The Securities and Exchange Commission is investigating into whether two solar companies, Sunrun and SolarCity, have hidden the number of customers they are losing, according to a report in the Wall Street Journal.
To specify, the SEC wants to know whether the companies are accurately disclosing the number of customers who have cancelled their contracts for home solar systems after signing up, the report said, citing a person familiar with the matter.
A subpoena has already been issued by the SEC and has began interviewing past and present Sunrun employees. The agency is “also looking at SolarCity,” the paper reported.
Some solar companies have disclosed that a growing number of customers have cancelled their contracts, however, they have not given any specific numbers or very much detail.
The amount of contract cancellations is important because they are a potential indicator of how well these companies are faring.
The news arises just as SolarCity’s parent company Tesla prepares to report its first quarter earnings, and a few months before the company’s scheduled debut of its line of solar roof tiles.
However, SolarCity representatives sent a statement to the Wall Street Journal saying that the company “has remained focused on reporting the quality of our installed assets, not pre-install cancellation rates. Our growth projections have always been based on actual deployments.”
Tesla also recently announced its abandoning its door-to-door strategy used by SolarCity and many others in the industry.
Last November, Tesla shareholders voted to acquire SolarCity. The solar power company had been chaired by Tesla CEO Elon Musk, and counted his relatives among its top executives.
Some analysts and investors criticized the deal stating they believed it was a bailout for Musk’s associates.
But in some quarters the deal found favor. It received the blessing of Institutional Shareholder Services, for example, a well respected proxy advisory firm. ISS also viewed the deal as a necessary step in Tesla’s plan to become an integrated sustainable energy company at a “low to no premium.”
Article written by HEI contributor Lydia Ezeakor.