Midwest Energy’s How$mart® program is one of the longest-running energy investment programs using Pay As You Save® financing. After making more than 1,300 investments totaling $7.7 million over 7 years, Midwest Energy has a charge-off rate of less than 0.1%, a figure that is 30 times lower than the national average for consumer lending.
Through the How$mart program, Midwest Energy has prepared energy efficiency assessments for more than 2,300 customers, and when those customers have been offered energy upgrades using the terms of PAYS® financing, more than half have agreed. This conversion rate is about 5 times higher than the prevailing rate of customer conversion in utility-sponsored home energy upgrade programs.
As a result of its investments, Midwest Energy has helped its customers achieve cost-effective efficiency savings of over 3 million kWh per year and 350,000 therms of gas per year. Customers pay for their savings through a How$mart charge on their bill that allows the utility to recover its costs, and the average How$mart charge is $41 compared to savings worth an average of $49.
Midwest Energy enjoys high customer satisfaction ratings, with 85% of customers rating the utility 8-10 on a 10 point scale (average 8.88). By comparison, the customer satisfaction among participants in the How$mart program is even higher, with an astounding 97% of participants giving Midwest Energy an 8-10 score. The average scores were higher as well, with the general customer base indicating a customer satisfaction level of 8.88 compared to the average rating by How$mart participants of 9.22.
In addition to customer satisfaction, Midwest Energy also surveys its customers on value perception. The utility earned high scores (8-10 on a 10 point scale) from approximately 2/3 of the general customer, and among customers participating in the How$mart program, that figure rocketed to 96%. The average value perception scores were also higher, with the general customer base rating the utility at 8.07 compared to 9.18 for customers in the How$mart program.
Brian Dreiling, Energy Services Manager for Midwest Energy, shared this performance data for the utility’s How$mart investment program when the Energy & Environment Study Institute (EESI) and Midwest Energy Efficiency Alliance presented an online discussion of experience with on-bill financing among electric cooperatives.
Eastern Illini Electric Cooperative and a representative of cooperatives in South Carolina also presented on their programs in the same session, which offered a helpful frame for comparison. Both of those programs require participants to be homeowners, and the Eastern Illini program required homeowners to have a FICO credit score of 700 or higher before it would make an investment. With PAYS financing, Midwest Energy did not need to disqualify renters, which Mr. Dreiling noted was an important factor for the utility.
Both Midwest Energy and the cooperatives in South Carolina had tapped federal financing to make their investments in energy upgrades at customers sites, while Eastern Illini made its investments using cash on hand, without drawing on an external source to raise capital. The cooperatives in South Carolina secured its capital through the Rural Economic Development Loan & Grant (REDLG) program of USDA, which has a maximum loan size of approximately $1 million. Midwest Energy has also tapped the REDLG program as well as working with the state energy office of Kansas to secure additional investment funds.
Credit: How$mart® program logo is presented here by permission from Midwest Energy.