The $3.1 billion dollar energy efficiency program run by utilities is slated for a major overhaul aimed at offering low-interest rate loans for home and business retrofits. The California Public Utilities Commission is expected to outline the basic concept of the energy efficient retrofit financing proposal by the end of the year, according to Jeanne Clinton, special advisor on energy efficiency to Gov. Jerry Brown. Under the emerging plan--dubbed \u201cOn Bill Repayment\u201d--utilities would act akin to loan brokers and servicing agents for banks looking to lend consumers money for energy efficiency retrofits. On behalf of the lenders, utilities would collect monthly payments from their customers who borrow as a separate line item on their monthly energy service bills. Another key part of the program, according to Clinton, is that the loans would be tied to the property. Therefore, when an owner sells their home or building the new owner would have to continue to make payments as part of their utility bill if the obligation was not yet paid in full. The program appears to have two other more controversial components. One would be a ratepayer-funded loan loss reserve fund that would pay off any loans made by banks that go into default. The other is that if a borrower chose to pay only the energy portion of their utility bill--skipping payment on their energy efficiency retrofit loan--their utility would be obligated to shut off their power or gas, subject to existing consumer protection policies governing service cutoffs. Clinton indicated there are still ongoing discussions about the shutoff concept. She explained the upcoming proposal at a Senate Select Committee on Energy Efficiency hearing Dec. 7 in Century City. The financing plan comes as a similar program that tied loans to property tax assessments--known as Property Assessed Clean Energy loans--has been stymied by a federal ruling, though there\u2019s some chance Congress could revive it (Current, July 22, 2011). The aim of the new state program, explained Alan Strachan, Global Legacy Foundation director, is to tap \u201clong\u201d money raised in the bond market for energy efficiency financing in place of today\u2019s short money. Strachan and other financiers explained that in the absence of a home equity line of credit homeowners have to finance energy efficiency retrofits through consumer credit, which carries a high interest rate. Tapping the long-term bond market could substantially reduce interest rates to consumers for energy efficiency retrofits, he said. CitiBank is ready to play as long as the program\u2019s structured correctly, said Miriam Wrobel, municipal securities division director for the giant bank. She said Citi has a mandate to lend for energy efficiency retrofits and is looking for programs in which it can participate. Sen. Kevin De Leon (D-Los Angeles) said that Wells Fargo and other banks also have expressed an interest in the program, which has been discussed around the state in recent months in a series of what he called \u201cstakeholder\u201d meetings. He chairs the select committee. Regulators at the CPUC see financing as crucial to achieving whole building retrofits that bring long-term energy savings, as utility subsidies for low-hanging fruit like compact fluorescent lights and energy efficient appliances reach the point of diminishing returns. That\u2019s because unlike screwing in new light bulbs or buying a new dishwasher, home retrofits are expensive and most people need to borrow money to be able to pay for them.