CSLB Keeping Eye Out for Shady Characters in Solar Field

Solar power continues to be one of the California construction industry's brightest stories – and one of CSLB's biggest source of complaints from consumers.

CSLB reminds licensees who do solar work that they must follow contracting law and regulations during all facets of a project, whether it's negotiating price, explaining financing options, performing installations, and obtaining the required construction permits.

To clarify, only contractors holding "A" General Engineering, "B" General Building, or C-46 Solar licenses can perform solar construction and installation. Contractors with a C-4 Boiler, Hot-Water Heating and Steam Fitting;, C-10 Electrical; C-36 Plumbing or C-53 Swimming Pool license can only do solar work within their classification as defined by CSLB regulations. Licensees in other trades with questions about the solar work permissible under their classification can call CSLB toll-free at 800.321.2752.

Solar construction has boomed in California with the advent of new financing options and quickly evolving technology that has lowered the price of solar systems. As a result, many more companies and solar practitioners are taking advantage of opportunities in the industry.

CSLB statistics reflect the rapid growth in solar. The number of active C-46 Solar contractor licenses issued by CSLB has more than doubled in six years, from 445 in January 2009 to 1,083 as of December 2015. Along with the jump in contractor numbers, applications by persons seeking to become home improvement salespersons (HIS), mostly in the solar industry, have surged. (See related story in this issue on CSLB's new, streamlined HIS registration system.)

But that growth also has been accompanied by a rise in consumer complaints to CSLB about unscrupulous practices when dealing with solar contractors and salespersons. Misleading power generation claims, cost savings that don't match what had been promised, and hard-sell, deceptive financing are the leading cause of solar complaints filed with CSLB.

Specifically, solar companies, contractors, and salespersons need to follow the law, and industry best practices, in these areas:

Financing and contract/lease terms – CSLB is receiving more complaints about financing contracts, especially those involving leases and power purchase agreements. The differences between customer-owned, leased, and power purchase agreements need to be clearly explained, as well as terms of purchase contracts and equipment leases so consumers understand their financing options and contract commitments.

Through the complaint process, CSLB is finding that some leases are weighed down with onerous terms that are not fully explained or are minimized when a contract is signed. Some of those "fine print" conditions include payments that start low but contain annual escalators, long payback commitments, or surprise costs, such as roof surcharges or equipment upgrades. Lease contracts also need to spell out repair and maintenance responsibilities for the power system, as well as what happens in the case of a home sale.

It's important not to oversell the capabilities, or cost-savings, of solar systems – Licensees need to make sure their solar projects produce the amount of power they claim, taking into account the variables of design, equipment, installation, site location, and weather/cloud patterns.

More contractors and solar companies need to be realistic with customers, and not overpromise energy/money savings.

Companies acting in the capacity of a contractor – CSLB has investigated several reports of consumers who have signed leases with companies that dispatch a licensed contractor to install a system, but are not licensed themselves. CSLB holds that leasing companies are acting in the capacity of a licensed contractor in such transactions, and must hold a California contractor license in the proper classification, even if a licensed contractor performs the work. A licensee who works on behalf of non-licensee on such projects also faces disciplinary action from CSLB.

On a related licensing note, companies based outside California must possess a valid and trade-appropriate CSLB license for solar projects in the state.

Solar sales and financing personnel must register as home improvement salespersons with CSLB – A trained and CSLB-registered sales staff is much less likely to mislead or misinform potential customers about the benefits of installing a solar system.

Don't sell customers more of a system than they need – It's important to match the size of a solar system to the residence or business, and power needs of the occupants. Overbuilt systems elevate the contract price, but may not be more efficient. In addition, utility companies generally will only pay for excess power from homes with properly sized solar systems.

Report solar work, license abuses to CSLB – CSLB encourages contractors licensed to perform solar work to report those who work out of class, are unlicensed, submit bids that significantly undercut their competition, or whose products or workmanship are substandard. The industry as a whole will benefit if its own members help police it.

Don't shortcut the permit process – Anyone who performs solar work needs to submit design plans that comply with particular city, county, and/or utility standards, obtain the required building permits, and follow through with a safe, quality installation. Contractors who cut corners typically find their shortcomings exposed during the permit or inspection process.

Solar contractors need to familiarize themselves with the permit requirements of the individual cities, counties, and utility departments, particularly if they're working in a new territory.

Stay current with new laws and regulations affecting the industry – Two developments gave the solar industry in California a big boost at the end of the year. In December, the California Public Utilities Commission (CPUC) proposed to adopt a successor program to the existing net energy metering agreement that pays California consumers for returning unused solar power to utilities.

A week later, the U.S. Congress voted to extend the solar investment tax credit at the current 30 percent rate through 2019, after which it will fall to 26 percent in 2020, 22 percent in 2021 and 10 percent in 2022. An additional commence-construction clause will extend the credit to any project in development before 2024.

The two developments are expected to keep the sun shining on the fortunes of the California solar industry for the near future, if not longer. That's good news – as long as companies, contractors and registered salespersons treat consumers fairly. CSLB is keeping a close watch on suspected abuses.