FeaturedHurricane María

P.R.’s Energy Bureau: Sunnova’s residential solar panel lease contracts illegal

The
oversight agency affirms that consumers can turn to it to claim their rights
and orders the Texan corporation to establish a protocol to disclose complete
information about its services. It also allows customers to object invoices.
Meanwhile, Puerto Rican company Maximo Solar Industries sues and accuses the
Texan company of establishing a monopoly.

By Eliván Martínez-Mercado | Center for
Investigative Journalism

The 436 consumers who filed a complaint with
the Puerto Rico Energy Bureau (NEPR) against Sunnova Energy Corporation, a
residential solar panel leasing company, were right. The NEPR recognized in a
report
the web of problems the complainants faced: the equipment did not provide the
service or savings promised to consumers.

They had put their signature on a tablet for
an allegedly credit check, but the company used the signature to stamp it on a
contract that they had not been shown. The clients found out that, to challenge
the invoices or seek any remedy, they had to go through an arbitration process
(outside the courts and the NEPR) and pay lawyers’ fees. Thus, they ended up
tied for 25 years to an energy purchase agreement that they had not seen before
signing and from which there was no escape.

But the NEPR concluded on Feb. 15, 2019 that,
by forcing them to resolve the disputes through arbitration, Sunnova violated
consumers rights to seek remedy before that entity, as mandated by Law 57 of
2014.

As a corrective measure, the NEPR ordered Sunnova
to amend the contracts, and establish a protocol that discloses the complete
information on the services it offers, and to allow customers to object their
invoices.

“If I can get out of this contract, it
would be wonderful. That
contract was very abusive,” said Madeline Batista, who requested Sunnova’s service for her home in the
southeast town of Naguabo.

She was
one of those who signed the request for services and credit verification on a
tablet and then learned about the details of the contract she had not seen. She
never got the savings on her bills.

The solar
equipment lacked batteries to store and use at night the energy that had been
harnessed from the sun during the day. Most did not even allow them to generate electricity
during the day, after Hurricane María’s winds destroyed the power grid,the
Center for Investigative Journalism revealed
. The installed technology
stops working when there is a blackout at the Puerto Rico Electric Power
Authority (PREPA).

“I
left Puerto Rico because I could not take the hurricane aftermath anymore. I
wanted them to provide some batteries for the equipment to work but Sunnova was
going to charge me more,” Batista said.

Now she
lives in North Carolina with her
son, while her husband stayed behind in Puerto Rico, because they cannot get
rid of the solar panels and are forced to pay for them.

“This is what is tying us to Puerto Rico
right now. The Sunnova people did me wrong, but they don’t want to take the
solar panels back and they threatened to damage my credit and take me to
court,” she said.

Sunnova is a corporation based in Houston,
Texas, organized under the laws of Delaware and authorized to do business in
Puerto Rico as a foreign corporation. It rents some 10,000 solar equipment on
the island, to interconnect them to PREPA’s network through the net metering
system.

If correctly implemented, this system supplies
energy to the consumer and exports the excess to PREPA in exchange for credit.
If the consumer needs more power, it buys it from PREPA’s grid.

“The Energy Bureau’s decision is a huge
step forward,” said Hannia Rivera Díaz, director of the Independent Office
of Consumer Protection (OIPC, for its initials in Spanish), in an interview
with the Center for Investigative Journalism (CPI). “It became crystal
clear that arbitration is only a voluntary process.”

“It is important that the person who opts
for this type of service checks that the company is certified by the Energy
Bureau. Consumers should study, prior to signing the contract, on what the
content is, the implications, and make sure about the service they will
offer,” added Rivera-Díaz, referring to the new energy market that Puerto
Rico is heading into after hurricane María, in which every day there are more
and more companies offering residential and commercial renewable energy
services.

“Sunnova’s practices during the
contracting process are not consistent with the obligations that power
companies have under Article 6.21 of Law 57-2014, to provide an adequate,
reliable and non-discriminatory service,” according to the NEPR’s report.

“Sunnova must make these disclosures
clear and precise, making sure the client understands the scope of the service
that Sunnova will provide and the obligations that the client assumes when
signing the PPA [power purchase agreement], regardless of the client’s academic
preparation, or social or economic status,” according to the report.

The NEPR alleged that, in some cases,
Sunnova’s salespeople made false representations to the customers, telling them
that they could leave appliances on all day, since the solar panels would
supply enough energy. The company ensured that customers would only pay $3
monthly for the connection to PREPA, plus the monthly payment to Sunnova for
the rented equipment, which would represent up to 30 percent in savings on
their bill, which was not true.

Sunnova carries out its marketing and
installation efforts through local companies, which is why many consumers don´t
know that they are doing business with a Texan company. According to the
report, neither their local partners are required to make the due disclosures
in order for consumers to make an informed decision.

One of those partners was precisely Máximo
Solar Industries (MSI), a Puerto Rican company that develops, markets and
installs renewable systems.

Claims of 1st private monopoly in renewable
market
MSI installed solar equipment for the house and the grocery store owned by
Edwin Hernández, in the western town of Mayagüez. But Hernández immediately
called his bank and cancelled the automatic payment to Sunnova, when he saw
that his bills, instead of dropping, soared, according to what he told the CPI.

Sunnova began a legal collection action
against Hernández, and he decided to sue MSI, which in turn defended itself by suing
Sunnova on Jan. 28, 2019. MSI accused the Texan company of canceling the
contract in bad faith and without proper notification and trying to restrict
his business. MSI says it has refused to be part of a “master plan”
to establish a monopoly in the solar residential market in Puerto Rico. In just
five years after arriving to Puerto Rico, Sunnova controls 90% of the island’s
residential solar market, according to the lawsuit.

MSI is asking in court for more than $11
million in unpaid bills and damages.

They allege that Sunnova, who lacks enough
staff to meet supply services on the island, forces its partners to subsidize
the losses in the local market, for which it withholds payments for
installation services, a practice that has already caused the insolvency of
some six installation companies.

They further argue that Sunnova blames it for
losses caused by PREPA, since that agency is not quick to connect the installed
renewable equipment to the grid. Investors have stopped providing Sunnova with
operational capital for their Puerto Rico market until interconnection problems
with PREPA are solved, so they are not paying MSI, according to the lawsuit.

Distributed generation systems (near
consumption points) are a measure of resilience in the context of more frequent
and intense hurricanes, instead of relying on PREPA’s centralized grid that
Hurricane María destroyed, causing one of the longest blackouts in history.

With Sunnova controlling most residential
solar panels, Puerto Rico is putting at risk the development of its energy
systems, said Attorney José Pérez-Vélez, former director of the OIPC.

“We would be creating another PREPA for
distributed generation, but it would be a private monopoly. It would be
disastrous for the island,” said Pérez-Vélez, who in 2016, referred
Sunnova before the NEPR for investigation. “Máximo Solar’s lawsuit proves
us right.”

Sunnova did not
respond to a CPI request for an interview. The NEPR gave 20 days, starting Feb.
15, 2019, for the company to submit any objection to the report.

Eliván Martínez-Mercado is an energy journalism fellow at the Energy Institute of The University of Texas at Austin. Comments to emartinez@periodismoinvestigativo.com

Author Details
This story was written by our staff based on a press release.

Comments (2)

  1. READING YOUR ARTICLE ON THE SUNNOVA STORY ,I HAVE SOLAR PANELS WITH SUNNOVA I WOULD LIKE MORE INFORMATION ON THE STATUS OF WHAT’S GOING ON THANK YOU RUDY GARAY

  2. trying to reach the puerto rico energy bureau with no luck can you send me info on how to cummunicate with them, telephone number or email thank you for your help

Leave a Reply to rudy garay Cancel reply