Amy Shelton J440: Backgrounder EWEB’S WEATHERIZATION PROGRAM SURVIVES REGIONAL BUDGET CUTS THANKS TO EUGENE VOTERS Bonneville Power Administration (BPA) budget costs over the next three years are expected to radically reduce regionwide funding for conservation programs. However, Eugene Water and Electric Board (EWEB) General Randy Berggren says that EWEB home weatherization programs, which helps to reduce energy consumption by optimizing energy efficiency, will not be affected by BPA cuts thanks to Eugene voters who approved the utility’s sale of conservation bonds in September, 2007. “The bond financing project was undertaken because EWEB had been looking for ways to continue to meet the demonstrated customer need for residential weatherization,” Berggren said, emphasizing that the bond sale was unique because conservation had never been funded through tax exempt bonds, with the full cost of retiring the bonds paid by BPA. The bonds are unconditionally guaranteed by BPA and do not in any way affect taxes in the city of Eugene. The plan proceeded in August, 2009 assuring low cost weatherization benefits to another 9,000 EWEB customers and a projected savings of 41 million kilowatt hours (kWh) per year over a three-year period.
Utility Conserves Energy for the City of Eugene EWEB is a municipal utility that was created in 1911. In accordance with the city of Eugene Charter, a five-member Board of Commissioners is elected by the citizens of Eugene, and this board retains full control and sets policy for the city’s water, electric and steam utilities.
Beginning with an energy-efficient home construction program in 1976 and the opening of the Energy Conservation Center in 1977, EWEB has now been actively helping its customers conserve energy for 33 years. In 1977, EWEB began offering audits of residences and providing information to commercial and light industrial customers about energy conservation. Since 1981, EWEB has continued to provide an aggressive residential weatherization program including home energy analyses, financing for installation of cost-effective measures and inspection of installed services, as well as many other conservation programs for commercial and industrial customers. Since EWEB began its residential weatherization program, customers have responded in large numbers to participate in the weatherization program. Prior to January 1, 2010 EWEB has received 38,701 requests for energy analyses since the program was initiated, completing 35,900 energy analyses in that time period. Of the 35,900 analyses completed, 21,880 customers have weatherized their homes and received financing through January, 2010.
A Conservation Bond Agreement Makes History The idea of conservation bonds was born when EWEB and BPA met in February, 2007. EWEB would sell the bonds at low interest and use the money as a predictable source of financing its home weatherization program. BPA would repay the bonds, thereby fulfilling its Congressional mandate to encourage conservation while minimizing its debt repayment. The bond issue was ultimately approved by the voters of Eugene, Oregon in September, 2007 and would become the first of its kind according to EWEB General Manager Randy Berggren. However, in November, 2007, Congress introduced legislation
limiting the use of private-purpose, tax exempt bonds, delaying the sale until an amendment giving BPA the ability to guarantee payment of tax exempt bonds was approved. The Treasury Department officials still had reservations about the conservation bond proposal, arguing that the conservation bonds would use tax exempt credit for a private purpose. Finally, at the request of Oregon’s Senator Wyden, the Treasury Department reconsidered its position in February, 2008. In addition, the tax exempt status of the conservation bond still needed approval by the Internal Revenue Service (IRS) to allow the bond sale to proceed under Section 9.f of the Northwest Power Planning Act. This approval was obtained in August, 2009.
Tax Exempt Bonds to Finance Conservation Programs Starts a Trend As Eugene voters predicted nearly two years before, the bonds were a good deal for everyone involved. EWEB ratepayers will have their homes weatherized and spare some future power plant construction costs. BPA will pay the costs, but using EWEB’s good credit rating will save an estimated $1.8 million. In addition, EWEB negotiated a clause in the agreement with BPA that the conservation bonds measure would be a ‘pilot’ project offered to EWEB as a demonstration program of tax exempt bonds to finance conservation programs. According to EWEB Treasurer, Jim Origlioso, the process of obtaining federal approval for the purpose of selling tax exempt bonds to finance conservation programs has been facilitated. “Any conservation bond requests utilizing our approved methodology should now be readily approved by the Treasury Department and the IRS.” Ultimately, EWEB’s conservation bond program may permit other Northwest utilities caught in the same financial situation to pursue long-term weatherization
programs. Ratepayers in other parts of the Northwest may have the option to weatherize their homes, keeping their electric bills down and sparing them future power plant construction costs. In addition, there are a number of programs that have resulted from the savings of the conservation bond that are currently available to other local power systems including: -Super Good Cents (SGC) Marketing and Incentive Program, a five-state program to promote the construction and purchase of new housing certified as energy efficient. -SGC ‘Idea’ homes, a program in which builders will allow their model homes to remain unoccupied for a year. -SGC Plans Book, a design competition in which local architects and builders will develop a series of stock house plans that meet SGC standards. -Low Income Weatherization Marketing Test, a marketing effort that targets customers who are not currently participating in the current low income weatherization program, which offers 100 percent financing for eligible low income customers. -Highrise Multi-Family Weatherization Field Test, which will include an in-depth energy analysis on 12 highrise apartment buildings, making recommendations and offering financial assistance for EWEB’s recommended improvements.
Conservation Programs Prove Elastic The conservation bond financing agreement was pursued by EWEB and BPA for three reasons: 1) Conservation is less expensive both economically and environmentally then other new resources, thus holding down the total cost of the Northwest electric system. 2) Conservation could be implemented sooner than other resources and could be increased as electricity demand grew.
3) Conservation helps customers reduce their electric consumption and combat rising electric bills. In addition, the bond sale has major benefits for EWEB customers: more funds for other conservation programs. Since EWEB’s weatherization bonds are sold at a lower rate than BPA would have paid on equal borrowings from the U.S. Treasury, the savings could be used for new conservation programs or enhance currently existing programs. EWEB’s existing programs that the conservation bond program complements includes: Residential Weatherization, Low Income Weatherization, SGC Energy Efficient New Home Construction Marketing Program, Commercial Energy Analysis, Residential Solar Analysis, Solar/Heat Pump Water Heater Rebates, Customer Communications and Energy Monitoring Research.