This summer the city of Portland and Multnomah County launched an innovative loan program that allows residential consumers to finance energy efficiency
When U.S. Department of Energy weatherization czar Gil Sperling spoke this week at Portland State University, a sense of excitement about Oregon’s leadership role in energy conservation infused the room.
Sperling told state energy bureaucrats and business people Tuesday that within 30 days the federal Department of Energy would be soliciting competitive bids for four or five grants of $80 million to $100 million each. The grants would go to communities that demonstrate an innovative approach to large scale home weatherization efforts, and pair public and private funding.
Oregon, he said, is in a competitive position to capture one of those grants, based on the strength of new local and state programs to retrofit homes and businesses. “I’m looking for Oregon to be a leader in programs that address the obstacles to how to leverage private dollars,” he said.
Despite the encouraging words, local energy advocates worry that the state could squander the opportunity if the state Department of Energy doesn’t take a more aggressive approach to build up the programs.
State Rep. Jules Bailey, D-Portland, who co-sponsored efficiency legislation that Gov. Ted Kulongoski signed last month, said he has been underwhelmed by the state department’s spark and entrepreneurship. “The U.S. Department of Energy is looking at Oregon and saying ‘you’re on stage and the lights are on,'” Bailey said. “The question is whether the implementing agency will step up.”
This summer the city of Portland and Multnomah County launched an innovative loan program that allows residential consumers to finance energy efficiency improvements to their homes with long-term, low-cost loans repaid on their utility bills. The pilot program aims to retrofit 500 homes and is funded by a limited pool of grants that the city hopes to expand with public and private money.
The Oregon Legislature is moving to fill that gap. This year it passed several measures to scale up similar efforts statewide by expanding an existing loan program administered by the Oregon Department of Energy. The Legislature’s aim, in part, was to provide a quick economic stimulus and create jobs.
Among other things, the bills set aside $5 million in lottery revenue to buy down the cost of small-scale efficiency loans, expand the agency’s bonding authority to $150 million for efficiency and renewable loans, and authorize the agency to stretch those dollars by blending them with private investors’.
The initiatives converge almost perfectly with priorities of the Obama administration, which just pumped $11.3 billion into energy efficiency and conservation programs under the American Recovery Act. The federal government is looking for innovative programs to serve as a model.
But while local governments and entrepreneurs are charging ahead to take advantage of the new opportunities, the state energy agency is taking a measured approach. The Oregon Department of Energy “is struggling to keep the pace with the rest of the players,” said Aaron Berg, a sustainability consultant who has worked with the City of Portland to develop a financial model for its new efficiency loan program. “They seem to be the boat anchor.”
After Sperling left Tuesday’s meeting, the state Department of Energy’s new director, Mark Long, explained his agency’s lengthy process to get the state program rolling. He said the agency had six months from the day the governor signed the bill — July 26 — to write the administrative rules and solicit bids to start a pilot program. But it plans to complete that work by Dec. 1 at the latest, something Long sees as a sign that the department is moving quickly.
He said the department intended to match the $5 million in lottery funds with $5 million from its small-scale energy loan program. That means there will be $10 million in total for pilot programs, which officials estimate will cover 1,200 retrofit loans.
Long said the loans won’t start flowing to consumers until May because the department won’t receive the lottery money until then. He said the number of loans is limited because the program will require a continuous stream of grant funding to make loan terms attractive, and the grant funding is currently limited to the lottery dollars.
Some believe the department could move more quickly, perhaps by tapping its reserves to fund grants in advance of receiving the lottery funds. Bailey, the state legislator, said he was told during this year’s legislative session that the timetable for issuing bonds wouldn’t delay rolling out the program.
Long said Thursday he understood there is some frustration, but that the department is moving as quickly as it can. It has money available under its existing loan program, he said, but the interest rate on those funds is too high to make the efficiency loans economical without grants to offset costs.
“I keep going back to this, the lottery money comes in May 1,” he said. “If somebody has money to give to us to offset (the loan costs), I’m happy to ramp this puppy up quicker. I’m not aware of it. If it’s there, let me know.”
Marshall Runkel, a former Portland staffer who now runs a company doing environmental retrofits, said he was underwhelmed with both the number of loans the department was planning as well as the timing. The city of Portland, he said, is already up and running with a program, and there was no need for the state to take a year.
He was also frustrated with Long’s conclusion that the program wouldn’t work without a continuous stream of grant money. He believes the state’s borrowing rates are low enough to make the deals work.
“If this achieves what it hopes to, it will keep on rolling,” Runkel said. “If it becomes a heavily bureaucratic program that has a clear beginning and end, it’s a lot less attractive.”