Pay-As-You-Save (PAYS®)

July 27, 2003

Harlan Lachman

PAYS America, IncPAYS America, Inc

Pay-As-You-Save (PAYS®) Products

Money-saving resource efficiency Money-saving resource efficiency products purchased with no up-front products purchased with no up-front payment and no customer debt payment and no customer debt obligation. The customer pays a tariffed obligation. The customer pays a tariffed charge on the utility bill as long as charge on the utility bill as long as there are savings.there are savings.

New PAYS Infrastructure

Tariff assigned to a meter location, not Tariff assigned to a meter location, not individual customersindividual customers

Billing & payment on the utility bill with disconnection for non-payment

Certification that products are Certification that products are appropriate & savings estimates exceed appropriate & savings estimates exceed paymentspayments

Benefits to Consumers

Eliminates significant risks for consumers

Creates potential for unlimited capital for cost-effective measures

PAYS charges offset by even greater PAYS charges offset by even greater savings in utility costssavings in utility costs

Disconnection for Non-Payment

Unlimited funding for measures Unlimited funding for measures requires reliable repaymentrequires reliable repayment

PAYS reduces threat of disconnection PAYS reduces threat of disconnection since utility bills are lowersince utility bills are lower

On-the-bill repayment without On-the-bill repayment without disconnection is not reliabledisconnection is not reliable

Some Questions

Advance the date for disconnection? Electric bill used for non-energy

purchases? Disclosure to successor customers?

NH PAYS Pilot

Two utilities -- PSNH, NHEC Started 2002 Utility-operated version of PAYS 10% of SBC for PAYS measures NHPUC order approved DNP and

“run with meter”

PSNH Results

82 projects from more than 25 towns82 projects from more than 25 towns Total cost of projects $865,457Total cost of projects $865,457 Overhead $86KOverhead $86K 25 completed, 15 in progress & 42 are 25 completed, 15 in progress & 42 are

awaiting approvalsawaiting approvals Average project cost $10,554Average project cost $10,554

First PAYS Product

Town of Stratford street lighting change outTown of Stratford street lighting change out $13,050 to change and relocate 58 fixtures$13,050 to change and relocate 58 fixtures $6,292 annual savings$6,292 annual savings Pays for itself in just 2 years, BUTPays for itself in just 2 years, BUT ““We could not have done it without PAYS”We could not have done it without PAYS”

Voters turned down project despite robust savingsVoters turned down project despite robust savings PAYS does not require voter approvalPAYS does not require voter approval

Not a loan, but a utility billNot a loan, but a utility bill

NHEC - a service for members

““Why pay now when you can pay as Why pay now when you can pay as you save?”you save?”

Vendor “Point of Purchase” CFLsVendor “Point of Purchase” CFLs Problem is customers forced to choose Problem is customers forced to choose

between of 30-85% subsidies and between of 30-85% subsidies and PAYSPAYS

NHEC Project

Health club air handling system Health club air handling system upgradeupgrade

Saves $800 per mo on electric bill & Saves $800 per mo on electric bill & $166 per mo on avoided maintenance$166 per mo on avoided maintenance

Costs only $530 a month Costs only $530 a month Net electricity savings of $270 per mo Net electricity savings of $270 per mo

& total savings of $430 per mo& total savings of $430 per mo

PAYS Lessons So Far

PAYS is working largely as expectedPAYS is working largely as expected Vendors are interested in offeringVendors are interested in offering Utilities can handle bill payment issuesUtilities can handle bill payment issues

PAYS PAYS doesdoes overcome barriers overcome barriers Customers with audits who don’t take actionCustomers with audits who don’t take action Government agencies who have debt or financing Government agencies who have debt or financing

issuesissues Potential to overcome split incentivesPotential to overcome split incentives Required payments don’t “scare off” customersRequired payments don’t “scare off” customers

Pilot experience surfacing issuesPilot experience surfacing issues Running program by IOUs limits measuresRunning program by IOUs limits measures ““It’s not a mortgage, not a loan, it’s a PAYS product!”It’s not a mortgage, not a loan, it’s a PAYS product!”

PAYS Point of Sale CFLs

Energy Star CFLs (6-20)Energy Star CFLs (6-20) $0.25 per mo for 24 mo$0.25 per mo for 24 mo 4 hours per day, net electricity savings 4 hours per day, net electricity savings

$0.27 per mo per CFL$0.27 per mo per CFL If 8,000 hours, total net savings $32.40If 8,000 hours, total net savings $32.40 If CFL stops working before end of If CFL stops working before end of

payments, free replacement from payments, free replacement from vendorvendor