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

3. Current On-bill Landscape

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

5. Program Objectives Motivating Factors (utility perspective) Energy Savings Targets Manage Peak Loads Enhance Customer Satisfaction Power Plant Avoidance Extend EE Funds to Underserved What do you want to accomplish?

6. Target Market(s) Goals Environmental Factors Target Market

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

8. Financial Product Structuring TypeTariff-based FinancingLoan-based Financing Transferability Yes -- financing is assigned to the meter. Sometimes Debt Classification Not necessarily classified as debt. Classified as debt. Regulatory Approval RequiredNot required. Financing Term Could be useful for incentivizing deeper retrofits with longer repayment periods Work well with shorter repayment periods 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 CEW OR 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 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 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: 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 SBEA CT Available Capital: $1.5 – $2 million Goals: Retrofit 100 homes Participants: 100 loans Value of Financing: $1.5 million Available Capital: $1.5 – $2 million Goals: Retrofit 100 homes Participants: 100 loans Value of Financing: $1.5 million

13. Program Comparisons (2) CEW OR 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 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 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: 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 SBEA CT 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: 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

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