PHOENIX – Rooftop solar companies are using deceptive marketing to push risky leases on consumers, and federal regulators need to step in.
That was the message sent by six Arizona congressmen in letters to the Federal Trade Commission and the recently created Consumer Financial Protection Bureau. But one of those letters was originally drafted by an employee of Arizona Public Service, the state’s largest utility and one of the largest campaign donors for the group of lawmakers.
The APS-authored, congressmen-signed letter comes as the latest in an ongoing effort to stymie third-party solar panel companies, whose business has grown tenfold over the past half-decade, presenting a challenge to the long-term business model of traditional utilities like APS.
The high-profile fight between the traditional utility and newer rooftop solar panel companies is not unique to Arizona. Similar struggles have emerged in other states as rooftop solar installations have increased dramatically since 2009.
On Nov. 19, Democratic Reps. Ron Barber, Ann Kirkpatrick and Kyrsten Sinema asked in a joint letter to the CFPB for a plan to look into solar panel leasing practices. Then, on Dec. 12, Republican Reps. Trent Franks, Paul Gosar and Matt Salmon sent a similar letter to the FTC.
After both letters were sent, the Arizona Corporation Commission voted late in 2014 to open a docket on consumer complaints about solar companies. Initial hearings are expected to begin this spring.
Thomas Van Flein, Gosar's chief of staff, said the Dec. 12 letter sprang from a draft provided to his office by a representative of APS.
Van Flein said the draft letter was one of numerous documents provided by APS on the topic.
"I think this is not unusual, to even have a draft provided to you by other stakeholders," Van Flein said. "Sometimes you have the opportunity to make changes, sometimes you don’t."
Van Flein estimated that he changed 30 or 40 percent of the letter APS provided.
"We read it, we revised it, we reviewed it. It was our letter at this point. We adapted it, we changed it, we vetted it," Van Flein said.
A comparative analysis shows four sentences of APS' draft were completely or mostly changed, along with a handful of other words and phrases.
Van Flein did not respond to requests to provide the full set of documents provided by APS.
Metadata encoded into the digital file provided by APS and edited by Van Flein lists David Peterson, Energy Innovation Program Consultant for APS, as the author of the letter. It also lists Pinnacle West, the parent company of APS, as the company that owns the computer it was created on. The same metadata showed that Van Flein had made the most recent edit to the file.
APS spokesman Jim McDonald would not answer specific questions about why Peterson wrote the letter, which purports to spring from constituent complaints.
“As we have told you previously, we regularly work with members of Congress and their staff on consumer and consumer protection topics along with an array of other issues of importance to APS, its customers and the state of Arizona,” McDonald said in an email.
Tristan Daedalus, a spokesman for Rep. Matt Salmon, said he and his staff did not know the letter originated from an APS employee.
Although the draft was originally written to the CFPB, Daedalus said Republicans in general, and Rep. Salmon in particular, are opposed to acknowledging the authority vested in the regulatory body. That's why it was revised to be sent to the FTC, he explained.
Gosar aide Van Flein said signing a letter drafted by APS was not a quid pro quo for campaign contributions.
Over the past three election cycles, the political action committee and employees of Pinnacle West Capital Corporation have given a combined $99,675 to Arizona Republicans Franks, Gosar and Salmon, according to data compiled by the Center for Responsive Politics. Pinnacle West has been the single largest campaign contributor for Gosar during his entire political career and has been the second largest campaign contributor for Salmon over the past three election cycles.
The political action committee and employees of Pinnacle West spent more than twice in 2014 than they did in 2010 on the campaigns of Arizona’s congressmen.
Contributions from the political action committee and employees of Pinnacle West
|2014||2012||2010||Total||2014 PNW rank||2012 PNW rank||2010 PNW rank|
Peterson said he could not comment on why he was asked to write the letter. He also declined to provide details about the consumer complaints cited in it, but described them as “common knowledge.”
In Peterson’s draft, however, he explained, “many reports are surfacing that homeowners who have signed these zero-money-down leases are struggling to sell their homes.”
That was changed to read, “numerous reports have found that homeowners who have signed these zero-money-down leases are struggling to sell their homes.”
"At the end of the day, I would advise you to wait for these hearings,” Peterson said. “When these hearings come – if the feds do what these letters ask them to do, and obviously the ACC (Arizona Corporation Commission) is taking it very seriously – at the end of the day, the hearings are going to happen, people are going to be under oath, and the evidence will be shown."
Van Flein said he did not actually review any consumer complaints.
In a similar Nov. 19 letter to the CFPB, four Democrats, Arizona Representatives Ron Barber, Ann Kirkpatrick, Kyrsten Sinema and Texas Representative Gene Green, warned of reports that solar leasing companies oversell economic benefits of their products.
The Democrats’ letter asserts concern over, “reports that solar leasing companies may be overstating the economic benefits of signing a long-term solar lease while failing to disclose important information during the sales process.”
Kirkpatrick’s office led the effort to produce the letter signed by the three other Democrats, though Van Flein said he also helped with their Nov. 19 letter.
Kirkpatrick’s spokeswoman Jennifer Johnson said privacy rules prevent their release, but also declined to answer questions about the quantity of reports, the way the reports reached their office, or to confirm that they reviewed any consumer complaints.
"We won’t be releasing anything further at this point but will definitely let you know when we hear back from CFPB," Johnson said in an email.
In the past three years, the Better Business Bureau has processed 129 complaints about SolarCity and 77 about Sunrun, two of the largest rooftop solar panel companies in Arizona. According to the BBB's rating explanation for the companies, those numbers are low for the size of the companies, which both have A+ ratings. Sixty-four percent of those who filed complaints filed them under “problem with product/service.” Twenty percent cited “advertising/sales” issues.
Former Arizona Attorney General Tom Horne also issued a consumer alert about solar leasing companies in May 2014, warning about inflated claims of savings. In August 2014, Horne filed a lawsuit against Stealth Solar alleging the company makes false claims in telemarketing and in-person sales pitches. In November 2014, Curtis Development and Legacy Luxury Homes agreed to a settlement with Horne’s office to stop making misleading claims to homeowners about solar installations.
This report was part of a collaboration between the Arizona Center for Investigative Reporting and the Arizona Capitol Times.