Introduction
EfficiencyPlus in Osage
(utility and local lender financing)
Rebuild Webster City (utility and
local lender financing)
Legal opinion on utility financing
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Introduction |
In 1996, the Iowa Association of Municipal Utilities joined forces with the Wisconsin Energy Conservation Corporation to create financing options for community energy management programs. A grant from the Iowa Energy Center allowed the two organizations to begin working in three Iowa communities -- Harlan, Osage, and Webster City.
Many utilities, including municipal utilities, are looking to financing as an alternative to more costly rebate and cash incentive programs. Utilities across the nation, anticipating a more competitive environment, are seeking to cut costs without cutting valuable services to their customers.
The programs described below attempt to shift costs from the utility (and thus all ratepayers) to the users of the services. Recognizing that some customers cannot afford the cost of energy efficiency improvements, financing mechanisms are created to fill that gap. In the three programs discussed, three different financing mechanisms have been established, varying by the needs of the utility, the interest of local lenders, and the makeup of the community.
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EfficiencyPlus in Osage |
Osage has a national and international reputation for community-based energy efficiency programs. In the past, however, those programs focused primarily on residential and large industrial customers. Osage Municipal Utilities now has chosen to concentrate on the small, Main Street business sector in offering customer-pay energy efficiency services.
Energy assessments will be available to businesses starting in August 1997. A fee will be charged for the service, which will include a walk-through audit, qualified contractor list, energy education materials, and a financing package.
Three local lenders have established the commercial interest rate at prime, with uniform terms and conditions. The utility is currently exploring using a line-of-credit from a local bank to make small commercial loans (under $3,000-$5,000) with on-the-utility-bill financing.
To download a copy of the EfficiencyPlus in Osage Business Assessment brochure, click here.
Coming soon: EfficiencyPlus in Osage program manual.
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Rebuild Webster City |
With a grant from the Iowa Department of Natural Resources and the U.S. Department of Energy, Webster City is participating in the Rebuild America program. Through the Iowa Association of Municipal Utilities (IAMU) and the Wisconsin Energy Conservation Corporation, Webster City Light and Power is creating financing mechanisms that complement the Rebuild program.
Pending approval from the City Council, the utility will establish an on-the-bill financing package for both residential and commercial customers. This will cover smaller loans (under $3,000), using a utility energy efficiency reserve fund. The interest rate and loan term will be established in cooperation with local lenders, who will offer similar rates and terms for loans over $3,000.
IAMU sought a legal opinion on any barriers to utility financing of energy efficiency. According to the Ahlers law firm, "A municipal utility has the authority to provide financing for energy efficiency improvements to qualified customers....Further, the municipal utility cannot disconnect utility service for nonpayment of the loan because it is considered a collateral or independent transaction; it is considered a nonutility service; or it is an insufficient reason to disconnect service under the Utilities Board rules. Combining loan repayments and payments for utility service may affect a municipal utility tax-exempt financing.
Coming soon: Rebuild Webster City brochure; Rebuild Webster City program manual.
Send comments and questions to energy@iamu.org.