Carl Fawcett describes the Mass Save HEAT 0% Loan Program for the ACI conference including pilot and program history, characteristics of the program, types of loans and other loan details, lending results and statistics, the HEAT Loan process, and trends related to volume and size. He also covers how contractors can best help their customers successfully through the steps of the process.

1. Mass Save®
HEAT 0% Loan Program
How it is Motivating MA Homeowners
October 16, 2012
ACI New England
Carl Fawcett
Director of Financing Programs

2. Sponsored by:
HEAT LOAN
PROGRAM

3. 2006-2012 HEAT Loan Statewide Results
through September 2012
• 15,914 closed loans
• $131.7M+ financed Energy Efficiency improvements
• $8,164 average loan size over last 5 years
• 60-90% range of loan approvals of applicants by lenders
• 47 banks and credit unions participating
• 80% of financing for heating system upgrades
One of the most successful financing programs for energy
efficiency improvements in America

4. Origins of HEAT Loan Program
• 1986-1990+ Original HEAT 0%
residential financing program
funded by oil overcharge dollars
awarded the Commonwealth of
Massachusetts from a federal
court case
• Program directed by DOER using
local organizations across the
Commonwealth to provide
customer and technical support

5. Son of the Original HEAT
• 2005 - MA Heating Energy Assistance and Tax Relief
Act signed into law. Act included tax credits to help
MA residents with skyrocketing energy costs
• One provision earmarked funding from residential
ratepayer-funded energy efficiency programs for a
low interest loan program pilot for residential
customers
• Loans under this pilot were intended to help
customers weatherize homes and install efficiency
upgrades to their heating and hot water systems

6. HEAT Pilot in 2006
• DOER decided the Mass Save residential program
would operate this pilot
• No similar financing program in the U.S. at that time
• Many program details to work out, including creation
of lender network, who would provide customer
support, and what measures would be eligible for
financing
• Working group of staff from DOER, participating
utilities, and CSG created framework
• Pilot launched winter 2006

7. Green Communities Act of 2008
• Legislation made HEAT loan
financing program a permanent
part of the Mass Save residential
program
• Loan product helps incentivize
residential efficiency adoption
and assists households to
overcome cost barrier posed by
large capital investments

8. Statewide HEAT Loan Organization
Sponsor/Territory Administrative Vendor
NSTAR (gas and electric) CSG
National Grid (electric only) CSG
Cape Light Compact Rise Engineering
Western Massachusetts Elec. Honeywell
New England Gas Honeywell
Fitchburg Gas and Electric Unitil

9. Characteristics of HEAT Loan Pilot
For comparison with current program:
• Pilot offered 0% and 3% loans depending on income
(80% Median)
• Small number of participating lenders (1-20)
• Maximum loan $15K, Minimum loan $2K
• Central AC was not eligible
• Heat loss calculation was required for heating system
replacements
• No fuel switching was allowed
• Only occupant owners of 1-4 unit properties
were eligible to apply for financing

10. 2012 HEAT Loan Program: Eligibility
• Applicants must have valid residential account
number with a sponsoring utility or Cape Light
Compact
• Must have had a Mass Save Home Energy
Assessment (HEA) for 1-4 unit properties (see also
condo eligibility)
• Applicant can be occupant or non-occupant owner
• Municipal electric customers who heat with NSTAR
Gas, Columbia Gas or New England Gas may apply;
National Grid Gas DOES NOT participate
• A “One Loan One Shot” program (some exceptions
granted by utilities)

11. 3 Types of HEAT Loans
Loan Options for Customers
Eligible Customer Type Loan Loan Term
Amount
Owner Occupied Micro Loan $500-$2000 24 Months
Owner Occupied Standard Loan $2001- Up to 84
$25,000 Months
Non-Owner Occupied Rental Property $5,000- Up to 84
Loan $25,000 Months

12. Some Loan Details
• Loan approval is not guaranteed; customers are eligible to
apply once they receive a HEAT Loan Authorization form
from loan administrator
• 47 credit unions & regional banks currently participating
• Lender determines loan approval or denial
• Loan approval based on credit and debt-to-income ratio
• Most loans unsecured; some lenders offer secured loan
• Most terms are 7 years (except for Micro Loans)
• Maximum loan amount is $25,000
• All loan amounts are net any utility rebates

13. Lending Results:
Preliminary results from survey of participating lenders
Averages from the survey:
• 86% of loans are approved
• 755 Av. FICO score
• 665 Av. minimum FICO score
• .55% Default rate
• 1-5 Day processing time for
loans by lenders
(many lenders offer same-day
processing)

14. As of April 2012:
Some Condo Units Eligible for HEAT Loan
• All residential electric, and natural gas, individually metered
condo units may apply
• Master-metered condos in complexes are NOT eligible
• Condo complexes that heat with oil or propane, are NOT
eligible to participate
• Lighting and insulation upgrades for condo units are
provided by the utility’s multifamily program - treat the
whole complex
• This program addition is a new opportunity for contractors
installing heating, hot water and air conditioning systems

15. Eligible Measures
HEAT Loan provides financing for energy efficiency
improvements that meet program minimum standards
– Insulation and/or air sealing upgrades
– Single-pane window replacements
– Efficient heating systems
– Air source and geothermal (ground source) heat pumps
– Ductless mini-split heat pumps/AC
– Thermostats
– Domestic hot water system
– Solar hot water systems
– Central Air Conditioning installed with QIV (New or replacement)
– Note: efficiency requirements for heating and DHW upgrades are the same as
the GasNetworks, Mass Save propane/oil and Cool Smart rebates.

16. Measures Financed Since 2006
Heating system
& DHW: 11,601
Weatherization:
1,575
Windows: 2,103
Central AC: 228
(6 months)

17. Residential HEAT Loan Process (Abbreviated)
Customer calls Utility and requests a Mass
Save Audit; audit is performed
Mass Save Audit verifies Customer’s
eligibility to participate in HEAT Loan
Customer solicits contractor quotes
Program reviews and authorizes proposals; Customer signs check over to Contractor
once work completed and passes inspection*
Customer receives authorization and receives
list of Lenders, applies for Verification Inspection
pre-approval
Customer closes loan with Lender.
Two-party check made in name of Contractor;
Lender gives check(s) to Customer

18. Application
Checklist:
A very important
part of the heat
loan folder.
It outlines all of
the steps to the
program.

19. Intake form

20. Contractor
Proposal

21. Authorization
Form

22. Two-party Checks Issued by Lenders,
Net any Rebates

23. Closed Loans by Year
2010 2011 2012
4500
4000
3500
3000 2009
2500
2000
1500 2006 2007 2008
1000
500
0

24. Trends: Volume
Volume of loans closed has increased every year
• Adding new measures such as central AC widens pool
• Increased marketing by Mass Save utilities and
lenders; increase in contractor referrals
• More word of mouth referrals by customers as
program matures
• Participating customers increase with addition of
micro loans and loans for non-occupant owners
• Large increase in customers participating in the
residential efficiency programs in the last 3 years due
to program expansion

25. Average Loan Size by Year
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
$3,649,346 $5,087,889 $7,428,164 $19,095,819 $27,609,119 $31,975,388 $36,877,721
2006 2007 2008 2009 2010 2011 2012
Average loan amount

26. Trends: Size
Reasons for loan size increasing:
• Additional measures now available
• Whole-house approach motivates
customers to do multiple measures
• Minimum efficiency requirements
for equipment increased over time,
encouraging customers to invest
upfront in more expensive and
higher efficiency equipment

27. Growth of HEAT Loans
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
2006 2007 2008 2009 2010 2011 2012
2112

28. Contractors can. . .
help customers master HEAT loan steps
Proposals you provide customers should include:
• Make, model #, and AFUE of equipment being proposed
• Clearly stated details of equipment to install
• Itemization of any non loan-eligible work, such as oil tank
removal
If you present several options, have the customer note which
one they are choosing. Encourage them to read HEAT Loan
steps and minimum standards for their improvements.
If central AC is being proposed, provide a Manual J version 8 load
calculation and AHRI certificate.
Become familiar with equipment efficiency requirements
for HEAT Loan and rebate programs.

29. For Minimum Requirements
for Energy Efficient Measures, Steps, and
Minimum Efficiency Standards: see
MassSave.com/heatloan

30. Contact Information:
• MassSave.com/heatloan
• HEAT Loan Support Line: 1-800-696-8077 for
National Grid and NSTAR territories
• Fax: 508-836-3181 (CSG)
• Email: MAHTLoan@CSGRP.Com
• Carl Fawcett, Director of Financing Programs for CSG:
carl.fawcett@csgrp.com or 1-800-696-8077