 The broadcast is now starting. All attendees are in listen-only mode. Good morning everyone. This is Mark Millby with the Midwest Energy Efficiency Alliance talking to you from Chicago, Illinois. Thank you for joining us this morning. This webinar is called On-Bill Financing, an energy efficiency solution for member-owned utilities in the Midwest. So this webinar will explore the potential of on-bill financing as a tool for member-owned utilities. We'll look specifically at programs developed in Illinois and Kansas and also hear from a regional expert on the subject in South Carolina. This presentation is brought to you in partnership by MIA and EESI, that is the Midwest Energy Efficiency Alliance and the Environmental and Energy Study Institute. The Midwest Energy Efficiency Alliance or MIA is a collaborative network with the purpose of advancing energy efficiency to support sustainable economic development and environmental preservation. MIA was formed in 1999 to bring strategic partners together to improve market conditions for energy efficiency. And currently, MIA has about 150 members across the region. That's the 13th state Midwestern region you see there. EESI, the Environmental and Energy Study Institute, was founded in 1984 by a bipartisan congressional caucus as an independent nonprofit organization but receives no federal funding. They are a source of nonpartisan information on energy and environmental policy development. In addition to policy work, EESI provides direct assistance to develop on-bill financing programs. So today's speakers include Lindsay Smith, who is the Vice President of Education at the Electric Cooperatives of South Carolina. Bob Vicki, the Vice President of Marketing and Economic Development at Eastern Illini Electric Cooperatives. And Brian Dreiling, the Manager of Energy Services at Midwest Energy in Kansas. So to start off, we're going to kick it off with Lindsay Smith from South Carolina. So Lindsay directs the Help My House residential energy efficiency program for South Carolina's independent consumer-owned not-for-profit electric cooperatives and the homeowners that they serve. Help My House's 100% no-money-down loans, bookend energy audits, trained contractors, and easy on-bill repayment served as models for the USDA Energy Efficiency Conservation Loan Program, or E-CLIP, and the Rural Energy Savings Program that was included in the 2014 Farm Bill. Thank you so much for joining us, Lindsay, and I'll pass it off to you. Thank you, Mark. Good morning or good afternoon, depending on which coast you're on, which part of the country you're in listening to this. I'm honored to be part of this webinar. I appreciate the opportunity to talk with you about our Help My House program in South Carolina. I put my email address there on the title slide at the bottom of the screen. I know we're going to have an opportunity for questions and answers at the end of this. But just in case anybody wants to email me directly after with any questions, you're welcome to do so, and I'll put that slide up again. I want to tell you a little bit first about the co-ops in South Carolina. There are 20 distribution systems in South Carolina. Together, they serve about 1.3 million South Carolinians in all 46 counties. We maintain and operate about 70,000 miles of line in the state and are together the largest distribution system in South Carolina by far. Next slide, please. We do not own generation. We buy it, mostly from the state-owned power authority called Santee Cooper, and we buy it through RGNT, which is Central Electric Power Cooperative. You'll hear more about them in a little bit. But right now, like other states, and because of the economy in part, we have too much generation in South Carolina. We're overbuilt, and we have two new nuclear units coming online. Santee Cooper does. They're partners with one of the big IOUs in the state. Two new nuclear units coming online within the next five years. Next slide, please. A little bit about our consumers, our members. In general, we are poorer. The state is hotter. The climate is hotter. We are less efficient in the way we use heat, electricity. So lots of heat pumps, and we're living in poorer housing stock than a lot of other states. A particular note, that first bullet, look how much manufactured housing, what many people call mobile homes, trailers, three times the national average. Next slide, please, Mark. I'm going to talk to you today about two Help My House programs. One, initially, was a pilot based, by the way, I must point out, in large measure on the House Mark program in Kansas, and you hear about in just a little bit from Brian. So props to them for doing something that works really well, and a model on which we based Help My House, the lone pilot. That pilot, as you see, if you would go back one more. The main purpose of the pilot was to test energy efficiency versus the cost of asking Santee Cooper and others to build new power plants. The cost of that, by our estimation, is significantly lower for energy efficiency if you invest on a large scale, but we're going to test that and test also if consumers would accept a model that we had put together. We used RUS and funding from Central Electric. For the first time, we asked the Red Leg program to make a loan for energy efficiency. And then on the working program side, on the right side of the screen at the bottom, we do have co-ops that have decided after the pilot ended in 2012 to launch their own programs funded by themselves or, again, by going back to USDA, RUS, and getting Red Leg loans for this purpose. Next slide, please. So here's a little bit more about the pilot. Again, Central Electric, our G&T established some efficiency goals. Their board did back in 2010, reducing residential energy use, wholesale power purchase costs, maintaining, improving member satisfaction. They partnered with us here at the statewide Electric Cooperatives of South Carolina is what that ECSE stands for to design this pilot program. And also wanted to see if federal legislation might come along to help fund and create a lending pool, a larger lending pool for a larger version of this same thing. Next slide, please. We constructed our on-bill financing program to look a lot like a tariff, although these are loans to members. We got a law passed in 2010 to pave the way for the pilot that says, in South Carolina now, we may tie the loans to the meter, not to the individual homeowner, but to the meter on their home. We do that by virtue of a new document that's kept at the register of deeds called the Notice of Meter Conservation Charge, NMCC for short, Notice of Meter Conservation Charge. So that's a document that it would be in the closing documents at the sale of a home to notify the buyer of that home that they're accepting, they're purchasing not only a home, but also the responsibility for paying off the loan for whatever measures were done to improve the energy efficiency of that home. So it also allows us another important, or can be disconnected if the member does not pay the loan payment. The same power that extends to co-ops and utilities for non-payment of electric bills would then extend for non-payment of the loan. It stays with the home if it's sold, as I said, and it eliminates the need, in our mind at least, for credit checks because, again, the loan is to the home. And we'll talk about survivability a little bit more in a minute. Next slide, please. What the model does is it allows members to finance energy efficiency measures with those low-interest loans, zero-down loans. So one of the barriers, as we all know, to members weatherizing homes, buying a new heat pump, insulating and so forth is lost. So one way to do that, again, this is a model that we looked at with Midwest in Kansas, go ahead and make 100% loan and fund it all. They repay these loans on their utility bills every month, so that's a convenient way to do it, and it enables those without the down payment to go ahead and do those things they've been waiting for years to do. Next slide, please. And you can go ahead and skip to the one after that. This is just to talk some more about the pilot. We had eight co-ops participating in that pilot. A number of these on the list there are now running their own programs, having had a really good experience and having had members who had a good experience in the pilot program. Again, Central Electric, G&T was the major player in this. They got the loan, the red leg loan. They paid for the cost, the administrative costs. Then we as the statewide had a major role as well. Next slide, please. Other very important stakeholders in the pilot, of course EESI, which is co-sponsoring this webinar, co-presenting this webinar, their work funded in part by the Doris Duke Charitable Foundation, a grant to EESI. And then together we all went out and hired ECOVA to come in and help us with operations of our pilot program. Next slide, please. Now, this slide speaks specifically to the structure of how the program works. It's the same structure, essentially, that's being used by the current working program. So it's worth talking about for a minute. You see Central Electric, the G&T at the top left. They go out and get the money from USDA, and then they lend it to KWSAMIs. That's a group we haven't talked about yet. I am the CEO of KW Savings. That is a third-party entity that Red Leg requires in order for the loan money to flow down to the individual homeowners. In other words, you can go get these Red Leg loans, which now the maximum on those is a million dollars each time. But you cannot, as a co-op or RUS lender, lend that money directly to your members' pay-off contractors. That must be a third-party. For us in South Carolina, KWSavings is that third-party in between the actual borrower, which in this case was Central, or it could be you as a co-op and your member. So KWSavings goes out and trains contractors, acquires VPI auditors. We have one on staff building performance institutes. So certified auditors that could easily also be ResNet. The account rep and co-op are one in the same. The account rep is at the co-op, although KWSavings can provide that individual as well if the co-op wishes. And then of course everything flows to the consumer member. Next slide, please. A little bit more about KWSavings and what we offer. We're in a la carte menu as a third-party. So co-ops can do these things themselves, a lot of them, or they can choose for KWSavings to do them. We do program management audits, as I mentioned, contractor management, so getting the contractors, vetting them, training them, background screening them. Loan review and processing, we have a co-op credit union, as I'm sure many of the folks on the phone do as well, access to that. We use our credit union to do the loan documents and processing. Member support and communications, and of course the other things listed there. Next slide, please. Another important function of KWSavings is setting and maintaining the brand standards for Help My House, which is our program brand. And we want that to be a brand that members begin to associate with quality service, quality controls with a consistent product. So you see the standards. Every co-op that runs the Help My House program must subscribe to these standards. Quality controls, the bookend audits, front end of the job, back end of the job. Loan documents either drafted by us or vetted by the co-op, I mean by the credit union. Data collection, we want to continue to collect data. How are the homes performing before the additions and improvements? How were they historically performing and then how are they performing once we're done? And then of course sharing a business plan to indicate how you're as a co-op going to run the program. Those are things we insist on as the brand managers. Next slide, please. How do you get your people? Well, how do you get members to sign up for this thing? Well, sometimes they select themselves. So high bill complaints are a source of participants. As are billing records going back in and finding folks you think based on what you know of the account and the account holder and the home, who might be a good candidate. At that point, when you've made your sort of list up, you go and you do visual audits, visual inspections. How old is the home? How many gaps around the doors and windows must be insulation or the attic look like, that sort of thing? If the house passes muster, at that point you're doing a full-on audit with a blower door and duct blaster. You're generating numbers from those tests that you put into a computer software and you determine whether or not you can save that homeowner enough each month to more than cover their projected loan payment each month. If you can, the home qualifies for our program. It has nothing to do with the member's credit rating, although I will say each of the co-ops participating looks at billing records at a minimum, and at least one of our co-ops has chosen to do credit scoring instead of a base score, so some options in there. Then there's the loan approval and contractor selection. The contractor selection is up to the member, to the homeowner. We give them a list and they pick. Once they do that, the contractor comes in, installs the measures. We come in back behind when the job is done, do another blower door duct blaster. The contractor must have hit the targets and quality measures that we require. If they have, if they have not, they must come back and redo anything that was not done properly. Next slide, please. A little bit about the measures that we installed in the pilot itself. These are fairly consistent. If we were to show a slide of what the current working programs are doing, not inconsistent at all with the kind of percentages you're seeing here. Lots of air sealing. That won't surprise anybody on the phone. Lots of duct leakage reduction. Also no surprise, attic insulation. Then you get down into the heat pumps, replacing electric furnaces. A lot of those in the manufactured homes. That's an easy, easy fix. Easy get. Replacing older heat pumps, first generation. Doing some floor insulation. And then miscellaneous other measures. Next slide, please. As we were doing all the work, we were predicting what our average savings would look like, what average predicted costs would look like, what projected simple payback would look like. And then we tested the actual, and as you can see there on the right-hand side, the numbers were really close, which was good. So simple payback of about a little under seven years. These are 10-year loans, by the way. And why 10 years? Because red legs, repayment, the money that has to get repaid to them is 10-year money. So that's why we tied it to the 10-year number. Next slide, please. Here's just sort of another representation of what the breakdown looks like for the member. Annual energy savings averaging in the pilot homes around $1,200 a year. About almost $900 of that being repaid in loan payments. And then the member putting in their pocket just under $300 a year. So they're already saving enough to more than cover that the average home is saving enough to more than cover its loan payments and put money in the homeowner's pocket. And of course, once the loan is paid off in that 6.67 years or whenever, all of the savings go in the homeowner's pocket. Next slide, please. And then here's a representation of the demand savings. We wanted to see what that looked like, and as you can see, it kind of tracks the savings and the loan shape, the energy efficiency savings, and the energy savings. And this is without, by the way, any controls installed in these homes. We deliberately avoided putting HVAC switches on and water heater switches, those sorts of things, controls. Because we wanted to see these measures work on their own. Next slide. And yeah, you can go ahead and skip to this because a year after we finished the last pilot home, we went back to these homeowners, let them live for 12 months in this newly weatherized home, and then ask them these questions. Are you satisfied with having participated in the program? And 96% of them said yes, either as satisfied or more. Next slide. Are you more comfortable? This is not something we can measure with any test equipment we just have to ask. And almost 90% of them said yes. Next slide. And what about your bills, we said? Are you more or less satisfied? I remember it's not just the electric bill now, it's the electric bill plus a loan payment. And again, almost 90% said yes. Next slide. And then we'll show you a couple, Terry and John Northworthy, who were served by Fante Electric. Their home is in Summerton, South Carolina. It's a sort of typical ranch home on a pond, on a small lake. They are both retired, so they're on fixed income. They're not underprivileged folks, but they're on fixed income. So they appreciate any savings they can get. And if you would click the next button there, Mark, you'll get to see what they're saving on a monthly basis. According to them, about $150 to $200 savings in their pocket or lower electric bills each month than what they experienced before we came. So very gratifying to see it make that kind of impact for the Northworthies. Next slide, please. Some conclusions we drew from our pilot. Again, the average home dropped energy use by about 34%, about 11,000 kWh a year. You saw the savings earlier on that slide. Coincident peaks savings represented on the slide that I showed you a moment ago. Dropped about a third. Load factor unchanged, again, because of the lack of switches in this particular program. But more comfort, more satisfaction from members, very important component of what we did. And of course, this pilot spawns some ongoing programs. Next slide, please. So it was very important for us to consider the business case for doing this. Because, again, I mentioned the outset, we're long on power in South Carolina. The economy's not too great here still, like for most of y'all. Sales are flat or even negative in some co-ops. So what's the business case? Well, here you go. Participant members' satisfaction positive. Load factor impacts minimal. I will also say, according to the co-ops, revenue impacts, small, even for a long-term, much more aggressive program. Speaking of long-term, there you see, why would you do something like this? Well, EPA's told us, and I'm sure many of y'all, and there are 111-D proposed rules. Energy efficiency is going to have to be part of your state implementation plan. We don't know to what degree, but South Carolina is one of the top states in the union in terms of EPA's expectations for carbon reductions. Energy efficiency is cheaper than new generation, likely less than two cents a kilowatt hour in our estimation. And, of course, there are broader economic benefits, and co-ops are all about these. It creates jobs, business for local folks, and the supply chain. Next slide, please. And I do want to talk to you a little bit about those working programs, and then before I hand it off, here they are. Akin Electric was the first out of the gate after the pilot ended. They are now on their third $1 million red leg loan, rural economic development loan from USDA, RUS, and going gangbusters. And, by the way, none of these folks on this list is doing any broad marketing of its programs. This is totally word of mouth, and you guys either on the phone. But there you go. The asterisks, let me explain those. Little River Electric, Lynch's River Electric, brand new to the fold, haven't done any houses yet, but will soon. York Electric, the asterisks next to them, they did a 10-home pilot in 2014 of their own version of the Help My House program to test all the measures I've listed for you previously, HVAC insulation, duct sealing, air sealing, in tandem with HVAC air conditioning controls. And so that was just kind of a test pilot that they did. Next slide, please. And I do want to talk about a little bit more about this. I'm sure you'll have an opportunity to talk some more as well. Mark mentioned at the outset, I have the privilege of working with EESI to help support their OBA on the financing efforts across the country. Here's some of the assistance that anyone on this call, anyone interested in an on-bill financing program can get from EESI, some of the support. You get experience from a lot of other people. They can help you assess whether it's a good fit, on-bill financing is a good fit for you, help you with resources, help design your program, talk to you about funding, all of those things there. So I would encourage anyone on the line who's interested, there are the contacts bottom left of your screen, John Michael Cross, Miguel Yanez, and I encourage you to reach out to them as well. And with that, I'll hand it off back to you, Mark. Thank you very much, Lindsey. Again, that was Lindsey Smith with the Electric Cooperative of South Carolina, and his contact information is right up there and I'll put that back up at the end of the presentation. I did want to let everyone know we're getting a lot of really great questions. What I'd like to do is get through these three presentations and then I will read back those questions to our presenters at the very end. So thank you for your patience there and keep the questions rolling into the questions box. So next up, we have Bob Dickey, who's the Vice President of Marketing and Economic Development with the Eastern Illini Electric Cooperative. Bob is in Paxton, Illinois, where he has had the privilege of working with Eastern Illini since January of 1998. The primary responsibilities of the marketing department are to increase off-peak kilowatt sales, to encourage economic development, educate members, organizations and students on the cooperative principles, energy efficiency, and the importance of sealing and insulating the building envelope, in addition to the benefits of geothermal. So Bob grew up on a farm and worked full-time while attending college night classes at Sangamon State University in Springfield, Illinois, where he received a degree in marketing and economics. He's made several energy efficiency presentations at regional and national conferences, including one in our nation's capital before senators and their staffs. He is also a board member of the Geothermal Alliance of Illinois. So Bob, welcome and thank you, take it away. Thank you, Mark. It's my privilege to be part of this presentation here today and I'm going to look at it from a little bit different perspective of the nuts and the bolts of what makes a loan program work or not work. I came in here in 1998, we've had a loan program since 1987 and it wasn't being used very effectively, but what happened was, as we did more and more geothermals, we now have over 1200 geothermal systems on our lines and that's representing over 10% of our total member base now. Rebates are getting very, very expensive and the board said we can't do that because very few are getting the benefit and all are paying for it. So they said we're not going to do rebates anymore so what we had to do is we had to pull out something else to help increase our energy efficiency with our members and help lower their bills and so what we did is we really started working on implementing a loan program which we call the energy-wise home loan program and a lot of it is basically for energy efficiency upgrades, whether it be insulation, building envelope ceiling, duct ceiling, but a lot of it is also with HVAC systems because we are rural and we have a lot of propane in our area and many of our members are paying anywhere from $1,800 to $2,500 a year to eat their old farmhouses and we want to do something better with that and help them do that so geothermal wasn't natural, but it's expensive so what we were trying to do was help our member lower their energy bills so when we say energy whether it's electricity or gas so we can help them lower it through energy efficiency, we will. One of the last things we want to do is encourage them to use electric resistance. We just don't think that's the smartest thing to do when there's other options like geothermal and air source heat pumps. Next slide please. So what we've been doing is we've been promoting this energy efficiency and it was amazing. We got ready to do our 75th anniversary so I was looking at some older documentation that we had available to our members and we had a member handbook and I was amazed that back in 1948 we were talking about the very same things on energy efficiency that we have been talking about here in the 21st century that the problem was why is it that we're not seeing more of it done? So what we discovered was that many of our members knew what they needed to do and they didn't have the financial capital available to make it happen. So we actually started promoting our, back in the early 2000, we started promoting our loan program and as of now we've loaned out to our members over $2.25 million for energy efficiency improvements and the average loan because it's geothermal, many of those are geothermal on top of insulation, the average is about $7,200. We're very careful about who sees this information from our members when it comes to their financials so there's three of us on a committee. I look at it first as a VP of marketing economic development and I take it to the CFO, he checks it over and then we have the CEO sign off on it. If any one of us three do not agree with what we see there and say this may be a risk as far as being paid back we will not loan the money. Many times so what we'll do is our goal is to help the member maybe there's not, they didn't supply us with enough information so what we'll actually do is go back to them and talk to them a little bit about some other ways that maybe we can make this work. So far that $2.25 million we had only less than $15,000 of bad debt and I hate to say this but 10,000 of it was in one loan and that's because we loaned money to somebody and didn't follow up to see where they put it and they didn't put it where they were supposed to and then they disappeared. So that changed a lot of things that we did as far as monitoring our loans. Next slide please. Our loan requirements first of all there's basically some forms that the member needs to fill out so what we see is and we'll see actually a copy of this before my presentation is over but we definitely want to have them fill out an application and it's fairly comprehensive and we want them to supply us with an invoice, a copy of an invoice or at least a bid with the knowing that before they get the money that this is going to happen. We also do look at their credit worthiness. We do the online utility services program which many of our cooperatives used here in Illinois, I don't know about across the country but here in Illinois to check out whether or not the member needs to pay a deposit when they become a member. So we use those same services but I do look at their credit history than just that. We used to loan up to 100% of the money. Our loans at one time were only $10,000 at max at seven years and we determined now that if we're going to do some of these we pretty well covered the members that can do what they can do with $10,000. We have now increased it to $20,000 but our board of directors said we want them to have some skin in the game so the maximum loan is $20,000 with the member pitching in 20% of that loan themselves. So if it's over $3,000 we do require a security agreement that they sign and we also have a UCC form. If the loan is more than five years and we have loans now go from five years to ten years the UCC form only lasts for five years so if it's a ten-year loan agreement then basically we've got to go back and we've got to refile that UCC form. But doing that UCC lien form has helped us several times when members got ready to sell their house and they hadn't paid off the loan yet and we got called and said hey, they even forgot about the fact that they had signed that and we were able to take care of that and that's why we don't have the bad debt. So interest we look at on a annual basis, it's based upon whatever the co-op is paying for that year and that's what we are a member as far as loan. Next slide please. Loans can range anywhere between $5,000 and $20,000. They can also range up from five years for a $5,000 loan in years for a $20,000 and look, you're part of a co-op there's a lot of membership here and as a result what you do affects the rest of our membership base and this is why we have these precautions and if we were loaned money to someone else would you want us to be very slack in what we're doing or would you like the same kind of criteria for other members and they all agree that they have no problem doing what we're passing to do. We've tried to make it, next slide please, we've tried to make it as simple as possible as far as applying for a loan so all they have to do is go to our website eic.coop website and click on energy efficiency. Next slide please. When they do that there's a drop down box and a tab and one of them is a loan program so we just basically on our, so if somebody wants to know about our loan they call in, talk to our member care representatives or anybody else, we can easily direct them to our website and if you notice in the upper right hand corner it says downloads, loan information and application that's our next slide we're looking at right now so there's actually just two pieces of paper or forms that you look at we used to mail these out to everybody and it really dragged out the process by going to our website now we can help someone immediately, they can go on to our website, download these fill them out, scan them and most everything I'm getting back now is all electronic but these are the two forms they're going to fill out and I'm going to end up and compare them later on when I get them back. Next slide please. So what we're going to do is we're going to do some internal documentation and tracking and so I'm going to take the information that we're asking and I'm going to put it on this form it's electronic form as well but I've got one for each of our members who have now applied for a loan we implemented this about 10 years ago and that helps us track better where our loans are at and gives a better feel for the amount of loan we're loaning and why we're loaning it so let's go to the next slide please so some of the things we're going to ask for is we want to be sure that the application is completed that we ask for a processing fee that processing fee is $50 we compare the credit report with the information they provide us on this application we also look at a count receivable with that member over the past 36 months see if there's any late pays we obviously have a copy of the contract we have a copy of the credit report it's very simple to do it takes me about 10 minutes to get a credit report and maybe another 20 minutes to actually take a look at how the application they filled out as far as their loans and their outstanding debt compares with the credit report we have asked them for proof of income now and usually it is a pay stub but sometimes what happens is they'll tell us they got this they make this big amount of money as far as their how much income they have but what they don't talk about is how much they owe so we're going to compare the pay stub with that and we also asked them for the last year's federal income tax filing we needed since we're going to find it file a UCC form and the security agreement we need their property tax ID number and a legal description of the property track the number of liquid payments in the past 24 months next slide please this is internal contact tracking the form you just saw before in the information I asked that goes in the personal file and that is only seen by myself the CFO and the CEO but sometimes someone will call in and they'll want to know where their loan at is that in the process so they maybe talk to member services they maybe talk to member care representatives anyone that picks the phone up and talks to them and what we've got with iView now through NISC we've got what we call contact tracking and this is just one view of contact tracking of views but for example they can pull up the member and in this top one here we have reasons and if you go down and look under the reasons it's loan information and there's a description there's a solution but we then can go to a questionnaire next slide please and this questionnaire as we go through the process we literally fill this out so our member care representative while they're on the phone can say well your loan has been approved and basically the security agreement is on its way if you haven't seen it yet sometimes they'll call back and they want to pay the loan off early we'll let them know what the total amount of payment is at that date and then basically they can talk to anyone without them knowing the particulars of that particular loan and find out where it is in the process so this is our process that you see here and what we're finding is that this process is working very well it's very simple and we've had a lot of success with it now and our members seem very satisfied with it the board of directors have definitely satisfied with it and especially since we haven't had any bad credit and our members are seeing their utility bills lower dramatically when it comes to their energy bills because they're spending less on energy due to their energy efficiency upgrades and they're typically with the geothermal system that would have cost them somewhere in the neighborhood of $24,000 they're seeing reduction in energy costs as much as $1,800 a year because of geothermal so again we're just trying to support our member we found this was better than rebates we had to come up with something and by the way when we did end those rebates this is when the loan program got to be even more how shall I say energetic with our members as far as wanting to utilize it so this is my portion of the presentation thank you very much Bob really appreciate it we are getting a lot of good questions again I'll read those out once we get through one more presentation here and also if anyone's experiencing a slight delay between audio and the visual you see my apologies don't worry the internet sometimes just seems to need an extra second or two to catch back up to the audio our next speaker and final speaker is Brian Dreiling who is the manager of energy services with Midwest Energy so Brian has worked in many energy use related business for 36 years is currently the manager of energy services at Midwest Energy in Hayes, Kansas Brian holds a bachelor of science degree in business management from Friends University he's a certified ResNet energy raider an IPA energy star provider and a level 3 thermographer Brian has extensive experience in utility demand side management programs financing mechanisms, energy audits thermal imaging and building simulations so thanks for joining us Brian and take it away well I'd like to thank everybody for joining us today and for the opportunity to brag a little bit on our program first thing go ahead and then change slides a little bit about Midwest Energy and where we're located obviously we're in Kansas we're a little bit different than the average cooperative we are combined gas and electric utility I have around 49,000 electric and around 42,000 gas customers out in western Kansas where we live things are pretty sparse and we're spread out a long way as you can see the map there and we're on the whole western half we're spread out around 41 counties so things can take a while out here and their customers are far between but that's just kind of the way we like that go ahead and switch slides please we've been in the business a long time just kind of like Bob was mentioning earlier and something we have found over about the 30 years of trying to do some energy efficiency programs there are three main things that we just have to have for our programs to work one thing is we have to have really good energy analysis we have to have good energy auditors they have to be able to perform all types of audits whether it's lighting, infrared scans blower, door, duct testing the whole gamut of things it's nice to have the auditors that have some kind of credentials whether it's resident or BPI and energy star certified it's nice to have that behind it we also realize that the results of these things have to be based on reality and we'll talk a little bit more about that later but that's one of the keys also over the years that if we don't have good installers things don't happen very well and we don't get the results we like and the last but not least is the financing side that's really why we're here today but over the past, over the years we've tried to eliminate that financing sometimes from our energy efficiency programs and we're finding out that we just don't have very good results without it for instance, this is our third generation the Housemart is our third generation of our loan programs that's what we're going to talk to you about today a little bit about Housemart what is it? it's not your average on bill financing that you would expect it's a little bit different than that it's based on a pay system pay as you save not our concept but we did use it from somebody else and we've modified it it works pretty well we treat it as a little bit different it's just not an energy efficiency it's just an investment kind of like they're doing in South Carolina we had to go through and we had some state statutes that actually treat this as a utility this isn't a whole lot different than the wires and pipes that we're getting loans for installing anywhere else Housemart has four key attributes we'll kind of look at those and we'll go ahead and flip to the other slide for me please you know our capital is important ours is a little bit different than average loan though because this is for the economically justified projects it is not unusual on our project that the savings does not always cover the total cost of the project so we allow people to buy things down if you go in and you need a new heating and cooling system and you already have say a gas system that's at 80% and you're only going to 90% 90% you may not see that much savings but you need a new one anyway because yours is bad we can still help on those projects but we're only allowed to help the portion that is economically justified and we'll take a little bit of a look at that later also because of this because we're we're restricted to the savings the capital that we loan out has to be low cost the lower it is the more we can help the better off we are and we find capital anywhere we can get it we've went through the state programs we've went through the stimulus programs and then we also use the red leg the RUS funds it's flexible enough that lets us go just anywhere we can for the financing go ahead and switch slides for me please and we talked a little bit earlier obviously they're on the utility bill I'm trying to here we go they're on the utility bill it's a fixed charge it doesn't change our terms are a little bit longer than normal we go up to 180 months on residential a little bit shorter on commercial and we base this on about 75 expectancy of the measures our liability measures are only about for seven the surcharges cover the project investment the cost of the state out of 5% go ahead and switch slides please savings and how do we come up with the savings we obviously do an extensive energy audit gather as much information as possible we go back to actual history what we have found the software packages out there have a tendency to overstate energy use overstate the energy obviously we still have the disconnection for nonpayment because after all it is just another utility service and we can treat it as such one thing we do also to help us especially when the money changes hands as we do file UCC filing we did not do that from the very beginning because it was always up to the person who started the house smart loan to notify the next people unfortunately they weren't doing that so we did start filing the UCC which is basically a small lien on the property so before it sells we do get notification that way everybody is aware of where that loan is go ahead and switch slides please it should be on slide number nine and the question here is we have some results we've been doing this since 2007 2007 was a small pilot for us but we've expanded it totally system wide now since then we've done 233 conservation plans basically for the audits we've completed about half of those actually a little over half of those you can see we've invested 7.7 million dollars you know the average project is around 50 to 800 dollars now this is where it's interesting the customers added to that 58 hundred dollars another 16 on average so here again the customer has their teeth into it also they have a little bit of stake in it to make it right also savings you can see pretty well their energy their terms of gas they kind of put that perspective a little bit the kilowatt hour saved per year is equal to about 270 houses on our system and the gas savings is equal to about 460 houses total usage that combined together is around 48 hundred tons of carbon not emitted but saved every year so it has been a good program for us go ahead and make a quick switch for me please as we look at this thing it kind of gives us some averages the house mark charge is not a big charge it's around 41 dollars a month you kind of see the savings it's 49 it doesn't seem like a lot of money but you can remember they're paying everything back and everything's a plus form the new equipment is installed they're saving a little bit of money saving a lot of energy and it's working out pretty well for us we do go back out every year and we check these as they roll through the year we watch to see how close we're getting and we look at pre pre-audit use and then post-audit use and we are very very close to our projected numbers here again we always calibrate our models back for that very purpose and we feel that's one reason is because it comes from satisfaction and I'll show you a little slide also become a little bit later but it is definitely up because of that and right now you know the politically it's pretty popular to have some kind of energy conservation program and with EPA rules we were going to have to change it anyway and get into it so go ahead and change slides for me please should be on slide number 12 now what does this mean for the customer you know it eliminates that large sum of money they have to pay up front to make some kind of improvement may not eliminate it totally but it does take the bulk of it out of there the split incentives are very nice we talked about that earlier about the landlords splitting out the green bar is obviously the customers that have just just our general customers and it shows that they're fairly well satisfied and their value of perception is not as good as we would like it but by just doing the audits and also doing the audits along with the finance you can see the drastic change I mean we are co-ops and we always want to do what our customers want us to do and this is a good indication of why we do the energy efficiency not only is it good for everybody it's what our customers want us to do you know these charts it's amazing when we can take a customer that is calling in about a high bill complaint and we can change their perception from 68% to 96% by just doing a program like that and that's a great feather in everybody's cap who are doing the energy efficiency side to things go ahead and change one slide please you know we've had a lot of interest in the Housework program it was one of the first voluntary pay programs around we've been doing it since 1997 a lot of inquiries from different regulatory commissions and places like that and we've won a few awards in the past 5 or 6 years we're really proud of this it's one of the things that our customers like and it's bringing us a lot of notification like to see it continue on and go into better I think that's everything I have go ahead and hit the next slide I believe that should be the last one should have my contact information up there our homes were foreclosed on the owner basically abandoned the home and mortgaged and walked away here's what happened in our state when that took place the lender and in both cases where it took place it was the same lender a large bank immediately has lawyers sue to vacate any other liens against the property so that they the mortgage lender the primary lender get any money that comes out of the sale of that home first they sued us they sued KW Savings and they helped my house brand to get the loan the notice of meter conservation charge removed we've won those cases though in court by our doing it's not a lien against the property but rather it's a loan tied to the meter on the property the courts have sided with us so in terms of risk management that document and the way our program is constructed has served us well so far we had one other instance I'll mention quickly where a homeowner actually vacated the home and then the home burned to the ground that was a unique situation obviously for a number of reasons including that of course the fire destroyed the equipment installation all the work we had done but we did not know that until two years later when a realtor managed to sell the property to a buyer and found the notice of meter conservation charge still intact at the registrar so it became part of the closing documents and the realtor called us and said you know what the heck is this my buyer shouldn't have to pay a loan back for equipment that no longer exists and of course on reflection we had to agree that's where it's important as on-bill financing programs to have a loan loss reserve for writing those things off which is what we did in that case in the other two cases all that happened was the loan went dormant for the time that the home was vacant after the foreclosures took place and then when the homes are resold the loan will either be cleared at closing by the buyer or seller or the buyer of the home picks up the loan where it left off and the only thing that the co-op is out is of course the interest I hope that answers at least part of that question I think so Lindsay thank you the next questions for Bob Bob can you talk about what are some of the deal breaker issues that would keep you or eastern Illini from loaning well number one we try to use 700 for an empirical score as the baseline but if they haven't been truthful on filling out their application compared to their credit scores or through their online credit use and what it shows outstanding as far as debt and we try to how should I say we try to balance that or justify that with them but if we just find that they're just not being forthcoming and of course if they definitely have had if they haven't paid their bill to us on a timely basis over the past 36 months those are basically deal breakers there are some times though where we bend over backwards because we see that this member it could have been for example they maybe even had a bankrupt and a lot of times if it's medical or other control the bills ran up there's nothing they could do about it and they need help and we will figure out a way to help them and I'm not saying that happens very often but we have never been burnt on anything like that when we've done it Thanks Bob Brian can you talk a little bit about how do you communicate monthly savings and benefits to customers in the program well the initial savings are laid out in what we call our conservation plan and these are the options that we give our customers whether they're replacing heating and cooling or insulation to envelope improvements so the savings are generated up front and the reports are all generated up front on the bill all they really see is the itemized charge for the loan and like I said we check them all to make sure that we actually see the savings we are and we're seeing pretty well everything we say we want to see except there might be a few occasions where somebody does something different they will after the audit they may start up a business in their garage and all of a sudden their energy use does something strange but for the most part we'll write on what we say we're going to say yeah this is a question for any of the three panelists have you encountered resistance from co-op boards that do not want to access federal funding for philosophical or ideological reasons and if so what do you think is the best way to approach that I'll speak for the Easterline electric cooperative we bought out when our cooperative was a merger of two cooperatives here in the central Illinois in 1986 the new cooperative bought out of the RUS program and as such we have been doing everything on our own because basically we're self-financed and that's the way the board basically wants to keep it so it's just I guess it's the mentality of the board and that could easily change as we get different board members but at this point that's what it is you know at Midwest Energy we we would probably accept any types of funding we could get as long as the restrictions aren't too prohibitive and sometimes with the RUS funding and things like that the red tape can be pretty stringent so but our board would probably allow it to get it from anywhere we could as long as it didn't affect anything else and just quickly this is Lindsay in South Carolina the co-ops that are running our program a couple of them have chosen not to access that federal funding they are using their own operating money and running the program in a very small scale so there are a lot of different ways you can fund your lending pool they don't necessarily have to be what I've talked about earlier with the red leg loads thank you and Lindsay another question for you could you quickly provide the details on the financing like low maturity interest rate the percent of energy efficiency project costs that were covered and also did you have to comply with lending regulations or did the credit union provide that service or did the tariff structure eliminate that requirement let me answer the last question first the tariff structure and the law the 2010 law eliminated that requirement but it did put in place certain provisions by which we have to abide in order to maintain that protection including the interest rate we can charge to consumers at 4% so if you get red leg money you're getting that at 0% from the federal government you're lending that out at 4 or in the case of at least one of our co-ops less than that 3.75 one of our co-ops by the way he elected to charge 5% just that was their preference and they knew by so doing they were outside of the statute which means they do not have the right to disconnect for nonpayment of the loans but they are still a help man house co-op they had their business plan approved they're still operating everything else that I described earlier in my presentation did I hit all of the questions there Mark or did I leave something out? I think so thank you here's a question again generally for all three panelists we've sort of everyone's touched on this just a little bit based on the problems with selling homes to which loans are attached and the asker brings up the fact that there have been areas the country where lease solar arrays have been homes with lease solar arrays have been more difficult to sell in some markets does anyone have a want to continue talking about that? in Kansas we have that issue a little bit with the loan program I'm not so sure they're harder to sell as long as you just close it up front and the prospective buyer knows how the program works but we've had a few instances where the house is sold and they didn't quite understand that they were going to pay for that new system after they bought the house and so they usually go back to some kind of negotiations with the seller and they work that out and we had a question earlier about what percentage of these loans continue on with the new owner ours are about 80% of these go on to the new owner and about 20% pay them off at closing so the new owners seem to be pretty receptive of this type of program thank you this is a question for Bob does the Illinois program really have an adjustable interest rate the cost of borrowing change over time but still how come there's no fixed interest rate well first of all this is eastern line electric cooperatives own program and we've had several discussions with the statewide association to make sure that we're within the legal format of requirements of the state of Illinois and we are so again we're using basically our own money and again we adjust the interest rate if necessary we're borrowing on an annual basis now it doesn't affect any other once there's a loan with a member that rate is fixed but it's all new loans and if I wasn't clear on that I apologize for that because it is each year any new loan if there's a change in the interest rate that's when it happens for the new loans thank you Lindsay can you please briefly explain again why no load control switches were part of the program yeah I mentioned earlier that the folks who put our help my house pilot together at Central Electric and the folks here at statewide wanted to see these weatherization measures operate without any controls on them to see what kind of impact that would have on the energy use in the home and also against peak without any kind of controls and by controlling them you'd be you'd be monkeying with that some of your decisions not to do them at that time I will say that the working programs a number of them have determined to do to install switches as they go I mentioned earlier Akin Electric was one of the first to start its own program after the pilot ended they've been very deliberate about every home that participates goes through their water heater control program and so every one of them gets a switch again as an ongoing thing I definitely recommend anybody considering running one of these programs why would you not do that if you have an opportunity to be in the home it may be a one off you might as well do that while you can thank you and I know just for the record I know we're over time but we still have a lot of people listening in so a couple more questions to go through so thanks to our speakers for sticking around just a couple more minutes we've been getting a couple questions in vacancy of a home one specific question was since the loan is tied to the meter what happens to if a home becomes vacant for an extended period of time also does interest continue to accrue during periods of dormancy so does anyone want to address these questions in our program in Kansas the interest does not accrue while it is being vacant but it does extend the loan life obviously until it is reoccupied again in South Carolina what is the name of so neither South Carolina nor Kansas have paced legislation but both states allowed financing through the meter what is the name of this kind of legislation you know I'm not so sure I have a name I mean it was just energy efficiency statute that was introduced in Kansas in 2007 and I have the number but I'm not sure if it actually had a particular name Lindsey did you see anything like that same here we didn't have a particular name for it but Mark if it would be helpful to you and the folks on the webinar I can certainly send you a copy of our state statute and if you wanted to distribute that with the slides you're welcome to do that yes thank you very much I'd do that and I would certainly distribute that to everyone one person, Lindsey you may have covered this but my apologies if you did we have one question someone asking whether retrofits in manufactured housing if there's issues with HUD code there none that I'm aware of there are issues and the person asking question may know all this stuff already so I apologize but there are issues of course with standards the standards as with building codes over time have changed fairly dramatically so there are cutoffs I believe 1990 is one of them and then there's a cutoff some years prior to that where the building standards for manufactured housing were significantly different to the point that we had serious reservations about retrofitting mobile homes of a certain age I'm not familiar with any HUD requirements about what you can and cannot do but obviously our visual inspections are what guide us what kind of home is the condition in and I'm sure many of you will come up on mobile and site-built homes that you know immediately when you roll up in the driveway that this is not a home you're going to be able to help it would probably be better if they just had a new home and we're not in that business unfortunately but we can make and have learned we can make significant differences for people in manufactured housing believe it or not even putting insulation in the attic what passes for an attic in the space between the roof and the interior of the home there's a lot you can do the biggest step though and I mentioned this during my presentation is to get that resistance heating that electric furnace out of the home and put a heat pump in its place you can make such a tremendous savings and we have a lot of double-wides here that's an automatic for us thank you very much and the last question that we've received is actually a couple people are asking about the red legs acronym that y'all are using and if someone wouldn't mind kind of explaining what that is and kind of advice for working with red legs well I talked about that a good bit so this is Lindsay in South Carolina the Rural Economic Development Loan and Grant Program Rural Economic Development Loan and Grant Program from USDA and RUS if you're an RUS borrower you're eligible to apply for that these loans have been used for years and years and years by co-ops to do as the name implies economic development to build or help people in their communities build businesses hotels industrial parks those kinds of things to draw industry and commercial businesses into their communities to create jobs and so forth we had worked with USDA and RUS before we launched our pilot to change the rules to allow us to do what we're doing with the money which is using that third party to lend it out as micro loans to help this weatherization effort so rural weatherization residential in our case but I'd encourage you just to Google USDA RUS Redleg I'm sure Google will pop up lots of links to their website and you can read more about how that works and look into it and get more sales Thanks Lindsay that was all the questions that were sent in do any of our speakers have any final thoughts they'd like to share with the audience we still have about 50 people on the webinar okay well with that I'd like to thank our three speakers for your excellent presentations and for staying after longer than an hour to answer all these really good questions that were sent in that was Lindsay Smith the Vice President of Education with the Electric Cooperatives of South Carolina Brian Dreiling the Manager of Energy Services with Midwest Energy in Hayes, Kansas and Bob Dickey Vice President of Marketing and Economic Development at Eastern Illini Electric Cooperatives in Paxton, Illinois thank you to our speakers and thank you to our attendees you will receive a recording of this presentation as well as the slides as well as any other documents that we discussed that the speakers will pass through me I'll then pass to you so this is Mark Millby at the Midwest Energy Efficiency Alliance and in partnership with we'd like to thank EESI in DC for helping us out with this thank y'all and have a great day thank you thank you