Woodbine program promotes big-system replacement

Woodbine Municipal Light & Power provides electricity—and interest-free energy-efficiency loans—to 1,800 customers in western Iowa. (Photo by Woodbine Municipal Light & Power)

With its successful zero-interest loan program for upgrading heating and cooling systems, Woodbine, Iowa, Municipal Light & Power proves that even small utilities can help customers get big energy savings.

In 2001, the municipal utility launched the program without benefit of consultants or extra staff. "Ours is a small operation with a small budget, so we've done our best to keep it simple," said Office Manager Theresa Corrin.

Both residential and commercial customers can apply to the utility for a loan to install an energy-efficient water heater, air conditioner or electric heat pump—by far the most popular upgrade. "Heat pumps offer the greatest potential for savings," Corrin explained.

Unlike many incentive programs that promote energy-efficient systems, Woodbine designed its loan program with customers in mind, rather than around specific load-management goals. Although the utility does not have any figures, Corrin estimates that an air-source or geothermal heat pump (GHP) can shave $50.00 or more per month off the customer's electric bill during heating season. 

The program does have benefits for the utility, as well, noted Corrin. "More efficient HVAC helps to level our top load." Just as important, she added, "It builds up our relationship with our customers."

Easy application process

Customers can apply for the rebate by filling out an application available at the utility office. The board of directors evaluates the applications and approves the loans. "The biggest factor is the customer's payment history," said Corrin. "Most applications get approval."

Municipal Light & Power pays 90 percent of the cost and installation of the selected system up to $3,000. The monthly payment is determined by dividing the total loan by 60 for a heat pump, and 36 for air conditioners and water heaters. If the utility loans the customer less than $1,200, the minimum monthly payment is $20. That allows the customer five years to pay for a heating system, three years for the other systems. The loan payment is added to the customer's monthly electric bill.

Customers sign an equipment replacement loan contract specifying the system, loan amount and the payment plan. Woodbine also requires customers to take a lien against the property associated with loan. "That step ensures that we get repaid, even if the customer moves," said Corrin who handles the paperwork for the lien.

Corrin had some previous experience with filing liens and needed no training to take on that duty. "But it's pretty self-explanatory," she said. "We keep a copy of the completed paperwork on file to use as a template."

Local contractors help

It is up to the customer to select the equipment and hire a contractor. Heat pumps and air conditioners must have a rating of at least 13 SEER, but otherwise, the utility does not specify any brand of equipment.

For customers choosing a GHP, finding a qualified contractor is not a problem in Woodbine. The town of 1,800 residents boasts two established heat pump vendors, removing what is often a major stumbling block for programs promoting GHPs in other areas. Customers are familiar with the locally-owned businesses and know that the contractors have experience with the region's soil conditions and climate. "Having those vendors right here in town has definitely contributed to the success of the program," Corrin acknowledged.

Randy Vandemark of Vandemark Heating and Cooling has been in business since 1992, but has noticed an increase in interest in heat pumps since the utility started offering loans. "About half of our installs are GHPs now," he said.

Sticking with big systems

Heat pumps account for the majority of 99 loans Woodbine has made since the beginning of the program. The efficient electric systems were the only equipment the loans covered initially. Woodbine added electric water heaters and efficient air conditioners in 2004. "I wasn't with the utility at the time, but I expect that other local vendors were asking to participate in the program,"said Corrin. "We have a really strong relationship with local businesses."

Currently, 43 of the utility's 59 active loans are for heat pumps. Interest built slowly, with three customers applying for heating system loans in 2002. "We advertised mainly in newspapers and bill stuffers," Corrin recalled. Some vendors, including Vandemark, helped to promote the program, too.

Subsequent years saw a small but steady increase in the number of applications, until a surge of interest in 2005, when the utility approved loans for 14 heat pump installations. "It tapered off over the next couple of years," Corrin noted. "We may have saturated the market at that point."

Rising natural gas prices, increased concerns about the environment and, of course, old propane and electric furnaces giving out may change that. So far this year, five loans have been distributed and three are pending. Woodbine has prepared for more applications by increasing the loan pool from $60,000 annually to $75,000.

The utility is looking at other rebates and is considering offering compact fluorescent lights to customers free of charge. But the equipment replacement loan will continue to be Woodbine's main incentive. "We want to put our resources behind a measure that really makes a difference to our customers," Corrin stated.

Resources

Woodbine, Iowa, Municipal Light & Power

People

Theresa Corrin

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