On-Bill Financing Allows You to “Pay As You Save”

May 26, 2017 – This 90-second video, produced by Appalachian Voices and Resource Main, shows how a utility company can help customers weatherize their homes, save money, and help cut back on energy consumption. The video was produced to introduce more consumers and electric utilities to “on-bill financing.”

The video shows that a utility using the program would pay the up-front costs for home energy efficiency improvements, such as weatherizing or upgrading heating and cooling systems, and the customer repays the cost over time.
The “Pay As You Save” (PAYS) model is particularly interesting. According to the video, some examples of the benefits for the PAYS program are:

1) Families immediately benefit from having a more comfortable and healthy home. Also, a recent survey by the National Association of Home Builders shows that buyers want energy efficient homes.

2) Families save money. In a PAYS® program, the money saved from the energy not consumed each month is more than the utility’s added charge to re-pay the cost of home improvements. It’s a net savings for the customer.

3) All the energy audits, contracting work, equipment supplies, sales and other services needed for home energy efficiency improvements create local, long-term jobs. And most of the wealth generated from this type of economic activity stays in the community.

4) On-bill financing lowers costs for everyone in the community. As more residents in a service area use less energy, the utility won’t need to provide as much, especially during peak times when energy costs are highest, and can spread those savings across all its customers.

5) Energy efficiency is the cleanest source of energy. Using less energy reduces the reliance on fossil fuels, helping protect clean water, clean air, forests and farms, and will help lessen the impacts of climate change.

Another aspect of the PAYS program, according to the video, is that the debt is tied to the property, not the resident, so renters can participate. The PAYS program does not operate from credit scores, so anyone who has a good history of paying their energy bill can participate. These innovations may allow the program to serve low- to moderate-income households well.

Rural electric co-ops are leading the way for these types of programs. Currently, there are 13 electric co-ops investing millions of dollars a year through a PAYS-type program, which could grow to 19 in the future. The co-ops are lowering energy use for participants by as much as 30 percent and are lowering energy bills by hundreds of dollars a year for most homes.