Sharing Insights of Our Experience with Pay As You Save® (PAYS®)

Sharing Insights of Our Experience with Pay As You Save® (PAYS®)

Roanoke Electric Cooperative offers to our member-owners a no-debt on-bill financing option for investments in cost-effective energy efficiency upgrades.  Our opt-in tariff for energy efficiency is called Upgrade to $ave, and it is based on the Pay As You Save® (PAYS®) system.  The PAYS system is suitable for all customer classes, including customer segments that often face barriers to money-saving investments, such as renters, members with poor credit, and businesses with limited access to capital. 

As part of our commitment to cooperation among cooperatives, Roanoke Electric entered into a Cooperative Agreement with the Rural Development Administration to produce a Decision Tool for Utility Managers that would support due diligence by executives in other electric cooperatives on two key decisions:

  1. Would our cooperative members benefit from a tariffed on-bill investment program for energy efficiency?
  2. If we include members on our residential rate, would we benefit from using a standard implementation plan for the PAYS system in that sector?

Our cooperative chose the PAYS system after finding that (a) offering a lending program would not meet the interests of our members, and (b) an opt-in tariff assured cost recovery for our cooperative.  Choosing to offer a tariffed on-bill investment program is consistent with our commitment to the cooperative principle of generating economic benefits for member-owners.

With the PAYS system, Roanoke Electric is not re-lending capital to members but rather offering to (a) make investments in energy upgrades to their properties with very low cost capital and (b) use an opt-in tariff to recover our costs.  Leading cooperatives in Kansas and Kentucky have years of experience with this approach, and the results from their programs raised confidence in our decision.

When we launched Upgrade to $ave, we faced an immediate waitlist of more than a hundred members, many of whom had high-bills and had not been able to benefit from an earlier loan program we had established with a local financial institution.  We were immediately able to invest in upgrades at most of these sites, and our local contractors flagged sites that would first need additional repairs for health and safety. 

In the first six months, local contractors completed upgrades to 75 homes with average estimated energy savings above 25%.  Most of the projects involved air sealing, duct sealing, insulation, efficient lighting, and installation of high efficiency HVAC equipment such as heat pumps.

In addition to generating energy savings, participants in Upgrade to $ave also generate spillover benefits such as reducing demand during periods of extreme weather.  As a result, our cooperative benefits from lower wholesale costs for both peak demand and energy.  We use some of the surplus benefits that accrue to all member-owners to pay for the cost of administering the program, which is provides an option open to all member-owners. 

Roanoke Electric purchases Energy Efficiency Credits every year to achieve our targets in the NC Renewable Energy Portfolio Standard, and with Upgrade to $ave, we are able to acquire those credits from our own members rather than pay suppliers in other parts of the state.  Those payments help buy down the cost of upgrades that might not otherwise pencil out as cost effective. 

The capital source for our investments through the Upgrade to $ave program is the Energy Efficiency & Conservation Loan Program (EECLP) offered by the Rural Utilities Service, and we have shared insights of our experience with EECLP as well.

We are using our existing billing system for cost recovery from the member-owners who take advantage of the offer, and we are using existing procedures for instances of non-payment, treating efficiency the same way we do all our energy services. 

While our cooperative is not subject to oversight by the state Public Utilities Commission, we do update our state authority for cooperatives on new tariffs.  Our Upgrade to $ave tariff is substantially the same as the ones already approved by the Kansas Corporations Commission and the Kentucky Public Service Commission, and model tariff language is included in the Decision Tool for Utilities Manager.

Upgrade to $ave has allowed our cooperative to strengthened our balance sheet while offering members the opportunity to both lower energy bills and improve the comfort of the homes and businesses in our communities. 

We welcome you to be in touch to receive a copy of the Decision Tool for Utilities Managers or raise any inquiries of interest.

Open Letter from Roanoke Electric CEO
Receive the Decision Tool for Utility Managers
Upgrade to $ave Briefing for NRECA Annual Meeting and CEO Close-Up

Recorded Congressional Briefing hosted by Energy & Environmental Study Institute (August 2015)

Recorded Webinar hosted by the Southeast Energy Efficiency Alliance (April 2015)

Q&A based on inquiries from participants in Roanoke Electric webinar (April 2015)