On-Bill Financing: Exploring the Energy Efficiency Opportunities and Diversity of Approaches

1. On-Bill Financing: Exploring the Energy Efficiency Opportunities and Diversity of Approaches KEEA/PBI Energy Efficiency 2013: A Policy & Law Conference, October 1, 2013 Casey Bell ACEEE Washington, DC

2. On-bill Financing Allows utility customers to invest in energy efficiency improvements and repay the investment through an additional charge on their utility bill. • Structured in numerous ways • Loan • Tariff • Service Agreement • Hybrid Models • Serves an array of markets • Residential • Owner-occupied • Rental • Commercial and Industrial • Small business

3. Current On-bill Landscape

4. Program Design Considerations Fundamental Secondary Credit Enhancements Customer Eligibility Requirements Project Eligibility Requirements Installation Marketing Additional Incentives • Program Objectives • Target Market • Selection of Program Administrator • Financial Product Structuring • Capital Source

5. Program Objectives What do you want to accomplish?

6. Target Market(s)

7. Selection of Program Administrator • Utilities • CDFI’s or Financial Services Providers • Energy Service Companies • Non-profits

8. Financial Product Structuring Bill neutrality?

9. Sources of Capital • Utility • Ratepayer Funds • Shareholder Funds • Public • Grants (Federal, State, Local) e.g. Stimulus • Public Loan Funds • Bond Issues • Revenue from Cap and Trade Programs • Private • Community Development Financial Institutions • Local Banks & Credit Unions • Large Commercial Banks & Capital Markets

10. Secondary Considerations • Credit Enhancements • Customer Eligibility Requirements • Project Eligibility Requirements • Installation • Marketing • Additional Incentives • Rebates • Lower Interest Rates • No Money Down

11. Program Example: Clean Energy Works Oregon

12. Program Comparisons SBEA CT CEW OR ECSC Pilot Available Capital: CL&P: $30 million UI: $7.5 million Goals: Comply with EERS and provide service to all customer classes. Participants: CL&P: 6,685 (since 2005) UI: 3,903 loans Value of Financing: CL&P: $17.3 million UI: $4.1 million • Available Capital: • $1.5 – $2 million • Goals: Retrofit 100 homes • Participants: • 100 loans • Value of Financing: • $1.5 million • Available Capital: • 2011: $12 million • 2012: $24 million • 2013: $36 million • Goals: Remodel 6000 homes by 2013 • Participants: • 599 loans (mid-2011) • Value of Financing: • $7.8 million

13. Program Comparisons (2) SBEA CT CEW OR ECSC Pilot Objectives: Compliance with EERS, Expand Access to EE Funds, DSM Target Market: Small business customers Program Administration: CL&P and UI (IOUs) Structuring: Loan, no transfer Capital Source: Public benefits fund w/ revolving loan fund • Objectives: • DSM, Customer Satisfaction • Target Market: • Residential (LMI focus) • Program Administration: • ECSC, Trade Association for State Cooperatives • Structuring: • Low-interest (2.5%) loan that follows the meter. • Capital Source: • USDA REDLG Program • Objectives: • Customer Satisfaction • Compliance HB 2636 • Target Market: Residential (owner –occupied and rental) • Program Administration: • CEW, Non-profit • Structuring: • Loan-based, transfer for $850 fee. 5.99% w/ 20 year repayment. • Capital Source: • Craft 3, CDFI

14. Challenges to Scaling • Quantify cost of operating loan programs & subsidizing finance charges. • Weigh importance of bill neutrality. • Energy Savings Data • Financial Performance Data And CONTEXT!!!

15. Questions? • Casey Bell • Senior Economic Analyst • Finance Policy Lead • ACEEE • (p): +1-202-507-4746 • (e): cbell@aceee.org