THERMAL EFFICIENCY TASK FORCE – FINANCE & FUNDING SUBCOMMITTEE FINANCE & FUNDING SUBCOMMITTEE HOUSE NATURAL RESOURCES & ENERGY HOUSE NATURAL RESOURCES & ENERGY January 24, 2013 Richard Faesy, Energy Futures Group
Overview Overview of committee scope & participants Overview of committee scope & participants 1 1. Current situation 2. Costs to meet the goals Costs to meet the goals 3 3. How we will get there 4. Financing Options Financing Options Funding Options Benefits Benefits 5 5. Q&A 6.
Subcommittee Charge g 3 Develop estimates of the levels of financing and Develop estimates of the levels of financing and funding, and identify financing mechanisms and sources of funding needed to achieve specified sources of funding needed to achieve specified statutory and Comprehensive Energy Plan thermal efficiency goals for defined market segments under various scenarios.
F&F Subcommittee Participants p 4 Richard Faesy Energy Futures Group (Chair) Ed Delhagen Ed D lh Vermont Dept. of Public Service (Staff) V t D t f P bli S i (St ff) Andrea Colnes Energy Action Network Ben Walsh Vermont Public Interest Research Group Chris Burns Burlington Electric Department Chris D'Elia Vermont Banker's Association, Inc. Craig Peltier Vermont Housing and Conservation Board Diana Chace Conservation Law Foundation Eileen Simollardes Vermont Gas Gabrielle Stebbins Renewable Energy Vermont Gaye Symington High Meadows Fund George Twigg Efficiency Vermont Gus Seelig g Vermont Housing and Conservation Board g Johanna Miller VECAN, c/o Vt. Natural Resources Council Joseph Bergeron Assn. of Vermont Credit Unions Norm Etkind School Energy Management Program Phil Cecchini Phil Cecchini Central Vermont Community Action Council Central Vermont Community Action Council Sandra Levine Conservation Law Foundation Tom Candon Vermont Department of Banking and Insurance
Current Energy Efficiency Funding gy y g Source Source $/Year $/Year To To VGS Natural Gas $2,200,000 EVT Electricity $40,000,000* Regional Greenhouse Gas $1,500,000 EVT Initiative EVT Forward Capacity Market $3,700,000 LI WAP & LIHEAP Gross Receipts Tax $7,900,000 Clean Energy Development RERC/VEIC $0 Fund Fund Various GMP CEED Fund $21,000,000 ** * Most funding directed to electrical, not thermal efficiency ** $10 mil for WAP , $1.2 mill. for electric, $1.5 mill. for thermal programs in 2013
Current Thermal Efficiency Programs y g 6 Sector Amount Residential – Market $4,395,000 Residential – Low Income $5,360,000 Multifamily Multifamily $1 052 000 $1,052,000 Commercial $1,555,000 Total $12,362,000 Note: Currently $0 for Renewables Energy Service Providers Note: Currently $0 for Renewables, Energy Service Providers, Planning & Measurement, and Cross-Cutting
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Costs to Meet the Goals 8 Category Category 2014 2014 2020 2020 2014 2020 2014-2020 Participant costs (financed and (financed and $ 56 mill. $ 56 mill. $135 mill. $135 mill. $687 mill. $687 mill. self ‐ funded) Currently available $ 12 mill. $13 mill. $89 mill. program funding New program $ 27 mill. $40 mill. $267 mill. funding needed Total Total $ 95 mill $ 95 mill. $188 mill $188 mill. $1 042 bill $1.042 bill.
New Program Funding by Sector 9
New Program Funding by Sector & Year g g y 10
Financing Needs g 11 2014: $56 million R Ramping up to… i 2020: $135 million For a total of… $687 million over the 7 years $687 million over the 7 years
Financing Options for Thermal Efficiency Finance Options for Thermal Efficiency Credit Enhancements Banks & Credit Unions PACE PACE NeighborWorks* g Federal Loan Products Federal Loan Products CDFI’s (FHA, VA, Power Saver) (FHA, VA, Power Saver) VGS* Vendor Financing CEEF VEDA VEDA USDA SBA * Vermont Gas Systems and NeighborWorks of Western Vermont service only limited portions of the state
DRAFT v2 Low (<80% AMI) Moderate High (>120% AMI) (>$81,700) (<$54,500) ($68,100) • Subsidized Loans (e.g., IRBD) • Subsidized Loans (e.g., IRBD) • Subsidized Loans (e.g., IRBD) Residential • Secured Loans • Secured & Unsecured Conventional • Secured & Unsecured Conventional • PACE Program Loans • PACE Program Loans Loans Loans Loans Loans • CDFI Loans • Home Mortgages • Home Mortgages • Vendor Financing (may be limited) • Energy Specific Loans • Energy Specific Loans • PACE Program Loans • PACE Program Loans • Energy Efficient Mortgages • Energy Efficient Mortgages • Power Saver Loans • Power Saver Loans • CDFI Loans • Vendor Financing • Vendor Financing • Credit Enhancements (e.g., LLRs) • Subsidized Loans (e.g., IRBD) • Subsidized Loans (e.g., IRBD) • Subsidized Loans (e.g., IRBD) Multi-Family • Secured Loans • Secured & Unsecured Conventional • Secured & Unsecured Conventional (2+ units; ( ; • CDFI Loans Loans Loans Owners of rental • Vendor Financing (may be limited) • Energy Specific Loans • Energy Specific Loans properties but not • Municipal Revolving Loan Funds • Energy Efficient Mortgages • Energy Efficient Mortgages renters) • Power Saver Loans • Power Saver Loans • Municipal Revolving Loan Funds • Municipal Revolving Loan Funds • CDFI Loans • CDFI Loans • CDFI Loans • CDFI Loans • Vendor Financing • Vendor Financing • Municipal Revolving Loan Funds • Municipal Revolving Loan Funds • Credit Enhancements (e.g., LLRs) • Subsidized Loans (e.g., IRBD) • Commercial Loans • Commercial Loans Commercial • C • Commercial Loans • VEDA L • VEDA Loans & Guarantees • VEDA L • VEDA Loans & Guarantees i l L & G t & G t • VEDA Loans & Guarantees • USDA Loan Guarantee Program • USDA Loan Guarantee Program • USDA Loan Guarantee Program • CDFI Loans • Energy Service Companies • CDFI Loans • SBA Loan Guarantee Program • Vendor Financing • SBA Loan Guarantee Program • Vendor Financing • Leasing • Vendor Financing • Leasing • Municipal Revolving Loan Funds Vendor Financing Leasing Municipal Revolving Loan Funds • Leasing • Municipal Revolving Loan Funds • Private Capital Markets (e.g., tax • Municipal Revolving Loan Funds equity, bonding) (Commercial Size) Small Medium Large
Funding Needs g 14 2014: $27 million R Ramping up to… i 2020: $40 million For a total of… $267 million over the 7 years $267 million over the 7 years
Funding Principles g p 1. Funding is sustainable and sufficient to meet the state’s mandated goals. g g 2. Funding levels are also dynamic to ramp up and down over time as needed. 3. The level of funding balances short ‐ term costs with the benefits of providing 3 Th l l f f di b l h i h h b fi f idi long ‐ term affordability to all Vermonters; mechanisms will be put in place to minimize negative financial impacts on low income Vermonters. 4. Funding source, like program delivery, is equitable across non ‐ electric fuels and by customer classes (residential, commercial, etc.); cross ‐ subsidization between fuels and customer classes is minimized; equitable treatment for ; q in ‐ state and out ‐ of ‐ state fuel providers is addressed. 5. Mechanisms that are administratively efficient to create and implement, simple and auditable are preferred simple, and auditable are preferred.
Funding Principles con’t g p 6. The collection mechanism, sources, and uses of public funding , , p g are transparent. 7. Price signals should support state energy policy goals. 8. Support the vibrancy of Vermont communities and competitiveness of Vermont businesses. 9 Public funding is used in ways that leverage private sources of 9. Public funding is used in ways that leverage private sources of capital where possible, in order to get the best return on each public dollar invested. 10. Public funding is used only to the extent that it is needed to mobilize capital and meet private market shortcomings. 11 P 11. Protect existing stable taxes for the Low Income i i bl f h L I Weatherization Program.
Funding Options g p High Preference Energy Efficiency Excise Tax 1. Tax Credit 2. Medium Preference Medium Preference Gross Receipts Tax (GRT) Increase 3. Remove Sales Tax Exemption 4. Ceiling Mechanism Ceiling Mechanism 5 5. Energy Efficiency Resource Standard (EERS) 6. Low Preference Expand the Energy Efficiency Charge 7. Regional Greenhouse Gas Initiative (RGGI) 8. General Fund 9. Federal Funding 10.
Energy Efficiency Excise Tax gy y 18 Target fuels we want to reduce consumption of: Fuel oil Propane Kerosene Kerosene Natural Gas Not including electricity; already covered Net out VGS efficiency budgets Small difference in terms of whether based on Btus or CO2 CO2 Exempt biomass “Site” not “source” based
Energy Efficiency Excise Tax gy y 19
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