Looking at solar leases for your home? How new rules can add to the cost

LOS ANGELES (KABC) -- As energy costs rise, more people are looking at solar panels as a way to save money, but will getting a solar lease for your home actually be better for your wallet?

A viewer reached out to Eyewitness News, saying the state has changed rules for solar leases. We did some digging and learned there are some hidden costs.

Seven years ago, Phillip Maxwell decided the cost of electricity was too high in Rancho Cucamonga and installed 28 solar panels. He said everything was great but in 2022, the California Public Utilities Commission cut the rate that utilities pay homeowners when they sell surplus power by 75%.

"As a solar household and a solar user, I made the capital and investment, trying to do the right thing, and it just didn't," said Maxwell. "It's not working out in my favor right now."

He was stunned when he called his power company.

"[I asked] what am I buying solar from you, or excuse me, energy?' and she said, 'You're paying 30 cents a kilowatt.' I said, 'Well, my system overproduces in the summer, what are you buying it for me from? And she goes, 'Oh, 3 cents a kilowatt.'"

Tyson Slocum, the director of Public Citizen's Energy & Climate Program, said if you make an investment then all of a sudden the government changes the terms of how you plan to finance that investment, that's not equitable either.

That is one big change for solar that could make it less attractive going forward, especially for people who do not own their system. Because of the high cost to install solar, a number of people decided to lease.

"You've got sometimes door-to-door salespeople, or other sales tactics, where the salesperson's working on commission," said Slocum, who adds leases might work for some people, but there can be drawbacks.

"Their goal is to sell as many contracts as possible."

"Where a lease comes in, just as with, you know, leasing a car or anything else, it's as if you don't want to put up all the money to purchase it, or if you don't have all the capital to do it," added Slocum. "So leasing is a type of alternative financing where you're basically paying rent payments on this."

READ ALSO | 'I'm angry we fell for it:' SoCal family fights messy 20-year contract after switching to solar

For a lot of homeowners, switching to solar energy involves pricey loans and leases. One SoCal family is currently dealing with a 20-year contract.

Maxwell says that lease can be a problem if you want to sell your home.

"As a real estate broker, I had a friend that had a house in Corona, and the seller wanted to sell the house, and the people didn't want to assume the solar lease, so it cost the seller $75,000 to remove their system off their house in order for the house to be sold," said Maxwell.

Slocum said the buyer has to commit to paying those lease payments.

"If they don't want to do that, then that can hold up the real estate transaction," he said.

So what should people interested in solar energy do?

Slocum suggests you call your power company to find out your return if you install solar and, if you choose to lease, be sure to read the contract carefully and make sure you understand what could happen.

"I think California can take better steps to impose stronger consumer protections to ensure that the bad apples don't spoil the good actors," said Slocum.