FEI-FEVI 2010 EEC Report filed March 31, 2011 - FortisBC

FORTISBC ENERGY INC. AND FORTISBC ENERGY (VANCOUVER ISLAND) INC.
2010 ENERGY EFFICIENCY AND CONSERVATION ANNUAL REPORT
program design principles were reviewed, the Ministry of Energy and Mines has strongly
favoured the “Pay As You Save”, or PAYS, model. The PAYS model is designed around the
creation of a utility-owned entity that would:
• Borrow funds from market investors to create a capital pool;
• Provide energy efficiency loans to households that would be assured to result in greater
utility bill savings than the loan repayment amount, sometimes requiring longer than
traditional amortization periods;
• Tie loans to the meter, meaning that when the homeowner sells the house, the new
owner can assume the loan;
• Insure the operation and performance of energy efficiency retrofits;
• Provide a guaranteed return to investors; and
• Offer collection of payments through the utility bill.
Market Research
The FortisBC Utilities and BC Hydro (“the Utilities”) conducted focus group sessions in Nov
2010 across the Lower Mainland, Prince George, and Kamloops to test consumer interest in
energy efficiency financing and preferences for loan terms and conditions, as well as the best
way to engage them. The FortisBC Utilities contributed approximately $12,000 towards
conducting this research. Focus group testing found limited interest in an energy efficiency
financing program operated by the Utilities. Most participants preferred to self-finance their
energy efficiency upgrades and viewed the Utilities as competitors to banks for such an offering.
Many participants noted that they already have a relationship with their banks and would be less
inclined to take money from a utility and go through the hassle of transferring the payment to the
next homeowner.
Program Issues
Although the PAYS model has some merit, the Companies have significant concerns that the
PAYS model is overly complex and creates significant legal responsibility around the quality of
the energy efficiency retrofits and guaranteeing that energy savings will exceed monthly
payments after retrofits are completed. There are also significant concerns that loan payment
defaults could be larger than energy bill payment defaults and in the absence of any loan default
fund, the Companies would have to recover the defaults from the entire customer base.
Additionally, the administrative burden associated with the collection of payments and the
transfer of the loan to the next customer through property disclosure statements is complicated
and outside the scope of the Utilities’ expertise.
Further discussions revealed that there remain a number of additional challenges and
complexities to developing the financing aspect of this type of program, including:
1. A number of financial institutions (i.e. VanCity, Royal Bank of Canada, and Toronto
Dominion Bank) already offer financial services specifically targeting energy efficiency
SECTION 11: ENABLING ACTIVITIES Page 253