Georgia: Habersham Electric Membership Corporation (EMC) ↴
Program name: Habersham EMC How$mart Program
Type of utility: Rural Electric Cooperative
Location: Northeastern Georgia
Launch date: January 2009
Primary market served: Residential
Total customers: 32,000 customers distributed across several counties in northeastern Georgia including Rabun, Habersham, White, Hall, Lumpkin and Stephens counties.
Sources of capital, interest rates and terms: Program capital was originally provided through an ARRA grant. Financing is available at different rates based on the repayment schedule. For at 10-year term, a $5,000 energy efficiency loan is available at 5% interest.
Shut-off for non-payment: Yes
Eligible measures: Energy efficient heat pumps and water heaters, duct and vent repair, floor and attic insulation, air sealing
Total projects: 343 loans have been completed as of 2011
Total amount financed: $2.1 million over the first two years
Average project savings: $480 and 5,100 kWh per participant per year
Default rates: Unknown
Rebates available: Unknown
Transferring of the property: The payment obligations are tied to the meter, not the individual who enrolls in the program. The payments are transferred to whoever pays the electric bill for the property, including to the new owner if the property is sold.
Key partners: Georgia Environmental Facilities Authority
Underwriting: Habersham EMC requires a good bill utility payment history of up to three years for members to be eligible for the program. Once the co-op approves the loan, an UCC-1 lien is filed on the property that will receive the upgrades. The UCC-1 Statement lists and describes any personal property that is provided by the borrower as collateral for the loan.
- The loan payment supersedes the electric bill payment: in the case that a customer makes a partial payment, the loan amount is paid off first.
- Habersham EMC began the aggressive efficiency finance program because it saw efficiency as a way to delay the huge capital cost of building a new power plant.
- 1% of the value of every loan is set aside in order to establish a loan loss recovery fund in case of defaults.
Kansas: Midwest Energy ↴
Program name: Midwest Energy How$mart Kansas
Type of utility: Rural Electric Cooperative
Location: Western Kansas
Launch date: 2007
Primary market served: Residential (owner-occupied and rental) and commercial
Total customers: 94,000 members across 41 counties in Western Kansas
Sources of capital, interest rates and terms: The program was established with ARRA funds. Capital for the program was first accessed through utility sources, and supplemented with low cost funding from sources such as the Efficiency Kansas energy efficiency fund, when available, and Kansas Housing Resources Corporation, and other sources. Loans for the program are provided at 3% for 15 years or three-quarters of expected measure life, whichever is less. Midwest Energy works to buy down interest rates when funding is available.
Shut-off for non-payment: Ability to disconnect for non-payment as granted by the Kansas PUC.
Eligible measures: Insulation, air sealing, new heating and cooling systems, thermal shell improvements, HVAC, anything attached to the permanent foundation that yields utility bill savings (including water, electric, gas, propane, fuel oil, etc.), C&I lighting and residential ground source heat pumps.
Total projects: 1,129 completed projects as of October 2014
Total amount financed: $6.3 million has been financed as of Oct 2014, with an average cost of $5,700 per project.
Average project savings: 2,100 kWh per participating household per year.
Default rates: Less than 1%
Rebates available: None directly from Midwest Energy.
Transferring of property: The owner/landlord is contractually obligated to disclose the energy efficiency agreements to prospective tenants and/or purchasers of the property. Additionally, Midwest Energy places a UCC-1 fixture lien on property. The UCC-1 Statement lists and describes any personal property that is provided by the borrower as collateral for the loan.
Key partners: Efficiency Kansas, Kansas Housing Resources Corporation
Underwriting: Midwest Energy requires only that participants be current on their utility bills in order to participate in the program.
- Loan payments have seniority over the energy portion of the electric bill. Partial payments are allocated to the loan first, leaving the energy portion of the bill unpaid. If the energy portion of the bill goes past 60 days, service can be disconnected.
- A one-time fee of up to 5% of project investment (about $200) may be added to the principal balance owed to pay for auditing expenses.
- Monthly charges will not exceed 90% of the projected energy cost savings.
- The program is marketed to customers who contact the company with billing concerns or complaints, as well as through contractors and social service agencies.
- Participants do not have to put any money down but are allowed to buy down the principal to meet payback criteria. This enables the inclusion of window measures.
- Midwest Energy provides free audits for customers who enroll in How$mart. Midwest Energy recommends specific improvements, such as insulation levels and new equipment sizing. These specific energy efficient retrofits will generate an estimated savings level sufficient to pay The customer then selects a contractor to perform the work as specified by Midwest Energy. Once the customer signs off on the completed work, Midwest Energy pays the contractor directly and adds the repayment charge to the customer’s bill.
Kentucky: Big Sandy RECC, Fleming-Mason RECC, Grayson RECC, and Jackson Energy ↴
Program name: How$martKY Energy Efficiency for Everyone
Program administrator: Mountain Association Community Economic Development (MACED)
Type of utility: Non-profit community development finance institution (CDFI) supporting a collection of rural electric cooperatives
Location: Eastern Kentucky
Launch date: Started in 2010 as a pilot program, and made permanent in 2013 by the Kentucky PUC
Primary market served: Single family residential and commercial
Total customers: 75,000 total customers across the four rural co-ops involved in the program: Big Sandy RECC, Fleming-Mason RECC, Grayson RECC, and Jackson Energy
Sources of capital, interest rates and terms: The program has several sources of capital from different entities. The Ford Foundation provided a $1 million loan from for capitalization. The Kentucky Housing Corporation contributed a $600,000 grant. MACED provided an additional $500,000. Participating co-ops and the Kentucky Department of Energy Development and Independence (KYDEDI) also put up program capital. Loans for the program are provided at 3% for 15 years or three-quarters of expected measure life, whichever is less. The maximum loan amount is $25,000. A fee of 5% of the project cost is rolled into the loan.
Shut-off for non-payment: Yes
Eligible measures: Energy retrofits, including insulation, duct sealing, air sealing, and heat pump upgrades
Total projects: 166 completed projects with an average of $8,000 cost per retrofit
Total amount financed: $1.2 million has been financed as of September 2014
Average project savings: 5,500 kWh and $624 annual savings per participating household, a savings of 30%.
Default rates: Unknown
Rebates available: Yes
Transferring of property: The owner/landlord is contractually obligated to disclose the energy efficiency agreements to prospective tenants and/or purchasers of the property. The utilities must file a UCC filing on the title. The utilities also must notify new customers of the meter charge when they become new customers.
Key partners: Kentucky Home Performance, Energy Efficiency Institute
Additional information: MACED acts as the loan originator by lending the loan capital to each participating cooperative. The cooperative then pays the contractor who performs the energy efficiency work. The participant then repays the loan monthly through their utility bill. Subsequently, the cooperative then passes the loan payment back to MACED.
Arkansas: Ouachita Electric Cooperative ↴
Ouachita Electric Cooperative, an electric cooperative in southern Arkansas, launched its Home Energy Lending Program (H.E.L.P.) in late 2013. The program’s objective was to remove the upfront cost barrier of implementing residential energy efficiency measures for the co-op’s 7,000 members by offering a low-interest energy efficiency finance program. H.E.L.P. was set up initially as an on-bill loan program, before transitioning to an on-bill tariff model.
On-Bill Loan Program
Through the original on-bill loan program, co-op members received a low-interest loan from Ouachita Electric to perform energy improvements in their homes, at no up-front costs, and with convenient repayment by the members back on their monthly utility bill. Participant homeowners’ in the H.E.L.P program were required to sign a promissory note, in the form of a debt obligation. Renters were eligible, provided the landlord signed a promissory loan note. Ouachita Electric also used utility bill payment history, instead of credit scores, to check for participant eligibility and credit-worthiness. There was no utility disconnection provision for failure by members to make loan repayments.
For the energy measures, participants could choose between recommend cost-effective measures by Ouachita Electric (including attic insulation, duct sealing, air sealing and lighting).The program was designed so that most participants had a net positive cash flow on a monthly basis, in that the energy cost savings exceeded the loan repayment amounts. This was accomplished through verification of every home with pre-and-post-project testing by Ouachita Electric personnel and the collection of smart meter data.
Ouachita Electric’s on-bill loan program helped improve 350 homes through December 2015, with zero loan defaults over the first year of the program. The average residential loan amount has been $3,093, with an average loan term of 4.7 years. Participants’ average electric energy use has dropped by 18%. The program provided up to 7-year repayment terms and a 3.5% interest rate on the loans. The program has also completed lighting retrofits in 14 schools and 10 Calhoun County buildings, as part of the county’s participation in the Georgetown Energy Prize competition.
On-Bill Tariff Program
In order to reach as many co-ops members as possible, provide additional longer-payback measures under the program, and minimize any program risks, Ouachita Electric sought and received the approval of the Arkansas Public Service Commission in early 2016 to transform the initial on-bill loan program into an opt-in tariff program.
In this opt-in tariff H.E.L.P. “Pay As You Save®” (PAYS®) program, Ouachita Electric pays for each project’s cost directly, instead of providing participating members with a loan, as in the on-bill loan program. The on-bill tariff participant then allows Ouachita Electric to recoup its investment over time via a fixed monthly charge on the electric bill that is less than the estimated monthly energy savings. These energy savings are calculated with pre-and-post upgrade smart meter data, based on the energy efficiency measures selected by the member. In fact, the cost recovery charge for each H.E.L.P. PAYS® program participant is not more than 80% of the estimated savings produced by the energy efficiency retrofit. Additionally, if a measure fails for any reason before cost recovery is complete, the Ouachita Electric will stop billing the tariffed charge to the member until repairs have been made.
With this on-bill tariff approach there is no loan, and thus, no debt for the member. Instead, a voluntary tariff charge is assigned to the monthly bill for that metered location until the project costs are fully recovered. Because the voluntary tariff charge is attached to the member’s meter, the payment obligation to the participant terminates when their occupancy ends, and the tariffed terms apply automatically to the next occupant or renter. As the repayment tariff charge is considered part of the customer’s bill for electric service, Ouachita Electric may disconnect the metered structure for non-payment of the bill, including the tariffed charge for cost recovery of efficiency upgrades. This provides Ouachita Electric with greater security for program performance and minimizes the financial risk should there be any non-payments. Most residential uncollectable accounts occur when occupants move and can’t be located. Investments made through the voluntary tariff will continue to be recovered whenever power is restored to the location.
The switch to an opt-in tariff model has also expanded the eligible energy efficiency measures to including heat pumps, HVAC upgrades, and starting this summer, residential solar PV panels. Because HVAC upgrades and solar PV systems tend to be more expensive than installing insulation, the maximum size of the energy upgrade project has been raised to $25,000, from $7,000, while the minimum project remains at $1,000. The cost recovery period for the H.E.L.P. PAYS program is up to 12-year repayment terms, and the cost of capital is low, similar to the loan program. In the first three months since the conversion into an opt-in tariff in March 2016, the Ouachita Electric H.E.L.P. PAYS program has agreed to invest over $1 million in energy improvements to include over 90 single family homes, a 64 unit apartment complex, and LED lighting conversion for a local junior college.
Both the original on-bill loan program and the newer tariff-based H.E.L.P. PAYS program have been financed with capital from the National Rural Utilities Cooperative Finance Corporation (CFC). Both versions of the program have also made use of a loss reserve fund created by the Arkansas Energy Office – a department within the Arkansas Economic Development Commission – to cover for any possible defaults or charge-offs that may occur in the Ouachita Electric program. The reserve is also used by five electric cooperatives in Arkansas operating similar programs - Ozarks Electric Cooperative, Arkansas Valley Electric Cooperative, Woodruff Electric Cooperative and Craighead Electric Cooperative.
From the beginning of the H.E.L.P. program, Ouachita Electric has partnered with EEtility, an Arkansas-based corporation to handle administration, contractor, and program eligibility support duties. Also, in order to implement an opt-in tariff program, the Ouachita Electric has licensed the PAY AS YOU SAVE® (PAYS®) system, a program design model developed by the Energy Efficiency Institute (EEI), based in Vermont.
North Carolina: Roanoke Electric Cooperative ↴
Program name: Roanoke Electric Cooperative’s “Upgrade to $ave” Program
Roanoke Electric Cooperative launched its “Upgrade to $ave” program in late 2014 to help co-op members reduce their energy bills with no upfront costs. The co-op, which serves 30,000 homes in eastern North Carolina, has found success with this opt-in tariff-based on-bill financing program after several failed trials with other energy efficiency programs. Roanoke Electric was particularly focused on creating an efficiency program that could reach all families, as 40 percent of the co-op’s members are classified as “low-income.” Roanoke Electric believes that a well-designed energy efficiency on-bill program can alleviate the energy burden on low-income homes while also spurring regional economic development. The lower overall energy use results in lower demand charges from the co-op’s wholesale power supplier, offering a clear business advantage to the co-op.
Roanoke Electric’s Upgrade to $ave program is based on an opt-in tariff-based on-bill program model called Pay As You Save® (PAYS®). Under this system, the participating co-op member pays nothing upfront for the co-op-approved energy efficiency retrofits. The cost of the retrofit is repaid through the member’s monthly electric bill via a voluntary tariff surcharge placed on the meter for up to 10 years. Since each project is designed to produce average energy savings that exceed the monthly repayment cost, the member should see positive cash flow from day one. Since the tariff is attached to the meter and not the individual, there is no “debt” and the tariff can be transferred to the next occupant. Both homeowners and renters with twelve months of good bill payment history are eligible to participate (credit scores are not checked). Participants are provided with an eight-month deferment period – allowing for the member to see the full benefits of the energy upgrades – before the repayment period begins.
To capitalize the Upgrade to $ave program, Roanoke Electric received a $6 million loan from the U.S. Department of Agriculture’s (USDA) Energy Efficiency & Conservation Loan Program (EECLP). Run by USDA’s Rural Utilities Service, EECLP provides loans to rural utilities to support energy efficiency and renewable energy projects at low federal interest rates. Roanoke Electric is investing the $6 million loan into participating members’ homes, making efficiency improvements that the member pays back over time as part of their monthly utility bills. The loan should initially cover approximately 800 homes, assuming an average project cost of $7,500. As these funds are repaid, the co-op can reinvest those funds into efficiency improvements in additional homes.
For Roanoke Electric members to qualify for the program, co-op-approved contractors must determine if the house can withstand normal weather conditions for the next 10 years, the duration of most tariffs. (This has been a barrier, as the co-op has found as many as half of the inspected houses did not meet the structural conditions criteria.) Once the house is approved, local energy assessors, certified by the Building Performance Institute (BPI), conduct an energy audit to identify cost-effective retrofits with a goal of at least 25 percent energy savings. After the work plan is approved by the member and co-op, a contractor is brought in to make the home improvements.
Roanoke Electric targets measures most likely to maximize savings and comfort in members’ homes, but any whole-house energy efficiency measures are eligible. Roanoke Electric offers a targeted package of upgrades, which include: attic and floor insulation, LED lighting, water heater wraps, air sealing, duct repair, and heat pump upgrades. The co-op works closely with the participant to show the cost savings of each custom retrofit and how the on-bill repayment schedule will work.
Since the start of the Upgrade to $ave program in 2014, 125 homes received retrofits at an average project cost of $6,900, lower than the $7,500 initially estimated. Roanoke Electric received an additional $482 energy efficiency credit for complying with North Carolina’s Energy Efficiency Conservation law. With this creative financing structure, the on-bill tariff program has produced tangible net savings for its participants. Of 75 participating homes analyzed, members are seeing an average savings of $120 a month, a little more than half of which is repaid to the co-op. In turn, participants are pocketing an average annual savings of $650, even while paying the tariff.
For the next phase of the Upgrade to $ave program, Roanoke Electric plans to provide emergency repairs to homes with structural issues that did not qualify for the on-bill program. Bringing houses up to code will improve the sanitation and safety conditions of co-op members’ homes, an important part of Roanoke Electric’s efforts to break the cycle of energy poverty in their region of North Carolina.
Please click on each cooperative or group of cooperatives for information about their respective on-bill financing programs:
(Please check back for additional case studies)