On-bill Financing Would Make Clean Energy Accessible to Everyone
Rising oil prices have all of us looking for real solutions to reduce the increasing burden of energy bills. Hawai鈥榠鈥檚 crippling addiction to foreign fuel means every uptick in the price of oil sends more of our limited dollars out of state 鈥 money that could spur the economy, pay down our mortgages or educate our keiki. Relief could come in the form of 鈥渙n-bill financing,鈥 an innovative program that would enable residents statewide to choose affordable clean energy solutions. Lawmakers should embrace the chance to pass this policy right now through House Bill 1520.
On-bill financing eliminates the initial cost of solar or energy-efficient appliances, allowing you to purchase them over time with the money you save by using less power. The payment appears as a line item on your electricity bill (hence, 鈥渙n-bill financing鈥). The program may be structured to ensure that your next bill is lower than your current bill 鈥 even as you pay off your purchase. It seems too good to be true, but it鈥檚 simply leveraging the 鈥渆fficiency鈥 in energy efficiency.
House Bill 1520 removes two major hurdles to participation: cost and complexity. Many folks who want to adopt clean energy don鈥檛 have an extra few thousand extra dollars to purchase a solar water heater or upgrade their old appliances. The existing sea of financing options, cluttered with differing terms and interest rates requires credit checks and considerable effort to navigate. On-bill streamlines this process, removing the guesswork and applying the payment directly to the reduced electric bill. The financing is worked out between the program administrator and a local bank, removing the customer鈥檚 burden of negotiating the transaction.
Think about it this way. How many people would pay $2,400 for an iPhone? Probably not many. Mobile service providers realize this. They provide a discounted phone and require customers to sign a multi-year contract鈥攕preading out usage payments instead of requiring it all upfront. Similarly, if the electric company required payment for 10 years of power upfront ($22,000 for most families), who would be able to afford electricity? Yet that鈥檚 what the current system requires of residents who want to purchase clean energy. If we want to achieve energy self-sufficiency, we need to stop getting in our own way and make it easy to do the right thing.
On-bill financing is advantageous for another reason. Currently, renters have little incentive to install energy efficiency upgrades, since they can鈥檛 take them with them. Landlords, likewise, don鈥檛 have as much interest in saving energy because they鈥檙e not paying the bill. By attaching the purchase to the bill, on-bill financing pairs the cost with the benefit. No other program directly solves this challenging issue of split incentives.
House Bill 1520 has broad support across our state, from the Governor to the solar industry to residents who want to do their part to help Hawai鈥榠 get off oil. On-bill financing was, in fact, part of the Hawaii Clean Energy Initiative agreement signed by the State and Hawaiian Electric in 2008. The Department of Energy鈥檚 Hawai鈥榠 leader at the time, Bill Parks, said that on-bill financing 鈥渨ill be critical to realize (Hawai鈥榠鈥檚 clean energy) goals.鈥
In spite of the overwhelming benefits and extreme practicality of this policy, some key decision makers are balking, citing vague concerns about on-bill financing鈥檚 鈥渃ost-effectiveness.鈥 Yes, developing the program will require some sleeve-uprolling and changes to billing administration. But for every resident that reaps the benefits of clean energy through on-bill financing, the program is far more cost-effective than the alternative 鈥 continue draining our wallets every month for ever-pricier oil-generated power.
On-bill financing is not a panacea, but it would be another tool in the toolbox that enables everyday folks to make smart energy choices. At a time when residents really feel the sharp pinch of Hawai鈥榠鈥檚 addiction to oil, it would be tremendously short-sighted for legislators to reject this smart, sensible policy.
On-bill financing is currently proposed in . The measure is pending before a joint House-Senate committee that must act by Wednesday, April 27. Find out more about the measure at .
About the author: Jeff Mikulina is Executive Director of the Blue Planet Foundation.
