On-Bill Recovery Financing Program Frequently Asked Questions

1. What is the On-Bill Recovery Financing Program?
   On-Bill Recovery Financing is a way to obtain loans for all-fuel energy efficiency improvements through the New York State Energy Research and Development Authority (NYSERDA) and to repay these through a charge on the customer’s electric and/or gas utility bill. On-Bill Recovery Financing makes it easy to pay for home energy improvements without paying cash up front.
2. How does the On-Bill Recovery Financing Program work?
   There are a number of participants in the financing process:
   • NYSERDA administers the program and provides the capital.
   • Utilities do the billing and collection of loan payments from the homeowner (however, if the customer ever disconnects utility service or has its service disconnected for non-payment, NYSERDA’s loan servicer will bill the customer directly monthly until utility service is re-established).
   • Loan originators review the homeowners’ loan applications to determine eligibility, prepare the agreement and disburse the loan proceeds directly to the contractor.
   • A loan servicer tracks the status of the loan from the time it is disbursed until the time it is completely paid off.
   • A title company records a declaration that shows the amount and term of the loan, and notes that the loan is being repaid through a charge on the utility bill.
   A homeowner participates in the Home Performance with ENERGY STAR program, where a BPI accredited contractor approved by NYSERDA will perform a comprehensive home energy assessment to identify opportunities for energy savings. The contractor will write a report that recommends specific energy improvements for your house along with cost figures for making the improvements and estimated energy savings. You apply for financing through NYSERDA’s loan origination contractor, Energy Finance Solutions.
   
   Once you are approved, you will sign a Note and a Declaration that all describe the terms and conditions of the financing, and authorize a NYSERDA Loan Installment Charge to be placed on your utility bill once the project is complete. Once the contractor has completed the improvements at your house to your satisfaction, the lender will pay the contractor’s bill and alert your utility. As you pay off the loan through your utility bill, the utility passes your payments to NYSERDA so they can be put back into the revolving loan fund for other borrowers.
3. Why does the homeowner have to sign a Declaration?
   The homeowner signs a declaration to let prospective purchasers of real estate know when there is an existing charge on a utility meter for an On-Bill Recovery Loan. NYSERDA will record the declaration. The declaration does not represent a lien on the property, but is recorded but is recorded in a similar way as a mortgage to provide notice to others of your obligations under this loan transaction.
4. Can consumers who signed up for On-Bill Recovery Financing prior to Feb. 17, 2012 switch from a mortgage to a declaration?
   Yes, consumers who applied for financing prior to Feb. 17, 2012 will be allowed to elect whether they want to proceed with a Mortgage for the full term of the loan or whether they want the option to have the mortgage converted to a declaration. The declaration does not represent a lien on the property, but is recorded in a similar way as a mortgage and provides notice to others of the homeowners’ obligations under this loan transaction.
5. When does the On-Bill Recovery Financing Program start?
   For owners of 1- to 4-unit residential homes, it began January 30. For small businesses, not-for-profits and multifamily buildings, details will be announced.
6. What home improvements does it cover?
   For residential homeowners, it covers home improvements that increase the energy efficiency of the home and meet Home Performance with ENERGY STAR and On-Bill Recovery Financing standards. To participate in the On-Bill Recovery Financing program, the homeowner must have a comprehensive energy assessment conducted by a participating Building Performance Institute (BPI)-Accredited Home Performance contractor, and home energy improvements must be recommended and installed by a participating Home Performance with ENERGY STAR contractor. In addition, on an annualized basis, the monthly on-bill repayment amount cannot exceed one-twelfth of the savings projected to result from the installation of the energy efficiency measures and the repayment term may not exceed the useful life of the improvement.
   
   Eligible home energy upgrades typically include insulation and air sealing; energy-efficient furnaces, boilers, water heaters, air conditioners, lighting fixtures and appliances.
   
   Eligible improvements for small business, not-for-profit and multifamily buildings are listed on NYSERDA’s website.
7. Is there a maximum income level to participate?
   No.
8. Will consumers really see no increase in their energy bills because the financing of energy improvements will be offset by their energy savings?
   The loan will be designed so that projected energy savings equal or exceed payments. However, these energy efficiency projects may not result in lower monthly costs over time, due to additional factors that contribute to monthly energy costs. Energy bills vary monthly due to pricing, weather and energy use. Therefore, some months your energy bills may be smaller than they would have been without the energy savings, and other months they may be larger. Also, customers may change their energy use habits over time and this may result in changes in energy bills.
9. How much is the maximum amount of the loan?
   A homeowner can finance up to $25,000 if the payback period (the amount of time it takes for the work to “pay for itself” in savings) is 15 years or less. If the payback period is longer than 15 years, the maximum amount eligible for financing is $13,000.
10. What are the financing terms?
    The interest rate for a residential On-Bill Recovery Loan is 3.49% for terms of 5, 10, or 15 years (this rate is subject to change by NYSERDA). Once approved for the loan, the consumer’s interest rate is fixed for the life of the loan. The financing interest rate for small business, not-for-profit, and multifamily buildings has not yet been established. Residential applicants will also be charged a loan processing fee of $150 by Energy Finance Solutions, which can be included in the amount financed. The loan term cannot exceed the useful life of the improvements.
11. Will unsecured loans through Green Jobs/Green NY still be available or do consumers have to use On-Bill Recovery to get a loan from NYSERDA?
    Yes, unsecured loans through Green Jobs/Green NY will still be available. On-Bill Recovery Loan is just another payment option.
12. What are the credit standards?
    For 1- to 4-unit residential homeowners, applicants must have:
    • a credit score of at least 640 (alternatively, a demonstrated history of satisfactory energy bill and mortgage payment);
    • acceptable levels of income relative to outstanding debt obligations;
    • no bankruptcies, foreclosures or repossessions within the past 7 years (5 years if demonstrated history of satisfactory energy bill and mortgage payments); and
    • not more than $2,500 in outstanding collections, chargeoffs, liens and judgments.
    
    Credit standards are still being developed for small business, not-for-profit, and multifamily (larger than 5-units) building owners.
13. Will NYSERDA have a list of participating lenders on the NYSERDA web site?
    Initially the lender is Energy Finance Solutions. Consumers can contact them by going to nyserda.ny.gov/residential for the loan information. An online credit application is available on the Energy Finance Solutions website. NYSERDA may issue a solicitation for additional lenders in 2012.
14. What utilities are participating in on-bill recovery?
    The law requires that the following utilities participate: Central Hudson, Con Edison, Long Island Power Authority, National Grid (upstate New York customers only), New York State Electric and Gas Corporation, Orange & Rockland, Rochester Gas and Electric.
15. Can you participate in the On-Bill Recovery Financing Program if you are a renter?
    For residential properties, the borrower must own the property in addition to being named on the utility account. For small business, not-for-profit, and multifamily buildings, the borrower must be named on the utility account, but does not have to be the property owner – they can qualify for On-Bill Recovery Financing if they have written authority from the property owner to make and finance the energy efficiency improvements in the property.
16. Can you get the work done and do on-bill if you are planning to buy the house but don’t own it yet?
    No. You must own the house.
17. Does the homeowner have to use certain contractors to participate in On-Bill Recovery? 
    Yes. For single family homes or 2- to 4-unit residential properties, the homeowner must use a company that is accredited by the Building-Performance Institute and participating in NYSERDA’s Home Performance with ENERGY STAR program. A list of eligible contractors is on the NYSERDA web site at nyserda.ny.gov/Contractors/Find-a-Contractor/Residential-Contractor
    
    For small business and not-for-profits, the owner must use a NYSERDA or utility program approved installer.
    
    For multifamily buildings, the owner must use a NYSERDA Multifamily Performance Program partner.
18. When does the homeowner need to start paying back the loan?
    Residential customers who apply for financing prior to June 2012 will not be charged on their utility account until the first utility billing period ending after May 31, 2012. No payments are due and no interest will accrue during this deferral period. Otherwise, payments begin within one or two utility billings after the contractor has completed work.
19. Who pays the contractor?
    Loan proceeds from the revolving loan funds will be used to pay the contractor. The payment will be made by Energy Finance Solutions.
20. Can do-it-yourselfers participate in the On-Bill Recovery Financing Program for the cost of equipment and materials?
    No. Consumers must use a BPI-accredited/NYSERDA approved contracting company to do the work.
21. What happens if the homeowner doesn’t pay this portion of his/her utility bill?
    A late payment charge will be incurred during any timeframe that the customer is no longer receiving a bill from the utility (if utility terminates the customer’s service for nonpayment; if customer requests the utility terminate the service; and if customer requests temporary service suspension).  During this timeframe, the customer will receive a direct statement billing from NYSERDA’s Loan Servicer.  If the customer does not pay that bill when due, the account will be subject to a late payment fee of 1.5% of the unpaid principal and interest charges.
22. Is there a penalty for pre-payment?
    No.
23. Is there a minimum loan amount for an On-Bill Recovery Loan?
    Yes. The minimum loan amount is $3,000 for most residents and $1,500 for those participating in Assisted Home Performance with ENERGY STAR, a program for residents with incomes between 60% and 80% of state or area median income, whichever is higher.
24. Does the homeowner have to pay off the loan if s/he sells the house?
    No. The loan is transferable to the new owner unless the parties agree that it will be fully paid prior to transfer.
25. How will On-Bill Recovery Financing Program affect oil and propane customers? 
    They are eligible for the On-Bill Recovery Financing Program. The cost of energy improvements will be on their electric bill. Their electric bill will, therefore, increase and savings will be found on their oil or propane bill.
26. Can a customer that purchases electricity and/or natural gas from an Energy Services Company (ESCO) with billing provided by a participating utility receive an On-Bill Recovery Loan?
    Yes, a customer who purchases their electricity and/or natural gas from an ESCO, but is billed by a participating utility, is eligible for an On-Bill Recovery Loan.
27. When did the On-Bill Recovery Financing Program law pass and what was its purpose?
    The bill was passed by the New York State legislature in June 2011 and signed into law by Gov. Andrew Cuomo on August 4, 2011. Its purpose is to provide a mechanism to encourage New York homeowners and businesses to make energy-efficiency improvements to their homes and businesses in order to reduce energy consumption and carbon emissions.