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Sustainable Energy Utilities
Sustainable energy utilities (SEU) represent an attempt by multiple utilities within a geographic region to place all energy efficiency operations under one roof, are more akin to an energy efficiency business model than a financing strategy. However, there is overlap. In Delaware, for instance, Citibank issued a $57 million tax-exempt bond through the state’s AA+ rated municipality to fund energy efficiency projects. Delaware’s sustainable energy utility contracts with energy service companies that execute projects and which repay the SEU’s debt service to bond holders through shared savings agreements. By 2020, Delaware’s SEU anticipates that up to 93 percent of its revenue ($56.2 million) will be self-sustaining through shared savings agreements and REC sales. Today, REC sales and energy efficiency savings account for roughly half of the utility’s revenues – estimated to be between $15 to 20 million in 2011. The remaining half derives from a utility public benefit fund, which is seeded through a utility surcharge.
The principle difference between a public benefit fund and an SEU is that an SEU is attempting to accrue revenue through shared energy savings. Public benefit funds are essentially a mandated hand-out while SEUs represent a capitalistic approach to energy efficiency. Vermont is the only other state to have formalized an SEU.
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