A $10 million state loan fund could help schools, local governments and state agencies lower their energy bills, Gov. Mike Rounds said Monday.

Rounds said he would propose a revolving loan fund to the 2008 Legislature: $5 million for schools and local governments and $5 million for state agencies, including state schools and universities.

Agencies could use the loans to make heating and cooling plants more efficient, to better insulate buildings or to reduce other energy costs.

The Energy Conservation Loan Fund would fund proposals with the fastest paybacks in reduced energy costs.

The interest rate would be 4 percent, and agencies would have to pay for 10 percent of the cost of the projects.

"Energy savings would pay back the rate of the loan, plus the rate of interest," Rounds said.

The governor expects most projects would pay back investments in eight to 12 years.

As loans are paid back, more projects could be funded. In the end, energy savings would reduce costs to taxpayers.

"Hopefully the demand is huge," Rounds said. "That would be a successful program."

Contact Bill Harlan at 394-8424 or bill.harlan@rapidcityjournal.com