How On-Bill Financing Unlocks Energy Efficiency

Speakers (l-r): Rep. James Clyburn, Michael Couick, Michael Smith, and Julie Barkemeyer .

Video Recording
Audio Recording
Fact Sheets

July 24, 2013——The Environmental and Energy Study Institute (EESI) and The Electric Cooperatives of South Carolina (ECSC) held a briefing about “on-bill financing,” an innovative approach to energy efficiency offering loans for energy improvements that are repaid through utility bills. South Carolina's customer-owned electric cooperatives (co-ops) recently conducted a residential on-bill financing pilot that achieved deep energy savings among its participants, resulting in improved home comfort and reduced monthly bills. Based on this and other success stories, the federal government may soon expand its support for similar programs.


Audio Recording

Audio recording of briefing and Q&A (mp3)

The recently-passed Senate farm bill includes language to create the Rural Energy Savings Program (RESP), a program which authorizes loans and assistance to co-ops around the country to start or scale-up on-bill financing programs. RESP can help communities save energy, cut household utility bills, improve comfort, and reduce emissions. The program would create stable, high-skilled jobs and keep more dollars in the local economy. The briefing provided details on the design and results of the South Carolina pilot, prospects on spreading the pilot model throughout the country, and the potential impact of RESP.

Earlier this month, South Carolina's co-ops released the results of the "Help My House" Loan Pilot Program. Billing data on the 125 participating co-op member homes indicated a 34 percent reduction in energy use (1.35 million kWh) in the year after the work was completed, translating to an average savings of $288 per home after loan payments. The low-interest 10-year loans (averaging just under $7,700) are on track for a simple payback of 6.6 years, nearly identical to projections released last year. The average participating home is expected to save a net of more than $8,500 over 15 years. Loan funds were partially provided through a no-interest loan from the U.S. Department of Agriculture's Rural Economic Development Loan and Grant (REDLG) program.

The pilot applied a comprehensive "whole house" approach, in which all of the energy efficiency measures were evaluated as part of the same system. Participating homes received a combination of air sealing, duct repair, HVAC upgrades, and insulation improvements. Loan eligibility was determined by good bill payment history rather than credit scores, opening up financing to a wider number of families.

Speakers for this forum were:


  • Rep. James Clyburn (D-SC) stressed the importance of improving rural communities through energy efficiency. Making rural homes affordable and energy efficient will help raise living standards, which will encourage people to stay in rural communities rather than look for better opportunities in cities. He stated that Help My House (HMH) and similar programs could have as significant an impact on rural families as electrification had many years ago. He believes that the whole country will be interested in HMH and has heard only positive feedback in Congress from both Republicans and Democrats.
  • Mike Couick, President and CEO of the Electric Cooperatives of South Carolina, provided an overview on electrical cooperatives (co-ops) and the HMH Pilot Project. He noted that co-ops serve 12-15 percent of U.S. citizens; in South Carolina, 1.4 million people belong to a co-op (out of a total population of 4.7 million). South Carolina residents are disproportionally affected by poverty (disposable income is about 20 percent below the national average), and are more likely to live in manufactured housing (24 percent of homes in the state are manufactured, the highest proportion in the country).
  • HMH was set up in part to overcome barriers for co-ops to invest in energy efficiency, which included a lack of convenience, information, financing, and incentives.
  • HMH was made possible because of a 2010 state law allowing co-op members to finance energy efficient measures with low-interest loans that are repaid through monthly utility bills, a process known as on-bill financing (OBF). The loan is tied to the meter and therefore transfers to the new homeowner if the house is sold.
  • The pilot's goals were to determine how to overcome barriers to the implementation of energy efficiency improvements (for both consumers and contractors), establish a functional model for OBF, determine cost-effectiveness for the co-ops (by shaving peak usage, not just total consumption), and determine member satisfaction. The South Carolina co-ops’ long-term efficiency goals include reducing residential energy use 10 percent from 2010 to 2020 and cutting wholesale residential power purchase costs.
  • Mike Smith, Manager of Energy Programs for the Central Electric Power Cooperative, Inc., discussed the engineering/technical aspects and results of the pilot. He explained that there were six major steps to the pilot process: participant selection (with a preference for "problem" houses with high bills/energy use), visual audit (to determine initial eligibility), comprehensive audit (by a trained contractor), loan approval and contractor selection (members were provided a list from which they selected and contacted a contractor), installation measurement (contractors were required to return if the post-audit determined the work was not done to standard), and final inspection and project approval.
  • Contractors found that manufactured homes (making up nearly half the pilot), though initially a problem, became the easiest homes to upgrade.
  • Upgrade measures included air sealing (99 percent of homes), duct leakage reduction (98 percent), attic insulation (91 percent), upgrading to or replacing a heat pump (89 percent), floor insulation (31 percent), HVAC tune up (3 percent), and miscellaneous measures (3 percent). The most energy savings resulted from moving to or replacing a heat pump (44 percent) followed by duct leakage reduction (17 percent), attic insulation (15 percent), air sealing (12 percent), floor insulation (11 percent), and HVAC tune up (1 percent).
  • Results: Homes in the HMH program had an average annual energy savings of 34 percent (10,809 kWh), which resulted in annual monetary savings of $1,157. The simple payback rate is 6.6 years; most participants have a 10-year loan designed to put money in their pockets (an average of $288/year) from day one. The ratio of peak to average energy use (load factor) had no net annual change.
  • Future: Four South Carolina co-ops are moving ahead with new OBF programs (including two that were not involved in the pilot) and a fifth is expected to follow suit.
  • Mike Couick returned to share the results of a participant survey, which was conducted approximately one year after the upgrade work was completed.
  • An impressive 70 percent of participants were more satisfied with their co-op after the work was performed (26 percent were as satisfied as before).
  • Comfort levels also increased: 76 percent said they were a lot more comfortable, 13 percent were somewhat more comfortable, and 11 percent did not feel a change.
  • Regarding their post-upgrade electric bills, 69 percent were very satisfied, 20 percent somewhat satisfied, 0 percent neutral, 7 percent somewhat not satisfied, and 4 percent very unsatisfied.
  • For some members, the program transformed the use of their homes. Prior to HMH, some lived in one room during winter because the rest of the house was too cold; after upgrades, they could use their entire house.
  • Conclusions: In the average home, electricity use dropped by one-third, savings exceeded loan repayment, and the total bill dropped. Coincident peak savings dropped about one-third, load factor was unchanged (though this would have improved if load control switches had been installed), homes became more comfortable, participants were extremely satisfied with the program and their co-ops, and HMH has spawned ongoing OBF programs.
  • Julie Barkemeyer, Senior Principal, Legislative Affairs, for the National Rural Electric Cooperatives Association, discussed the Rural Energy Savings Program Act (RESPA) and its potential impact.
  • Ninety-six percent of co-ops operate efficiency programs, and 70 percent offer financial incentives to promote greater efficiency.
  • Projects similar to HMH have occurred in Kansas (the "How $mart" on-bill financing program has saved almost 1.4 million kWh per year), Indiana (Hoosier Energy) and New Hampshire.
  • NRECA supports the Rural Energy Savings Program Act (RESPA), legislation similar to language originally introduced by Rep. James Clyburn (D-SC) and passed by the House in 2010. The bill would assist rural electric co-ops in offering or expanding energy efficiency programs much like the South Carolina pilot. Through RESPA, the U.S. Department of Agriculture would offer zero percent interest loans to co-ops to support on-bill financing programs. RESPA maintains bipartisan support and passed the Senate as part of the farm bill in 2012 and 2013.

Fact Sheets

"Help My House" Fact Sheet
NRECA Fact Sheet: Rural Energy Savings Program Act (RESPA)

Original briefing notice

For more information, contact John-Michael Cross at jmcross [at] or (202) 662-1883.

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