Some solar prices sky high - consumer complain about pressure sales tactics

North County Times | April 13, 2011

Purchasing a residential solar power system can be complicated as it is, but a few companies have made the process more difficult by combining aggressive sales tactics with high prices.

It is not illegal to charge high prices or employ pushy salespeople, but the use of such tactics in the fast-growing industry has sparked numerous complaints from consumers. Joshua Monasmith, a 26-year-old electrician, had just bought his home in 2009 when he won an online contest for some free remodeling from American Home Craft, now known as Sungate Energy Solutions in San Diego. He was excited about solar, and allowed a representative to come to his house to give him a presentation.

The salesman spent two hours with him, trying to get him to sign a deal, Monasmith said. "The sales guy, he was a bit pushy ---- and kind of off-putting. He kept wanting to lock in the deal," Monasmith said. "I wanted to read everything and try to learn as much as I could about what we were getting into. He kept trying to solidify the deal ---- he tried to shake my hand like seven times." After two hours, Monasmith caved. "They lured me in with these discounts, 'If you agree now ...' so when I did that, they locked me into the deal," Monasmith said. The company took months to do the work. It finally finished the job after Monasmith complained to the Better Business Bureau and the California Contractors State License Board. Monasmith paid $15,800, before state rebates kicked in, for a 1.4-kilowatt system, much smaller than the typical 5-kilowatt system most Californians buy, and for much more money per watt than usual. A North County Times analysis of data provided by the California Solar Initiative, the state agency that manages a rebate program for solar panels, showed that the median residential price per alternating current watt in 2009 was $8.56, which means half of installers typically charged less than that. Monasmith paid $11.28. Bradley Smith, CEO and owner Sungate Energy Solutions, said his company had to charge these prices to stay in business. "Our sales practices are not high-pressure sales tactics; we don't do that," Smith said.

Solar buying complicated

Potential buyers of solar panels are confronted with details about electric bills, electricity, solar generation, permitting and a host of other parameters.

Some companies have exploited public ignorance on the subject to rush homeowners into expensive purchases that may not meet their needs, said Ben Airth, residential program manager for the San Diego-based, nonprofit California Center for Sustainable Energy. Stories of sales tactics like those Monasmith described appear on review websites such as, in complaints with the Better Business Bureau, and on solar blogs.

Among the 368 solar companies who applied at least 10 times for a rebates in California between 2009 and 2010, three companies charged prices significantly higher than those charged by the rest of the industry. Two of those three ---- Pacific Home Remodeling and Sungate ----- have been the subject of numerous complaints involving the use of pressure sales tactics and not performing to expectations. "Marketing is really the thing that they use to get that volume," Airth said. "They'll do the phone calls, go door to door, blanket a neighborhood with mailers. As soon as you call them, they're at your door the next day. If you get 'em in the house, it's nearly impossible to get 'em out."

According to the CSI data, between 2009 and January 2011, San Diego-based Sungate had the highest median price per residential install, at $16.21 a watt; Galkos Construction Inc. in Huntington Beach, also known as GCI Energy, came in second at $14.45 per watt; and Pacific Home Remodeling, headquartered in San Diego, charged third most at $14.02 per watt. The median price for all companies during this period was $8.63 per watt, and a savvy customer could have secured a solar installation for as little as $6.52 per watt from San Diego-based Clary Solar.

Two garnered complaints

Of the three most expensive installers, two had widespread consumer complaints. Pacific Home Remodeling has a C- rating from the Better Business Bureau, including 50 complaints in the past three years, and one star from Yelp reviewers. Sungate, under its prior name of American Home Craft, had 1.5 stars, and while its Better Business Bureau rating was not available at the time of this writing, it had 32 complaints over the past three years. The Utility Consumers' Action Network, a consumer advocate, has a warning on its website about Sungate's sales practices. On the other hand, Galkos has an A rating from the Better Business Bureau. Galkos President Frank Gialketsis said his company charged high prices partly because it used to employ union labor, and partly because it offers services above and beyond what most solar contractors do. Gialketsis said this includes reroofing underneath solar panels and cosmetic work to ensure the panels and accessories match the house exterior, and the company guarantees its work for decades, all of which are rolled into the cost.

"Different things we do, that come back to haunt us when it comes to the CSI data," Gialketsis said. Small systems expensive Galkos, as well as Sungate and Pacific Home Remodeling, appear to specialize in much smaller solar installations than are typical: The three companies installed more systems providing less than 2 kilowatts of power than any other companies, with Galkos leading the way with 706 installations. Because some costs, such as permit applications, inverters and cables, are the same regardless of system size, small systems would tend to be more expensive per watt. But these systems can also be worth less to consumers, because they produce so much less power. "They'll (Sungate and Pacific Home Remodeling) sell you six to 10 panels, they'll tell you these are the highest-producing modules on the market, and that's it," Airth said. "Customers will hardly notice the difference on their electric bill." Sungate's Smith said his prices were high so he could pay for marketing. "We direct-mail 1.5 million pieces a year," he said. "We structure our pricing the way we need to stay in business." Salesman talks tactics

No one from Pacific Home Remodeling responded to calls or e-mails for comment, but Airth and other industry professionals said Pacific Home Remodeling also used pressure sales tactics. A project manager at a rival company started his career in solar in 2009 at Pacific Home Remodeling. "Basically, that company was pretty much a straight-up sales company," said the former salesman, who asked that his name not be used. "Very aggressive sales." He said Pacific Home Remodeling taught him to close a deal in one sitting no matter how long it took. Officials told him to plan on spending three or four hours with each prospect if he hoped to complete a sale, he said. He was taught to start customers at a high price, and then offer a series of pretexts for lowering the price. But each "discount" was only available if the customer signed a contract immediately, the man said. "If an average system that would cost $25,000 for another company, their starting price was up around $50,000," the former salesman said. "We'll drop it by 10 percent, but it's still well above what these systems could cost." Airth said the Center for Sustainable Energy has received numerous complaints about these kinds of maneuvers by Pacific Home Remodeling, and he has neighbors who had these kinds of problems with this company. There's nothing illegal about charging high prices or about some kinds of pressure sales tactics. However, the California Solar Initiative created a rule last year that said companies looking to offer customers state rebates couldn't charge more than two standard deviations above the mean price. The cap in January was $14.34 per watt, according to program manager Molly Sterkel. "Still very high, yes. It is a somewhat of a free market," she said. Suspended from rebate program Both Pacific Home Remodeling and Sungate are suspended from the California Solar Initiative, Sterkel said, though not for charging high prices. "I'm subject to all the conversations when we remove contractors, and they're always long and sordid," Sterkel said. She said the reasons for the suspensions were confidential. But she said suspensions tend to relate to problems with bad installations or inaccurate paperwork. Sungate's Smith said he expected to have his company's suspension lifted in May. Absence from the rebate program doesn't mean those companies are out of business; it just means they can no longer offer state rebates to customers.

Sterkel emphasized that most solar contractors charge competitive rates. She and Airth said buyers should not agree to purchase during the first meeting with a salesperson, as solar power systems are complicated and should be customized for each home. They recommended getting at least three estimates before signing on the dotted line (see sidebar for how to pick a solar installer), and Sterkel said provides a wealth of comparative pricing data. "Don't accept pressure tactics," Sterkel said. "The problem contractors are the exception to the rule. You should practice good common sense with a solar contractor as you would with any contractor."

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