Full Description

It is well known that one of the most common barriers to successful project development is the initial up-front cost of implementing resources efficiency programs. The simplest explanation for why utilities so regularly neglect opportunities for resource efficiency in favor of continued inefficiency and expensive capital projects, is that, as an investment, resource efficiency is not available on the same financing terms as capital projects. Traditionally, resource efficiency improvements have been funded out of current revenues resulting in large payback periods or financed as part of much larger bond issues constraining them by a dependency on capital projects. In contrast, infrastructure-related projects are commonly capitalized and repayment can be made over the life of the project resulting in viable payback periods and cost/benefit evaluations. Because of the difference in the way these projects are financed, it is not surprising that many utilities have an aversion to undertaking resource efficiency activities. Over the last several years however, innovative methods have been developed to eliminate many of the traditional hurdles to successful resource efficiency project development. This paper describes creative means for resource efficiency financing and implementation including public/private partnerships, a variety of State and Federal programs, and synergetic utility projects which may include utilities providing similar services, as in two or more water utilities, or utilities furnishing disparate services, for instance electric, water, and gas utilities working collectively on a single project. In 1993, the California Municipal Utilities Association (CMUA) coordinated the formation of the Financing Authority for Resource Efficiency of California (FARECal)--a joint powers agency with the purpose of assisting member agencies in the development and implementation of resource efficiency projects through collective financing. FARECal's initial focus has been in financing water, electric, and natural gas conservation and demand-side management projects. The City of Riverside, California, and the City of Pasadena, California, serve as case studies to demonstrate the effectiveness of FERCal financing.

Product Details

Published: 01/01/1995 ISBN(s): 0898678315 Number of Pages: 6File Size: 1 file , 230 KB