Aci mass heat-loan-carlfawcett-csg


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Carl Fawcett describes the Mass Save HEAT 0% Loan Program for the ACI conference including pilot and program history, characteristics of the program, types of loans and other loan details, lending results and statistics, the HEAT Loan process, and trends related to volume and size. He also covers how contractors can best help their customers successfully through the steps of the process.

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  • $131,723,446 - exact # through Sept 2012 of financed Energy Efficiency improvements
  • Aci mass heat-loan-carlfawcett-csg

    1. 1. Mass Save® HEAT 0% Loan ProgramHow it is Motivating MA Homeowners October 16, 2012 ACI New England Carl Fawcett Director of Financing Programs
    2. 2. Sponsored by:HEAT LOANPROGRAM
    3. 3. 2006-2012 HEAT Loan Statewide Results through September 2012• 15,914 closed loans• $131.7M+ financed Energy Efficiency improvements• $8,164 average loan size over last 5 years• 60-90% range of loan approvals of applicants by lenders• 47 banks and credit unions participating• 80% of financing for heating system upgradesOne of the most successful financing programs for energy efficiency improvements in America
    4. 4. Origins of HEAT Loan Program• 1986-1990+ Original HEAT 0% residential financing program funded by oil overcharge dollars awarded the Commonwealth of Massachusetts from a federal court case• Program directed by DOER using local organizations across the Commonwealth to provide customer and technical support
    5. 5. Son of the Original HEAT• 2005 - MA Heating Energy Assistance and Tax Relief Act signed into law. Act included tax credits to help MA residents with skyrocketing energy costs• One provision earmarked funding from residential ratepayer-funded energy efficiency programs for a low interest loan program pilot for residential customers• Loans under this pilot were intended to help customers weatherize homes and install efficiency upgrades to their heating and hot water systems
    6. 6. HEAT Pilot in 2006• DOER decided the Mass Save residential program would operate this pilot• No similar financing program in the U.S. at that time• Many program details to work out, including creation of lender network, who would provide customer support, and what measures would be eligible for financing• Working group of staff from DOER, participating utilities, and CSG created framework• Pilot launched winter 2006
    7. 7. Green Communities Act of 2008• Legislation made HEAT loan financing program a permanent part of the Mass Save residential program• Loan product helps incentivize residential efficiency adoption and assists households to overcome cost barrier posed by large capital investments
    8. 8. Statewide HEAT Loan OrganizationSponsor/Territory Administrative VendorNSTAR (gas and electric) CSGNational Grid (electric only) CSGCape Light Compact Rise EngineeringWestern Massachusetts Elec. HoneywellNew England Gas HoneywellFitchburg Gas and Electric Unitil
    9. 9. Characteristics of HEAT Loan PilotFor comparison with current program:• Pilot offered 0% and 3% loans depending on income (80% Median)• Small number of participating lenders (1-20)• Maximum loan $15K, Minimum loan $2K• Central AC was not eligible• Heat loss calculation was required for heating system replacements• No fuel switching was allowed• Only occupant owners of 1-4 unit properties were eligible to apply for financing
    10. 10. 2012 HEAT Loan Program: Eligibility• Applicants must have valid residential account number with a sponsoring utility or Cape Light Compact• Must have had a Mass Save Home Energy Assessment (HEA) for 1-4 unit properties (see also condo eligibility)• Applicant can be occupant or non-occupant owner• Municipal electric customers who heat with NSTAR Gas, Columbia Gas or New England Gas may apply; National Grid Gas DOES NOT participate• A “One Loan One Shot” program (some exceptions granted by utilities)
    11. 11. 3 Types of HEAT Loans Loan Options for CustomersEligible Customer Type Loan Loan Term AmountOwner Occupied Micro Loan $500-$2000 24 MonthsOwner Occupied Standard Loan $2001- Up to 84 $25,000 MonthsNon-Owner Occupied Rental Property $5,000- Up to 84 Loan $25,000 Months
    12. 12. Some Loan Details• Loan approval is not guaranteed; customers are eligible to apply once they receive a HEAT Loan Authorization form from loan administrator• 47 credit unions & regional banks currently participating• Lender determines loan approval or denial• Loan approval based on credit and debt-to-income ratio• Most loans unsecured; some lenders offer secured loan• Most terms are 7 years (except for Micro Loans)• Maximum loan amount is $25,000• All loan amounts are net any utility rebates
    13. 13. Lending Results: Preliminary results from survey of participating lendersAverages from the survey:• 86% of loans are approved• 755 Av. FICO score• 665 Av. minimum FICO score• .55% Default rate• 1-5 Day processing time for loans by lenders(many lenders offer same-day processing)
    14. 14. As of April 2012:Some Condo Units Eligible for HEAT Loan • All residential electric, and natural gas, individually metered condo units may apply • Master-metered condos in complexes are NOT eligible • Condo complexes that heat with oil or propane, are NOT eligible to participate • Lighting and insulation upgrades for condo units are provided by the utility’s multifamily program - treat the whole complex • This program addition is a new opportunity for contractors installing heating, hot water and air conditioning systems
    15. 15. Eligible MeasuresHEAT Loan provides financing for energy efficiencyimprovements that meet program minimum standards – Insulation and/or air sealing upgrades – Single-pane window replacements – Efficient heating systems – Air source and geothermal (ground source) heat pumps – Ductless mini-split heat pumps/AC – Thermostats – Domestic hot water system – Solar hot water systems – Central Air Conditioning installed with QIV (New or replacement) – Note: efficiency requirements for heating and DHW upgrades are the same as the GasNetworks, Mass Save propane/oil and Cool Smart rebates.
    16. 16. Measures Financed Since 2006 Heating system & DHW: 11,601 Weatherization: 1,575 Windows: 2,103 Central AC: 228 (6 months)
    17. 17. Residential HEAT Loan Process (Abbreviated) Customer calls Utility and requests a Mass Save Audit; audit is performed Mass Save Audit verifies Customer’s eligibility to participate in HEAT Loan Customer solicits contractor quotes Program reviews and authorizes proposals; Customer signs check over to Contractor once work completed and passes inspection* Customer receives authorization and receives list of Lenders, applies for Verification Inspection pre-approval Customer closes loan with Lender. Two-party check made in name of Contractor; Lender gives check(s) to Customer
    18. 18. ApplicationChecklist:A very importantpart of the heatloan folder. It outlines all ofthe steps to theprogram.
    19. 19. Intake form
    20. 20. Contractor Proposal
    21. 21. Authorization Form
    22. 22. Two-party Checks Issued by Lenders, Net any Rebates
    23. 23. Closed Loans by Year 2010 2011 20124500400035003000 2009250020001500 2006 2007 20081000500 0
    24. 24. Trends: VolumeVolume of loans closed has increased every year• Adding new measures such as central AC widens pool• Increased marketing by Mass Save utilities and lenders; increase in contractor referrals• More word of mouth referrals by customers as program matures• Participating customers increase with addition of micro loans and loans for non-occupant owners• Large increase in customers participating in the residential efficiency programs in the last 3 years due to program expansion
    25. 25. Average Loan Size by Year$10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 $3,649,346 $5,087,889 $7,428,164 $19,095,819 $27,609,119 $31,975,388 $36,877,721 2006 2007 2008 2009 2010 2011 2012 Average loan amount
    26. 26. Trends: Size Reasons for loan size increasing: • Additional measures now available • Whole-house approach motivates customers to do multiple measures • Minimum efficiency requirements for equipment increased over time, encouraging customers to invest upfront in more expensive and higher efficiency equipment
    27. 27. Growth of HEAT Loans$40,000,000$35,000,000$30,000,000$25,000,000$20,000,000$15,000,000$10,000,000 $5,000,000 $0 2006 2007 2008 2009 2010 2011 2012 2112
    28. 28. Contractors can. . . help customers master HEAT loan stepsProposals you provide customers should include:• Make, model #, and AFUE of equipment being proposed• Clearly stated details of equipment to install• Itemization of any non loan-eligible work, such as oil tank removalIf you present several options, have the customer note which one they are choosing. Encourage them to read HEAT Loan steps and minimum standards for their improvements.If central AC is being proposed, provide a Manual J version 8 load calculation and AHRI certificate.Become familiar with equipment efficiency requirements for HEAT Loan and rebate programs.
    29. 29. For Minimum Requirementsfor Energy Efficient Measures, Steps, and Minimum Efficiency Standards: see
    30. 30. Contact Information:•• HEAT Loan Support Line: 1-800-696-8077 for National Grid and NSTAR territories• Fax: 508-836-3181 (CSG)• Email: MAHTLoan@CSGRP.Com• Carl Fawcett, Director of Financing Programs for CSG: or 1-800-696-8077