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To motivate homeowners to invest in efficiency, they must know that the value will be recovered at home sale.

To motivate homeowners to invest in efficiency, they must know that the value will be recovered at home sale. …homeowners don’t usually ask about “payback period” for kitchen cabinets. Today, programs to promote investment in efficiency

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To motivate homeowners to invest in efficiency, they must know that the value will be recovered at home sale.

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  1. To motivate homeowners to invest in efficiency, they must know that the value will be recovered at home sale. …homeowners don’t usually ask about “payback period” for kitchen cabinets.

  2. Today, programs to promote investment in efficiency fight against market failures, including lack of information. Information about expected utility expenses is essential for appraiser to value property properly and for lender to determine ability to pay….yet missing. $ Listing Price $ Taxes $ Insurance Home Buyer Lender Realtor Appraiser ? Utility expenses ? ? MLS Appraiser uses MLS to get information on subject house AND comparables for valuation ?

  3. Difference in after-tax, after-housing income from different houses can be material, & important to buyer & lender Total Energy Use varies widely across households, 2005 RECS. 1 Range in total utility bills can be meaningful amount of income. 2

  4. Proposal: Utility efficiency program aimed to help homebuyers and other market participants learn more about expected utility expenses • Principles: • Not a silver bullet or panacea. Must be viewed as part of broad home energy improvement strategy. • It is about information(can exist in tandem with other programs to support improvements). • Must be no burden on the home sale transaction (i.e., automated, low-cost, fast, easy to understand). • Will not be uniformly embraced and willrequire advocacy. Goal is to gain foothold in the market and grow.

  5. Operational ratings and asset ratings each convey information about expected utility expenses Operational Rating Asset Rating • Based on prior energy bills, with adjustments • Requires in-home inspection by professional • Uncertainty about predictive power based on many variables (e.g., number of occupants, behavior, etc.) • Allows better comparison between houses. • Tradeoff between cost of assessment and accuracy. • Conveys dollar amount • For purchase/sale: House inspection is typically first oppty for rating, unless seller motivated to get rating (self-selection) or strong incentives. • For purchase/sale: Quicker, inexpensive, syncs with time of listing Inaccuracies and uncertainty must be weighed against baseline of what is done today.

  6. Suggested Options Operational Score Energy Audit Asset Score / Rating • Various options • DOE Home Energy Score • HERS • Prior bills (kwh and dollars) • If tied to ENERGY STAR “Home Energy Yardstick” can deliver scores 1-10 based on prior bills. Professional inspection. Evaluation of energy performance characteristics. Detailed recommendations for improvement, costs, and savings Utility systems integration to regional MLS would enable. “Green Button” delivers information to homeowner. Cost ~ $100 if tied to existing inspection, or ~ $300 if additional visit Not an asset rating. Aimed at fault detection and spurring repairs. • Alternative is online tool/questionnaire for Realtor, buyer, seller to perform on own. Permissions in listing documents Essentially automates what could happen today when buyer asks seller for copies of paper bills. HERS Rating with Diagnostics ($300 to $500) - comprehensive audit and rating with numerical HERS index score, suggested improvements and predicted expenses Some combination Utility data + Asset rating ?

  7. Main Programmatic Options for Utility Programs Marketing Subsidy Systems Regulatory Make a score / rating available, easy to obtain Include in current residential programs as a “leave behind” Contribute to cost of getting score / rating as part of utility home energy improvement program Utility delivers info for score / rating (automated to MLS or lender, with permissions) City / State ordinance requiring disclosure at time of sale

  8. Links Home Energy Scoring regimes: Alaska Residential Real Property Transfer Disclosure Statement: http://commerce.state.ak.us/OCC/pub/rec4229.pdf Home Energy Score Pilot Programs: http://www1.eere.energy.gov/buildings/homeenergyscore/pilot_summaries.htmlhttp://apps1.eere.energy.gov/buildings/publications/pdfs/homescore/energy_label_sample.pdf Northeast Energy Efficiency Partnerships (NEEP) sample form: http://neep.org/uploads/NEEPResources/id762/NEEP%20GuidanceChecklist%20Real%20Estate%20Professionals_Final_Nov2011.pdf EnergySavvyin Seattle: http://www.energysavvy.com/topics/home-energy-efficiency-in-seattle/ Energy Audit RESNET HERS http://www.resnet.us/library/difference-between-energy-audit-and-ratings/ NYSERDA Comprehensive Home Assessments: http://www.nyserda.ny.gov/Page-Sections/Residential/Programs/Existing-Home-Renovations/Comprehensive-Home-Assessments.aspx Utility Bill Disclosure EPA Home Energy Yardstick: http://www.energystar.gov/index.cfm?fuseaction=home_energy_yardstick.showgetstarted New York State Truth in Heating Law: http://law.justia.com/codes/new-york/2010/eng/article-17/17-103/

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