USDA unveils new no-interest efficiency loan program for rural utilities

Informational webinar July 12, 2016
Letter of intent due Aug. 5, 2016

The Rural Utilities Service (RUS), an agency of the Department of Agriculture (USDA), has opened the application process for its new Rural Energy Savings Program (RESP).

Under this new program, rural electric cooperatives and other rural energy providers have access to $52 million in zero-percent loans for relending to homes and small businesses to make cost-effective energy-efficiency improvements. Participants repay their utility for these improvements over time through a fixed charge on their monthly utility bills. RESP loans can be used for a wide variety of energy-efficiency measures, providing the utility can justify the cost-effectiveness of the measures for the consumer.

Utilities across the country have successfully implemented this on-bill financing model and it is part of an ongoing initiative by Environmental and Energy Study Institute You are leaving WAPA.gov. (EESI) to help families make home energy upgrades with no upfront costs.

To be considered for this initial round of RESP loans, utilities must submit a letter of intent to RUS by Aug. 5. RUS did not provide any information regarding the size or number of loans it plans to make. USDA and the Department of Energy will co-host a free webinar You are leaving WAPA.gov. on July 12, 12 to 1 p.m. Mountain Time, to discuss the program. The webinar will provide an overview of the program and cover evaluation, measurement and verification methods used to assess an energy-efficiency program or project.

“We view the Rural Energy Savings Program as a real win for rural electric co-ops and their members, as well as for other rural utilities,” said EESI Executive Director, Carol Werner. “We hope that these utilities will move quickly to tap the program.”

Source: Environmental and Energy Studies Institute, 6/21/16

Fort Collins forges ahead on climate goals

Throughout the nation, municipalities are showing leadership in addressing climate change, and Fort Collins, Colorado, is leading the leaders. The city recently revised its climate action goals to reduce its total greenhouse gas emissions 20 percent by 2020 and 80 percent by 2030 across all sectors relative to 2005 levels.

An article in the Rocky Mountain Institute (RMI) Outlet Redirecting to a non-government site notes that the 2030 target is 20 years sooner than the “80 by ‘50” goal other leading cities have set, making it among the most ambitious of any city in the world. RMI is among the many partners the Fort Collins City Council engaged to assess the costs and benefits to the community of accelerating the city’s greenhouse gas emissions goals. The partnership includes community leaders, local businesses, citizen advisory groups, the communities’ generation and distribution utilities and research institutes.

Investment required
Led by city government and Fort Collins Utilities,Redirecting to a non-government site the partnership has discussed, analyzed and reviewed approaches to achieving the goals. The forward-looking plan lays the groundwork to stimulate hundreds of millions of dollars of new investments in efficiency and renewable resources in the years ahead. The upfront capital requirements will be high, but RMI estimates that the investments in carbon reduction will begin producing real financial benefits to the community close to 2030.

In addition to investing in infrastructure upgrades and clean central generation, the community will need to improve its building stock as well. The targets the city has identified to achieve its goals include:

  • Reduce building emissions by 40 percent through greater efficiency and distributed solar adoption
  • Reduce carbon emissions from the utility electricity system by 79 percent from 2005 levels
  • Reduce transportation carbon emissions by 57 percent from 2005 levels
  • Create a zero-waste community

Utility tackles challenge
Increasing the efficiency of the building stock poses a special challenge, as buildings are responsible for 53 percent of emissions and participation in retrofit programs is often low. The city’s municipal utility plays a central role in encouraging citizens to invest in efficiency for homes and commercial facilities. A recently approved update to the utility’s on-bill financing program allows unprecedented access and flexibility for financing efficiency. The plan gives customers the ability to allocate costs between tenant and landlord, and includes longer financing terms that match the life of the upgrades, lower interest rates and an easier approval process.

The integrated utility services model Redirecting to a non-government site Fort Collins Utilities developed with RMI’s support could, if adopted, do even more to promote building efficiency. It would allow the utility to centrally deliver energy services; such as efficiency, distributed renewables and value-added services; at scales that will achieve cost savings and high-quality service, and be paid for on customers’ electricity bills. This approach offers an innovative model for utilities seeking to grow their business by diversifying their services to customers.

Long journey to sustainability
The new goals are part of continuing process that has engaged the city and its partners for more than 15 years.

The Fort Collins City Council passed a resolution in 1999, committing the city to reducing its greenhouse gas emissions significantly by 2010. The landmark year of 2007 saw the formation of the city’s Climate Task Force and the implementation of FortZED, funded by an $11 million federal grant. The project created a zero-energy district in Fort Collins’ downtown business district and the Colorado State University Redirecting to a non-government site campus. It also launched a dialogue between the university, the utility and the city that continues today, and led directly to the city council’s vote to adopt the historic new goals.

The process has not been smooth or easy, but the city has already made significant progress. By continuing its methodical, inclusive and thoughtful approach, Fort Collins is showing how even a town of 150,000 can make big strides in fighting climate change.

Source: RMI Outlet, 3/4/15

Free webinar looks at on-bill financing

On-bill Financing: Options and Obstacles
Tuesday, Jan. 15, noon CST

High up-front costs are one of, if not the biggest barrier preventing customers from making energy-efficiency upgrades to their commercial and residential properties. Over the years, many utilities have tackled this challenge by providing consumers with on-bill financing programs. On-bill Financing: Options and Obstacles will explore examples of successful programs power providers have created to meet their load management goals, while helping consumers save energy and money.

Clean Energy Ambassadors presents its Lunchtime Webinar Series on the third Tuesday of each month from 12-1 pm Central Time. Because the webinars focus on the needs of consumer-owned utilities, discussions are specific, candid and informal. Register Redirecting to a non-government site for this free webinar, and check out the full line-up of CEA services and events Redirecting to a non-government site. Contact Anthony Cutler at 406-969-1040 with any questions.

On-bill financing moves to the mainstream

Editor’s note: This story is the first in a series on overcoming barriers to energy-efficiency improvements, and originally appeared in the February 2012 Energy Services Bulletin.

Of all the factors preventing consumers from upgrading the inefficient systems and equipment that run up their utility bills each month, financing may rank as Number 1. It’s certainly hard to argue with a lack of money—if you don’t have it, you don’t have it. Moreover, the people who could benefit most from energy-efficiency improvements often have the least available cash to pay for them. One solution that  many utilities around the country are exploring is on-bill financing.

How it works
This financing mechanism rolls the loan payment for the energy-efficiency measures into the customer’s monthly utility bill. Utilities may service the loan themselves or partner with state energy offices, financial institutions or other third-party providers. The sources of capital, program design, target market and implementation strategy vary widely, depending on the utility’s specific situation and goals.

The American Council for an Energy Efficient Economy (ACEEE) recently published a report listing many advantages to on-bill financing:

  • The loan is secured through an existing relationship with the utility, instead of a (potentially unfamiliar) financial institution.
  • Monthly utility bills decline, even though the loan payments are included.
  • The customer’s payment history can be used to establish creditworthiness.
  • Utility bills showing reduced energy use create a clear link for participants between their energy-efficiency investment and the resulting savings.
  • Rebates and incentives available through the utility can be bundled with the financing to improve the terms of the loan.
  • Capital investors see on-bill programs as a more secure investment since they are based on an established payment relationship.
  • Loans can be tied to a rental property’s meter, so the renter benefit from lower utility bills and greater comfort while occupying the unit, and landlords benefit from increased property values.

Of course, when a program has so many moving parts, it is difficult to pin down the precise elements that are most likely to ensure success. Utilities launching a first-time program will also have to deal with administrative challenges such as:

  • Identifying or setting aside capital to use for loan funds
  • Up-front costs if billing systems need to be modified
  • Diverse utility and regulatory structures
  • Specific needs of different communities
  • Differing state and regional legal regulatory landscapes

What’s in it for utilities
In spite of the challenges and drawbacks, the number of utilities exploring on-bill financing programs is growing. Just as no two programs are alike, the reasons utilities offer them are just as diverse.

Case studies from the ACEEE report show an early on-bill program in Wisconsin saving 1.8 GWh and 93,000 therms over the life of the investments. According to KW Savings, a South Carolina nonprofit, its significant investment in an on-bill pilot offset the cost of building additional generation to meet current demand. Clean Energy Works Oregon uses on-bill repayment not only to reduce energy waste, but also to create green jobs and make efficient technologies more affordable.

As far back as 1997, Delta Montrose Electric Association (DMEA) was using on-bill financing to move its customers from expensive propane heat to geoexchange heat pumps. First with the Co-Z Energy Plan and now with its Geothermal Loop Tariff, DMEA has been building its electrical load while improving its customers’ comfort and saving them money.

Midwest Energy created How$mart in 2006 to convert energy audits into actual energy-efficiency improvements and to reach the underserved tenant market. To date, 650 customers have taken advantage of the program to fund measures in the program’s free energy audits. The utility estimates that measures implemented under How$mart have saved 2,000 kilowatt hours annually for electric projects and 260 therms per year for natural gas.

Want to know more?
Obviously there is much for a utility to investigate before undertaking an on-bill financing program: capital sources, administrative logistics, local regulations and legislation, technical support, consumer protection, and program design. But for all of the complexity and potential risk, on-bill financing offers utilities a way through one big barrier to energy efficiency improvements.

Western would like to help our customers explore this tool. If you would be interested in participating in a workshop or webinar on on-bill financing, contact Energy Services Manager Ron Horstman mailto:horstman@wapa.gov at 720-962-7419. Also, if your utility has explored or implemented a program, share your experiences with Energy Services Bulletin.