Lyndon Rive, SolarCity CEO, Apologizes After Employee Lies to Customers About Arizona Corporation Commission

Categories: Solar Energy

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Lyndon Rive, CEO of SolarCity, apologized to the Arizona Corporation Commission this week after one of his employees spread misinformation to customers.

The flap began about 11 p.m. on July 31, records show, when SolarCity sales consultant Doyle Dreesen sent a breathless email to an unknown number of customers that blasted Arizona Public Service and the corporation commission.

See also:
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As New Times covered in a feature article last month, APS and solar companies have been slugging it out in recent weeks over the amount of money APS pays to owners of grid-tied solar panels for the electricity they produce. The utility wants to pay less for "net metering," arguing that solar users aren't paying enough for the services and equipment they use. Last month, APS put proposals before the commission that try to account for the perceived loss. In the other corner are solar firms like SolarCity, which -- through hired gun Jason Rose -- have portrayed APS as a benighted monopoly bent on killing off a perceived competitor.

The five-Republican-member commission plans public hearings on the matter before they vote on the APS proposals.

Under these black clouds, Dreesen fired off his ill-conceived, late-night email to solar customers, informing them that "We discovered two separate items that APS has not been forthcoming about and thev do effect [sic] YOU." Click here to read the letter, which we found on the corporation commission's website.

Dreesen went on to write:

The first is that they met behind closed doors with the ACC and got the buyback credit at the end of the year changed from their wholesale rate (The average of what it cost them to produce electricity) to the cost of their natural gas production. (The cheapest way they generate electricity at this time) It is going to reduce your year end buy back from approximately $.06/kwh to $.025/kwh. The change was made without anyone being aware that it was being considered.

Dreesen also mentioned some of the fine print in APS' net-metering proposals. Both of the payment-lowering proposals grandfather-in existing solar customers for 20 years -- but, as Dreesen points out in his email, that would only apply to the homeowner who purchased the solar system, not to a potential future buyer of the home.

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SolarCity
Lyndon Rive, SolarCity founder and CEO
While Dreesen's right about the grandfathering clause and the change in the "avoided cost rate" for APS, (an amount that APS uses to determine the retail rate paid to the grid-tied customers with installed solar panels), he was apparently dead wrong about the "closed doors" part. But SolarCity customers, not knowing he was wrong, flooded the corporation commission with emails expressing concern about the alleged back-room deal.

Two days later, a ticked-off sounding Bob Stump, corporation commission chairman, fired off a letter to SolarCity's CEO, telling him he'd seen the employee's letter that accuses the commission of breaking state open meeting laws. (Tip of the hat to the website Western Free Press, which first published Stump's letter and Rive's reply.) Stump informs Rive in the letter:

Please see to it that your employees do not misrepresent the facts about Commissioners' integrity and Commission processes. The Commission is spending its resources responding to scores of e-mails accusing Commissioners of violating the law and of negotiating "back room deals." All of these messages derive from an e-mail sent by a Solar City employee. It is unfortunate that Commissioners did not receive prior notice from your company regarding this matter. Also, to the best of my knowledge, no retraction has been issued.

On August 5, Rive writes back to Stump, offering his "sincerest apologies" for Dreesen's email.

SolarCity representatives know "for a fact" that Dreesen is wrong about a meeting behind "closed doors," Rive writes, because they were at the June 12 commission meeting during which the avoided-cost matter was voted on.

Rive writes that the employee "acted alone and without our knowledge, " and he outlines three measures being taken immediately:

We are taking steps to discipline this employee to ensure that this never occurs again. We are calling a special meeting of all Arizona employees to remind them of our policy against sending unsanctioned communications that do not represent the views of the company. Finally, we will send an email to the customers that received his email to clarify the misstatements made by our employee.

(We'd like to take this moment to remind everyone that if someone sends us a news tip at ray.stern@newtimes.com and wishes to stay anonymous, we will honor that wish.)

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11 comments
Charles-1
Charles-1

I did an analysis. It may certainly be within the reach of many affluent Arizona homeowners to leave the APS grid. However, an energy storage system is necessary and it will double the cost of a complete solar system.

At my residence, I pay around $0.26 per kWh (independent of any taxes, fees, service charges, or assessments) for on-peak electricity in summer. I used about 232 kWh on-peak in June, which amounts to $60.32 (before taxes), over half of the the charge of $110.02 total I paid for all electricity (on-peak and off-peak) before any taxes, assessments, or fees for "Customer account charge", "Metering", "Meter Reading", and "Billing". (My home is fairly energy efficient.)

Generating my own electricity during on-peak hours would save about $600 anually. Generating ALL my own electricity would save at least $1,300 anually, if completely off-grid. A Lithium-ion (LFI battery) energy storage system might never pay for itself at its current cost, but I would enjoy it anyway.

Charles-1
Charles-1

Without net-metering, Arizona Public Service (APS) residential photovoltaic distributed generator (DG) customers will have no alternative but to go completely OFF-GRID for solar power to make sense, economically.

A winter day's worth of my electric power use requires a 20 kWh battery for storage (40 kWh for summer) and is about the same capacity as the Nissan Leaf's electric-car battery (24.5 kWh).

Inexpensive, modern 4-6 kW inverters (SMA "Sunny Island") with built-in 200-500% short-term overload capability can easily handle air conditioner startup and use. However, electric clothes dryer, water heater, and cooking range use may double the size of the needed inverter system.

I could easily make it through the Arizona summer with only a 20 kWh battery, running just the air conditioner with the solar array in a legal "generator backup" mode with no connection to the APS grid.

Eliminating the current "net-metering" arrangement and a future drop in the price of Lithium-ion (safe LFI) batteries might eventually increase the number of homeowners who would consider completely abandoning the APS grid when the economics make sense. (An 8.8 kW STC solar system costs about $20,000 - add a 20 kWh battery and inverters for about another $20,000.)

Charles-1
Charles-1

The current issue before the Arizona Corporation Commission is the proposed APS change to the existing net-metering EPR-6 rate, used in conjunction with whatever other rate you choose (e.g., Combined Advantage 12p-7p). The current APS photovoltaic (PV) subsidy is almost non-existent, now. However, the Federal and Arizona State tax credits are still substantial, if you are employed and have tax liabilities you can reduce.

Net metering allows a homeowner to "bank" excess generated electricity, kWh for kWh, on the local substation "grid", exchanging very expensive, very valuable, "peak demand" electricity for less valuable "off peak" electricity consumed by the homeowner at night.

Under the current Arizona EPR-6 rate, off-peak electricity use is credited first with any excess photovoltaic (PV) generation, then any on-peak electricity use is credited when the off-peak use amount is exhausted.

If a solar-electricity generating homeowner happens to generate more electricity than they consume (on average) over a period of a year, APS then pays them *less* than $0.06 (six cents) for each kWh delivered.

jannak
jannak

Craven didn't mention that solar companies are trying to protect their profits too. Let's call it both ways. If we're talking about choice, what choice do customers without solar have as they get burdened with the costs solar customers aren't covering? Of course, companies like Solar City don't care about those folks.  It's no surprise that a "rogue" employee sent a communication like this. They do whatever it takes, and they don't let the facts get in the way. Nice to see someone finally call them out on this stuff.

jeanjb
jeanjb

small solar companies are being put out of business because of solar city practices.

it cost 15 grand to install a complete rooftop system(4000 watts),and solar city(wholy owned by elon musk) is charging YOU the taxpayer that amount to install and charge the poor customer a huge lease for the power it produces,and flooding the market and causing APS to back out of the solar business.

both are greedy bastards willing to rape the JOHN Q PUBLIC out of any savings!

the company that installed my system five years ago is almost bankrupt because of solar city monopoly like business practices!

renember jane hull buying cars?

marcy
marcy

@jeanjb 

Solar City is not "wholly owned by Elon Musk".

Solar City is a publicly traded company (SCTY) and their public filings show that Elon Musk controls 28% of the company.  Since you can buy shares of Solar City it is obvious that he doesn't own the whole thing.

Solar City doesn't "charge YOU the taxpayer" with "15 grand to install a complete rooftop system" either.  The "huge lease" they charge customers amounts to less than the amount those customers would pay for the power produced.

Calling Solar City a monopoly is as dumb as the rest of your incorrect statements. 

Small solar companies are getting put out of business because they can't compete in the free market.  

yourproductsucks
yourproductsucks

@jeanjb Solar is dead as soon as subsidies to the consumer stop.  No one buys a solar hot water heater anymore...

JohnQ.Public
JohnQ.Public topcommenter

@jeanjb  I hope you're not talking about me because that sounds like it would really suck.

phxjustice
phxjustice

@yourproductsucks Maybe that's why oil companies fight so hard to continue their century-plus of taxpayer subsidies, eh?

Serendippdy
Serendippdy

@phxjustice @yourproductsucks Yes, just keep blaming the oil and gas companies. Why don't we talk about effective tax rates that both industries pay? How do you think tax burdens between the two industries stack up? There's a big difference between tax deductions and subsidies. The solar / green energy stimulus grant / subsidy program is nothing more than a lighter version of cap & trade tax liability credit trading. 

Phxjustice -- can you name one oil subsidy you'd have congress remove?

Also, there's a difference between the govt subsidizing energy companies and ratepayers subsidizing other users. The day I start paying money for my neighbor to drive a Prius, let's talk...

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