Your Questions Answered

September 26, 2022

Multiple contractors asked: How (and why) should we talk about on-bill repayment?

Answer: On-bill repayment (OBR) is an exciting new feature for GoGreen Business that allows customers to pay for their energy efficiency project right on their utility bill. We’ve been talking about it since it launched in SCE, SoCalGas and SDG&E territories (PG&E to come soon). But why should you offer it to your customers? How does it benefit you, the contractor, and how does it benefit the customer? We caught up with Howard Cagan of La Costa Energy Doors and Lee’s Sandwiches Service Manager Bill Quach, the contractor and customer involved in the program’s first OBR project, to find out what they like about the program.

Contractor Benefit: Speedy Approvals

Like many contractors in California, Cagan knew about the utilities’ On-Bill Financing (OBF) program with its appealing 0% financing for bill-neutral projects. He likes many aspects of OBF, but occasionally needs faster financing (OBF can take a good deal of time for approval). Because GoGreen Business’s OBR works with private finance companies, which can move more quickly on approvals, and because bill neutrality is not a requirement, meaning there’s no time required to do that level of project analysis, approvals for OBR are faster. “Five days compared with months — there’s just no comparison,” says Cagan. “OBR is much faster.”

Sold on OBR for its speedy approvals, Cagan decided to go a step further and combine the best of OBR (speed) with the best of OBF (0% financing) by initiating his own interest rate buy-down to 0%. Because GoGreen Business finance companies are offered a credit enhancement, their interest rates are lower than market rates – meaning Cagan’s out-of-pocket cost for the buydown (which brings the customer’s cost down to the equivalent of 0% financing) was lower than it would have been had he worked with a non-GoGreen Business lender.

Customer Benefit: Ability to Monitor Net Cost of Investment

Cagan’s approach appealed to Bill Quach, Service Manager for Lee’s Sandwiches, a chain of Vietnamese-American restaurants famous for their banh mi sandwiches. Working together, they determined that new fast-closing cooler doors for the company’s warehouse in Southern California would save a lot of energy, enabling Quach to recoup his investment within a couple of years. Quach says OBR will help him keep an eye on his return on investment.

“The advantage of paying back the financing on the utility bill is it helps to remind me about this investment so I can monitor the energy and money saving progress,” said Quach.

Customer Benefit: Possibility of Off-Balance Sheet Treatment

Though Quach doesn’t mention it specifically, OBR may allow some customers to move their project out of the “capital expenses” column and into the “operating expenses” column. Some customers may find such off-balance sheet treatment advantageous. Each customer should make this determination with appropriate tax and legal guidance.

Overall, Quach is pleased with OBR and his new project. “I strongly recommend this for those who have the budget and are ready for it,” he says.

Learn more about OBR by reviewing this Contractor Roundtable presentation and the On-Bill Repayment Project Eligibility Checklist.