As regular readers of this blog know, I’m not as concerned with being the first to break news as in tracking and analyzing developments in the energy industry over time. A recent example was my coverage of the maturation of commercial PACE (property assessed clean energy) programs and the imminent launch of one such program in greater Miami.
Last month, I described an innovative energy financing proposal called on-bill repayment (OBR), which would eliminate the upfront cost of energy improvements. The proposal was pitched to the California Public Utilities Commission (CPUC) by Brad Copithorne, an Energy and Financial Policy Specialist with the San Francisco office of the Environmental Defense Fund (EDF), who customized the concept for the California market.
In an April 25 blog post, Copithorne announced two developments that together make it much more likely that California will launch an OBR program, as expected, in January 2013. California’s program would be the first statewide OBR program for energy efficiency and renewable energy upgrades to be financed entirely by third parties.
The CPUC released a Proposed Decision that directs the state’s major utilities to develop an OBR program for commercial properties. The same decision noted, however, that the CPUC does not have the legal authority to direct the utilities to establish a similar program for the residential sector.
EDF sponsored legislation introduced by Senator Kevin de León, SB 998 (PDF), which would give the CPUC the authority to compel the utilities to develop OBR programs for homeowners. The bill was passed out of a key Senate committee on April 24.
Here’s Copithorne with an update on the state of play:
Senator de León and EDF have been working together to assemble a broad coalition of supporters including labor, contractors, building owners, banks and other investors, solar installers, energy efficiency project developers, environmental advocacy and environmental justice groups.
We are excited to report that yesterday the bill passed the California Senate’s Energy, Utilities and Communications Committee. While we have a long way to go, this is another key step toward establishing a program that can invest billions of dollars of private capital in energy efficiency and renewable energy projects in California at no cost to taxpayers or ratepayers.
Here’s how on-bill repayment would work, from my March 28 post:
After performing an energy audit of the home or commercial building, or assessing the suitability of the rooftop for solar, a contractor recommends improvements to the building owner. Improvements could include attic and wall cavity insulation, high-efficiency windows and appliances, duct-sealing, or rooftop solar. The contractor presents an estimate of the upfront cost of the improvements. If the building owner agrees to the upgrades, the contractor sends a loan request to participating banks for approval. The loan is repaid through the customer’s monthly utility bill.
“Whatever the savings would be on the project, they would be required to exceed what you have to pay each month on the loan,” said Copithorne. He offered an example. A homeowner pays an average of $300 per month for utilities. The package of energy upgrades recommended by the contractor will save $200 monthly. After the monthly loan payment, say $180, represented as a line item on the utility bill, the customer’s bill drops from $300 to $280. If the property is sold, the loan stays with the meter and would be taken over by the new tenant.
The CPUC is scheduled to vote on its on-bill repayment Proposed Decision on May 10.
