On November 8, California regulators approved (PDF) plans by the state’s largest utilities to make an innovative financing proposal called on-bill repayment (OBR) available to their commercial customers. The programs, which will enable property owners to avoid the upfront cost of energy improvements, are scheduled to launch in March 2013.
Regular readers of this blog will recall that I have reported several times before, most recently on August 31, on OBR. With on-bill repayment, commercial property owners in California can tap third-party financing to pay for energy efficiency and renewable energy upgrades and repay the loans via monthly electricity bills. If the property is sold, the loan stays with the meter and would be taken over by the new tenant. (In March, I described in more detail how OBR works.)
On-bill repayment was presented (PDF) to the California Public Utilities Commission (CPUC) by Brad Copithorne, Energy and Financial Policy Specialist with the San Francisco office of the Environmental Defense Fund (EDF). OBR has been tried elsewhere, including Oregon and New York state, but Copithorne customized the concept for the California market.
California’s investor-owned utilities were told in the November 8 ruling (PDF, p. 70) to be prepared to launch their commercial OBR programs no later than March 31, 2013, the same timeline given in a May 2012 CPUC decision.
“We understand that some of the utilities have expressed concern that this timeline is aggressive. A predictable timeline for OBR implementation is critical, as EDF is working closely with multiple market participants to create a pipeline of projects that can be executed as soon as the program is operational,” Copithorne wrote in a November 12 blog post.
Copithorne told me that he was spending much of his time reaching out to potential project partners – energy service companies (ESCOs), energy efficiency project developers, and solar installers – to establish a pipeline of deals. If the utilities do not launch OBR on time, he said, “those companies are going to have some pretty unhappy customers, and we’re going to get some egg on our face. It’s really critical that we create deadlines, and stick to deadlines, and that these things are predictable.”
Commercial property owners should be able to fund renewable energy and demand response improvements, in addition to energy efficiency upgrades, with OBR. “EDF has been assuming that the California OBR program would only cover energy efficiency retrofits,” Copithorne wrote on October 3.
“In a sidebar conversation with a senior California Public Utilities Commission (CPUC) staff member, yesterday,” he went on, “I learned that it may be possible to extend OBR to renewable and demand response projects.” The November 8 CPUC ruling makes clear that as long as ratepayer funds are not used to finance OBR loans, projects could include clean energy and demand response upgrades.
Copithorne told me it is too early to name companies participating in projects at the spring 2013 OBR roll-out, but he is optimistic about the level of interest. “We’re having conversations with everyone from people who do $5,000 lighting retrofits in restaurants up to folks who want to do $5-million solar projects on giant shopping centers,” he said.
Copithorne is also optimistic that OBR will be expanded to the residential sector in California and to other states. A bill that would have granted the CPUC regulatory authority to establish OBR programs for homeowners died at the end of the 2012 California legislative session. Copithorne says the bill will be re-introduced when the new session opens in January 2013.
“We’re optimistic that this is something that is going to be perceived as a big win for California consumers, create jobs, and allow people to reduce their utility bills. We’re hopeful to get it passed in the new session,” he said.
Copithorne and colleagues at EDF are also working to advance OBR legislation in Texas, Ohio, and North Carolina. Copithorne spoke with me by phone from Austin, where he’d met with Texas policymakers the previous two days.
“This is something that appeals in traditionally red states, very conservative states,” he said. “We come in and we talk about how there is no taxpayer funding, no ratepayer funding. We’re able to create jobs, and create investments from third parties. And we do it in a way that enables each business, each solar or energy efficiency company, to decide their own go-to-market strategies, and limit the influence of bureaucracy.”
