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What is On-Bill Financing?

Here’s a new way to finance qualified home energy improvements between $3,000 and $25,000 at 2.99% interest for terms up to 15 years in length.

While this winter has been milder than last, the price per gallon for heating oil has been climbing steadily. Looking ahead, electric rates will go up about five percent in April for most of us due to an increase the Public Service Commission approved two years ago.

So, now is a great time to tune up your home before the summer air conditioning season arrives and while this winter may still pack some arctic punch.

Weatherizing a home well typically includes air-sealing the basement and rim joists in the attic by hiring a certified contractor.  Energy upgrade costs for homes can range from a few thousand dollars to ten thousand or more, depending on the home’s condition and size.

This work can pay for itself over time by lowering a home’s heat losses in winter and avoiding heat gains in the summer. 

Just as important for many homeowners, these upgrades can make a home dramatically more comfortable, less drafty, and more evenly heated and cooled.

But how do we pay for this work?

  • We can pull out a credit card. But many of us a loathe to incur those super high interest rates.
  • We can draw down our home equity line. But many of us would rather avoid lowering any equity we have in our homes.
  • We can apply for low interest loans to the state’s Green Jobs Green NY program. The interest rate for a GJGNY loan is 3.99% or lower with a $25,000 cap on the amount borrowed for qualified home energy upgrades. But that involves a new loan bill arriving each month.
  • Or, we can pay it back through our regular utility bills that we already handle each month by using a brand new state program

This month New York State is launching the On-bill Recovery Loan Program–or on-bill financing for short. Through a collaboration between the state (NYSERDA), major utilities (Con Edison, NYSEG, etc), and lenders, initially Energy Finance Solutions, this program is designed to be:

  • convenient by adding to an existing bill you already pay,
  • low cost with a low 2.99% interest rate (even lower than the GreenJobs rate),
  • repayable from the money you save on energy, and 
  • transferrable to a new owner, if you sell your property.  

In short, the homeowner repays the cost of energy improvements through a charge on the monthly electric or gas bill–hence the name “on-bill.” The utility collects these funds and forwards them to the state. The state forwards them to the lenders. The interest may even be tax deductible for the homeowner. 

On-bill financing requires no cash payment up front. On-bill does require the homeowner use a company accredited by the Building Performance Institute and participating in the state’s Home Performance with Energy Star program.

How does the On-bill recover loan program work?

  • NYSERDA administers the program and provides the capital.
  • Utilities do the billing and collection of loan payments from the homeowner (however, if the customer ever disconnects utility service or has its service disconnected for non-payment, NYSERDA’s loan servicer will bill the customer directly monthly until utility service is re-established).
  • Loan originators review the homeowners’ loan applications to determine eligibility, prepare the agreement and disburse the loan proceeds directly to the contractor.
  • A loan servicer tracks the status of the loan from the time it is disbursed until the time it is completely paid off.
  • A mortgage servicer records the mortgage and records its satisfaction once fully repaid.

Here is the state’ s On-Bill FAQ Or contact EnergizeNY, the Westchester based service group working on home energy efficiency. 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Hoosierphilly February 11, 2012 at 04:20 PM
Nice thought. In practice too difficult to comply. Too limiting as only certified trades men can get this. Any product installed that meet standards should get tax credits by the beds and the states. High performance products cost more and get no tax credits, which does not reward most for any energy saving devices.....windows, insulation, applianes, furnaces, AC etc. If they need to verify use receipts and they could also do more if we meet various levels of energy savings. This scould be verified by inspections as well as receipts. The enouragements thus far just sound potentially good, but are too are to meet the standards and likely premium prices as well.
Heather Flournoy February 12, 2012 at 01:13 PM
There are contractors trained in how to take into consideration the complex interactions of moisture, air flow, mechanicals for heating and cooling, and more, within your home when tightening it up. If not done properly, in a piecemeal way, you risk causing damage to the structure and yourself. This is serious stuff. The 'home performance' approach (which our state and most of the rest of the country has embraced) is based on building science. Not to scare anyone, but if you tighten up a house and do not have a professional check that toxic flue gasses are leaving the house as intended, up the flue, you risk bringing those gasses inside. Even if your house still feels 'leaky'. Windows, it should be noted off the bat, are generally the last place to spend your money when looking for energy savings. Sure, there are upgrades you can do by yourself by going to a big box store, but everyone should know that if you touch one aspect of the house, say by insulating it, you are effecting moisture levels and your heating system. That is why there are professional contractors trained and certified in how to analyze a building and make educated recommendations. The products they use are no diiferent than other contractors (cellulose, foam, caulk, new heating systems, and so on). The difference is how they use them. There are incentives for hiring 'home performance' contractors (e.g., 10% back in cash to you on the cost of the upgrade work.). Call EnergizeNY...
Heather Flournoy February 12, 2012 at 01:24 PM
PS If you are into the building science aspect of home energy improvements, check out Home Energy magazine. Or if you want a quick course in this 'whole house' approach, come hear a talk by Dick Kornbluth ... he was in Pound Ridge last week, and will be talking elsewhere in Westchester soon.
Leo Wiegman February 13, 2012 at 04:00 PM
Thanks, Heather. Hoosierphilly: The state is just trying to make more ways available for homeowners to be able to afford home energy upgrades. But, in order for the state to do so, it needs some quality control to ensure that worthwhile upgrades are being diagnosed for your specific home and are installed correctly. Hence, they imposed a BPI certification requirement for contractors. www.bpi.org PS Generally speaking, air-sealing the exterior perimeter of your home's attic and basement to halt infiltration is often a good place to start and not expensive, e.g. where sill plates and rim joists are exposed and open the wall cavities. Airsealing can be a DIY job you tackle on the weekends, but is a typically a one day job for a professional.

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