PAYS® Essential Elements & Minimum Program Requirements

A.  A program based on PAYS® has these essential elements:

  1. A tariffed charge assigned to a location, not to an individual customer;
  2. Billing and payment on the utility bill with disconnection for non-payment; and
  3. Independent certification that products are appropriate and savings estimates exceed payments in both the near and long terms.

B.  A program based on PAYS® has these minimum program requirements: 

  1. The offer to the customer will not be burdened with customer risk, which undermines the offer’s attractiveness, results in fewer projects being completed, and reduces the program’s effectiveness in achieving its goals.
  2. The utility doing billing and collection of PAYS charges agrees to pay the capital provider(s) each month the amount billed to PAYS customers that month, regardless of the utility’s collections, and to treat any bad debt for PAYS measures the same way that it treats all other bad debt.
  3. PAYS offers will not be forced to compete with other rebate options. Any utility offering rebates and implementing a program using the PAYS system will offer the same rebates to all participants. Utilities can reduce the costs for rebates if rebates available to all customers are limited to the amount required to qualify an upgrade for the PAYS tariff.
Key design tips to ensure PAYS®programs meet these essential elements and minimum requirements
  • Upgrades
    • PAYS upgrades use proven technologies to ensure reliable savings.
    • Upgrades do not entail new debt obligation for participating customers.
    • At the conclusion of utility cost recovery, upgrades belong to building owner.
    • Upgrades do not have end-of-lease charges or transfer-of-ownership financial obligations.
  • On-bill charges
    • Participants receive immediate net annual savings of at least 25 percent above program services charges (80 percent rule).
    • Duration of payments is not more than 80 percent of the estimated life of shortest-life component or a full parts and labor warranty/insurance policy.
    • The program services charge is a fixed amount that may not be increased mid-payment-term.
    • Pre-payment of unbilled charges is not permitted (i.e., no payment without savings).
    • Utilities may disconnect customers for non-payment (DNP) in accordance with current policies, but upgrades may not be repossessed.
  • Repairs
    • Charges stop if upgrades stop working until they are repaired and working again. Charges are also suspended for vacancy if meter is shut off.
    • Repairs or vacancy may extend the duration of charges but not increase the monthly payment amount.
  • Cost-effectiveness analysis
    • Savings analysis is onsite and building specific, and it includes no energy inflation or adders. It uses the amount of savings expected at the end of cost recovery for upgrades whose savings degrade over time, and it should be reported in units of energy not dollars.
    • Savings estimates used in a cost-effectiveness analysis may be for monthly, bi-monthly, or annual periods.
    • The exact cost of installed upgrades must be known at the time of assessment to avoid the cost and customer hassle of a second assessment because a vendor’s installation price is different from the one used for the original assessment.
    • Programs that set contractors’ prices based on negotiated or bid averages reduce the assessment cost and simplify program marketing and communications.
    • Utility subsidies and state and federal credits may only be included in cost-effectiveness analyses if they can be used to lower the upgrades’ cost used in the assessment (no post-installation rebates paid to participants).