Clyburn Testimony on Rural Energy Savings and Jobs Program

WASHINGTON, DC – House Majority Whip James E. Clyburn testified today before the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research on H.R. 4785, the Rural Energy Savings Program Act.  Congressman Clyburn introduced the Rural Energy Savings Program Act, or “Rural Star” which is companion legislation to the recently House passed Home Star Energy Retrofit Act.  This legislation has bipartisan and bicameral support and will create jobs, increase energy efficiency and lower energy bills for rural American families and businesses.  Here are links to the bill text and summary, and a link to testimony from other panelists at today’s hearing.  Below is Clyburn’s testimony.

 

Statement of the Honorable James E. Clyburn

Before the Subcommittee on Conservation, Credit, Energy, and Research, Committee on Agriculture

Hearing to review H.R. 4785, the Rural Energy Savings Program Act 

Wednesday, May 12, 2010

Chairman Holden, Ranking Member Goodlatte, and members of the Subcommittee, I appreciate the opportunity to testify today in support of H.R. 4785, The Rural Energy Savings Program Act.  Thank you for your courtesy.

We continue to face an uphill battle as our country climbs out of the worst recession since the Great Depression.  Congress must act to empower individuals and communities to get back on their feet, and the bill before us today is an excellent vehicle that will do just that.  The Rural Energy Savings Program, which some have dubbed as “Rural Star”, will put Americans back to work and help financially-strapped families save money on their energy bills.  The legislation is first and foremost a jobs bill, and it is based on common-sense ideas that can be done in a fiscally responsible manner that will protect taxpayers and the Treasury.

I have a great deal of pride in this legislation, as it is a homegrown idea from South Carolina.  It represents the best of our country’s democratic traditions: an engaged citizenry, working across party lines, to help their neighbors and make their communities better.  I am proud to be associated with this effort and I particularly want to thank my partner in this project, the distinguished gentlemen from Kentucky, my good friend, Ed Whitfield.

The genius of this idea lies in its simplicity.  This is a loan program, not a grant or rebate, and the loans are paid back to the federal treasury.  The bill will provide loan authority to USDA’s Rural Utilities Service (RUS) so that rural electric cooperatives can make loans to families and small businesses to implement energy efficiency improvements that meet RUS energy savings standards.  Participating consumers will repay the co-ops for the installation and material costs through a charge on their utility bills over a 5 to 10 year window.  The resultant energy savings from the upgrades will cover most, if not all, of the loan’s cost; and after the loan is repaid, consumers will save hundreds of dollars on their energy bills annually.

Today, the unemployment rate in South Carolina hovers around 12 percent, and in many parts of my district, the rate is twice that number.  Among South Carolina rural electric cooperative customers, 12.5 percent of families live below the poverty level, and 24 percent live in mobile homes or trailers, which are notorious energy sieves.

Twelve counties in South Carolina qualify as Persistent Poverty Counties, where, according to the Economic Research Service of the USDA, 20 percent or more of residents are poor, as measured by each of the last four censuses since 1970.  As national studies have shown, for the poorest households, earning less than $10,000 per year, 70 percent of their after-tax income goes toward energy expenses.

In my district, I’ve talked with individuals and families, from young high school graduates to senior citizens living on a fixed income, many of whom have lost their jobs and who are forced to make hard choices every month between paying their electric bills and putting food on the table or buying medications they need to stay healthy.  These are folks like Alicia Smith from Orangeburg County in my district.  Alicia lives in a double-wide mobile home and, as a result of inefficient and obsolete utility systems in her home, her energy bill averages more than $400 per month.  I would like to show you a short video about Alicia and how the Tri-County co-op helped her make her home much more energy efficient.

[show Alicia Smith video]  http://www.youtube.com/watch?v=7fxDfDujKmQ

That video really shows you what a great program we are talking about: loans, not rebates or handouts; putting contractors back to work.  Moving products – insulation, HVACs, doors – off of shelves and getting our manufacturing sector back to work.  And most importantly, making a difference for real people and saving them money.

Last autumn, I learned of efforts by rural electric cooperatives in South Carolina to address these issues – to create jobs in our state while helping their customers who are struggling with high energy bills.

For several years now, South Carolina cooperatives have tried to help their customers reduce their energy consumption and save money by conducting energy audits of their homes.  However, very few of these of customers have the up-front savings or the financial credit strength to afford purchasing or installing the energy efficiency measures recommended.  Even if a partial rebate was provided, most energy efficiency retrofits that yield significant energy savings are still too cost-prohibitive for these rural families.

And so South Carolina cooperatives determined what was necessary, and what would help them be most responsive to their customers’ needs: to make available low-cost loans for high impact energy efficiency improvements – loans that could be repaid over time on the customer’s utility bill.

For those unfamiliar with concept of cooperatives, I’ll provide a little background.  Electric co-ops are the independent, not-for-profit electric utilities established in the New Deal to bring electricity to rural America.  They are owned by their consumers and active in the communities they serve, ensuring that they are highly accountable to their members.  Today, there are more than 900 electric cooperatives providing utility service to 42 million Americans in 47 states, operating under a consumer-focused approach to business unique in the utility sector.

As this Subcommittee well knows, for 75 years USDA has been working with rural cooperatives to maintain and expand their infrastructure and establish new and vital services, resulting in billions of dollars in rural development and hundreds of thousands of jobs in rural America.  Since their inception, co-ops also have borrowed extensively from the Federal government to finance electric distribution, generation and transmission investments.  The default rate on these loans has been so small in the past 20 years that USDA has actually made money on them.

Moreover, most co-ops have the necessary experience, infrastructure and incentive to implement this program.  A few, however, are leading the way.  The Rural Energy Savings Program was modeled in part on an operational program developed by Midwest Energy in Hays, Kansas, known as How$mart™.  At the planning level, South Carolina has a fully developed program concept that is ready to go as soon as it gets funding, while other states are close.  Because low-cost funding has not been available to this point, co-ops have not been able to implement a large-scale, comprehensive energy efficiency improvement program.

As an example, New Hampshire’s electric cooperative currently runs an energy efficiency on-bill financing program for small-businesses, which functions exactly the way co-op programs would under this proposal.  New Hampshire wants to expand its program to residences, but access to capital at reasonable rates has prevented the co-ops from doing so.  This proposal would make available that upfront capital.

Just as important as the energy savings to rural customers is the positive impact on the economy.  South Carolina cooperatives have estimated that in South Carolina alone the bill would create 2,539 new jobs in the first year, 4,618 by 2020, and 7,113 by 2030.  These include direct jobs at the cooperatives and for contractors associated with performing energy audits and retrofitting homes, as well as indirect jobs generated by suppliers and support services.  Nationally, the bill would create 20,000 to 40,000 new jobs every year.

Importantly, these will be good jobs at good wages that don’t require a 4-year college degree.  Community colleges and technical schools will be critical partners in helping to train the workers needed to implement the program.  Already in South Carolina the Technical Education System has created BPI certification programs to train the types of professionals who would conduct energy efficiency audits under the RESP.

The Rural Energy Savings Program is a real opportunity to positively impact the lives of rural, low-income communities across the country – to improve their quality of life, provide them with the training necessary to gain good-paying jobs that can’t be shipped overseas, and to allow people to help their neighbors and improve their communities.

In conclusion, Mr. Chairman, this bill provides for job creation, energy conservation and cost-effective upgrades that will save real people money on their energy bills.  There is such broad bipartisan support for this initiative because it is a win-win-win proposition.  I would note that the bill currently has 41 Co-sponsors, including 9 Republicans and several Members of this Committee.  I urge the Subcommittee, and the full Agriculture Committee, to take the first step forward to help families in rural American and pass H.R. 4785 expeditiously.

Thank you for your time, and I would be happy to answer any of your questions.