What Are Inclusive Utility Investments? (An RPC Explainer)
Rural Americans spend as much as 40% more on energy than their urban counterparts, and that disparity is even more glaring when you consider income. Even as rural electric cooperatives (RECs) seek record-breaking numbers of clean energy investments, their member-owners (customers) still face tremendous needs for energy efficiency upgrades. Member-owners also face increases in extreme weather events that require their RECs to bolster local resiliency. The Rural Power Coalition recommends inclusive utility investments based on the Pay As You Save® (PAYS®) system as a direct response to both necessities.
What are inclusive utility investments?
In an inclusive utility investment program, a utility provides capital to pay for energy efficiency upgrades at a member-owner’s home, farm, or business and recovers its costs through a charge on the customer’s utility bill. With inclusive utility investment, utilities can treat cost-effective building energy upgrades as part of the essential services they deliver and bring the benefits of lower energy costs and good local jobs home to the entire membership.
How do inclusive utility investments work?
To make an inclusive utility investment, the utility assesses the energy savings potential of the building rather than the customer’s financial liquidity or creditworthiness. This makes home energy upgrades accessible to customers in sound housing without credit checks, property ownership, or debt obligation.
The customer is then offered their choice of cost-effective upgrades. The utility covers the upfront cost of all selected upgrades (i.e. insulation, HVAC, air sealing, on-site solar, EV charger, etc.) and recovers those costs of upgrades with the energy savings over time through a monthly charge that is less than the estimated savings from the upgrade. Until the investment is recovered, the monthly charge can automatically shift to future customers at that site – it does not move with the customer.
How do we fund inclusive utility investments?
Capital for these inclusive utility investments is readily available on excellent terms. The Rural Energy Savings Program (RESP) provides 0% financing to RECs, and multiple electric cooperatives have used RESP to make inclusive utility investments.
How do inclusive utility investments benefit my community?
Deployed at scale, inclusive utility investments make buildings healthier and more resilient, create well-paying jobs that can never be outsourced, and generate long-term savings that drive community economic development.
Has this been done before? (IUI success stories)
HELP PAYS, Ouachita Electric Cooperative, Arkansas
Ouachita Energy Cooperative invested almost $3 million in upgrades to local member homes in the first year, including both renters and homeowners. With weatherization and HVAC, they’ve seen an 18% reduction in demand across all the participating members (with some as high as 30-40%). In the cases where they have also added solar, the savings has increased up to 70-80%. And for every residential project completed, they’re seeing a 1.5 to 2 KW reduction for peak demand on average, helping save all members money.. Four years after beginning the HELP PAYS program, and investing in solar at a commercial customer site, OEC implemented a 4.5% rate decrease for residential members. (source)
Upgrade To $ave, Roanoke Electric Cooperative, North Carolina
The program has enrolled more than 10% of the utility’s residential customer base, approximately half of which require repairs before a full upgrade. Over the lifetime of the upgrades, the estimated net present value to the utility of the upgrades installed to date is $3,047 per home and $1 million for the program. (source)
How$mart, Midwest Energy, Kansas
Between 2008 and 2021, the program has invested more than $14M in 2475 retrofits, reaching more than 8% of membership, with a cost recovery rate of 99.9%. (source)
Other Programs:
U-Save Advantage, Appalachian Electric Coop, Tennessee
SmartSTART®, New Hampshire Electric Cooperative
Vividly Brighter Upgrades, Rappahannock Electric Cooperative, Virginia
Dive into these resources for more information on inclusive utility investments:
Introduction to Inclusive Utility Investment (Clean Energy Works)
Bridging the Gap: Ensuring Access to Energy Efficiency For All (Dr. Tony Reams, Deputy Director for Energy Justice at U.S. Department of Energy)
Inclusive Utility Investment webpage (EPA/ENERGY STAR)
Utility Benefits of PAYS® (Eetility)
Inclusive utility investments: tariffed on-bill programs (EPA Toolkit for Decision makers)
2022 PAYS® Status Update (Energy Efficiency Institute)
Summary statistics and program features from all PAYS® programs.
PAYS® Essential Elements and Minimum Program Requirements (Energy Efficiency Institute)
Model PAYS® tariffs for IOUs/munis and co-ops (Energy Efficiency Institute)
A downloadable PDF of this explainer is available here: https://drive.google.com/file/d/1UAgyIRtiCxkwfoQjv-wVjYFEbBu8Xi0s/view?usp=sharing