By rolling upgrade costs into monthly bills, utilities are helping customers save energy and money at the same time
Photo © iStockphoto.com/sturti
Drafty windows, leaky ducts and poor insulation are common, and that means that much of the heating and cooling it takes to keep them comfortable slips outside, leading customers to use much more energy than they should have to — an estimated 10 to 20 percent, according to the U.S. Department of Energy.
The simple solution to this problem is an energy efficiency upgrade — patching leaks in ductwork, sealing the frames of windows, laying insulation in attics, replacing old heat pumps. The costs can range from a few hundred dollars to about US$8,000, but these interventions can result in energy savings over time that more than offset the expense. It’s a pragmatic investment that lowers costs in the long run.
But with an innovative financing mechanism, electric utilities like the Roanoke Electric Cooperative are using their borrowing power to finance energy efficiency upgrades in homes at no upfront cost to their customers.
This is possible through what’s called tariffed on-bill financing. Using energy efficiency loans available from the federal government, utilities pay the upfront costs of upgrading a home’s energy efficiency and then amend that home’s newly lowered bill with a tariff charge that pays back the cost of the upgrade month by month.
Key to making it work is that the tariff is calculated so the customer’s bill is always lower than it was before the upgrade. About 80 percent of the monthly savings go toward paying off the cost of the upgrade, and the rest goes to cutting the customer’s costs. In other words, they reimburse the utility for the cost of the upgrades and still pay less for energy each month than they did before the improvements were made. MORE