By Sabrina Barr

At its February 4, 2021 meeting, the Enforcement Committee of the Contractors State License Board (CSLB) heard a presentation from the California Public Utilities Commission (CPUC) seeking CSLB’s comments on two proposals for enhancing protections for solar consumers (Agenda Item C).  The proposals arise from the CPUC’s ongoing rulemaking proceeding, R.14-07-002, in which the Commission is implementing a process, known as “net energy metering” (NEM), that allows solar customers to earn utility bill credit for the unused electricity generated by their systems and returned to the grid. The proposals are designed to protect solar consumers who are participants in the NEM program from solar providers and their agents who use unscrupulous tactics to evade detection and enforcement action by various regulatory agencies.

These proposals are the latest products of the longstanding partnership between CSLB and the CPUC following the passage of AB 1070 (Gonzalez Fletcher) (Chapter 662, Statutes of 2017), which required the two agencies to collaborate on the development of materials to provide consumers with clear and concise information about the installation of solar energy systems in their homes. [23:1 CRLR 107–109; 118–120] Since then, CSLB and the CPUC have partnered on various issues regarding private solar installation and interconnectivity to the grid. A major product of this partnership has been the combined CSLB and CPUC Interagency Solar Taskforce. Since its establishment, the task force has been analyzing contracts known as “interconnection packets” that have been submitted to the utilities for connecting to the electrical grid. [see 23:2 CRLR 123–125; 24:1 CRLR 124–125; 24:2 CRLR 100]

The first proposal for discussion responds to CPUC Commissioner Martha Aceves’ January 5, 2021 ruling seeking comments on a proposal by the California Solar & Storage Association for enhanced audits by the electric investor-owned utilities (IOU) and for development by the electric IOUs of solar transaction record databases as a component of an enhanced audits program. Specifically, it would require IOUs to provide CSLB with contract information for consumers participating in NEM, including a record of every interconnection application to connect to the grid. This proposal would expand and formalize a process that CSLB and the CPUC have already been engaging in by requiring IOUs to create databases for the agencies to better access this information. The proposal would also allow for the creation of a contractor “watch list” to keep track of contractors who violate solar installation and interconnectivity requirements or for whom the agencies have received consumer complaints.

The second proposal responds to Commissioner Aceves’ September 3, 2020 ruling soliciting comments on a proposed recovery fund for NEM solar customers. This proposal would provide an avenue for solar consumers who have been harmed to recover their losses when other remedies have failed to provide restitution. According to the Interagency Solar Task Force’s September 2020 Update at CSLB’s September 9, 2020 meeting (Agenda Item E-2), this happens when a contractor is subject to license revocation, files for bankruptcy, or is unlicensed, leaving homeowners with no financial redress.

The CPUC’s proposal is largely based on data CSLB shared at the Interagency Solar Taskforce meeting in August 2020, including its report that it received an average of 90 new solar-related complaints per month in Fiscal Year 2019–20. This monthly average complaint count is the highest CSLB has experienced since 2015. Out of 251 solar-related complaints that CSLB investigated and referred to legal action, 141 were closed without redress because a contractor’s license had been or was imminently going to be revoked, and 17 more cases involved unlicensed contractors.

In its order proposing the recovery fund, the CPUC also cited the results of CSLB’s audit of solar contracts collected by IOUs.  CSLB’s initial review of these contracts revealed that over 90 percent of the 153 contracts it reviewed demonstrated a clear violation of the Contractors State License Law, particularly Article 10, the Home Improvement Business (sections 7150–7170 of the Business and Professions Code). The most concerning trends included: 1) the Home Improvement Salesperson listed on the contract was not registered or the HIS was registered but not to the prime contractor, both of which are violations of the law; 2) the commencement and completion dates did not comply with section 7159 of the Business and Professions Code; and 3) the payment schedules stated in the contract requested payments in advance of work performed, also in violation of section 7159.  While the CPUC recognized that the sample size of the contracts audited was not representative, it found that the percentage of contracts showing violations of laws regarding basic practices and data from recent CSLB complaints provides additional context about the scope of the challenge that its proposal seeks to address. According to the CPUC, solar fraud has particularly harmed low-income, elderly, and non-English speaking consumers and communities.

Based on this data, the CPUC estimated the recovery fund to require $1,631,763 annually and proposed that the recovery fund be funded by an additional fee of between $10 and $20 per connection to the grid. Commissioner Aceves’ September 3 order also sets out specific parameters and details with respect to the guiding principles and operations of the fund.

After the CPUC’s presentation of both proposals to CSLB’s Enforcement Committee, despite some committee member concern about potential contractor backlash towards the additional fees to support the $1,631,763 fund, the committee voted unanimously to recommend that the full board support both proposals as modified by CSLB staff to reduce the number of contracts CSLB would be required to audit on an annual basis.

CSLB’s next full board meeting is scheduled for Thursday, March 25, 2021, at 9:00 am via WebEx, and will be considering these proposals at that meeting (Agenda Item E-3). The public will have an opportunity to comment to the Board during the meeting.