Linda Butler cut her monthly power bill by an average of $188 through energy-efficiency improvements.
To understand the power of conserving electricity, consider the bill Linda Butler received in early September from her electric co-op: Total due, about $125.
That's a reasonable amount for comfortably cooling a 1,296-square-foot home through the “dog days” of August in South Carolina, especially when you consider that Butler, a member of Tri-County Electric Cooperative, shares her home with her daughter and granddaughter. But just a few months ago, her peak-season heating and cooling bills were $400 to $500 a month, with one bill almost $800. To make matters worse, she and her family were still sweating through summers and shivering through winters.
Like many homes in South Carolina, Butler’s was poorly insulated and riddled with air leaks that made an outdated heating and cooling system work overtime. Her salary as a part-time teacher’s aide made paying utility bills a struggle, and left nothing to pay the thousands of dollars it would cost to make her home energy efficient. In desperation, she entered the Help My House home makeover contest offered by the state’s electric co-ops.
From 4,000 entries, Butler’s home was one of seven selected for free efficiency upgrades as a demonstration project to show how everyday fixes could reap significant savings. Under the supervision of her co-op, contractors plugged leaks, added insulation and installed a new, high-efficiency heat pump. “I didn’t know that a house could have so many holes in it,” Butler said.
In the 10 months since the work was completed on her home, Butler has cut her energy use by 20,309 kilowatt-hours and her monthly bills by an average of $188. To date, all seven Help My House winners have saved a total of 33,016 kilowatt-hours and $4,296.29.
Now consider that hundreds of thousands of homes served by co-ops in South Carolina need those same basic upgrades, and imagine the savings if the homeowners could find a way to pay the upfront costs of improvements.
The Rural Energy Savings Program Act, nicknamed Rural Star, would do just that. Approved by the U.S. House of Representatives on Sept. 16, the bill would allow co-op members to finance qualified efficiency upgrades through low-interest loans repaid by monthly energy savings. If it passes the Senate and becomes law, Rural Star would provide $4.9 billion in federal loan funds to electric co-ops nationwide. The co-ops, in turn, would loan the funds to their members at very low interest rates with the funds paid back over a period of 5 to 10 years.
South Carolina’s electric co-ops developed the concept and have a plan to loan approximately $750 million to co-op members with a goal of upgrading 225,000 homes over 10 years. That plan calls for participating co-ops to use a repayment formula where two-thirds of the savings on each monthly bill would be applied to the loan, with the co-op member keeping the remaining third. To qualify, homes would undergo an energy audit to ensure that the loan can be paid back in a reasonable time, said Mike Couick, CEO of The Electric Cooperatives of South Carolina.
A homegrown idea
The idea for the Rural Star program began with a June 2009 conversation between Couick and Congressman John Spratt, the representative of South Carolina’s 5th District and one of the most senior members in the House. Couick was watching the climate change debate in Washington with concern. The vast majority of South Carolina’s electricity is produced by coal-burning power plants and the federal government was considering taxes on the carbon dioxide they produce, along with mandates to force utilities to use costly alternative energy sources. No matter how well-intentioned, those ideas would have one certain result: South Carolinians would face higher power bills.
“I sat down with Congressman Spratt lamenting that everything Congress had looked at was going to be a lot more expensive for co-op members,” Couick said. “He said, ‘We’ve got to do something to help these folks. Bring us back some ideas.’ ”
Couick then met with Ron Calcaterra, CEO of Central Electric Power Cooperative. As the provider of electricity for all 20 of South Carolina’s distribution co-ops, Central concluded that the cost-effective way to reduce carbon dioxide emissions and keep electricity affordable was to lower system-wide energy use and reduce peak demand. When Central’s engineers studied the options, they calculated that improving the efficiency of 225,000 homes could reduce energy use by 5.6 million megawatt-hours over the next 10 years, cutting the state’s carbon dioxide emissions by 6.7 million metric tons in the process.
The sticking point: Finding a practical way for co-op members, many with low incomes, to pay the up-front costs of energy-efficiency upgrades. Co-ops in Kansas had experimented with microlending programs and on-bill financing, but the plan developed by South Carolina’s co-ops expanded the concept to whole-house efficiency on an unprecedented scale.
When Couick brought the proposal to Washington, he shared it with Spratt and House Majority Whip James Clyburn, who represents South Carolina’s 6th District. “I fell in love with the idea and then introduced the concept to the members of Congress on both sides of the aisle,” Clyburn said. "Everybody felt this was a great thing to undertake."
Sponsored by Clyburn, the Rural Energy Savings Program Act gained bipartisan support with 55 co-sponsors, including Spratt and Republican Reps. Bob Inglis, Joe Wilson and Henry Brown. When the bill was introduced in March, Republican Senator Lindsey Graham, an early co-sponsor of a companion bill in the Senate, joined Democrats Clyburn and Spratt at a press conference to promote the Rural Star concept. “This is a plan that will help consumers become more energy efficient and lower their electricity costs,” Graham said.
The House bill authorizing the loan program sailed through the Agriculture Committee and quickly made it to the floor for a final vote, where it passed 240-172. The bill is pending in the Senate. If passed and signed into law, Congress will still need to approve funding for the program in the appropriations process before loans can begin.
Dollars and sense
While the Rural Star program began with the goal of reducing greenhouse gas emissions, the economic benefits for South Carolina are a “grand slam,” Spratt said. “The real impact of this is that it will work, and it has multiple winners.”
If the program sufficiently lowers energy use, all co-op members will avoid paying the estimated $4 billion cost of building new nuclear power facilities—nuclear being the only practical power source that would also lower carbon dioxide emissions. The program is expected to create 3,500 private sector jobs throughout the state in the first three years, as workers would be needed to perform energy audits and upgrades. And as Clyburn points out: “These are jobs that cannot be exported.”
The investment in efficiency upgrades would also spur sales of American-made equipment and supplies, but the greatest benefit to local economies would be the on-going savings for co-op members. If the program reaches its goal of upgrading 225,000 homes, the combined savings to those members are estimated at $280 million a year, Couick said.
That would be especially helpful for low-income earners who in peak seasons may spend 60 to 80 percent of their disposable income on energy. Less money spent on utility bills means more money for other necessities.
That was certainly the case for Linda Butler, who joined Clyburn at a September press conference to tell her story and urge passage of the bill. “I hope they will get it passed because there are a lot of people out there who need it,” she said.