Week In Review

State Capitol Week in Review

            LITTLE ROCK – It can take several years before the effects of legislation is fully appreciated, and that has been the case with the package of energy bills approved last year by the legislature.

            For example, Arkansas now has a handful of stations that sell compressed natural gas (CNG), and thanks to rebates and incentives in Act 532 of 2013 there likely will be more in the near future.  As more fleets of motor vehicles are converted to be able to run on CNG, the United States becomes less dependent on imports of petroleum produced in volatile foreign countries.

            A new “Farm to Fuel” refinery in DeWitt is now producing bio-diesel for trucks, buses and farm vehicles. Research done at Arkansas State University and Phillips County Community College of the University of Arkansas led to the facility’s decision to process waste vegetable oil and camelina, a distant relative to canola with a short growing season.

            Act 1252 of 2013 authorizes the Arkansas Development Finance Authority to issue bonds to finance energy efficiency projects for state government buildings and facilities.

            With the passage of Act 1074 of 2013, Arkansas joined 30 other states in authorizing financing of Property Assessed Clean Energy (PACE) projects.  The act allows cities and counties to form Energy Improvement Districts, which will be operated and controlled by a locally-appointed board of directors.

            The Energy Improvement Districts can raise funds by issuing bonds, accepting grants or contracting for loans from private investors.  The district takes applications from real property owners for loans to pay for improvements that will lower their energy bills, for example, the installation of solar panels, better insulation or more efficient HVAC systems.

            Approval of the loan is contingent on an energy audit proving that the project will create enough energy savings to pay off the loan. This requirement is a protection for property owners and the improvement districts, similar to the requirement that a prospective home buyer must get an inspection before a bank or other lender approves a mortgage to buy a house.

The property owners pay off their PACE loans through their property taxes. The total energy savings are greater than the higher taxes, so the property owner saves money throughout the life of the loan.  After the loan is paid off, the savings are even greater.

Federal regulations limit the ability of residential homeowners to apply for PACE loans, and for that reason supporters say that PACE primarily will benefit owners of commercial and industrial properties, as well as multi-family units such as apartments.

            Heating and air conditioning companies were major supporters of Act 1074.  They say it will facilitate financing of energy improvement projects and thus stimulate job creation within their industry.

            Two cities - North Little Rock and Fayetteville - have formed Energy Improvement Districts and an ordinance to create one in Little Rock has been proposed to the mayor.

            More than 11,000 Arkansans work in what is labeled as the “advanced energy” industry.  It’s a wide-ranging variety of more than 90 companies in Arkansas that produce energy from renewable sources such as bio-fuels, from nuclear power and from alternative sources such as wind, hydropower and solar thermals. 

A major segment of the industry comprises heating, ventilation and air conditioning (HVAC) companies, which employ more than 2,400 Arkansans.  Jobs in the production of oil and natural gas, which are considered more traditional energy resources, are not counted in the “advanced” energy sector.