Pioneering Green Legislation in New York a Model for Other States
On the eve of its adjournment, New York’s state legislature provided a new opportunity to create thousands of jobs for New Yorkers.
The new law, the Power NY Act of 2011 (AB 7006-A), establishes the first statewide “on-bill recovery” program — allowing charges for retrofitting a home or business to be included in a utility bill statement and paid over time, with monthly payments calibrated to include energy savings so that the loan doesn’t increase the bill.
The passage of this bill is considered a next step to New York’s Green Jobs/Green NY Act, legislation that was enacted in 2009 to retrofit one million homes in five years and consequently create 14,250 full time jobs. The Power NY Act of 2011 comes at a time when most Americans believe that their government’s number one concern should be the creation of jobs.
Thanks to the 2009 law, New York homeowners now have access to convenient and safe loans for energy efficiency retrofits and are given over 15 years to pay back the cost of the retrofit. The first pot of money comes from commercial lenders as well as from the auction of carbon emission credits earned through the Regional Greenhouse Gas Initiative, managed by the New York State Energy and Research and Development Agency (NYSERDA). On-bill recovery legislation will allow homeowners the ability to repay the loan as a line item on their utility bill at a rate that is less than their energy savings. This way, the upfront costs of a retrofit will be quickly recovered and a sustainable funding cycle will ensue.
With these two pioneering laws, homeowners do not face upfront costs, and instead see immediate savings that will last permanently. Moreover, retrofits can be jump-started on a grand scale without affecting the state’s budget. New York State is also a winner with this legislation, as it would raise $5 billion in third-party capital.
Making utility bills the source for green financing is important for three reasons:
• It directly links energy savings and repayment;
• It gives homeowners the protection of a utility bill; that is, it allows some protection for late payments and offers alternative payment plans; and
• It reassures lenders that they will get their investment paid back since the retrofit generates the money to pay for itself, and utility bills have a good track record for payment.
Better than equity loans, on-bill financing is a rational and safe way to allow many struggling homeowners to afford energy efficient measures. Without on utility bill financing, advocates insist, the gains from the Green Jobs/Green New York Act would only be available to wealthier homeowners with capital and good credit.
By advancing job creation legislation focused on the green economy, New York is developing the technologies and jobs of the future while addressing our increasing energy dependence and environmental crises. Not only will homes be more energy efficient, they will be healthier living and more working environments for the people of New York.