Metropolis Considers Program To Assist Residents Make House Power Upgrades
Traverse City could be the second Michigan state to start a program that will allow residents to fund major home energy improvements and slowly pay back the loans over time on their monthly utility bills.
Traverse City agents will consider a request from Traverse City Light & Power (TCL & P) tonight (Monday) at 7:00 p.m. to launch the “On-Bill Funding Program” in early 2020. Michigan lawmakers passed laws in 2014 to promote clean energy by allowing utility companies to help customers finance energy improvements through low-cost loans. Holland was the first city to initiate such a program under legislation. Since 2016, 121 loan applications have been approved for a total of $ 1.18 million.
The program allows homeowners to borrow between $ 5,000 and $ 30,000 to make their homes more energy efficient. “We’re not just talking about an air conditioner or a dehumidifier,” says Tim Arends, Executive Director of TCL & P. ”This is the case when people want to make insulation, windows, doors and natural gas stoves – very expensive improvements.” For the loan an administration fee of a maximum of five percent is charged. Instead of paying upfront for costly upgrades, residents can instead spread the loan payments across their monthly utility bills for up to a decade.
The aim is to make energy improvements accessible to a large number of customers – including those who would otherwise not be able to afford them. The program has more relaxed credit standards than a traditional bank loan: customers only need to have paid utility bills on time for 12 consecutive months and are not allowed to have any delinquent taxes, bankruptcies or foreclosures in the last three years. The program is only available to residential customers – rental units can be requested if the landlord has a TCL&P account – with a full household energy audit completed before the loan was approved. According to Arends, many customers are seeing long-term savings on their bills due to the energy improvements.
While Holland wanted to secure loans from its own in-house funds, TCL & P’s in-house funds are already committed to the utility’s upcoming citywide fiber program. As a result, TCL & P reached out to the U.S. Department of Agriculture (USDA) and received preliminary approval to receive loan funding of up to $ 1.8 million over the next 10 years under the Department’s Rural Energy Conservation Funding Program. “It has certain requirements, such as the city commission must approve the idea,” says Arends. “But we’re pretty confident that we can get an interest-free loan. We’d only borrow as much money as we actually lent (to customers). “
According to Arends, the program is a win-win for TCL&P, allowing the utility to help its customers with upgrades, get closer to their own renewable energy goals and reduce grid demand. “The energy you don’t use is the cheapest,” he explains. “So if we can get people to improve their energy efficiency, the goal is for them to use less energy and this will reduce our peak demand. Ultimately, this benefits all TCL&P tariff payers as we as a utility company don’t have to purchase as much capacity as we would if they didn’t make these improvements. “
The program also presents low liability to TCL&P as homeowners are required by law to repay the loans. “The risks for us are minimal,” says Arends. “If they don’t pay it back, we can mortgage it and get it back, just like we collect property taxes. There is no credit risk in providing the program. “
If the commissioners approve the program tonight, TCL&P will next seek final approval from the state and USDA to continue the lending program. The utility company trains agents to guide customers through the loan application process, then sets up a website and marketing campaign to bring residents’ attention to the program. Arends believes the process could take four months. The program is expected to start in February, he says.