New Mexico Attorney General Hector Balderas filed suit against Vivint Solar yesterday, with seventeen unique counts alleging a pattern of unfair business practices, fraud and racketeering. The full complaint can be found here (38 page PDF).
The suit’s main allegations center on Vivint’s presentation of its 2.9% annual escalator rate in its 20 year power purchase agreement (PPA), and what that price ends up being relative to electricity utility PNM Resources. The utility serves much of Central and Northern New Mexico, including Albuquerque and Santa Fe.
The suit notes that Vivint’s escalator increases a total of 72% at the end of the 20 years, while recent electricity prices offered by PNM Resources Inc have been flat.
The suit contends there is a disconnect between Vivint’s statements in the company’s PPA and their filings. On page one of the PPA, it states, “We will not place a lien on Your Property.” The suit notes that Vivint files a UCC-1 Financial Statement with every solar power project. The state then states, “reasonable consumers are led to believe that this erroneous UCC filing is in fact a lien on their home, and potential home buyers of those homes are misled about any encumbrances on the real property” – however, the state does not state in the document that Vivint actually does file a lien – only that the nature of a UCC-1 might lead someone to believe a lien is filed.
Other complaints are alleged in the document relating to broader business actions that surround these two processes. Specifically, that the complex ownership structure of securitized solar power clouds exactly who owns the PV system attached to a home and adds challenges to the home sale process.
A broader theme in the suit, embodying all of the specific alleged violations and driving the state’s Attorney General, is how the product was presented relative to the marketplace. There is the primary presentation of the solar panels as being “free” – representing the no-money-down aspect of a solar lease. That the PPA suggests the 2.9% might be reached is suggested in early pages, when in reality the document states explicitly that the rate of increase will be 2.9% from day one.
More importantly, the spirit of the agreement – saving money with solar power – becomes a much more challenging issue in times of flat electricity prices relative to a defined 2.9% elevator rate.
When contacted via email, Vivint Solar released the following statement:
Our commitment to our customers is to provide them the opportunity to adopt clean, renewable energy while always adhering to the highest ethical sales standards. We believe we have honored this commitment in New Mexico and that our practices in the state comply with applicable law. While we take these allegations very seriously, we strongly believe this lawsuit lacks merit. We cannot comment more specifically on pending litigation.