Archive for Tuesday, February 15, 2011

Westar Energy offering revolving loan program to improve energy efficiency in homes

February 15, 2011


Efficiency Kansas

Participation in Efficiency Kansas, which includes a revolving loan program and a home energy audit, is among the categories where Lawrence and Manhattan residents are competing against each other in the Take Charge Challenge.

The competition, which runs until fall, will see which town can save the most energy.

“This is a really important part of the challenge that Lawrence residents should look at doing if they want to help us win … and if they want to save money,” said the Lawrence Take Charge Challenge coordinator Margaret Tran.

As of now, Manhattan is in the lead.

For residents interested in participating in Efficiency Kansas through Westar Energy, an open house will be held in Topeka from 4 p.m. to 8 p.m. Feb. 21 at the Capitol Plaza Hotel, 1717 SW Topeka Blvd. The open house will be in the hotel’s Emerald Ballroom.

Since November, Jessi Asmussen and her husband have had a to-do list of energy efficient upgrades for their drafty 100-year-old Lawrence home.

But before they could cross anything off the list, the couple was waiting on the Kansas Corporation Commission to grant approval to Westar Energy so the utility could participate in its $38 million revolving loan program.

Earlier this month, Westar Energy announced that the KCC did just that, allowing Asmussen and hundreds of other Westar customer to take out a loan so they could make upgrades to improve their home's energy efficiency. Customers would then pay off that loan through their utility bill.

The revolving loan is part of a state program known as Efficiency Kansas, which is funded through federal stimulus dollars. When the program began more than a year ago, the intent was to reach thousands of homeowners.

So far, just 180 people have taken advantage of the state loan program.

Until now, the loans were with smaller utility companies or through banks. Those bank loans, which came with a 4 percent interest rate, often required homeowners to take out a second mortgage, have a high credit score and 20 percent or more equity in their home.

The agreement with the KCC will allow Westar customers to repay their loans through monthly installments on their Westar utility bill. Westar will use a customer's payment history when deciding whether to issue a loan.

“Utilities have a high level of confidence that customers will be able to pay on time and in full,” KCC spokeswoman Cara Sloan-Ramos said.

Before homeowners can receive a loan they must pay for a home-energy audit, which is being offered at a highly reduced cost of $100.

So far, 300 Westar customers have gone through the energy audit. And, many were like Asmussen, waiting for Westar’s loan program before making the fixes recommended in the audit.

According to an audit done last fall, Asmussen’s home first needed to have the windows sealed to keep cold air from coming inside and then the attic and exterior outlets need to be better insulated. Asmussen also hopes to replace the air conditioner.

To help cover the cost of the upgrades, the couple are taking out a $4,824 loan through Westar.

“Added to your utility bill, it becomes a very manageable bill,” Asmussen said.

Westar's loan does come with restrictions.

• Homeowners can't take out loans of more than $20,000, and small businesses can't have loans of more than $30,000.

• Customers must have had Westar service for at least 12 months at the same address.

• Applicants must be current on their bill and must not be on a payment agreement or had their service disconnected in the past 12 months.

• The loan must be paid off over 15 years.

• The loan comes with a $250 administrative fee from Westar and a monthly $2 charge from Efficiency Kansas.

• If the homeowner or tenant changes while the loan is being repaid, the debt obligation must be disclosed in writing and transferred to the new homeowner or tenant.

The program could come at a cost to other Westar customers. According to the agreement with the KCC, any of the lost revenue Westar has as a result of the energy conservation through the Efficiency Kansas program will be recovered through increasing utility bills. The KCC approved Westar's loan program for a four-year pilot period.


parrothead8 7 years, 4 months ago

"According to the agreement with the KCC, any of the lost revenue Westar has as a result of the energy conservation through the Efficiency Kansas program will be recovered through increasing utility bills."

So if I take out a loan and have work done to increase the energy-efficiency of my home, Westar will then raise my rates to make sure they're still making the same amount of money off me as they used to? Or will they just raise other people's rates...the ones who don't have work done? This makes no sense to me. Westar wants us to save energy so they can save billions by not having to build more power plants, but they want to charge us the same amount for using less energy? God, I wish I had the money to go solar. Or any other source of energy besides Westar.

Bill Griffith 7 years, 4 months ago

If you have work done to your home you will most likely come out ahead in the wallet. The energy saved should more than offset any rate recovery the KCC allows. That being said, look for a future docket where Westar is granted a rider or something like it to recover its lost revenue. I don't think a utility should recover all of the lost revenue if it is also getting a front-end payment as Westar is in this program-but a utility needs a carrot in order to do energy efficiency correctly and this is a good program its just that Westar is getting paid a bit more than I think they should to be involved in it. Disclosure: I am having some of my rental properties done under this program.

jafs 7 years, 4 months ago

It is not a good program, in that it punishes those who choose to conserve energy and/or make upgrades on their own.

One of the reasons people do that is to save money.

I will call the KCC and express my displeasure with this provision - I called them before the decision was made and gave them the same feedback.

LadyJ 7 years, 4 months ago

If it is a rental property, why can't the owner make the payment on their bill?

Bill Griffith 7 years, 4 months ago

The loan is tied to the meter at the property address. The only way that would occur is if the owner pays the utility bill normally.

Mike Edson 7 years, 4 months ago

After reading the press release on the Westar website, and the accompanying LJW article, I am angered by this program. As a renter, I do not want the cost of energy efficient upgrades on my utility bill. Not to mention that it seems the only one who will benefit from this will be Westar. I will not be responsible for another person's loan agreement. I see this as when someone you barley know asks you to co-sign on a car loan. This is why I rent and not own a house. The payment responsibility should fall on the landlord not the tenant. The thought that the "loan payment" must be passed on from tenant to tenant as they move in and out of the rental is ridiculous. So if a tenant moves out, a letter disclosing the debt has to be drawn up and given to the next tenant. So would a landlord tell the future tenant about this loan payment before or after they sign the lease? Even if I owned a home I would still be leery of this program. I want to see the increased energy efficiency of my home by having lower utility bills. No point in doing if it doesn't save you money.

LadyJ 7 years, 4 months ago

I would assume the landlord would deduct that amount from the rent, but who knows. What if the tenant skips out on the bill and leaves two months electric bill unpaid and they are never able to collect? How many tenants have a 12 month unblemished payment history? What if the rental unit sits empty for a few months and the electricity is off? Some things make no sense.

Bill Griffith 7 years, 4 months ago

LadyJ, the article does leave out important information. The owner has to have a Revert-To-Owner agreement with Westar where the electricity automatically is put in their name when the unit sits empty and the landlord is responsible for the utility bill. If the tenant skips, then as usual Westar is on the hook for the bill. The advantage from a tenant/owner's perspective is that Westar does not do a credit check on the tenant. Personal experience shows that I have had two tenants turned down due to the fact they owe the utility money and three that have qualified.

Bill Griffith 7 years, 4 months ago

Edson, you have a couple of reasonable misconceptions. First, the tenant is guaranteed savings on their utility bill over what it was the previous year so there is built-in savings for the tenant. Westar keeps a portion of the savings to recoup the investment in the house's upgrades. The landlord must have a new tenant sign a form acknowledging the program and have it sent to Westar. There is sophisticated software that will show the state and Westar that the improvements to be made will save a substantial amount of money over a 15 year period. The advantage to a landlord is he/she now has an incentive to upgrade a home's comfort where before there was very little reason to do this. This is the most effective program of ee upgrades for rental property in the U.S. (not Westar's per se,) but the upgrades tied to a loan on the utility bill.

jafs 7 years, 4 months ago

Why should a tenant pay for the loan to the landlord to improve their property?

At the very least, it seems to me that any tenants who would be responsible for that should have to agree to it in writing prior to the investments taking place.

Ken Lassman 7 years, 4 months ago

OK, the landlord doesn't participate in the program but instead raises the rent to either take out a loan or directly pull together the money to make the energy efficiency improvements that will save the tenant's utility bills. What's the difference? This just seems to me to be an innovative way to finance the improvements that should be done anyway.

And like I said in a Smart Meter discussion, the rates are going to go up regardless. Invest in renewables? Rates go up. Invest in coal plant? Rates go up. Invest in retrofitting existing coal plant? Rates go up. Invest in energy efficiency in order to avoid the cost of a new power plant? Rates go up. Welcome to reality.

jafs 7 years, 4 months ago

  1. If Westar simply raises rates to ensure revenue, the tenant will not see much, if any savings, on the electric bill.

  2. Conservation lowers usage without investing in expensive new equipment, and would lower one's utility bill as well.

The best thing for all of us to do, in my opinion, is simply lower our usage, which we can do easily and without spending any money. And, without this sort of program, our rates wouldn't rise either, so we would save money.

One mechanism that is obvious and helpful is the fact that we pay more when we use more - the idea of these programs that even those of us who use less will pay more is counter-intuitive at best.

Ken Lassman 7 years, 4 months ago

Alas, read my last post and welcome to reality. Why do you think that rate hikes will stop considering the record? Here are KS residential rates from 1990 to 2009 from the Energy Information Administration: Residential Price
(Cents per kilowatthour) 7.83 7.83 7.90 7.86 7.89 7.92 7.86 7.71 7.65 7.64 7.65 7.66 7.67 7.71 7.74 7.90 8.25 8.19 8.88 9.53 So you're right: the best thing to do is simply to lower the usage, and you might be able to at least tread water!

Bill Griffith 7 years, 4 months ago

Number one sounds correct but has flaws. The rate increases have been small and will continue to be small based on Westar's power needs out to 2025. Two of the houses I am having done will probably shave 1500 dollars off of the heating bill. If the total cost of the work per house is 3000 dollars divided by 180 months = 17 bucks per month Westar will hold back on the SAVINGS. The tenant will save a chunk. Obviously, the program works best in the worst houses and does the least good in the best houses. But it does provide widespread market penetration potential to the rental market where decision-making is different than in owner-occupied homes. .

Bill Griffith 7 years, 4 months ago

The tenant has to agree to it in writing prior to the investments taking place. Remember the tenants are guaranteed energy savings over the same period the year before due to the upgrades. They SAVE money.

eaglar 7 years, 4 months ago

You don't have to take out a loan. A hundred bucks for an energy audit is a good deal, and you could learn a lot about what you need to do to make your home more energy effiecient. That information would be invaluable for most of us.

Mike Edson 7 years, 4 months ago

Did anyone else notice that this article just got buried on the back page? Westar must be trying to control bad press.

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