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Aug. 22, 2016

FTC Should Ban Forced Arbitration Clauses in Solar Leases

Statement of Tyson Slocum, Director, Public Citizen’s Energy Program

Note: Public Citizen today submitted comments (PDF) to the Federal Trade Commission (FTC) urging the agency to ban mandatory arbitration clauses in solar leasing contracts.

Forced arbitration clauses have no place in solar leasing contracts. These “rip-off clauses” hidden in the fine print rob consumers of the ability to take a company to court if it breaks the law or engages in abusive practices.

While mandatory arbitration clauses are common in many industries, they usually aren’t included in electric utility service contracts. That’s because electric utility service always has been considered a public service and has been regulated as such for more than a century by states. The terms in solar leases essentially function as electric utility service. But state regulatory commissions do not regulate solar leasing contracts, leaving consumers vulnerable to corporate abuses and lawbreaking.

Homeowners who lease – rather than buy – their solar panels under long-term contracts account for more than three-quarters of all new rooftop solar deployed in the U.S. over the past year. Public Citizen obtained sample leases from SolarCity and other leasing companies and found that many contain mandatory arbitration clauses.

Public Citizen earlier this year urged the solar leasing industry leader, SolarCity, to remove arbitration clauses from standard contracts, but the company has refused. That’s why the FTC needs to protect consumers by eliminating mandatory arbitration in contracts from solar leases and power purchase agreements.

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