FISCAL NOTE



FUND(S):

Special Revenue

Sources of Revenue:

Special Fund

Legislation creates:

A New Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


This bill creates the Higher Education Energy and Water Savings Revolving Loan Fund proposed by the Governor. Through an initial investment of $7 million, it is anticipated that the higher education institutions will propose, and if approved for a loan, initiate projects that will result in significantly greater savings over time through reductions in energy and water usage. Projects will be considered for loans on a competitive basis and those offering the highest savings and quickest payback will be funded. Institutions would repay the loan with the dollars saved from reduced energy and water costs. Once the payback point is reached, subsequent savings would accrue to the benefit of the institution.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 7,000,000 -700,000 -7,000,000
Personal Services 0 0 0
Current Expenses 0 -700,000 -7,000,000
Repairs and Alterations 0 0 0
Assets 7,000,000 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


The initial investment would be $7 million in FY 2008 which is reflected above by an increase in Assets. However, over time this investment cost would be offset by a reduction in utility costs which is reflected by a $700,000 reduction in Current Expenses for FY 2009. We estimate a savings of about $700,000 per year, on average, which would allow the institutions to recoup the initial investment in ten years. By the tenth year, the net fiscal impact is estimated to be zero. In the eleventh year and beyond, the reduced energy usage would generate savings greater than the initial investment. We estimate that on average energy and water savings projects finance by loans from this program will achieve payback in approximately ten years.



Memorandum


There are no issues which have not been covered in the explanation above.



    Person submitting Fiscal Note: Richard Donovan
    Email Address: donovan@hepc.wvnet.edu