1.8.21 - MN Update & EEI Clarifies PAYS® Requirements
Our fellow PAYS Pal, Alice Madden, shares that MN Public Utilities Commission will be deliberating in final meetings about the next steps for the Inclusive Financing pilot program proposed by the City of Minneapolis on January 12th and 14th!
This pilot program was built with community input after a multi-year campaign to bring inclusive tools for deeper access to efficiency to the North Star state.
See the meeting pdf agenda attached which includes links to the briefing materials.
Energy Efficiency Institute (EEI) has clarified PAYS® Essential Elements and Minimum Program Requirements
On December 31, 2020, EEI, the creators of PAYS®, posted an updated version of PAYS® Essential Elements and Minimum Program Requirements on its website. These components must be built into a utility efficiency program in order for the program to be called Pay As You Save® or PAYS®. EEI owns the trademark and is the final word on whether a program complies with these requirements.
Based on conversations over the past several years with utilities, state officials, and advocates, EEI’s principals, Harlan Lachman and Paul A. Cillo, felt that a clarification about what constitutes a Pay As You Save® program was needed. See the full text of the Essential Elements and Minimum Requirements below!
Three key clarifications are:
When calculating the monthly charge and copay amount for an upgraded location, utilities must use estimates of all significant annual savings the participant will receive (e.g., water, sewer, electricity, gas, and oil bill savings) from upgrades installed at that location.
Utilities are not permitted to impose the requirements of their other program offers to limit PAYS program offers or participation. All customers in the target market with cost effective upgrades should be allowed to participate.
EEI has never charged a utility that wants to use the trademark to brand its program. However, only EEI can determine that a program complies with all of the PAYS® Essential Elements and Minimum Program Requirements.
PAYS® ESSENTIAL ELEMENTS & MINIMUM PROGRAM REQUIREMENTS
Effective December 31, 2020
The Energy Efficiency Institute (EEI) owns the Pay As You Save® and PAYS® trademarks, which are registered with the U.S. Patent and Trademark Office. EEI does not charge for the use of these trademarks and allows for their use only to identify resource efficiency programs that EEI determines meet these PAYS Essential Elements and Minimum Program Requirements.
A. A program based on PAYS® has these essential elements:
A fixed monthly tariffed charge assigned to a location, not to an individual customer;
Billing and payment on the utility bill with disconnection for non-payment; and
Independent certification that products are appropriate and savings estimates exceed payments in both the near and long terms.
B. A program based on PAYS® has these minimum program requirements:
The offer to customers is not burdened with customer risk, which undermines the offer’s attractiveness to customers, results in fewer completed projects, and reduces the program’s effectiveness in achieving its goals. PAYS upgrades and the associated monthly charge must not entail new debt or liens for the participant.
PAYS offers will not be forced to compete with other utility offers. A utility offering rebates, for example, as well as implementing a program using the PAYS system will offer the same rebates to participants of all their programs. However, a utility cannot use the requirements of other offers to limit PAYS program offers or participation.
PAYS upgrades must use properly installed, reliable technologies that are proven to produce savings.
Once the utility has recovered all of its investment in upgrades at a location, ownership of the upgrades will transfer to the building owner at that time without any additional financial obligations. Upgrades may not be repossessed.
If upgrades stop working, monthly charges must stop until the upgrades are repaired and working again. Charges are also suspended for vacancy if the meter is shut off.
The amount of the monthly charge will not change for an upgraded location for the duration of utility cost recovery unless one or more measures in an upgrade package fails for reasons other than the owner, customer (if different), or occupants have removed, damaged or failed to maintain it, and it cannot be repaired or replaced. In this case, the charge will be reduced if the remaining package would have originally qualified for the tariff; if not, the charge will be eliminated completely.
Repair costs or the costs associated with deferred collections from vacancy may be recovered by extending the duration of charges at a location for as long as needed, but not beyond when the upgrades are functioning and producing savings.
Cost effectiveness must be based on site- and building-specific analysis at a location, use actual installation costs, and include no inflation rate.
When calculating the monthly charge and copay amount for an upgraded location, utilities must use estimates of all significant annual resource savings the participant will receive (e.g., water, sewer, electricity, gas, and oil) from upgrades installed at that location.
Utility subsidies and state and federal credits may be included in cost-effectiveness analyses only if they lower the payment to the installing contractor, assuring a fair monthly charge is passed along to successor customers.
The monthly charge for a location must be set so that the amount a residential or commercial participant pays annually is not more than 80 percent of the upgrades’ estimated annual savings based on current retail rates and the payment term is not more than 80 percent of the estimated life of the shortest-life measure of an upgrade package or the term of a full parts and labor warranty/insurance policy on the upgrades (80 percent rule).
Charges are binding on the participant and all successor customers at the upgraded location until they have fulfilled all their obligations and are no longer a customer at the location or until utility cost recovery is complete.
Each month, the utility must pay the capital provider(s) the amount billed to PAYS customers, regardless of the utility’s collections, and treat PAYS uncollectibles the same as it treats all other uncollectibles.
Pre-payment of unbilled charges is not permitted because the participant will not yet have the savings to cover this payment.
Whenever possible, the implementing utility must file notice with the property records for the upgraded location of the benefits and obligations of the upgrades to ensure buyers of the property are notified.