In December, Bonnie and Russ Ramsay decided it was time to go solar after talking to a salesman from Able Energy Co.
The deal, Bonnie Ramsay said, was too good to pass up. After rebates and tax credits from their utility company, Minnesota Power, the family would have to pay just $33,000 for a solar power system that would actually cost $58,000 to install on their home near Duluth. So the Ramsays signed the contract and forked over $11,200 in down-payment money.
What the Ramsays didn’t know was that Minnesota Power had just stopped doing business with Able Energy, alarmed by the lack of progress on 19 other projects the utility had approved for the company. Now, like dozens of other Able Energy customers in Minnesota and Wisconsin, the Ramsays are fighting to get their money back.
The prospect seems daunting. State regulators recently moved to revoke the St. Paul company’s license, and the Minnesota Attorney General’s Office is investigating complaints of fraud. Meanwhile, a spokesman for the Wright County Sheriff’s Office confirmed investigators have launched a criminal probe involving a customer angry over a stalled project in Monticello.
“The whole thing stinks,” Bonnie Ramsay said. “We don’t have a lot of confidence this is going to work out for us.”
Mike Harvey, president and owner of Able Energy, said it’s not time for customers to panic. Despite acknowledging financial problems that have resulted in some bounced checks, including those to his own employees, Harvey said he has no plans of shutting down Able Energy and will challenge the revocation of his license.
Harvey said he is cooperating with investigators, but he believes he has done nothing wrong and that he will ultimately be exonerated. Harvey also predicts that he will complete work on 120 projects that remain unfinished in Minnesota and Wisconsin.
“We hired some of the wrong people and I am doing everything in my power to make it right,” Harvey said.
If Able Energy doesn’t survive, there is not much of a safety net for its customers, who risk losing hundreds of thousands of dollars in advance payments. Unlike some states, Minnesota does not require solar installers to contribute to a recovery fund that can be tapped if a building contractor fails or commits fraud.
Considering the rapid growth of the solar business in Minnesota, industry leaders and state officials said it may be time to rethink Minnesota’s approach.
“Is this a one-off or a sign of things to come?” asked Charlie Durenberger, director of licensing and enforcement for the state Department of Labor and Industry. “I don’t know how to predict that. ... It is something the industry should be talking about.”
Contracts with no deadlines
Trevor Sumner joined Able Energy in 2016 as a regional sales representative, and business was good. Thanks to generous rebate programs and increased consumer awareness, the solar industry was finally taking off in Minnesota. In 2016, a total of 666 solar projects were completed in Minnesota, a fivefold increase from 2010, according to the state Labor Department.
Able Energy, which has completed about 500 projects across the Midwest since the company was founded in 2010, was riding the wave. Customers were posting positive online reviews of the company’s work, and Sumner had no trouble convincing people to provide down payments equal to a third of a project’s total cost — typically $3,000 to $7,500 per residential project.
Able Energy sold so many systems it was unable to keep up. Suddenly, instead of completing jobs in three to six months, it was taking a year or longer.
Instead of taking a pause, however, Harvey told his sales crew to hit the gas, Sumner said. Apart from making new sales, Sumner said Harvey asked him and his colleagues to go back to existing customers and collect an additional deposit worth 30 percent of costs — even if the company wasn’t ready to start work.
“We started taking those 30 percent payments and either giving them a start date that was completely impossible or not giving them a date at all,” Sumner said.
Harvey blamed the problem on former employees who provided “false installation deadlines.”
Jonathan Kemp, who signed his contract with Able Energy in August 2016, is still waiting for the company to start installing his solar system in Burnsville. Kemp recently sued to collect his $30,712 payment, which covered 100 percent of his project costs.
“We were naive,” Kemp said. “The contract doesn’t really hold them to any kind of deadline ... I am shocked that they were able to operate like this in Minnesota.”
Harvey said he would not commit to providing refunds to dissatisfied customers, saying he expects both sides to live up to their agreements. He noted that none of the company’s contracts provides “guaranteed timelines.”
“If some of these customers are unhappy, they will get a reduced installation cost — that is how this company has always operated,” he said.
Looking back on the past two years, Harvey said he is the victim of a bad string of luck. He said several employees created problems, including a manager who embezzled about $200,000 in company funds. He said he is still investigating that case and has not yet pressed charges. Harvey also blamed his problems on a vendor who failed to deliver needed solar panels.
“I don’t think I contributed to it at all,” Harvey said. “I relied on a few employees who obviously did not do a good job on these customers.”
Harvey said the company’s financial problems have been compounded by court judgments against Able Energy, including $57,000 owed to a Michigan lender and $65,000 owed to a California solar panel supplier. Two Minnesota customers also won judgments totaling $29,000.
When funds were unexpectedly removed from Able Energy’s bank accounts to pay judgments, checks started bouncing, Harvey said.
“It was a nightmare,” said Sumner, who quit in late February. “We went weeks without getting paid.”
To help get the company back on track, Harvey brought in an adviser, David Laursen, who built a successful heating company in northern Minnesota. After several months of work, however, Laursen walked away in late February.
“I cut the cord because there are too many financial issues for me to deal with,” said Laursen, adding that the company needs an investor willing to put up a “ton of money.”
If Able Energy was a homebuilder or a remodeling company, its customers could turn to the state if the company failed or was found to have committed fraud. In the past five years, 461 people have applied to get relief from the state’s recovery fund, an industry-supported effort that provides up to $75,000 per affected homeowner, according to the Labor Department.
Unlike other states, including Massachusetts and Nevada, Minnesota does not include solar installers in the fund, which is supported by fees of up to $600 per company for a two-year licensing period. Some of Able Energy’s customers said they will be contacting their legislators to push for such protection.
“It’s really frustrating to find out that money is sitting there and none of us can use it to get reimbursed,” said Duluth resident Judy Gibbs, who spent $8,000 for a solar system that has yet to be installed. “If a licensed contractor has to pay into a fund, why not do the same for solar industry folks?”
David Shaffer, policy director for the Minnesota Solar Energy Industries Association, said his group will probably support a recovery fund in the future.
“It is important to make sure customers are not victimized by the success of the industry and the few bad actors that come along for the ride,” Shaffer said.