Kansas Write-Up Final
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Home Energy Efficiency Efforts In Kansas
Home Energy Efficiency Efforts
For advocates of home energy efficiency, adoption of the latest energy codes is only part of a larger strategy to achieve actual efficiency gains for homes. In recent years, the state has created a number of programs to help homes and businesses meet energy efficiency goals. One note‐ worthy program, the Energy Efficiency Disclosure Form, requires sellers of all new homes to provide homebuyers with a report on energy‐ efficiency specifications. A more‐recent endeavor, Efficiency Kansas, is an innovative revolving loan program created by the State Energy Office which provides low‐interest loans to homeowners and business owners to retrofit older homes and commercial buildings with cost‐effective energy efficiency improvements.
Energy Disclosure Form for New Homes
The Kansas Energy Efficiency Disclosure form is a one‐page summary of a new home’s energy efficiency features. The state requires sellers to use the form to disclose information about the home’s envelope and mechanical sys‐ tems and to prominently display the form within a home to be sold. The form is designed to allow the builder/seller to list envelope and mechanical systems specifications alongside the relevant 2006 IECC and federal standards. Analogous to the EPA mileage sticker on a new car’s window, the user‐friendly form allows prospective buyers the chance to see what is “under the hood” of their new home. The form’s required entries include R values (insulation levels) for walls, attics, and foundations, as well as window “U” values (heat loss rating), and specifications for water heaters and HVAC equipment. The disclosure form also allows progressive builders the opportunity to go even further, by demonstrating a new home’s actual building performance. By checking a box on the form, builders can indicate that the home has been assessed by a HERS rater or that it has qualified as an EPA Energy Star Home. HERS raters are trained and certified by RESNET (Residential Energy Services Network) to conduct inspections on homes to determine their energy efficiency. After inspecting the building plans and conducting on‐site testing of the home, HERS raters use a computer program to generate a score between 1 and 100, with a lower score indicating a higher level of energy efficiency. While build‐ ers are not required to complete this section, this section signals to potential buyers that the builder has gone the extra mile to assure the home’s energy efficiency. In addition to single family homes, the law also applies multifamily residential units in buildings containing up to four total units. The form, incorporated in state statute (KSA 66‐1228), was developed with input from the Kansas Homebuilders As‐ sociation, the Association of Realtors, the Kansas Manufactured Housing Association, and the State Energy Office.
1850 M St. NW Suite 600 | Washington, DC 20036 | www.bcap-ocean.org
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The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes
Although the disclosure forms are required only on newly built homes, the State Energy Office plans to incorporate similar disclosure in its retrofit programs.
Efficiency Kansas Loan Program
The Efficiency Kansas loan program (www.efficiencykansas.com) is a newly created low‐interest loan fund that al‐ lows Kansas homeowners and small business owners to borrow up to $20,000 or $30,000, respectively, to make cost ‐effective energy efficiency improvements to their homes or businesses. Created with $34 million allotted to the state by the American Recovery and Reinvestment Act of 2009 (ARRA), the program was officially launched Novem‐ ber 17th 2009 and is managed by the State Energy Office. Efficiency Kansas is based on a “whole house” approach to energy efficiency, and all projects approved for financing are based on an energy audit of the home or small business. Designed as a public‐private partnership, Efficiency Kansas gives customers two ways to access financing: through part‐ ner lenders or partner utilities. To get started, prospective participants get prequalified by a partner lender or utility. Next, they contact one of the quali‐ fied auditors listed on the Efficiency Kansas web site to schedule an energy audit. While homeowners must pay for cost of the audit, the state is providing rebates of $350 to the first 1,000 participants who complete a project through Effi‐ Kansas City, Kansas ciency Kansas. The State Energy Office estimates that the au‐ dit will cost anywhere between $500 and $600 (this includes the cost of the required post‐retrofit audit discussed below). After performing a thorough audit, auditors provide owners with a customized Energy Conservation Plan (ECP), which lists estimated energy and financial savings and prioritizes improvements based on how quickly they will pay for themselves through the energy savings. Improvements may include insulation, air sealing, and new heating and cooling equipment, among others. It all depends on what the energy audit shows to be cost‐effective. To be approved for Efficiency Kansas financing, all project costs must be covered by the estimated energy savings over the term of the loan. With the ECP and a contractor’s bid in hand, homeowners may apply for a loan from two sources: a partner lender or utility. For homeowners, the maximum loan amount is $20,000. Small businesses can receive a loan of up to $30,000. The maximum loan term is 15 years. For loans originating from partner lenders, the state provides the funds to the lender at 0% interest, and the lender is allowed to charge up to 4% interest. The lender retains the 4% interest to defray the loan costs, and sends the principal in each loan payment to the state to replenish the revolving fund. To keep fees down for borrowers, the state provides each lender with a $250 per loan origination fee for each loan they originate. If an owner of a home with an outstanding loan chooses to sell it, the owner must pay the balance of the loan in full at closing (with no pre‐ payment penalty).
1850 M St. NW Suite 600 | Washington, DC 20036 | www.bcap-ocean.org
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The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes At present, 17 lenders, totaling 106 branches across the state, have signed up to be Efficiency Kansas Partner Lend‐ ers. For customers electing to finance through a utility, the program works the same way, except the loan is repaid through the monthly utility bill. The program’s first partner utility is Midwest Energy, which now operates their How$mart program in partnership with Efficiency Kansas. Kansas Gas Service, with over 643,000 customers, has filed an application to offer Efficiency Kansas; the application is currently in process with the Kansas Corporation Commission (KCC), the state’s utility regu‐ latory agency. Two other large electric utilities are expected to file with the KCC in the near future, and several non‐ regulated rural electric cooperatives will soon be offering Efficiency Kansas to their customers. To be eligible for the utility track, customers must have 12 months of utility service history, be current on their pay‐ ments, and not have had their service disconnected in the previous 12 months. These eligibility requirements should allow customers with bad credit to participate in the loan program; the utility track also allows for improvements to rental units, provided both the tenant and landlord are amenable. If customers sell their home or small business be‐ fore the loan is repaid, they must disclose the loan (meter‐based obligation) to the buyer, who will continue the loan repayment through their monthly utility bill. To increase transparency, partner utilities are required to file a notice that will appear during a home title search, as well as requiring all customers to sign forms agreeing to disclosure. After work on each project is completed, Efficiency Kansas requires the energy auditor to return to the building and conduct a post‐retrofit audit to verify the measures have been installed per specifications and that there are no safety hazards (e.g., the structure is now too tight). The cost for the post‐retrofit audit is included in the initial price quote. Homeowners who finance a project through Efficiency Kansas remain eligible for the federal energy efficiency tax credits of up to $1,500 through the American Recovery and Reinvestment Act (Recovery Act). The tax credits are for specific improvements, including upgraded doors, roofs, windows, insulation, and HVAC equipment that meet spe‐ cific federal standards. More information on energy efficiency tax credits is available from the Alliance to Save En‐ ergy. The State Energy Office started Efficiency Kansas on a strong footing by hiring a marketing firm to develop a state‐ wide advertising strategy, providing support for qualified energy auditor training institutions, as well as providing scholarships for prospective auditors to attend trainings. So far, 100 scholarships have been awarded. The state has estimated that residents who participate in the program will reduce their heating and cooling bills by 20%. For 10% of homes participating in the program, the state will conduct an on‐site audit of the ECP to ensure that the initial en‐ ergy audits were conducted correctly. As of April 2010, this nascent program has approved 10 loans. The State Energy Office anticipates that the number of Kansans participating in the program will grow steadily over the coming year. Detailed costs of the program follow:
BCAP
Dedicated to the adoption, implementation, and advancement of building energy codes
1850 M St. NW Suite 600 | Washington, DC | www.bcap-ocean.org
The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes
Efficiency Kansas Loan Cost Breakdown
Loan Fund Energy Audit Rebates to Homeowners Loan Origination Rebates to Banks Marketing Program Training Sessions Scholarships for Energy Auditor Training Administration Costs Total $34 million $350,000 $481,000 $500,000 $100,000 $150,000 $1,619,000 $37.2 million
BCAP
Dedicated to the adoption, implementation, and advancement of building energy codes
1850 M St. NW Suite 600 | Washington, DC | www.bcap-ocean.org
Navigating the World of Energy Codes | www.bcap-ocean.org
Home Energy Efficiency Efforts In Kansas
Home Energy Efficiency Efforts
For advocates of home energy efficiency, adoption of the latest energy codes is only part of a larger strategy to achieve actual efficiency gains for homes. In recent years, the state has created a number of programs to help homes and businesses meet energy efficiency goals. One note‐ worthy program, the Energy Efficiency Disclosure Form, requires sellers of all new homes to provide homebuyers with a report on energy‐ efficiency specifications. A more‐recent endeavor, Efficiency Kansas, is an innovative revolving loan program created by the State Energy Office which provides low‐interest loans to homeowners and business owners to retrofit older homes and commercial buildings with cost‐effective energy efficiency improvements.
Energy Disclosure Form for New Homes
The Kansas Energy Efficiency Disclosure form is a one‐page summary of a new home’s energy efficiency features. The state requires sellers to use the form to disclose information about the home’s envelope and mechanical sys‐ tems and to prominently display the form within a home to be sold. The form is designed to allow the builder/seller to list envelope and mechanical systems specifications alongside the relevant 2006 IECC and federal standards. Analogous to the EPA mileage sticker on a new car’s window, the user‐friendly form allows prospective buyers the chance to see what is “under the hood” of their new home. The form’s required entries include R values (insulation levels) for walls, attics, and foundations, as well as window “U” values (heat loss rating), and specifications for water heaters and HVAC equipment. The disclosure form also allows progressive builders the opportunity to go even further, by demonstrating a new home’s actual building performance. By checking a box on the form, builders can indicate that the home has been assessed by a HERS rater or that it has qualified as an EPA Energy Star Home. HERS raters are trained and certified by RESNET (Residential Energy Services Network) to conduct inspections on homes to determine their energy efficiency. After inspecting the building plans and conducting on‐site testing of the home, HERS raters use a computer program to generate a score between 1 and 100, with a lower score indicating a higher level of energy efficiency. While build‐ ers are not required to complete this section, this section signals to potential buyers that the builder has gone the extra mile to assure the home’s energy efficiency. In addition to single family homes, the law also applies multifamily residential units in buildings containing up to four total units. The form, incorporated in state statute (KSA 66‐1228), was developed with input from the Kansas Homebuilders As‐ sociation, the Association of Realtors, the Kansas Manufactured Housing Association, and the State Energy Office.
1850 M St. NW Suite 600 | Washington, DC 20036 | www.bcap-ocean.org
BCAP
The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes
Although the disclosure forms are required only on newly built homes, the State Energy Office plans to incorporate similar disclosure in its retrofit programs.
Efficiency Kansas Loan Program
The Efficiency Kansas loan program (www.efficiencykansas.com) is a newly created low‐interest loan fund that al‐ lows Kansas homeowners and small business owners to borrow up to $20,000 or $30,000, respectively, to make cost ‐effective energy efficiency improvements to their homes or businesses. Created with $34 million allotted to the state by the American Recovery and Reinvestment Act of 2009 (ARRA), the program was officially launched Novem‐ ber 17th 2009 and is managed by the State Energy Office. Efficiency Kansas is based on a “whole house” approach to energy efficiency, and all projects approved for financing are based on an energy audit of the home or small business. Designed as a public‐private partnership, Efficiency Kansas gives customers two ways to access financing: through part‐ ner lenders or partner utilities. To get started, prospective participants get prequalified by a partner lender or utility. Next, they contact one of the quali‐ fied auditors listed on the Efficiency Kansas web site to schedule an energy audit. While homeowners must pay for cost of the audit, the state is providing rebates of $350 to the first 1,000 participants who complete a project through Effi‐ Kansas City, Kansas ciency Kansas. The State Energy Office estimates that the au‐ dit will cost anywhere between $500 and $600 (this includes the cost of the required post‐retrofit audit discussed below). After performing a thorough audit, auditors provide owners with a customized Energy Conservation Plan (ECP), which lists estimated energy and financial savings and prioritizes improvements based on how quickly they will pay for themselves through the energy savings. Improvements may include insulation, air sealing, and new heating and cooling equipment, among others. It all depends on what the energy audit shows to be cost‐effective. To be approved for Efficiency Kansas financing, all project costs must be covered by the estimated energy savings over the term of the loan. With the ECP and a contractor’s bid in hand, homeowners may apply for a loan from two sources: a partner lender or utility. For homeowners, the maximum loan amount is $20,000. Small businesses can receive a loan of up to $30,000. The maximum loan term is 15 years. For loans originating from partner lenders, the state provides the funds to the lender at 0% interest, and the lender is allowed to charge up to 4% interest. The lender retains the 4% interest to defray the loan costs, and sends the principal in each loan payment to the state to replenish the revolving fund. To keep fees down for borrowers, the state provides each lender with a $250 per loan origination fee for each loan they originate. If an owner of a home with an outstanding loan chooses to sell it, the owner must pay the balance of the loan in full at closing (with no pre‐ payment penalty).
1850 M St. NW Suite 600 | Washington, DC 20036 | www.bcap-ocean.org
BCAP
The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes At present, 17 lenders, totaling 106 branches across the state, have signed up to be Efficiency Kansas Partner Lend‐ ers. For customers electing to finance through a utility, the program works the same way, except the loan is repaid through the monthly utility bill. The program’s first partner utility is Midwest Energy, which now operates their How$mart program in partnership with Efficiency Kansas. Kansas Gas Service, with over 643,000 customers, has filed an application to offer Efficiency Kansas; the application is currently in process with the Kansas Corporation Commission (KCC), the state’s utility regu‐ latory agency. Two other large electric utilities are expected to file with the KCC in the near future, and several non‐ regulated rural electric cooperatives will soon be offering Efficiency Kansas to their customers. To be eligible for the utility track, customers must have 12 months of utility service history, be current on their pay‐ ments, and not have had their service disconnected in the previous 12 months. These eligibility requirements should allow customers with bad credit to participate in the loan program; the utility track also allows for improvements to rental units, provided both the tenant and landlord are amenable. If customers sell their home or small business be‐ fore the loan is repaid, they must disclose the loan (meter‐based obligation) to the buyer, who will continue the loan repayment through their monthly utility bill. To increase transparency, partner utilities are required to file a notice that will appear during a home title search, as well as requiring all customers to sign forms agreeing to disclosure. After work on each project is completed, Efficiency Kansas requires the energy auditor to return to the building and conduct a post‐retrofit audit to verify the measures have been installed per specifications and that there are no safety hazards (e.g., the structure is now too tight). The cost for the post‐retrofit audit is included in the initial price quote. Homeowners who finance a project through Efficiency Kansas remain eligible for the federal energy efficiency tax credits of up to $1,500 through the American Recovery and Reinvestment Act (Recovery Act). The tax credits are for specific improvements, including upgraded doors, roofs, windows, insulation, and HVAC equipment that meet spe‐ cific federal standards. More information on energy efficiency tax credits is available from the Alliance to Save En‐ ergy. The State Energy Office started Efficiency Kansas on a strong footing by hiring a marketing firm to develop a state‐ wide advertising strategy, providing support for qualified energy auditor training institutions, as well as providing scholarships for prospective auditors to attend trainings. So far, 100 scholarships have been awarded. The state has estimated that residents who participate in the program will reduce their heating and cooling bills by 20%. For 10% of homes participating in the program, the state will conduct an on‐site audit of the ECP to ensure that the initial en‐ ergy audits were conducted correctly. As of April 2010, this nascent program has approved 10 loans. The State Energy Office anticipates that the number of Kansans participating in the program will grow steadily over the coming year. Detailed costs of the program follow:
BCAP
Dedicated to the adoption, implementation, and advancement of building energy codes
1850 M St. NW Suite 600 | Washington, DC | www.bcap-ocean.org
The Online Code Environment and Advocacy Network | Navigating the World of Energy Codes
Efficiency Kansas Loan Cost Breakdown
Loan Fund Energy Audit Rebates to Homeowners Loan Origination Rebates to Banks Marketing Program Training Sessions Scholarships for Energy Auditor Training Administration Costs Total $34 million $350,000 $481,000 $500,000 $100,000 $150,000 $1,619,000 $37.2 million
BCAP
Dedicated to the adoption, implementation, and advancement of building energy codes
1850 M St. NW Suite 600 | Washington, DC | www.bcap-ocean.org
