- Senator Jeff Sessions has sent a letter to Treasury sec. Jacob Lew questioning the level of government funding SolarCity (SCTY -2.9%) receives. He heavily references an Aug. 31 Barron's column taking aim at SolarCity's fair market value estimates for its solar installation/electricity sale contracts (its government grants are based on them).
- SolarCity's estimates are above its installation costs. Sessions: "Over-inflating the cost of solar products is not only detrimental to the government, but to investors as well ... there is concern that SolarCity might become the next Solyndra—a company propped on the back of the taxpayers, not the product produced."
- Sessions also notes SolarCity's history of major losses (generally the result of the company's aggressive financing/installation efforts), and that a planned 2017 drop in federal tax credits to 10% is expected to increase the company's financing needs.
- He concludes by asking Lew to explain the Treasury Dept.'s willingness to let solar firms to set their own fair market values, as well as to provide details about past grants.
- SolarCity is down 11% over the last two days, but still up over 4x YTD.
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