WASHINGTON — The U.S. Energy Information Administration has determined that a legislative proposal to create and authorize $2.4 billion of home energy conservation bonds, as well as new tax credits, would help save 14 trillion British thermal units more than normal expected consumption levels.
The EIA, however, found that the 14 trillion Btu in savings from the bonds and tax credits would only amount to a 0.1% drop in expected consumption.
The bonds were proposed in a draft of the Domestic Manufacturing and Energy Jobs Act of 2010, which was unveiled in July by House Ways and Means Committee chairman Sander Levin, D-Mich.
The EIA detailed its findings in an Oct. 6 letter to Ways and Means staffers who had requested the estimated energy impact of some of the draft bill’s provisions.
Under the draft, state and local governments could issue home energy conservation bonds and use the proceeds to establish long-term programs to provide loans and grants to consumers purchasing energy-efficient appliances. The tax credits could be taken by manufacturers of such appliances.
The EIA, which provides official energy statistics for the federal government, also determined that while energy savings would continue over the life of the energy-efficient equipment, consumption would revert back to higher levels in the future as the equipment was replaced after the incentives for buying them were no longer available.
The Ways and Means Committee estimated the provision would cost $1.26 billion over 10 years.
However, the EIA could not analyze the energy impact of another draft provision that would authorize an additional $3.5 billion of clean renewable energy bonds. The provision would apply to a limited segment of the electric utility market and the EIA said it could not differentiate that segment from the broader market.
The provision would allocate 60% of the new bond authority to public power providers and the remaining 40% to rural electric cooperatives and would expand its use to include energy storage systems and certain biogas equipment.
The committee estimated that provision would cost $1.39 billion over 10 years.
Both the HECBs and CREBs could be issued as tax-credit bonds, which provide investors with a tax credit in lieu of tax-exempt interest payments, or direct-pay bonds similar to Build America Bonds.
The direct-pay option would allow issuers to sell taxable bonds and receive direct subsidy payments from the federal government.
Issuers of HECBs would receive subsidy payments equal to roughly 100% of their interest costs, whereas issuers of CREBs would receive payments equal to 70% of interest costs.
Several tax-credit bond programs gained the direct-pay option under the Hiring Incentives to Restore Employment Act, which was signed into law in March.
Levin’s draft bill also would allow state and local governments to issue private-activity bonds to finance homeowners’ energy-efficiency upgrades under property assessed clean energy programs.
The so-called PACE bonds would differ from home energy conservation bonds in that they would be used to finance energy retrofits to the house itself, whereas HECBs would finance the purchase of energy-efficient appliances.
However, the draft would not address an overarching problem that has brought the PACE programs to a halt — the refusal of Fannie Mae and Freddie Mac to purchase mortgages tied to them. The EIA was not asked to analyze the energy impact of the PACE provision, which was estimated to cost $730 million over ten years.
The bill has not yet been formally introduced, but some of its provisions could be added to tax legislation that Congress is expected to consider after the November elections in a lame-duck session.