Home%20Energy%20Ratings%20in%20Delaware

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Home Energy Ratings in Delaware

• Roger Colton
• Fisher, Sheehan Colton
• February 1999

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Agenda

• Review objectives
• Review energy costs in Delaware
• Introduce HERS in Delaware
• Review consumer impacts

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Training Objectives

• To explain the link between energy costs and
  shelter affordability
• To explain the role of Home Energy Ratings in
  supporting energy efficiency
• To explain the financial impacts of energy
  efficiency investments

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Consumers Interest in Energy

• Increased energy efficiency ranked 9 in top 10
  trends in consumer demands for new homes (1996).
• 1997 survey 83 of consumers more likely to buy
  from builder who offers energy efficiency
  upgrades.
• 1998 survey consumers willing to spend extra
  1200 - 1500 for 300 annual energy savings.

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Energy Costs in Delaware

• Fourth highest in nation
• 1,594 per year in 1997
• Average natural gas bill 655
• Average electric bill 940
• SOURCE
• National Consumer Law Center, Energy and the
  Poor The Crisis Continues (1995)

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Energy End Uses in the Home
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Average Consumer vs. Lower-Income Consumer

• Average
• Bill 1,700
• Burden 4

• Low-income
• Bill 1,450
• Burden 15

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The intensity of energy use/costs

• Average
• Cost intensity 0.62/sq foot
• Use intensity 50,000 BTU/sq foot
• of shelter costs devoted to energy 13

• Low-income
• Cost intensity 0.69/sq foot
• Use intensity 57,000 Btu/sq foot
• of shelter costs devoted to energy 27

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Summary of Energy Use Discussion

• Distinguish heat and non-heating
• Distinguish between energy end-uses
• Distinguish discretionary and non-discretionary
  use
• Distinguish energy bills and energy burdens.

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Home Energy Rating System (HERS)

• Similar to EPA rating of automobiles on a miles
  per gallon basis
• Represents a standard measurement of homes
  energy efficiency

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A HERS Audit Looks At

• Attic, wall and floor insulation
• Water heating
• Lighting
• Heating and cooling systems
• Quantity and quality of doors/windows
• Mechanical equipment
• Health and safety features

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HERS Report Should Contain

• Overall rating score on the home
• Recommended cost-effective energy upgrades
• Estimates of both the costs and the annual
  savings of the upgrades
• Improved rating score after the upgrades
• Estimated total energy cost before and after
  upgrades
• Health and safety improvements

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The Energy Efficient Mortgage

• Home purchase mortgage add-on
• Finance 4000 or 5 of loan
• Without further credit qualification
• Without further appraisal
• Insured by FHA

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The Concept of Cost-Effective

• Saves more than it costs
• Net Present Value
• Cash flow

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Potential Areas of Benefit

• Space heating savings
• Domestic hot water savings
• Increased comfort

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Example 1 Cash Flow Savings
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Example 2 Purchasing Power
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Example 3 Effective Impacts

• Effective Interest Rate Reduction
• Assumptions
• 400 a year in energy savings
• 2000 energy efficiency investment
• 50,000, 30-year mortgage (7.5 interest)
• Effective interest rate reduction is 1.2 (from
  7.5 to 6.3).

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For More Information

• roger_at_fsconline.com