Money for studies and upgrades of hvac systems and their controls may be waiting for you and your customers – but you have to know how to get it. In the past, some of it was restricted to government-owned buildings (e.g., K-12 schools, firehouses), but now even for-profit commercial buildings are eligible for a piece of the pie.

If electric deregulation is happening in your state, this money comes from your electric bills. Most deregulating states are setting aside one to three mills (tenths of a cent) per kilowatt-hour as “system benefit charges” (SBC), also called “universal service fees.” That may not seem like much, but it adds up fast when every ratepayer is paying into the pot.

Show Me The Money

All 24 deregulating states (except Delaware) are collecting the cash and doling it out for a grab bag of energy and social programs that would otherwise be gutted when utilities are no longer (as part of deregulation) required to support them. Most of those programs were previously funded through electric rates so their cost was not visible on electric bills. Now you’ll see them charged as a separate line item on the deregulated utility bills covering power delivery that all customers must pay.

SBC funding falls into four basic categories:

  • Low-income energy assistance (i.e., to help the needy pay their bills);
  • Energy efficiency grants (for both studies and upgrades);
  • Renewable energy sources; and
  • R&D on new energy technologies.

If you’re interested in the second category, such assistance may be just what’s needed to shorten the payback of an otherwise underfunded project.

In the past, grants and demand-side management (DSM) rebates from utilities were available to pay for energy efficiency work, but that money crested in 1994 at about $2.7 billion a year. Now it’s below $1 billion a year in those states that have not yet deregulated their electric utilities (mostly in the South, Midwest, and Northwest). The lesson: Get the money while you can.

The Usual Paperwork

State energy offices and some utilities are setting them up and handling the money. In general, each funding category (e.g., efficiency, R&D) gets some money in each grant cycle, with winners being those who can best write their applications to fit the programs’ aims. Like all government-controlled programs, getting the money can take several months. For consultants and contractors, it pays to learn the ropes of SBC funding programs.

Upgrades Getting Funded

Most money for energy efficiency upgrades is focused on commercial, institutional (both for-profit and nonprofit), and industrial customers. Unlike many DSM programs that paid for permanent reductions in demand (e.g., higher EER chillers), SBC funding is generally oriented toward reducing peak electric demand and summer consumption, and not toward other forms of energy (oil and natural gas). But that limit is really quite broad, since it also offers funding for fuel switching (e.g., from an electric to a gas-fired chiller) and maybe even distributed generation.

SBC funding covers only a portion of a study or installation project (typically 25% to 50%). The most interesting exception is New York State where customer membership in either ClimateWise or the Energy Star Buildings program (both sponsored by the EPA) boosts the state’s contribution to 75%. A customer that could previously only afford a $25,000 upgrade can now spend that money and instead get a $100,000 upgrade!

Jumpstarting The Cash Flow

Each state’s program is different, so here are some shortcuts. To get a quick synopsis of what your state is up to, go to, where the American Council for an Energy Efficient Economy (ACEEE) maintains the best overview of each state’s SBC funding by category. Under the “EE” column, you’ll find the money available for energy efficiency grants.

To get to your state energy offices for more details, applications forms, etc., go to, where the National Association of State Energy Officials keeps a list of hyperlinks to state energy offices, many of which have downloadable forms.

If you don’t act before this money is gone, you have no one to blame but yourself. ES