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SB1465 would protect public against questionable tactics of rooftop solar companies

Sen. Debbie Lesko

Sen. Debbie Lesko

“We haven’t been able to sell our home for almost a year. The solar company told us the solar panels would increase the value of our home by $25,000.  Instead the opposite has been true.   Our Realtor has shown our home 149 times, people really like it, but don’t want to take over the 20-year solar lease.  We have moved into independent living and we need the money from the sale of our home. Can you help us?”

This was the phone call I recently received from long-time constituents. A solar company talked them into leasing solar panels for 20 years, even though they are in their 80s.   They cannot break the lease and the buy-out option is not available until 2018.

My constituents are distraught over an issue that is getting more and more attention in Arizona and across the nation.  It is time that something is done.

A bipartisan group of Arizona and Texas congressmen, the AZ Corporation Commission and the AZ Residential Utility Consumer Office (RUCO) have raised serious questions about the financing agreements and sales practices of some of the roof-top solar companies.  Some companies may be doing a good job, but others are not.

As a matter of common-sense and consumer protection it seems to me that a good starting point would be to ask the solar companies to provide complete and standardized disclosures in their leasing and financing agreements. This is what we require in statute from the insurance industry, motor vehicle dealers and mortgage lenders.

Consequently, I have authored and introduced legislation supported by Republicans and Democrats alike.  SB1465 does nothing more than require standard disclosures so that homeowners considering solar leasing or purchase will have more complete, understandable information before making a decision.

My legislation would simply require these kinds of disclosures and provisions:

  • To start, it must be, at minimum, in 10 point type to be readable.
  • Blank spaces need to be filled in.
  • The Price and Total Cost must be included.
  • Tax Incentives and Subsidies associated with the agreement and who will receive those benefits must be stated and defined.
  • Warranty terms and performance standards need to be stated.
  • The terms and credit requirements for a future homebuyer to assume the lease must be spelled out.
  • The assumptions about future electric rates used to determine the savings projections must be disclosed.
  • The customer can cancel within 5 business days.

Consumer protection disclosures are in everyone’s best interest. They protect the homeowner by providing clear and accurate information. They also protect the responsible solar companies with an affirmative defense that they have given the buyer the information they need if a dispute does arise.

This is not a pro or con solar issue; this is a consumer protection issue.  It is my job to help protect my constituents, especially the senior citizens in my community and throughout the state.

– Republican Sen. Debbie Lesko represents District 21, which includes Sun City, Youngtown, Peoria, El Mirage and Surprise.

5 comments

  1. I wholeheartedly support this legislation to provide transparency and needed oversight for consumers. We feel this is solid legislation at least on the peripheral, I would like to see the actual bill before a complete endorsement. We are solidly aligned with strong consumer protections against predatory solar leasing or sales companies.

    -Brandon Cheshire, Owner of SunHarvest Solar in Phoenix, AZ

  2. Thank you Senator Lesko ! I have been trying to build awareness concerning these issues for several years with websites and videos and have been drowned out by the the large corporate solar players at every turn. Finally these issues will be brought to light. Here’s a few other issues that need to be considered:

    1. Add up your lease payments and when compared to an outright solar system purchase you’ll typically find that you’ll easily be paying up to 3 times more on a $0 down solar lease versus a purchase. Today, pricing for an average sized 4.75 kW purchased system has dropped below $11,000 after applying the 30% federal tax credit.

    2. You’ll typically pay so much more for a lease than a purchase that’s it’s actually you who will be over-paying for your own maintenance, monitoring and insurance not the leasing company. Why do you think so many solar leasing companies are BUYING solar systems while leasing them to you?

    3. You may have trouble selling your home because what home buyer in his right mind will want to assume your lease payments on a used, outdated system when they can buy a brand new system with the latest technology and keep the 30% federal tax credit for thousands less.

    Don’t believe it ? Well then simply type the keywords “solar lease scaring buyers” into Google and you can read many accounts of homeowners and real estate professionals reporting difficulty when trying to sell a home with a 20 year solar lease or PPA attached to it.

    4. After making 20 years worth of leasing payments, you won’t even own the system. It will still belong to the leasing company. If you want to own their system after making all those payment, then you’ll have to buy it from the leasing company at the end of your lease at fair market value.

    5. Check that quote from the solar leasing company and you’ll find that most of the time they won’t even tell you what brand of equipment they’re installing on your home. I wonder why?

    6. Most if not all $0 down solar leases include an annual payment escalator that will increase your monthly payment by up to 2.9% per year for 20 years.

    Imagine what would happen if your utility company decides to, or is ever mandated to lower their rates or flatten out their rate tier structure, like is happening in California. You could end up being forced to pay more for your electricity than if you never had signed that air tight, escalating solar lease contract in the first place.

    7. Remember, the solar leasing/PPA companies are still using Gen 1, boxy looking aluminum framed solar panels that were originally designed back in the 1950s, instead of the latest, Gen 2 technology that’s already available So you’ll be stuck with the same aging solar system on your roof without the ability to upgrade for the full 20 year term of the contract.

    Your neighbors are just going to love you at year 13 of your 20 year lease with that boxy looking superstructure bolted to your roof. If you bought your system instead, you can sell it at any time you wish and take the proceeds from the sale and upgrade to the latest and greatest equipment that will produce even more power in the same amount of space and improve your home’s curb appeal. You can’t do that with a lease because it’s not your system to sell.

    8. You’ll have to forfeit the 30% federal tax credit and any applicable cash rebate to the leasing company and you won’t get tax deductible interest on your lease payments. Only a $0 down FHA solar loan or second mortgage can give you tax deductible interest and let you apply all of your incentives to a lower priced system for a much better return on your investment.

    9. With one of those $0 down solar loans that the leasing company is offering you’ll have to come up with a 30% balloon payment that is due on June 1st the year after installation, regardless of the amount claimed in the tax credit and you’ll have a 2.9% annual payment increase.

  3. The Arizona Solar Energy Industries Association (AriSEIA) issued a press release yesterday (2/18/15) citing an analysis of Arizona Regional Multiple Listing Service (ARMLS) residential sales data for the past six months that shows homes with solar actually sell faster and at much higher prices than homes without solar.

    Contrary to what proponents of SB1465 want us to believe, actual sales data proves solar owned and leased homes sold the fastest of any home and command a higher price. If solar home sales outpace traditional sales, then maybe the problem isn’t the lease. Maybe some real estate agents know how to sell homes with solar better than others. If that’s the case, then why is more industry regulation necessary? The short answer is, it isn’t.

    You can find the press release and data here: http://bit.ly/17UFIR9

  4. Having solar roofing installed on your house is a good idea but make sure you think the whole process through before making a move. You should look up the best roofing company in town that is providing solar services. If you get the job done from untrained professionals, you will face many troubles with maintenance.

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