SEC Investigating Sunrun And SolarCity Over Contract Cancellations

The U.S. Securities and Exchange Commission (SEC) is investigating whether Sunrun and SolarCity, two major residential solar installers, have “adequately disclosed how many customers have canceled contracts after signing up for a home solar energy system,” according to a Wall Street Journal (WSJ) report.

Citing someone “familiar to the matter,” the WSJ says the federal agency has already subpoenaed Sunrun and spoken with workers about the company’s contract cancellation disclosures, and the SEC is also probing Tesla subsidiary SolarCity.

As of press time, a Sunrun spokesperson has not responded to a request for comment; however, a SolarCity spokesperson told the WSJ in a statement that the solar installer “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.”

Both solar installers previously mentioned increases in customer cancellations last year, but details were scarce. Although the U.S. residential solar market has been booming for the past few years, the market segment experienced a slowdown in 2016.

Sunrun and SolarCity are public companies, and as the report points out, contract cancellations can serve as a way for investors to judge how well a company is performing.  Following the WSJ report, a number of law firms are publicly prepping potential lawsuits on behalf of investors in Sunrun and Tesla, which acquired SolarCity last November.

Furthermore, the WSJ suggests the issue of solar contract cancellations might indicate consumer dissatisfaction over questionable business practices of some solar companies, in general.

The WSJ notes that “hundreds” of homeowners have filed complaints against solar providers, alleging that the companies deceived the consumers about the price of systems or potential savings and used aggressive sales methods. Some homeowners have also said they were confused and didn’t know they were signing contracts.

According to the WSJ, SolarCity’s statement 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.”

Notably, though, Tesla also reportedly revealed plans last week to cease SolarCity’s door-to-door sales strategy and instead focus on online and retail sales – a choice Tesla claimed is “what most of our prospective customers prefer and will result in a better experience for them.”

In a statement to Solar Industry, Tom Kimbis, executive vice president of the Solar Energy Industries Association (SEIA) and head of the group’s consumer protection work, defends the solar sector’s track record on good business practices.

“In the residential solar industry, integrity and word-of-mouth recommendations are paramount, and the solar industry would not have achieved more than 1.4 million installations without satisfied customers,” he says. “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.”

Kimbis adds, “There is no doubt there is more to do. We are actively working with attorneys general across the U.S. to ensure customers are both well informed and protected, and we are committed to educated customers who understand every element of the solar transaction.” In fact, Mississippi Attorney General Jim Hood has just launched a consumer’s guide to solar power, which cites SEIA resources.

To read an exclusive op-ed from Kimbis, titled “Consumer Protections: Myth vs. Fact,” click here.


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