Instead, Congress Should Work With Stakeholders on Measures to Keep PACE Programs Growing With the Right Set of Consumer Protections
Sen. Tom Cotton (R. Ark) has introduced a bill, the PACE Act of 2017, that would needlessly set back important emerging state and local energy efficiency and clean energy programs just as we need them the most. While he claims his goal is to protect consumers, it sure looks like he is bent on harming an effective type of clean energy initiative that states and cities across the country are interested in—and has helped over 100,000 homeowners lower their energy bills by making their homes more efficient and installing solar panels.
Property Assessed Clean Energy (PACE) programs allow a homeowner to obtain financing to make home improvements related to energy use—such as adding insulation, replacing a broken heater with a high-efficiency model, and installing rooftop solar panels. The key feature of the financing is that the homeowners pay for these improvements with payments made through their property taxes.
Improving energy efficiency in our homes and increasing access to home solar PV (photovoltaic) systems is important to curbing global warming pollution and lowering consumer energy bills. But S. 838, as introduced last week, threatens to effectively end the programs. Congress should reject the bill and instead work with all interested parties to ensure these important state and local energy efficiency and solar programs continue to grow and that appropriate consumer protections are in place.
The Cotton bill is poorly considered, fails to account for the unique benefits and attributes of PACE financing, and risks shutting down these popular state and local programs. Sen. Cotton’s inflammatory press release announcing the legislation completely mischaracterized PACE programs.
Sen. Cotton calls PACE a “scam,” but in fact, PACE programs are an effective way to allow homeowners to make their homes more efficient, install solar panels, and lower their energy bills. According to the U.S. Department of Energy, since 2009, more than 100,000 homeowners have made energy efficiency and renewable energy improvements to their homes through PACE programs. Through the end of 2016, residential PACE programs had allowed homeowners to invest nearly $2 billion in energy efficiency, solar, and other upgrades to their homes.
Sen. Cotton calls PACE financing programs “high interest,” but that’s not the case. Obtaining affordable financing has long been an obstacle for many homeowners seeking to do energy efficiency upgrades and to install rooftop solar systems. As noted earlier, with PACE financing, the homeowner pays for clean energy home improvements through property taxes. Because the financing is secured by the customer’s obligation to pay property taxes, customers may obtain funds at lower cost than through comparable unsecured financing and credit cards.
NRDC has long been a supporter of state and local PACE programs as an innovative way to overcome obstacles to home energy retrofits. NRDC has worked with the federal government, and state and local governments to develop regulatory frameworks that will support PACE programs. My colleague Ashok Gupta, co-author of this blog, serves on the board of directors of PACENation, a non-profit organization aimed at encouraging energy efficiency and renewable energy by promoting PACE financing programs.
As with any new program, administrative and operational details need to be continuously improved and the PACE industry has been engaged with stakeholders in doing that. One important aspect that is still evolving is how consumer protections and disclosures apply to this unique financing mechanism. It is very important to make sure that appropriate consumer protections are in place to ensure that homeowners get the promised benefits from PACE financing.
Addressing consumer protection
While some consumer protections for PACE programs are already in place in states such as California (where most residential PACE programs are currently based), and some are recommended by Department of Energy guidelines issued in November 2016, there may well be gaps and federal consumer protection provisions can also be helpful and appropriate as PACE programs grow throughout the United States.
In light of the important and substantial energy efficiency gains produced by customers using PACE, and the number of customers relying on PACE to finance home improvement work, it is very important to examine carefully how to implement needed consumer protections and to ensure that disclosure requirements are carefully tailored.
In contrast, Sen. Cotton’s bill is a blunt instrument that threatens the progress of PACE programs rather than carefully implementing additional consumer protections.
Moving forward, we encourage PACE supporters and consumer advocates to work together to find a well-tailored solution that will both allow PACE programs to continue to grow and will put in place the right set of consumer protections. That could then form the basis for well-crafted federal legislation that will also meet both goals.