A model -- and money -- for energy efficiency

A new program offering cheap money for energy-savings improvements is rolling out in Kansas.

The Efficiency Kansas Loan Program, funded by the federal stimulus package, has started offering 15-year loans to homeowners and small businesses for improvements such as furnaces, air conditioners, insulation and windows that reduce energy usage.

The loans will be offered by participating banks and at least some of the state’s utilities, including Kansas City Power & Light and Westar Energy.

Residential borrowers can receive up to a $20,000 but the average loan is expected to be $5,000 to $6000. Small businesses can borrow up to $30,000.

The loans, funded by $38 million in federal stimulus money, will have interest rates capped at 4 percent if the loan is by a bank plus a $2 monthly administrative fee. Utilities will not charge interest but will have an administrative fee that’s not yet been determined.

Loans are available so far through Sunflower Bank, which has several branches in the state, and Mid America Bank in Baldwin City. Roughly a dozen more banks have applied and are expected to soon offer financing along with other utilities.

State officials hope the loans will be more widely available by the end of the year or early 2010.

“Our hope is it will be accessible to all Kansans by then,” said Abbie Hodgson, a spokeswoman for the Kansas Corporation Commission. The commission’s State Energy Office is overseeing the program.

State officials expect the program to run indefinitely since loan payments will be used to make additional loans.

Kansas Gas Service is considering participating in the loan program. Atmos Energy, another area gas utility, could not be reached for comment.

Updated lists of participating banks and utilities along with other details of the loan program are available here. Questions can be answered 785-271-3185.

One of the goals of the federal stimulus package is energy conversation. Most states have plans to get some of the cash into the hands of utility customers to help curb energy usage.

Missouri is working on a program that could offer loans — or grants or rebates — but a decision hasn’t been made on the program’s details.

The Kansas program fills a gap that has often perplexed energy experts. While tax credits and utility rebates are available, coming up with the rest of the money to make the improvements can pose a problem for homeowners especially when the improvements are big-ticket items such as a high-efficiency furnace, air conditioner or heat pump.

The Kansas loan program provides the needed cash, and the improvements might still be eligible for other tax credits or rebates.

“You almost can’t go wrong,” said Dustin Jensen, associate director of the Metropolitan Energy Center in Kansas City. The organization is helping train energy auditors for the Kansas program.

The essence of the Kansas program is to make energy-saving improvements but only ones that make economic sense to ensure that the loan won’t be higher than the projected energy savings. The projected savings will need to have a payback that is less than the period of the loan.

To help ensure that the savings will be realized, all loans will require an energy audit. Once the improvements have been completed, there will be a follow-up audit to ensure the work was done properly and will provide the predicted savings.

The Kansas Corporation Commission’s State Energy Office is providing $350 rebates to help offset the energy audit cost for the first 1,000 loans.

Another feature of the program makes renters eligible, with permission of the landlord.

Meanwhile, both Kansas and Missouri are still planning to offer rebates on energy-efficient appliances such as refrigerators. Previously, Kansas was told it would receive $2.7 million and Missouri $5.6 million for the rebates. But details must still be approved by federal officials. The program could be ready late this year or early 2010.

Reach Steve Everly at 816-234-4455 or send e-mail to severly@kcstar.com