SB1419 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 44-1761, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1761. Definitions

In this article, unless the context otherwise requires:

1. "Collector" means a component of a solar energy device that is used to absorb solar radiation, convert it to heat or electricity and transfer the heat to a heat transfer fluid or to storage.

2. "Distributed energy generation system":

(a) Means a device or system that is used to generate or store electricity, that has an electric delivery capacity, singly or in connection with other similar devices or systems, greater than one kilowatt or one kilowatt-hour, and that is primarily for on-site energy consumption.

(b) Does not include an electric generator that is intended for occasional use.

3. "Energize" or "energized" means that the distributed energy generation system is installed and operational for its intended purposes of generating or storing electricity.

4. "Heat exchanger" means a component of a solar energy device that is used to transfer heat from one fluid to another.

5. "Interconnected" or "interconnection" means a distributed energy generation system that is connected to the power grid and that is able to transfer electricity to the power grid.

6. "Seller or marketer" means an individual or a company acting through its officers, employees or agents that markets, sells or solicits the sale, financing or lease of distributed energy generation systems or negotiates or enters into agreements for the sale, financing or lease of distributed energy generation systems.

7. "Solar daylighting" means a device that is specifically designed to capture and redirect the visible portion of the solar beam spectrum, while controlling the infrared portion, for use in illuminating interior building spaces in lieu of artificial lighting.

8. "Solar energy device":

(a) Means a system or series of mechanisms that is designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses either by active or passive means. Such systems may also have the capability of storing such energy for future utilization. Passive systems shall clearly be designed as a solar energy device such as a trombe wall and not merely a part of a normal structure such as a window. For the purposes of this subdivision, "Trombe wall" means a massive equator-facing wall that is painted in a dark color to absorb thermal energy from incident sunlight.

(b) Includes a distributed energy generation system.

9. "Third-party inspection" means an inspection conducted by a licensed professional who is:

(a) Not affiliated with or employed by a contractor or an installer.

(b) Authorized to examine and certify that a roof, home or solar system complies with all of the following as determined by the chief building official or the authority that has jurisdiction:

(i) Applicable building codes.

(ii) Safety standards.

(iii) Workmanship and permit requirements. END_STATUTE

Sec. 2. Section 44-1762, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1762. Solar energy device warranties; installation standards; inspections

A. The collectors, heat exchangers and storage units of a solar energy device that is sold or installed in this state or leased or financed under an agreement pursuant to section 44-1763, and the installation of the solar energy device, shall be warranted for a period of at least two years or shall include an energy production output guarantee provided pursuant to section 44-1763, subsection A, paragraph 4. The remaining components of the solar energy device and their installation shall be warranted for a period of at least one year.

B. Any person who manufactures, furnishes for installation or installs a solar energy device shall provide with the solar energy device a written statement of warranty, responsibilities assumed or disclaimed and performance data of the solar energy device and components of the solar energy device as prescribed by section 44-1763 as part of the agreement for the financing, sale or lease of a solar energy device. The form of the statement required by this subsection is subject to approval by the registrar of contractors. The statement shall specify the source of any performance data it contains. A copy of the statement shall be delivered to the registrar of contractors where it shall be kept on public file.

C. A person who sells a solar energy device in this state shall furnish a certificate to the buyer that the solar energy device complies with the requirements of this section.

D. A solar energy device that is sold or installed in this state shall comply with all applicable state and federal consumer protection, rating, certification, performance, marking, installation and safety standards that are required by section 44-1763.

E. An individual who installs a solar energy device in this state, in addition to being a licensed solar contractor under title 32, chapter 10, article 4, shall:

1. Possess the general license that is appropriate to the type of solar energy device that is installed. Installers of a solar water heater or a photovoltaic device shall possess an appropriate contractor's license.

2. Meet any education and training standards that have been adopted by the registrar of contractors.

3. Pass an examination on the installation of the type of solar energy device to be installed, if the registrar of contractors has adopted such an examination.

4. Obtain a third-party inspection verification as required in subsection I of this section, if applicable.

F. Solar energy devices that are designed or installed by the final owner are exempt from the requirements of subsections A through E of this section.

G. The installation of a solar energy device shall meet the requirements of:

1. All applicable fire, safety and building codes as prescribed by a local authority that has jurisdiction.

2. Consumer protection standards requirements, including any freeze protection and temperature related damage standards.

3. A manufacturer's installation requirements.

3. 4. All other applicable federal, state and local laws.

H. Contractors who fail to meet safety, installation or other prescribed standards or the requirements of section 44-1763 are subject to disciplinary action under title 32, chapter 10, article 3.

I. An individual who is a licensed solar contractor pursuant to title 32, chapter 10, article 4 and who had a disciplinary action within the previous two years shall obtain a third-party inspection to verify that the installation complies with the applicable safety standards, workmanship and other prescribed standards pursuant to this article. The licensed solar contractor shall provide a copy of the third-party inspection report to the individual who bought, financed or leased the solar energy device. If a third-party inspector identifies any deficiency in the installation of the solar energy device, the licensed solar contractor shall correct the deficiencies, and failure to correct the deficiencies is subject to disciplinary action.END_STATUTE

Sec. 3. Section 44-1763, Arizona Revised Statutes, is amended to read:

START_STATUTE44-1763. Distributed energy generation system agreements; disclosures; exception

A. An agreement governing the financing, sale or lease of a distributed energy generation system to any person or a political subdivision of this state must:

1. Be signed by the person buying, financing or leasing the distributed energy generation system and must be dated. Any agreement that contains blank spaces affecting the timing, value or obligations of the agreement in a material manner when signed by the buyer or lessee is voidable at the option of the buyer or lessee until the distributed energy generation system is installed. Any blank spaces in the agreement must be shown to and initialed by the buyer or lessee at the time the buyer or lessee signs the agreement.

2. Be in at least ten-point type.

3. Include a provision, which must be separately acknowledged by the buyer or lessee, granting the buyer or lessee the right to rescind the financing, sale or lease agreement for a period of not less than three business days after the agreement is signed by the buyer or lessee and before the distributed energy generation system is installed.

4. Provide a description, which must be separately acknowledged by the buyer or lessee, including the make and model of the distributed energy generation system's major components or a guarantee concerning energy production output that the distributed energy generation system being sold or leased will provide over the life of the agreement. If the warranty period for any major component is less than the duration of the agreement, the length of the warranty must be disclosed to and separately acknowledged by the buyer or lessee and be written in bold type and separately initialed by the buyer or lessee.

5. Include a written description that is communicated in clear and easily understandable language and that is separately acknowledged by the buyer or lessee before the distributed energy generation system is installed. The written description must include both:

(a) The current condition of the existing roof and the roofing components.

(b) The estimated total cost of removal and reinstallation of the distributed energy generation system.

6. Include a copy of the written report by the licensed contractor to the buyer or lessee. The licensed contractor who drafted the report may not be affiliated with or employed by the contractor or installer. The written report must include an evaluation of the current condition of the roof and the roofing components and clearly state in writing whether the roof and the roofing components will remain serviceable for at least the full duration of the agreement. The buyer or lessee shall acknowledge receipt of the written report before the distributed energy generation system is installed.

5. 7. Separately set forth the following items in bold type, which must be separately acknowledged and initialed by the buyer or lessee, if applicable:

(a) The total purchase price or total cost to the buyer or lessee under the agreement for the distributed energy generation system over the life of the agreement.

(b) Any interest, installation fees, document preparation fees, service fees or other costs to be paid by the buyer or lessee of the distributed energy generation system.

(c) If the distributed energy generation system is being financed or leased, the total number of payments, the payment frequency, the amount of the payment expressed in dollars and the payment due date.

6. 8. Provide a disclosure in the sale and financing agreements, to the extent they are used by the seller or marketer in determining the purchase price of the agreement, that identifies all current tax incentives and rebates or other state or federal incentives for which the buyer or lessee may be eligible and any conditions or requirements pursuant to the agreement to obtain these tax incentives, rebates or other incentives.

7. 9. Identify the tax obligations that the buyer or lessee may be required to pay as a result of buying, financing or leasing the distributed energy generation system, including:

(a) The assessed value and the property tax assessments associated with the distributed energy generation system calculated in the year the agreement is signed.

(b) Transaction privilege taxes that may be assessed against the person buying or leasing the distributed energy generation system.

(c) Any obligation of the buyer or lessee to transfer tax credits or tax incentives of the distributed energy generation system to any other person.

8. 10. Disclose whether the warranty or maintenance obligations related to the distributed energy generation system may be sold or transferred to a third party.

9. 11. Include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, if a transfer of the sale, lease or financing agreement contains any restrictions pursuant to the agreement on the lessee's or buyer's ability to modify or transfer ownership of a distributed energy generation system, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the distributed energy generation system is subject to review or approval by a third party, the agreement must identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.

10. 12. Include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, if a modification or transfer of ownership of the real property to which the distributed energy generation system is or will be affixed contains any restrictions pursuant to the agreement on the lessee's or buyer's ability to modify or transfer ownership of the real property to which the distributed energy generation system is installed or affixed, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the real property to which the distributed energy generation system is affixed or installed is subject to review or approval by a third party, the agreement must identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer.

11. 13. Provide a full and accurate summary of the total costs under the agreement for maintaining and operating the distributed energy generation system over the life of the distributed energy generation system, including financing, maintenance and construction costs related to the distributed energy generation system, that must be acknowledged and INITIALED by the buyer or lessee.

12. If the agreement contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, provide an estimate of the buyer's or lessee's future utility charges as impacted by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of the agreement in one percent increments. Any comparative estimates must be calculated by applying the entire rate change range to the duration of the agreement.

13. 14. Include a disclosure that is written in bold type and all capital letters, the receipt of which shall be separately acknowledged by the buyer or lessee, that states:

Utility rates and utility rate structures are subject to change. These changes cannot be accurately predicted. Projected savings from your distributed energy generation system are therefore subject to change. Tax incentives are subject to change or termination by executive, legislative or regulatory action.

14. 15. Comply with section 32-1158.

B. If a document or sales presentation relating to a distributed energy generation system states or suggests that the distributed energy generation system will result in financial savings for a buyer or lessee, the document or sales presentation must substantiate the methodology used to calculate those savings and, if the document or sales presentation is intended for a specific potential buyer or lessee, reasonably quantify the cumulative savings expected for the duration of the agreement.

C. If a document or sales presentation relating to a distributed energy generation system contains financial savings comparative estimates or utility rate comparative estimates, the document or sales presentation must include historical utility rates for the immediately preceding period of time that is of the same duration as the proposed financing or lease period for the same class of utility customer in the same utility service territory as the prospective buyer or lessee. These historical rates must be included in any comparative estimates.

B. A contractor or the agent of a contractor for a distributed energy generation system may not make a written or oral statement regarding any estimated savings that a buyer or lessor may receive.

D. C. Before the maintenance or warranty obligations of a distributed energy generation system under an existing lease, financing or purchase agreement is transferred, the person who is currently obligated to maintain or warrant the distributed energy generation system must disclose the name, address and telephone number of the person who will be assuming the maintenance or warranty of the distributed energy generation system.

E. If a document or sales presentation relating to a distributed energy generation system contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, the document or sales presentation must contain an estimate of the buyer's or lessee's future utility charges as impacted by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of an agreement for the financing, sale or lease of a distributed energy generation system in one percent increments. Any comparative estimates must be calculated by applying the entire rate change range to the duration of the agreement.

F. D. Recurring payments under a distributed energy generation system lease may not begin until the distributed energy generation system is approved by a local utility, energized and interconnected.

G. E. This section does not apply to an individual or company, acting through its officers, employees or agents, that markets, sells, solicits, negotiates or enters into an agreement for the sale, financing or lease of a distributed energy generation system as part of a transaction involving the sale or transfer of the real property to which the distributed energy generation system is or will be affixed. END_STATUTE