Solar companies say legislation would drive them out of state

It’s a popular new way to bring solar panels to homes of middle-class families who often feel they can’t afford them.

Solar companies are installing the panels on the homes in some states for free, but charge the homeowner for the power produced.

And now these companies are aiming for the Washington market.

But a Washington lawmaker thinks consumers need to be protected in the deal.

His legislation has started what he’s calling the “Solar Wars.”

The solar companies are lobbying hard against the legislation that they say would kill the solar industry in Washington by ending net metering, the practice by which solar customers sell energy back to the grid.

“No solar company would be able to operate in Washington,” said Bryan Miller, a spokesman for The Alliance for Solar Choice.

The organization’s seven members include the two largest leasing companies in the country, SolarCity in San Mateo, California, and San Francisco-based Sunrun, where Miller works.

But Rep. Jeff Morris, D-Mount Vernon, sponsor of HB 2045, said his bill would protect consumers confused about the solar-leasing companies’ “operating contracts,” which he said are complicated and hard to understand.

Unlike when leasing a car, consumers often do not have the option of buying the solar panels on their roof, yet are locked into 20- and 30-year contracts with the leasing companies to buy the power the panels produce.

He said it would require the companies operating in Washington to be regulated by the state Utilities and Transportation Commission. The commission responds to consumer complaints and investigates if a company isn’t doing what it promised, Morris said.

“The reason they’ve gone just off the rails on this is because they’re afraid that it’s going to sweep across the 50 states,” Morris said.

SolarCity, chaired by Tesla Motors and SpaceX founder Elon Musk, and Sunrun are active in about 15 states and account for an estimated 70 percent of new solar installations in the country. They recently said that electric utilities throughout the nation are trying to stomp out solar because they fear it will make them obsolete.

Morris said that there needs to be a 10-year smart plan to address integrating new technologies, such as solar panels, electric cars and smart thermostats — all part of the “huge change” electric utilities are facing, he said.

“Not since Edison invented the light bulb have we seen such change in the electric industry,” Morris said.

HB 2045 is one of several proposed energy bills, following Gov. Jay Inslee’s executive order last year for an overhaul of the solar industry, and seems the most likely to make it through the Legislature.

Morris has been meeting for months with utilities, solar installers and manufacturers and environmental groups to draft a long-term plan for the future of Washington solar.

As written so far, HB 2045 would allow leasing companies to operate here, but under different rules for net metering and state incentives than Washington companies.

“This is likely a contentious point with leasing companies, as they would prefer for the Washington solar market to be an easy target versus a level playing field,” wrote Samantha Parsons, of SolTerra Systems in Seattle, in an open letter responding to a leasing company attack against HB 2045.

The Alliance for Solar Choice says Washington has very little solar and Morris’ bill would ensure only the rich can afford it. Solar proponents here say incentives and low-interest loans have helped bring down the costs of solar.

Snohomish County PUD spokesman Neil Neroutsos said the utility has seen “a huge interest in solar” in just the past five years, with 75 solar installations increasing to around 650.

PUD customers can also qualify for an extra cash incentive offered by the utility, as well as getting help with paperwork, finding a contractor and obtaining a low-interest loan, said Steve Klein, PUD general manager.

A typical Snohomish County PUD customer could expect not only to have paid for the solar installation after 25 years, but to have made $14,220 going solar.

SolarCity’s didn’t allow its customers to buy the panels until recently. A customer leasing a roof-top system from SolarCity could expect to pay $21,967.08 over 20 years.

SolarCity owns the system and the customer pays SolarCity for the power it produces, starting at $68.83 a month for the first year in the leasing estimate and increasing 2.9 percent a year, to end up paying $118.46 a month in the last year of the 20-year lease.

Any incentives and rebates, including the federal tax credit, go to Solar City.

Sunrun does not currently offer ownership of its solar installations, said Miller of The Alliance for Solar Choice.

If a customer sells their house, he or she would either have to pay off the contract and add that to the home’s cost, or transfer the contract to the buyer. Or the customer could pay to move the system to their new home at their own expense.

Leasing companies are worried that any changes to solar-industry rules could set a precedent that could affect their business models across the country, said Dave Kozin, an owner of A&R Solar in Seattle and a founder of trade group Solar Installers of Washington.

Formed in 2013, the trade group includes most of the state’s installers and has been working with Morris on HB 2045.

Some of the state’s electric utilities are pushing for a charge on solar customers, which they say is needed to pay for grid maintenance, he said.

The PUD’s Klein said the utility hasn’t been part of that discussion, but he suspects a conversation on some sort of charge to cover fixed costs including grid maintenance to all residential customers* will take place over the next year.

He acknowledged that solar-generating customers help decrease the utility’s need to buy power at peak times when it’s more expensive.

But the PUD still has to pay to maintain the grid those same customers need at night and on cloudy days, he said, and it wouldn’t be “fair and equitable” to expect the PUD’s other customers to foot the bill.

Kozin said his trade group would oppose anything approaching the $50 monthly charge recently imposed in Arizona.

“The fear is that could have a significant negative impact on our industry,” he said.

HB 2045 is a work in progress, Kozin said, and his trade group will keep working with Morris to help draft a bill that would be fair to all.

“We just want to design a system that kind of allows everyone to compete,” he said.

* Clarification, April 13, 2015: Snohomish County PUD general manager Steve Klein said he expects a conversation to take place on a charge on all residential customers to cover fixed costs including grid maintenance. An earlier version of this story said the charge would be more limited.