Inclusive Financing for Housing Energy Upgrades Thank you for the invitation to join you at this Summit… Marshall Cherry, COO Roanoke Electric Cooperative October 12, 2016

Electric Cooperatives in NC invest in local economic development 2.5 million North Carolinians are served by an electric co-op 93 of the 100 counties are served by an electric co-op Roanoke Electric Source: NC Electric Membership Cooperative

` 1,500 square mile service area 2,210 miles of line $39 million operating revenue $84 million asset value 52 employees 14,700 meters 95% residential 5% commercial/industrial `

More people reporting high bills 40% of our members state that their average electric bill averages more than $200 per month, compared to 21% on the national benchmark.

Efficiency upgrades can lower bills Insulation Duct Sealing Air Sealing Heat Pump Upgrades Water Heater Wraps LED

Our initial loan offer wasn’t enough get to “Yes”… We offered cost effective upgrades and on-bill financing… Yet major barriers remained: Creditworthiness Renter eligibility Disinterest in additional debt So, we sought a solution that would be more inclusive and generate more value for more members

Customer: Current & Future Opt-In Tariffed Approach Capital Provider Utility REC Utility REC USDA RUS - EECLP ON-BILL COST RECOVERY TIED TO METER INVESTMENT IN UPGRADES Metered Site Solution Providers Program Operator REC Member-Owners Local Contractors TRC Customer: Current & Future Based on the Pay As You Save® system developed by EEI.

Where We Invest Pass Co-Pay No Go Savings are sufficient for the utility to recover its investment within 10 years through a tariff capped at 75% of estimated savings 25% of estimated savings stay with member Purchase of EE Credits capped at $.02/kWh for total savings Co-Pay Amount needed from member (if any) in order to make the investment Pass No Go Assessment doesn’t identify savings that are cost effective enough to warrant investment Assessment identifies major repairs needed first Estimated savings are calculated using current rates – without assuming rate escalation.

Actual Results for Initial Participants Sample of over 75 homes Average cost of upgrades $7,135.00 Average buy-down for EE Credits $350.00 Average monthly savings per site $105.00 Average monthly tariff $64.00 Average monthly savings for member $41.00 % of savings kept by member during cost recovery (Target: 25%) 39% 10-year term at 3% per annum

Results $1 million of in investment in the first year Better buildings Jobs and workforce development Lower costs for the utility Lower bills for the participants Higher customer satisfaction

Offer: We can help more communities Millions of dollars of capital for cost effective investment can finally reach renters and low-income households. We have extended an open offer of assistance to cooperatives in NC and across the country. Investor owned utilities like Duke can use the same solution. www.roanokeelectric.com/pays

Request: Reaching beyond efficiency upgrades We find good investments in the majority of the houses we evaluate for cost effective upgrades. The #1 reason we decline to invest: The house is unlikely to be fit for service for the life of upgrades. Major repairs needed. We seeking experts who can help us explore options to address this chronic problem in a systemic way – including developing better housing stock in our service area.

Inclusive Financing for Housing Energy Upgrades Thank you for the invitation to join you at this Summit… Marshall Cherry, COO Roanoke Electric Cooperative October 12, 2016

Appendix

Harnessing Our Business Members contact us seeking assistance with cost savings. Roanoke EC, through The Roanoke Center, identifies the best efficiency upgrades for investment. Contractor installs upgrades at no upfront cost to member, with quality assurance oversight from The Roanoke Center. Our program is open to members regardless of income, credit score, or status as renters or home owners. We do screen for bill payment history, checking for more than 2 disconnections for non-payment in the last 12 months. Utility recovers its costs for the upgrades with a fixed charge on the bill that is less than the estimated savings.

Path to Investment & Returns Cost Savings Inquiry Check usage history; complete enrollment Site visit by Program Operator Evaluation of Opportunities for Investment Upgrades installed by Certified Contractor Pay contractor and assign Tariff to meter at member’s location

The Offer & Investment Allows more member-owners to access capital for energy efficiency improvements to their properties/dwellings on a debt-free basis Helps local qualified contractors gain steady and consistent work Lowers demand costs for the electricity Roanoke EC buys Avoids purchasing solar, poultry, swine and wind renewable energy credits that are mandated by the State of NC

We are financing our investments with financing from the Energy Efficiency & Conservation Loan Program Upgrade to $ave Roanoke Electric Cooperative Using PAYS® EECLP PAYS® Up to $5 Billion available annually at Treasury rates $6 Million Investment program ~$7,000 in upgrades per participant Pay As You Save® and PAYS® are trademarks of Energy Efficiency Institute, Inc.

Decision Tool for Utility Managers:   Key considerations before investing in resource efficiency and rooftop solar through a tariffed on-bill program January 2016 www.roanokeelectric.com/usda-eeclp

Bill Size & Member-Owner Satisfaction