Scammers are using fake caller ID numbers to try and take advantage of San Diego utility customers by trying to sell them rooftop solar panels. The company is encouraging customers to be on the look out for these calls and to report them to authorities immediately.
SDG&E warns of phone scam using fake caller ID
SAN DIEGO — San Diego Gas & Electric warned customers Thursday of an increase in complaints about phone scammers using the name of the utility in fraudulent calls.
The most recent complaints involved people who identified themselves as being with SDG&E and selling rooftop solar panels, according to the utility.
SDG&E officials said they don’t sell or install private solar panels or work with third party companies to sell or install them on their behalf. The utility also doesn’t initiate contact via email, phone or otherwise to demand immediate payment or ask for personal information, such as bank accounts, social security numbers or other sensitive information.
Making things more confusing for customers, scammers are starting to use technology that fools caller ID systems, so their calls display “San Diego Gas & Electric” and its main customer service number, 800-411-7343, regardless of the actual source of the call.
SDG&E officials said spreading awareness of the latest fraud techniques helps residents from becoming victims.
According to the utility, energy companies nationwide are working with local, state and federal law enforcement agencies to identify and prosecute scammers. People who receive a suspicious call or one that makes them feel uncomfortable should hang up, or not answer it in the first place if possible.
SDG&E encourages anyone who has been a victim of the solar scam to report any loss of money to their local law enforcement agency.
By Alex Ayers
Recently rooftop solar panels have been promoted to Alabama residents as a way for energy consumers to lower their electrical bills, however there are still many risks involved that oftentimes may outweigh the benefits.
Rooftop solar panels have increased in use in recent years, 18 gigawatts of solar photovoltaics were installed between 2008 and 2014 nationwide. At this growth rate rooftop solar will play a part in supplying American consumers with electricity in the future, and Family Businesses for Affordable Energy promotes diverse energy sources because competition helps to keep energy prices affordable.
However, if growth continues before hidden costs are dealt with, it has the potential to have major impacts on the affordability of electricity for family businesses and households.
The largest growth in rooftop solar panels has come from states that mandate the price that consumers are paid to sell excess solar energy back to the grid through a policy known as net-metering. Alabama solar users currently can sell their excess power to their utility company when they are not using all of the generated power themselves at market rates instead of state mandated rates. The rates at which utilities pay consumers for the electricity vary by state, but those states that mandate retail prices shift the cost burden of maintaining the grid away from solar users to non-solar consumers. This increases the cost of electricity on low-income users and renters who cannot afford or are not allowed to install their own rooftop solar panels.
For non-solar consumers in Nevada this means an increase of $600 per year to subsidize rooftop solar users. In states where net-metering is poorly regulated it creates a regressive income transfer from those who cannot afford solar to those who can. For utilities that transfer the costs from households to commercial customers, the increased overhead cost is passed on to the consumer through increased product prices, either way consumers lose out in poorly regulated net-metering schemes.
Alabama has so far successfully stayed away from these regressive policies, buy could see pressure to change in the future.
As rooftop solar becomes more popular, it opens up the market to bad actors that try and take advantage of consumers interested in lowering their electrical bills. For consumers leasing solar panels there are often hidden costs associated with maintenance and upkeep of the panel that are not easily identifiable in the the leasing agreement.
Some companies require lessees to contract with another company to clean and maintain the panels at costs of up to $700 per year. With long-term leases of 15-20 years these requirements significantly increase the payback period of the solar panels. The leases also make moving more difficult as the leaseholder can put a lien on the entire property claiming it is necessary to protect the solar panels. Additionally, installing solar panels can increase the assessed value of the home and therefore increase the property taxes paid by the consumer.
In addition to hidden costs, some bad actors have used solar installations to scam consumers. In 2015 an Arizona judge released more than 1,000 customers from their leases from a predatory company that failed to install nearly three-quarters of the units and withheld state payments owed to customers.
In other states predatory companies can install panels claiming the cost to the homeowner will be significantly lower than buying electricity from the utility company, but when utility rates remain steady, the rates charged by the solar installer increase over time costing the homeowner more than if the panels had never been installed. As solar becomes more popular, stronger consumer protections will be needed to stop predatory companies like these.
Recent improvements in efficiency and decreasing costs of production will make rooftop solar an ever larger producer of electricity in America, however Alabama lawmakers should stay vigilant in future policymaking to ensure that the hidden costs are not shifted to non-solar users, especially low income consumers who cannot afford higher electric bills. Smart policies can protect all consumers and help make energy more affordable.
Alex Ayers is the executive director of Family Businesses for Affordable Energy (FBAE). FBAE launched the Make Solar Safe initiative for consumers and policymakers to better understand how to protect solar power customers from predatory companies, unsafe construction, and other hazards.
Two of the largest solar rooftop companies in the nation are again under investigation for potentially fudging their books. This time, it seems the companies have been failing to disclose the true percentage of their customers that cancel contracts prior to having the solar panels installed.
Customers that have cancelled contracts after signing have claimed they were “strong armed” or even threatened by sales people. In 2016, approximately half of SolarCity’s contracts were cancelled prior to installation, and nearly 40 percent of Sunrun’s were.
SEC investigates Bay Area solar power companies Sunrun and SolarCity
By Riley McDermid, May 4, 2017
Two Bay Area solar technology companies are being probed by the Securities and Exchange Commission over whether or not they have adequately disclosed how many customers signed up for solar systems but later canceled their contracts.
San Francisco-based Sunrun and San Mateo-based SolarCity (which is owned by Tesla) are now being investigated by the SEC for potentially obfuscating how many customers they are losing, a person familiar with the matter told the Wall Street Journal.
“The SEC recently issued a subpoena to Sunrun and interviewed current and former employees about the adequacy of its disclosures on account cancellations, said the person familiar with the investigation,” the paper reports. “The SEC is also looking at SolarCity, the person said.”
The issue is an important one because cancellations can gauge the financial health of a company — and because there have been ongoing allegations that some customers feel pressured into buying solar services, which they then cancel.
“Some customers say they were strong-armed into buying solar-energy systems by sales representatives who threatened to sue them if they didn’t proceed with a project or to place a so-called mechanic’s lien on their homes—a measure used to force a homeowner to pay for a home-improvement project,” the Journal reports.
“Others say they didn’t realize they had actually signed contracts. Many said they believed they were just giving permission for a consultation.”
These cancellations at both companies, which are publicly traded, have become increasingly important to investors worried about their growth and the future of solar tech in general.
“Cancellations grew to be so large at SolarCity that in early 2016, before the company was sold to Tesla, about half of its customers were backing out of contracts before solar panels could be installed, according to people familiar with the matter,” the Journal reports.
“At Sunrun, that cancellation figure grew to be as high as 40 percent earlier this year, according to people familiar with the figure. The cancellation rates were especially high among customers who were approached by salespeople at their doorstep or while they were shopping at big-box stores, these people say. The increase in cancellations caused Sunrun to halve its growth expectations in 2016 from 80 percent to 40 percent, one of these people said.”
“[SolarCity] has remained focused on reporting the quality of our installed assets, not pre-install cancellation rates,” a spokesperson said in a statement. “Our growth projections have always been based on actual deployments.”
Yesterday, Mississippi Attorney General Jim Hood announced the creation of the Consumer’s Guide to Solar Power in Mississippi. The guide is meant to help consumers educate themselves on the basics of solar energy, financing options, and questions to ask installers to ensure professional installation.
Attorney General Announces the Consumer Guide to Solar Power in Mississippi
Attorney General Jim Hood is pleased to announce the creation of the Consumer’s Guide to Solar Power in Mississippi.
In December 2015, the Mississippi Public Service Commission (PSC) issued a groundbreaking rule allowing net metering in the state. Net metering is the process by which individual utility customers who use solar panels or other renewable energy generators can sell their excess power back to the power companies. The electricity produced by the customers using renewable energy generators can be placed on the electric grid to offset their power bill.
“Renewable energy including solar power can be beneficial to the environment while providing a costs savings for the consumer,” Attorney General Hood said. “It is critical to determine whether the investment for the renewal energy in a solar system is the right choice for your home or business. This guide offers tips and resources to help make that determination.”
The Attorney General’s Office is a member of the Mississippi Net Metering Working Group (Working Group), which was created under the new Order Adopting Net Metering Rule issued by the PSC. The Working Group is tasked with considering and addressing consumer protection and safety standards. The Consumer Protection Division of the Attorney General’s Office developed the guide with input from the Working Group and multiple stakeholders. The guide is a product of an ongoing multisector effort to protect consumers in this new arena, and the office appreciates all of the feedback received.
“Our neighboring states have experienced problems with licensing of solar contractors, so we want to be sure our office provides help and guidance to consumers in our state when making decisions in their solar installation,” General Hood said. “We tried to do this by way of legislation, but because that was tied up in the Capitol, we have produced this guide as a resource.”
Adding solar panels to meet a home or business energy requirements may help reduce electric bills, contribute to saving the environment, and increase the value of the property. However, adding a solar power system to a property is a big decision, and consumers should understand the basics of solar energy, financing options, and which questions to ask the experts. It is also important to know what to ask when hiring an installer. For more information and for a copy of the guide, go to www.agjimhood.com.
The Securities Exchange Commission is investigating solar-energy companies after seeing an increase in the number of contract cancellations. There are reports of customers being strong-armed into contracts by salespeople pushing benefits of solar that other customers are saying never appear.
SEC Probes Solar Companies Over Customer Cancellations
Dow Jones Newswires
Federal regulators are investigating whether solar-energy companies are masking how many customers they’re losing, according to a person familiar with the matter.
The Securities and Exchange Commission is examining whether San Francisco-based Sunrun Inc. and Elon Musk’s San Mateo, Calif.-based SolarCity Corp. have adequately disclosed how many customers have canceled contracts after signing up for a home solar-energy system, the person said.
Investors use that cancellation metric as one way to gauge the companies’ health. Companies typically give customers a few days after signing a contract, or even up until the time of installation, to back out of a deal.
Some solar-energy companies have recently disclosed in public filings and earnings calls that increasing numbers of customers are canceling, but the companies have provided few details about the number of cancellations or their impact on the companies’ business.
The SEC recently issued a subpoena to Sunrun and interviewed current and former employees about the adequacy of its disclosures on account cancellations, said the person familiar with the investigation. The SEC is also looking at SolarCity, the person said.
An SEC spokesman declined to comment. Representatives for Sunrun didn’t respond to multiple requests for comment. A spokeswoman for SolarCity said in a statement that the company “has remained focused on reporting the quality of our installed assets, not pre-install cancellation rates. Our growth projections have always been based on actual deployments.”
For years, solar companies — which number about 4,000 private and public firms in the U.S. — have enjoyed explosive growth, transforming a fledgling sector into a $33 billion industry that generates electricity for more than 1.5 million homes nationwide.
To generate business, solar companies have long relied on thousands of salespeople who knock on doors, make hundreds of cold calls and even trail people as they shop at retailers like Home Depot Inc., according to salespeople, executives and homeowners.
Hundreds of complaints have been filed against solar companies to attorneys general in Texas, Oregon, California and Florida, with customers saying they are paying more on their utility bills, not less as they were promised, and have been sold expensive systems they can’t afford, according to Freedom of Information Act requests filed by the Campaign for Accountability, a consumer-watchdog group, and according to lawsuits filed by customers.
Some customers say they were strong-armed into buying solar-energy systems by sales representatives who threatened to sue them if they didn’t proceed with a project or to place a so-called mechanic’s lien on their homes — a measure used to force a homeowner to pay for a home-improvement project. Others say they didn’t realize they had actually signed contracts. Many said they believed they were just giving permission for a consultation.
“In the residential solar industry, integrity and word of mouth recommendations are paramount,” the Solar Energy Industries Association, a trade group, said in a statement in response to questions. “Our investigation of state public records suggests that the number of complaints represents a very small fraction of the number of successful solar installations nationwide.”
In its statement, SolarCity said: “We strongly encourage our sales team to pursue only customers who are truly interested in moving forward, and they earn commissions only on systems that are actually installed.”
Tesla Inc., which bought SolarCity in November, said on Friday it would stop making door-to-door solicitations, a shift of the company’s longtime sales strategy. The electric-car company said the decision reflects “what most of our prospective customers prefer, and will result in a better experience for them.”
The SEC investigation and other problems now facing solar companies are the latest example of troubles surrounding companies that say they help homeowners “go green.”
A fast-growing loan program, known as Property Assessed Clean Energy, or PACE, to finance renewable-energy home improvements has been dogged by similar problems and now faces congressional legislation that would tighten industry oversight. PACE lenders partner with solar companies to offer financing for homeowners.
The solar industry lately has suffered from a series of problems: greater competition from smaller players that has led to price cuts for services, falling prices for solar panels and more stringent regulations in some states.
Nationwide, companies are expected to increase the number of solar-electricity systems installed by less than 3% in 2017, according to the Solar Energy Industries Association. That is down from an increase of 16% last year and about 64% in 2015.
Diminished growth expectations have hit shares of solar-panel installers. Sunrun’s stock is trading at about $5, down more than 60% since their peak in December 2015.
Two smaller providers, Sungevity Inc. and Verengo Inc., recently filed for bankruptcy protection.
Cancellations grew to be so large at SolarCity that in early 2016, before the company was sold to Tesla, about half of its customers were backing out of contracts before solar panels could be installed, according to people familiar with the matter.
At Sunrun, that cancellation figure grew to be as high as 40% earlier this year, according to people familiar with the figure. The cancellation rates were especially high among customers who were approached by salespeople at their doorstep or while they were shopping at big-box stores, these people say.
The increase in cancellations caused Sunrun to halve its growth expectations in 2016 from 80% to 40%, one of these people said.
Most of those figures weren’t disclosed to investors. Instead, the companies have provided limited transparency.
In its annual report in March, Sunrun said, “We have experienced increased customer cancellations in certain markets during 2016.” The company does report how many systems it has installed net of cancellations, but it doesn’t break out the number of cancellations.
SolarCity said the number of cancellations increased last year, but didn’t say by how much.
Company executives, salespeople and homeowners blame the rise in cancellations on what they describe as aggressive sales tactics used by the industry.
Katarzyna Herink, 35, said she listened to a persuasive pitch from a Sunrun salesman at her house in Long Island, New York, last year and considered moving forward with installing solar panels on her roof.
Days later, the company told her she had signed a contract and they were going to start installation, without providing her any details about the cost or showing her the contract, Ms. Herink said.
When she complained, Sunrun told her a document she had initialed on the salesman’s iPad during his initial visit constituted the contract, Ms. Herink said.
Ms. Herink immediately canceled the deal.
“We actually wanted to do it, but it was such a scary experience,” she said. “Now we’ve decided to stay away from it.”
Leased solar panels are not always the value add they seem like when selling a home. There are several factors that can actually make it harder to sell a home with leased solar panels. It may be necessary for the current homeowner to pay off the entire lease before the home can be sold hurting the seller’s bottom line.
Leased solar panels can harm value of home when selling
By: Kari McCoy
Dear Kari, my husband and I purchased our home two years ago. About six months later we added leased solar panels to our home. All was going well until my husband just received a call of a job transfer. This job is three hours away. So, naturally we will need to sell our home. Our thoughts were with our added solar, it would make our home worth more money with the whole world going “green.” When our Realtor came over to list our home for sale he told us this was not the case. In fact, he said leased solar panels can complicate or kill a home sale. Does this sound like he is telling the truth?
Thank you for your popular question. I understand how you could assume that having leased solar panels could only be a marketing plus and even fetch a higher price. Here comes the harsh truth with home buyers and leased solar panel systems. In the beginning when the solar companies sell the homeowner their leased product they tell the homeowner that the buyer can simply assume that lease if they ever go to sell their home. Now let’s look at the problems that could arise:
- Some mortgage lenders now require the monthly lease payment to be included in the debt to income ratio calculation in qualifying for the loan. Henceforth, if the buyers’ income or credit score are not high enough to meet those guidelines there is no deal.
- Some buyers complain when they learn they need to take over solar payments for the next 15 or more years and they don’t even receive the tax credit.
- Some sellers price their home higher because they have solar panels, but if the buyer has the opportunity to obtain a similar home for $15,000 or $20,000 less, most buyers will choose that and then add their own solar selection.
- Some buyers are concerned that the current solar equipment will become obsolete or will not save as much on their electricity bill as they could with more modern equipment. Solar panel years as far as technology goes is like dog years. One year can make a huge difference in efficiencies and outcome.
- Most home buyers want solar, but they want to be able to select their own company and their own terms of the lease. They would also like to receive the tax credit for themselves.
If you are considering selling your home with leased solar panels keep in mind there is a high probability that you will need to pay the leased solar panels off in full through the close of escrow. Be wise and clearly understand your long-term obligation when committing to leased solar panels.
I am not a solar panel expert and this article is an attempt to answer a question. For further information please contact a real estate attorney.
Kari McCoy owns the Kari McCoy Group, Residential Real Estate, at Lyon Real Estate. For more information contact McCoy at 916-933-5274 or email@example.com. BRE#00841588
Read original post: http://www.folsomtelegraph.com/article/4/19/17/leased-solar-panels-can-harm-value-home-when-selling
Industry associations pushing for preferential treatment of renewable energy sources including solar panels have staffed up with former government officials who helped create the incentives and know the best ways to keep them in place. As these industry groups push for increased use of renewables, they also push for more taxpayer dollars to support their industries.
Behind The (Revolving) Green Door
By Derek Hunter
The “green” economy is growing, thanks in large part to government “investment,” more commonly known as subsidies. Were it not for the billions of tax dollars pumped into solar, wind, and other “renewable” energy sources, they simply wouldn’t exist. For all the bluster from politicians and activists about them being the way of the future, the future definitely is not now.
They do produce energy, but not consistently nor cost effectively. If they did, so much private capital would pour into them there would be no need for the government subsidies and they wouldn’t be able to keep up with customer demand. As it stands, this is not happening.
Maybe one day the sun will always shine and wind will always blow, and those technologies will find ways to store energy for a literal rainy day. Until then, the power and pocket of government is their only real hope for survival.
Governments across the country are mandating the use of “renewables” as a percentage of their citizen’s energy consumption, federal regulations are making it nearly impossible for proven energy production to grow, and bureaucracies seek to continually expand their power and scope of their reach.
Who better to navigate that leviathan than the people who helped create it?
Enter the revolving green door.
You’ve probably never heard of the Solar Energy Industry Association (SEIA), but their President and CEO, Abigail Ross Hopper, cashed in on her “public service” to run the organization. Serving as Director of the Bureau of Ocean Energy Management at the Department of the Interior and as Director of the Maryland Energy Administration for Democrat Governor Martin O’Malley before that, Hopper helped create the regulatory monster through which she now navigates SEIA. Knowing the procedures (and the staff) is, naturally, a leg up when it comes to accessing favorable government treatment.
Another fellow traveller down the green road is Tom Kiernan, CEO of the American Wind Energy Association. His biography includes having been “Deputy Assistant Administrator of EPA’s Office of Air and Radiation where he assisted in leading the implementation of the 1990 Clean Air Act Amendments.” That being the case, of course, Kiernan has valuable knowledge for navigating a system he helped create.
Another government “success” story is Greg Wetstone, President and CEO of the American Council on Renewable Energy. In a past life, Greg “was Senior Counsel to the House Energy and Commerce Committee, and played an important role in crafting the 1990 Clean Air Act Amendments.” Again, it’s always easier to traverse through a maze you helped design.
None of this would matter were not one of the keys to success for these groups, beyond staffing up with the people who created the regulatory scheme that governs their industry, is favorable treatment in the tax code. As Republicans shift from the failed health reform to tax reform, expect these groups to fight to keep their preferred treatment in the spider web that is the current tax code.
To give one example of how the current tax code favors these industries is the solar investment tax credit. Solar panels are expensive, the current tax code allows consumers to take a 30 percent credit if they buy solar panels for the home or business. In reality, it is a subsidy for the industry, insulating them from market forces that would keep customers away from buying their product.
This credit became law in 2006, and has been set to expire twice but didn’t. It’s now extended through 2021. SEIA touts this preferential treatment on its website. With the prospect of tax reform looming and the opening up of the entire code possible, I reached out to SEIA to see if they planned on lobbying to keep it. They didn’t really answer, saying the credit “has already undergone ‘tax reform.’ In 2015, on a bipartisan basis, Congress extended the ITC and provided a ramp down of the credit by 2021.”
But if history is any guide, all special interest groups, “green” or otherwise, are expected to push hard to maintain their preferential treatment in the massive tax code.
The problem isn’t the solar investment tax credit, or any one credit or subsidy, it’s the entire concept of government manipulation through the tax code – rewarding certain behaviors and punishing others. These manipulations, those who influence and created the labyrinth of government through which we have to navigate our lives, are not just in the industries the media deem worthy of attack.
There are the revolving door in politics, the ones that get media attention and those that are “green.” If you want to “drain the swamp,” you can’t just ignore the ones you like. They all matter.
Financing for solar panels creates problems for home owners and potential home buyers. Increasing use of property assessed financing is seen as a predatory lending threat by the Mortgage Bankers Association similar to the sub-prime lending practices that caused the 2008 housing crisis. The financing option also makes it harder for properties to be eligible for Fannie Mae and Freddie Mac mortgages.
‘Property assessed’ financing for solar panels reveal serious problems for Realtors, lenders
By Peter Schorsch
As solar energy expands as Florida’s next big growth industry, with it comes a host of unforeseen consequences.
While promises of reduced energy costs for consumers and the lure of “no credit needed,” county-approved loans are indeed attractive, easy financing and lower energy costs could be masking other, potentially devastating, economic problems.
A letter last year from the Pinellas Realtors Organization, standing for over 7,000 real estate professionals countywide, to County Commissioner Charlie Justice cautions against one such situation where the lure of cheap solar hides something much deeper, and darker.
In 2016, The City of St. Petersburg considered using “property assessed clean energy” (PACE) financing for solar energy-related improvements to homes and businesses throughout the region. PACE, which The Wall Street Journal calls one of the “fastest-growing types of financing in the U.S.,” gives property owners special financing agreements with local municipalities, which agree to repay the costs of green energy improvements — such as solar panels — through long-term assessments on property tax bills. Pasco County already has PACE.
The issue was again brought up at a recent Pinellas Board of County Commissioners meeting last week, which was then pushed to a future workshop.
While the intent of the PACE initiatives was to offer no personal liability for the property owner, PACE liens — like property taxes — take precedence over mortgages, said a joint letter from Mindy Rovillo, Pinellas Realtors 2016 chair, and David Bennett, the group’s president and chief executive officer.
“This makes the bonds easier for municipalities to sell,” Rovillo and Bennett write, “but if a home is foreclosed on then liens are paid before the mortgage lender can recoup any money.”
In 2010, Florida lawmakers approved legislation enabling PACE initiatives, which quickly became a boon to finance companies. Since then, the state has developed five active PACE programs, which offer both commercial and residential financing. Homeowners would see special property assessments on tax rolls, revenue which would pay back the bonds.
Realtors are warning — as they have since 2012 — that if the average home sells every five years — and the typical PACE loan is for 20 years — real estate agents will be on the hook to explain this special tax assessment to potential homebuyers.
“Once the prospective buyer learns about this new cost to purchasing the home, this information may cause delays in the completion of the transaction or even a cancellation,” the letter said.
In addition, refinancing a property under a PACE lien could be “problematic.”
“Homeowners who participate in the PACE program with the goal of reducing their monthly expenses through lower energy bills could find themselves unable to take advantage of the significant savings that even a single percentage drop in interest rates can bring with it,” Rovillo and Bennett wrote.
Realtors’ fears about the hidden financial consequences PACE initiatives for solar upgrades are just another of the many red flags raised in the push to expand Florida’s solar industry.
Several news reports exposed the range of questionable sales practices used by solar companies to get consumers to install panels on their homes. For example, SolarCity, one of the industry’s largest players, offers 20-year leases to finance solar panel installations.
However, problems began when the billion-dollar corporation began lowering the requirements by using subpar credit scores to target homeowners looking to save on electric costs by financing solar panels. This practice has led a wave of foreclosures — some estimates put the number in the thousands — of homes under lien for unpaid solar panels. The practice has thrown chaos into mortgage companies trying to sort out who exactly owns the panels.
In addition, Sun Sentinel reporter Ron Hurtibise recently revealed a burgeoning industry in South Florida of fly-by-night companies offering to finance major improvements — such as solar panels — for up to 20 years with no money down and no credit checks. Promises of rebates that would “pay for themselves” came up against a harsh reality when homeowners learn they are ineligible for such reimbursements.
PACE loans face a similar reality, Realtors say.
“Homeowners who participate in the PACE program with the goal of reducing their monthly expenses through lower energy bills could find themselves unable to take advantage of the significant savings that even a single percentage drop in interest rates can bring with it.”
While favoring structural improvements such as hurricane strengthening, Realtors believe PACE loans prove to have an adverse effect on mortgage availability, particularly since the Federal Housing Finance Agency (FHFA) does not allow Fannie Mae, Freddie Mac, and Federal Home Loan Banks to purchase mortgages under PACE liens.
“Approximately 75 percent of residential properties utilize Fannie Mae, Freddie Mac, or Federal Home Loan Banks to finance residential mortgages either directly or indirectly. In a community that has a high number of senior citizens, first-time homebuyers, veterans, and those in search of workforce housing,” Rovillo and Bennett write. “It does not, in our eyes, seem prudent to engage in a program that could deny 75 percent of the financing market to a property.
Concerns over the PACE program have led the Mortgage Bankers Association (MBA) to lobby the Donald Trump administration, the Consumer Financial Protection Bureau (CFPB) and other federal agencies to restrict these residential energy-efficiency loans, comparing them to the subprime mortgages which lack federal consumer protections against predatory lending.
According to the MBA website, the group “believes that energy-efficient home improvements can be beneficial for homeowners; however, MBA has significant concerns with the PACE program construct and the risk it poses to traditional lien priority.”
Florida solar companies are pushing back against consumer protection requirements amidst investigations by federal and state governments for fraud. The industry is claiming these protections to stop fraudulent companies will be a burden on their small businesses, even though most are large corporations, some valued over one billion dollars.
Questionable practices, fraud, hidden costs: The dark side of Florida’s solar industry
By Peter Schorsch
Florida’s solar industry has embraced a comfortable narrative – they are the small-business “little guys” facing giant corporations, which care little about consumers and renewable energy.
In reality, nothing could be further from the truth. And it reveals a dark side to sunny solar.
For example, The Daily Caller is reporting on an investigation by the Treasury Department into potential fraud by solar panel companies – many receiving three years of taxpayer cash — in a case that could have “two-and-a-half times” the reach of Solyndra, the scandal that dogged the early years of the Obama administration.
Republicans senators are calling on Treasury Inspectors General Eric Thorson and J. Russell George to offer updates on the investigation into solar companies inflating market value of their products to bolster taxpayer funding.
According to a letter to Treasury officials from Republicans Jeff Flake of Arizona and Lisa Murkowski of Alaska: “The Department recently indicated that applicants included ineligible costs or otherwise overstated the value of their solar energy investments by claiming approximately $1.3 billion in unwarranted cash grants.”
Murkowski and other Republicans have been waiting for results of the investigation, scheduled for release back in June 2015. For more than three years, federal officials investigated potential fraud by solar companies.
“Based on the information available,” Murkowski wrote in November, “we remain concerned that the 1603 cash grant program and the administration of the investment tax credits lack sufficient transparency, oversight and enforcement to protect taxpayers.”
In addition to the Treasury investigation, a recent New York Times article and reporting by the South Florida Sun Sentinel exposes Florida’s solar industry for what it truly is – billion-dollar, for-profit corporations engaging in highly questionable business practices to prey on consumers.
SolarCity, the nation’s leading installer of rooftop solar panels – and a favorite in the renewable energy sector – promotes itself to investors with a single idea, a 20-year lease to sign up for its solar panels.
However, SolarCity has employed practices that echo big-bank mortgages that led to the financial crisis and Great Recession of 2008.
Sun Sentinel reporter Ron Hurtibise uncovered other programs throughout South Florida that have cropped up over the past two years, giving consumers, particularly those elderly or disabled, a chance to finance major improvements – such as solar panels – for up to 20 years with no money down and no credit checks.
Unscrupulous contractors target many of these Floridians with promises that solar panel rebates that would “pay for themselves.”
Later, those consumers learn they have been scammed, and are ineligible for such reimbursements.
NYT journalists Danielle Ivory and Diane Cardwell also found dozens of homeowners who, over the last three years, entered long-term solar panel agreements shortly before (and sometimes after) defaulting on mortgages. More than a dozen homeowners were already in default, or with other liens on the property, by the time SolarCity sent paperwork to the government.
The situation got to the point where Mohammed Ahmed Gangat, an attorney for SolarCity, was forced to file documents with a New York State Court asking for an extension. The company was, as the Times reports, “inundated with hundreds of lawsuits in New York, and thousands across the country, all of which have named SolarCity as a defendant in a residential foreclosure action.”
A statement from SolarCity representatives clarified Gangat’s statement, saying that there were only 139 cases out of “more than 305,000 installed customers.”
Either way, the figures pose a problem: If the attorney (who SolarCity pointed out was not an employee) cited incorrect figures in his filing, he would be subject to ethical disciplinary action. On the other hand, if the number of cases is indeed “in the thousands,” SolarCity – now owned by automaker Tesla – could face a “threat to its financial performance that it has not disclosed to the government and investors.”
To consumers, the basic premise of SolarCity is simple, install solar panels and save on electric bills.
The company offers to pick up installation costs, an average of $25,000 to $30,000, and charge customers a flat rate for electricity produced by the panels, usually at rates 10 to 15 percent below that of utilities.
Customers get cheaper power; SolarCity gets regular monthly payments.
But in the past few years, SolarCity lowered requirements for entry into the program – using a cutoff 650 FICO score, considered by many to be only “fair” credit. But that credit score is assessed months before solar panels are installed, and can fluctuate considerably based upon financial situations.
As Rod Griffin, director of public education at credit reporting agency Experian, told the Times: “For a consumer with a sub-700 score, it’s likely that there are already some indicators of risk there, but not a severe one to that particular lender, I guess, at that point.”
Relying on a single credit score – one that could change for the worse at almost any time – calls into question SolarCity’s business practices, especially considering the expensive hardware that will be sitting on foreclosed homes, which could number in the hundreds (or even thousands).
Adding to the confusion are courts that will have a difficult time determining the true ownership of installed solar panels.
Of course, SolarCity is not the only solar company facing these problems, but it is one of the largest.
“SolarCity needs to contest every foreclosure to have any realistic chance of getting either paid for or the return of their solar panels,” Connecticut attorney Christopher McCormick said. After a decade representing banks, McCormick now works with homeowners facing foreclosure.
“Those panels are pretty valuable,” he told the Times. “It makes sense that the company would not want to lose them.”
In addition to McCormick, several groups have formed to educate the public on the dark reality of the solar industry.
One such website – MakeSolarSafe.com – says its goal is to “share the truth about solar energy” and help policymakers make “well-informed energy policy decisions.”
The group reveals the downsides of “net metering,” reimbursements to solar rooftop owners for electricity generation they return to the grid, which results in “a great deal of hidden cost.”
According to the website: “Customers leasing rooftop solar systems are often unaware of additional maintenance costs for which they are responsible. In fact, they are often required to purchase additional maintenance agreements with the company they are leasing from. Average panel cleaning costs can be as much as $20 per panel, costing customers with large photovoltaic systems as much as $700 per year for cleaning.”
Another hidden cost of solar power is the maintenance of the shared electrical grid, by way of increased voltage and stress throughout the power infrastructure.
Since solar energy is by nature intermittent, the introduction of solar-based electricity often causes spikes to the entire system, leaving consumers (including those not using solar) to pay the increased maintenance costs.
Massive solar corporations, questionable business practices, thousands of foreclosures and hidden costs for consumers — it is far from the “little guy” image solar groups such as Southern Alliance for Clean Energy portray the industry in its effort to expand solar power throughout Florida.
Original article at: http://floridapolitics.com/archives/234536-questionable-practices-fraud-hidden-costs-dark-side-floridas-solar-industry
Consumers must be protected from misleading tactics and false promises of rooftop solar lead generators. Lead generators make it easier for companies to target customers with fraudulent products promising energy savings. The FTC has started to take notice and is looking to crack down on the practice.
Congress, administration should look at ties between rooftop solar and lead generators
As a long time supporter of the renewable energy industry, I continue to be pleased about the expansion of renewable fuels that contribute to the reduction of our carbon footprint. Around my home state of California, and all across the nation – especially in the West, where sunshine is abundant – the proliferation of rooftop solar can be seen in almost every residential neighborhood. This is a good thing.
However, the rapid deployment of rooftop solar panels has also led to the rapid expansion of an industry – known as lead generators – that is often rife with consumer fraud. Lead generators are a type of business that function exactly as their name indicates: generate leads for businesses looking to aggressively grow their customer base. Lead generators can interface with the public through multiple avenues, including online, in person or over the phone. In practice this means they generate business for industries by knocking on people’s doors, sending fliers in the mail, generating telemarketing phone calls or pop-up advertisements on popular websites.
In the case of rooftop solar, lead generators often offer customers promises of significant savings on their electric bills, access to government loan programs, or other offers that require a quick decision in order to take advantage of a special offer. The problem is, apparently many of these promises are misleading, and can pressure customers to make a decision that is against their own financial best interest.
It is known that rooftop solar is a prime target for the lead generation industry. The upcoming lead generation convention in Las Vegas later this month has a panel on “How to Maximize Your Returns from Solar Leads” and the organizers entice industry participants by promising that the “The solar boom is well underway.” But consumer advocates and investigative journalists have sought to expose this business relationship. A recent article in the The Salt Lake Tribune, found examples of lead generators calling on behalf of the: “Utah Public Utilities Commission — a nonexistent entity that could be mistaken for the Utah Public Service Commission.”
While most Americans have never heard of the lead generator business, the federal government is aware of the industry and the Federal Trade Commission (FTC) – whose official mission is “Protecting Americas Consumers” – has weighed in with serious concerns and taken actions against the industry. The FTC watches lead generators closely, because they have been at the forefront of many consumer fraud issues, including pressuring people to take loans that led to the mortgage crisis. Just last year, the FTC brought a federal action against a telemarketing firm in California that was targeting millions of Americans on the national Do Not Call Registry. The FTC is so concerned about lead generators, that late last year it produced a report looking at: “some of the consumer protection concerns…complexity and lack of transparency, aggressive or possibly deceptive marketing, and the potential misuse of consumers’ sensitive information.”
Lead generators are typically paid on commission, therefore incentivized to be very aggressive (e.g. ignoring the Do Not Call Registry) to close the deal. These tactics can generate near-term profits for rooftop solar companies, but they can sometimes lead to consumer abuse.
In the same The Salt Lake Tribune article, a representative of the rooftop solar industry explained that ethical rooftop solar companies reject this type of behavior by lead generators. He went on to say that anytime there is a rapid expansion in rooftop solar, that there will be: “a handful of unscrupulous people who are trying to take advantage of people’s ignorance.” The rooftop solar industry also has websites where consumers can go to learn more about rooftop solar and learn how to avoid scams. This is also good and the industry should be commended.
However, lead generators don’t actually sell solar panels – they only sell their leads to interested rooftop solar panel companies. This allows the rooftop solar industry to, on the one hand, decry the actions of lead generators – many of whom operate overseas – but on the other, buy those leads to try and make a sale.
We need government intervention to put an end to bad practices associated with the lead generation business – especially as it relates to rooftop solar. I urge Congress and the Administration to look into this matter, and identify ways to protect consumers. We cannot allow either the rooftop solar industry or the lead generator industry to act with impunity.
Ron Dellums represented California’s 9th District in the United States Congress from 1971–1998, and served as Oakland Mayor from 2007-2010.