Non Conventional Utility or State Sponsored Financing Vehicles

Generally, these types of financing arrangements are designed to support various utility or state objectives. Often, these instruments are similar to conventional financing vehicles and may be provided at below prevailing market rates and be available for host facilities with higher risk credit profiles.

• State-sponsored financing vehicles are often provided as part of state economic development efforts, usually through an agency designated as the Economic Development Authority. Loans are provided in order to retain or expand businesses currently operating in the state or to attract new business to the state. Business retention financing may be provided to important community employers that are either facing bankruptcy or being enticed to move their operations to another state. The benefit to the state is not based on the profitability of the financing, but on the future tax revenues or the improved economic vitality of the state that results from the project.

• Utility-sponsored financing vehicles are one of many types of incentives offered for energy system installations as part of utility demand side management (DSM) or marketing programs. Low-cost or even no-cost financing may be provided to customers installing energy systems that either strategically reduce or expand loads, depending on the utility's objectives. Marketing programs are somewhat similar to state-sponsored economic development financing programs in that they are designed to retain or expand loads of current customers or to attract new customers into the service territory. In many cases, customers must provide guarantees of a certain amount of usage as part of the agreement. DSM-based financing programs are designed to encourage various types of energy efficiency projects which serve the utility's integrated resource planning objectives. With the advent of utility deregulation, many of these programs have been cut back or eliminated.

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