In January, a California man filed a class-action complaint against the solar services firm Sunrun, claiming the company engaged in deceptive marketing practices.
We recently came across the filing, which can be found here.
The suit alleges that Sunrun, one of the leading providers of solar leases and power purchase agreements, is making false claims about the projected rise in electricity prices.
The plaintiff, Shawn Reed, signed a contract with Sunrun in August of 2011 to lease a solar system. According to the filing, Reed "understood from Sunrun that increases in electricity prices would result in the cost advantage of the Sunrun system," which influenced his decision.
As the document points out, Sunrun uses a number of broad projections about electricity prices in its online marketing materials.
"You already pay a lot for electricity today. In the future, you’ll pay even more," reads the site. "Nationwide, electricity rates have been increasing 6% per year over the last thirty years. When you go solar, you take control of your electricity costs and opt out of utility rate increases. You’ll save money with solar by locking in a lower rate for your electricity than you will pay for the next thirty years. Many Sunrun customers start saving money right away."
Another part of Sunrun's site reads: "Nationwide, average utility rates have been on the rise for the last 30 years. There’s no evidence that this trend will reverse anytime soon. Going solar today will help you lower your electricity costs and put money back into your pocket.
SolarCity, another leading company offering solar leases and power purchase agreements, also makes very similar claims on its website.
So are these deceptive? The lawsuit points to Public Utilities Commission charts showing a leveling of average retail electricity prices in Southern California Edison territory, where Reed lives. The chart also shows that average retail rates in Pacific Gas & Electric territory have dropped slightly since 2009. (Interestingly, it also shows that San Diego Gas & Electric Rates have fluctuated wildly, but climbed overall.)
Reed claims that he never would have leased the Sunrun system if he had known that rates wouldn't have risen as claimed in the Sunrun marketing materials. The class action suit seeks to find:
"Whether Sunrun represented that increases in electricity prices would result in the cost advantage of the Sunrun system over time; Whether Sunrun knew of should have known that the promise of the system sure to result in cost advantage was false when made; Whether Sunrun should have disclosed that electricity prices may be leveling off or decreasing in the future; Whether the promise of a system sure to result in cost advantage was likely to deceive consumers into leasing a system they otherwise would not have; Whether the failure to disclose that electricity prices have been leveling off or decreasing in recent years was likely to deceive consumers into leasing a system they otherwise would not have."
So what does electricity pricing look like in the future?
According to the International Energy Agency, the national average retail price of electricity will rise from 11.87 cents in 2012 to 12.32 cents in 2014.
"Rising costs of infrastructure upgrades continue to drive increases in residential electricity rates, although lower fuel prices in recent years have kept growth in retail rates relatively modest. After an increase of 1.3 percent during 2012, EIA expects retail residential electricity prices will grow by 1.7 percent in 2013 and by 2.0 percent in 2014," reports the agency.
The EIA also reports that the average retail price of electricity in California actually increased from 14.77 cents in 2011 to 15.54 cents in 2012.
In November of 2012, the California Public Utilities Commission approved a 5 percent rate increase for Southern California Edison in order to improve reliability. The following month, Pacific Gas & Electric announced it would raise rates by 2.6 percent this year.
So rates are indeed rising; although not at the same historical 6 percent rate that Sunrun references on its website. But did Reed receive inaccurate or false information about electricity prices before signing the contract? It all depends on what Sunrun and the installation contractor told him. If the above data sets and combined broad marketing claims made by Sunrun on its website are everything the case rests on, it's tough to see where the company intentionally deceived, as the suit claims.
However, a part of the case appears to be based on oral statements made to Reed by a Sunrun salesperson.
The remainder of the lawsuit focuses on what the company told Reed about ending his contract. According to Reed, a sales representative told him that he could terminate his contract without any obligation if he moved. According to the class action complaint, the Sunrun contract offered contradictory language on ending the contract. In "Terms and Termination" section, Sunrun says it will remove the panels at no cost at the end of the lease. But in the "Sunrun's Remedies" section, the company says the customer must pay the remainder of the lease if the contract is terminated. Reed says those terms are "necessarily confusing to the average consumer and coupled with oral misrepresentation are likely to deceive."
Perhaps this is why SolarCity, a Sunrun competitor, recently opened up its contract to the public. The company says it wants to "equip consumers with the information they need to comfortably adopt solar."
Susan Wise, the Public Relations Manager for Sunrun, declined to comment. After multiple phone calls and emails, the lawyers for the case also declined to comment.
The complaint, issued in early January, was filed on behalf of anyone who entered into a contract with Sunrun before February 2012. It demands a jury trial in the Superior Court of California in Los Angeles County.