Many California small businesses are struggling to make ends meet in a state often criticized for its unfriendly and over-regulated business environment. These businesses need every break and economic incentive possible.
The California Public Utilities Commission now has the opportunity to vote in support of the 2006 program applications by Pacific Gas and Electric Co., Southern California Edison, Southern California Gas and San Diego Gas & Electric Co., providing on- and off-bill financing for California’s small businesses.
On-bill financing, referred to as OBF, is a utility-based method of providing seamless zero or low percent financing through the monthly power bill for small-business energy efficiency improvements.
Energy costs are one of the largest expenses for small businesses. Such a program will eliminate many initial cost barriers so energy efficiency can be quickly translated into a profit-building enterprise for small businesses while allowing for more energy to be available on the grid.
California small businesses will now be able to invest thousands of dollars toward equipment designed to lower energy costs. The small businesses need only to have a solid on-time payment history with the utility service provider to access this capital.
OBF will help to allow small-business owners to hire more employees, keep their businesses capitalized and provide a better chance for them to survive an economic downturn, keeping California’s economy strong.
Several successful OBF programs already exist in New England, with the same basic components as programs now offered for CPUC consideration by PG & E;, SCE, SoCalGas and SDG & E; in California. Aside from upfront costs and zero percent financing, the programs also include loan repayment based on estimated savings. Customers pay approximately the same per month as they did before participating; once payments are paid for, all savings are reflected in lower monthly bills. The loan repayment is rolled into the monthly electric bill.
Permanent and comprehensive efficiency improvements are the focus of the program, providing long-term savings and providing more small businesses with the opportunity to address energy costs as a “controllable” expense.
OBF will help California small businesses retrofit their facilities and pay off the cost with the energy savings, often taking less than two years. It means small businesses can share in leading the fight for America’s energy independence.
It also means your favorite restaurant has a better chance of surviving through economic downturns by being able to install Energy Star food service equipment, turning previously high energy costs into newfound money that can be used to keep the salad bar well stocked. The same can also be said for the local corner market, allowing it to keep supplying your favorite items at low cost to you and stay in business.
OBF also allows small businesses making large investments toward energy efficiency to make the largest possible contribution, using Public Purpose Funds collected in their utility bills, toward emissions reduction and to contribute in a significant way toward avoiding brownouts or outages when the power grid calls for too much power.
California’s investor-owned utilities should be commended for their cooperative leadership as they offer this much-needed financial tool to increase small-business energy efficiency investments.
The CPUC should now support California’s economic well-being and the vital future of California small businesses by approving these programs.
Scott Hauge is founder and president, and Hank Ryan is executive director of Small Business California, a proactive, nonpartisan business advocacy organization dedicated to the well-being of California small business.
