Public Utility Commission orders on-bill program to finance clean energy
Last Friday evening, February 1, the Hawaii Public Utilities Commission (PUC) issued a landmark decision and order to create an on-bill program, very much in line with EDF’s recommendations for on-bill repayment (OBR), that will provide access to low-cost financing for solar and energy efficiency projects for homeowners and small businesses. This decision comes 18 months after the State passed legislation directing the PUC to investigate an on-bill program and authorized the Commission to implement the program (by decision and order or by rules) if the on-bill program was found to be viable.
The PUC decision determined that a statewide on-bill program is viable, and specified program design criteria that the Commission deems necessary to achieve viability. EDF has been working to shape the proposal with key stakeholders including environmental groups, lenders and the Hawaii State Energy Office.
The specified criteria include the following components that EDF believes are critical for achieving both success and scale:
- bill neutrality (project savings exceed financing payment obligations)
- tariff-based obligation
- tariff is tied to the utility meter and therefore transferable
- standard collection procedures, including disconnection for non-payment of OBR obligation
- pro-rata allocation of partial payments
Since the terminology can be confusing, it is worth noting that this is not a typical ratepayer-funded on-bill finance program, despite having the same designation. The Hawaii program leverages private capital, and the PUC supports participation by multiple sources of capital rather than a single financing entity. EDF believes both of these elements are critical to scaling the program and meeting the needs of a diverse set of property owners.
The Commission recognizes that ‘one of the appealing aspects of on-bill financing is that it may make renewable energy and energy efficiency more accessible to the rental and other underserved markets.’ Tying the obligation to the utility meter allows renters to access the on-bill program, and enables transferability of the payment obligation to subsequent meter owners.
Some issues are left unresolved and will be addressed through the establishment of a working group for the on-bill program, which will be tasked with further developing program details and making recommendations to the Commission. EDF plans to work closely with key stakeholders to make this program a success.
Hawaii stands to benefit tremendously from an on-bill program, which will expand access to relatively affordable energy. The state relies on petroleum to generate over 75 percent of its electricity, while retail electric prices are the highest (and have experienced the highest grown rate over the last 10 years) in the nation at 37 cents/kWh. For perspective, a residential solar installation can offer customers electricity at about 24 cents/kWh.
Furthermore, homeowners with less than sterling credit, however, are often unable to qualify for the financing of a solar project. Hawaii’s program is expected to greatly expand eligibility for financing, enabling these customers to achieve significant utility bill savings, and making clean energy a clear environmental and economic winner for Hawaii. Mahalo to the Hawaii PUC.