftenintheformofahomeequityloan)topurchasethesystemandthereisnoongoingrelationshipbetweenthehomeownerandthesolarcompanyaftertheinstallationofthesystemotherthanpotentialrepairandmaintenanceorwarrantyissues.LoanAgreement:Thehomeownerentersintoaloanagreementwiththesolarcompanytofinancethepurchasepriceofthesystem,thuseliminatingthehomeowner’sobligationtoobtaintheirownloan.Solarcompaniesthatofferthismodelhaveenteredintoagreementswithfinancialinstitutionstosupporttheirloanoffersandthesetermsmaydifferfromwhatthehomeownermightbeabletoobtainindividually.

Third-PartyOwnershipoftheRooftopSolarSystem:

PurchasePowerAgreement(PPA):Thesolarcompanyretainsownershipofthesolarsystemandthehomeownerbuysalloftheelectricityproducedbythesolarsystematanagreed-uponpriceperkWh.Thispricetypicallyrisesoverthetermofthecontract.Thehomeownertypicallyisnotrequiredtoinvestanysignificantcapitalcosts.PPAsareusuallylonger-termcontractswithtermsofupto20years.Lease:Thehomeownerentersintoaleaseagreementandmakespre-establishedmonthlypaymentstothesolarcompany,whoretainsownershipofthesystemforthecontractterm.Ineffect,thehomeownerisrentingthesolarsystemandhastherighttouseallthepowerproducedbyit.Theleasepaymentstypicallyriseyearlyoverthecontracttermandarenottiedtotheoutputofthesystem.Unlessthecontractincludesaperformanceguarantee,thehomeownercouldexperiencehigherorlowerelectricbillsdependingontheelectricaloutputassumedatthetimeofthetransaction.Thefollowingchartsummarizesthedifferentattributesassociatedwithaloan,a

lease,andaPPA:

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PurchasewithLoan Lease PPATypesofLoansincludesecuredandunsecuredsolarloans,homeequityloans,homeequitylineofcreditandPACEloans

Typesofleasesinclude$0downoracustomdownpayment,withmonthlypaymentsthattypicallyescalateeachyear.Optiontopre-pay(functionslikeacashpurchase,withtheleasingcompanyretainingalltaxcreditsandrebates).

Sameaslease

Meetqualifications,suchasminimumcreditscore.

Typicallyaminimumcreditscoreisrequired,butnotalways

Sameaslease

Termsof5-20years;3.5-7.5%interestrates.Somestatesoffersubsidizedloans.Interestonaloanmaybetaxdeductible.

Contractfor20-25yearperiod Sameaslease

Purchaserretainsanyincentivesandtaxcredit.

Leasingcompanyretainsanyincentivesandtaxcredits.

Sameaslease

Homeownerownsthesystemandisresponsibleformaintenance.

Leasingcompanyownsandmaintainssystem.However,consumermayhavesomemaintenanceresponsibilities,suchastreetrimming.

Sameaslease.

Consumermakesloanpayments.Hastherighttouseallofthepowerproducedbythesystem.

Consumerpaysamonthlyleasepaymentinexchangefortherighttouseallofthepowerproducedbythesystem.Ifthesystemproduceslesspowerthanpredicted,thecostwillbehigher.

ConsumeragreestobuythepowergeneratedbythesystematasetpriceperkWh.

Attheendoftheloanperiodtheconsumerownsthesystem.

Attheendoftheleasetheconsumercanbuythesystematthefairmarketvalueorpricespecifiedinthelease;havethecompanyremovethesystemorrenewthelease.Howisfairmarketvaluedetermined?

Sameaslease

Systemtransfersatsaleofhome.

Buyermayhavetoqualifytotakeoverleasepaymentsorsellermayberequiredtopurchasesystembeforesale.

Sameaslease.

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Whetherloan,leaseorPPA,thesearesignificantfinancialoutlaysforaconsumer,potentiallywithtermsthatmaynotbefullyunderstoodby,ornecessarilyfavorableto,thepurchaser.Whilecertainpoliciesrelatingtoresidentialsolar,suchasnetmetering,remaincontroversial,thereisagrowingawarenessoftheneedfordevelopingandimplementingbasicconsumerprotectionpolicesrelatingtothesaleandleasingofsolarsystems.

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CHAPTERII:ITISDIFFICULTTOSHOPANDCOMPARECOSTSFORROOFTOPSOLARANDTHEPROJECTEDIMPACTSONARESIDENTIALCUSTOMERELECTRICBILL

Whenshoppingforarooftopsolarsystem,customersarepresentedwithawidevarietyofoptionsthatincludeoutrightpurchase,apurchasepoweragreement,alease,oraloan.Customersmayhearaboutsolarpoweroptionsdirectlyfrommarketersintheformoftelemarketingsalescalls,door-to-doormarketing,web-basedadvertisements,andrecommendationsfromneighborsandfriends.Whiletheideaofsolarpowerisfairlysimpletoexplain—installsolarpanelsonthehomeowner’sroof--itisnoteasytocomparisonshopforaresidentialrooftopsolarsystem.Whetherpurchasedorleased,theconsumerismakingalong-termfinancialcommitmentwiththeexpectationthatsavingsonutilitybillswilloffsetthemonthlycostofthesystem.Achievingthesesavingsinrealityisdependentonavarietyoffactors—includingcontractterms,federal,state,andlocalsubsidies,theestimatedincreaseinthecustomer’scostofelectricity,andtheperformanceofthesolarpanelsthemselves.Whilesomeorevenallprospectivecustomersmayalsobemotivatedbytheenvironmentalattributesofsolarsystemsandtheirpotentialtodisplacethegreenhousegasorcarbonemissionsassociatedwithmoretraditionalpowerplants,mostconsumersalsoexpectbenefitsintheformofareducedmonthlyelectricbill.Thesavingspotentialforrooftopsolarsystemsisparticularlyimportanttocustomerswhocannotaffordtofinancethepurchaseofthesolarsystemthemselves.

A. SOLARCOMPANYWEBSITESOFTENMAKEGENERICSTATEMENTSANDDONOTEXPLAINMANYDETAILSOFTHEPROPOSEDTRANSACTIONAreviewofsomeofthetopsolarcompanywebsites8revealsthepotentialforconfusionandconfirmsthedifficultyofshoppingandcomparingthevariousoptionsordeterminingtheprojectedsavingsinthecustomer’smonthlyelectricbill.Inalmosteverycase,thesolarcompany’swebsitemakesgenericstatementsaboutelectricbillsavings,butasksthecustomertocalloremail(andthenreceiveasalescall)forapricequote.

• ThesolarcompanyBrite’swebsitepromotesaresidentialcustomerlease

(http://www.britelease.com/).Whiletherearenosampleleasedocumentsavailableonthiswebsite,theCompanyoffersanodownpayment15-yearleasewithaperformanceguaranteeandclaimthatconsumers“startsavingimmediately.”Thesitestatesthatelectricityratesriseanaverageof5to6%annually.Infineprint,thecustomerisinformedthatthereisa2.5%annualescalationinleasepayments.Thewebsitedoesnotincludeanylinkstobrochures,references,oreducationalmaterials.

• SunEdison(www.sunedison.com)onlyofferspurchasepoweragreementsforresidentialsolarinsixstates.Whilethewebsitepromotes“potentialsavings,”therearenoexplicitpromisesorestimatesofsavingsandthe“frequentlyaskedquestions”portionofthewebsitegenerallyidentifiesthecustomerspecificinformationneededtocalculatebenefitsandcosts.Thecompany’ssolarsystemispromotedasalongterminvestmenttoreducetheelectricbill,addvaluetothesaleofthehome,andasanactiontoreducecarbonemissions:

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Idon’tplanonbeinginmyhomefor20years,whywouldIaddsolar?Regardlessofhowlongyou’llbeinyourhomeitalwaysmakessensetogosolarformanyreasons.Financially,youwillbesavingmoneythefirstmonthyougosolarandeverymonthyouareinthehome.You’llalsobeabletosellyourhomeformoreasaresultbecauseitisamoreenergyefficienthome.Lastlyyou’llbereducingyourcarbonfootprintbynotusingthedirtyenergythattheutilitycompaniescurrentlyprovide.Aneffectthatwillnotonlybefeltbyyoubutbyyourchildrenandgrandchildren.Willmysystemincreasethevalueofmyhome?Yes!Theamountdependsonthemarketconditionsatthetimeyousellyourhome,theareaofthecountryyouliveinandtheamountofmoneyyouaresaving.However,mosthomeswillappraiseanywherefrom$5,000-$15,000more.

SunEdison’swebsiteexplainsthattheCompanywillnotchargethecustomeranyupfrontcostsfortheinstallationofthenewsolarsystemandthecustomerwillpayfortheenergythatthesolarsystemgenerates,“ataratetypicallythatislowerthanyouarecurrentlyproviding”(sic).Specifically,“Afterallofthefreeequipment,maintenance,andmonitoring,theonlythingyouhavetopayforwithourPPAisthepoweryoursolarpanelsproduce.Welockinaratethatisusuallylessthanyourlocalutilitycompany’smarketrate—whichmeansyou’refreefromthevolatilityoffuturerateincreases.Plus,ifyouproducemorepowerthanyouuse,weputitbackonthegridandyougetacreditfromyourutilitycompany.Ifyouproducelesspowerthanyouneedyoucanstilluseenergyfromyourenergyprovideratyouragreeduponprice.”

• Sungevity(www.sungevity.com)promotesa“savingsgraph,”thatreliesonaprojected

electricityrateincreasederivedfromnationalaverageelectricityrateincreasedatafrom1993-2013:“Thesooneryougosolar,thesooneryoucansave.”Thiscompanyoffersloans,leases,andaPPA,butdoesnotincludeanyofthesampledocumentsonitswebsite.Whilethereisafineprintdisclaimeraboutthe“estimates”forelectricitypricesandsavings,thepromotionalmaterialpresentsasavingsgraphwithastraightlinethatimpliesthepriceforsolarwillremainconstantfor20years.Yetthereisafineprintdisclaimerthatincludesawiderangeofcustomerleasepaymentsandthefactthatthereisanescalationclauseforthe“fixed”leasepayments:

Systemsize,cost,andavailabilityvaryaccordingtolocation,electricityusage,andutilitycompany.A5kilowattsystemleasestartsat$40-$140permonthfor20yearsonapprovedcredit.Paymenttermsvaryandmayincludefixedpaymentsorescalatingpaymentsatarateof1.5-2.9%annuallyfor20years.Zerodueatleasesigning.Nosecuritydepositrequired.ContactSungevitySalesforafreecopyofourwrittenperformanceguarantee.

• Sunrun’swebsite(www.sunrun.com)prominentlystatesthatitscustomersare“typically

saving20%”andthat“electricityratesareskyrocketing”aswellasthefollowingstatements:“Noneedtobuy.AsolarleaseorPPAcanbeaslittleas$0down.”“AsaSunruncustomeryou’llsave20%ormoredependingonhowhighyourelectricratesare,howmuchsunshineyouget,andfinancialincentives.”“TheaverageU.S.homeownercouldsave$84amonthbygoingsolar.

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Insomestates,it’smorelike$150amonth.”“Over20years,savingscanreach$20,000ormore.”Thewebpagewiththelargeprintreferenceto20%savings,includesanasterisktothefollowingstatement:

*SavingsclaimbasedonaverageSunruncontractsignedbeforeSeptember15,2014,paymentbyautomaticdebit,andanassumedannualutilityrateincreaseof3.5%.Actualsavingswillvary.Savingsdependsonseveralfactors,includingproducttype,systemproduction,geography,weather,shade,electricityusage,andutilitystructuresandrateincreases.Seesunrun.com/save20fordetails.

Sunrunoffersloans,outrightpurchase,leases,PPAs,andaprepaidoption.Thereisno

presentationofthecontractdocumentsonthewebsite.Withregardtochoosingamongthevariousoptions,Sunrunpresentsaseriesofquestionsthatpromotethe“payasyougo”and“norecurringbill”options.WithrespecttothechoicebetweenaleaseorPPA,thereisadisclosurethatthisoptionisdependentonthestatelawatthecustomer’sresidence.Whileseveralstatementsaremadewithregardto“flatmonthlypayments,”thereisnomentionofanypriceescalationincontract.

• SolarCityisthelargestresidentialsolarcompany.Onitswebsite(www.solarcity.com)the

CompanyidentifiestheStatesinwhichitoperatesandofferspurchase,loans,leaseandPPAswithexplanationsofeach.Unlikeothersolarcompanywebsites,SolarCityincludesactualPPAandleasedocumentsavailableforreviewbycustomers.SolarCitypromotessolarprimarilyasameansofreducingcarbonemissions.While“savings”aregenerallypromotedtoprospectivecustomers,theonlyspecificexampleisamentionofasavingsofupto40%ontheentirehomeenergybillwithasolarloan,butingeneralthewebsiteoptionsstatethatpaymentswillbelessthanthemonthlyelectricitybill.Whiletheactualleaseorcontractdocumentsreferenceapaymentescalationrate,thereisnoreferencetothisfeatureonthewebsiteorinpromotionalstatements

• Vivint(www.vivintsolar.com)emphasizespayinglessforelectricityandincludesabargraph

comparingmonthlyelectricbillsversussolarpoweredelectricbillsinHawaii,astatewithhighelectricityratesthatisnottypicalofotherjurisdictions.TheCompanyemphasizesacontractwithazerodownpayment,withafineprintreferenceto“forqualifiedcustomers.”Whilethechartpresentsapurported20yearsavingsestimate,thefineprintsaysthechartisnotbasedonactualsavings.Thewebsitedoesnotincludesamplecontractsoranyexplanationofhowcustomerpaymentsescalateovertime.TheonlypurchaseoptionexplainedonthewebsiteisaPPA(“OurPowerPurchaseAgreement(PPA)isthereasonwecanofferyouanaffordablesolarsolution.Youagreetopayforthepowerourarrayproduces,andweagreetodesign,install,finance,andserviceasolarenergysystemforyourhome.”).TheCompanyalsopromotescustomerquotationsandsavingsexperiencesonitswebsite.

Evenacasualreviewofthesewebsitesconfirmsthatthereareamyriadoffactorsto

considerandweighinacustomer’schoicetoinstallsolarpower.Thereisthepotentialforconsumerstobeconvincedtobuyorleasesystemsunderunfavorableloanorleasetermsthatdonotactuallyproducesavingsatthelevelpromotedinsalesandmarketingmaterials.Asdescribedinoneconsumereducationpiece:“[W]ithsomanysolarfinancingoptionsnowavailable,themarketplacefortheseproductshasbecomeincreasinglycomplex.Itcanbehardtochooseamongthedifferentpackagesandvendors.Thedifferencebetweenthemmaynotbereadilyapparent.Somecontractsarefilledwith

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confusingtechnicaljargon,andkeytermscanbeburiedinthefineprintofacustomercontact.”9B. ITISDIFFICULTFORCUSTOMERSTODETERMINETHEIROVERALLSAVINGSFROMINVESTINGINSOLARPRIORTOENTERINGINTOAPURCHASE,LOAN,LEASEORPPA

Thesalespitchissimpleenough—thecostofinvestinginsolarwillresultinsavingsonthemonthlyelectricbillthatoffset,ormorethanoffset,themonthlypaymentforthesolarsystem.Solarpowersystemsarealsomarketedtoresidentialcustomersasameansofloweringpollutionfromtraditionalpowerplantsandcontributingtothecallforreducingcarbonemissionsandhelpavoidglobalwarming.

Theimpactofarooftopsolarsystemonacustomer’sfutureelectricbillisnotsimple.

EstimatingfutureenergypricesandtheoutputofasolarPVsystemisnecessarilydependentonassumptionsandpredictions,aswellastheveracityandqualificationsofthesolarmarketersandinstallers.Inadditiontotheactuallease,PPAorloanterms,aconsumer’sactualmonthlysavingsinenergybillswilldependsignificantlyontheincreaseinelectricityratesoverthecontractterm,anynetmeteringorvalueofsolartariffprograms,aswellasneworincreasedfixedchargesorothernonbypassablefeesandsurcharges.Anyavailabletaxcredits,rebatesorotherincentivesapplicabletothecustomer’sinstallationwilllowertheoverallcostofthesystem.Propersiting,sizing,installation,andperformanceofthesystemisalsoessentialfortheconsumertoachievethemaximumsavingsattheleastcost.

Toillustratethepointofhowprojectedsavingsvarygivenassumptionsaboutfutureutilityrates,considerthefindingsinanarticleontheMotleyFoolwebsite.InAprilof2014theMotleyFoolobtainedquotesonsolarleasesfromSolarCityforhomesinConnecticutandCalifornia.10TheSolarCityquotesassumedelectricityratesinbothjurisdictionswouldriseatarateof4.8%eachyear.TheMotleyFoolfound:“Ifweusethehistoricalcompound20-yeargrowthrateofelectricity,theConnecticutquotestillresultsinsignificantsavingsovertwodecades,butfarlessthanthe$23,942quotedbySolarCity.TheCaliforniaquotewouldactuallyresultinahighercostofelectricityfromsolarusingthehistoricalaveragegrowthrate.”

AnexamplefromconsumereducationalmaterialsdevelopedbytheAgCenteratLouisianaStateUniversitygivesahypotheticalexampleoftwodifferentfinancingoptions.Comparingthetwooptions,theexampleshowsonescenariowheremonthlypaymentsforsolarwouldbe$16higherthantheinitialmonthlyelectricbill,andanothernettingsavingsof$30permonth.Again,thesavingstoconsumersarehighlydependentontheriseinthepriceofelectricity:“Maintenanceexpensesmaybeincurred,andproductionvarieswithweatherandshadechanges.Electricityratescouldrisemorethanexpected,whichwouldincreasetheannualsavingsfromthesolarpowerproducedandshortenthepaybackperiod.Conversely,ifutilityelectricratesfallorexpensesrise,thereversehappens(savingswouldbelessandthepaybackperiodlengthened).”11

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Gettinganestimateiscrucial,butcomparisonshoppingamongthevariouspurchase

andloanoptionsisdifficult.Itisunderstandablydifficulttogiveconsumersquotesovertheinternet,givenallthefactorsthatmustbeconsideredinsizingandpricingasolarsystem.Manysolarinstallersareeagertogiveconsumersquotesbasedonanactualevaluationofthecustomer’sproperty,butacustomerwouldhavetoobtainsuchinformationfromseveralsolarcompaniesandavarietyofsolarpurchase,loan,orleaseoptionstocomparetheimpactontheirmonthlyelectricbill.Astheexamplesaboveshow,solarprovidersusedifferingestimatesofthefuturepriceincreasesforelectricity—thehighertheestimatedpriceincreases,themorecosteffectivesolarbecomes.Consumersmaynotunderstandthatevenaftergettingavarietyofcostestimatestheymaynotbeabletocomparethemonan“applestoapples”basis,giventhevaryingassumptionsmadebyeachprovider.

Thereareafew“savingscalculators”availabletoconsumersthatarenotdirectlyassociatedwithanysolarcompany.TheCaliforniaEnergyCommissionhaslaunchedtheSolarAdvantageValueEstimator,orSAVE.Thetool“estimatesthepresentvalueofasolarphotovoltaic(PV)system;providingamethodtocalculatetheenergysavingsvalueofasolarsystemincludingtheestimatedvalueinannualenergysavings.TheCaliforniaEnergyCommissiondevelopedSAVEinresponsetoexpressedinterestfromrealestateprofessionals,andotherstakeholders.”12ThecalculatorworksforCaliforniaaddressesonly.Itusesa2%annualescalationinenergyprices.TheNationalRenewableEnergyLabsNRELPVwattscalculator13offersdefaultsettings(unlikeCASAVE)andalsoincludesinformationonallavailablefederalandstateincentives.

Amorecustomer-friendlyoptionthatallowsconsumerstocomparequotesonan

“applestoapples”basisisEnergySage.14ThiswebsitehasthesupportandbackingoftheU.S.DepartmentofEnergy,NewYorkStateEnergyResearch&DevelopmentAuthority,ConnecticutGreenBank,andMassachusettsCleanEnergyCenter.Accordingtothewebsite,“EnergySagegetsyouquotesfrommultiplequalifiedinstallers,calculatestheimportantfinancialmetricsandmakesiteasytocompareyourquotessoyougetagreatdeal!Allatnocost!”EnergySagestatesthatitprescreensinstallersbasedon“reputation,experienceandqualityofservices.”Thewebsitesaysitsstaffwillanswerquestionsand“helpguideyourdecision.”

Yet,eventhebestsavingscalculatorcannotprovideanaccurateestimateofsavings,

becausetherearesimplytoomanyvariables.Theseincludethelocationandconditionofthehome,shade,conditionoftheroof,localrestrictions,sizeofthesystem,escalationofpayments,insurance,taxes,repairs,maintenance,andmore.Additionalconsiderationsincludethecertificationandreputationoftheinstaller,responsibilityformakingrepairs,homeownerassociationrestrictions,andresponsibilityforroofdamage,tonameafew.

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C. FEDERALANDSTATEINCENTIVESIMPACTCUSTOMERPAYMENTSANDSAVINGSFORSOLAR Thistransactionismadeevenmorecomplicatedbytheexistenceoffederal,state,andlocalsubsidiesassociatedwiththeinstallationofrooftopsolarsystems,someofwhicharetemporaryinnatureandcanexpireorbechanged.

Federalsubsidies:Certainresidentialdistributedgenerationinvestments15receiveaninvestmenttaxcredit(ITC)of30%ofeligiblecosts,withnoupperlimit(exceptforfuelcells).Rentalpropertydoesnotqualifyforthetaxcredit.Ataxcreditreducestheamountoftaxesowedbyataxpayeronaone-timebasis.Forexample,ifthevalueoftheITCwere$6,500andthefederaltaxowedwere$6,500,thetaxpayerwouldpaynotaxfortheyear.SinceitwasfirstenactedintheEnergyPolicyActof2005theITChasbeenextendedandexpanded.TheCongressionalResearchServiceestimatesthattherevenuecosttothefederalgovernmentoftheITCwas$500millioninFY2013and$600millioninFY2014.

ThemarketvalueofsolarcompaniesisheavilydependentonthefederalITCbenefit.As

reportedbySEIA,BloombergNewEnergyFinanceestimatedthatiftheITCexpiredinstalledsolarcapacitywoulddecreasebynearly8gigawattsin2017,comparedto2016levels.16Therefore,theCongressionalactionthatadoptedafive-yearextensionoftheITCinlate2015omnibusbudgetlegislationwasasignificantfactorintheclaimsofsolarlobbyrepresentativesthatitwouldallowfora$133billioninnew,privatesectorinvestmentsintheU.S.economyby2020.17ItistypicalunderleaseandPPAagreementsforthethird-partyownertoclaimthevalueofthistaxcredit.Thus,theresidentialcustomerdoesnotdirectlyclaimthetaxcredit,butmustrelyonthesolarprovidertorealizethevalueofthetaxcreditinthetermsofthetransaction.181920

Stateandlocalsubsidiesandincentives:Stateandlocalgovernmentsprovideavarietyoffinancialandpolicyincentivestobothresidentialandcommercialcustomersforsolarinstallations.Financialincentivesaretypicallydefinedasdirectpayments(suchasrebates),taxcredits,andsubsidizedloans.Policyorregulatoryincentivesincludetheapprovednetmeteringpolicyorvalueofsolartariff.Solarinstallationsmayalsobesubjecttolocallicensingandpermittingstandardsandfeesthatcouldimpactthecostofthesystem.

Stateandlocalfinancialincentivescansignificantlyreducecoststoconsumersinstallingsolarsystemsorotherdistributedgeneration.Asearchofanationaldatabaseofrenewableenergyandsolarenergyincentivesandstateregulatorypoliciesforresidentialincentivesrelatedtosolaridentified612stateandlocalprogramsacrossthecountry.21

Accordingtothe50StatesofSolarreport:“Atthestatelevel,thegeneraltrendsarethatsolarrebateincentivesaredecreasing,solartaxincentivesareexpiring,renewableportfoliostandardsarenearingtheir

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targets,netmeteringcapsarebeingreached,andnetmeteringandratedesignareundergoingregulatoryandlegislativereview.”22

Changesinstateandlocalsubsidiesandincentivesforsolarinstallationswillalterthefinancialtermsofthesolarprovider’scontractandleaseoptions,includinginsomeinstancesforexistingcontracts.Sincethevalueofsolartothecustomerisprimarilylinkedtosavingsinenergyexpenditures,theinteractionsamongtheapplicablesubsidiesandincentivepaymentsisnotknowntomostcustomersandgenerallynottransparentinthepaymenttermsofthesolarprovider’scontractdocuments.

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CHAPTERIII:THECASEFORADOPTINGCONSUMERPROTECTIONSFORSOLARPOWERTRANSACTIONS

RecentStateAttorneyGeneralenforcementactivities,Statelegislativereforms,andnationalpublicityhaveheightenedaninterestinunderstandingandconfrontingtheneedforspecificconsumerprotectionpoliciesforresidentialsolartransactions.23

Thereareseveralstateandfederallysponsoredpublicationsandweb-based

resourcesthatattempttoprovideunbiasedconsumereducationalmaterialsaimedathelpingresidentialcustomersunderstandthevarioussolarsystemtransactionsandcomparethevariousfinancialmodels.24Whilevaluable,consumereducationcannotsubstituteforstateoversightincludingspecificdisclosureandcontracttermregulationsgoverningthesecomplexdocuments.ArecentarticlebyanationalmediawebsitedevotedtorenewableandsolarenergydevelopmentssummarizestheseconcernsandinitiativesandhighlightedrecentlegislationadoptedinArizonaandthecallsfromsomeU.S.Congressmentoseekgreateroversight.25

ThisChapterdocumentsthenatureofthecustomerconcerns,StateAttorneyGeneralenforcementactivities,andasummaryoftheCaliforniaandArizonastatutorypoliciestogoverncertainaspectsofresidentialsolartransactions.AppendixAprovidesasummaryofotherproposedstatelegislationtoadoptconsumerprotectionsforcertainsolartransactionsconsideredin2015,butthatwerenotadopted.A. CUSTOMERCOMPLAINTSANDREVIEWS Inlightofthecomplexityofsolarenergycontractterms,thesignificantcoststoconsumers,andthesite-specificnatureofanyanalysisofcostsandbenefitsorimpactsonacustomer’selectricbill,itwouldnotbesurprisingforsomecustomerstofilecomplaints,buttheymaynotknowwheretoturn.CustomersmightfindtheirwaytotheStateAttorneyGeneral’sconsumeroffice,typicallythesectionoftheAttorneyGeneral’sofficethatdealswithunfairtradepracticeissues.OthercustomersmightfileacomplaintwiththelocalBetterBusinessBureau.Severalweb-basedcomplaintorcustomersatisfaction-ratingservicesreportoncustomercomplaintsaboutsolarinstallationandcontractterms. InDecember2013,GreenTechMediapublishedareviewofthetopfivesolarinstallersbasedoncustomercommentsandreviewsmaintainedbyYELP,apopularcustomerreviewwebsite.26ThereviewfocusedoncustomerratingsofSolarCity,VerengoSolar,VivintSolar,RECSolarandSungevityinCalifornia.Asaresultofthereviewofnegativecommentsaboutanyofthesesolarcompanies,theauthorconcluded,“Clearly,upsetcustomersweremostannoyedwithpushysalestacticsandhiddenfeesincontracts.Themostpositivereviewscamefrompeoplewhofeltliketheentireprocesswastransparent.”

Notingthatupto10%ofthetotalcostofthesolarsystemisestimatedtobecustomeracquisitioncosts,theauthornoted,“Reducingthosecostsmeanscrafting

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bettermanagementsoftwareandmoreattractivefinancingoptions,aswellasfindingnewretailoutletsviawhichtoreachconsumers.Butgettingcustomerstoactuallysignacontractrequirestraditionalsalestacticslikedoor-to-doorvisits,phonecallsandadvertising.”Also,theauthor,relyingonhisanecdotalexperience,statedthathehadheardfarmorepositivereviewsabouttheinstallationprocessthannegative,butthat“hardsalestacticsaretheuncomfortablerealityofcustomeracquisition."

AnotherwebsitethatpublishescustomerreviewsandexperienceswithsolarinstallersandsolarcompaniesisConsumerAffairs.27Thiswebsiteinformsviewersthatitacceptscommercialadvertisementsforitswebsite,butstatesthatitdoesnotreflecttheirreviewsorcustomercomments.Whilethereisnointenttosuggestthatthenegativecommentsorcomplaintsreflectedonthisoranyotherwebsiterepresentsastatisticallyvalidindicatororthattherearewidespreadnegativeexperiences,thefactthatnegativecommentsandcomplaintsexistcanprovidearedflagtosuggesttheneedforreforms.ThenegativecommentsaboutsolarinstallersreflectawiderrangeofissuescomparedtothosenotedaboveinthereviewofYELPdatafrom2013dueinparttoitsinclusionofmorerecentsolarmarketingactivitiesinmultiplestates.Inadditiontocommentsaboutpushysalestacticsandlackofclearexplanationofcontracttermsandfees,thesereviewersdescribedclaimsofsavingsontheelectricbillthatdidnotoccur(“IwastoldIwouldbeoffthegrid.”);disputesaboutdamagestotherooforinoperablesystemsthatwerenotrepairedinatimelymanner;delaysininstallation;andmisrepresentationofthetransaction.FromaMassachusettscustomer:

“Backin2013[]notifiedmeandtoldmeIqualifyforsolarpanelsbecauseIwasalowincomefamily.Theyputthesolarpanelson.Ireceivedabillforquitealot.Icalledthem.TheytoldmeIamina20yearcontractonlease.Nobodynevermentionedanyofthistome.TheytoldmeIsignedthepaper.Itwasfineprint.IfeelthatIwastrickedandcoercedintodoingthis.Iwanteveryoneouttheretobeawareofthesepeople.Theyarenothingbutaripoff.SonowIsitherestuckwitha20yearcontractwithanextrabilleachmonth.IfIknewanyofthisupfrontofcourseIwouldn'thavedoneanyofthis.Theyarenothingbutaripoff.Ifyouseethemcomingruntheotherway.”

B. STATEATTORNEYGENERALENFORCEMENTACTIONSANDCIVILSUITS

TheAttorneysGeneralinseveralstateshavetakenactionagainstsolarcompaniesandsolarinstallersusingtheirauthorityunderexistingstatelawsonfraudanddeceptivetradepractices:

• TheAttorneyGeneralofArizonahassettledacriminalcomplaintagainstasolarretailerthatmarketedsolarpanelinstallationspromisingrebatesfromthelocalutilitythatwerenotdeliveredeventhoughtheutilitypaidtheretailertherequiredrebate.Over$1millioninrestitutionwasmadeavailabletocustomers,butthelocalutility’ssolarrebateprogramisnowdefunct.28

• TheAttorneyGeneralofArizonahasalsosettledaconsumerfraudcasefiledagainstasolar

energyinstallerthatmadethousandsoftelemarketingcalls,conductedhighpressuresalespresentations,andsoldproductsthatdidnotresultinthepromisedreductioninenergy

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bills.ManyofthecustomerswhocalledtheAttorneyGeneraltocomplainaboutthissolarproviderhadactuallyexperienceincreasedelectricbillsaftertheinstallationofsolarpanelsduetoequipmentcosts.29

• TheAttorneyGeneralofMassachusettsannouncedasettlementwithSoltasEnergy

Corporationoverallegationsthatitviolatedthestate’sConsumerProtectionandFalseClaimsactsbyfailingtohonoragreementstosellnetmeteringcredits.

• In2014theLouisianaAttorneyGeneralinvestigatedSaderPowerEnterprisesforalleged

violationsoftheLouisianaUnfairTradePracticesActrelatingtoallegationsthatSadermisledconsumersabouttheamountofcostsavingsfromtheuseofsolarequipmentandthecostsofleasingtheequipment.

• A2013classactionlawsuitispendingagainstSunruninaLosAngeles,CASuperiorCourt

thatallegesthatthissolarprovider,oneoftheleadingprovidersofsolarleasesandpowerpurchaseagreements,ismakingfalseclaimsabouttheprojectedriseinelectricityprices.30

Somedisgruntledcustomershavefiledtheirowncivilactionsagainstsolarcompanies.InLouisianaaclassactionwasfiledagainstSaderPower,allegingunfairtradepracticesbypromisingclaimsofsubstantialsavingsoncustomerelectricbills,butsomecustomersendeduppayingmorefortheirmonthlyelectricbillaftergettingsolarpanels.ThislawsuitisstillpendinginU.S.DistrictCourtforEasternDistrictofLouisiana.31 C. LEGISLATIVEINITIATIVES Inmoststates,theAttorneyGeneralhasauthorityoversolarmarketingandsalesactivitiesbycommercialentities,includingsolarproviders,aspartoftheirUnfairTradePracticestatutes.Thesestatutestypicallyapplytoconsumertransactionsgenerallyandprohibitunfairanddeceptivetradepractices.Asindicatedabove,severalAttorneysGeneralhavemadeuseofthisauthoritytoinitiateinvestigationsandbringformalenforcementactionsagainstseveralsolarproviders.However,thesegenericconsumerprotectionstatutesdonottypicallyreflectspecificdisclosureandcontracttermsthatarespecifictosolarsystemmarketingandsalesactivities.Asaresult,severalstateshaveconsidered,butfewhaveadopted,morecomprehensiveregulatoryprogramsthatlinkthetraditionalunfairtradepracticepolicieswithspecificenergyand/orregulatedutilityoversight. Californiaadoptedspecificdisclosureobligationsforsolarprovidersin2008.Thesedisclosures,whileminimal,providesomekeyprotectionsforconsumers:

Anindependentsolarenergyproducercontractingfortheuseorsaleofelectricityortheleaseofasolarenergysystem,toanentityorperson,foruseinaresidenceshallincludeadisclosuretothebuyerorlesseethat,ataminimum,includesallofthefollowing:

• Agoodfaithestimateofthekilowatthourstobedeliveredbythesolarenergysystem.• Aplainlanguageexplanationofthetermsunderwhichthepricingwillbecalculated

overthelifeofthecontractandagoodfaithestimateofthepriceperkilowatthour.

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• Aplainlanguageexplanationofoperationandmaintenanceresponsibilitiesofthecontractparties.

• Aplainlanguageexplanationofthecontractprovisionsregulatingthedispositionortransferofthecontractintheeventofatransferofownershipoftheresidence,aswellasthecostsorpotentialcostsassociatedwiththedispositionortransferofthecontract.

• Aplainlanguageexplanationofthedispositionofthesolarenergysystemattheendofthetermofthecontract.

Further,thisstatuteauthorizesthePublicUtilityCommissiontorequiresolar

energyproviderstoprovideadditionaldisclosurestoabuyerorlesseeasaconditionofreceivingratepayer-fundedincentives.

Thelawalsorequiressolarenergycompaniestorecordanoticewhensolarelectricityproducingequipmentisinstalledonresidentialproperty.Thecodeisquitespecificthatsuchnoticeshallberecorded“againstthetitle”totherealproperty.Thecodealsosaysthatthisnotice“doesnotconstituteatitledefect,lien,orencumbranceagainsttherealproperty”.

Arizonamostrecentlyadoptedlegislationin2015,withthestatutetotakeeffectonJanuary1,2016.32Whiletherearenospecificprovisionsregardingcomplaintsandenforcement,thenewrequirementsamendTitle44(Chapter11,RegulationofParticularBusinesses),asectionofArizona’slawthatisundertheenforcementpowersoftheAttorneyGeneral.

Thenewstatutoryrequirementsincludespecificdisclosuresandcertaincontracttermsforthesale,lease,orfinancingofasolarenergydevicethatisintendedtobeusedprimarilyforon-siteconsumption.Anysuchagreementmust:

a.Besignedanddatedbythepersonbuying,financingorleasingthesystem;b.Beinatleast10-pointtype;c.Includeaprovisiongrantingthebuyerorlesseetherighttorescindtheagreementwithinthreebusinessdaysaftertheagreementissignedandbeforethesystemisinstalled;d.Provideadescription,includingthemakeandmodeloraguaranteeconcerningenergyproductionoutputthatthesystemwouldprovide;e.Separatelysetforththetotalpurchasepriceorcostforthelifeoftheagreement,anyinterestorfeestobepaid,andthetotalnumberofpayments,paymentfrequency,theamountofpaymentandthepaymentduedate,ifthesystemisfinanced;f.Identifypotentialtaxobligations;g.Discloseandseparatelyidentifytaxincentivesandrebatesthebuyermaybeeligibleforandanyconditionsorrequirementstoobtainthesetaxincentives,rebatesorotherincentives;h.Disclosewhetherthewarrantyormaintenanceobligationsmaybesoldortransferredtoathirdparty;i.Discloseandseparatelyacknowledgetheabilitytomodifyortransferownershipofasystemortherealpropertytowhichthesystemisaffixed,includingwhetheranymodificationortransferissubjecttorevieworapprovalbyathirdpartyandincludethecontactinformationoftheentityresponsibleforapprovingormodifyingthetransfer;

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j.Provideasummaryofthetotalcostsofoperating,maintaining,financingandconstructingthesystem;k.Provideanestimateoftheutilitychargesimpactedbypotentialutilityratechangesfromwithinplusorminus5%rangeofanannualincreaseordecreasefromcurrentutilitycostsiftheagreementcontainsanestimateofutilitychargeswiththeinstallationofasystem;andl.Includeadisclosurestatingutilityrates,structuresandprojectedsavingsaresubjecttochangeandtaxincentivesmaychangeorbeterminatedbyexecutive,legislativeorregulatoryaction.Thenewlawexemptsanindividualorcompany,actingthroughitsofficers,

employeesoragents,thatmarkets,sells,solicits,negotiatesorentersintoanagreementforthesale,financingorleaseofasystemaspartofatransactioninvolvingthesaleortransferofrealpropertytowhichthesystemisorwillbeaffixed.Finally,thestatutespecifiesthatanyagreementcontainingblankspaceswhensignedbythebuyerorlesseeisvoidableuntilthesystemisinstalled.

InadditiontothelegislationadoptedinArizonaandCalifornia,consumerprotectionlegislationrelatingtoresidentialsolarsystemswasintroduced,butnotadopted,inseveralstatesduringlegislativesessionsendingin2015includingIndiana33,Washington34,Louisiana35,andNevada.36Theselegislativeproposalsvariedindetailandspecificprovisions,butallincludeddisclosures,authorityforalicense,orregistrationwithagencyoversightandenforcement.AsummaryoftheselegislativeproposalsisincludedinAppendixAtothisReport.

D. STATEANDFEDERALGUIDANCEONENVIRONMENTALCLAIMS

Mostsolarprovidersmarkettheirproductsas“green”or“renewable”andmostconsumersbelievesolarisenvironmentallyfriendly,yetinactuality,theseclaimsmaynotbecompletelyaccurate.Questionsrelatingtohowsolarprovidersmarkettheirsolarsystemsbyclaimingrenewableor“green”energyattributeshasbeenaddressedbytheFederalTradeCommissionandinabulletinrecentlyissuedbytheVermontAttorneyGeneralentitled“GuidanceforThird-PartySolarProjects.”37Solarprovidersshouldnotclaimthattheirproductwillgivethecustomer“renewable”or“green”electricitysimplybecausethesolarpowergeneratedbythesystemhasvalueasaRenewableEnergyCertificate(REC).ARECisacertificatethatprovesthattheholderhasgeneratedorhaspurchasedelectricitywithcertainrenewableattributes.RECscanbeboughtandsoldinprivateandpublicmarketsandRECsareimportantattributestoensurecompliancewithstaterenewableenergymandatesandrequirements.However,unlesstheRECisspecificallyassociatedwithsolarenergy(which,insomestatesisregisteredasa“SolarREC”),theuseofaRECthatmayhaveattributesforrenewableenergyotherthansolarenergyshouldbecarefullydescribed.

TheVermontguidanceclearlystatesthatsolarproviders,includingcommunitysolarproviders,cannotpromoteprojectsasclean,renewableenergyifthesolarproviders

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retainandthenselltherenewableenergycredits.Thatpracticeisknownas“doublecounting”theRECs,anditisdeceptive,accordingtothisGuidance.

E. PROPOSALSFORINDUSTRYSELF-REGULATIONAREINSUFFICIENTFORCONSUMERPROTECTION Tradeassociationsforcompaniesintheresidentialsolarelectricindustrytypicallyopposetheadoptionoflegislationorregulationsthatwouldimposespecificconsumerprotectionrequirements.Ratherthansubmittogovernmentregulation,tradeassociationsoftenpromoteindustryself-regulationasasubstitute.

Forexample,inapendingproceedingbeforetheNewYorkPublicServiceCommissiontoadoptcertainregistrationandconsumerprotectionrequirementsonsomeDistributedEnergyResource(DER)providers,theSolarEnergyIndustriesAssociation(SEIA)submittedcommentsinopposition:

Asthenationaltradeassociationforsolarenergythathasbeenworkingacrosstheleadershipoftheindustrytobuildaself-regulatoryframework,theSolarEnergyIndustriesAssociation(SEIA)stronglyencouragesthatNewYorkallowSEIAandthesolarindustrytoself-regulate,ratherthansubjecttheNewYorksolarindustrytowell-intentionedbutpotentiallycostlyregulations.Asawhole,theSEIASolarBusinessCode(Code)adoptedbySEIA’sBoardofDirectorsandpublishedSeptember14,2015,providesahigherlevelofconsumerprotectionthantherulesproposedbyPSCStaff(Staff)inthisMatter.38

SEIAhasadoptedaCodeofEthics,aswellasModelLeaseandPurchaseAgreementsdevelopedbytheNationalRenewableEnergyLaboratory.Mostrecently,SEIAhaspublishedaSEIASolarBusinessCodethatconsistsofTheCodeconsistsoffivesections:GuidingPrinciples;Unfair,Deceptive,orAbusiveActsorPractices(UDAAP);Advertising;SalesandMarketingInteractions;andContracts.39

SEIAanditsmembersadoptedtheCodewithoutpublicinputorparticipationand,asa

privateorganization,couldnotpossiblydosoinanycase.Thesefactssupportthepropositionthatany“regulations”or“codeofconduct”applicabletoretailsolarprovidersshouldbeundertakenbyagovernmentalagencywithnoticeandopportunityforallpartiesandinterestedpersonstoparticipateandhaveinput.SEIA’sCodedoesnotreflecttheinputforconsumerrepresentativesandgovernmentalagencieswiththenecessaryexpertise.

Theself-regulationofthisemergingconsumermarketisnotanadequatesubstitutefor

meaningfulandenforceablelawsandregulations.Theattemptatself-regulationbySEIAisatestamentthatthereisaneedforoversightofstandardsandenforcement.TheSEIAcode,whilerecognizingtheneedforsomeuniformityinstandardsanddisclosures,isneithersufficientnorcomprehensive.WhilemanyoftheprovisionsoftheCodewouldbebeneficialtoconsumers,theCodeisnotasufficientsubstitutebecauseitisvoluntaryandunenforceableinanypublicprocessthatwouldincludefinesorordersforrestitution.Finally,aprivatemembershiporganizationisunabletorequirenon-memberstocomplywithitsproposed

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policiesandanymemberthatobjectedtoanyprovisionoftheCodeoranyattemptto“enforce”theCodecouldandlikelywouldseveritstiestotheorganization.

AppendixBisamoredetailedcritiqueoftheSEIACode.

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CHAPTERIV:RECOMMENDATIONSFORCONSUMERPROTECTIONPOLICIESANDMANDATESFORRESIDENTIALSOLARTRANSACTIONS

ThisChapterrecommendsstatelawand/orregulationstogoverntheretailsalesofsolarpowertoresidentialcustomersforinstallationonacustomer’sresidence,typicallyonthecustomer’sroof.ChapterVaddressescertainuniquefeaturesassociatedwithcommunitysolarprograms,butitisintendedthatthedisclosureandoversightpoliciesrecommendedinthisChaptershouldalsobeconsideredforcommunitysolarprograms.Nosellerofgoodsandservicesshouldcommitunfairtradepractices,makedeceptivedisclosures,ormisrepresenttheproductorserviceinmarketingandsalesactivities.Theseproposalsarespecifictosolarleaseandsaletransactions,withspecificdisclosuresandcontractualprovisionsthatflowfromthelongstandingconsumerprotectionpoliciesthathavegovernedretailsalesofproductsandservicestoresidentialcustomers.Inaddition,theserecommendationsareintendedtocomplementexistingstateandfederalconsumerprotectionlawsandregulationsthatapplytotelemarketingsalescallsanddoor-to-doormarketingtoresidentialcustomers,aswellasfederalfinancialtransactionlawsanddisclosuresthatapplytoloansissuedbyregulatedfinancialinstitutions.Theserecommendationsalsodonottakeprecedenceoverexistingstateorlocalhomeconstructionandrepairregulationsthatmaybeapplicabletotheinstallationforsolaronacustomer’shome.

TheproposedpoliciesinthisReportareorganizedinthefollowingtopics:

A. RegistrationorLicensing;StateAgencyAuthority

B. Disclosures:ACustomerTemplate

C. ContractProvisions

E. SalesandMarketingConduct

E. EnforcementandPenalties;CustomerComplaints

A. REGISTRATIONANDLICENSING

Apersonshallnotsell,leaseorinstallarooftopsolarsystemoracommunitysolarsystemorsellelectricitygeneratedbysuchsystemsunlessthepersonhasregisteredwiththeCommissionbysubmittingaformasprescribedbytheCommission.

1.TheCommissionshalladoptregulations:

(a)RequiringaregistrationformsubmittedtotheCommissiontoinclude:

(1)thename,streetaddress,mailingaddress,electronicmailaddressandtelephonenumberoftheregistrant;

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(2)thenameandcontactinformationofanyregisteredagentoranypersondesignatedbytheregistranttoreceivenoticesandothercommunicationsfromtheCommission;

(3)thename,address,andtitleofeachofficerordirector;

(4)ifthecompanyispubliclytraded,thecompany'smostrecentannualreportfiledwiththeUnitedStatessecuritiesandexchangecommission;

(5)ifthecompanyisnotpubliclytraded,thecompany'scurrentbalancesheet;

(6)thecompany'slatestannualreport,ifany;

(7)astatementdescribingeachactivitydescribedinthischapter/sectioninwhichtheregistrantintendstoengage;

(8)astatementdescribingeachjurisdictionwheretheregistrantoritsaffiliateoperates;

(9)astatementdescribingthemanagerialandtechnicalqualificationsoftheregistrant;and

(10)anyotherinformationrequiredbytheCommission;

(b)RequiringaregistranttosubmittotheCommission:

(1)Anexampleofeachconsumercontractandagreementforthesale,loan,lease,orpurchaseagreementinwhichtheregistranthasindicatedheorsheintendstoengage;and

(2)Anupdatedexampleoftheagreementifapreviouslysubmittedexampleisnolongerreasonablyaccurateoriftheregistrantintendstoengageinanactivitydescribedinthischapter/sectionforwhichtheregistranthasnotyetsubmittedanexampleofanagreement;

(c)RequiringaregistranttosubmittotheCommissionanamendedregistrationformifanyinformationprovidedtotheCommissiononaregistrationformorapreviouslysubmittedamendedregistrationformisnolongercorrect;and

(d)Providingthetimeperiodwithinwhichanupdatedexampledescribedaboveoranamendedregistrationformmustbesubmitted.

2.Thecommissionmayrejectanapplicationthatdoesnotcontainallinformationrequiredbythissectionorbycommissionrule.

3.Thecommissionmusttakeactiontoapproveordenyanyapplicationforregistrationwithin_______daysafterreceivingtheapplication.Thecommissionmayapprovesuchapplicationwithorwithoutahearing.Thecommissionmaydenysuchapplicationaftera

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hearingwhenitfindsthatthecompanyoritsregisteredagenthasviolatedthischapterortherulesofthecommission,orthecompanyoritsregisteredagenthasbeenfoundbyacourtorgovernmentalagencytohaveviolatedthelawsofastateortheUnitedStates.

4.Thecommissionmaychargeaone-timeapplicationfeetorecoverthecostofprocessingapplicationsforregistrationunderthissection.

5.Thecommissionshalladoptrulestoestablishthecompanies'responsibilitiesforrespondingtocustomercomplaintsanddisputes.

6.Thecommissionshalladoptannualreportingrequirements.

7.Thesolarpowercompanymustkeepitscustomerrecords,includingcustomercontractsandagreements,availableforinspectionbythecommissionforfiveyears;

8.Thesolarpowercompanymustcooperatewithcommissioninvestigationsofcustomercomplaints;

7.Thecommissionmayconductinvestigationsandmaysuspendorrevokearegistration,and/orimposefeeorpenaltiesuponcomplaintbyanyinterestedparty,includingthestateutilityconsumeradvocate,oruponthecommission'sownmotionafternoticeandopportunityforhearing,whenitfindsthattheregisteredcompanyoritsagenthasviolatedthischapter,therulesofthecommission,orthecompanyoritsregisteredagenthasbeenfoundbyacourtorgovernmentalagencytohaveviolatedthelawsofastateortheUnited

States.

B. DISCLOSURES

Asolarprovidershallaccuratelyandcompletelydescribetheproposedtransactioninitsmarketingmaterialsandtermsofserviceandshallnotincludeanypromisesorsuggestionsofbenefitsthatarenototherwiseincludedinthecontractualtermsandconditions.Asolarprovidershallbeheldtocomplywithitsdisclosuresifthereisanyconflictwiththeunderlyingcontractualtermsandconditions.

ThecommissionshalldevelopamodelConsumerDisclosureTemplatethatisprovidedinaseparatedocumentofatleast12pointtypeandthatmustbeusedbylicensed(or

DISCUSSION:Consumerprotectionsarenoteffectiveunlessagovernmentalagencyhastheauthoritytoinvestigatecomplaintsandtakeactionagainstbadactors,andsuchenforcementcannotoccurwithoutregistrationorlicensing.Regulatorsshouldknowhowtocontactauthorizedrepresentatives,investigatethebackgroundofabusiness,andtakeactionagainstaproviderforviolationsofstatelawsandregulations.ThisReportrecommendsthepublicutilitycommissionasthemostlikelyfocusforoversightandenforcement,butrecognizesthatanalternativeagencyorarrangementcouldbeappropriatelyidentified.

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registered,whereapplicable)solarprovidersthatwillinclude,ataminimum,thefollowinginformation,andseparatelysignedanddatedbythepersonbuying,financing,orleasingthesolarenergysystem:

1. Theexpectedamountofelectricitythatwillbeproducedbythesolarenergysystem.Thebuyerorlesseeshallbeprovidedwithagoodfaithestimateofthenumberofkilowatthoursthatwillbedeliveredbythesolarelectricsystemonamonthlyandannualbasis,togetherwithadescriptionofthewarrantiesandlimitations,ifany,affectingtheestimate.

2. Totheextentthatthesolarproviderhaspromotedthesale,lease,orfinancingforacustomer’ssolarsystemasameanstosaveorlowerthecustomer’selectricitybill,theprovidershallincludethemethodologyandestimatedresultoftheproposedtransactiononthecustomer’selectricitybill,usingamethodologyforestimatingthefuturepriceofelectricitythatisapprovedbythecommission.Suchanestimateshallbeprovidedforthelengthofthefinancialtransaction.

3. Allofthecostsassociatedwithinstallingthesolarenergysystemincludingbutnotlimitedtoanytaxesthebuyerorlesseewillberequiredtopayaspartofanypurchaseorleaseagreement.

4. Agoodfaithestimateoftheimpactoftheinstallationofthesolarenergysystemonthevalueofthehomeaswellasagoodfaithestimateofanyapplicablepropertytaxes,suchestimatestobebasedonadisclosedmethodologyordata.

5. Thevalueofallfederal,state,andlocaltaxcredits,electricutilityratecredits,RenewableEnergyCredits,incentives,orrebatesthatthebuyerorlesseemayreceiveorsignover,ifapplicable.

6. Agoodfaithestimateofeachfinancialbenefitthebuyerorlesseewillreceiveorwaiveuponsigninganagreement,includingtaxcredits,electricutilityratecredits,incentives,subsidies,orrebatesandinformationregardingtheallocationofresponsibilityforpaymentsifandwheneachofthesefinancialbenefitsexpiresorismodified.

7. Theexpectedrateofcompensationforanyelectricityproducedbythesolarpowersystemandsoldtothecustomer’selectricutility,includingthecurrentreimbursementrateoftheelectricutilityatthetimeofsigningacontract,withadisclaimerthatthecurrentreimbursementrateissubjecttochange.

8. Ifretailnetmeteringorasimilartariffisinplaceatthetimeofthesaleorlease,anoticeinformingthebuyerorlesseethatadditionalchargesfordistribution,transmission,orstand-bygenerationmaybeimposedinthefutureifapprovedbythecommission,orbychangestostatelaw.

9. Thefullextentofpaymentsandinterestratesortheescalationofpaymentsoverthelifeofthesaleorleaseagreement.

10. Agoodfaithestimateoftheanticipatedvalueofanyassetsthatremainwithalesseeattheendoftheleaseagreementifapplicable.

11. Informationonthepotentialfireandotherhomesafetyrisksofasolarelectricsystem,andanexplanationofhowoperationsofthesolarelectricsystemcould

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affecthomeappliancesandequipmentintheeventthatthesystemisoperatingwithoutbackuporsupportfromtheutilitygrid.

12. Informationonwhetherthesaleorleaseagreementinsuresthesolarpowersystemagainstdamageorlossandunderwhatcircumstancesthecompanydoesnotinsureorcoverdamagesorlossofthesystem.

13. Astatementthatthebuyerorlesseeshoulddeterminewhetherhomeownerinsurancerateswillbeaffectedbytheinstallationofthesolarpowersystem.

14. Astatementthatthebuyerorlesseeshoulddeterminewhetherahomeowner’sassociationhasanyrestrictionsontheinstallationofasolarpowersystem.

15. Adisclosureonwhethertheleaseagreementprotectsagainstanydamageorlosstothelessee’srealandpersonalpropertyandhowtheinstallationofthesolarpowersystemmayimpacthomeinsuranceagreementsandratesandotherwarranties.

16. Astatementthattherearecostsfortheremovalortemporaryremovalofasolarelectricsystemincaseofroofrepairorreplacementduetoweather,wearandtear,orotherevents.Thebuyerorlesseeshallbegiveninformationonthecoststhecompanywillcoverandwillnotcoverintheeventtheroofneedsmaintenanceand,inthecaseofaleaseagreement,whetherthelesseeisrequiredtomakeanyleaseagreementpaymentsduringthetimethesolarelectricsystemisinoperableduetoroofmaintenance.

17. Informationexplainingthetermsoftheleaseagreementincasesofinoperabilityduetoproductmalfunctionsordefects.

18. Thecoststothebuyerorlesseeofanyadditionalmeteringequipmentorequipmentusedtoconnectthesolarpowersystemtothehomeorgrid,includinginstallation,removal,ormaintenanceandcleaningareaafterconstruction,installation,andremoval.

19. Astatementofthecompany’spolicyontheuseofcustomerdataasitrelatestoelectricityusage,production,andpersonalinformationandwhethersuchinformationisorcouldbesharedwithanyadditionalparties,withtheconditionsandmethodsofsuchsharingidentified.

20. Informationregardingthechangeintermsofleaseagreementintheeventofthesaleofthehomeorintheeventofthedeathofthelessee,andwhetherandunder

whatcircumstancestheleaseistransfer-able.

DISCUSSION:Thelegislation(orregulation)shouldnotmerelylisttheitemsthatmustbedisclosedtothecustomerbecausesuchadirectivemayresultinincludingthedisclosurerequirementsinamulti-pagecontract,typicallywritteninfineprintandwithtechnicaltermsandjargon.SimilartotheproposalforaConsumerTemplateinonelegislativeproposal,theregulatorycommissionshoulddevelopamodelCustomerDisclosureTemplateandrequiresolarenergyproviderstousethemodelthatisprovidedtoallprospectivecustomersandwouldbeavailableforeachfinancialmodelorproductofferedbythesolarenergyproviderasadvertisedontheprovider’swebsite.ThisModelwouldnotregulatethefinancialcontentsofthesolarprovider’soffer,butwouldrequireallsolarprovidersmarketingtoresidentialcustomerstousethesametermsanddefinitionsandmaketheiroffersinamannerthatallowsacomparisonofimpactsonthecustomer’selectricitybillsandobligationsundertheapplicablefinancialarrangement.WhereactualcustomerspecificinformationisrequiredtocompletetheTemplate,thecustomershouldreceiveadocumentthatreflectstheirspecificanalysisandinformation.Wherethisinformationisnotavailable,theprovidershouldberequiredtouseactualaveragecustomerusageandinstallationspecificationsfromtheutility’sserviceterritoryforpublicdisseminationwiththe

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C. CONTRACTTERMS

Anagreementgoverningthefinancing,saleorleaseofasolarenergysystemtoanypersonofthisstatemust:

1. Besignedbythepersonbuying,financingorleasingthesolarenergysystemandmustbedated.AnyDisclosureStatementorcontractualagreementthatcontainsblankspacesaffectingthetiming,valueorobligationsoftheagreementinamaterialmannerwhensignedbythebuyerorlesseeisvoidableattheoptionofthebuyerorlesseeuntilthesolarenergysystemisinstalled.

2. Beinatleast12pointtype.3. Includeaprovisiongrantingthebuyerorlesseetherighttorescindthefinancing,

saleorleaseagreementforaperiodofnotlessthanthreebusinessdaysafterthebuyerorlesseesignstheagreementandbeforethesolarenergysystemisinstalled.

4. Provideadescription,includingthemakeandmodelofthesolarenergysystem’smajorcomponentsoraguaranteeconcerningenergyproductionoutputthatthesolarenergysystembeingsoldorleasedwillprovideoverthelifeoftheagreement.

5. Separatelysetforththefollowingterms,ifapplicable:a. Thetotalpurchasepriceortotalcosttothebuyerorlesseeunderthe

agreementforthesolarenergysystemoverthelifeoftheagreement;b. Anyinterest,installationfee,documentpreparationfees,servicefeeorother

coststobepaidbythebuyerorlesseeofthesolarpowersystem;c. Ifthesolarpowersystemisbeingfinancedorleased,thetotalnumberof

payments,thepaymentfrequency,theamountofthepaymentexpressedindollars,andthepaymentduedate.

6. Provideadisclosureinthesaleandfinancingagreements,totheextenttheyareusedbythesellerormarketerindeterminingthepurchasepriceoftheagreement,identifyingallcurrenttaxincentivesandrebatesorotherstateorfederalincentivesforwhichthebuyermaybeeligibleandanyconditionsorrequirementspursuanttotheagreementtoobtainthesetaxincentives,rebatesorotherincentives.

7. Identifythetaxobligationsthatthebuyerorlesseemayberequiredtopayasaresultofbuying,financing,orleasingthesolarpowersystem,including:

a. Theassessedvalueandpropertytaxassessmentsassociatedwiththesolarpowersystemcalculatedintheyeartheagreementissigned;

b. Anyobligationofthebuyerorlesseetotransfertaxcreditsortaxincentivesofthesolarpowersystemtoanyotherperson.

8. Disclosethetermsofanywarrantyandwhetherthewarrantyofmaintenanceobligationsrelatedtothesolarpowersystemmaybesoldortransferredtoathirdparty.

9. Includeadisclosure,thereceiptofwhichshallbeseparatelyacknowledgedbythebuyerorlessee,ifatransferofthesale,leaseorfinancingagreementcontainsanyrestrictionspursuanttotheagreementonthelessee’sorbuyer’sabilitytomodifyor

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transferownershipofasolarpowersystem,includingwhetheranymodificationortransferissubjecttorevieworapprovalbyathirdparty.Ifthemodificationortransferofthesolarpowersystemissubjecttorevieworapprovalbyathirdparty,theagreementmustidentifythename,addressandtelephonenumberof,andprovideforupdatinganychangein,theentityresponsibleforapprovingthemodificationortransfer.

10. Includeadisclosure,thereceiptofwhichshallbeseparatelyacknowledgedbythebuyerorlessee,ifamodificationortransferofownershipoftherealpropertytowhichthesolarpowersystemisorwillbeaffixedcontainsanyrestrictionspursuanttotheagreementonthelessee’sorbuyer’sabilitytomodifyortransferownershipoftherealpropertytowhichthesolarpowersystemisinstalledoraffixed,includingwhetheranymodificationortransferissubjecttorevieworapprovalbyathirdparty.Ifthemodificationortransferoftherealpropertytowhichthesolarpowersystemisaffixedorinstalledissubjecttorevieworapprovalbyathirdparty,theagreementmustidentifythename,addressandtelephonenumber,andprovideforupdatinganychangein,theentityresponsibleforapprovethemodificationortransfer.

11. Provideafullandaccuratesummaryofthetotalcostsundertheagreementformaintainingandoperatingthesolarpowersystemoverthelifeofthesolarpowersystem,includingfinancing,maintenanceandconstructioncostsrelatedtothesolarpowersystem.

12. Iftheagreementcontainsanestimateofthebuyer’sorlessee’sfutureutilitychargesbasedonprojectedutilityratesaftertheinstallationofasolargenerationsystem,provideanestimateofthebuyer’sorlessee’sestimatedutilitychargesduringthesameperiodasimpactedbypotentialutilityratechangesrangingfromatleastafivepercentannualdecreasestoatleastafivepercentannualincreasefromcurrentutilitycosts.Thecomparativeestimatesmustbecalculatedbasedonthesameutilityrates.

13. Includeadisclosure,inatleast12pointtype,thereceiptofwhichshallbeseparatelyacknowledgedbythebuyerorlessee,thatstates:Utilityratesandotherfederal,state,orlocaltaxsubsidiesaresubjecttochange.Thesechangescannotbeaccuratelypredicted.Projectedsavingsfromyoursolarpowersystemarethereforesubjecttochange.Taxincentivesaresubjecttochangeorterminationbyexecutive,legislativeorregulatoryaction.

14. Ifapplicable,includeadisclosureregardingtheratethebuyerorlesseecanexpecttobecompensatedforanyelectricityproducedbytheirsolarpowersystemandsoldtotheelectricutility.Thedisclosure,inatleast12pointtype,thereceiptofwhichshallbeseparatelyacknowledgedbythebuyerorlessee,shallprovideinformationtothebuyerorlesseeaboutthecurrentreimbursementrateofthebuyerorlessee’selectricutilityatthetimeofsigningtheagreement.Thedisclosureshallalsocontainadisclaimerthatthecurrentreimbursementrateissubjecttochange.Ifretailnetmeteringisinplaceatthetimeofthe

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purchase,thesolarcompanyshallinformthesolaruserthatadditionalchargesfordistribution,transmission,orstand-bygenerationmaybeimposedattherequestoftheutility,byruleofthecommission,orbychangestostatelaw.

15. Anagreementforthefinancing,saleorleaseofasolarpowersystemthatdoesnotcomplywiththerequirementsofsubsection1orthatisnotaccompaniedbythestatementrequiredbysubsection2isvoidableattheoptionofthepersonbuyingorleasingthesystemuntiltheinstallationofthesystembegins.

16. Ifapplicable,adisclosuresimilartothefollowing:Thisagreementlimitsyourrighttobringacourtcaseorfileaclassactiontoenforcethisagreementorseekdamages.Instead,youagreetosubmitanyclaimstoanarbitratorwhowillhavetheauthoritytointerpretthisagreementanddecideanyclaimsyoumayhave.40

TermsofSolarContractRelatedtoSaleofaHome

1. Intheeventthatrealpropertysubjecttoasolarpowersystemconsumercontractissold,theremainderoftheconsumercontractmustbeassumedbythebuyerifamemorandumhasbeenrecordedreflectingtheessentialtermsoftheconsumercontract,unlessthesellerand

buyeragreeotherwise.Ifthebuyerofsuchpropertyassumesaconsumercontractthebuyercontinuestoqualifyforallapplicableincentives.

2. Thirtydayspriortoclosing,thesellerofthepropertyshallnotifyanyutilityandsolarpowercompanyaffectedbytheconsumercontractthatthebuyerisassumingthecontract,orthatthebuyerandsellerhaveagreedotherwise.

3. Withinsevendaysoftheseller'snotice,theutilityandsolarpowercompanyshallprovidethedocumentationoftheproceduresnecessaryforassumptionoftheconsumer

DISCUSSION:Standardizingcontracttermsanddisclosuresdonotinanywayregulateorlimitthepricechargedforasolarlease,PPAorsale.AsshownbytheAttorneyGeneralenforcementactions,andstatelegislation,thereisarecognizedneedtoprovideconsumerswithclear,understandabledisclosuresthatallowthemtomakemeaningfulcomparisonsamongoffersandtofullyunderstandthetermsofthefinancialtransaction.Solarprovidersshouldnotmakeclaimsofsavingsonwebsitesoranysuchclaimsof“average”savingsshouldbeconspicuouslyidentifiedwiththebasisfortheclaimandallowcustomerstoaccessorreviewthedatathatsupportssuchclaims.Claimsofcustomersavingsontheelectricbillshouldreflectautilityspecificprofilebecausesavingsaresocloselyrelatedtoaspecificutility’sratesandapplicablenetmeteringorsolartariffpolicy.Consumersshouldbeabletoaccessthisinformationbyinputtingtheirzipcodeontheprovider’swebsite.

Inaddition,consumersshouldbeinformedinaconspicuousmannerthattheirfutureandpredictedsavingsorcostforelectricityissubjecttochangebytheutilitycommissionorstatelegislature.

Withregardtothedisclosureconcerningtheobligationtosubmitclaimstoanarbitrationprocess,alineofU.S.courtcaseshaveheldthatthe1926FederalArbitrationActpreemptsstatelegislationthatmayattempttoprohibitsuchcontractualprovisions.

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contractbythebuyer,or,intheeventthatthebuyerisnotassumingthecontract,forterminationoftheconsumercontractandremovaloftherenewableenergysystem.

4. Attheendoftheconsumercontracttermorintheeventofanyearlierterminationoftheconsumercontract,theownerofthesolarpowersystem,whetheritisautilityorasolarpowercompany,isresponsiblefortheremovalofthesolarpowersystemfromthepropertyandmayrecoverthecostthereofonlyasspecifiedintheconsumercontractandnotedintherecordedmemorandum.Theowneroftherenewableenergysystemmayonlyobtaindamagesfortheprematureterminationofaconsumercontracttotheextentthattheamountofthedamagesisspecifiedasliquidateddamagesintheconsumercontract.

5. Renewableenergysystemconsumercontractsmaynotgrantutilitiesorsolarpowercompaniesanyauthoritytoapproveordisapproveofthetransferofrealpropertyassociatedwithsuchaconsumercontract.

6. Theownerofasolarpowersystemshallguaranteesufficientfundstoproperlydisposeofthesystemattheendoftheconsumercontract.

7. Theownerofasolarpowersystemmustremovetherenewableenergysystemfromthepropertywithintwenty-onedaysofawrittenrequestofthepropertyowner.Theownerofasolarpowersystemisresponsibleforidentifyinghazardousandcommerciallyvaluablematerialscontainedinthesolarpowersystemandhowthosematerialswillbeproperlydisposedoforreclaimed.Theownermustprovidethisinformationtothe

commissionuponrequest.

PrivacyofCustomerInformation

1. Solarprovidersshallkeepconfidentialcustomerspecificorprivateinformationrelatingtothecustomer’selectricityusage,financialsituation,credithistory,andotherresidence-specificinformationobtainedtoimplementtheproposedtransaction.Suchcustomerspecificinformationobtainedfromthecustomerorthecustomer’selectricutilityshallnotbeusedortransmittedtoanyentity,includingaffiliates,foranypurposeotherthantoimplementthecustomer’stransactionwithoutthecustomer’saffirmativeconsent.

DISCUSSION:TherehavebeencomplaintsaboutleaseandPPAcontractsincludingaprovisiongivingthesolarprovider(theownerofthesolarpanels)therighttoapproveanewhomeownerbeforetheleasecouldbetransferredtothenewowner.Severalstateshaveaddressedthissituationintheirproposedlegislation,andtherightsandobligationsatthetimeofthesaleofpropertyareakeydisclosureintheArizonalaw.

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D. SALESANDMARKETINGCONDUCT

1. Solarpowercompaniesshallensurethatallsales,marketingandadvertising,whetheroral,writtenorelectronic,areaccurate,easilyunderstandableandbasedonfactsandincompliancewithstateandfederallawsandregulations.Solarpowercompaniesshall(1)accuratelydescribethecustomer’sfinancialobligationsundertheproposedtransactioninitssalespresentationsandmarketingmaterialsbasedonitsunderlyingformalcontractorleasingdocuments;and(2)ensurethatitsmarketingandsalesstatementsandpromisesconformtotheformalandwrittentermsandconditions.

2. Solarpowercompaniesareresponsiblefortheactionsoftheiremployees,agentsandanyotherthirdpartyrepresentativesandshallensuretheycomplywiththerequirementsofthissection.Solarpowercompaniesshalldocumenttheirinternaltrainingandmonitoringprogramsapplicabletotheirsalesagents,whetheremployeesorthirdpartyagents,andmakesuchrecordsavailabletothelicensingorregulatoryauthorityuponrequest.

3. Solarpowercompaniesshouldnotrefertosolarpoweras“free”inoralorwrittenmarketingorsalesdiscussionsunlesstheConsumerwillnotpayanythingforthesolarsystemortheenergyitgenerates.

4. Ifadvertisedpricesincludeinitialpricingreductionsorfutureincreases,allmaterialtermsofsuchinitialreductionsorfutureincreasesshallbedisclosedwhensuchpricesaremarketedorotherwisecommunicatedtoConsumers.

5. Publicstatements,includingthoseonwebsitesorinprintmaterial,thatdescribesolarenergyas“clean”or“renewable”aredeceptiveiftheRenewableEnergyCreditsaresoldandthereisnoadequatedisclosureaboutit.Disclosuresmustbeproximatetothepromotionofsolarenergy.

6. Whereapplicable,solarprovidersshallbesubjecttotheregistrationandapplicablerequirementsofthe[StateDoortoDoorand/orTelemarketingSalesActs].

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DISCUSSION:Similartoregulationsontheretailsaleofelectricity,consumerprotectionregulationapplicabletoretailsolarprovidersshouldexplicitlyprohibitmisleadinganddeceptivesalesandmarketingstatementsandreferencethestate’sspecificunfairtradepracticeorgeneralconsumerprotectionlaw.Asellercannotmisrepresentthenatureoftheformalagreementorusestatementsthataredirectlycontradictedbytheformalagreementorcontract.Forexample,retailsellersofelectricgenerationsupplycannotadvertisethattheirgenerationsupplywillsavecustomersontheelectricitybillandthenbillthecustomerbasedonavariableormonthtomonthpricethatmightcomplywiththefineprinttermsofthecontract,butthatresultsinsignificantincreasesinthecustomer’smonthlyelectricbill.Asimilarexampleexistswithpromotingsolarenergytransactions.Solarprovidersshouldnotoffer“free”electricityoreven“freesunpower”becausethatisnotwhatisreflectedinthetransaction.

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E. ENFORCEMENTANDPENALTIES;CUSTOMERCOMPLAINTS

1.ThecommissionshallinvestigateanycomplaintreceivedagainstasolarpowercompanyrelatedtoaviolationofthisChapter.If,afterinvestigatingsuchcomplaint,thecommissionfindstherehasbeenaviolationofthisChapter,thecommission,afternoticeandhearing,mayimposeanadministrativepenaltyagainstthesolarcompany.ThecommissionshallpromulgaterulesandregulationstodeterminetheappropriatepenaltiesforviolationsoftheprovisionsofthisChapter.

2.NothingintheChapterisintendedtoprecludetheauthorityoftheAttorneyGeneraltoinvestigateandenforcestateconsumerprotectionlawspursuanttothatoffice’sjurisdiction.

3. AsolarprovidershallmaintainrecordsofcompliancewiththerequirementsofthisAct,includingdisclosurestatements,contractterms,trainingandoversightofitsagents,customercomplaints,andcustomernoticesandcontractcommunicationsforaperiodofthreeyearsorthelengthofthecontractterm,whereapplicable.

4. Inordertoproperlyallowcustomerstocommunicatequestionsandcomplaints,thesolarprovidershallmaintainreasonableandadequatecustomerservicefacilities,atollfreetelephonenumber,andsufficientstaffingtohandleincomingcustomercommunications,ameanstoobtainadditionalstaffingintheeventofanemergency,andsufficientlytrainedpersonneltoensurethattheservicerepresentativecanprovideinformationaboutthecustomer’sspecifictransactionandassociatedissuesrelatingtotheimplementationofthattransaction,withaccesstomanagerialorsupervisoryassistanceas

needed.

DISCUSSION:Theproposedconsumerprotectionscannotbeeffectiveunlesstheregulationscanbeenforcedandviolatorspenalized.Enforcementrequiresthatanagencycaninvestigatecomplaints,thesolarprovidershouldberequiredtomaintainrecordsdemonstratingcompliancewiththeunderlyingconsumerprotectionandcontractrequirements,includingevidenceofaffirmativecustomerconsentandenrollment,receiptofdisclosuresbythecustomer,customercomplaints,complaintsnotresolved,andbusinessrecordsassociatedwiththeseactivitiesforaminimumtimeperiod,typicallythreeyearsfromthedateofthetransactionforenrollmentsanddisclosuresandarollingthreeyearperiodforcustomercomplaints.

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CHAPTERV:COMMUNITYSOLARPROJECTS:ADDITIONALCONSUMERPROTECTIONS

Communitysolarprojects42aretypicallylessexpensiveperoutputofenergythan

individualsolarinstallations,dueinparttotheirinstallationontheground,andtheassociatedeconomiesofscaleincreatingalargersolararray.Acommunitysolarprojectalsoenablestheoptionofmakingsolarpoweravailabletoabroadergroupofresidentialcustomers,includinglowerincomehouseholds,rentersandthosewithhomesthatareinappropriateforasolarinstallation(duetolocation,typeofroof,shade,etc.).Acommunitysolarprojectisalargerversionoftheindividualrooftopsolarinthatitisessentiallyasmallelectricgeneratingplantlocatedinthedistributionsystem.

Communitysolarsystemscanbeowneddirectlyandentirelybytheutility,ownedby

theutilityinpartnershipwithathirdpartyservingaspecificrole(e.g.,projectdeveloper,customerinterface),orownedbyathirdparty.Thethirdpartycouldbeaprofit-makingsolarprovideroranon-profitlocalcommunityagencyororganization.Acommunitysolarsystemcouldbepromotedbythelocalutilitypursuanttotariffsorotherdirectivesofthestatepublicutilitycommissionorpromotedbyasolarproviderwhomayseekthenecessarylandunderaleasingarrangementandthensolicitindividualcustomerstoparticipateintheproject.

Acommunitysolarprojectiscomposedofthreedistinctactivities:First,agroupof

participantsvoluntarilypayforasubscription(ordirectownership)ofaportionofacommunitysolarsystemthatislocatedoff-site.Second,theelectricityproducedbythesystemflowsdirectlyintotheelectricgrid.Third,inexchangefortheirsubscription,theparticipantsreceiveanagreeduponcompensation(e.g.,acreditontheelectricbill)fortheelectricproductionoftheirportionofthecommunitysolarsystem.

AccordingtotheSolarElectricPowerAssociation(SEPA),13statesplustheDistrictof

Columbiahaveenactedcommunitysolarlegislation.Eachstatepolicyvaries,particularlyinscaleandreimbursementrate,butthefoundationforeachistheenablementofbillcreditsforcustomersparticipatingincommunitysolarprograms.43TheSEPAreportanalyzed68communitysolarprojectsinoperationacrossthecountry.About80percentoftheseprojectsareunder1megawatt(MW).About73percentoftheorganizationsrespondingtoSEPA’scommunitysolarsurveychargesubscribersanupfrontfeetobuyintoaproject;butassolarcostshavedropped,sohaveupfrontfees,from$5perWattin2011to$3perwattin2015.AccordingtoSEPA’sReport,“Initialmarketresearchshowsthatconsumersareinterestedincommunitysolar,butarelookingforprogramswithflexiblecommitments--suchasshort-termcontractsandtransferability.Somewouldalsoprefertheprojectsbelocatedatremotelocationswheretheydon’thavetoseethem.”

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The

marketing,sales,contract,anddisclosurerequirementsrecommendedinChapterIVshouldalsobeadoptedforcommunitysolarprojects.Thereareseveralaspectstocommunitysolarprogramsthatraiseconsumerprotectionissuesandconcerns,someofwhichareuniquetocommunitysolarandothersofwhicharesimilar

totheoffersforrooftopsolarsystems.ThisChapterdescribestheuniquefeaturesforcommunitysolarandrecommendsadditionalconsumerprotectionpoliciesthatshouldbeadoptedfortheseprograms.

UtilityandCommissionOversight.Severalstatecommunitysolarprogramsthrust

thelocalutilityandthepublicutilitycommissiondirectlyintotheoversightandapprovaloftheseprograms.Insomecases,thesizeandscopeoftheprograms(intermsofthesizeoftheutilityarrayandnumberofparticipantsorsubscribers)arerestrictedorlimitedtopilotprograms.Inmostcases,theseprogramscomewithastatutorymandatetodevelopspecificconsumerprotectionorregulatoryoversightregulations.Ineithercase,therearegroundsfordirectoversightandregulationbytheregulatorycommission.

CommunitySolarMarketingActivities.Whetherornotthecommissionhasbeen

requiredtoconductcommunitysolarpilots,thepotentialformarketingabuseandtheneedforoversightofprivatemarketersisparticularlyimportant.Whenasolarproviderismarketingtoobtainsubscribers,itmayseektomarketitsprojectviatelemarketingordoor-to-doorsalesactivities,promotingasolaroptionatalowercostthanforindividualrooftopsolarsystems.Itwillbeveryimportanttoensurethatmarketingclaimsandlegalagreementsareproperlyandaccuratelydisclosedandthatconsumersareprotectedagainstmisleadinganddeceptiveclaimsabouttheimpactofsubscribershipontheirmonthlyelectricbill.Thisconcernisparticularlyimportantforprojectsthataredesignedtosolicitlowerincomeanddisadvantagedcustomerstoenrollinacommunitysolarprogram,thusintendingtomakesuchanoptionmoreaffordablecomparedtorooftopsolarsystems,manyofwhicharenotavailabletocustomerswithouta

AmongthecasestudiesevaluatedintheSEPAreportarethefollowing:XcelEnergyhascommunitysolarprojectstotalingalmost20MWinits

Coloradoserviceterritory.Xcel’sSolar*RewardsCommunityprojectsareconstructedandownedentirelybyprivatesolarcompanies.Theseprojectshaveenjoyedrapidgrowthandareusuallyfullysubscribedwithin6monthsofcomingonline.Xcelselectsitsfor-profitpartnersthroughacompetitivebiddingprocessandpaysthemsubsidiestiedtotheamountofelectricitygenerated.Earlyintheprogram,participantspaidanupfrontfeebasedontheirsubscriptionsize,howeverfinancingisnowavailabletomostsubscribers.

In2015,GrandValleyPower(GVP)partneredwithGRIDAlternatives

(GRID)tobuilda24kWCSG.Thesystemwasdedicatedspecificallytolow-incomecustomersinGVP’sserviceterritoryandisoperatedandmanagedbyGRID.GRID,anonprofit,promotesaCSmodelthatinvolvescombiningequipmentdonationsfromsolarmanufacturers,financialcontributionsfromvarioussources,andlaborfromjobtrainingprogramsandvolunteers.Subscriberstotheprogrampaynoup-frontfeeandreceiveanongoingcreditfortheproductionoftheirshareoftheCSG,thoughthereisa2centperkWhfeetohelpdefraymanagementcosts.Subscribersparticipateinfour-yearcycles.Aftereachcycle,theycanre-qualifyfortheprogram,oriftheynolongerqualify—forexample,iftheirincomehasrisenaboveprogramlimits—theirsharecanbeassignedtoanotherlow-incomeparticipant.

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specificcreditscoreorcredithistory.Inaddition,communitysolarsystemsareoftentoutedasapotentialmeanstoenrollcustomerswhodonotowntheirhomesinsolarpowersystems.

TheSEPAReportidentifiedseveralkeyissuesforbothregulatorsandconsumersto

understandandconsiderwithregardtocommunitysolarprojects:CustomerOffer.Thisreferstothepaymentforparticipation--typicallyeitheran

upfrontpaymentofallcostsoranongoingpremiumpaymentappliedtotheelectricityproducedbythecustomer'sshareofthesystem.Financingmaybeofferedforupfrontpayments.OftheactivecommunitysolarprogramsstudiedbySEPA,73%haveanupfrontpaymentcustomeroffer,17%haveanongoingpayment,and10%allowcustomerchoiceamongthetwooptions.

ValuePropositiontoSubscribers.Thisreferstothefinancialvaluethesubscriber

receivesinreturnforparticipatinginthecommunitysolarproject,eitherabillcredit(71%ofthosereviewedintheSEPAReport),oraseparatelineitempaymentontheelectricbill(29%).Thebillcreditreducesthesubscribers’kWhconsumptionbythekWhproducedbytheirshareoftheproject.Aseparatelineitempaymentisarateuniquetothecommunitysolarprojectthatisbasedonavoidedcostsinavalueofsolartariff,netmetering,oranotheraccountingmethod,andwouldbeappliedtoallkWhproducedbythesubscriber’sshareoftheoutput.Theutility’sadministrativecosts,particularlybillingsystemcosts,areafactorindesigningbothoftheserates.

Sign-upFee:Theprojectmaychoosetochargeasign-upfeethatcanbeusedto

guaranteeasubscriber’ssharebeforetheprojectisactuallygeneratingelectricity.OftheprojectsstudiedbySEPAthatcurrentlyhavefees,thefeesrangefrom$50toseveralhundreddollars.Whenupfrontpaymentisrequested,ahighersignupfeemaybechargedtoreserveashare,andthencreditedtowardtheupfrontpayment.Forprojectswithongoingpayments,sign-upfeesmayprotectagainsttheriskofasubscriberleavingbeforetheminimumterm.

RenewableEnergyCreditTreatment:Renewableenergycredits(RECs)maybe

availableforthecommunitysolarproject.RECshavevalue,therefore,adecisionmustbemadeastowhowillownthecreditsandwhatwillbedonewiththem.SEPAdescribestwooptions:Inthefirstoption,theowneroftheenergycanmaintainownershipoftheREC.Inthiscase,itisthenuptotheownerwhethertheyretiretheRECtomeetacompliancerequirementoriftheysellitonthemarket.ThesecondoptionisthattheRECcanbetiedtotheenergyproductionandtransferredtothecustomer.44

ProposedConsumerProtectionPoliciesforCommunitySolarProjects.Severalstateshaveadopted,orareconsidering,consumerprotectionsthataredirectlyapplicabletocommunitysolarprojects.ThisReportrecommendsthattheproposedconsumerprotectionpoliciesreflectedintheMarylandandMinnesotapublicadvocateproposalsbeadopted:

Marylandadoptedalawin2015creatingapilotprogramforcommunitysolarprojects.TheMarylandlawrequiresthecommunitysolartobeinthesameelectricserviceterritoryasitssubscribers,butathirdpartymayfinance,build,own,oroperateacommunitysolarproject.Electricutilitiesmustbuythevirtualnetexcessgeneration,uptospecifiedlimits.TheMarylandlawcreatesathree-yearpilotprogramthatallowsfortheconstructionofcommunity

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solarprojectsundertheauthorityoftheMarylandPublicServiceCommission.TheCommissionmustadoptregulationsimplementingthepilotprogramnolaterthanMay15,2016,andthethree-yearprogramwillstartfollowingruleadoption.KeyissuestoresolveinthePSCrulemakingareconsumerprotectionmeasures—atariffstructureunderwhichanelectriccompanyprovideskilowatt-hourorvaluecreditstothecommunitysolarsubscriber;virtualnetmeteringcalculation;protocolsforcommunicationamongthepertinentparties;andinterconnectionprotocols.Underthepilotprogram,individualsystemsizesarecappedat2megawattsand200kilowattsubscriptionscannotconstitutemorethan60percentofitssubscriptions.Thecumulativenameplatecapacityunderthepilotprogramcountstowardtheexistingstatutorylimitationof1,500megawattsforallnetmeteringprojectsinthestate.TheCommissionisrequiredtolimitthepilotprogramwithincertainparameterssothatitcanconducta“meaningful”(asrequired)analysisoftheprogramanditsresults.ThelawrequirestheCommissiontoinitiateastakeholderworkgroupthatexaminesandidentifiesthecostsandbenefitsoftheprogramandrecommendswhethertoestablishapermanentcommunitysolarprogram.TheCommissionwillthenreportitsfindingsandrecommendationstotheMarylandlegislaturebyJuly1,2019.45

TheMarylandOfficeofPeople’sCounselhasproposedspecificissuesthatshouldbe

reflectedintheforthcomingconsumerprotectionanddesignregulationsforthesepilotprograms.46Specifically,thisOfficehasrecommended:

SignUpandDepositLimits:Thesign-upcostsanddepositrequirementthatdevelopersimposeonsubscribersinterestedinparticipatingandreservingaportionofCSEGSmustbelimitedtoareasonableamount.SomeprotectionmustexisttopreventdevelopersfromcollectingdepositsfrominterestedcustomersandneverbuildingtheCSEGS.Onepotentialsolutiontothiswouldberequiringsubscriberdepositstoenteratypeof“escrow”accountwhichwouldtransferapercentageofthefundstothedeveloperonlyaftertheCSEGSbecomesoperational.Thisapproachcould;however,limitdevelopers’abilitytoeffectivelyfinancesystems,sosomebalancewouldhavetobestruck.

TheNeedforContractRegulation:Forsomeextremelyimportantconsumerprotectionissues,simplyrequiringdisclosuretothesubscribersisinsufficient.Iftheissuehasbeenidentifiedasakeyprotectionclause,itshouldbemandatedbytheCommissionaspartoftheprogram,ratherthanjustbeingarequireddisclosure.Thiswillpreventunscrupulousdevelopersfromtakingadvantageofunder-educatedsubscribers,poisoningthecommunitysolarprogram,andpotentiallydampeningtheentiresolarindustryandmarket.

Listofsuggestedprogrammaticrules:

• Noyearlypriceescalationpast2%embeddedintocontract.• Notransferfeesifcustomermoveswithinserviceterritory.• Projectionsofcostsavingsmustincludeascenarioof0%increaseinelectricrates.• Nofeeforadownsizingallocationwithinfirstsixmonthsupto20%ofsubscribed

blocks.• Nofeetodownsizebyatmost5%eachyearthereafter.

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SubscriptionTransferability:Subscribersshouldbeabletotransfertheirsubscriptionbacktothesubscriberorganizationsonamonthlybasis,butmayincurapenaltytodoso.ShouldaCSEGSbeundersubscribed,theportionofthecapacitythatisnotsubscribedshouldbecreditedatthecommodityrateuntilnewsubscriberscanbefound.

Downsizing:Thereshouldbeprovisionsallowingsubscriberstodownsizetheirsubscriptionsize.Forexample,regulationscouldprovidesubscriberswitharighttodownsizetheirsubscriptionsizebyatmost20%withoutpenaltywithinthefirstsixmonthsofsigningup,5%thereafter,inaccordancewiththeminimumownershippercentages,shares,orcapacityestablishedbythesubscriberorganization.Thispreventsapotentialdisincentiveforsubscriberstoconserveenergyafterjoiningtheprogram,whileincentivizingsubscriberorganizationstoprovideexcellentcustomerserviceandmaintaincompetitivecostsasmorecommunitysolaroptionsbecomeavailabletoconsumers.

Minnesotahasimplementedacommunitysolarprogramcalled“solargardens”inwhichcertainconsumerprotectionissueshavebeenspecificallyconsidered.Inthisproceeding,XcelEnergysubmittedaproposedtarifftoimplementcommunitysolarprojects.TheOfficeofAttorneyGeneral—AntitrustandUtilitiesDivisionraisedsignificantissueswithregardtothelackofspecificinformationontheutility’sproposedtariffandmaderecommendationstoreformtheproposalpriortoanyCommissionapproval.47ThecommentssubmittedbytheMinnesotaAttorneyGeneralproposedthattheCommissionadoptconsumerprotectionsforsolargardensubscribers,relyingontheCommission’sobligationthatthesolargardenprogramisinthepublicinterestandtoensurethatconsumersareprovidedwithfullandfairdisclosuresoffuturecostsandbenefits.

AsdescribedbytheAttorneyGeneral’sComments,Xcel’sproposedtariffwaslackingin

keyinformation,includingwhatcustomersmightberequiredtopayforsolargardensubscriptions,whethercustomerswouldpayanyfeeinalumpsumorinsubscriptions,thedurationofcustomersubscriptions,thetransferabilityofanycustomersubscriptions,orthemethodsthatsolargardendeveloperswouldberequiredtousetoestimatetheoutputofthesystem.ReferringtoinformationfromXcel’scommunitysolardevelopersinColorado,“SolargardendevelopersinXcel’sColoradoserviceterritoryestimatethat,inexchangeforthe$3,700up-frontcost,subscriberswillreceivebillcreditsofapproximately$270peryearperkilowatt,concludingthatcustomerswouldnotrecovertheirinitialinvestmentformorethan13yearsaftertheprojectbecomesoperational.48AmongtherecommendationsbytheAttorneyGeneralarethefollowingconsumerprotectionpolicies:

• RequireregistrationorcertificationbeforetheCommunitySolarProjectqualifiesfor

incentives.Thisshouldincludebasicinformationabouttheownership,site,andthefinancialandtechnicalabilitytomanageaproject.

• Contractsbetweentheutilityandtheprojectdevelopermustbeapprovedbythecommission;

• Consumershouldreceivecomplete,credibleandaccuratedisclosures,includinginformationonthecosts(includingfinancingcosts)andbenefitsofaparticularprojectpriortosigningacontract;

• Consumersshouldbeabletorecoveranypaymentsmadeforsubscriptionsintheeventthattheirlifecircumstanceschange;

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• TheCommissionshouldreviewmaterialsusedbycommunitysolarmarketerstopromotetheirprojecttocustomers;

• Consumersmustbeinformedofthetimeperioditwilltaketorecoveranyinitialpaymentspriortoobtaininganycustomersignature;

• Astandardcontractordisclosureformshouldberequiredforallcommunitysolarprojects;

• TheCommissionshouldestablishastandardizedmethodusedtodeterminehowtheprojectwillestimateprojectoutput;

• TheCommissionshouldestablishastandardizedmethodtoprojectfutureelectricitypricesorimpactsoncustomerbillsduringthelifetimeoftheprojectand/orthecustomer’ssubscriptionobligation.

IntheOrderapprovingtheSolarGardentariff,49theCommissionrejectedtheAttorney

General’swarrantyorperformancerecommendationonthegroundsthatitmightimpedethecreationandfinancingofsolargardensattheearlystageoftheirdevelopment.TheCommissionrejectedtheAttorneyGeneral’srecommendationsonreviewingsolargardencontractsandmarketingmaterials,anddevelopinguniformstandardsforsolargardenproductionestimates,againconcludingthatsuchrequirementswouldburdensolargardenoperatorsatthestartoftheprogram.Withregardtodisclosures,theCommissionrequiredXcel’scontractwiththesolargardenoperatortoprovidesubscriber-specificdisclosuresonfuturecostsandbenefits,proofofinsurance,andproofofalong-termmaintenanceplan.TheCommissiondidrequiresolargardenoperatorstoobtainopinionlettersonthelegalandtaxbenefitsofparticipationintheprogram.TheCommissionagreedthatcustomersubscriptionsshouldbetransferablebacktothesolargardenoperator.Finally,theCommissionadoptedtheAttorneyGeneral’ssuggestionsaboutdataprivacyandstrengthenedsubscriberprivacyprotections.

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APPENDIXA:SUMMARYOFSTATEPROPOSEDLEGISLATION(2014-2015)

Thelegislativeproposalssummarizedherewerenotadopted.Indiana:HB1320wouldhaveallowedthirdpartyownershipandincluded

requirementsregardingsafetyandinterconnectionandamendedthestate’sdeceptivetradepracticesacttorequireconsumerdisclosuresrelatedtodistributedgenerationorsolarpowersystems.TheStateAttorneyGeneralwouldhavehadauthoritytoreceivecomplaintsandenforcethenewlaw.Requireddisclosuresincludedestimatesoftheenergyoutputofthesystem,allfinancialtermsincludingpriceescalations,disclosureofallstateandfederalsubsidiesandincentives,andcleardelineationofresponsibilityfortheequipmentatthetimeahomeissold. Washington:HB1912coveredvariousaspectsofdistributedgenerationincludingstatetaxcredits,incentives,solarmodulerecycling,andrequiringanindependentconsultanttoprepareatwo-phase"SmartPlanforaSmartGrid"study.Withregardtoconsumerprotectionprovisions,thebillwouldhavepermittedthirdpartyownershipandprovidedaregulatoryframeworkforthirdpartyownersofdistributedgeneration.ThelegislationproposedtoempowertheWashingtonUtilitiesandTransportationCommissionwithjurisdictionovernon-raterelatedconsumerprotections,whileretainingthecurrentjurisdictionpursuanttothestate’sunfairtradepracticestatuteimplementedbytheAttorneyGeneral.Third-partyvendorsandaffiliatesofanelectricutilitymustregisterwiththecommission,disclosetermsofservice,andcooperatewithcommissioninvestigationsofconsumercomplaints.Thisincludesrequirementstoprovide,onaseparatepageinconspicuousprint,certaintermsaddressingarbitrationorwaivingtherighttojoinaclassaction,andtofilewiththecommissionortheAttorneyGeneralcopiesofjudgmentsorarbitrationdecisionsinactionsallegingviolationofconsumerprotections.Thecommissionisgrantedregulatoryauthorityoverconsumerprotections.50Certainminimumdisclosuresareenumeratedinthelegislation.

OneofthemoreinnovativeprovisionsofthebillwasarequirementforthedevelopmentofaConsumerTemplatethatwouldthenberequiredtobeusedbythirdpartysolarcompanies.Thetemplatemustincludetermsdeemednecessaryforaconsumertounderstandthebusinessdeal,suchasperformanceguarantees,respectiverightsoftheparties,andthefinancialpaybackofthesystem.

(1)Anyinstallationcompany,competitiveelectricserviceprovider,orelectricutilityprovidingarenewableenergysystemeligibleforanincentivepaymentundersection5ofthisactmustprovidetheentityapplyingundersection5(1)ofthisactauniformstatementofessentialterms.TheuniformstatementmustbeinaformatestablishedbytheWashingtonStateUniversityextensionenergyprogram,whichmustconsultwiththeattorneygeneral,theutilitiesandtransportationcommission,andrepresentativesofutilitiesinestablishingtheuniformstatement.

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(2)Theuniformstatementmustbeprovidedpriortoexecutionoftheconsumercontractandmustbesignedbythecustomer.

(3)Theuniformstatementmustincludeinformationregardingtherespectiverightsandresponsibilitiesofallpartiesinvolved,andincludesuchtermsasreasonablynecessaryforthecustomertounderstandandmakeaninformeddecisiontoentertheconsumercontract.Suchinformationmustincludethefollowing:

(a)Informationaboutthesystem'sperformance,suchasamonthlyorannualproductionperformanceguaranteeorrangeofperformanceandsystemsizeandcapacity;

(b)Customercosts,includingtheamountofanydownpaymentrequired,periodicpayments,orcostperkilowatt-hourofelectricityproduced,andanybuilt-inescalationratesorscheduleofpaymentamounts;

(c)Lengthofcontracttermandtotalexpenditureorrangeofexpenditures,ortheeffectiveannualinterestrateoverthetermoftheagreement;and

(d)Thecustomer'srightsandresponsibilitieswhensellingarenewableenergysystemaspartofasaleofrealproperty,includingresponsibilityforsystemremovalcosts,disposalofthesystem,andanyremainingperiodicpayments.

Most importantly, the proposed bill included specific languagewith regard to theoversight and enforcement powers of the commission, including its ability to resolvecustomer complaints and conduct enforcement actions and assess penalties. The thirdpartyentitiessubjecttothisjurisdictionwerealsorequiredtocooperateininvestigations,handling of customer complaints, and maintain records of their sales and financialactivities for five years. These entities were also required to ensure that its customercontractsmeetthedisclosurerequirementsofthecommission’srules.

Withregardtocontracttermsthatmaylimitthecustomer’srighttoobtainaremedybycourtorclassaction,theentity“mustprovidethesetermsonaseparatecontractpageinboldandconspicuousprintandrequirethecustomertoseparatelysignacknowledgmentoftheterms.”And,theseentities“maynotincludeinaconsumercontractaprovisionthatlimitsaconsumer'sabilitytoseekdamages.Aprovisionlimitingdamagesisvoidasagainstpublicpolicy.”

Louisianaalsoconsideredspecificlegislationgoverningsolarpowertransactions,butdidnotenactanyfinallanguage.ThisbillauthorizedthePublicServiceCommissiontopromulgaterulesandregulationstogoverntheregistrationofsolarcompanieswiththecommission,toconductinvestigations,imposefeesandpenalties,andtakeactionsnecessarytoassureproperimplementationoftheconsumerprotectionprovisionsofproposedlaw.Theproposalprovidesforcertaindisclosurestobemadebyasolarcompanytoasolaruser.Thesedisclosuresincluderegulatory,financial,safetyandinformationregardinguseofcustomerinformationandinsurancecoverage.ThebillrequiredtheCommissiontoinvestigateanycomplaintreceivedagainstasolarcompanyrelatedtoa

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violationofproposedlaw,andif,afterinvestigatingsuchcomplaint,theCommissionfindstherehasbeenaviolation,thecommission,afternoticeandhearing,mayimposeanadministrativepenaltyagainstthesolarcompany.TheCommissionwasauthorizedtopromulgaterulesandregulationstodeterminetheappropriatepenaltiesforviolationsofproposedlaw,butsuchregulationswouldnotprecludetheconsumer’srighttofileacivilsuitfordamagesorcriminalchargesintheappropriatestateorfederalcourt.Thebillexplicitlyoutlawedthetypicalmandatoryarbitrationclauseforsolarpurchaseorleaseagreementsandstatedthattheinvocationofarbitrationshallbevoluntaryatthediscretionofthesolaruser.

Thelegislationproposeddisclosuresconsistentwiththoseproposedinotherstates,includingfinancialtermsandanyavailablestateorfederalincentives.TheLouisianaproposalalsorequiredsafetyandmaintenancedisclosures,suchasresponsibilityfordamagetotheequipmentortheroof;insurance;andastatementthatrooftopsolarpanelscouldlimitaccessbyafiredepartment.

Nevada:A.B.330proposedtorequiresolarproviderstoprovidewiththesaleorinstallationanexpress,writtenwarrantyforthesystemwhichmustprovidecoverageforbothpartsandlabor.Thesellerorinstalleralsomustprovidewiththesaleorinstallationadescriptionofthewarranty,adescriptionofanyresponsibilityassumedordisclaimedbythesellerorinstaller,andperformancedataforthesystem.Thebillproposedtherequirementsforanyagreementforthefinancing,saleorleaseofadistributedgenerationsystemorforthepurchaseofelectricitygeneratedbyadistributedgenerationsystem.Theagreement,whichmustbeinwriting,wouldhavetomakedisclosuresregarding:themanufacturer,sellerandinstallerofthesystem;thecostandfinancialdetailsofthepurchaseorleaseandthecostofoperatingandmaintainingthesystem;anytaxincentivesrelatingtothepurchaseorleaseofthesystemorthepurchaseofelectricity;andanyrestrictionsorobligationsimposedbytheagreement.Thesellerorlessorofasystemorthesellerofelectricityalsomustprovidewrittenstatementsregardingutilityratesandattestingtothetruthfulnessandcompletenessoftheagreement.Anysuchagreementisvoidableattheoptionofthepersonpurchasingorleasingthesystem,orpurchasingelectricitygeneratedbythesystem,untiltheinstallationofthesystem.Withregardtothecontentsoftheagreement,thebillrequiredthatitincludeanestimateofthecostofelectricityforthepurchaserorlesseeafterthesystemisinstalled.ThebillalsoincludedaregistrationrequirementthroughtheNevadaOfficeofEnergy.Violationsoftheprovisionsofthisbillwouldconstitutedeceptivetradepractices.

Ofnote,ifacontractreferencedthepriceofelectricityprovidedbyapublicutility,thelegislationrequiredaseparate,writtenstatementinatleast12-pointfont,stating:

Utilityratesandutilityratestructuresaresubjecttochange.Foradditionalinformationregardingutilityratesandutilityratestructures,youmaycontactyourlocalpublicutilityorthePublicUtilitiesCommissionofNevada.

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APPENDIXB:CRITIQUEOFTHESEIABUSINESSCODEFORSOLARTRANSACTIONSASASUBSTITUTEFORSTATEREGULATORYOVERSIGHTANDSTANDARDS

ThefollowingsummarizesthekeyprovisionsoftheSEIACodeandprovidesCommentsthatidentifypotentialshortcomingsparticularlyascomparedtotheproposedconsumerprotectionstandardsrecommendedinChaptersIVandVofthisReport:

Unfair,Deceptive,orAbusiveActsorPractices(UDAAP).TheCoderequiresmembersto“regularlyexamineandconsiderthepossibilityofUDAAPviolationsinallaspectsofitsbusinessthattouchonConsumersortheirinterests,includingbutnotlimitedtomarketing,sales,origination,contractterms,contractoptions,installation,servicing,andlossmitigation.”Membersarerequiredto“regularlyremindandtrain“eachemployee”toavoidUDAAPviolations.

RESPONSE:WhilethissectionoftheCodeappearstoattempttorespondtoexistingstate

andfederalUnfairTradePracticeslaws,thereisnoidentificationofwhatconstitutesUDAAPoranyreferencetosuchdescriptionsorexamplesofwhatwouldconstituteUDAAP,althoughanumberofthesubsequentsectionsoftheCodeclearlybuildontraditionalUDAAPcriteria.Noristhereanyrequirementthatmembersdevelopandprovideevidenceoftrainingmaterialsandactualdocumentationoftrainingactivitiesforeitheremployeesorthemember’sthirdpartyagents.

Advertising.TheproposedCodeincludeshighlevelstandardsgoverningadvertising,

including:

“Claimsshouldbeaccurate,easilyunderstandableandbasedonfacts.”“Systemproductioncalculationsmusttakeintoaccountmaterialfactors.”“Projectionsoffutureutilitypricemustbebasedonacceptedsourcesandmethods.”“Endorsementsmustbegenuineandauthorizedbytheendorser.”

RESPONSE:ThereareanumberofvaluableandimportantspecificsincludedinthisSection

oftheCode,includingaprohibitiononreferencestosolarsystemsas“free”,anobligationtospecificallyidentifyanyincentivesandassociatedeligibilityrequirements,andobligationsfordisclosuresofaccurateprices,allpricingdetails,andrequiringfact-basedestimatesthatincludeall“materialfactors.”

CalculationofEstimatedFutureElectricityRates.Oneofthekeydisclosuresassociated

withanyconsumer’sdecisiontoinvestinoragreetoasolarinstallationcontractistherelationshipbetweenthecostofthesolarsystemandthemonthlyleasingorpurchasingcostscomparedtothecustomer’scurrentelectricbillandestimatesoffuturerateincreases.Withregardtoprojectionsoffutureutilityprices,theCoderequiresitsmemberstorelyonatleastoneofavarietyofsources,includingtheU.S.EnergyInformationAgencyapplicabletothestatewherethesystemwillbelocated,stateutilitycommissionorenergyofficepublications,utilityratecasefilings,“historicalutilitypricedataforthesystemlocation”(thesourceforwhichisnotidentified),“industryexpertsorotherqualifiedconsultant,”the“retailsourceorelectricity

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generationsourceservicingthesystemlocation,”and“othersimilarreliablesourcesqualifiedbySEIA.”Further,theCodeallowsthemembertouseamethodforfutureutilitypriceprojectionsrelyingonan“averagegrowthrateusingnolessthanfiveyearsofdataendingwiththemostrecentyearforwhichdataispubliclyavailable,”anddatathatisbasedon“thirdpartysources”withsomelimitations.

RESPONSE:Theserequirementsarenotreasonablebecausetheywouldallowforawide

rangeofpotentialsourcesanddatatobeusedthatcarryahighdegreeofpotentialinaccurateormisleadingprojectedutilityprices.Consumerswouldnothavethenecessaryinformationtocompareoffersacrossprovidersbecauseeachprovidercoulduseadifferentdatasettoestimatefutureelectricityrates.Thisprovisionofthecodedoesnotservetopreventunfairanddeceptiveprojectionsofsavings.AsdiscussedfurtherinactualrecommendationsinSectionIV,anycalculationsoftheimpactofasolarsystemonaresidentialcustomer’selectricbillshouldrelyonthecurrentelectricpriceschargedbytheindividualconsumerandastate-specificandutility-specificapprovedmethodologytoprovidearangeofpotentialfutureutilitybillimpacts.Ofmostimportance,thesolarmarketerorprovidershouldberequiredtoaffirmativelydisclosetheriskthatanysuchprojectionswillbeincorrectandarenotsubjecttothecontrolofthesolarprovider.

SalesandMarketingInteractions.TheCodeincludesrequirementsonrespecting

consumerprivacy,treatingcustomersfairlyandcompliancewithDoNotCalllistsandTelemarketingSalesRules,theFTC’sCAN-SPAMAct,andrelatedstatutes,referencingstateorlocalanalogouslaws.Membersarerequiredtomaintaina“donotcontact”listandensurethattheiragentscomplywithsuchinformation.MembersandtheiragentsmustaccuratelyidentifytheCompanytheyrepresentandavoidstandarddeceptivestatementsandmisrepresentationsthatwouldbeapplicabletoanyretailsalesandmarketingactivitypursuanttomostStateUnfairTradePracticeActs.

RESPONSE:TheobligationsandprohibitionsincludedinthisSectionoftheCoderepeatthe

currentapplicablefederalandstatelawandregulations,almostnoneofwhicharespecifictothemarketingofsolarsalesandleasing.

Contracts.TheCodeincludesrequirementsforcontracts,suchasthatcontractterms

shouldreflectverbalrepresentations;contractsshouldbeclearandunderstandabletoConsumersandcontainallcontractterms;andthatcompaniesshouldallowConsumerstheabilitytorescindcontracts.Standardrequirementsthatthecontractbe“writteninlegiblefont,”andwrittentobe“easytounderstand”areincluded.Thespecific“materialterms”thatmustbeincludedincontracts(andare“recommended”beplacedabovetheCustomer’ssignature)areidentifiedas:

• Costs,• Ownershipterms,• Financingterms,• Warranties,• Consumeroptionsintheeventofahomesale,• Terminationandsystemremovaloptionsandcosts,and• Consumerrightsregardingdamagetopropertyfrominstallation.

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TheCoderequiresthattheprovidermustprovideathree-dayrightofrescission(exceptforsolarsystemsinstalledonnewhomesaletransactions)withareasonablemeansofexercisingthatright.

WithregardtoRenewableEnergyCertificates(RECs),thememberisprohibitedfrom

doublecountingtheREC---byrelyingonitsvalueafterthesaleofitinthetransactionforanyotherpurpose.Further,thecompanyisrequiredtoeducatecustomersaboutRECsandreferthemtoaspecificpublication,“GuidelinesforRenewableEnergyClaims:GuidanceforConsumersandElectricityProviders,CenterforResourceSolutions(Feb.26,2015).IftheagreementassignstheRECtotheCompanyandnottheConsumer,theprovidershould“explain”totheConsumerthattheConsumerhasnorightstotheREC,but“maystatetotheConsumerthatsellsitsRECsthat,bypurchasing,leasingorhostingasolarsystem,theConsumerishelpingadvancesolarenergyintheU.S.,orsimilarbroadpolicyormarketstatements.”

RESPONSE:Theseprovisionsareappropriateinmostcases,buttheyfailtoadoptthe

levelofspecificitythatshouldbeincludedandasidentifiedinChapterIVofthisReport.Furthermore,someoftheobligationsto“explain”certainobligationsorissuestoaffectedcustomersisnotsufficientinthatthereisnorequiredmethodofexplanationorrecordofhoworwhenthisexplanationisgiven.WithregardtotherecommendedstatementsaboutRECs,thespecificadviceoftheVermontAttorneyGeneralasreflectedinChapterIVofthisReportismoreexplicitandaccurate.

Thecodeisvoluntaryandthusdoesnotprovideconsumerprotectionacrosstheindustry. TheSEIABusinessCodeincludesGuidingPrinciplesthatrequiremembersoftheSEIAto“expresslyagreetofollowingtheCode,cooperatewithSEIAandanydesignatedthirdpartyduringanyinvestigationsintoallegedviolationsoftheCode,andcomplywithanyauthorizedactionsbySEIAorthirdpartiestoenforcefindingsmadewithdueprocess.”Inaddition,theCoderequiresmembersto“takecommerciallyreasonablemeasures”torequirethemember’s“contractors,serviceprovidersoragentstoabidebytheCode. RESPONSE:Theseobjectivesarewelcome,buttheapplicabilityofthesepoliciesonlyto“members”andthelackofanymeanstoconductpublicproceedingstodetermineviolationsandassessappropriatepenaltiesaresignificantshortcomings.While“members”arerequiredtocomplywiththeCode,notallretailpromotersorsellersofsolarinstallationsaremembersofSEIAsinceSEIAisavoluntaryorganizationandmemberscancomeandgoastheyplease.SEIAidentifiesitsmembershiponitswebsite,claimingthatthislistincludesover1,000entities,manyofwhomarenotretailsolarproviders,butthosewhocontractwithsolarproviders,lobbyontheirbehalf,orprovidelegalandtechnicaladvice.51SEIAalsoidentifiesthenumberofmembersbyStateandbytypeofentityinvolvedinthesolarindustry.Asexpected,someoftheStateswiththehighestnumberofmembersarethosewithsignificantsolarsalesandleasingactivity,suchasCalifornia,Florida,NewJersey,andNewYork.But,strangely,severalstateswithveryhighsolarmarketingactivities,suchasArizonaandNevada,haveveryfewmembers,lessthan10accordingtothisinformation,andmanyofthoselistedforthesestatesarenotactualretailproviders,butfinancialorotherentitiesthatwouldprovideservicestosolarmarketersandtheiragents.Finally,mostofSEIA’smembersdonotactuallyconductretail

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salesandleasingtoresidentialcustomers,butareassociatedwiththemanufacturing,legalandfinancialconsulting,andadvocatesforsolarpowerbusinesses.

MembershipinSEIAisvoluntary,thusadherencetothecodeisaswell.Further,itisnotclearwhetherSEIAactuallyrepresentsamajorityorevenalargenumberofsolarcontractors,installers,orotherretailmarketingentitiesofferingsalesorleasingofsolarsystemstoresidentialcustomers.

WithregardtoSEIA’sattempttoapplyitsCodetotheagentsofitsmembers,i.e.,thosethird

partyvendorsoragentsthatmayactuallysolicitsalesandleasesfromresidentialcustomersonbehalfofaSEIAmember,theCode’sobligationtouse“commerciallyreasonablemeasures”isaweaksubstituteforaclearobligationthatSEIAmembersareresponsiblefortheactionsandrepresentativesoftheiragentsandwillbeheldaccountablefortheactionsoftheiragents.ThereisnorequirementintheCodethatSEIAmembersprovideevidenceofhowtheircontractorsandagentsaretrainedorhowthemembersarerequiredtodocumenttheiroversightandsupervisionoftheiragentstoassurecompliancewiththeCode.TheCodeisnotenforceableinanymannerthatwouldserveasadeterrenttobadactorsorthatwouldcompensateaggrievedconsumers.

AccordingtoSEIA,itwilladoptmeaningfulenforcementtoolstoensuretheCode“has

teeth.”InSEIA’sviewinternalreviewandtoolssuchasletterstomembersregardingviolations,andsuspensionofmembershipareappropriateandsufficientenforcementactivities.

RESPONSE:SEIAisaprivatenon-profitorganizationwhosememberspayafeetosupporttheSEIAstaffandtheSEIAmission.Thisorganizationhasnogovernmentalorformalenforcementauthority.SEIAcannotprohibitanon-memberfromviolatingitsCodeandcannotrequirenon-memberstorecognizeorcomplywiththeCode.Withregardtoitsmembers,SEIAcannotimposeanypenaltiesonitsmembersforviolatingtheCode.ThesuggestionbySEIAthatitcanissue“letters”orsuspend“memberbenefits”tothosefoundnotincompliancewiththeCodeisaninsufficientenforcementmechanismandwithoutanypreventivevalueorrecompensetoconsumers.

SEIAdoesnotstatehowitwillconductdecisionsaboutcomplianceornon-compliance

withtheCode.CustomersarenotlegallyinformedoftheirrighttocomplaintotheSEIAanddoingsowouldchillthecustomer’slegalrighttofilecomplaintswithothergovernmentalauthorities,includingthestateAttorneyGeneralortheFederalTradeCommission.AllofitshandlingofcustomercomplaintsandallegationsofviolationoftheCodecanandlikelywillbeheldinconfidentialforumswithoutanyproceduraldueprocessrightsandremediesthatareaffordedconsumersbeforestateandfederalregulatoryagenciesandcourts.

Furthermore,thefederalandstateAnti-TrustActsprohibitSEIAandsimilar

organizationstoundertakeanypoliciesoractionasagroupthatmightbeallegedorfoundtobeanti-competitive,thatis,havingtheimpactofthwartingtheabilityofnon-SEIAmembersfromconductingbusinessandobtainingconsumerswhetherornottheycomplywiththeCode.Anymovetocreatea“shield”tothoseproviderswhoagreetobecomeanSEIAmemberandabidebytheCodeora“sword”tolabelcompetitorswhoarenotmembersoftheSEIAandhave

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notagreedtocomplywiththeCodewilllikelyraiseseriousAnti-Trustclaims.Furthermore,theexistenceoftheAnti-TrustobligationspreventsSEIAandsimilartradeorganizationsfromimposingcertainrequireddisclosureterms,usingcertainplainlanguageterms,creatingbarrierstoentrywithregardtofinancialandtechnicalqualifications,orimposingcustomerserviceperformancecriteria.

SEIA’sSolarBusinessCode,whilecontainingsomeusefulrecommendationsand

provisions,isnotasubstituteformoreformallegislationand/orregulationsgoverningthesolarindustryinitsdealingwithresidentialcustomers.

Thereissomeprecedentfortheseconclusions.Theretailenergymarkethasbeenthe

subjectofdetailedlicensingandconsumerprotectionregulationsandpoliciessincetheonsetofretailcompetition.NoStatehasreliedon“self-enforcement”orindustrycodesofconducttoregulateretailenergyproviders.BoththeNationalEnergyMarketersAssociationandtheRetailEnergySuppliersAssociation(RESA)recognizethisrealityandhavearguedthatsuchprivateregulationshouldnotbesubstitutedforgovernmentalstandardsandregulations,particularlywhenthereisthepotentialfordisparatetreatmentamongsomecompaniesofferingsolarpowerservicesandotherentities,whomaywishtocombinesuchserviceswithothercompetitiveproductsthataresubjecttogovernmentregulation.RESA’srecentcommentstotheNewYorkPublicServiceCommissiononitssuggestionthatdistributedenergyresource(DER)providersmightbeabletorelyonaself-enforcementmechanismwithacodeofconductstated,“Staffshouldhoweverbemindfulthatnoorganizationhastheauthorityorresourcestomonitorandenforceanystandardsthatareadopted.FortheforeseeablefuturethatwillremaintheprovinceoftheCommission.”Evenmoreimportantly,asRESAdescribed,retailenergysupplierswhoarerequiredtobelicensedandregulatedintermsofdisclosureandconsumerprotectionandservicequalityattributesbystateutilitycommissionswillbeofferingDERproductsandservicestoresidentialcustomersthatmaybundleenergycommodityanddistributedgenerationproductsandservices.Asaresult,thereisthepotentialforunfairdiscriminationintermsofregulatoryoversightandconsumerprotectionenforcementthatislikelytohaveanti-competitiveimpactsifsolarprovidersareabletoavoidanydirectordetailedregulationbystatesthroughaprivatelyoperatedself-enforcementmechanism.52

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APPENDIXC:CONSUMEREDUCATIONALMATERIALS

o SolarPowerForYourHomeAConsumersGuide,LSUAgCenterCommunication,2015(partiallyfundedbyEEI)http://www.lsuagcenter.com/en/communications/publications/Publications+Catalog/Home+Improvement/Energy/Solar-Power-for-Your-Home--A-Consumers-Guide.htm

o Energy.govsolarresourceandeducationmaterials:http://energy.gov/eere/sunshot/solar-energy-resource-center-0?Topic=Solar%20Basics_and_Educating%20Consumers

o U.S.DepartmentofEnergy,AConsumersGuide:GetYourPowerFromtheSun.http://www.nrel.gov/docs/fy04osti/35297.pdf

o AHomeowner’sGuidetoSolarFinancing,Leases,Loans,andPPAs.ByNateHausman,ProjectManager,CleanEnergyStatesAlliance.February2015.http://www.cesa.org/assets/2015-Files/Homeowners-Guide-to-Solar-Financing.pdf

o AConnecticutConsumer’sGuidetoBuyingaSolarElectricSystembytheConnecticutCleanEnergyFundhttp://uhaweb.hartford.edu/solarinfo/WebPictures/Consumer_Solar_Guide.pdf

o EnergySagewebsite:https://www.energysage.com/solar

o BetterBusinessBureau,Don’tFallforaSolarEnergyScamThisSummerhttp://www.bbb.org/blog/2012/06/dont-fall-for-a-solar-paneling-scam-this-summer/

o SEIA,ResidentialConsumerGuidetoSolarhttp://www.seia.org/sites/default/files/resources/SEIA%20Residential%20Consumer%20Guide%20to%20Solar%20Power%20-%20June%202015.pdf

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ENDNOTES1Inpartthisisduetothelowerproductioncostsassociatedwithsolarpanelsgenerallyandtheimpactof

competitionfrommanufacturersinChina.AccordingtoEnergySage,44%ofthesolarpanelsinuseintheU.S.

weremanufacturedinChinaandU.S.solarpanelscostonaverage10-30centsmoreperwattthanimported

panels.http://blog.energysage.com/where-solar-panels-are-manufactured/2Manystatesinitiallyadoptedgenerouspaymentsundertheirnetmeteringpoliciestostimulateanascent

industryandestablishedceilingsassociatedwithnetmeteringcosts.Asthoseceilingsarereachedandthe

costsassociatedwithnetmeteringaregrowing,manystatesarereviewingandreconsideringthispayment

andcostallocationsystem.3SEIASolarMarketresearchReport.http://www.seia.org/research-resources/us-solar-market-

insight/about4SEIA,U.S.SolarMarketSetsNewRecord,installing7.3GWofSolarPVin2015,PressRelease(February22,

2016),availableat:http://www.seia.org/news/us-solar-market-sets-new-record-installing-73-gw-solar-pv-

2015Itshouldbenotedthatutilityscalesolarstillrepresentsthebulkofsolarpower,representinghalfofall

solarinstalledin2015.5Themarketreached72%thirdpartyownershipin2014.SolarCity,oneofthelargestrooftopsolar

marketers,sellsone-thirdoftheU.S.residentialsolar.

https://www.greentechmedia.com/research/report/us-residential-solar-financing-2015-20206However,SolarCityannouncedinearly2016thatitwasterminatingitsMyPowerleasingproduct.Likea

solarlease,ittiedthecustomer'spaymenttoasolarsystem'senergyproduction,butunlikealease,the

homeownerownedthesystemoncetheloanwaspaidoff.See,

http://www.foxbusiness.com/markets/2016/02/27/solarcity-corp-backed-itself-into-corner-with-

mypower-loan.html7ThecommunitysolartransactionisaddressedspecificallyinChapterVofthisReport.8ThesewebsiteswerevisitedinDecember2015-January2016.9AHomeowner’sGuidetoSolarFinancing,CleanEnergyStatesAllianceandU.S.DepartmentofEnergy,p210WilltheSolarLeaseLiveForeverorFlameOut?

http://www.fool.com/investing/general/2014/04/30/will-the-solar-lease-live-forever-or-flameout.aspx11SolarPowerforYourHome:AConsumersGuide,LouisianaStateUniversityAgCenter,2015,

http://www.lsuagcenter.com/portals/communications/publications/publications_catalog/home%20improv

ement/energy/solar-power-for-your-home--a-consumers-guide12http://www.gosolarcalifornia.ca.gov/tools/calculators.php13http://pvwatts.nrel.gov14www.energysage.com15SolarWaterHeat,SolarPhotovoltaics,Wind(All)GeothermalHeatPumps,FuelCellsusingNon-Renewable

Fuels,Wind(Small)FuelCellsusingRenewableFuelsonexistinghomesandnewconstruction.

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16http://www.seia.org/research-resources/solar-itc-impact-analysis(Accessed11/7/2015)17“SEIACelebratestheExtensionoftheITC,”http://www.seia.org/news/seia-celebrates-extension-itc

(Accessed12/24/2015)18DISCUSSIONPAPERSINECONOMICSWorkingPaperNo.13-05TaxEvasionandSubsidyPass-Through

undertheSolarInvestmentTaxCredit,MollyPodolefsky,UniversityofColoradoatBoulder,November2013

<http://www.colorado.edu/econ/papers/Wps-13/wp13-05/wp13-05.pdf>(Accessed11/7/2015)19SeeSolarCityForm10-QfortheperiodendingSeptember30,2015,filedonOctober30,2015,pp54-55.<

http://investors.solarcity.com/secfiling.cfm?filingID=1564590-15-8928#SCTY-

10Q_20150930_HTM_ITEM_1_A_RISK_FACTORS>(Accessed11/7/2015)20http://www.reuters.com/article/2012/10/09/us-usa-solar-investigation-

idUSBRE8980YL20121009#8LSvOOsxldo35JdC.97(Accessed11/7/15)21http://www.dsireusa.org/DSIRE,theDatabaseofIncentivesforRenewablesandEnergyEfficiency,isa

“comprehensivesourceofinformationonincentivesandpoliciesthatsupportrenewableenergyandenergy

efficiencyintheUnitedStates.”ThedatabaseisoperatedbytheN.C.CleanEnergyTechnologyCenteratN.C.

StateUniversityandisfundedbytheU.S.DepartmentofEnergy.Consumerscansearchbystateorzipcodeto

findcurrentincentivesandpolicies,withoptionstofilterbytechnologyand/orprogram.TheU.S.

DepartmentofEnergymaintainsasimilardatabase:http://energy.gov/savings/search22https://nccleantech.ncsu.edu/wp-content/uploads/50-States-of-Solar-Q3-FINAL_25.pdf23http://www.wsj.com/articles/solar-power-fight-hits-home-in-arizona-143833500024AppendixCliststhemostprominentconsumereducationmaterials.25“AreRooftopSolarCompaniesDoingEnoughtoProtectConsumers?”GreentechMedia.comSeptember24,

2015[visited10/28/2015]26https://www.greentechmedia.com/articles/read/yelp-reviews-of-the-top-us-solar-installers27www.consumeraffairs.com/solar-energy/Thiswebsitewillallowtheconsumertosearchbyspecificsolar

companies.28AttorneyGeneralBrnovichSettlesLawsuitAgainstSolarCompany|ArizonaAttorneyGeneral29ArizonaConsumersEligibleforCriminalRestitutioninSolarRebateScam|ArizonaAttorneyGeneral30http://www.greentechmedia.com/articles/read/sunrun-class-action-complaint.ThiscomplaintisCaseNo.

BC498001.31NewOrleansAdvocateon1/1/2015(http://www.theneworleansadvocate.com/news/11222295-

171/nearly-2m-lawsuit-accuses-sader)(Accessedon11/24/2015):32http://www.azleg.gov/DocumentsForBill.asp?Bill_Number=SB1465&Session_ID=11433HOUSEBILLNo.1320wasintroducedJanuary13,2015.Anamendedbillpassedtherelevantcommitteein

a9-4vote,butthebilldidnotreachthefloorforanyfinalvote.

https://iga.in.gov/legislative/2015/bills/house/1320#

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34HB1912wasintroducedFebruary2,2015andreintroducedinthreesubsequentspecialsessions.Whilea

proposalpassedcommitteeonavoteof8-3,thebilldidnotreachthefloorforavote.

http://app.leg.wa.gov/billinfo/summary.aspx?bill=1912&year=201535SB214wasfiledApril3,2015anditwasconsideredincommitteeonApril29,2015,butleftpendingatthe

endofthesession.

https://legis.la.gov/legis/BillInfo.aspx?s=15RS&b=SB214&sbi=y36A.B.330wasintroducedMarch16,2015andwasvotedoutofCommitteewithamendments,butno

furtheractionoccurred.

https://www.leg.state.nv.us/Session/78th2015/Reports/history.cfm?DocumentType=1&BillNo=33037OfficeofAttorneyGeneral,StateofVermont,“GuidanceforThirdPartySolarProjects.”[Undated]38SEIAComments,NewYorkPublicServiceCommission,RE:Case15-M-0180–IntheMatterofRegulation

andOversightofDistributedEnergyResourceProvidersandProducts(September24,2015).39www.seia.org(September2015)[©SolarEnergyIndustriesAssociation]40See,Horton,David,“FederalArbitrationActPreemption:PurposivismandStatePublicPolicy,”Georgetown

LawJournal,Vol.7,2013.http://georgetownlawjournal.org/files/2013/07/Horton.pdf41See,e.g.,CommonwealthofPennsylvania,byAttorneyGeneralKathleenG.Kane,BureauofConsumer

ProtectionandTanyaJ.McCloskey,ActingConsumerAdvocatev.EnergyServicesProviders,Inc.d/b/a

PennsylvaniaGas&Electric,DocketNo.C-2014-2427656,OrderDenyingMotionInLimine(December1,

2014);PennsylvaniaPUC,Kibackv.IDTEnergy,Inc.,DocketNo.C-2014-2409676,OpinionandOrder(Aug.

20,2015);MarylandPSC,IntheMatteroftheInvestigationintotheMarketing,Advertising,andTrade

PracticesofAmericanPowerPartners,LLC;BluePilotEnergy,LLC;MajorEnergyElectricServices,LLCand

MajorEnergyServices,LLC;andXoomEnergyMaryland,LLC,CaseNos.9346and9346(b),ProposedOrder

(Oct.23,2015).42Communitysolarprojectsaresometimesreferredtoas“solarfarms”or“solargardens.”43SolarElectricPowerAssociation,“CommunitySolar:ProgramDesignModels,”(December2015).This

Reportisavailableathttp://www.solarelectricpower.org/about-sepa/sepa-news/press-releases/sepa-

report-provides-models-for-community-solar-success.aspx(AccessedDecember27,2015).44TheformeroptionispursuedinamajorityofCSPs.Someofthemainreasonsforthisarethatfew

communitysolarprojectsubscribershavesufficientunderstandingofRECstomonetizethemandthevalueof

asingleindividual’sRECSareoftenoutweighedbytransactionalcosts.Theprojectownercanbetterdraw

valuefromtheRECs,andinmanycasestheyareabletopassthisvalueontotheirsubscribers.Itshouldbe

notedthatmanyworkinggroupmemberspointedoutthatwhenaRECisnottransferredtothecustomeror

retiredonbehalfofthecustomer,thenthecustomerisnotactuallybuyingsolarpower.Inthesecases,

communitysolarprojectownersshouldbeawareoftheFederalTradeCommission’sguidancethat

“marketersshouldnotmakebroad,unqualifiedrenewableenergyclaims,directlyorbyimplication.”See

SEPACommunitySolarReportat11-12.

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45MarylandHouseBill1087,availableat:http://mgaleg.maryland.gov/2015RS/bills/hb/hb1087F.pdf

(signedbyGovernorMay12,2015).46TheMarylandPublicServiceCommissionvotedtoissueproposedrulestoimplementthecommunitysolar

programandadoptedmany,butnotall,oftherecommendationsoftheOPC.See,RM56,RevisionstoCOMAR

20.62-CommunitySolarEnergyGenerationSystems,availableattheCommission’swebsiteat:

http://www.psc.state.md.us/search-

results/?keyword=RM56&x.x=20&x.y=10&search=all&search=rulemaking47OfficeoftheAttorneyGeneral—AntitrustandUtilitiesDivisions’SupplementalResponsetoExcelEnergy’s

PetitiontoApproveSolarGardenTariff,PublicUtilitiesCommissionofMinnesota,IntheMatterofthe

PetitionofNorthernStatesPowerCo.forApprovalofitsProposedCommunitySolarGardensProgram,

DocketNo.E002/M-13-867(December3,2013).48AttorneyGeneralCommentsat4,citingtoaDenverPostarticle,fn.16.49MinnesotaPublicUtilitiesCommission,IntheMatterofthePetitionofNorthernStatesPowerCo.,d/b/a

XcelEnergy,forApprovalofitsProposedCommunitySolarGardenProgram,DocketNo.E-002/M-13-867

(April7,2014).ThisproceedingsubsequentlyresultedinnumerousfilingsandordersfromtheCommission

duetothelargevolumeofsolargardeninterconnectionproposalsmadetoXcelEnergy,manyofwhomwere

proposalsfortheco-locationofseveral1MWgardenprojectsatonelocationbyoperatorsthatproposedto

servelargercommercialcustomers,givingrisetoconcernsabouttheincreasedcosttoratepayersforthe

subsidypaymentsorderedbytheCommissiontostimulatesolargardendevelopment.50Asincludedinthebill,“Thelegislaturerecognizestheimportanceofensuringpublicsafetyandconsumer

protectionwithanappropriatelevelofregulationthatstillallowsacompetitivemarketplacetodevelop,and

forthisreasonthelegislatureconfersauthoritytotheWashingtonUtilitiesandTransportationCommission

toregulateas"competitiveelectricalcompanies"privatethird-partyvendorswhoproviderenewableenergy

systemsdirectlytoconsumersthroughaconsumercontractandaffiliatesofinvestor-ownedutilitieswho

investcompanydollarstomakethesesystemsmorewidelyaccessible.”51https://www.seia.org/directory[Visited11/16/2015]52RetailEnergySupplyAssociation(RESA)Comments,NewYorkPublicServiceCommission,RE:Case15-M-

0180–IntheMatterofRegulationandOversightofDistributedEnergyResourceProvidersandProducts

(September24,2015).