Stories

The Daily Q: Who is in charge of new energy efficiency loans?

Governor Andrew Cuomo announced yesterday that New York consumers seeking to make energy-efficiency upgrades to their homes – such as installing insulation or low-fuel boilers – can now obtain inexpensive loans and repay the debt on their monthly utility bills, as part of a new program called On-Bill Recovery Financing. On-bill financing allows consumers to…

Governor Andrew Cuomo announced yesterday that New York consumers seeking to make energy-efficiency upgrades to their homes – such as installing insulation or low-fuel boilers – can now obtain inexpensive loans and repay the debt on their monthly utility bills, as part of a new program called On-Bill Recovery Financing. On-bill financing allows consumers to pay off the cost of the improvements over time, through the savings generated by reduced energy use.

The New York State Energy Research and Development Authority (NYSERDA) will be administering the program, which offers 2.99 percent interest for 5-, 10- and 15-year loans. Central Hudson Gas and Electric, ConEdison, Long Island Power Authority, National Grid, New York State Electric and Gas Corporation, Orange & Rockland, and Rochester Gas and Electric are all participating in on-bill recovery.

Utility companies will now be billing consumers for the loans and must accurately report energy-use reductions on utility bills and credit the savings against the debt owed.

But what happens when they don’t? The New York World asks today: Who will be looking out for consumers who borrow for energy efficiency upgrades through the state’s on-bill financing program?

What we found

If there are any disputes related to the program – be they about bills or the loan payments – NYSERDA is set to step in to mediate and handle any customer complaints. As far as accurately reporting energy savings in homes goes, the utilities are completely removed from the process, involved only to remit back to NYSERDA the loan repayments that appear as line items in the utility bills.

NYSERDA instead will contract the reporting work out to companies accredited by the Building Performance Institute (BPI), and homeowners can pick their contractors as long as they’re recognized by NYSERDA. The BPI-certified contractors typically conduct checks on the energy use of between 10 and 15 percent of their clients to ensure that the right amounts of savings are being recorded.

“Our job is to oversee the program,” said NYSERDA spokesperson Dayle Zatlin. “The utilities just send out the bill, and the contractors help us administer the program.”

Advocates who have weighed in on the legislation behind the program are largely optimistic about the way it will be run. “NYSERDA is supposed to track the energy savings, something they’ve improved at over the years,” said Emmaia Gelman, Green and Equitable Economies Strategist at the Center for Working Families, a policy group whose research informed the state program.

As for the utilities, Gelman notes, they are participating first and foremost because the new legislation “says they have to do this.” The utilities will receive some modest financial incentives from NYSERDA, intended to cover their administrative costs, including upgrades to their billing systems: $100 per loan, plus a fee of 1 percent on the amount of each loan. Based on average loan amount of $8,200, this fee would average about $82 per loan, according to the authority.

“NYSERDA programs are well-audited and verifiable — they’ve been so for a decade in New York,” said Jackson Morris, a senior policy advisor at the Pace Energy and Climate Center who is involved in the implementation of this latest program. “What we’re doing is changing the mechanism, but we don’t have to reinvent the wheel.”

Add a comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

4 Comments

  1. NYSERDA, not Con Edison or other utilities, are arranging the loan program. While payments will be made through your utility bill, any savings calculations and loan arrangements will be made through NYSERDA.

    • Michael C: Thank you for clarifying that point which was also brought up in our answer section by NYSERDA. You are right — NYSERDA manages the loan fund, and all the utilities do is include the repayments of the costs of the energy efficient improvements as a line item in their clients’ bills.

    • Dan: That’s a good question and NYSERDA’s policy for non-payment of utility bills includes a late fee charge of 1.5 percent of the unpaid principal plus interest charges. For partial payment, utilities are given a layer of protection with NY legislation stating that the available money should go toward covering the bill first. Might be good to note that recent studies have shown that default rates on utility bills are low, and that of on-bill programs are even lower — less than one percent.

      As for what happens when a homeowner (in NY it would mean the owner of the building, not just an apartment in the building) relocates, the loan is transferable to the new owner unless the parties agree that it will be fully paid prior to transfer. All homeowners have to sign a mortgage under the program’s legislation to ensure that a future purchaser of the home will be informed of the NYSERDA Loan Installment Charge.
      To residential properties qualify for NY’s on-bill recovery financing, a person must both own the building where the energy efficient improvements are being completed and be named on the utility bill, so there wouldn’t be a case of tenants leaving and landlords having to pick up bills (as might be the case in other states). For small business, not-for-profit, and multifamily buildings, the borrower must be named on the utility account, but does not have to be the property owner – they can qualify for an On-Bill Recovery Loan if they have written authority from the property owner to make and finance the energy efficiency improvements in the property.

      Check out the NYSERDA FAQ on this issue: http://www.nyserda.ny.gov/About/Statewide-Initiatives/On-Bill-Recovery-Loan-Program/FAQ.aspx
      as well as pages 21-22 of this recent on-bill financing review done by the American Council for an Energy-Efficient Economy: http://www.ice-wish.eu/uploads/files/86uk-On_bill_programme.pdf