Financial Incentives to Consumers

There are a growing number of Federal, State, and privately funded incentives in Pennsylvania designed to help homeowners and others make energy-efficient home improvements.

Adams Electric Cooperative - Energy Resource Conservation (ERC) and Supplemental Loan Program. This Utility-sponsored loan program provides low interest loans that are processed by credit application, credit check, credit tests and credit documents. Customers of the Adams Electric Cooperative who qualify can borrow up to $25,000 with terms of 1-7 years for energy improvements in either existing or new homes. The loan can be used to finance a variety of heating/cooling systems and weatherization projects.
Contact: Loan Program
Adams Electric Cooperative
1338 Biglerville Rd
PO Box 1055
Gettysburg, PA 17325-1055
Phone: (717) 334-2171
Phone 2: (888) 232-6732
Fax: (717) 334-3980
Web site: http://www.adamsec.com/

Citizens Bank. Provides loans up to $10,000 at a 3% interest rate for weatherization and energy improvements. Phone 1-888-304-5400.

Keystone Home Energy Loan Program. Funded by the Pennsylvania Treasury Department and administered by AFC First, the Keystone Home Energy Loan Program (HELP) is a low-interest loan program that covers energy efficiency improvements including heating and cooling systems, upgrades to windows, doors, insulation and siding and upgrades of lighting and ceiling fans. In addition, this loan covers the purchase and installation of solar, wind and geothermal systems.

Loans are available for both first and second homes. The cost of all of the work performed on the home is eligible for financing provided at least 65% of the project comprises eligible measures.

Participants may choose either a secured or an unsecured loan. Unsecured (no collateral required) loans have a 3, 5, or 10-year repayment terms but some low-income participants may qualify for a lower interest rate. This type of loan is available for amounts from $1,000 - $10,000.

Secured home equity loans with terms of 10, 15, or 20 years are available for amounts from $10,000 - $35,000. The interest rate will depend on the term of the loan. The amount of the secured loan may not exceed 120% of the home's appraised value in the first, second, or third lien position. The secured loan option is only available for primary residences.

There are no pre-payment penalties or equity requirements for either type of loan. There are no closing costs for unsecured loans and closing costs for secured loans are generally below $500. The improvements must be completed by an AFC First or Fannie Mae-approved contractor, a list of which can be found at www.keystonehelp.com/search/index.php.

To start the application process, see the program website to calculate monthly payments and apply online.
Contact: Ken Yeager
AFC First Financial Corporation
PO Box 3558
1005 Brookside Rd - Suite 200
Allentown, PA 18106
Phone: (610) 433-7486; or (888) 232-3477
Fax: (610) 433-7488
E-Mail: kyeager@afcfirst.com
Web site: http://www.KeystoneHELP.com

PA ENERGY STAR Homes Pilot Program. The Energy Coordinating Agency (ECA) is currently running a pilot program which helps to reduce the cost of the energy rating and testing work required to certify homes to the national ENERGY STAR Homes guidelines. The program is currently available in Philadelphia and Pittsburgh. Contact jenh@ecasavesenergy.org for more information.

PA Home Performance with ENERGY STAR Pilot Program. The ECA is also running a pilot program to make existing homes more energy efficient. ECA can waive the cost of the whole house audit performed by BPI certified auditors for homeowners who implement energy saving measures in their homes. The program is currently available in Philadelphia and Pittsburgh. Contact jenh@ecasavesenergy.org for more information.

Residential Energy Conservation Subsidy Exclusion (Personal Loan). According to Section 136 of the IRS Code, energy conservation subsidies provided by public utilities,* either directly or indirectly, are nontaxable: "Gross income shall not include the value of any subsidy provided (directly or indirectly) by a public utility to a customer for the purchase or installation of any energy conservation measure."

The term "energy conservation measure" includes installations or modifications primarily designed to reduce consumption of electricity or natural gas, or improve the management of energy demand. Eligible dwelling units include houses, apartments, condominiums, mobile homes, boats and similar properties. If a building or structure contains both dwelling and other units, any subsidy must be properly allocated.

Given the definition of "energy conservation measure," there is strong evidence that utility rebates for residential solar thermal and solar electric projects may be nontaxable. However, the IRS has not ruled definitively on this issue. For taxpayers considering using this provision for renewable energy systems, consultation with a tax attorney is advised.

Other types of utility subsidies that may come in the form of credits or reduced rates may also be nontaxable, according to IRS Publication 525:

"Utility rebates. If you are a customer of an electric utility company and you participate in the utility’s energy conservation program, you may receive on your monthly electric bill either: A reduction in the purchase price of electricity furnished to you (rate reduction), or a nonrefundable credit against the purchase price of the electricity. The amount of the rate reduction or nonrefundable credit is not included in your income."

* The term "public utility" is defined as an entity "engaged in the sale of electricity or natural gas to residential, commercial, or industrial customers for use by such customers." The term includes federal, state and local government entities.

Contact: Public Information - IRS
Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web site: http://www.irs.gov

PA Home Energy—Home Improvement with Energy Star. To help homeowners make energy efficiency improvements to an existing home, PA Home Energy will provide a modest financial incentive to Pennsylvania residents whose electric service is provided by Allegheny Power. They hope to expand these incentives statewide pending funding.
These financial incentives range from $200 to $1,000. The amount of the incentive is determined by the amount of energy saved during the home energy improvement. Your service provider will have computer software to determine the amount of the incentive after the home improvements are completed.
For further information: http://www.pahomeenergy.com/homePerformance/Financing_info.html

Links and Resources:
Pennsylvania Homeowner Incentives for Energy Efficiency