The Securities and Exchange Commission is looking into whether solar companies Sunrun and SolarCity have hidden the number of customers they are losing, according to a report in the Wall Street Journal.
Specifically, the SEC wants to know whether the companies are sufficiently disclosing the number of customers who cancel contracts for home solar systems, once they have signed up, the report said, citing a person familiar with the matter.
The SEC has already issued a subpoena to Sunrun and interviewed past and current Sunrun employees. The agency is “also looking at SolarCity,” the paper reported.
While some solar companies have disclosed that increasing numbers of customers have cancelled contracts, they have not given specific numbers or many details.
Contract cancellations are a potential indicator of how well these companies are faring.
Representatives from Tesla, Sunrun and SolarCity were not immediately available to comment for CNBC on the matter.
The news comes as SolarCity’s parent Tesla prepares to report first-quarter earnings, and months before the company’s scheduled debut of its line of solar roof tiles.
However, SolarCity representatives sent a statement to the Wall Street Journal saying that the company “has remained focused on reporting the quality of our installed assets, not pre-install cancellation rates. Our growth projections have always been based on actual deployments.”
Also, Tesla recently announced it is abandoning the door-to-door sales strategy used by SolarCity and many others in the industry.
Tesla shareholders voted to acquire SolarCity last November. The solar power company had been chaired by Tesla CEO Elon Musk, and counted his relatives among its top executives.
The deal received criticism from some analysts and investors, a few of whom saw it as a bailout for Musk’s associates.
But the deal also found favor in some quarters. For example, it received the blessing of Institutional Shareholder Services, a respected proxy advisory firm. ISS saw the deal as a necessary step in Tesla’s plan to become an integrated sustainable energy company at a “low to no premium.”