Discussion
of Issues
Issue 1:
Should the Commission grant Sunrun’s Petition for
Declaratory Statement?
Recommendation:
I.
Yes. Based on the facts presented by
Sunrun, the Commission should grant Sunrun’s Petition and declare: (1) Sunrun’s
residential solar equipment lease as described in Sunrun’s Petition does not
constitute a sale of electricity; (2) offering its solar equipment lease to
customers in Florida as described in Sunrun’s Petition will not cause Sunrun to
be deemed a public utility under Florida law; and (3) the residential solar
equipment lease as described in Sunrun’s Petition will not subject Sunrun or
Sunrun’s customer-lessees to regulation by the Commission. The Commission
should also state that its declaration is limited to the facts described in
Sunrun’s Petition and would not apply to different, alternative facts. (Harper,
Crawford)
Staff
Analysis:
Sunrun’s
Petition asks the Commission to declare whether Sunrun’s solar leasing program as
described in Sunrun’s Petition will make Sunrun or its lease customers a public
utility subject to the Commission’s jurisdiction under Section 366.02(1), F.S. Although
Sunrun provided a copy of a draft solar equipment lease for the Commission’s
consideration when addressing Sunrun’s question, the Commission would not have
the authority to approve Sunrun’s draft lease.
Sunrun’s Petition and its draft solar
equipment lease provide that the lease payments are fixed and are
therefore independent of electric production. This is consistent with Rule 25-6.065,
F.A.C., which allows customers to
lease an on-site renewable generation system from a third-party without
triggering the Commission’s jurisdiction. Staff recommends the
Commission grant Sunrun’s Petition for Declaratory Statement. Below is a more
detailed explanation of Staff’s recommendation.
Law Governing Petitions
for Declaratory Statements
A
declaratory statement procedure is intended to enable members of the public to
definitively resolve ambiguities of law arising in the planning of their future
affairs and to enable the public to secure definitive binding advice as to the
applicability of agency-enforced law to a particular set of facts. Department of Business and Professional
Regulation, Div. of Pari-Mutuel Wagering v. Investment Corp. of Palm Beach,
747 So. 2d 374, 382 (Fla. 1999). Declaratory statements are governed by Section 120.565, F.S., and the Uniform
Rules of Procedure in Chapter 28-105, F.A.C. Section 120.565, F.S., states, in
pertinent part:
(1)
Any substantially affected person may seek a
declaratory statement regarding an agency's opinion as to the applicability of
a statutory provision, or of any rule or order of the agency, as it applies to
the petitioner's particular set of circumstances.
(2)
The petition seeking a declaratory statement shall
state with particularity the petitioner's set of circumstances and shall
specify the statutory provision, rule or order that the petitioner believes may
apply to the set of circumstances.
Rule
28-105.001, F.A.C., Purpose and Use of Declaratory Statement, provides:
A declaratory
statement is a means for resolving a controversy or answering questions or
doubts concerning the applicability of statutory provisions, rules, or orders
over which the agency has authority. A
petition for declaratory statement may be used to resolve questions or doubts
as to how the statutes, rules, or orders may apply to the petitioner’s
particular circumstances. A declaratory
statement is not the appropriate means for determining the conduct of another
person.
If a petitioner
requesting a declaratory statement meets the filing requirements provided by Rule
28-105.002, F.A.C., an agency must issue the declaratory statement.
Rule 28-105.002, F.A.C., requires a petition for declaratory statement to
include the following information:
(1) The caption shall read: Petition for
Declaratory Statement Before (Name of Agency).
(2) The name, address, any e-mail address,
telephone number, and any facsimile number of the petitioner.
(3) The name, address, any e-mail address,
telephone number, and any facsimile number of the petitioner’s attorney or
qualified representative if any.
(4) The statutory provision(s), agency
rule(s), or agency order(s) on which the declaratory statement is sought.
(5) A description of how the statutes,
rules, or orders may substantially affect the petitioner in the petitioner’s
particular set of circumstances.
(6) The signature of the petitioner or of
the petitioner’s attorney or qualified representive.
(7)
The date.
Rule 28-105.003, F.A.C., provides
the requirements for how agencies must dispose of declaratory statements. The rule states that an agency may rely on the statements of fact
set out in the petition without taking any position with regard to the validity
of the facts.
Sunrun’s Petition for
Declaratory Statement
Sunrun’s particular circumstances and facts
The
Petition states that Sunrun has offices in Tampa, Florida, and is the nation’s
largest dedicated residential solar storage and energy services company with
over 160,000 customers currently in 22 states and the District of Columbia. In
Florida, Sunrun offers only its “cash solar product,” which customers must
purchase and pay for in full, upfront.
Sunrun
plans to offer leasing as an option in Florida for potential customer-lessees
who prefer not to or cannot purchase and pay upfront for residential solar
systems. Sunrun states that the Florida residential solar equipment lease will
consist of a 20-year lease of solar panels with an option to include batteries.
According to Sunrun, the proposed leasing program payment amounts will be based
on a negotiated rate of return and will be independent of electric generation,
production rates, or any other operational variable of the leased equipment.
Amici
Curiae Gulf Power and FPUC raise issues in the memorandum of law that
questioned the facts outlined in Sunrun’s Petition. Specifically, they pointed
out that Sunrun did not file a lease agreement with its Petition, so it is
unclear whether the lease agreement would match the facts set forth in Sunrun’s
Petition. In response to the Commission’s concerns expressed at the March 1,
2018 Agenda Conference, Sunrun filed a draft solar equipment lease. The draft
lease includes the following provisions:
·
Lease payments will be fixed for a 20-year lease
term. The payment amounts will be based on a negotiated rate of return and will
be independent of electric generation, production rates, or any other
operational variable of the leased equipment.
·
Sunrun will hold legal title to the leased
equipment and receive the tax credits and depreciation benefits associated with
the investment.
·
Sunrun will have no control over the use of the
equipment other than as the beneficiary of covenants requiring the
customer-lessee to maintain the equipment in good repair.
·
At the lease expiration, the customer-lessee
will be able to purchase the solar equipment at fair market value, renew the
lease on an annual basis, or require removal of the equipment.
·
Sunrun will provide customary workmanship
warrantees to protect the customer-lessees’ home from damage during the
installation process. The customer-lessees will be responsible for the costs of
ongoing system maintenance through their monthly lease payment. Equipment
warranties and maintenance services will be triggered by damage to or malfunction
of the system, or its components, and will not be dependent upon electrical
generation or system production rates.
·
The customer-lessee will be responsible for the
cost of non-warranty maintenance, repair, and replacement.
·
Once the system is installed and interconnected,
the operational burden and risk of maintaining the equipment and assuring
adequate solar exposure conditions will be borne by the customer-lessee.
·
The customer-lessee will be responsible for the
costs of applicable property taxes and insurance.
·
Lease terms and conditions will be compliant
with applicable IRS and accounting standards.
Statutes,
Rules, and Commission Orders Applicable to Sunrun’s Facts
The
statute to be applied is Section 366.02(1), F.S., which states, in pertinent part,
that the Commission’s jurisdiction extends to public utilities defined as:
Every person, corporation,
partnership, association, or other legal entity and their lessees, trustees, or
receivers supplying electricity or gas…to or for the public within the state.
The rule that applies is Rule
25-6.065, F.A.C., which provides, in pertinent part:
The term ‘customer-owned renewable generation’ does not
preclude the customer of record from contracting for the purchase, lease,
operation, or maintenance of an on-site renewable generation system with a
third-party under terms and conditions that do not include the retail purchase
of electricity from the third party.
Rule 25-6.065, F.A.C., allows customers to contract to lease an on-site renewable generation system
with a third-party. The rule allows leases for solar equipment that include a
maintenance agreement so long as the lease payments do not depend on electric
generation.
The
Commission order applicable to Sunrun’s Petition is Order 17009, issued December 22, 1986, in Docket No. 860725-EU, In re: Petition of Monsanto Company for a
declaratory statement concerning the lease financing of a cogeneration facility. In Monsanto,
the Commission declared that the Monsanto Company’s on-site lease financing of its
cogeneration facility did not result in a retail sale of electricity, did not
cause the lessor to be deemed a public utility, and did not subject either the
company or its lessor to regulation by the Commission.
Staff’s
Analysis of Sunrun’s Petition for Declaratory Statement
Sunrun’s
Petition asks the Commission whether Sunrun’s proposed solar leasing program
triggers the Commission’s jurisdiction under Section 366.02(1), F.S. In its
Petition, Sunrun states that the declaratory statement procedure can assist
Sunrun with planning its future conduct and will help avoid costly
administrative litigation by selecting the proper course of action in advance.
Because Sunrun seeks to offer and market the residential solar equipment lease
program in Florida only if the Commission grants, in the affirmative, its
request for a declaratory statement, Sunrun is a substantially affected person
and has standing to bring its Petition.
According
to the declaratory statement rules, the Commission’s
analysis of Sunrun’s Petition is limited to the facts presented in the
Petition, and the Commission may answer the
question without taking any position with regard to the validity of the facts.
Because the Commission’s analysis in this case is limited solely
to the jurisdiction question raised by Sunrun’s Petition, staff has analyzed
the facts presented under Section 366.02(1), F.S, prior Commission orders, and
Rule 25-6.065, F.A.C., to determine if Sunrun’s proposed program constitutes a
sale of electricity.
Staff reviewed the draft solar lease for the sole purpose of
confirming that it reflected the facts stated in Sunrun’s Petition. Because the
Commission’s analysis is limited solely to the jurisdiction question raised by
the Petition, other provisions in the draft lease, such as those provisions
that relate to Sunrun’s compliance with the Florida Consumer Protection Law,
were not part of staff’s analysis.
Also, Gulf Power and FPUC provided marketing materials from
Sunrun’s activities in other jurisdictions in their memorandum of law. In
response, Sunrun provided Florida-specific marketing materials while noting its
activities in other jurisdictions are irrelevant to its Petition in Florida.
Because staff’s review of Sunrun’s
draft solar lease was limited to confirming that the draft solar lease
supported the facts presented in the Petition, staff did not consider Sunrun’s marketing
materials for other states.
Rule
25-6.065, F.A.C., Interconnection and Net
Metering of Customer-Owned Renewable Generation
Sunrun filed a draft solar
equipment lease to illustrate how its leasing model would operate in Florida.
Sunrun’s draft solar lease shows that the lease customers must utilize their
utility’s service and interconnection and net metering provisions. This is
consistent with Rule 25-6.065, F.A.C., which provides, in pertinent part:
The term ‘customer-owned renewable generation’ does not
preclude the customer of record from contracting for the purchase, lease,
operation, or maintenance of an on-site renewable generation system with a
third-party under terms and conditions that do not include the retail purchase
of electricity from the third party.
In 2002, the
Commission adopted Rule 25-6.065, F.A.C., “to promote the development of small
customer-owned renewable generation, particularly solar and wind energy
systems.” Rule
25-6.065, F.A.C., allows customers to lease solar equipment from
a third party. The rule allows for a maintenance agreement to be included in
the lease so long as the lease payments do not depend on electric generation.
According to Sunrun’s facts, the customer will be the end-user, and the lease
payments do not depend on electric
generation. Therefore, staff believes the lease program model as
described in Sunrun’s Petition is consistent with Rule 25-6.065,
F.A.C.
Sunrun’s Petition is Consistent with
the Monsanto Order
The Commission has issued
previous orders on petitions for declaratory statement that have addressed the
concept of what constitutes a public utility in terms of leasing cogenerators
or the use of energy created by cogenerators. These orders stand for the
general proposition that where a customer pays a flat fee to an energy
generation equipment supplier for personal use and that fee is not based on
electric production, there is no jurisdictional sale of electricity.
Although
the Monsanto declaratory statement
considered cogenerators rather than a solar customer-owned system, the order reflects
the facts which are most similar to the facts presented in Sunrun’s Petition
because it involved leasing equipment for self-generation. In Monsanto, the company asked the
Commission for a declaratory statement to recognize that the company’s use of
lease-financing for equipment to increase the company’s own on-site generation
would not render the company subject to the Commission’s jurisdiction. In its
petition, the company stated that it would pay a fixed amount for the lease, an
amount that was not tied to energy production. The lease would run for a
minimum of five years, after which the company could elect to renew it,
purchase the equipment, or pay for the removal of the equipment. The Commission
answered the declaratory statement in the affirmative and held that Monsanto’s
plan would not trigger the Commission’s jurisdiction because the company was
“leasing equipment which produces electricity rather than buying electricity
that the equipment generates.”
The Commission stated: “(M)ost importantly, just as in the lease of an automobile,
the lease payments would be fixed through the term of the lease.”
In Monsanto, the company was responsible for maintenance of the
cogenerators. Amici curiae state
in their memorandum of law that “[i]f the proposed leasing arrangement places
repair, replacement and/or maintenance obligations on the lessor rather than
the lessee, such an agreement would appear to be odds with the Commission’s
holding in Monsanto.” Amici curiae do not state how the assignment of
maintenance obligations would conflict with Monsanto
or how that would result in a sale of electricity and appears to be irrelevant.
In Monsanto, the Commission
considered maintenance because of
the operational nature of cogenerators. Cogenerators can be turned off and on and
ramped up and down, and, as a result, maintenance activities and costs
can vary. Therefore, the lessee in Monsanto
assumed the responsibility of maintaining the leased equipment to avoid having
the lease payments go up and down due to maintenance activity. The holding in Monsanto is based on the fixed nature of
the lease payments rather than who has the obligation for maintenance.
Like Monsanto, Sunrun’s lease payments are
fixed and, therefore, independent of electric production. Sunrun’s proposed
residential solar equipment lease program will allow individual customers to
generate electricity for personal use. Unlike the fact in Monsanto that the lessee assumed responsibility for maintaining the
leased equipment because maintenance activities could cause the lease payments
to vary, Sunrun’s maintenance arrangement allows the company to maintain the solar panels without
affecting the lease payments. Sunrun will monitor the output of the solar
panels for the purpose of maintenance, and if faulty panels are detected and
repaired or replaced, the customer’s monthly lease payment would remain fixed
regardless of the output and maintenance activity. Therefore, the lease payments
would not vary based on generation, and the lease arrangement would not be
considered a sale of electricity.
After the Monsanto order, the Commission promulgated
Rule 25-6.065, F.A.C., “to promote the development of small customer-owned renewable generation,
particularly solar and wind energy systems.” Rule 25-6.065, F.A.C., allows customers to lease solar equipment from a third party and allows for a maintenance
agreement so long as the lease payments do not depend on electric generation.
Thus, the Sunrun Petition is consistent with both Monsanto and the Commission’s current Rule 25-6.065,
F.A.C.
Sunrun’s Draft Solar
Equipment Lease is Consistent with Sunrun’s Petition
Staff
believes that Sunrun’s Petition contains the necessary facts to support its
request for a declaratory statement. The Petition describes the proposed model
in a manner sufficient for the Commission to answer the question of jurisdiction.
Staff reviewed
Sunrun’s draft solar lease for the limited purpose of further understanding the
facts in the Sunrun Petition. Specifically, staff’s analysis was limited to the
facts related solely to the Commission’s jurisdiction. Accordingly, staff
reviewed the draft solar lease’s terms and obligations for the lessor and
lessee with respect to lease payments and maintenance and warranties.
Staff believes
that Sunrun’s draft solar lease payment structure is consistent with the facts
in its Petition. Because the draft solar lease provides that the lease payments
are fixed payments, it does not constitute a retail sale of electricity.
In
addition, Sunrun’s draft solar lease is consistent with the maintenance and
warranties structure outlined in its Petition. Sunrun’s draft solar lease offers
customers a maintenance agreement that is independent of electric production. While
Sunrun states it will give customers an estimate on the solar panels’ output
for the purpose of sizing the system to fit the customers’ home, it makes no
other representation, warranty or guarantee of any kind regarding the system’s
output or performance. Because
the lease payments are fixed regardless of the repairs and maintenance that may
be required with the panels, Sunrun’s draft solar lease terms appear to be
independent of electric generation.
Sunrun states
that the proposed leasing program’s maintenance package allows Sunrun to
monitor the system remotely to collect information on the panels to notify
Sunrun of any defects with the panels, such as damage or malfunction of the
panel due to moisture intrusion. Sunrun
states that it will monitor and collect data from the panels in order for
Sunrun to proactively address any problems that may arise due to system
defects, which is necessary for Sunrun to meet the consumer protection
requirements in the law and Sunrun’s contractual obligations with its
customers. Sunrun states while it will be remotely measuring the energy
produced by the solar system, Sunrun will not operate the system or manipulate
the systems’ output. Rather, the monitoring of the system is simply to collect
information to ensure the equipment is operating properly and to provide Sunrun
with information to enhance its service. Staff believes that the fact that
Sunrun proposes to monitor and collect data while maintaining the solar system does
not conflict with the facts outlined in Sunrun’s Petition. Moreover, staff
believes that the fact that Sunrun is offering customers a maintenance plan as
part of its fixed lease payment plan is consistent with Rule 25-6.065, F.A.C., which does not preclude the
customer “from contracting for the purchase, lease, operation, or maintenance of an on-site renewable
generation system.” (Emphasis added.)
Staff
believes that Sunrun’s Petition contains the necessary facts to support its
request for a declaratory statement. Sunrun’s proposed solar leasing program
will not allow for customer payments or charges based on electric production
because the monthly lease payments are fixed. Staff believes Sunrun’s proposed
solar leasing program as outlined in its Petition is consistent with Rule 25-6.065, F.A.C.
If Sunrun goes outside the clear bounds of its Petition, then the
Commission’s declaratory statement would not apply to an alternate set of
facts. It is well settled that declaratory statements are inherently limited to
the facts upon which they are based. The
declaratory statement will be controlling only as to the facts in Sunrun’s Petition
and not as to other, different or additional facts.
Conclusion
For the reasons set forth above, staff recommends that the
Commission grant Sunrun’s Petition for Declaratory Statement and declare: (1)
Sunrun’s residential solar equipment lease as described in Sunrun’s Petition
does not constitute a sale of electricity; (2) offering its solar equipment
lease to customers in Florida as described in Sunrun’s Petition will not cause
Sunrun to be deemed a public utility under Florida law; and (3) the residential
solar equipment lease as described in Sunrun’s Petition will not subject Sunrun
or Sunrun’s customer-lessees to regulation by the Commission. The Commission
should also state that its declaration is limited to the facts described in
Sunrun’s Petition and would not apply to different, alternative facts.
Issue 2:
Should this docket be closed?
Recommendation:
Yes, if the Commission votes to either grant or deny
the Petition for Declaratory Statement, the docket should be closed.
Staff Analysis:
Whether the Commission grants or denies Sunrun’s
Petition, a final order will be issued. Upon issuance of the final order, the
docket should be closed.
