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August 2, 2010

California axes $30m clean energy program after PACE row

The California Energy Commission said the PACE programs would have supported more than 4,000 jobs in the state

The California Energy Commission has canceled a $30 million initiative that would have set up renewable energy programs in 23 counties and 184 cities in the state.

The move to axe Property-Assessed Clean Energy (PACE) programs came in direct response to the decision by the Federal Housing Finance Agency (FHFA) and mortgage giants Fanny Mae and Freddy Mac to refuse to support them (see this BrighterEnergy.org story).

The California regulators have ended funding awards to five local governments and jurisdictions already putting in place PACE programs, which would have allowed homeowners and businesses to finance solar panels via extra payments on their property taxes.

Despite support for PACE programs from the Obama Administration and California Governor Arnold Schwarzenegger – as well as legal action from the state’s Attorney General against the FHFA ruling – the California Energy Commission said it was forced to end its PACE program initiative.

Karen Douglas, who chairs the Commission, said her organization supported the concept of PACE programs, seeing them as “essential” to efforts to support clean energy in California.

But, she explained that the currently initiative had to be canceled in order to make use of the federal stimulus money before time runs out at the end of the year.

Ms Douglas explained: “Given, however, the strict deadlines for expanding Recovery Act funds, the Energy Commission must act quickly to encumber the federal stimulus funds under the Municipal Financing Program in a way that supports and allows additional financing options, including PACE, to ensure that the benefits of this program are protected.”

Punitive

The FHFA has allowed Fannie Mae and Freddie Mac to take punitive actions against homeowners who live in communities that participate in PACE financing programs. The Agency sees PACE programs as affecting mortgage valuations and offering too much risk for lenders.

The Commission said the FHFA had “undermined California’s job creation and environmental initiatives” in its handling of PACE program policy, and “should not be in the business of interfering with municipal discretion to use their taxing authority for the general welfare to upgrade their infrastructure and local resources”.

Ms Douglas said: “It is vital that energy financing programs, including PACE, are offered so building owners can overcome one of the biggest obstacles to investing in energy efficiency and renewable energy projects – lack of access to long term, low-interest financing.”

We are optimistic that this issue will be resolved” - Karen Douglas, California Energy Commission

Californian cities including Berkeley and Palm Desert, as well as the County of Sonoma, have already piloted PACE programs during the past two years.

The California Energy Commission has invested $110 million to encourage the development of clean energy retrofits for residential, municipal and commercial buildings, including the funds for PACE municipal financing.

The canceled programs for five local governments and jurisdictions, which would have supported PACE programs in 23 counties and 184 cities, had been expected to create more than 4,000 jobs in its first two years, as well as cutting energy consumption by 336 million kilowatt-hours.

Ms Douglas said California lawmakers were now working with the White House to address the FHFA PACE financing issues, adding: “We are optimistic that this issue will be resolved.”