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Solar marketing scandals in New Mexico: Deceptive sales reported for overpriced, underperforming systems
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Editor鈥檚 note: This is the first story in a two-part investigative series by the Journal on consumer reports about deceptive marketing practices by some solar companies operating in New Mexico. Part two will appear on Monday.
A solar salesperson spent five hours in July on a site visit with Jan, a 76-year-old homeowner, to convince her that installing a small rooftop solar system on her Northeast Heights home would eliminate her electric bills overnight.
The salesperson represented a California-based company with an sa国际传媒官网网页入口 office.
During the visit, the sales rep arranged for a $23,000 loan for Jan through a third-party lender to install a four-panel system on her house. She digitally signed for the loan on her desktop computer, but never received any written documentation about the solar system she was apparently committing to buy.
Later, after printing out the one-page financial document she signed, Jan realized it was a 25-year agreement with a $79-per-month repayment plan. That鈥檚 $18 more than her current utility payments, which average about $61 per month based on a review of all her Public Service Co. of New Mexico bills since January 2022.
That alarmed her. And, apart from the cost, Jan realized a 25-year loan was unrealistic at her age.
鈥淚鈥檓 76. That just won鈥檛 work for me, and I called the company to tell them that,鈥� Jan told the Journal. 鈥淏ut the next day, an engineer came back and went up on the roof. They then told me I had three days to cancel my contract.鈥�
Jan did cancel after consulting with another local firm, Affordable Solar, which sent Solar Consultant Tyson Lanier to her home to review her energy use and needs.
Lanier concluded that the California firm鈥檚 four-panel solar installation would not even have generated enough electricity to meet half of Jan鈥檚 energy consumption, meaning she still would be paying a PNM a monthly bill for electricity on top of the $79 monthly loan repayments. And, the system itself was way overpriced at $12.40 per watt of generating capacity, which equals 14.2 cents per kilowatt hour of actual electric production.
As a low-consumption utility customer, Jan currently pays PNM less than 8 cents per kilowatt hour.
In addition, Lanier estimated she would need eight solar panels 鈥� or twice the number of units the California company planned to install 鈥� to fully offset 100% of Jan鈥檚 electric consumption from PNM. And, even then, Affordable could have installed the full eight panels for under $5 per watt in total cost, or less than 50% of what the California company was charging for a system half the size.
In the end, Affordable advised Jan that purchasing a solar system was, financially, not in her own best interests.
鈥淭hat company said it could offset all her electricity with just four panels, but it would actually take eight panels,鈥� Lanier told the Journal. 鈥淎nd they quoted a very high price for the system.鈥�
Deceptive marketing
Like Jan, many homeowners in sa国际传媒官网网页入口 and around the state are reporting aggressive sales efforts by some solar companies that conduct door-to-door marketing campaigns to sign them up for solar systems they say will immediately eliminate homeowners鈥� electric consumption from PNM or other utilities while significantly saving them money from day one.
But many who then sign contracts rapidly discover that their systems don鈥檛 actually produce the amount of electricity promised. And they end up stuck with both ongoing PNM bills, plus monthly payments on their solar panels, through 20- to 25-year contracts that actually cost them much more than if they had stayed with their utility company.
The Journal interviewed more than a half dozen sa国际传媒官网网页入口 homeowners who signed up for solar systems based on marketing promises that turned out to be false, and they鈥檙e now tied to contracts that they either can鈥檛 or don鈥檛 know how to get out of.
The problem is not new, nor limited to New Mexico. Similar marketing scandals have been reported in many other states, leading to individual and class-action lawsuits and efforts by various attorneys general to sue solar companies involved in such practices.
Just this year, for example, Connecticut鈥檚 Attorney General sued New Jersey-based installation company Vision Solar after receiving numerous consumer complaints about that firm鈥檚 allegedly deceptive sales tactics regarding potential savings and system performance. The private Connecticut-based law firm Silver Golub & Teitel also initiated a class-action suit against Vision Solar representing nearly two dozen plaintiffs.
Minnesota鈥檚 Attorney General sued four Utah-based solar companies and three lending institutions in 2022 for deceptive and fraudulent marketing practices in Minnesota. And, last summer, California legislators established a $4 million fund to help local victims of fraud in the solar industry.
In 2018, former New Mexico Attorney General Hector Balderas sued Vivint Solar Inc. 鈥� a national installation company that was later acquired by the publicly traded firm SunRun 鈥� for allegedly ensnaring nearly 3,600 uninformed consumers into binding 20-year 鈥減ower-purchase agreements.鈥� Under those PPAs, Vivint basically replaced PNM and other utility companies as electric providers by owning the solar systems it placed on homes, and then allegedly charging the homeowners more over time for the solar electricity produced than what they previously paid the utility companies.
Vivint reached a $1.95 million settlement with the Attorney General鈥檚 Office in 2020 that committed it to modify its marketing practices under an agreement that鈥檚 now binding on SunRun.
But today, Attorney General Ra煤l Torrez鈥檚 staff continues to receive consumer complaints against other companies operating in New Mexico, said Jacqueline Ortiz, deputy director for the AG鈥檚 Consumer and Environmental Protection Division.
鈥淲e鈥檙e seeing complaints that could potentially violate the state鈥檚 Unfair Practices Act,鈥� Ortiz told the Journal.
That includes things like 鈥渆scalating contracts鈥� for solar system purchases.
鈥淚t starts out at a certain price and then escalates over 20 years to egregious prices where the consumer is paying more for the solar system than they paid on their electric bills,鈥� Ortiz said. In other cases, consumers sign contracts for systems that don鈥檛 get installed or never actually get turned on even though the homeowner is already paying for the solar panels.
鈥淭here are a lot of different issues that could be violations of the UPA,鈥� Ortiz said. 鈥溾�e are looking into solar companies now as a result, but I can鈥檛 talk about what we鈥檙e doing specifically.鈥�
Escalating complaints
Although the state Public Regulation Commission does not regulate solar companies, the PRC鈥檚 Consumer Relations Division reported in June that it saw 鈥渁n uptick鈥� in complaints about rooftop installation firms in May, ranging from companies not delivering promised savings to installing systems with unusable panels.
The PRC sends those complaints on to the Attorney General鈥檚 Office for potential action. But after receiving some 15 calls and online complaints in a two-week period, the PRC published a news release to alert and educate consumers about fully researching solar contracts before signing anything, said Consumer Relations Division Director David Martinez.
Apparently, at least one solar company was targeting neighborhoods with a particularly aggressive door-to-door sales campaign.
鈥淭he company told people that if they just sign up, they would only pay for their solar system and never pay a utility bill again,鈥� Martinez told the Journal. 鈥溾�hey offer consumers a golden egg and pressure them to sign right then and there. But consumers should do their research and never just sign right there and then when salespeople come knocking on your door.鈥�
The city of sa国际传媒官网网页入口 also received more than a half-dozen complaints since last year, said Office of Consumer Protection Manager Mari Kempton.
The office initiated an educational campaign in 2021 to inform consumers in English and Spanish about solar contracts. And, last year, it set up a database to receive complaints and log them.
鈥淪ome of the complaints are about aggressive sales tactics and misleading statements,鈥� Kempton told the Journal. 鈥淪ome are disputes over contracts, and others are about defects in system construction itself.鈥�
One homeowner signed a contract with a company to install a system that later never worked because the city apparently never permitted it; yet the consumer is making monthly payments on the solar loan the company arranged for the system, Kempton said.
鈥淧eople are upset about companies lying during sales pitches, deceptive marketing and predatory contracts,鈥� Kempton said.
Industry growing pains
The solar industry is well established in New Mexico, with dozens of homegrown installation firms operating here for many years. And with generous federal and state tax credits that can offset the cost of a residential solar system in New Mexico by up to 40%, market demand is growing exponentially.
Nationwide, residential solar installations expanded by 40% last year compared with 2021, with a record 700,000 homeowners installing systems, according to the Washington, D.C.-based Solar Energy Industries Association.
In New Mexico, PNM reported about 36,000 solar systems were connected to its grid by year-end 2022, representing a cumulative total of about 250 megawatts of rooftop generation. That鈥檚 up from about 15,000 solar interconnections and 100 MW in 2018.
But as the solar industry gains momentum, business competition is heating up everywhere. Many new players are entering local and national markets, and many existing companies are expanding from their home turf into more states.
And, as business expands, the industry faces growing pains, said Jim DesJardins, executive director of New Mexico鈥檚 Renewable Energy Industry Association.
鈥淭his is a growing, vibrant industry, but it comes with challenges, and one challenge is it attracts people who want to make a quick buck,鈥� DesJardins told the Journal. 鈥淲e have been hearing reports about deceptive marketing practices, and we鈥檙e concerned about it.鈥�
Those problems first appeared in New Mexico about seven or eight years ago, as national firms like Vivint Solar started aggressively expanding into the local market. Vivint and others introduced new products and sales techniques that didn鈥檛 exist here before, such as offering power purchase agreements for homeowners as an alternative to buying a solar system, plus door-to-door sales campaigns in urban and rural areas around the state.
That led to the Attorney General鈥檚 lawsuit and later settlement with Vivint, plus a collaborative effort among state public officials and business leaders here to establish a set of industry marketing standards. That culminated in a new 鈥淒istributed Generation Disclosure Act.鈥� It clearly delineates all the details that, at a minimum, solar companies must inform consumers about in writing 鈥� everything from basic details regarding solar system design, assumptions and estimated annual electric output, to production decline over time and precise explanation of loan or system repayment terms.
Out-of-state firms
The Vivint settlement did send a message to solar companies 鈥� particularly out-of-state firms new to New Mexico 鈥� that state government will take action against companies involved in deceptive marketing practices, said Patrick Griebel, a partner at Marrs Griebel Law Ltd., who has helped former Vivint customers negotiate better contract terms with Vivint鈥檚 new owner, SunRun.
鈥淰ivint sold its portfolio to SunRun, and to SunRun鈥檚 credit, they have been working out contract modifications for homeowners who didn鈥檛 see any energy savings under Vivint,鈥� Griebel told the Journal. 鈥淰ivint is no longer lying to people, and we have a new company that鈥檚 trying to clean up the Vivint contracts in good faith鈥he question now is, how can we effectively bring other companies to task?鈥�
By and large, most new consumer complaints about deceptive marketing continue to come from customers signing contracts with firms from other states that set up operations here.
鈥淚t鈥檚 typically out-of-state firms that we get calls on, and it鈥檚 typically because of high-pressure, door-knocking sales campaigns,鈥� Griebel said.
There鈥檚 generally a dichotomy between in-state and out-of-state solar firms when it comes to deceptive marketing and broken promises, said Nick Kadlec, president and CEO of the homegrown, statewide installation company New Mexico Solar Group.
鈥淣ot all out-of-state companies are bad, and not all in-state companies are good, but it is generally that way when it comes to egregious consumer complaints,鈥� Kadlec told the Journal.
Indeed, all disgruntled homeowners who spoke with the Journal held contracts with firms headquartered in other states.
In part, that reflects the transient nature of marketing teams hired by out-of-state companies.
鈥淭he salespeople are incentivized to do anything to get the sale and lock people into contracts with no-cancellation clauses,鈥� Kadlec said. 鈥溾�� It鈥檚 set up for sales reps to overpromise on contracts, and there鈥檚 a lot of turnover in those companies.鈥�
In contrast, local firms are vertically integrated with sales and installation teams both located together here and fully accountable to local management.
鈥淭hat makes the sales and installation operations much more aligned, with direct company supervision that encourages teams to strive to provide value to homeowners and take care of customers,鈥� Kadlec said. 鈥溾�� When there鈥檚 a split between marketing teams and out-of-state installation firms, it sets it up so one side blames the other when things don鈥檛 go well.鈥�
Many salespeople are brought in from out of state and aren鈥檛 well-trained to begin with on the complexities of solar systems, said Wayne Stansfield, general manager at Affordable Solar, the state鈥檚 largest installation company. That impedes accurate explanations for homeowners on things like correctly determining system size to meet a customer鈥檚 needs, applying state and federal tax incentives to reduce system cost, or 鈥渘et metering鈥� programs that allow solar rooftop owners to earn credit back from PNM and other local utilities when their systems overproduce electricity.
鈥淭hey aren鈥檛 trained well by their higher ups, and they鈥檙e all on commission and scrambling to make sales to earn their income,鈥� Stansfield told the Journal. 鈥溾�s a result, they end up preying on vulnerable homeowners. It鈥檚 very frustrating and upsetting for us in the local industry.鈥�
In Affordable Solar鈥檚 case, the company prohibits door-to-door sales to avoid such problems.
鈥淲e don鈥檛 do door knocking because we can鈥檛 control the message,鈥� Stansfield said. 鈥淓ven if you train your marketing representatives right, it can go wayward and you can鈥檛 control that. It鈥檚 ripe for problems to arise.鈥�
Meanwhile, the problems caused by some companies can effect the entire industry.
鈥淲hen someone has a positive experience, they鈥檒l likely tell maybe two people about it,鈥� Stansfield said. 鈥淏ut if they have a negative experience, they鈥檒l tell more like 10 people.鈥�
And that can cause a ripple effect that can turn homeowners away from exploring the benefits of going solar.
鈥淭his situation hurts everyone,鈥� Kadlec said. 鈥淚t hurts our customers and the industry as a whole.鈥�
