Spire MO’s Stipulation Agreement to run Pay As You Save®
Fellow PAYS Pal Geoff Marke, Chief Economist at the Missouri Office of Public Counsel, sent us an update from MO where parties have come to a unanimous stipulation and agreement for Spire PAYS!
It is estimated that MO Commission approval of Spire PAYS is about a month away.
Once approved, Spire (which serves approximately 1.2 million accounts in MO) will become the first all gas investor-owned utility to run a PAYS program!
According to the attached stipulation, the PAYS interest rate is at 3% with $6 million the first program year and $11 million each year thereafter to be reevaluated again in the next rate case (likely 3 years from now). Given that $1M/yr will be allocated for administrative costs, the remaining program budgets for upgrade investment will be $5M in year one and $10M in the following years. If we assume the average upgrade size of ~$7,500, Spire’s program will reach almost 700 homes in year one and almost 1,400 homes each year thereafter.
The City of Berkeley, CA’s electrification plan calls out PAYS and asks for comments by May 15!
Fellow PAYS Pal Bruce Mast alerted us to The City of Berkeley’s draft plan for electrifying its existing building stock (see attached) which notes that " Increased costs for equipment, increased bills, and increased debt are all not acceptable or possible for many low and moderate-income (LMI) people who are already struggling financially." Because of cost concerns, the plan stipulates that the City needs to develop strong incentives and financing mechanisms before enacting any mandatory electrification requirements. In particular: “ACTION CC-7 (See also ACTION TR-5): Collaborate With Partners Such as Utilities and Other Funding Entities to Develop Accessible and Affordable Financing Options (for Renters and Homeowners) Such as Tariffed on-Bill Financing Programs.The development of accessible funding and financing programs is one of the most critical actions needed to make building electrification equitable and cost effective and will require action from the City as well as other private and public partners.”
The report then mentions Pay As You Save and features this footnotes that links to the SEEA Utility Guide: “Pay as You Save® (PAYS® ) is a market-based system developed by the Energy Efficiency Institute (EEI) that provides a platform for TOB investment programs. PAYS is the most widely used form of tariffed on-bill programs for energy efficiency.”
Unfortunately the report went on to misrepresent the concept on Page 71 when they explained tariffed-based solutions as the utility operating as a bank: “The amount amortized in Table 3-4 reflects cash flow estimates utilizing the Pay As You Save® tariffed on-bill financing (TOBF) model31. This financing vehicle treats the utility as a bank and spreads the cost of a home’s energy upgrades over years of utility bills….”. PAYS Pals know that PAYS allows utilities to stick to what they do best: low-risk capital investment and cost recovery, rather than acting as a collection agency or qualifying and issuing loans like a bank. Regulators have embraced PAYS precisely because there is no loan or lien, which avoids the risk of default and running afoul of complex federal lending laws. LibertyHomes will submit a comment to correct the banking comparison.
One other notable feature is their use of the term “targeted universalism” which is defined to be “the practice of setting a universal policy goal (for example, electrifying all existing buildings) while identifying targeted strategies and actions specifically for marginalized communities to ensure that those communities can benefit from the policy goal.” This might be an effective way to describe PAYS itself in certain circumstances.
Granholm, Shah, and Hummel All Quoted in the Same Utility Dive Article!
The importance of inclusivity to the Biden Administration continues to accumulate as can be seen in a recent Utility Dive article about the need for inclusive clean energy investments that featured quotations from fellow PAYS Pal, Dr. Holmes Hummel, alongside Secretary of Energy, Jennifer Granholm, and the Director of the DOE Loan Program Office, Jigar Shah!