Minnesota homeowners out thousands of dollars after second solar installer fails in two years

Darrin Lundeen thought he did everything right when he went shopping for a company to put solar panels on his house.

He looked at online reviews and settled on five finalists. He checked the companies out with the Better Business Bureau. He even decided against hiring the firm with the lowest bid.

But a year after Altaray Solar installed a $28,000 system on his home in New Hope, it still doesn't work. Even worse, Lundeen has to deal with about $6,000 worth of damage to his basement, which flooded last year when power was unwittingly cut to his sump pump. The culprit, Lundeen said: faulty wiring by Altaray.

Unfortunately for Lundeen and hundreds of other Altaray customers, the Utah-based company shut down last year after regulators in Minnesota and Nevada yanked its license because of substandard and incomplete work.

"I just pray that we get what's coming to us," Lundeen said. "But it is hard to trust people at this point."

The collapse of Altaray comes a year after Minnesota regulators took action against another major solar company, Able Energy, which shut down after failing to complete work on 80 projects in Minnesota despite taking $1.5 million in upfront deposits.

State officials are now working on legislation aimed at providing relief to homeowners and others who get scammed by solar companies that refuse to honor their commitments in Minnesota. But the debate is raising questions about the licensing of solar contractors and whether the state did everything it could to protect customers from unscrupulous operators.

Rep. Shane Mekeland, a Republican from Clear Lake who sits on the committee that oversees the Minnesota Department of Labor and Industry, blamed the department for allowing Able Energy to operate with an electrician's license rather than the more comprehensive residential contractors license. He noted that solar systems sometimes require major modifications to a house.

"If you are punching holes through someone's roof, I'd want to make sure you were properly trained in how to do it," Mekeland said. "The department should have been looking into this a long time ago."

There is another key distinction. If customers are harmed by a residential contractor, they can file a claim with the state recovery fund, which compensates homeowners who have experienced out-of-pocket losses as a result of a contractor's deceptive actions or nonperformance. The fund allows customers to collect up to $300,000 for damages related to any single company. Electrical contractors, however, are not part of the fund. Instead, Able's customers must divvy up a $25,000 performance bond, which will cover less than 2% of their losses.

David Shaffer, executive director of the Minnesota Solar Energy Industries Association, said the department should have required solar contractors to have both licenses. Of the 20 or so companies doing residential work, Shaffer said Able Energy was the only major solar installer operating with just an electrical permit.

"I don't know why they didn't require two licenses to perform this type of work on someone's house," Shaffer said.

Department of Labor and Industry spokesman James Honerman said the department asked the Legislature to require solar installers to obtain a residential contractors license in 2019, but the proposal was "eventually removed due to lack of support."

"Solar contractors have operated in Minnesota without major incident until the department took action against Able Energy in 2018," Honerman said.

Requiring dual licenses, however, won't eliminate the risks. Altaray, for example, had both licenses and a B-plus rating from the Better Business Bureau (BBB) when Lundeen hired the firm last spring for his solar project in New Hope. But over the next few months, the company's customers filed dozens of complaints with the BBB.

Some Alataray customers said their systems were malfunctioning. Others were still waiting for their systems to be inspected and connected to a meter.

Dave Livermore said he signed up for a $45,000 solar system with Altaray after one of the company's salesmen unexpectedly showed up at his door in Forest Lake and talked him and his wife into a deal.

Though Altaray installed his system a year ago, Livermore had to hire another company to take over the project, address various code violations and warranty the work going forward. Altogether, Livermore said, he will spend an extra $7,790 to deal with the mess left when Altaray walked away from the job.

Livermore said he was astonished when he started getting monthly bills of $240 last summer, even though the system didn't become operational until 2020. The bills came from Digital Federal Credit Union, which provided financing for many of Altaray's customers in Minnesota. Livermore said he found out that Altaray received 90% of the money it charged for solar systems from the credit union once its customers acknowledged installation of their solar panels, even if the system wasn't functioning yet.

"I got took," Livermore said. "They got 90% of their money and they only had to do a fraction of the work. And they did this to 480 people."

Digital spokesman Ed Niser said the credit union is not affiliated with Altaray. "We are actively working with our Minnesota borrowers who may have been affected to address the situation, including offering payment deferrals and assistance identifying contractors to complete their solar installations," Niser said in a written response to questions.

In Minnesota, Altaray obtained more than 100 permits to install solar systems, according to attorney Jeremy Kalin, a former legislator who represents Livermore and 20 other families pursuing claims against Altaray.

"This is a total moral failure by a systematically shady contractor," said Kalin, who estimates that Altaray bungled projects worth $20 million to $80 million across the U.S.

In May, after Altaray failed to promptly resolve many of the complaints, the BBB revoked the company's accreditation. In October, the Nevada State Contractors Board revoked Altaray's licenses and fined the company $10,000 for committing a "fraudulent or deceitful act," among other violations. The Minnesota Department of Labor and Industry followed suit in November, revoking the company's licenses and issuing fines totaling $40,000.

Altaray owners Sean Andrew Clawson and Carlos Puerto-Jara did not respond to calls for comment.

In February, Puerto-Jara filed for bankruptcy in Utah, listing total assets of $185,000 and liabilities of $5.5 million. He said about $4 million of those liabilities involve Altaray and lawsuits against the company. Puerto-Jara now earns $9,999 a month as marketing director for a solar installer named Solcius in Provo, Utah, court records show.

Michael Harvey, owner of Able Energy, also filed for bankruptcy after state regulators moved to revoke his license in 2018. But the case was dismissed after state regulators and former customers protested, saying Harvey committed fraud and should not be able to use the court system to escape his debts.

In August, Harvey responded to the accusations by agreeing to the dismissal and saying he "believes he has an approach that will work toward resolving any valid claims with creditors." Harvey did not respond to calls seeking comment.

Harvey's former customers do not expect to collect anything from him, noting his company had just $14,000 in the bank when it closed last year. They now hope to persuade state legislators to reimburse some of their losses from the state recovery fund.

But that is going to be "very, very difficult," said Rep. Mike Sundin, DFL-Esko, chief sponsor of legislation that would add solar installers to the fund.

Though solar installers support the bill, residential construction companies are lobbying against a key provision that would make such assistance retroactive to 2016. Sundin said there is bipartisan support for protecting solar customers in the future.

"We need to prevent this from happening again," Sundin said. "These companies need to be held accountable."

Jeffrey Meitrodt • 612-673-4132