Washington Post: Solar firms probed for possible ‘misrepresentations’ in getting public money
by Carol D Leonnig, Washington Post (excerpts)
SolarCity, SunRun (two of the biggest players in Hawaii’s market) and Sungevity have received subpoenas from the Treasury Department’s office of inspector general for financial records to justify more than $500 million in federal grants and tax credits the firms tapped for performing work. The probe seeks to determine whether the companies accurately reported the market value of their costs when applying for federal reimbursement, which was calculated at one-third of the costs.
The solar companies received money through the Treasury’s $13 billion program, known as the 1603 program, which used funds from President Obama’s stimulus initiative to offer cash grants to clean-energy developers. The goal was to spur the spread of wind farms, solar panels and other clean power sources nationwide.
SolarCity, SunRun and Sungevity have been by far the largest recipients among companies installing solar panels on homes. Working heavily in the sunny states of California and Arizona, the three firms collected hundreds of millions of dollars in federal cash grants to pick up a share of their costs on thousands of home installations during the past three years.
But the prices some of these industry leaders charged for their work were sometimes far higher than the broader industry’s market rate, according to solar experts and details of the Treasury investigation released in company reports. While firms can install solar panels for roughly $5 per watt of energy and make a comfortable profit, some firms were charging as much as $7 and $8 per watt….
Thorson’s office is working with the Justice Department’s Civil Division in the investigation, looking at “possible misrepresentations” by the firms about costs, according to a SolarCity corporate filing. In preparation for its public stock offering this month, Solar City disclosed in October that it had received a subpoena from the inspector general’s office in July.
Sungevity’s and SunRun’s role in the inquiry has not been previously reported.
The three solar companies have found financial partners in such major household names such as Google, U.S. Bancorp, Credit Suisse and Citigroup. There is no suggestion that these financial partners engaged in any improprieties. But SolarCity notified investors in a security filing that the IRS is auditing two of the 23 investment funds it created with partner firms to finance its work. SolarCity did not name the partners in the funds but said the audits are focused on whether project costs are based on fair market values.
SolarCity and SunRun have been generous political supporters of Obama. At SolarCity, for example, officials in the company and its two key venture capital firm backers, along with their relatives, donated an estimated $579,000 to Obama in 2008 and 2012, according to campaign reports.
On Tuesday, SolarCity postponed its scheduled public offering as investors balked at the proposed $13 share price. On Wednesday, SolarCity slashed its stock price to $8 and began trading Thursday.
In a securities filing related to the stock offering, the company reported that the Treasury had notified SolarCity it was reducing the rate at which it would be reimbursed for some solar installations and might reduce others. The company said it may have to repay the government and its investors.
The Treasury said that in some California projects, the price SolarCity could claim would fall by 12 percent, and in some Arizona projects, it would fall by 24 percent, the company reported.
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