Image: KVUE
By Cyrus Reed
Two bills to add energy efficiency programs at the State Energy Conservation Office, or SECO (under the Comptroller of Public Accounts), were discussed on the House Floor on the last days to get a House bill approved and sent to the Senate. Despite both bills being extremely modest in scope, the Texas Public Policy Foundation and the Texas Conservation Coalition, among others, targeted them. One failed on third reading while the other passed and has moved onto the Senate. Why? Let’s talk politics.
Rep. Rodriguez Tries to Help Churches But Mentions Renewables
Back in 2013, Rep. Eddie Rodriguez (D-Austin) passed legislation to allow SECO to begin a pilot program through their LoanSTAR – a revolving loan program for energy efficiency and renewable technologies for governmental entities – to help churches and other non-profit buildings. The program had a deadline for getting the loans out the door. While the legislation passed, and SECO was tasked with establishing rules and getting some loans – which would be repaid by the non-profits – out the door, SECO never did the rulemaking for the programs before the statutory provisions ran out. So Rep. Rodriguez did what any good legislator would do – he refiled his legislation in 2015 and extended the deadline for getting the programs done at SECO by 2017. HB 2769 was born.
On March 30, 2015, Rodriguez got his hearing before the Committee on Energy Resources, and had both the Sierra Club and Texas Impact, a non-profit representing churches and other religious and faith-based organizations, testify in favor. Ten other witnesses also signed up in favor of the legislation, including industry groups like the Texas Solar Power Association.
In relatively small order, the bill passed favorably from the Committee with no major controversy on April 9, 2015. To be clear, the bill spent no additional money and merely allowed SECO to begin a pilot program. And then, on April 16, the bill was set on the House calendar.
Then the problems began.
The bill got on the naughty list ostensibly due to the reticence of conservative politicians to allow public funds for loans for private non-profit buildings and perhaps (even though they would be repaid). In addition – although this is speculative – the word “renewable energy” was part of the bill. Rodriguez began to work the bill, but he kept delaying a vote. Not once, but nine times.
Finally, on the last day to pass a House bill in the House, Rodriguez sought a vote. But first, he laid out an amendment to try and meet the concerns of his critics. The amendment would have required SECO to evaluate the creditworthiness of borrowers before approving any loan to guarantee the money would be paid back. The amendment didn’t matter. On a nearly straight party-line vote, the modest energy efficiency pilot project went down on a 91-50 vote with nearly every Republican opposed.
Reps. Anchia & Keffer Spurn Air Quality to Get One Past the House
A similar bill – also creating a new program at SECO – almost came to the same fate in the House. HB 2392, as filed, would have allocated $3 million from the Texas Emissions Reduction Plan to create a revolving loan program for residential energy efficiency – commonly known as WHEEL, or Warehouse for Energy Efficiency Loans. However, the author of the bill – Rep. Rafael Anchia (D-Dallas), removed the funding mechanism in committee after multiple stakeholders informed him that simply creating the program and the authority at SECO would be enough to jumpstart the program. Once established, private funds, utility funds, or even federal funds could be sought to get the program off the ground.
The bill was sent to the House Committee on Energy Resources for a hearing on April 20. Again, there was no opposition to the bill in committee. A diverse set of stakeholders, from Dow Chemical to the Sierra Club to the U.S. Green Builders to the National Association of Insulation Manufacturers, signed up or testified for the bill.
Essentially, WHEEL uses initial funding to leverage private funding for a funding mechanism (see below). HB 2392 had one advantage over Rodriguez’s bill – it had a Republican co-sponsor, Rep. Jim Keffer (R-Eastland).
However, the bill did become the target of the Texas Conservative Caucus, the Texas Public Policy Foundation, and even the GOP caucus. Opposition seemed to be ideological again – the argument being something like, Texas shouldn’t be using public funds or processes to help individuals become more energy efficient, even though the programs are completely voluntary. As with Rodriguez’s bill, Anchia’s bill was postponed as Rep. Keffer and Rep. Anchia worked the floor and offered two clarifying amendments. First, they made it completely clear that no general revenue state funds would be used for the program – ever. Second, they required SECO to issue a report that quantified the energy savings each year and specifically made it clear the report would not quantify emissions reductions. Apparently, those opposed didn’t want this voluntary program to seem like a program intended to meet EPA reduction targets.
Once these amendments were added, a bipartisan coalition of members of the House passed the bill on a 100-36 vote on May 12. The next day, however, some opposition emerged, but the bill squeezed through on an 81-59 vote, with 31 Republicans joining 50 Democrats.
On May 14, the bill passed the House and was sent to the Senate, where it has yet to be referred to a Committee. It is important to note that while the bill only authorizes SECO to pass rules and set up the program, it’s reasonable to believe that private and utility funds might become available should Texas join other states like Kentucky, Hawaii, and Pennsylvania, which have already established WHEEL programs.
Sierra Club asks our members to contact their Senator and urge them to take up and pass HB 2392. Here's how to look up their number: Who Represents Me?
The Mechanics of WHEEL
Step 1: Participating programs commit funds to WHEEL.
Sponsor deposits initial commitment of interest rate buy-down (IRBD) and supplemental IRBD (if desired) with custodial agent.
Step 2: Programs or third party originates and issues loans.
Borrowers receive a fixed rate for the term of the loan.
Step 3: WHEEL purchases, aggregates loans across all participating programs and issues bond for sale to secondary market investors.
Bond issuance is backed by cash flow of loan principal and interest repayments.
Step 4: WHEEL repays investors and sponsors.
After private investors are paid with the revenues from the loan pool, remaining cash flows from the loan pool will be returned as Program Income to sponsors.
If historic loss rates continue, sponsors should receive more in Program Income than they initially contributed to support the loans. The amount of Program Income will depend on the Sponsor’s contribution relative to the size of the entire loan pool and the overall performance of the loan pool, among other factors.
Step 5: Sponsor recycles or reallocates funds.
Program Income can be recycled to support future lending in the sponsor’s jurisdiction or reallocated for other uses.
Source: http://www.naseo.org/wheel