Certain solar providers can’t claim to sell solar or renewable energy when it comes from community solar projects. The state Attorney General’s office last month said some companies have been doing so and deceiving their customers.
Under federal consumer protection laws, solar companies commit fraud when they sell a community solar array’s renewable energy credits (REC) while also telling customers they are purchasing renewable energy. The Attorney General’s office has already stated an intention to seek civil penalties against solar companies that continue to violate this law. A similar state law forbids the practice as well.
“Our view is that if you are in any way implying to customers that they’re ‘going solar,’ but you’re selling those RECs to sophisticated out-of-state utilities … then you’re potentially involving the Vermont consumer protection act, which prohibits deceptive and unfair practices,” Vermont Law Professor Jared Carter said.
In upcoming weeks, Carter will hold meetings across the state to determine whether solar customers have been deceived on a large scale, and to give them the opportunity to join a potential class-action lawsuit against companies that have engaged in illicit practices, he said.
Carter said he hopes to resolve the issue legislatively, or through voluntary action on the part of solar companies, but said he’s prepared to take up a class-action lawsuit if no other solution arises.
He is doing so as a member of the Vermont Community Law Center, a non-profit that takes on lawsuits and other legal efforts in the interest of the public. The organization two years ago sued Log Cabin and Birdseye for marketing as “all natural” foods that contained synthetic ingredients.
In the wake of the Attorney General’s letter last month, companies including SunCommon were forced to reword some of their advertising language. Carter said that wasn’t enough to satisfy state law.
“If they’re implying in a way that a reasonable consumer would think they’re getting solar energy, I think that’s putting them on precarious ground according to the consumer protection act in Vermont,” Carter said.
Out-of-state utilities must buy certain amounts of renewable energy, and they often purchase it in the form of renewable energy credits. Doing so is typically cheaper than building their own solar facilities.
When in-state solar providers build solar arrays whose renewable energy credits are sold out of the state, Vermonters are subsidizing another state’s renewable energy costs, Carter said. When those same companies lead in-state customers to believe they, too, are purchasing renewable energy, the companies deceive their customers, Carter said.
“This funding scheme allows out-of-state utilities to externalize the actual costs of building renewable energy… because Vermonters in good faith are subsidizing the true cost of going solar, and that’s what these RECs are allowing us to do,” he said.
It’s cheap for utilities to purchase renewable energy in the form of RECs from Vermont community solar arrays because solar companies pass the cost of building the projects onto their customers, Carter said.
“In our view, they’re essentially getting hardworking Vermonters to subsidize out-of-state utilities,” Carter said. “We support renewable energy in Vermont, but we think this sort of practice hinders Vermont’s ability to be a leader, and quite frankly compromises the renewable energy industry.”
Carter said he’s more interested in “restoring integrity” to the renewable energy industry than he is pursuing litigation. He said he’s asking solar companies to cease marketing their product as renewable when they shouldn’t. He’s also calling on solar companies that sell RECs to allow customers to break their service contracts in order to buy energy instead from solar companies that do not sell their RECs.
Carter said he’s also pursuing a legislative solution.
The Senate Energy Committee has already commissioned a study on the matter of RECs, which is to be presented this session, Senate Natural Resources and Energy Chair Chris Bray, D-Addison, said. Should that study find that current practices harm the development of renewable energy, he might attempt legislation to correct that, Bray said.
“What needs to be clear for people is how RECs work, and what they really mean, financially, and environmentally, and even from an engineering standpoint,” Bray said.
“I’ve heard incompatible assessments of what renewables in Vermont do,” he said. “I’ve heard the utility world say, when you add renewables in Vermont, even when you sell the RECs in Connecticut, you still keep fossil-fuel-fired plants in Connecticut from firing up; and then I’ve heard other people say, when you sell the RECs in Connecticut, you allow that fossil-fuel-fired plant to keep running. Only one of these things can be true. To me it seems like an engineering question, and we need to get to the bottom of it.”
Bray said that he wants to address the problem of climate change more than he wants to dictate the terms of funding mechanisms used to accomplish that end.
Bray also said he fears that “some people are spoiling for a fight,” and that attempts to resolve the question of REC sales doesn’t “poison the well” with Vermonters who want their power supplied from renewable sources.
The ability to sell RECs is a sound piece of public policy that allows solar companies to offer affordable energy to customers while still putting new solar facilities on the ground, SunCommon co-owner Duane Peterson said in an email.
“RECs have helped SunCommon bring community solar to 500 Vermonters, providing CSA members the opportunity to help generate renewable energy while saving money on their power bills,” he wrote. “ We’ll continue to make this innovative solution to climate change available to Vermonters.”