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Energy Advantage Program for Small Business

Frequently Asked Questions


PROGRAM OVERVIEW

The Energy Advantage Program (EAP) for Small Business partners with the U.S. Small Business Administration (SBA) 504 Loan Program lenders (and other approved lenders) to identify opportunities to offer technical assistance, financial analysis, and rebate and incentive support to small and medium business (SMB) owners who are already financing capital projects for their facilities, but are not yet optimizing energy efficiency or connected to utility services and incentives. Qualifying businesses include small and medium commercial, industrial, and agricultural LADWP customers that are financing facility retrofits, gut rehabs, equipment upgrades, and new construction projects.
The EAP is funded by California utility customers and administered by LADWP under the auspices of the California Public Utilities Commission, through a contract awarded to Chicago Bridge & Iron (CB&I). California customers who choose to participate in this program are not obligated to purchase any additional services offered by the contractor.

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The EAP is a LADWP sponsored program that offers no-cost energy efficiency technical and financial assistance to help small/medium business owners make smart energy choices. For small businesses that qualify for a U.S. SBA 504 Loan, the EAP provides no-cost technical assistance to help owners identify energy efficiency measures and apply for utility rebates. The EAP is designed to help small business owners optimize energy efficiency by purchasing or improving properties or investing in new equipment.

The SBA 504 Loan Program offers qualifying commercial and industrial small business borrowers up to $5.5 million to purchase fixed assets, such as real estate and equipment. It offers 10-20 year fixed loans at rates 1-2% below market, and is typically used to build, gut, or retrofit buildings that will house the businesses. The 504 loan is a popular loan which covers 40% of a project’s total cost, with a primary bank providing 50% and the owner contributing 10%.

The EAP will use the SBA’s definition of a small business. As a result, many medium sized businesses qualify as a small business under the SBA definition:

  • Manufacturing: Maximum number of employees may range from 500 to 1500
  • Wholesaling: Maximum number of employees may range from 100 to 500
  • Services: Annual receipts may not exceed $2.5 to $21.5 million
  • Retailing: Annual receipts may not exceed $5.0 to $21.0 million
  • Agriculture: Annual receipts may not exceed $0.5 to $9.0 million

PROGRAM BENEFITS AND PARTICIPATION PROCESS

EAP offers no-cost technical and financial services to qualifying small business customers throughout the entire process to make participation easy for participating customers. These services include:

  • Energy analysis of your project
  • Energy audits and technical assistance to identify energy efficiency opportunities
  • energy efficiency measure (EEM) recommendations that will reduce utility costs and increase asset value
  • energy efficiency measure cash flow analysis
  • Positive Cash Flow Opportunities
  • LADWP rebate and incentive support
  • Lender referrals for customers considering energy efficiency projects and not working with a lender

There are significant benefits for borrowers to improve efficiency when participating in the EAP and SBA 504 loan programs. First, small/medium business owners who can demonstrate that they are improving a base building’s energy performance 10% or more become eligible to increase their borrowing cap from $5 million to $5.5 million per project. Secondly, their utility incentive commitments can be used towards their 10% cash required for closing. Finally, by reducing on-going operating costs and increasing monthly cash flow, owners may be seen as less risky and therefore more likely obtain needed capital.

The EAP offers an opportunity for small/medium business customers to include deeper energy efficiency measures into their loans that may be cash flow positive right away, at below market interest rates, for 10-20 years.

Participating in EAP is as easy as 1, 2, 3!   These three easy steps include:

  1. Send the EAP enrollment form to CB&I by Fax (949) 474-8309 or email at EAP@cbi.com
  2. Receive a no-cost audit and financial assistance provided by the EAP Program
  3. Install identified and qualifying measures before submitting rebate application, with EAP Program’s assistance

ELIGIBILITY

Many LADWP small and medium business customers qualify for the EAP. Eligibility requirements for these customers include:

  • Must be a small and medium commercial, industrial, and agricultural owners financing facility retrofits, gut rehabs, equipment upgrades, and new construction projects
  • Must be a LADWP customer
  • Must qualify for a Small Business Administration Loan or other participating small business lending product
  • Must be willing to consider energy efficiency enhancements to planned projects
  • All other applicable rebate and incentive program terms and conditions apply

The following are examples of typical eligible energy efficiency measures.

  • Central System Natural Gas Boilers
  • Natural Gas Storage Water Heaters
  • Central System Natural Gas Water Heaters
  • Central Demand Hot Water Heaters
  • Pool Heaters
  • Commercial Cooking equipment

Examples of typical ineligible measures include, but may not be limited to:

  • Technologies where there is no significant replacement/installation of equipment or modification to existing equipment, as determined by the Utility Administrator
  • Measures that are not permanently installed and can be easily removed, as determined by the Utility Administrator
  • Measures that save energy because of operational changes (not including control system modifications i.e. programming or re-programming)
  • Fuel-switching measures that do not meet the Utility’s three-prong test
    1. Does not increase source-BTU consumption
    2. Must have a TRC benefit-cost ratio of 1.0 or greater
    3. Must not adversely affect the environment
  • Self-generation or cogeneration projects (i.e. measures that are replacing or installing self-generation or cogeneration equipment)
  • Pre-owned equipment that doesn’t meet specific conditions (please contact the Utility Administrator for eligibility)

Renewable projects can be financed through the SBA 504 Loan Program, along with qualifying energy efficiency projects. However, technical assistance under the EAP will be limited to energy efficiency projects.

For additional information on renewable rebates, please refer to LADWP program information at www.ladwp.com or contact your electric utility.

IMPLEMENTATION

The EAP technical team is here to help you throughout the process; from identification of energy efficiency measures through the utility rebate application. We want your efficiency program to succeed. The following services are provided at no-cost to you:

  • Energy Audits
  • Equipment specification review
  • New construction design assistance
  • Cash flow analysis of proposed energy efficiency measures when financing the owner’s loan
  • Utility rebate and incentives identification and application support

Yes, a customer may choose their own auditor or energy consultant. The EAP team can work with those consultants to provide peer review, cash flow analysis, and to ensure that projects are optimizing available rebates and incentives and complying with program requirements.

You may use your own energy audit report under the following conditions:

  • It is ASHRAE level 1 compliant or higher
  • Your energy audit has been conducted within the last year
  • No major construction at the facility has occurred since the time of the audit

Yes. The EAP team will conduct a review of your planned efficiency measures and provide the final approval to move forward with your identified energy efficiency measures before assisting you with the rebate application process.

Yes. Once energy efficiency measures have been identified in the energy audit, you should provide the contractor’s information to the EAP team. All contractors must be licensed, insured and follow applicable permitting regulations, per the requirements of the State of California.

Our team of technical professionals will assist you through the process from identification of efficiency measures until you receive your approved rebate. Your designated representative will help guide you and help you understand the most effective measures for your project.

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