Florida Public Service Commission Allows Solar Company to Offer Residential Solar Equipment Leases

On April 20, the Florida Public Service Commission (PSC) met to review a petition for a declaratory statement filed by Sunrun, Inc. The petition sought a declaratory statement that Sunrun residential solar equipment leases did not constitute a sale of electricity; offering the leases would not make Sunrun a public utility under Florida law; and that the leases would not make Sunrun or its lessees subject to PSC regulation.

Before this meeting, Sunrun only offered cash solar products that had to be paid for in full by customers. However, Sunrun wanted to offer a lease option whereby customers could sign a 20 year lease of solar panels. The price would be negotiated without respect to electricity generation. According to the lease terms, Sunrun would retain title to the equipment and receive tax credits and depreciation benefits. At the end of the lease term, the customer would have the option of purchasing the solar equipment at fair market value, renewing the lease annually, or requesting removal of the equipment. Sunrun would provide workmanship warranties to protect the home during installation, but the costs of maintenance would fall to the customer. Sunrun argued that under Florida law, it would have to sell electricity in order to be classified as a public utility. However, in Order No. 17009, the PSC decided that an equipment lease did not constitute a sale of electricity. Furthermore, Commission Rule 25-6.065 can be read to agree that self-generation of electricity using leased equipment does not on its own constitute the sale of electricity.

The PSC posted notice of the petition back in January and requested any comments be forwarded to the Commission. Gulf Power Company and Florida Public Utilities Company filed a joint motion for leave to file Amici Curiae Memorandum.  In the Memorandum, the two utilities expressed concern that Florida’s law that only public utilities can sell electricity be maintained. The two companies also expressed concern that Sunrun did not provide a copy of the proposed lease to review, thereby depriving the Commission of all of the information needed to make a decision. Sunrun filed a response to the Memorandum and focused on the fact that this was not a case of first impression for the Commission and sufficient information had been supplied for a decision to be made. Florida Electric Cooperatives Association, Inc. filed a motion in support of the two utilities. The Commission ruled on February 15 that the motion by the utilities to file joint Amici Curiae Memorandum was granted. The PSC met on February 16 and reviewed the petition. The staff who reviewed the petition recommended that Sunrun’s petition be granted. It was stated at the meeting that a decison should be issued by March 29. At the March 1 meeting of the PSC, Sunrun counsel was present to answer any questions. Commissioner Polmann stated that he would follow the staff recommendation, but no one seconded his motion. Commissioner Brown had several questions and in particular wanted to see a copy of a lease. Sunrun did not have an effective lease since the company had no intention to begin lease operations if the Commission did not provide the declaratory statement that was requested. Commissioner Fay also had several questions about the ability or willingness of Sunrun to provide a lease or some sort of form of what an agreement would look like. Commissioner Clark questioned some of the specifics aspects of a lease, with respect to the production of electricity. At the conclusion of the meeting, the Commissioners decided to defer a decision until they could view a sample lease from Sunrun. Sunrun provided a draft lease on March 19.

At the April 20 meeting, all of the Commissioners voted to approve the petition and issue the declaratory statement requested by Sunrun. The Commission found that the fixed lease payments, which were independent of electricity production, conformed to Florida law. Therefore, Sunrun could offer solar equipment leases in the state without being considered a public utility subject to regulation by the PSC. This decision will allow customers in Florida to generate electricity for their personal use using solar electricity, without having to pay for all of the equipment up front. It will also allow customers to take advantage of net metering and interconnection with their local utility company. It provides a further option for Florida customers.

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