Leading U.S. residential solar contractor SolarCity has come in the crosshairs of Democrats and Republicans in Congress. They have sought an end to the company’s “potentially deceptive sales tactics.” The Congressional leaders have questioned SolarCity’s 20-year lease model with zero upfront cost to customers. They have received multiple complaints that huge savings SolarCity promised to customers never materialized.
SolarCity pioneered the leasing business model
Four Democrats and 12 Republicans have asked two different federal agencies to investigate the matter, reports Tori Richards of Watchdog. They have expressed concerns that the San Mateo-based company’s leases were not offered with accurate disclosures or in good faith. The has sent a letter to the Federal Trade Commission, while Democrats have sent letters to the Consumer Financial Protection Bureau.
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
Backed by billionaire entrepreneur Elon Musk, SolarCity promises customers that, using solar, they will have to pay less for electricity than they pay for utility bills. The company pioneered the leasing business model to take advantage of the federal and state tax breaks paid to solar-energy owners. U.S. Rep. Paul A. Gosar, R-Arizona, is a solar advocate. But he initiated the probe following complaints from constituents.
SolarCity customer reports $350 jump in monthly electricity bill
Rep. Gosar told Watchdog that he didn’t want the future of solar energy harmed. If there are consumer scams, thousands of customers will begin to question the entire solar industry. A SolarCity customer brought the company’s actual brochure to Gosar’s legislative director Jeff Small. The company had based savings on utility rates increasing 4% annually. But in Arizona, utility rates have gone up by an average of just 1%.
Every small thing in the company’s sales pitch was suspicious, Small told Watchdog. In California, a SolarCity customer said he was promised huge savings, but electricity bills jumped $350 a month. However, SolarCity spokesperson Jonathan Bass rejected the reports of customer complaints, saying that the company had a “strong commitments to customer protection.”
SolarCity shares rose 3.21% on Thursday to close at $50.91.