What is On-Bill Financing?

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.