The Dome

Local energy auditors hope a proposal from Westar Energy will help save a fledgling state program that gives loans to homeowners for energy efficiency upgrades.

When the state was awarded $38 million in federal stimulus money last November, it had anticipated reaching several thousand homeowners through a revolving loan program known as Efficiency Kansas.

So, far that hasn’t happened.

Only 58 residents have participated. Their loans have used about $386,000 of the $38 million, which the state has until April 2012 to spend.

Lawrence home energy auditor J.R. Demby, owner of The Demby Group, said he doesn’t think the state has a “chance on this planet” of spending all the money before the deadline.

“Even with the program being drastically changed, if a utility isn’t on board, I don’t care how you parse it, it’s not going to work,” Demby said.

A cumbersome process

Efficiency Kansas allows for homeowners to borrow as much as $20,000 for home improvement projects such as sealing around windows and doors, insulation, heat pumps, new windows and more energy-efficient air conditioners.

Until now, the state has partnered with banks and smaller utilities around the state.

The state hasn’t set any stipulations on how banks lend the money. But local energy auditors said most homeowners either couldn’t qualify or considered the process too cumbersome.

Many of the banks required homeowners to take out a second mortgage, have a high credit score and 20 percent or more equity in their home.

The loans also came with a 4 percent interest rate.

“The overwhelming majority are not going to go out and put a second mortgage on their home to get improvements made, even though the interest rate is 4 percent,” Demby said.

So far, Demby has done 11 audits for homeowners who said they want to move forward, but won’t sign up for a loan until a utility comes on board.

Despite a couple dozen inquiries about the program, Ryan Grimm, who owns Essential Inspections, said he hasn’t had any homeowners take out a loan.

“It’s a great program. It’s just a lack of exposure and a lack of mobility. Most clients can’t foresee going forward and securing a second mortgage,” said Grimm, whose business is about 50 percent home energy audits.

Grimm also said many of his customers were unaware of the stipulations made under the loan.

Before they can borrow money, homeowners have to first do an energy audit, which prioritizes improvements based on what would be the most cost-effective. For homeowners to get the loan, they must do what’s first on the list.

Many people entered the program thinking they could buy new windows, but then learned that windows were far down on the list of cost-effective improvements.

“A lot of clients still have in their head that windows save money, but putting in windows is not going to save the most money,” Grimm said.

Still a success

Efficiency Kansas programs manager Ryan Freed considers the program a success.

“While we may not have as many loans as we had hoped, we have definitely created a great opportunity for Kansans to create a business and create a sustainable opportunity for themselves,” he said.

Fewer than six official jobs have been created under the funding. But Freed notes the state now has 78 certified energy auditors; it previously had 10.

In the last month, Efficiency Kansas has introduced two new programs. Kansans can receive an energy audit worth $500 to $600 for just $100. The program will also provide a $500 rebate toward the cost of any improvement to the home’s thermal envelope. Both programs are limited to the first 1,500 participants.

Freed admitted there have been bumps along the way, but said the state wanted to be sure not to create a government program.

“Our ultimate goal is to give this program over to the private sector. So it took some working and negotiating with the members of the lending community and the utility companies and the auditors and different contractors out there to figure out how we can best position them to get this program up and running,” Freed said.

Westar’s proposal

If approved, Westar’s proposal to partner with Efficiency Kansas, would make it the first major utility in the state to do so.

Last week, Westar held a public hearing on its plans, which the Kansas Corporation Commission has to sign off on.

For a $240, one-time charge, consumers would be able to take out a loan through Westar and repay it through their energy bill. Westar wouldn’t charge interest and if the house sold, the new occupants would make payments on the loan through their energy bill.

To qualify, residents would have to have paid their energy bill on time for the previous 12 months.

Grimm thinks that loan program won’t take off until large utilities are involved and noted that smaller rural utilities have had good results with the program.

“It’s much easier to financially qualify and a lot more appealing than the bank track, no doubting that,” Grimm said.

Not everyone is so supportive of the plan. David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board, doesn’t have a problem with Westar partnering with the state. But he doesn’t like the fact that Westar wants its customers to cover the lost revenue from lower energy usage because of the home upgrades.

Demby, however, thinks this might be the only chance for the program to succeed.

“I have argued unbelievably with an incredible number of people around the state trying to identify and discuss things that I thought were a problem with the program,” Demby said. “I think this is as close as it is ever going to get to finally showing some fruit of life.”