GEO’s Schoen Testifies for On-Bill Financing
GEO Board of Directors Member Phil Schoen (Geo-Enterprises – Tulsa, OK) testified in Washington, DC on Oct. 13 before the Senate Committee on the Environment and Public Works’ Subcommittee on Green Jobs and the New Economy at their hearing, “Innovative Practices to Create Jobs and Reduce Pollution.”
The subcommittee is chaired by Sen. Bernie Sanders (D-VT). Senators in attendance included Sen. Boxer (D-CA), Sen. Whitehouse (D-RI), Sen. Merkley (D-OR), Sen. Inhofe (R-OK), Sen. Sessions (R-AL), and Sen. Boozman (R-AR). Witnesses also included Kyle W. Kempf, Senior Director, Government Affairs for the National Small Business Association; Edward White, Jr. , Vice President of Energy Products for National Grid; Dr. Anne Smith, Senior Vice President for NERA Economic Consulting; and Steve Rowlan, General Manager, Environment, Nucor Corp.
After describing how geothermal heat pumps work, and their benefits in terms of efficiency and the environment, Schoen said that the biggest challenge facing the industry is high installation cost.
To help alleviate the problem, he said, “One strategy that is very promising is on-bill financing, which allows residential and commercial energy efficiency projects to be financed directly on the utility bill. The advantage of this approach is that the up-front costs are converted into a small monthly payment that is more than offset by the monthly energy savings realized by the project.
“Several states, including Illinois and California, have initiated on-bill financing programs. But many utilities are reluctant to participate because of concerns about the default risk and the added complexity of administering the financing. Some utilities have turned to third-party financing programs as a solution, particularly in the residential market.
“By creating a federal program that would reduce financial exposure of the utilities—through a loan-loss fund, for example—I am confident that more utilities would implement on-bill financing programs. A federal loan-loss backstop would offer utilities a major incentive, and would not be very expensive. The default rate for on-bill financing programs is very low, and since the loan is tied to the utility bill and not the homeowner, the loan would continue to be paid as long as the building is occupied.
“If you are looking for a relatively inexpensive way to create jobs, improve the energy efficiency of our homes and buildings, lower energy costs for consumers, and reduce greenhouse gas emissions, I can think of no better approach than encouraging more utility companies to offer on-bill financing programs for installing geothermal heat pumps.”
Schoen then highlighted the jobs implications of such action. “By tackling the upfront cost issue, we expect our industry will rapidly expand and we will create thousands of new jobs. These are U.S.-based jobs—from the manufacturing to the drilling to the installation,” he said. “We estimate that one new job will be created in this country for every additional 18 heat pump installations—and that is a very conservative estimate. From my perspective, I would expect that my installations would more than double if we had a robust on-bill financing program. This would allow me to grow my workforce by one-third—from 24 to 32 workers.”
In conclusion, Schoen emphasized the environmental benefit of encouraging the installation of geothermal heat pumps: “We will also dramatically reduce carbon emissions. Over an average 20-year lifespan, the installation of 100,000 units of residential geothermal systems can reduce greenhouse gas emissions by almost 1.1 million metric tons—the equivalent of removing 58,700 cars from our roads or planting more than 120,000 acres of trees.” You can watch and listen to Phil Schoen’s complete testimony at the U.S. Senate website, by clicking here. His presentation starts at 54:00 minutes into the hearing (move the slider at bottom of screen).