December 24, 2015
Vermont

Vermont Attorney General warns solar companies to stop ‘false marketing’

By Mike Polhamus | VTDigger.org | Posted: 12/23/2015 | www.reformer.com

The Vermont Attorney General’s office has issued a warning to certain solar companies, telling them to stop deceptive marketing practices and false claims that the energy they sell consumers is actually renewable.

The AG’s office has targeted companies that sell or lease in-state solar panels to Vermont customers, and then sell the renewable energy they produce to out-of-state utilities.

Under a new guidance letter issued last week, the AG’s office says these businesses cannot claim that their Vermont customers are buying solar power. Companies that do so violate federal consumer fraud laws, according to the letter from Assistant Attorney General Justin Kolber.

Kolber’s letter does not name any offenders, but he cites examples of deceptive marketing claims from SunCommon and NRG representatives.

Kolber said the state will seek civil penalties against renewable energy producers that falsely claim to sell “renewable,” or “solar” or even “clean” energy to Vermonters.

The warning applies to more than half of what are known as “community solar arrays” within the state, according to a Vermont Law School professor.

Solar producers say they are simply using a valuable incentive program for its intended purpose, and that their customers know what they’re buying.

Kevin Jones, deputy director at the Institute for Energy and the Environment at Vermont Law School, said most Vermonters don’t understand that when a solar panel’s renewable energy credits (RECs) are sold, the owner of that solar panel no longer draws renewable energy from it for their own use.

Unscrupulous marketers capitalize on this ignorance, Jones said.

“This is all about greed and profit, and people getting away with misrepresenting their product to Vermont customers, harming Vermont consumers, harming the Vermont environment, and doing it willingly,” Jones said.

“There are a lot of really good solar companies in Vermont selling honest solar products and having their business taken away by these sham solar investments,” he said.

“If you go to [offenders’] websites, and look at their marketing material, it’s very clear to me that they’re trying to imply that they’re selling solar, when they’re not,” Jones said. “It’s not sufficient to bury something in the frequently asked questions, or in a provision of the contract when across your website and marketing materials, you’re selling something else.”

The practice violates federal fraud laws because it purports to sell the same renewable energy to two different customers – the company that buys the REC and the customer who buys energy under the belief that it’s renewable.

Vermont Law School filed a petition with the FTC last year against Green Mountain Power for a similar practice, Kolber said.

“The FTC declined to investigate, but they issued a strongly worded letter to Green Mountain Power,” Kolber said. “Other Vermont solar companies are doing the same thing.”

That letter instructed the state’s largest electric utility “to tighten up our language,” said Green Mountain Power spokeswoman Kristin Carlson, “and we have.”

In the wake of that instruction, Green Mountain Power always notifies customers when the company sells a project’s renewable energy credits to third parties.

Waterbury-based solar concern SunCommon had to change a few words on its Web page as a result of Kolber’s recent guidance letter, but that was about it, said Duane Peterson, one of SunCommon’s two co-presidents and a company founder.

The company does sell its renewable energy credits to third-party companies, SunCommon spokeswoman Emily MacManamy said.

SunCommon’s community solar array customers know they are not buying solar energy, Peterson said.

While SunCommon representatives can’t tell community solar array customers they’re buying solar energy, “we’re certainly allowed to say we’re building solar,” Peterson said. “We’re allowed to say CSA members are supporting the construction of solar.”

“They’re paying money to help produce solar energy,” he said.

SunCommon doesn’t market energy to community solar array customers as either solar energy or renewable energy, he said.

“It’s so-called ‘double counting,'” Peterson said of the outlawed marketing technique. “Only one buyer gets to claim the environmental attribute.”

An “environmental attribute,” Peterson said, is the term describing a given unit of energy as renewable, solar or clean. When a company sells a renewable energy credit, the associated electricity’s environmental attribute is sold along with it. Energy without a REC is non-renewable, and is comparable to the natural gas or nuclear power that supplies most of New England’s grid.

“So, solar developers in this state need to be careful in describing their projects and the benefits to avoid double counting, and we understand that,” Peterson said. “We understand this and we’re committed to it.”

The community solar arrays his company sells, Peterson said, do not provide solar or renewable energy to members.

SunCommon marketing parlance does use the term “solar credit” to refer to earnings toward their energy bill that community solar members receive from electricity their arrays produce. This is not the same as a renewable energy credit, Peterson said. His company’s use of the term “solar credit” in this sense could lead to some confusion, Peterson said.

Under the arrangement Peterson describes, Vermonters are paying to construct new solar arrays, he said.

Another solar company said the practice of reselling renewable energy credits hinders development of new renewable energy sources, both in Vermont and throughout the region.

Utilities in other New England states must acquire large quantities of renewable energy, and companies that export what’s produced in Vermont eliminate the need those utilities would otherwise have to build renewable energy sources in their own states, said Jonathan Teller-Elsberg, of Norwich-based Solaflect Energy.

Massachusetts and Connecticut utilities buy most of Vermont’s exported renewable energy credits, Teller-Elsberg said. These utilities must supply a certain portion of their energy needs from renewable sources, and may do so either by building renewable sources or by purchasing RECs, he said.

If they fail to meet these requirements, they pay penalties as high as 40 cents per kilowatt-hour, Teller-Elsberg said.

“That’s such a huge penalty, there’s no way they’re going to allow themselves to pay it,” he said. “If they don’t buy the RECs from Vermont, they’re going to build their own solar field, because that’s way cheaper.

“When you build in Vermont, Massachusetts satisfies its rules, and they no longer need to build a separate solar field,” he said. “But Vermont customers who think they’ve gone solar have built no new solar, because the Massachusetts utility was going to build that anyway.”

“This behavior by some of the Vermont businesses is slowing down development of renewables rather than accelerating it,” he said. “I think this aspect of the debate is not well understood.”

Teller-Elsberg said Solaflex doesn’t sell the RECs their facilities produce, and said this policy is motivated by the desire of the company’s owner “to save the earth.” This does put the company at a competitive disadvantage, he said, since most people aren’t aware of what a REC represents.

“What the accounting says, is, it doesn’t matter if you have a solar panel on your roof, you haven’t gone solar if you’ve sold the RECs,” he said. “But 97 percent of people say, ‘I have a solar panel on my roof you pointy-headed academic, leave me alone.'”

But because Vermont has adopted renewable portfolio standards for utilities like those in other New England states, Vermont will build out renewable power sources regardless, said Bruce Genereaux, one of the owners of Green Mountain Community Solar.

The fact that some solar companies sell RECs only speeds that process, he said.

“The Legislature put into law certain targets that cause utilities to have to go out and pay for renewable energy,” Genereaux said. “That payment makes it economically feasible for solar farms or wind farms. If it weren’t for the excess money from the RECs, in my opinion, there would be way fewer solar farms and wind farms.”

In-state, out-of-state demand

Kolber’s letter warning solar providers against misleading marketing tactics does not mention Genereaux’s company by name, but it contrasts statements from SunCommon and NRG representatives with disclosure statements from Green Mountain Community Solar’s website that do not deceive customers.

Genereaux said he’s happy to tell customers they’re not getting solar energy, because most of them invest in solar panels not to purchase renewable energy, but to save money, he said. Genereaux sells the RECs his community solar projects produce, but his company offers customers the option of keeping the RECs for a 20 percent surcharge, he said.

Beginning in 2017, Vermont’s utilities will need to meet certain renewable source requirements, Genereaux said. Vermont solar companies at that point will have an in-state market through which to sell RECs, he said.

Demand for Vermont renewable energy will remain, he said.

For Massachusetts to meet its own renewable energy requirements, Genereaux said, “the whole state would have to be carpeted in solar panels.”

The entire system of RECs is designed to allow the region to build out renewable energy sources in concert, so that states and areas with better conditions for producing renewable energy can sell it to consumers in other areas, he said. Without them, Massachusetts would never meet the renewable standards its legislature put in place.

That’s what Teller-Elsberg is afraid of.

“The appetite to have acreage of the state devoted to solar panels is finite – it does have a limit,” Teller-Elsberg said. Meeting Vermont’s own goals of supplying 90 percent of its energy needs from renewable sources while still exporting RECs to other states might exceed that limit, he said.

Jones says guidance from the AG’s office is much needed because the issues involved with RECs are numerous and complex. Many solar customers intend to support and to utilize renewable energy produced within the state, and hope to reduce their own and their state’s dependence on the fossil fuels and nuclear energy that supply New England’s grid.

But most energy consumers haven’t familiarized themselves with the product’s arcana sufficiently to determine whether their membership in a community solar array supports development of additional solar energy or not, he said. Nor should they have to.

“Hopefully this leads [companies] to change their behavior, and hopefully people file complaints,” Jones said. “Whoever owns [the REC] is buying renewable energy. If you unbundle that, you’re not. You’re buying essentially fossil fuel and nuclear energy off the grid.”

URL to article:  https://www.wind-watch.org/news/2015/12/24/vermont-attorney-general-warns-solar-companies-to-stop-false-marketing/