Discussion
of Issues
Issue 1:
Should the
Commission grant Vivint’s Petition for Declaratory Statement?
Recommendation:
(4)
Yes. Based on the facts presented by Vivint, the
Commission should grant Vivint’s Petition and declare: (1) Vivint’s proposed
residential solar equipment lease, as described by its petition, will not be
deemed to constitute a sale of electricity; (2) Offering its solar equipment
lease, as described in its petition, to consumers in Florida will not cause
Vivint to be deemed a public utility; and (3) The residential solar equipment
lease described in its petition will not subject Vivint or Vivint’s
customer-lessees to regulation by this Commission. The Commission should also
state that its declaration is limited to the facts described in Vivint’s
Petition and would not apply to different, alternative facts. (Harper,
Crawford)
Staff Analysis:
Vivint’s Petition asks the Commission
to declare whether Vivint’s solar leasing program as described in Vivint’s
Petition will make Vivint or its lease customers a public utility subject to
the Commission’s jurisdiction under Section 366.02(1), F.S. Although Vivint
provided a copy of a draft solar equipment lease, approving Vivint’s draft
lease does not fall within the Commission’s jurisdiction and review of the
lease is not necessary for the Commission’s determination of Vivint’s Petition.
The facts in Vivint’s Petition are
virtually identical to the facts set forth by Sunrun Inc. in Docket No.
20170273-EQ. Thus, staff is unsure as to why Vivint saw a need to request a declaratory
statement. Vivint’s Petition states that it is aware of the Commission’s recent
decision in Order No. PSC-2018-0251-DS-EQ, issued May 17, 2018, in Docket No.
20170273-EQ, In re: Petition of Sunrun
Inc. for a declaratory statement concerning the leasing of solar equipment
and that the order was limited to the specific facts described in Sunrun’s
Petition. According to Vivint, it is seeking this declaratory statement to
remove questions or doubts concerning the applicability of the statutes, rules
and orders identified in its particular set of circumstances, including its
proposed long-term lease of solar generation equipment to residential customers
throughout Florida.
Vivint’s
Petition states that its proposed residential equipment lease program will have
fixed lease payments that are 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. This is also consistent with the Commission’s recent decision in
Sunrun. Staff recommends
the Commission grant Vivint’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 28-105.003,
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.
Vivint’s
Petition for Declaratory Statement
Vivint’s particular
circumstances and facts
The Petition states that Vivint is one of
the nation’s largest dedicated residential solar, storage, and energy services
company with over 125,000 customers in 21 states and the District of Columbia. Vivint
offers solar equipment cash sales in those 21 states and also offers a solar
equipment lease program to homeowners in a number of states including Arizona,
California, and South Carolina, with plans to expand the program to additional
states. Vivint now seeks to offer its residential equipment lease program to
Florida residential customers.
In Florida, Vivint currently sells solar
equipment to residential customers but does not offer a lease option. Vivint offers customers who cannot pay cash
for their solar generation equipment an option to finance the purchase of their
solar equipment. Vivint’s Petition states its proposed solar equipment lease
will provide another financing option to Florida homeowners who prefer not to
or cannot afford to purchase and pay upfront for a residential solar system. Vivint
states that its proposed Florida residential solar equipment lease complies
with Florida law, is consistent with prior Commission precedent, and will
consist of a 20 year lease of solar equipment intended to provide a homeowner
with the means to generate much of the electricity needed for that residence. Vivint’s
Petition states its residential solar equipment lease will include the
following provisions:
·
Monthly lease payments will be fixed for a
20-year lease term. The payment amounts will be based on costs to purchase the
solar equipment and install the system, plus a rate of return for Vivint’s
investment. The customer-lessee payments will be independent of electricity
generated by the solar system, utility prices, maintenance activities, solar
irradiance, or any other operating operational variable of the leased
equipment.
·
Vivint will hold legal title to the leased
equipment and will receive all Investment Tax Credits, and any other benefits
associated with the investment.
·
Vivint will have no control over the use of the
equipment other than as the beneficiary of the representations and covenants from
the customer-lessee contained in the lease.
·
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 request removal of the equipment at no additional
cost.
·
Vivint will provide industry standard
workmanship warrantees to ensure the highest quality installation and protect
the customer-lessees home from damage during the installation process. The
customer-lessees will bear the costs of ongoing system maintenance through
their specified monthly lease payment. The system’s equipment warranties and
maintenance services will be triggered by damage to or malfunction of the
system, or its components, and are not dependent upon electrical generation or
system production rates.
·
The customer-lessee will be responsible for the
cost of non-warranty maintenance, repair, and replacement, including for example,
alteration of the system and any damage to the system due to windstorm,
vandalism, negligence or other events not directly caused by Vivint.
·
Once the system is installed and interconnected,
the costs and expenses of maintaining and insuring the equipment are all borne
by the customer-lessee except to the extent assumed by Vivint through the maintenance
provisions of the lease.
·
The customer-lessee will be responsible for all taxes
assessed on or arising from installation or operation of the leased equipment.
·
Lease terms and conditions will be compliant
with applicable Florida state law, and applicable IRS and accounting standards.
Vivint provided the Commission with a draft
solar lease for the limited purpose of assisting the Commission to further
understand the facts in the Vivint Petition. Although staff reviewed the lease
and its relevant provisions appear to be consistent with the petition, staff
believes a review of the lease is not necessary for the Commission’s
determination of Vivint’s Petition. Instead, staff’s analysis primarily focuses
on whether Vivint’s Petition meets the standards for a declaratory statement. Staff
need only look to Vivint’s Petition for this analysis. Other provisions in
Vivint’s draft lease that involve statutes and rules that are outside the
Commission’s jurisdiction, such as those provisions that relate to Vivint’s
compliance with the consumer protection laws, are not relevant to and therefore
were not considered in staff’s analysis. The
analysis is limited solely to the jurisdiction question raised by the Petition.
Statutes, Rules, and Commission Orders
Applicable to Vivint’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 Vivint’s
Petition is Order No.
PSC-2018-0251-DS-EQ, issued May 17, 2018, in Docket No. 20170273-EQ, In re: Petition of Sunrun Inc. for a declaratory
statement concerning the leasing of solar equipment. In Sunrun, the
Commission declared that consistent with Rule 25-6.065, F.A.C., the Commission does
not have jurisdiction to regulate a company or its customer-lessees when
customers-lessees lease solar generation equipment, pay a flat monthly lease
payment for their personal use of the equipment, and that flat monthly lease
payment is not based on electric generation.
Staff’s Analysis of Vivint’s Petition
for Declaratory Statement
Vivint’s Petition asks the Commission
whether Vivint’s proposed solar leasing program triggers the Commission’s
jurisdiction under Section 366.02(1), F.S. In its Petition, Vivint states that
the declaratory statement procedure can assist Vivint with planning its future
conduct and will help avoid costly administrative litigation by selecting the
proper course of action in advance. Because Vivint 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, Vivint is
a substantially affected person and has standing to bring its Petition.
According to the declaratory statement
rules, the Commission’s analysis of Vivint’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 Vivint’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 Vivint’s proposed program constitutes a sale
of electricity.
Rule 25-6.065,
F.A.C., Interconnection and Net Metering of Customer-Owned Renewable Generation
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.”
In 2008, Rule 25-6.065, F.A.C., was
amended to include net-metering and expedited interconnection, and to allow 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 Vivint’s facts, the customer will be the end-user, and the lease payments do
not depend on electric generation. Vivint’s proposed solar equipment
lease program 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. Therefore, staff
believes the lease program model as described in Vivint’s Petition is
consistent with Rule 25-6.065, F.A.C.
Vivint’s
Petition is Consistent with the Sunrun Order
In
Sunrun, Sunrun requested a
declaratory statement from the Commission stating that its proposed residential
solar equipment lease did not constitute a sale of electricity and that the
lease programs described in its petition would not subject Sunrun or its
customer-lessees to regulation by the Commission. Sunrun provided a draft lease
to the Commission at the request of the Commission for the limited purpose of assisting
the Commission to further understand the facts in its petition.
The Commission answered Sunrun’s request
for a declaratory statement in the affirmative because Sunrun’s Petition described fixed lease payments that would
not vary based on electric generation. The Commission held that the proposed
lease arrangement did not constitute a sale of electricity. The Commission
found the Sunrun leasing model as described in its Petition was
consistent with Rule 25-6.065, F.A.C., which
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.
Like Sunrun,
Vivint’s lease payments are fixed and are therefore independent of electric
production. Vivint’s proposed residential solar equipment lease program will
allow individual customers to generate electricity for personal use. Vivint’s
maintenance arrangement allows the company to maintain the
solar panels without affecting the lease payments. Because the lease payments
would not vary based on generation, the lease arrangement would not be
considered a sale of electricity.
Staff believes that the Vivint Petition is
consistent with both Sunrun and Rule 25-6.065, F.A.C. If Vivint goes outside the clear
bounds of its Petition, then the Commission’s declaratory statement would not
apply. 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 Vivint’s Petition and not as to other, different or
additional facts.
Conclusion
For the reasons set forth above, staff
recommends that the Commission grant Vivint’s Petition for Declaratory
Statement and declare: (1) Vivint’s proposed residential solar equipment lease,
as described by its petition, will not be deemed to constitute a sale of
electricity; (2) Offering its solar equipment lease, as described in its
petition, to consumers in Florida will not cause Vivint to be deemed a public
utility; and (3) The residential solar equipment lease described in its
petition will not subject Vivint or Vivint’s customer-lessees to regulation by
this Commission. The Commission should also state that its declaration is
limited to the facts described in Vivint’s Petition and would not apply to
different, alternative facts.
