Can L.A. Save Electricity with “On-Bill” Recovery”?

Sitting here in Los Angeles, I’ll be keeping my eye on an ingenious new program in New York designed to save energy and create green collar jobs. On June 22nd, the State of New York adopted a law which will provide billions of dollars for property owners to make energy efficiency improvements. What’s so ingenious about that? The State funding won’t be for grants, but for loans. The loans will be paid back to the State in installments whenever an energy bill like an electric bill is paid.

Install a Ceiling Fan — Save Electricity
Here’s how it’s supposed to work. Let’s say a property owner takes out a loan for improving insulation and installing a ceiling fan. This should save on the electric bill for A/C in the summer, freeing up the property owner to pay an installment of the loan. The utility company will charge as much as before the insulation and ceiling fan were installed and put the savings on the electric bill towards paying off the loan. When the loan is fully paid, the property owner will start seeing a lower electric bill. This is “on-bill recovery” — the loan is repaid with each payment of a lower utility bill.

The beauty part for New York is that the State won’t have to administer these little loans. People are good about paying their electric bills so the State can expect that most of the loans will be repaid. Of course, this puts the utility company in the middle, adding to its administrative load. But in some cases, the utility company may benefit in the long run by reducing the need to build new power plants.

Save Energy and Create 60,000 Green Collar Jobs
New York hopes that 1,000,000 property owners throughout the State will take out loans for improved insulation, ceiling fans, installation of more efficient Energy-Star appliances, etc. Of course, this will mean more efficient use of electricity, heating oil, etc. And also importantly, New York hopes that these loans will create 60,000 “green collar” jobs. These will be new jobs in a sector that has been particularly hard-hit by the recession, construction.

As an electrician, I’m well-aware that construction jobs and jobs in many other sectors have been hard hit in L.A., too. I’m going to be watching how this program works for New York and will keep you updated. In the meantime, if you need electrical work in Los Angeles County, please give me a call at (818) 446-0888 or click my The Electric Connection homepage.