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LIPA to vote on consumer protection rules for home solar businesses

Solar energy panels are installed on the roof

Solar energy panels are installed on the roof of a home in North Massapequa on Nov. 14, 2017. Credit: Chris Ware

For the first time ever, Long Island will regulate its $1 billion home solar industry under a new plan aimed at stopping fraud and abuse.

LIPA trustees this week are to vote to adopt a new set of consumer-protection rules for solar installation and related businesses. The move will come four months after a Newsday/News 12 Long Island special report found some customers had leased substandard systems without full knowledge of their complex terms.

LIPA’s decision follows by more than a year the state Public Service Commission’s adoption of similar rules, which are now in place in the rest of the state. LIPA does not fall under the PSC’s supervision. It also follows a five-year period in which solar leasing companies expanded widely without specific regulation in the state, particularly on Long Island, after the Cuomo administration and LIPA allowed solar leasing companies to be eligible for state and LIPA rebates. After spiking sales through 2017, many of those companies have left the market or gone out of business.

The new plan will require that “customers understand the costs and benefits of their investments and are afforded protection from confusion, fraud, and abusive marketing.” Long Island has more customers than any region in the state — nearly 40,000 home and small office rooftops at last count.

Solar industry officials — aware of complaints against some vendors putting expensive systems on homeowners roofs — say they can abide by the new proposed regulation.

“We are happy to see PSEG putting protection measures in place to protect Long Island homeowners and solar companies,” said Arthur Perri, chair of the Long Island Solar Energy Industry Association. “It’s unfortunate that some clients have been burned, but consumers should know that solar is alive and well on Long Island and that they can trust local solar.”

The state rules, and LIPA’s proposed version of them, are aimed at stemming questionable practices by some companies in the solar and related energy businesses that sought to entice customers with promises of lower bills and greener energy.

In some cases, the Newsday investigation found, customers were unaware of clauses in their contracts that allowed the companies to increase the leasing cost by upward of 3 percent a year. Others were surprised to discover that their homes’ titles were encumbered with so-called uniform commercial code filings that could complicate home sales or refinancings, and while others found that their systems didn’t produce the promised energy savings.

The rules bar energy companies from “misleading or deceptive” conduct, including in the presentation of rates and savings associated with the systems. Customers can request written information about the company, as well as information about their planned purchase in “plain language.”

The suppliers must comply with laws regarding door-to-door marketing and telemarketing, and cooperate with the state, LIPA and law enforcement in any deceptive practices investigations.

The rules put new limits on the release and safeguarding of customer information by LIPA and the energy companies, including prohibiting the companies from selling, disclosing or providing the information without the customer’s consent unless it’s required to maintain service.

Tom Falcone, chief executive of LIPA, said companies found to have broken the rules could face a state audit, suspension from LIPA solar-energy programs, and an inability to get customer information needed to enroll them in programs. But he said he believed most companies “welcome” the rules. “If you’re someone who’s honest and treating customers fairly, you have nothing to fear here.”

LIPA’s new rules will encompass all the state rules, but include a clause that relies on the state Department of Public Service to make a “written recommendation” of resolutions to an offending energy company once the state investigates a complaint. The clause is needed because the department, while fielding complaints from LIPA customers, doesn’t have formal jurisdiction over LIPA, a stipulation of Gov. Andrew M. Cuomo’s LIPA Reform Act. Instead, the department has a “review and recommend” role in LIPA affairs, leaving formal authority to LIPA’s 9-member board of trustees.

LIPA’s proposal says the new oversight rules were required to “ensure that customers understand the costs and benefits of their investments and are afforded protection from confusion, fraud, and abusive marketing.”

Scott Maskin, chief executive of SUNation Solar Systems, Long Island’s largest installer, applauded the move.

“The bottom line: if this cleans up the toilet, it’s good,” said Maskin. “Anything that protects the consumer is a good thing.” He worried, however, that the proposal didn’t appear to include penalties for wrongdoers. “It’s not going to scare anybody unless there’s teeth to it.”

LIPA’s rules come as the state attorney general’s office has confirmed it is conducting an investigation into the solar-energy market, begun under former Attorney General Eric T. Schneiderman. His replacement, Barbara Underwood, who will leave office in January, declined to comment on the probe or LIPA’s proposed rules. “Given that we have an ongoing investigation, we are of course not going to comment,” spokeswoman Amy Spitalnick wrote in an email.

Underwood has a “Going Solar” consumer tip page on her website, saying, “New York’s solar market is growing, creating jobs and producing clean power. That’s good for the environment and increases our energy security and resiliency,” but adds it’s “important homeowners have the information they need to make informed decisions.”

Nationally, complaints against solar leasing firms — and efforts to prevent abuses — shouldn’t stop overall government efforts to encourage solar and other environmental-friendly energy recovery methods, say experts.

“Solar will continue to grow and be a big part of the energy mix,” said Tyson Slocum, energy program director of Public Citizen, a longtime advocacy group that has criticized top solar companies in the past. “But we need to make sure consumers are protected.”

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