GVEA Launches On-Bill Financing Pilot Program
Published April 2, 2025
By Brian Kassof
At the beginning of March, GVEA announced the opening of its long-awaited, pilot on-bill financing program. The Responsible Energy Decisions Using Cost-Effective Efficiencies (REDUCE) Program offers members low-interest loans to make energy-saving upgrades to their homes—these can include energy efficient appliances, weatherization, lighting improvements, or solar arrays. Members then repay the utility in monthly installments. GVEA is offering loans of $500 to $10,000 in the pilot program.
On-bill financing programs allow utility customers without the money to pay up front or access to traditional sources of credit to make energy efficiency upgrades that lower their energy bills. In most cases, the savings from these upgrades more than offset the cost of the loan repayments, saving consumers money. These programs are popular in many parts of the country, but GVEA’s will be the first in Alaska.
There has been growing interest in on-bill financing programs in Alaska in recent years. In 2018, the Legislature passed HB 374, which created a legal framework for such programs. GVEA has been working on its on-bill financing program for almost five years, since its Board approved funding for the project in 2020. GVEA Directors and members have commented on the project’s slow progress on a number of occasions.
There are a few other programs in Alaska that provide access to funding for energy upgrades, but they differ from on-bill financing in significant ways. These include Homer Electric Association’s (HEA) line-of-credit program for its members and the C-PACER (Commercial Property Assessed Clean Energy and Resiliency) programs currently available in the Matanuska-Susitna Borough and Municipality of Anchorage. In 2024, the Legislature passed HB 273, which authorized the organization of a Green Bank under the Alaska Housing Finance Corporation (AHFC). Facilitating loans for energy upgrades would be one of the Green Bank’s primary functions; however, recent actions by the Trump Administration have created uncertainty about the federal funds that were expected to be the source of the Green Bank’s initial capital.
What is On-Bill Financing?
On-bill financing programs are a way for utilities to assist their customers in making energy upgrades. A utility loans a customer the funds needed to make the upgrade, and loan repayments are included as a part of the customer’s monthly utility bill. The savings from these upgrades usually reduce ratepayers’ bills by enough to offset the loan repayments. In many cases, the savings can be greater than the loan payments (and/or continue after the loans are paid off).
These programs are seen as a way to help utility customers make energy-saving upgrades they could not otherwise afford. Many customers lack the financial resources to invest in upgrades, even if these will save them money in the long run. Banks are hesitant to offer loans for many energy upgrades, and, even when they do, many families lack the assets or credit history necessary to secure a loan from traditional lenders. On-bill financing programs usually are designed to achieve “bill neutrality”—this means that a customer’s annual energy savings should be equal to (or greater) than their loan repayments.(For more on on-bill financing, see this AETP Explainer).
GVEA’s REDUCE Program:
GVEA’s REDUCE program offers loans between $500 and $10,000 to residential members to make energy-saving upgrades to their homes. Eligible technologies include energy-efficient appliances, lighting upgrades, weatherization, and solar generation equipment. This is a pilot program—if successful, GVEA intends to extend the program in the future. Applications opened on March 1 and will be accepted until the initial funding for the program--$200,000—is fully distributed. Only residential members who own their own property are eligible. GVEA will charge 3% interest on the loans to cover administrative costs. GVEA will only consider proposed upgrades that it believes will achieve bill-neutrality.
According to the GVEA REDUCE website, the pilot program will work in the following way. Eligible members will identify the technology/equipment they want to install, then get a bid from a local contractor for equipment and installation. GVEA considered providing a list of recommended or pre-approved contractors, but ultimately did not. Members then submit the written bid and a completed application to GVEA, which will evaluate them based on program criteria and if they will achieve bill-neutrality. This may require an on-site assessment by GVEA, depending on the technology and other circumstances.
If the application is approved, the member would hire the contractor who would supply and install the equipment, then submit their bill directly to GVEA. If the costs are higher than the approved loan amount, the member will be responsible for the balance. Members will then start their monthly repayments. Loans of $5,000 or less will have a five-year repayment period; for loans between $5,001-$10,000, the repayment period will be 10 years. Participants also can sign a maintenance agreement that, for an additional monthly fee, covers annual maintenance and any needed repairs on the equipment for the life of the loan.
GVEA has not provided a specific list of equipment eligible for the program. The REDUCE website list four main categories—energy efficient appliances, weatherization (which could include insulation or energy efficient doors and windows), lighting improvements, and home solar arrays. There was some question whether some technologies, such as heat pumps, would be eligible. Some board members thought they should be part of the program, but they were not part of the proposal made by staff in April 2024. Their inclusion was still undecided as of fall 2024. AETP has asked GVEA if they are eligible, but has not heard back—this story will be updated if an answer is received.
The program is open to GVEA residential members who own their service location, who have been GVEA members for at least one year, and who have not had service discontinued for non-payment of a bill in the last 12 months. Applicants do not have to undergo a credit check—their recent payment history to GVEA is sufficient evidence of the ability to repay the loan. Members may only have one active loan at a time.
To be eligible, members’ average power usage over the past year must be at least 600 kilowatt hours per month. According to Ashley Bradish, GVEA’s Director of External Affairs and Public Relations, the usage requirement is to ensure bill-neutrality. GVEA believes that those with lower usage might not save enough to cover their upgrade’s cost.
Program participants who sell their properties before their loan is repaid have two options. If they signed the maintenance agreement with GVEA, the new buyers can agree to assume responsibility for the balance of the loan. If participants did not opt for the maintenance agreement, or a buyer refuses to take on the loan, the member must pay off the balance before completing the sale.
This is a pilot program. It is funded by $200,000 in unclaimed capital credits. Capital credits are funds collected by a cooperative from its members to cover emergencies and capital construction, which are returned to members after a period of time if they are not used. Those not claimed by former members are often used to fund scholarships and other projects—more information on GVEA’s capital credit program can be found here. GVEA has stressed that, because it is using these funds, the REDUCE pilot program will have no impact on other members’ rates.
GVEA plans to collect data on various aspects of the pilot program (repayment, energy savings, administrative costs) for 12 months. At that time, it will assess the program’s success and see what changes, if any, are necessary. If the program is succeeding in its goals, GVEA plans to apply to the United States Department of Agriculture’s (USDA) Rural Energy Savings Program (RESP), which provides no-interest loans to Rural Electric Cooperatives to support on-bill financing programs. At the same time, it would submit a proposal for a broader on-bill financing program to the Regulatory Commission of Alaska (RCA).
GVEA believes the pilot program does not require RCA approval since it is funded by unclaimed capital credits. However, it believes that RCA approval is required before repayment is included on members’ utility bills. As a result, participants in the pilot program will receive a separate monthly bill for their loan repayments.
Depending on the information it collects and member interest, GVEA may change aspects of the program if it is expanded. For example, GVEA is considering whether landlords might be able to apply for loans to upgrade rental properties. The list of technologies covered may also change.
A Long Developing Program:
GVEA’s on-bill financing program has had a long gestation period. Members have been advocating for such a program for about 10 years, and HB 374 was passed in 2018 to facilitate the creation of such programs. The development of the program has not been without some controversy, relating to both its form and the slow pace of its development.
In 2020, GVEA’s Board allotted $200,000 in unclaimed capital credits to fund a pilot on-bill financing program. That fall it asked GVEA’s Member Advisory Committee (MAC) to prepare design a program. After some initial confusion over the scope of its assignment, a MAC-created task force spent 2021 researching and preparing a proposal. The task force presented its findings at the February 2022 board meeting, at which point the project was turned over to GVEA staff to convert into a functioning program.
The MAC task force’s report had several core conclusions. It argued that the rules laid out in HB 374 were too restrictive and that GVEA could implement a program through a tariff change without following the law’s requirements. (A tariff is the set of rules that govern a utility’s services and rates—regulated utilities require RCA approval to change their tariff). Their principal objection was to HB 374’s framing of financing as personal loans. They recommended instead a variation of on-bill financing known as “on-bill tariff” (also known as Inclusive Utility Investment). Under this system, efficiency upgrades are considered a utility investment in a structure, tied to an electrical meter, rather than a personal loan. This allows renters to participate in programs and makes it easier to transfer property to new owners. The MAC report also emphasized bill neutrality and flexibility over what types of technologies were covered. (For more on the development of the MAC’s proposal and its content, see this AETP story from 2022).
When the project was turned over to GVEA staff, Board Chair Tom DeLong expressed a hope that a finalized proposal would be ready by the end 2022. It would actually be over two years before staff brought its proposal for an on-bill financing program to the Board in April 2024. A number of reasons were given for project’s slow pace, including a changeover in computer systems and unanticipated demands on staff time by other projects, including proposals for federal grants. GVEA members and directors asked about the program’s status a number of times during board meetings.
The staff proposal, which forms the basis of the REDUCE program, differed from the MAC’s in several ways. Most significantly, staff did not agree with the MAC’s belief that the RCA would allow a program that did not adhere to HB 374’s rules. This meant excluding renters and largely rejecting the inclusive utility investment model. It also meant including the purchase of a maintenance plan as a prerequisite for passing on a loan through the sale of the property (which HB 374 requires). The staff proposal did retain some elements of the MAC plan, such as an emphasis on bill neutrality and the inclusion of a wide variety of technologies.
When the staff made its presentation to the board in April 2024, it anticipated the REDUCE program would be launched in July. However, due to a number of factors, which, according to Bradish, included continued demands on staff time by other issues, its launch was delayed several times, until March 2025. GVEA has limited its advertisement of the program initially—an article appeared in the March issue of Ruralite magazine, and a detailed website was launched. GVEA Chief Administrative Officer Abby Dillard told the Board at its March 2025 meeting that they were limiting advertisement of the program until they could gauge interest, due to the limit amount of funds available.
Other Similar Programs in Alaska:
The REDUCE program will be the first on-bill financing program in Alaska. There are a number of other Alaskan programs that provide loans that can be used for energy upgrades, but these differ from on-bill financing in key respects. One is HEA’s Line of Credit program, that provides members with loans between $200 and $10,000 to purchase appliances or wiring upgrades. These can include, but are not limited to, energy saving appliances and technologies such as heat pumps and electric car chargers. The program, which HEA has offered for over 30 years, differs from on-bill financing in several other key respects. It requires a credit check, monthly payments are made through electronic fund transfers or credit cards, and it charges near commercial interest rates (currently 7.71% or 7.85%, depending on the length of the loan).
The C-PACER program is based on a national model. It helps commercial-property owners to get long-term loans for energy upgrades. Like on-bill financing, these loans are supposed to pay for themselves through energy savings. C-PACER loans are made by banks, but repaid through an annual assessment collected by local government. The program allows property owners to get longer-term, lower-interest loans than are available through traditional lending. In Alaska, C-PACER funds can also be used to increase a building’s resiliency.
HB 80 (passed in 2017) provided a legal framework for C-PACER programs in Alaska (it was later amended by HB 227 in 2022). Programs are created by local governments, with the Alaska Energy Authority (AEA) providing information and logistical support. So far two localities—the Matanuska-Susitna Borough (since 2022) and the Municipality of Anchorage (since 2023)—offer C-PACER programs.
In 2024, the Legislature passed HB 273, which included provisions creating an Alaskan Green Bank under AHFC. The Green Bank, officially known as the Alaska Sustainable Energy Corporation (ASEC), is meant to help finance “sustainable energy projects” for individuals, small businesses, or communities. (For more on HB 273, see this AETP article; more information on Green Banks can be found here).
The ASEC was expected to get its seed funding from the $20 billion earmarked for Green Banks as part of the 2022 Inflation Reduction Act’s Greenhouse Gas Reduction Fund. It is currently unclear if these funds will become available. The Trump Administration has tried to freeze the bank accounts of groups that were charged with distributing the funds, claiming financial mismanagement and a lack of proper oversight by the Biden-era Environmental Protection Agency (EPA). The EPA has subsequently said it is cancelling the grants and demanded their return; this has been challenged by the recipients, who say these actions are illegal, and is the subject of on-going litigation.
