Local companies lead pilot program for homeowners across Michigan

REGION – Let's say one of your New Year's resolutions is to finally replace your old behemoth furnace with a more efficient model and to start saving some money on your gas bill. Your timing might not be better.

Starting this month, you could be one of the first consumers to lasso a fixed-rate loan under a new financing system called "Michigan Saves." The goal of the program is to make energy efficiency upgrades and renewable energy systems more affordable for everyone – from Joe Blow Consumer to businesses to local governments and schools.

Especially noteworthy: the Grand Traverse region will be the first area in the state to launch a pilot project for Michigan Saves.

Members Credit Union, Brown Lumber and Cherryland Electric will be operating the pilot: Members will serve as financier, Brown as general contractor and Cherryland will handle bill payments.

"This is the first time in the nation where you've got a cooperative utility, a private lender, and contractor working together with some trust fund monies," says Marc McKellar, director of business development and public relations at Members Credit Union. "We attended the Michigan Saves meetings and worked out the issues with them, but the three of us put this thing together."

Last June, the Michigan Public Service Commission (MPSC) granted $8 million to Public Sector Consultants Inc., a policy analysis and program management firm, to design and implement Michigan Saves.

"There was a lot of interest in doing a program of this type before we got our grant, so we were trying to merge the two ideas," says Sally Talberg, a senior consultant with Public Sector Consultants. "But the origination of the idea was in northwest Michigan."

Full implementation of Michigan Saves will begin later this year and will focus initially on loans to residential consumers, she says.

The loan could, for example, be used to fund purchases of certain energy-efficient appliances, to install energy-efficient lighting, upgrade an HVAC system or add insulation.

Cherryland got on board with the pilot "… to make energy savings simple and low cost … and to be a leader in innovative financing that helps members conserve energy and save money," says GM Tony Anderson.

"We felt like we were large enough to make it happen and small enough to be responsive to changes that might occur during the pilot. We don't have a lot of bureaucratic layers that can often delay things at larger utilities."

While the loan rates have yet to be announced, McKellar says the terms will be "very competitive," since they're backed by the trust fund.

All of the rates will be fixed, whereas home equity loans are often variable, he points out. There will be no penalty for early payment and no application fee. The maximum loan amount will be $15,000.

"It's my hope that the interest rate on the loans will be lower than the market due to the loan guarantees provided by the state, and the ease of collection provided by Cherryland," adds Anderson.

How the Pilot will Work

Joe Homeowner (who must be a Cherryland Electric member) will start by answering a brief questionnaire available at the Michigan Saves website or any of the three partners' websites. This will then be submitted to Brown Lumber, who will set up a time to meet Joe at his house to determine the scope of the job and give him an estimate. Once the estimate is calculated, Brown will send it electronically to Members Credit Union. Joe will then apply electronically to Members and, if approved, will close the loan. After the closing (at this point, a non-member would need to join the credit union), the check will be made out to Brown Lumber and Joe in the amount of the estimate. Members will inform Cherryland Electric of the loan amount, so it can be added to Joe's utility bill (called "on-bill payment").

"It'll be beneficial to Cherryland members because it'll allow them to make one single payment rather than two," Anderson notes.

Looking Ahead

Boosting sales and creating jobs locally and across the state are other intended outcomes of the pilot.

Brown, for example, could put several sub-contractors to work, and could sell a few of its own energy-efficient products in the process.

"We sell many of the items that will be involved in this program … new furnaces and weatherization-type work will probably be the major components that will upgrade a home's efficiency," says Trevor Williams, manager of Brown Lumber Installed Sales & Service (BLISS). "We have some HVAC contractors we work with in our BLISS network and expect to add more as this program takes off."

"We got involved (with the pilot) because we knew there was a need for help to get this program off the ground," he adds. "We believed in the idea of a program like this and how much it could help our community."

Coming Soon

It will be mid-year before the program rolls out across Michigan. According to those involved, it's expected to become a model for other states.

For now, though, Tony Anderson is content just to see it helping people locally.

"I hope we have a few hundred people saving money on interest expense and energy by 2012," he says. "I hope to see this program provide the lowest possible interest rate for members who otherwise would not be able to make energy-saving improvements to their homes." BN

Note: If you're not a Cherryland Electric customer but still want to take out a loan to improve your home's energy efficiency, Members Credit Union has a program to meet your green financing needs.

Its in-house, recently-revamped Save Green Home Equity Loan program offers special rates and terms.

"The rates are now more competitive, with longer terms," said Marc McKellar, director of business development and public relations.

Interested homeowners should contact a supplier or contractor to determine the scope of the work and obtain a purchase order/estimate before applying at a Members branch. Homeowners can also apply online using the purchase order/estimate from the supplier.

The full list of approved energy product and service categories (i.e., appliances, water heaters, heating/cooling, home envelope, lighting) is available at www.memberscu.com.