“What if your home could be fixed up so that you’re cool in the middle of summer, warm in winter, and you have more money every year for things you need?”

So begins a new 90-second video explaining a simple way to pay for home energy efficiency improvements. Simple in concept, that is, but a bit more complex in the details.

The video was produced by Appalachian Voices and Resource Media to introduce more consumers and electric utilities to “on-bill financing” — a decidedly wonky concept, but one that, if adopted widely, would transform America’s energy landscape and benefit millions of low- to moderate-income families.

As the video explains, a utility using the program would pay the upfront cost for home energy efficiency improvements, like weatherizing or upgrading heating/cooling systems, and the customer repays the cost over time. But here’s where on-bill financing, particularly the Pay As You Save® (PAYS) model, gets interesting.

Five main benefits

• Families immediately benefit from having a more comfortable, healthy and valuable home. A recent survey by the National Association of Home Builders shows that buyers want energy efficient homes.
• 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.
• 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.
• 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.
• Energy efficiency is the cleanest source of energy. Using less energy reduces our reliance on fossil fuels, helping protect clean water, clean air, forests and farms, and will help lessen the impacts of climate change.

But wait, there’s more. PAYS® is an inclusive program because it’s accessible to virtually everyone. It’s debt-free — the financing is tied to the property, not the resident, so renters can participate. And it doesn’t rely on traditional credit scores, so anyone who has a good history of paying their energy bill on time can participate. It’s these innovations that allow the program to serve low- to middle income households particularly well.

Rural electric co-ops leading the way

As nonprofit, member-owned entities, electric co-ops are especially positioned to provide on-bill financing programs. There are currently 13 electric co-ops — 12 in the Southeast and one in Kansas — investing millions of dollars a year through a PAYS-type program, and that could grow to 19 in the near future. (By comparison, not a single investor-owned utility is offering PAYS®, although there’s no reason they couldn’t). The co-op programs are lowering energy use for participating members by as much as 30 percent, and lowering energy bills by hundreds of dollars a year for most homes.

This is just the beginning. Investment potential for residential energy efficiency in the U.S. reaches into the billions, much of that in rural areas served by co-ops. Here’s one example: a recent needs assessment by Appalachian Voices found that 4,400 households are living in poverty and could immediately benefit from PAYS in the French Broad Electric Membership Corp. service area in Western North Carolina. With about 840 electric co-ops across the U.S., millions of low- and moderate-income residents stand to benefit from a PAYS® program, generating tens of billions of dollars in investment for rural areas.

Our hope is that the video released today helps kick-start more conversations about how PAYS® on-bill financing works, and how utilities can provide this service for their customers.

Share the video — help spread the word.

If you would like to learn more about inclusive on-bill financing for energy efficiency improvements, or how to advocate for such a program in your community and with your electric utility, please email Rory McIlmoil at rory@appvoices.org or call (828) 262-1500.