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Mecklenburg Co-op officials take close look at Rural Star

Mecklenburg Electric Cooperative officials are studying the Rural Energy Savings Act, also known as Rural Star, that passed in the U.S. House of Representatives last week. The bill has been sent to the Senate for consideration. “We are still evaluating the language in the bill and whether or not it is a program that will benefit our membership,” said John C. Lee, Mecklenburg Electric Cooperative president and CEO. “The bill has undergone a number of changes since it was introduced, for example, it began as a grant offering and has since been modified to be a loan program, primarily as a response to the rising national deficit.”

Under provisions of the Rural Star bill, rural homeowners would have the opportunity to upgrade the energy efficiency of their homes, according to Michael Kelly, deputy press secretary in the 5th District Congressional office.

In addition to making energy financing affordable for co-op customers, the bill is projected to create an estimated 20,000 to 40,000 construction jobs nationally, Kelly said.

Rural Star would provide $4.9 billion in loan authority through the United States Department of Agriculture’s Rural Utility Service (RUS) to rural electric cooperatives to offer low-interest micro-loans to residential and small business customers for energy-saving retrofit and structural improvements, he explained.

Every dollar loaned by RUS to the cooperatives is repaid to the taxpayers within 10 years. The program builds on the existing co-op infrastructure that has strong community ties and a proven history of on-bill financing for consumer loans.
Trained auditors and contractors would conduct energy audits to determine what sorts of energy efficiency improvements are warranted, Kelly said. Typical consumer loans would be $1,500 to $7,000 and would cover sealing, insulation, heat pumps, HVAC systems, boilers, roofs and other improvements that would produce sufficient savings, he said.

Participating consumers repay the co-ops for the installation and material costs through a monthly charge on their utility bills, Kelly added.

In the simplest terms, local electric co-ops will receive funding from a loan fund that will finance efficiency upgrades in consumers’ homes, Kelly said. The consumers will then repay the co-op with a small charge on their monthly bill. Kelly said the reduced energy consumption would cover most, if not all, of the monthly charge, meaning customers would see little to no change in their bills.

The loans will be repaid within a five to 10 year window, Kelly said. After the loan is repaid, consumers will continue to save hundreds of dollars annually, he added.

Although Rural Star has many positives, Mecklenburg Electric Co-op officials have questions.

“One concern we have is that should someone default on one of these loans, their unpaid balance would have to be subsidized by the rest of our members since it is the cooperative, not the consumer, that is the responsible party to the federal government,” said Lee. “While we always are on the lookout for any offering that will benefit our members, we have no desire to become a lending institution and prefer instead to concentrate on one thing and one thing only, distributing electricity to our members. 

“With that said, we will continue to evaluate the bill and if, at any time, we believe it to be a program that brings value to our membership, we’ll take a look at what kind of costs would be incurred to administer it and then decide if it is a prudent use of our members’ dollars.”