Making energy efficiency easy.

• Author: Durkay, Jocelyn
• Position: TRENDS & TRANSITIONS - On-bill financing for electric consumers

Consumers, businesses and policymakers interested in improving energy efficiency often face a significant barrier: the higher upfront costs of the newest and smartest appliances, boilers, HVAC systems, furnaces, insulation, lighting and weatherization. To help, some states and utilities are offering "on-bill financing," which incorporates the finance costs of the upgrades into the consumers' utility bills over time.

The intention of on-bill financing is to increase the number of efficiency improvements in existing homes and buildings by making it easier for middle-and low-income customers, renters, residents of multifamily properties and small businesses to purchase energy-efficient products.

Twelve states have enacted legislation to create revolving loan funds for capital, authorize pilot programs or require utilities to offer on-bill financing. Several states have also employed on-bill financing to meet state requirements for energy efficiency. And 11 states have considered bills related to on-bill financing this year.

South Carolina's "Help My House" Rural Energy Savings Pilot Program, launched in 2010, saw a 34 percent reduction in energy use in the year following improvements. Customers saved, on average, $288 a year after paying off on-bill financing loans, which averaged $7,700 with a 10-year maximum payback. The program was funded by a U.S. Department of Agriculture grant after state lawmakers passed a law...