Budget deficit hits state energy programs, rebates cut
Belt tightening throughout the State of Alaska has reached the Alaska Housing Finance Corp.
The state-founded lending agency announced Feb. 24 it will suspend its popular Home Energy Rebate Program at the close of business March 25 due to lack of funding. Applications for energy efficiency improvement funding will be accepted through the late-March date; however reimbursement will be subject to available funds in addition to applicant qualifications.
The program held about $5 million as of last December, according to AHFC Director of Public Affairs Stacy Schubert.
While AHFC’s primary mortgage business is self-sustaining and it returns an annual dividend to the state General Fund each year, the quasi-government entity also manages programs related to its business for the state when directed by the Legislature.
The Home Energy Rebate Program was last funded by the Legislature with an $18.5 million appropriation in fiscal year 2015, which ended in June 2014, just prior to the start of oil’s precipitous price slide.
Overall, the program has received $252.5 million since its inception in 2008.
According to AHFC, about 40,000 families have completed an initial energy audit to determine qualifying energy efficiency upgrades to their homes. More than 24,500 families completed improvements to existing structures and received rebates averaging $6,463. Another 3,200 households received rebates for new homes built to the six-star efficiency, the highest level of the U.S. Department of Energy’s Energy Star rating system.
AHFC Executive Director Bryan Butcher said in a statement that a broad spectrum of Alaskans benefited from the Legislature’s investment in the program beyond just the homeowners.
“Independent studies by the University of Alaska’s Institute for Social and Economic Research, Cold Climate Housing Research Center and others have shown increased technical job skills and the program saved an equivalent of 18,104,986 gallons of No. 2 fuel oil, buoying local economies and helping bridge the natural gas shortfall experienced in Southcentral during the brownout practices in 2009 and 2010,” Butcher said.
Hopeful participants eligible for a rebate have up to 18 months after the home energy rating audit to complete the qualifying improvements. The maximum rebate for each home is $10,000.
The direct rebate program may be coming to an end, but AHFC’s longstanding Home Energy Loan Program is alive and well, Schubert said.
Under the loan program, borrowers with a mortgage through the corporation can apply for up to a $30,000 loan on a maximum 15-year term to pay for energy efficiency upgrades at low rates. As of Feb. 26, the interest rate on an AHFC Home Energy Loan was 3.375 percent.
In the first seven months of the 2016 fiscal year AHFC financed 87 energy efficiency “add-on” loans, which is nearly an identical activity level to the comparable 2015 period, according to Schubert.
Renewable Energy Fund cut
Gov. Bill Walker turned to the Alaska Energy Authority’s Renewable Energy Fund for savings in his amended 2017 fiscal year budget proposal.
The governor cut out a $5 million General Fund appropriation for the fund that he had included in his first 2017 budget submitted in December.
Each year the governor is required to draft an initial budget proposal for the Legislature by mid-December. Governors then have until mid-February to make changes to their first proposal.
Budget Director Pat Pitney wrote to the Legislature’s Finance committees in a Feb. 16 letter, explaining that the administration would not be opposed to funding the Renewable Energy Fund through sources other than the General Fund.
AEA spokeswoman Emily Ford wrote in an email that there would be unintended consequences to eliminating the full $5 million appropriation. Doing so would impact to the authority’s ability to staff and manage the existing 133 active Renewable Energy Fund grants that total $131 million of state investment for ongoing projects, according to Ford.
The authority is working with the Office of Management and Budget to restore $2 million in receipt authority for the fund through the legislative process. That would allow AEA to administer the ongoing Renewable Energy Fund grants, she wrote.
With $271 million in total commitments from the Legislature, the Renewable Energy Fund has helped complete 54 projects across the state since its inception in 2008. Those projects, with a total cost of about $500 million, have generated more than $1.2 billion in benefits to local communities, according to AEA.
The fund got an $11.5 million appropriation in the current 2016 fiscal year budget passed last spring.
AEA had recommended seven Renewable Energy Fund applications for funding up to the first-presumed $5 million limit for future projects in its latest round nine of fund activity. The authority received 52 applications for the current round of program funding.
Recommended grant applications are ranked each year based on numerous criteria including project cost, cost-benefit ratio, and available applicant matching funds. The projects are then funded based on ranking and the amount of funding made available by the Legislature.
Elwood Brehmer can be reached at [email protected].