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Archive for Monday, September 27, 2010

Westar proposal may energize loan program

Homeowners seek simpler way to get money for efficiency upgrades

The "Dome Home" in east Lawrence was designed to be energy efficient, and uses florescent light bulbs throughout for added savings.

The "Dome Home" in east Lawrence was designed to be energy efficient, and uses florescent light bulbs throughout for added savings.

September 27, 2010

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Energy program seeing limited use

A multi-million dollar energy program in the state has not been getting as much use from residents as thought. The program provides some funding for home improvements that increase energy efficiency. Enlarge video

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.”

Comments

Richard Heckler 4 years, 2 months ago

For a $240, one-time charge = interest or a tax

MartinT 4 years, 2 months ago

Merrill, Good God ! Why must something exta be bogus if it doesn't come free? Why the assumption that a $240 service charge is too much to pay for Westar underwrite and manage what is essentially an interest free loan of several thousand dollars for 10 years or more? And it's a loan you're invited to walk away from when you move. On top of that, the requirement is that the loan doesn't fly unless the extra cost to the homeowner via added meter payments is offset by energy cost savings that are equal to or greater than the added cost. This should be a no-brainer.

BTW, I also take issue with the characterization reportedly made by David Spring, consumer counsel for the Citizen's Utility Ratepayer Board. He is reported to describe the $240 as a charge to cover the lost revenue from lower energy use. If he did say that, I question his political motives for raising hackles with such an apparently misleading and unfair claim. Believe me, we all lose if that kind of cynical rhetoric prejudices us against such a potentially transformative program under which we ALL can gain.

The biggest problem regarding this issue seems to be low public confidence in Kansas officials and goofy management of the Efficiency Kansas program to date. These are valid reasons for us to remain informed, thoughtful and vocal.

Bill Griffith 4 years, 2 months ago

I agree with your first paragraph MT, except that the 240 dollars does look quite a bit like a loss recovery gambit. But if it were changed to some type of shared savings with the customer base and have accelerated compensation to the utility for their ee efforts instead of the 18 month lag that they have not-it could be much more palpable.

I don't think Springe is being political-he is just being Dave the economist and CURB representative. This can be a great program if some tweaking is done to it. I am ready to roll when it gets approved and call an energy auditor.

local_vocal 4 years, 2 months ago

$240 for a one time intrest free loan? That is better than the the 4% 2nd mortgage the bank was requiring when I inquired. The money is given to the "lender" ie (bank or utility) intrest free. The stipulation was that they could not charge more than 4%. Most banks are maxing out their profit potential, where a simple $240 fee for "processing a physical location loan" does not seem unreasonable. I hope many utilities jump on ship and assist some "not so wealthy" to get a $5000-7000 upgrade done to their homes. Slum lords should be backing this.

Mark Zwahl 4 years, 2 months ago

They have $38 million and have only used $386,000 on 58 participants? In nearly a year? And yet, the program manager calls this a success? Of course he does. He's been working and getting paid regardless of the outcome. Meanwhile, no real new jobs have been created, a jillion tons of coal have been cooked up, and no homeowners saved any money. Government programs are a burden on us when they're run like this.

goodcitizen 4 years, 2 months ago

If you read in the article the problem is they DIDN'T want it to be a "government program" (why this is a dirty word I dunno---people seem to like their govt roads and govt military, and govt health dept, and I have had nothing but a good experience with my govt student loan (Direct Loan prog)). So they have been waiting for business to step up---Now Westar has held back long enough to have time for their lawyers to figure out how to belly up to the trough, so they are ready to step in and take advantage.

Bill Griffith 4 years, 2 months ago

Good Point and Westar is still being greedy with a program that has promise by attempting to recover money for the lower sales. Way to continue your greedy ways Darkstar.

poolside 4 years, 2 months ago

They need to dump this money into the state weatherization programs, that are run by the counties, that currently have wait lists of pre qualified families.

Bill Griffith 4 years, 2 months ago

Sounds good, but those programs are backed up a mile as it is and this would just make it much worse. One of my acquaintances has been waiting over 8 months just to get the audit done.

Moderateguy 4 years, 2 months ago

Yet another example of the complete insanity and waste of "Porkulus." If you own a home and need new windows, guess what? You should go buy them with your own damn money or get a loan. Don't use my daughters future to pay for it.

This is absolutely not the role of government.

They should just cancel the program and not spend the rest of the money. Then again, I'm sure it's working well in "gimme gimme California." They are masters at spending federal dollars.

Alceste 4 years, 2 months ago

It's all about generating cash flow for the "energy auditors" who seemingly are in bed with the utility companies. These "auditors" simply aren't making any money as they dreamt they would be; see that pile of dough up in Topeka, and want at it. Plain and simple, really.

Too, that guy with Efficiency Kansas, Ryan Freed ( r.freed@kcc.ks.gov )....he's just in a state of Kansas cakewalk job through the Kansas Corporation Commission. I will bet money that is an UNclassified job obtained through cronyism. Heck even if it's a classifed job, still obtained through cronyism. With a "track record" such as the one being exhibted by this program, you'd think somebody would be in "hot water." Wait....this is Kansas....'scuse me....I forgot for a second....http://www.kcc.state.ks.us/energy/staff.htm

Bill Griffith 4 years, 2 months ago

The State Energy Office recruited people to train to be auditors-they are not in bed with the utilities. However, it will take KCPL and Westar getting their tariffs approved in order for this program to take off. From what I hear the KCC staff is NOT pleased that Westar wants to recover lost sales due to efficiency gains.

Centerville 4 years, 2 months ago

This is Commissioner Harkin's baby. He insisted that the programs be structured this way. He kept insisting when the problems became obvious. It looks like Westar has been forced into taking another hit for this incompetent administration. 35 days.

sciencegeek 4 years, 2 months ago

Supposedly, Westar is also going to request a rate increase to make up for revenue lost because ratepayers didn't use as much power after making changes for energy efficiency.

jafs 4 years, 2 months ago

Yes.

And they're also requesting that customers who didn't get the loans or the improvements pay a higher rate.

It's a perfect example of why utility companies shouldn't be administering the programs- they have a built-in conflict of interest - if people use less energy, they make less money.

If you don't like the proposal, call the KCC and tell them.

Bill Griffith 4 years, 2 months ago

The actual ee program design is good but their should be an incentive for the utilities to hit a certain mark or they get penalized like the real world outside of corporate-monopoly land.

jafs 4 years, 2 months ago

I disagree.

When individuals invest in energy efficiency improvements or conservation, they benefit by lowering their utility bills.

Allowing Westar to simply charge higher rates defeats that, which isn't a good thing.

Bill Griffith 4 years, 2 months ago

What I am speaking to is the ee program this is based on which the loan is tied to the electric meter and has proven to be a success in different places in the country-most closely in Midwest Energy's territory. I am not speaking about Westar being allowed to get a cost recovery for lost sales-that is a poor precedent.

Bill Griffith 4 years, 2 months ago

KCC staff has already came out against that line of thought. Of course, the commissioners are the final deciders...

Alceste 4 years, 2 months ago

Remember.......this is KANSAS....it don't work like this in other states whose populace do more than "take it".....we like to be hillbillies and take it from Mr. Charley. We like bible thumping and ignorance. We deserve everything we get.....

PS: Contact Westar and listen to the babble they give ya.....about how the electric rates in Kansas are some of the lowest in the nation and they NEED to raise rates.....the woman is funny as all get out....acts like Westar is broke! http://www.eia.doe.gov/energyexplained/index.cfm?page=electricity_factors_affecting_prices

Take your pick....the nonsense will all be the same: http://www.westarenergy.com/wcm.nsf/content/efficiencyworks%20contacts

Charlie Bannister 4 years, 2 months ago

Typical of anything the government gets involved in. They screw up everything they touch. This is an ongoing nightmare that is the Obama administration. Come on November 2nd!!!!!

Bill Griffith 4 years, 2 months ago

Apollo Program, Interstate Highway System, Atomic Energy, Social Security, Clean Water Act, Clean Air Act, Removal of Lead from paint and gasoline........etc.

Alceste 4 years, 2 months ago

kosmo513....it has nothing to do with the Obama Administration. Each state was allocated monies and each state was given Carte Blanche in how to use these monies. This problem is a 100% Kansas problem.

Time and time and time again, we are subjected to the same bankrupt thinking the "big boys" in Topeka deliver. They change seats like musical chairs, but it's the same group of Tweedle Dees and Tweedle Dums who get appointed to the "thinking jobs". Here alone is the "bio" on this Commissioner Harkins:

"Harkins has served in a variety of regulatory and public policy capacities throughout his career in state government. Most recently, he has served as director of the Kansas Energy Office at the KCC, and was special assistant and energy advisor to Governor Sebelius from 2003 to 2006. In addition, Harkins has held the positions of secretary of the Kansas Department of Health and Environment, director of the State Water Office and director of the University of Kansas Public Management Center.

"Harkins has spent his professional career in public service as a cabinet secretary, educator and expert in issues including health care, energy and water policy. He spent more than a decade training the next generation of public administrators."

http://www.kcc.state.ks.us/about/harkins.htm

Ok...I give up....what on earth does energy have to do with KDHE or water for that matter? Nowhere in that bio does it state what the guy has DONE...only where he's been.

These politc people just get one free lunch after another. They give 'em back and forth to each other.....kinda sorta like how past Gov. Hayden ended up at Kansas Wildlife and Parks Department as but one simple example.

Kontum1972 4 years, 2 months ago

gee whiz whip up a new favor for us consumers....

obtw...how much are those new meters going to cost us..in some sort of hidden fee...?

Centerville 4 years, 2 months ago

The KCC will approve this Westar request, as it has the past six requests, because Westar keeps pulling their political fat out of the fire. It started with Sebelius' wind energy stunt, continues through the transmission debacle and now the problems with the stimulus money. Right now, Westar is the KCC's Mr. Wolf. He "fixes things'. And gets paid well to do it.

Bill Griffith 4 years, 2 months ago

Can you give specific examples of this? Because on the transmission issue Westar did not get what they wanted.

Bill Griffith 4 years, 2 months ago

Good. Because this program does nothing of the sort.

Bill Griffith 4 years, 2 months ago

I am in Westar's territory and I have not gotten any of these calls. As far as owing the utility under the Efficiency Kansas program if you move the loan does not travel with you.

kansasmutt 4 years, 2 months ago

For every penney you save on your bill with Weststar , they raise rates 2 to 3 times that amount. It is BS to go green. I have done it and all it did was cost me to make the changes and my bills gone up every month. My usage is way way down and my bills just go up and up and up. The only way to do it right is buy a wind turbin and disconect from weststar.

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