Eligibility of Financed Equipment through the Retrofit Program
September 28, 2016
The Business Working Group (BWG) intends to clarify the eligibility of financed equipment through the Retrofit Program. While Section 3.4 of the program rules indicates the equipment must be purchased and installed, the procurement arrangement and title to the equipment is not required to be a critical consideration for the approval of the project unless it will impact the participant's ability to deliver the contracted electricity savings throughout the term of the agreement.
Section 3.4 (c) of the program rules also indicates that Eligible Costs must not include financing costs. This provision excludes costs associated with financing, leasing and lease-to-own procurement arrangements from the calculation of the Project Cost which are in addition to the base project cost (i.e. interest charges). The net present value of the project (base project cost) is the value which must be used as the Project Cost and for the purpose of calculating the incentive cap through the aforementioned procurement arrangements.
While the BWG intends to make this clarification explicit through the next version of the Retrofit Program rules, LDCs may accept applications with financing, leasing and lease-to-own procurement arrangements under the conditions specified above without a waiver.