Public power utilities who are interested in energy efficiency should consider the experience of Ouachita Electric Cooperative. This Arkansas co-op is using the Pay As You Save® (PAYS) tariff-based financing model for energy-efficiency improvements and has seen much greater penetration than with the on-bill debt-financing model. Upon introducing PAYS, Ouachita Electric Cooperative saw a 100% increase in participation during a three-month period with renters, rather than homeowners, accounting for one-third of the new participants.

Key Details:

• On-bill debt-financing models and tariff-based financing models incentivize residential energy-efficiency investments by eliminating up-front costs for customers
  • The utility recovers the installed cost through monthly charges on customer bills
  • Customers benefit from reduced energy needs, which is designed to enable repayment of the efficiency investments without increasing total monthly costs
  • These programs have been shown to improve home values and customer satisfaction
• On-bill debt-financing models employ loans where the customer is assigned the repayment
  • Loans may be contingent upon customer credit qualifications and the program administrator’s debt limitations
  • These programs may not require regulatory approval
• Tariff-based financing models (like PAYS) employ voluntary tariffs where the meter is assigned the repayment
  • This model incentivizes improvements with homeowners and renters alike through decreased monthly payments over longer periods. Customers only pay the fee while they reside in the property
  • Some member-owned utilities pursing this model have used grants or financing through the Rural Utilities Service or Energy Efficiency & Conservation Loan Program
  • These programs require regulatory approval if pursued by regulated utilities and are often voted into effect by members of cooperatives

Implications:

Energy efficiency continues to be an important and cost-effective tool for meeting our energy needs. Tariff-based financing models provide utilities with a method to both expand and increase customer participation in existing energy-efficiency programs while also reducing aggregate peak demand, lowering customer bills, and increasing the value of homes in their service areas.

More information:

Ouachita Electric Cooperative: HELP PAYS (Pay As You Save – Energy Efficiency Program)
Roanoke Electric Cooperative: Sharing Insights of Our Experience with Pay As You Save® (PAYS®)
Public Utilities Fortnightly: Investor-Owned and Public Power Can Learn From Co-ops
UtilityDive: Pay as You Save: Co-ops are reaching new customers with a novel way to pay for efficiency
ACEEE: On-Bill Financing for Energy Efficiency Improvements: A Review of Current Program Challenges, Opportunities, and Best Practices

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