Developing Local Energy Efficiency Lending Programs Presented to the EARN Conference 2011 Localizing Finance Panel Milwaukee, Wisconsin September 14, 2011 Keith Welks Deputy Treasurer Pennsylvania Treasury Department

Public/Private Partnership Leveraging Public $$ and Private Delivery Keystone HELP I Unsecured loans to $10K for ES improvements Fixed interest rate for maximum 10-year term (2006: 7.99%; : 8.99%) Consumer oriented, contractor-centric program design Housing Finance Agency introduces complementary program for secured loans to $35,000 Keystone HELP II Unsecured loans to $15K for ES improvements (6.99% for maximum 10-year term) Unsecured loans to $15K for advanced ES improvements (5.99% for maximum 10-year term) Unsecured loans to $15K for improvements recommended by whole-house audit (4.99% for 10-year term) Housing Finance Agency enhances complementary program for secured loans to $35,000

Production To Date (through August 2011) Loans made: 8509 (with secured: 9300) Dollars lent: $57.2M (with secured: $74.2M) Loss Reserve: approximately 8% of unpaid balance) Original Average term approximately 7 years, with actual expected loan life closer to 5 years Loan charge-offs to date of 1.48%, with late accounts totaling less than 1%

Key to Success: Harmonizing Interests Effective loan programs integrate, and maximize consonance between, critical participants Borrower (necessary) Simple – fast – cheap (if lucky: cost-effective) Lender (Originator/underwriter/servicer) (necessary) Easy to market to consumers – ability to control underwriting decisions – take out strategy Contractor (highly desirable) Easy to learn, easy to explain – competitive advantage – minimal additional paperwork, obligations Program Sponsor (Supporting funds) (very likely) Acceptable leveraging – relevant and effective projects – robust data/metrics Capital Supplier (Aggregator) (very likely) Alignment of economic interests – security – return – take out strategy