By Dennis Vacco
SPECIAL TO THE NEWS
Like most important issues facing America today, energy policy has become deeply politicized. Pipelines, oil, natural gas, nuclear power, wind turbines and solar panels are either good or bad depending on which side of the political divide you stand.
Unfortunately, energy policy is often driven by special interests advocacy and campaign contributions, which combine to produce faulty science. In New York State, Gov. Andrew M. Cuomo has set forth an ambitious goal mandating that by 2030, 50 percent of the state’s power generation will be from renewable sources. This so-called 50 by 30 target is now the fulcrum of energy policy and related decisions in New York.
Pipelines that would transport abundant natural gas are rejected while wind turbines and solar panels that would consume tens of thousands of acres in more rural upstate New York are preferred. This massive upstate land grab is driven by politics, tax credits and investors. An ill-conceived state siting statute has virtually eliminated any local control over massive wind and solar projects.
Unfortunately, Cuomo is not the only statewide official to use energy policy as a means to further his political ambition. Attorney General Eric Schneiderman has been on a crusade against Exxon Mobil for over a year. Using the powerful Martin Act, Schneiderman has previously claimed that Exxon Mobil misled investors by failing to accurately report forecasts of the company’s reserves. Now, in a case pending in State Supreme Court, the Attorney General’s Office is claiming that Exxon Mobil misrepresented to shareholders the risk that climate change poses to the company.
Schneiderman’s dogged pursuit of Exxon Mobil is in stark contrast to his reaction to claims of investor deception by an alternative energy company in which the state has made a huge financial investment. That company is SolarCity, a publicly traded company that last year became a part of Tesla Motors. Schneiderman has subpoenaed 3 million pages of documents from Exxon Mobil and has yet to make a valid case against the company. On the other hand, Schneiderman has ignored troubling signs at SolarCity.
One would think that the state’s top law enforcement official would be concerned about claims of misrepresentations to Wall Street investors by SolarCity simply based on the fact that the state of New York paid $750 million for the construction of a huge production facility in Buffalo predicated on SolarCity’s promise of delivering 5,000 jobs.
Because the market for residential solar panels is shrinking, the company now projects at best 500 jobs, a staggering investment of taxpayer dollars for so little return. The bait and switch regarding job projections in Buffalo alone should attract Schneiderman’s attention, to say nothing of claims about deceiving investors or consumers.
Schneiderman has the legal tools through New York’s unusual Martin Act to attempt to answer questions about SolarCity’s growth claims. A critical issue is how many customers the company has signed up for home solar energy systems. The Tesla annual report for the year ending Dec. 31, 2016, puts the number at 325,000. If that is true, Tesla has a long way to go to meet the forecast it made to shareholders in a letter at the end of 2014 that it would “ultimately reach 1 million customers by mid-2018.” In 2015 and 2016, according to the company’s representations, it added only 135,000 customers. At that rate, SolarCity won’t have even a half-million by the middle of next year, making the taxpayer investment in the Buffalo plant more risky and ultimately putting more pressure on the governor’s 50 by 30 target.
It seems there’s plenty of justification to pursue an alternative energy company here. Perhaps the problem for Schneiderman is that the energy company in question is an ideological bedfellow.
To Schneiderman, SolarCity sits on the correct side of the political divide regarding energy. From his vantage point on that political divide, it is far more advantageous to raise claims of investor fraud against a company in the business of producing and providing oil and natural gas while ignoring similar claims of misrepresentation by an alternative energy company.
Dennis C. Vacco is a former New York attorney general and currently a partner at Lippes Mathias Wexler Friedman.