To motivate homeowners to invest in efficiency, they must know that the value will be recovered at home sale. …homeowners dont usually ask about payback period for kitchen cabinets.

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. Appraiser Lender Realtor MLS Appraiser uses MLS to get information on subject house AND comparables for valuation $ Listing Price $ Taxes $ Insurance ? ? ? Home Buyer ? Utility expenses

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. Range in total utility bills can be meaningful amount of income. 1 2

Proposal: Utility efficiency program aimed to help homebuyers and other market participants learn more about expected utility expenses Principles: 1.Not a silver bullet or panacea. Must be viewed as part of broad home energy improvement strategy. 2.It is about information (can exist in tandem with other programs to support improvements). 3.Must be no burden on the home sale transaction (i.e., automated, low-cost, fast, easy to understand). 4.Will not be uniformly embraced and will require advocacy. Goal is to gain foothold in the market and grow.

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

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

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

Home Energy Scoring regimes: Alaska Residential Real Property Transfer Disclosure Statement: Home Energy Score Pilot Programs: Northeast Energy Efficiency Partnerships (NEEP) sample form: EnergySavvy in Seattle: Utility Bill Disclosure EPA Home Energy Yardstick: New York State Truth in Heating Law: Energy Audit RESNET HERS NYSERDA Comprehensive Home Assessments: Renovations/Comprehensive-Home-Assessments.aspxhttp:// Renovations/Comprehensive-Home-Assessments.aspx Links