Residential Energy Conservation

July 1979

NTIS order #PB-298410 Library of Congress Catalog Card Number 79-600103

For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 Stock No. 052-003 -00691-0 Foreword

This report is the result of a request from the Technology Assessment Board that the Office of Technology Assessment (OTA) analyze the potential for conserving energy in homes in terms of energy and costs. The report reviews existing and promising technologies, and a broad set of issues affecting why these technologies are or are not used, how their level of use and effectiveness can be improved, and related Federal programs and policies. The choices Congress makes in framing energy conservation policy reflect society’s views of the present and the future, its concept of the appropriate role of Gov- ernment, and its sense of urgency about the changing energy picture. The diverse nature of residential housing in this country, the many decisions involved in planning, building, buying, and operating a home, and the basic desire of consumers to be allowed the maximum freedom of choice– all of these factors make policy decisions in this area difficult. This study focuses on the demand aspect of residential energy use, specifically those functions that consume most of a home energy budget— fuel to heat and cool space and to heat water. A number of related issues are relevant to this topic but go beyond the scope of the study: land use patterns, transportation habits, protection of residential customers as purchasers of certain types of energy, centralized versus decentralized power sources, and cogeneration. While these issues are important, this study deals only with ways to improve energy efficiency within the 80 million existing housing units and in housing to be constructed over the next two decades. Active solar systems are not included, because of the recent publication of OTA’s Application of Solar Technology to Today’s Energy Needs. Conservation as discussed in this analysis is the substitution of capital, labor, and ingenuity for energy, in the form of products that make a home more energy efficient. This definition relies on making productive investments that provide the same level of comfort and convenience with less energy. Homeowners and renters who also choose to change their styles of living could achieve savings beyond those resulting from conservation technologies alone. This is a conservative definition of conservation that does not treat ethical arguments or other areas of debate. Although based on the technology of energy conservation, the report also addresses human factors that play such a major role in shaping energy consumption. Choices open to builders, designers, suppliers, local and State officials, lenders, utilities, owners, renters, and others are examined Thus, this work attempts to address com- prehensively a problem that at first appears simple, but proves to contain many economic, behavioral, and motivational variables, many technical and human un- knowns, and many possible policy paths. As this report goes to the 96th Congress, the problems generated by an altered energy supply situation are clear and dramatic. I n addition to broad policy questions such as the contribution that conservation can make and the choice between types of policy approaches, very specific questions—such as standards for new housing–face the Nation. I believe this report can assist Congress in dealing with these vital issues.

DANIEL DE SIMONE Acting Director

iii Residential Energy Conservation Staff

Lionel S. Johns, Assistant Director Energy, Materials, and Global Security Division Richard E. Rowberg, Energy Group Manager Nancy Carson Naismith, Project Director David Claridge Steve Plotkin Joanne Seder Pamela Baldwin Doreen McGirr Richard Thoreson John Furber Rosaleen Sutton Lisa Jacobson Lillian Quigg

Contractors and Consultants

Booz, Allen & Hamilton John Bell John Murray McCombs Consumer Federation of America Richard Bourbon Joseph Mohbat Design Alternatives Robert D. Brenner Lee Stephenson Malcolm Lewis Associates Robert Dubinsky Robert Theobald NAHB Research Foundation Dennis Eisen Oak Ridge National Laboratory Frederick Goldstein Technology & Economics C. Alexander Hewes, J r

OTA Publishing Staff

John C. Holmes, Publishing Officer Kathie S. Boss Joanne Heming Residential Energy Conservation Advisory Panel

John H. Gibbons, Chairman Director, Environment Center, University of Tennessee

John Richards Andrews William Konyha Architect First General Vice President United Brotherhood of Joiners & Robert E. Ashburn Carpenters Manager, Economic Research Department Long Island Lighting Company W. B. Moore Vice President Operations/Marketing Edward Berlin Gulf Reston, Inc. Leva, Hawes, Symington & Oppenheimer Donald Navarre Ellen Berman Vice president, Marketing Executive Director Washington Natural Gas Company Consumer Energy Council of America Harold Olin Joel Darmstadter Director of Construction Research Senior Fellow U.S. League of Savings Association Resources for the Future David Rickelton Sherman B. Given Consulting Engineer President Morley Construction Company Andy Sansom Energy Institute Donald Holtzman University of Houston President Holtzman Petroleum Company Samuel Stewart Car/son Companies, Inc.

Grant P. Thompson Senior Associate The Conservation Foundation Reviewers and Friends

OTA thanks these people who took time to provide information or review part or all of the study. Robert Naismith Lee Schipper Atlantic Research Corporation Lawrence Berkeley Laboratory

Alan Ackerman, Energyworks, Massachusetts George Amaroli, Public Utility Commission, State of California Carl Bernstein, Lawrence Berkeley Laboratory Ed Bistany, Office of Energy Resources, State of Georgia Ken Bossong, Center for Science in the Public Interest Mary Love Cooper, Legislative Counsel Bureau, State of Nevada Alan S. Davis, National Consumer Law Center Gary DeLoss, Environmental Policy Center Bruce Hannon, University of IIIinois Craig Hollowell, Lawrence Berkeley Laboratory Betsy Krieg, Lawrence Berkeley Laboratory Sally Cook Lopreato, University of Texas Ed Meyer, Office of Energy Resources, State of Georgia Harvey Michaels, Energy Office, State of Massachusetts David Norris, Energy Task Force, New York City EIliott Wardlaw, Energy Management Office, State of South Carolina Edith Woodbury, Woodward East, Detroit Contents

Volume I Chapter Page Executive Summary...... 3

1. Trends ...... 17

Il. Residential Energy Use and Efficiency Strategies ...... 29

Ill. The Consumer ...... 65

Iv. Low-lncome Consumers ...... 77

v. Housing Decisionmakers ...... 91

VI. Utilities and Fuel Oil Distributors ...... 119

VIl. States and Localities...... 153

Vlll. Federal Government and Energy Conservation ...... 167

lx. Economic Impacts...... 211

x. Indoor Air Quality...... 219

xl. Technical Options...... 227

Appendix A–lnsuIation ...... 277 Appendix B–Thermal Characteristics of Single-Family Detached, Single- FamilyAttached, Low-Rise Multifamily, and Mobile Homes–1975-76...... 292 Appendix C– Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 322

Volume ll—Working Papers

(These working papers will be available from the National Technical Information Service. PIease contact the OTA Public Affairs Office for details)

1. Low-Income Consumers’ Energy Problems and the Federal Government’s Response: A Discussion Paper–prepared by Consumer Federation of America Il. Description and Evaluation of New Residential Energy Efficient Technologies—prepared by Technology & Economics

vii EXECUTIVE SUMMARY EXECUTIVE SUMMARY

Page n Residential Energy Consumption , ...... 4 -Residential Energy Prices...... 6 Consumer Attitudes ...... 7 Low-lncome Consumers...... 7 Existing Housing ...... 8 Building Industry Response ...... 9 Affordability ...... 10 Design Opportunities...... 10 States and Localities...... 11 Utilities ...... 11 lndoor Air Quality ...... 12 Federal Conservation Programs ...... 12 Housing Standards...... :...... 13 Research and Development ...... 13 Tax Policy ...... 13 Federal Housing Programs ...... 14

FIGURES

Page I. Comparative Energy Use Projections. .,...... 6 Executive Summary

Americans are responding to a changed amines the underlying problems and what to energy situation by rapidly curtailing the direct do about them. use of energy in their homes. The patterns of energy use established by households in the Following this section, the study’s major 1960’s have changed dramatically, Residential findings are presented. They lead to these con- energy use, which grew at a rate of 4.6 percent clusions, among others: per year during the 1960’s, has grown at an average annual rate of 2.6 percent since 1970. 1. Analysis of data on price and consump- In 1977, Americans used 17 quadrillion Btu* tion, combined with research on consum- (Quads) of energy in their homes, 22 percent of er motivation, indicates that the desire to the total national energy use. Had the growth save money is the principal motivation for rate of the 1960’s continued, the Nation wouId changes in energy habits (turning down have used an additional 2.5 Quads–equiva- the thermostat at night) and investment in Ient to 430 million barrels of oil – in 1977. conservation (purchasing insulation or having the furnace improved). This report As impressive as these figures are, they can outlines the approximate level of energy be better. Savings of more than 50 percent in savings that might result from investments average use by households, compared to the up to the point where dolIar savings over early 1970’s, are already being achieved in the life of the investment are greatest. If it some new homes, and experiments with exist- is national policy to encourage energy ing homes indicate that similar reductions in savings beyond this point—for example, heating requirements can be realized through to the point where investments in energy retrofit. These savings can be achieved with ex- savings provide smaller economic return isting technology, with no change in lifestyle but greater energy savings– additional in- or comfort— and with substantial dolIar sav- centives would be required. The differ- ings to homeowners. However, more sophisti- ence between these two points is substan- cated design, quality construction, and careful tial in energy terms, because once a dwell- home operation and maintenance will be re- ing is efficient, costs of operation are quired. relatively insensitive to energy prices. For the residential sector as a whole, the Such a shift would be analogous to the potential energy savings can be seen in standards set in 1975 to improve energy another way. If the trend of the 197o’s were to performance of new cars. In addition to continue for the balance of the century, the price or economic incentives, regulation residential sector would use about 31 Quads of could also increase energy savings. energy in 2000. But if investments were made 2. One of the principal ways to improve en- in home energy conservation technologies up ergy use Iies in the area of information to the point where each investor received the and technology transfer. Those who actu- highest possible dollar savings (in fuel costs) ally implement policy need more training. over the investment’s life, energy use in the Policy may be made in Washington, but is year 2000 would be reduced to between 15 and carried out by tradespersons, builders, 22 Quads, depending on the price of energy. local code inspectors, loan officers, ap- The cumulative savings between now and 2000 praisers, energy auditors, heating techni- compared to the 1970’s trend would be equiv- cians, State and local officials, do-it- alent to between 19 biIIion and 29 billion bar- yourselfers — literally thousands of indi- rels of oil. Despite the sound economic reasons viduals. The essentially human nature of for achieving these savings, there are reasons the effort is both a strength and a weak- why they may not be reached. This report ex- ness — many are willing to take some action, but there are many obstacles to *A Quad = 1 quadrillion Btu = 1.055 exajoule (E J). perfect performance.

3 4 . Residential Energy conservation

3. The diversity of the housing stock, num- and localities, the utilities, and Government ber of persons involved, requirements for programs. technology transfer, and product availability all argue for careful pacing of Fed- Trends in Residential Energy eral policy, based on setting goals over at least a decade. For example, short-term Consumption programs, aimed at one particular solu- The decade of the 1970’s has brought signifi- tion, appear to constrain the market and cant changes in the historical patterns of may not encourage optimal solutions. growth in energy consumption in the residen- This is particularly true of programs tial sector. Earlier, Americans as a group were aimed at the existing housing stock. Antic- increasing their use of energy in the home at an ipation of the tax credit for insulation average rate of 4.7 percent per year; in the caused increased prices and spot short- 1970’s, the annual growth rate has averaged 2.6 ages and may not have produced substan- percent. Moreover, the remaining growth is at- tial insulation beyond what would have tributable primarily to a growth in the number occurred in any event. Another reason for of households; the amount of energy used in deliberate policymaking is that knowl- each household has remained almost constant edge of the nature of a house as an energy between 1970 and 1977. In 1970, 63.5 million system is imperfect. Although a good deal households collectively used 14 quadrillion is already known about saving energy, Btu of energy (Quads) or about 230 million Btu more remains to be learned. Because apiece. (A Quad is equivalent to 500,000 bar- choices will vary with climate, local re- rels of oil per day for 1 year—or the annual sources need to be developed; these re- energy required for the operation of eighteen sources will include both trained person- 1,000-MW powerplants–or 50 million tons of nel and improved data. coal. )

Policy choices will reflect the goals for sav- In 1977, residential use of energy accounted ings and costs. If the current trajectory is ap- for 22 percent of total energy consumption, propriate, present programs appear to be ade- totaling 17 Quads. By comparison, the com- quate in number and range. A lower growth mercial sector in 1977 used 11 Quads (1 4.5 per- rate can probably be accomplished by vigor- cent of total), transportation accounted for 20 ous congressional oversight, some administra- Quads (26 percent), and industry used 28 tive adjustments, review and fine-tuning of Quads (37 percent). Total 1977 U.S. energy use program operation, and improved information was 76 Quads. efforts. If the sector is already moving fast enough, less emphasis could be placed on resi- Many factors have contributed to the dential energy use. In order to move much slowed growth in residential energy use in this more rapidly, stronger measures wiII be re- decade. Among them are energy price in- quired. A great deal of energy could be saved creases, economic fluctuations, demographic in homes above present levels; these savings trends, the OPEC embargo, and consumers’ re- would stilI be cost-effective to the consumer. sponses to rising awareness of energy. Demon- A stronger program approach might reflect na- strating a precise cause-and-effect relationship tional security goals and a high return on the between any one of these factors and the housing dollar. lower growth rate is statistically impossible. Fortunately, isolating and quantifying the con- The following sections consider the trends il- tribution of each factor is probably of limited lustrated by this volume and the major factors utiIity to policymaking. affecting residential energy use and conservation: price, consumer attitudes, the poor, ex- The rapidity of the slowdown suggests that isting housing stock, building industry re- actions taken to reduce consumption so far are sponse, design opportunities, the role of States primarily changes in the ways people use their Executive Summary ● 5

existing energy equipment — e.g., turning down would be 24 Quads. This trend wouId represent thermostats and insulating. A longer time an annual growth rate of 1.6 percent, which is frame is normally required to bring about the household formation rate projected by the widespread replacement or improvement of Oak Ridge National Laboratory housing capital stock, including heating equipment model. This modest decline from 1970-77 and housing units. trends would appear to be relatively easy to achieve under current laws and programs (with No one can say with certainty whether the improvements in their implementation in some residential energy growth rate will stabilize at cases) and without sacrificing personal com- today’s rate, drop still further, or creep back fort, freedom, or social goals that require in- up toward earlier trends. Countervailing forces creases in energy consumption for those at the could work in either direction. The current low end of the economic spectrum. Much of demographic trend toward slower population the decline could be accomplished through re- growth is expected to continue for the near placement of capital stock and construction of term, but household formation rates are likely smaller, more efficient housing units to ac- to exceed population growth rates. Energy use commodate new households. in the residential sector can be expected to grow faster than population as long as new An even lower consumption Ievel in 2000 households are forming at a higher rate, could be achieved through an optimal eco- although construction of highly efficient new nomic response — one in which all residential housing would alter that presumption. consumers made the maximum investment in conservation technologies that they could On the other hand, if energy prices continue justify through paybacks in reduced energy to rise, greater investments in conservation costs over the remaining Iives of their dwelling (energy productivity) measures will become units. Such responses would depend on the cost-effective for consumers. Moreover, while levels of energy prices over the next two there will be more households, each is likely to decades. Using a range of plausible energy be smaller; having fewer people at home gen- prices, possible residential energy consump- erally means smaller dwelling units and lower tion levels were projected to be between 15 levels of energy consumption in each home. and 22 Quads in 2000, based on optimal eco- Very few experts believe that residential ener- nomic response. Few observers expect the gy growth rates will ever again approach the lower end of the range to be achieved even very high pre-1970 rates. using the highest price assumptions, because If residential energy use were to continue of imperfections in the marketplace. Circum- growing by 2.6 percent annually until the year stances requiring especially vigorous public 2000, total residential consumption in that policies could create additional incentives to year would approximate 31 Quads. This is con- consumers to approach this level of savings. siderably lower than the 48 Quads American The middle ground between the 1970’s trend homes would consume in 2000 if growth pat- and the optimal economic response trend is terns of the 1960’s had continued. Yet actual seen by many as a reasonable public policy consumption in 2000 might be even lower than target. Measuring our progress toward this con- 31 Quads, driven down by rising prices and a servative goal would be relatively easy; each number of other factors, including improved year, the goal would be to maintain constant design and technology as well as evolving con- national average energy consumption per sumer awareness of the economic benefits of household by keeping the growth in residential conservation. energy use to a rate determined by the house- If residential energy growth were to match hold formation rate. This target appears to be the rate of household formation — that is, if the manageable within our current social, politi- energy consumption per household were to re- cal, and economic situation. This option would main constant between now and 2000—total not involve sacrifice, because it would allow residential sector consumption in that year for a constantly improved level of residential 6 ● Residential Energy Conservation

amenities that can be achieved by means of while the growth slowdown of the 197o’s has improved energy productivity (less energy per concurred with a rise in real prices. The in- unit of amenity provided). Some critics will crease in energy prices has been especially view this goal as too easy, too modest; con- marked since 1974, when the embargo reached sidering depletion of nonrenewable resources, its peak and the Arab oil cartel began a quin- maximum return on housing dollars, environ- tupling of oil prices. The OPEC nations’ recent mental quality, and the national security im- decision to raise oil prices in 1979 and other plications of our oil imports. (Comparative Middle East developments can be expected to energy use projections showing these Quad affect U.S. energy consumption patterns fur- levels appear graphically in figure 1.) ther For the residential consumer, the 1970’s Figure 1 .—Comparative Energy Use Projections (Residential sector) have already brought a 65-percent rise in home oil-heating bills, a 37-percent increase in the Quads natural gas bill, and a 25-percent rise in the 50 electricity biII (in constant 1976 dolIars). I n current dollars, the increases have been far more dramatic Even so, price controls on oil, aver- 40 age costing of electricity, and Government regulation of natural gas prices at the wellhead 30 have resulted in subsidized retail prices that fail to reflect the full replacement cost of oil, gas, and electricity generated from either nuclear or fossiI fuels. 20 It is important that energy prices represent true replacement costs whether this is higher 10 or lower than current energy prices. It is only under this circumstance that consumers have a correct signal to use in determining how much 0 to invest in conservation if they are to achieve 1970 1975 1980 1985 1990 1995 2000 maximum dollar savings. Furthermore, if soci- Year ety decides that information on items such as A— Residential consumption based on simple extrapolation of 1970-77 trend. environmental damage, resource depletion, B— Residential consumption based on simple ex- and reliance on foreign oil would not be accu- trapolation of 1960-70 trend. rately given by normal market forces, than it is C– Residential consumption based on constant level of possible to adjust the replacement cost ac- energy use per household; growth results from in- cordingly or to provide equivalent financial increase in number of households. D-E – Range of “optimal economic response” based on centives. I n any case, since dollar savings are assumption that energy saving devices are installed as the principal motivation for energy conserva- they become cost-effective. Range is formed by price; tion, it is important that conservation policy be upper boundary represents response to lowest projected price, lower boundary represents response to concerned with energy prices. highest projected price. Price increases clearly mean less disposable NOTES: These curves are not given as predictions of the future, but as points of comparison for discussion See chapter I for detailed information. income for consumers. Stretching the avail- For SI users. Quads can be substituted using exajoule (EJ) on this able resources through higher productivity of figure within the accuracy of the calculations. One Quad ~ 1 EJ. energy use is a less costly approach than devel- Residential Energy Prices oping new supplies. Improving energy productivity in household use helps to counter the in- Rising energy prices appear primarily re- flationary impact of rising costs. A number of sponsible for reduced residential consumption policy responses are possible between holding in recent years. Rapid growth in the 1960’s ac- prices steady or allowing them to rise directly companied a decline in real energy prices, in response to costs; these include matching price increases with income subsidies for all or It is unreasonable to expect that consumers some portion of the population, using taxes to will make major housing or behavioral choices protect against windfall profits, and other based on energy alone. Having adequate space strategies. Price-based policy will be unaccept- for a growing family, being near schools and able to those who believe that consumers can- shops, feeling certain that a home is warm not withstand higher costs, or who believe that enough to ensure health and comfort—these, price increases do not reflect true scarcity or too, are important consumer values. rising marginal costs. Data on attitudes and behavior indicate that Consumer Attitudes information programs that emphasize the positive economic benefits of conservation are The level of energy use in a given home is more likely to show results than those based greatly influenced by the attitudes, choices, on ethical urgency. Moreover, public state- and behavior of its occupants, within a range ments or campaigns that link conservation and circumscribed by the limitations of the struc- sacrifice, such as suggestions that conserva- ture itself. Energy consumption in identical tion means residents should be cold in their houses may vary by as much as a factor of two homes, may be ineffective, if not counter- depending solely on these variables. productive.

Available research data indicate that con- More research on actual household energy sumer motivation to invest in conservation use patterns, as welI as attitudes and behavior, measures stems largely from a basic desire to would improve the policy makers’ ability to save money and resist rising prices. This is the select successful motivational strategies. prime concern of homeowners. Energy costs are now about 15 percent of the average annual cost of homeownership, and in the heat- Low-Income Consumers ing and cooling season monthly payments may approach the level of the mortgage payment. Although rising energy prices provide a The dramatic increase in fuel costs, over the strong incentive for widespread conservation, very low costs of the 1960’s and early 1970’s, they present special hardships for low-income consumers who cannot absorb higher utility has graphically demonstrated to residents that reducing direct energy use is a wise invest- and fuel bills, and have Iittle access to investment capital. For the 37 million persons (17 ment. Early experiments in helping consumers percent of the U.S. population) with household to change their energy use patterns suggest incomes at 125 percent of the poverty level or that providing feedback, or quick response information on how much energy a home is below, utility costs typically consume between using, helps people conserve. Experiments with 15 and 30 percent of the family budget. special meters, report card billing by utilities (bills that compare use for a month compared Some low-income families spend as much as to the same month last year), and similar tech- half their budgets on energy in the heating sea- niques are now underway. son, yet a significant portion of this heat is lost because of substandard housing. Poor and Consumers are frequently unsure about near-poor households in rented housing are what changes are most effective. Knowledge handicapped with regard to energy, as they about effective communication argues for im- usually do not control their heating systems or proving local resources. Consumers have more their dwelling’s maintenance and improvement. trust in information from their locality or State than from remote institutions. The information provided by the Federal Government and by Efforts to relieve the energy-based economic large oil companies is not well received. problems of the poor have taken two ap- 8 ● Residential Energy Conservation

preaches: first, providing home improvements Existing Housing intended to reduce energy needs, and second, providing financial assistance to meet energy Improving energy efficiency in existing hous- bills. Neither approach has been totally satis- ing wiII be a principal area of policy emphasis factory or adequately deployed. Although in the next decade, as most of the population direct aid by “weatherization” appears highly wilI continue to be housed in the 80 million ex- cost-effective in the long run, it is impossible isting units. Both the largest savings of energy under current funding to reach more than 3 and the largest amount of protection against percent of all eligible homes each year. Labor the impact of rising prices will come from “ret- shortages and other programmatic problems rofitting” existing homes. owner-residents, have also hampered the Federal weatheriza- rather than builders, are the principal audience tion efforts, although the basic concept is both for this effort. sound and popular. Because the poor frequently cannot reduce consumption and have no ac- Making homes use less energy without cess to capital to improve their housing, Feder- lowering the level of comfort is not technically al funds can cause energy savings that would difficult, but it requires careful attention to not be achieved without such assistance, as the specific needs of the structure, quality well as improved Iiving conditions. workmanship in improvements, and continuing attention to the energy use patterns of the Financial assistance for payment of utility residence. An audit by someone trained in bills is more controversial. Questions about home energy use is necessary to identify the this approach reflect a larger issue, which may optimal package of changes for a specific be described as the “right to energy” doctrine. home. Data on the energy characteristics of As energy is as necessary as decent housing, the existing stock are inadequate, and this adequate nutrition, and medical care— al I of complicates policy formulation. While Federal which the Government subsidizes to some ex- level efforts at data collection may be the tent— consumer advocates have argued that a most effective, States and localities are in a basic minimum quantity of energy should also better position to stimulate local conservation be subsidized for low-income persons. So- efforts and to provide accurate technical in- called “lifeline” utility rates are one means of formation and guidance to occupants. States subsidizing energy; early experiences with such and localities, along with trade and profes- rates suggest, however, that they may provide sional groups, wilI bear major responsibility for neither conservation incentives nor adequate training and for improving the quality control financial relief for many of the poor. of retrofit projects. Dissemination of technical information by the Federal Government and Federal work on appliance labeling and stand- Other proposals include energy stamps and ards wiII underpin local efforts. large programs of emergency financial aid, legal aid for poor persons dealing with utilities and fuel providers, and procedures to prevent I n addition to the savings available through shutoff of heat and power because of nonpay- tightening the thermal shell of the building, ment during winter months. These programs substantial energy savings can be obtained meet social needs but do not provide resiliency through retrofit of the heating and cooling to the problem. Because of a growing concern equipment, and through replacing the heating among elected officials and the wider public and cooling devices with more efficient sys- about the inabiIity of financial aid programs to tems. address basic causes of poverty, weatherization and broader housing programs designed Present tax credits will encourage retrofit, to put all persons in decent homes may offer a although such credits may represent a substan- better approach. Such a policy subsidizes tial revenue loss while not adding a large incre- energy efficiency rather than price. ment of investment. (The Congressional Budg- Executive Summary ● 9 et Office estimates that many persons who in- studs instead of the standard 4-inch studs. This stall insulation, for example, would have done technique makes it easy to increase the so without the credit. ) Grants and direct assist- amount of insulation in the walls, and the ance, such as weatherization, are most respon- distance between the studs allows the change sive to the needs of low-income persons. Home without economic penalty. Encouraging improvement loans have not been attractive to change in the industry requires making eco- those making changes to their homes costing nomic and technical determinations, judging less than $1,000, but this could change if fuel what will work and what will save money, and prices continue to rise and pressure to retrofit providing that information to the key actors at is increased. the right time. Principal actors for the residential sector are: As in the case of new housing, lending institutions that finance mortgage lending could 1. 100,000 builders, who make the basic play a critical role. If lending institutions re- decisions to build in response to what viewed energy costs of a home when consider- they perceive market demand to be, ing a mortgage application, a total cost picture within the requirements of specific build- would be made available to the prospective ing codes and available materials; purchaser. Funds available to the buyer to finance conservation investments through the 2. 21,000 lending institutions, which approve mortgage would be amortized over a long peri- financing for both builders and buyers; od and would bring down monthly operating and costs. A more vigorous policy initiative would require that existing housing be brought to a 3. homebuyers, who by their purchasing de- specified standard of energy efficiency prior to cisions determine the demand for housing sale, or prior to utiIity connection. of varying types and prices, and thus influence the perceptions and decisions of builders and lenders. Building Industry Response Building standards and codes directly affect The homebuilding industry appears to be renew construction. The stringency of codes will sponding to consumer demand, information, reflect the policymaker’s views of the abilities and price and taking advantage of opportuni- of the industry and the urgency of the energy ties to improve energy efficiency. Typical new situation. Performance standards, now being construction already matches the preliminary drafted by the Federal Government, are energy standards recently adopted by many needed to allow for flexibility and experimen- States (ASH RAE 90-75 or Model Code levels). tation in construction. Application of per- New building reflecting these standards is still formance standards in housing may be partic- considerably below the level of energy effi- ularly delicate, because of problems of meth- ciency indicated as cost-effective by OTA odology and the resources of builders. The analysis. Tighter code requirements, combined average U.S. homebuilder constructs less than with information targeted at builders and buy- 20 homes a year, does not use sophisticated ar- ers, will help sustain and intensify the trend to chitects or engineers, and works in a highly better homes. leveraged market. These builders may prefer a simple code that can be easiIy followed by car- Although the design and construction indus- penters and laborers. try is fragmented and generally cautious toward major change, it can respond quickly I n addition to standards and codes, changes and readily re-adapt its designs and methods in the economics of the market can encourage once the economic and technical feasibility of energy conservation. Broad interpretation of new housing features or construction tech- tax credits and use of tax incentives, particu- niques are proven and accepted in the market- larly tax incentives provided directly to the place. For example, many builders are now builder, will stimulate greater change in new altering frame construction to utilize 6-inch housing. 10 ● Residential Energy Conservation

Affordability calculation that includes likely energy costs would give buyers, and lenders, a more com- Properly selected conservation choices will plete estimate of total costs and could encour- lower utility’ costs and thus reduce the total age cost-cutting investments. Federal leverage costs of homeownership and operation. The could be used to provide additional funding possible effect of eliminating marginal buyers for conservation improvements at the time of from the housing market must be weighed sale, subsidize downpayments or interest rates against the consequences of encouraging these for energy-efficient homes, or deny mortgage buyers to acquire homes that are likely to have funding to homes not meeting an energy stand- substantial and rapidly increasing monthly ard. Federal and State energy agencies could energy bilIs. As fuel costs continue to rise, a help lending institutions determine standards broader view of “affordability” is necessary. appropriate to local conditions. Better dissemination of information on cost- effective opportunities and Iifecycle costs to builders, equipment suppliers, lenders, and Design Opportunities buyers may be a promising approach for increasing conservation investments. Energy-conscious design is a paradox: once the most ancient of the builders’ skills, it is Energy conservation features often add to being rediscovered as a modern trend. Proper the initial cost of homes. Builders and lenders orientation of the home on the lot, thoughtful are cautious about decisions to increase pur- placing and sizing of the windows, and chase costs, especially in Iight of dramatic in- planned-in natural ventilation combined with creases in the price of housing in recent years. shading by eaves and trees produce houses Slightly increased first costs mean that mar- that use astonishingly little energy. Even ginal buyers may have to scale down their ex- though the ideas are as old as shelter itself, pectations. First-time homebuyers who have modern materials and design techniques can limited savings for downpayments are more af- adapt and improve the concepts for urban fected by increased downpayments than are America. Such homes are neither expensive previous owners who have an equity to invest. nor outlandishly designed, and need to be en- On the other hand, a substantial amount of couraged by Government action. However, energy can be saved without great expense— policy actions are difficult to develop because typically $1,500 to $2,000--and without com- energy-conscious design is part of the fabric of plicated or untried devices. Some of the most the building itself. Unlike discrete, technologi- effective actions involve reducing air infiltra- cal add-ens, energy-conscious design features tion through caulking and weatherstripping, in- cannot easily be listed in a tax regulation or vestments in storm windows and insuIation, building code. Special policy focus by Govern- and improving the energy efficiency of heating ment on such designs may be particularly ap- and cooling systems. The energy efficiency of propriate because there are few natural mar- many new homes can be substantially in- ket forces to promote such building choice. creased by adding enough thermal protection Even if the full advantages of energy-con- to allow a reduction in the size of heating and scious design are not explored, quite conven- ventilating equipment; in some instances this tional, off-the-shelf technologies now exist to choice has actual [y meant lower first costs. reduce heating and cooling loads at least 50 Lending institutions can improve the flow of percent below those of homes built in the early information on total costs of homeownership 1970’s. Houses built using these technologies and operation by including energy costs when will reduce energy use through greater effi- calculating monthly payments on mortgage ciency with no change in living habits or level applications. The mortgage transaction is a of comfort. In fact, comfort may be increased critical intervention point, as buyers are fo- through reduction of drafts and cold spots. cused on the home and money is being bor- The real bonus results from the low purchased- rowed to be repaid over a long time period. A energy costs of operating such homes. These Executive Summary . 11

technological solutions to energy consump- ities of the States in mind are most likely to tion — such as heat exchangers, “smart” ther- take root and remain effective as Federal pri- mostats, and draft-excluding devices — can be orities change and Federal funding fluctuates. easily encouraged by Government action assisting the market. Localities work most closely with new construction through the building permit process. Improved data collection is needed on Local code inspection offices may require homes that use little purchased energy. Con- special help, both technical and financial, to struction of such homes on a demonstration improve their level of activity. This will cer- basis, perhaps one in every county, could pro- tainly be the case if Federal actions to man- vide the type of direct learning experience date energy changes in building codes con- most valuable and influential for builders and tinue. WhiIe the needs of localities may press a buyers. State energy office beyond its capabilities, these off ices must recognize the importance of Technologies now in the development or providing resources to localities. commercialization stage will offer opportunities for energy savings well beyond the options Transfer of information and technology now available. More efficient furnaces, new from the Federal ‘Government can be im- approaches for the design and construction of proved. Trained personnel, either from Wash- walls and windows, and electronic systems to ington offices or regional offices, could greatly monitor and control the operation of homes assist States in working out technical problems are now being tested and used experimentalIy. and establishing ground rules for program As these devices become more reliable and operation. lower in cost, the options for reducing home energy use will increase dramatically. Utilities

States and Localities The ways in which gas and electric utilities can most effectively stimulate energy conser- States and localities bear the major responsi- vation in the residential sector are just begin- bility for implementation of federally author- ning to be understood and exercised. As experi- ized residential conservation programs. Build- ence with utility-based conservation activities ing code revision and enforcement, informa- is gained, early concerns about utility involve- tion and education efforts, quality control, ment in nontraditional activities (such as in- and regulation of utilities all come within the sulation financing) and uncertainty about the jurisdiction of States, counties, and towns. The impacts of innovative pricing and service de- priority assigned to conservation goals by livery options (particularly time-of-use pricing these levels of government will directly influ- and load management) are being replaced with ence the level of effort and thus the resources encouraging empirical data. available to consumers and builders. Utilities can encourage residential energy Current Federal policies both help and conservation through information programs hinder State and local efforts. Central diffi- and home energy audits; financing and/or mar- culties include rapid pacing of Federal initia- keting insulation and other conservation de- tives that may not match the capabilities of vices; altering the rate structures to reflect the locality; failing to involve States and local- costs that vary with time of use; and instituting ities in preparing guidelines and reguIations; programs of load management in the residen- placing responsibility for administering a large tial sector. Relatively few utilities have carried number of complicated programs on State out aggressive conservation programs to date, energy offices that are frequently small, under- although most electric and gas companies staffed, and underfunded; and imposing Feder- have undergone some adjustments in their al priorities that may not match local needs. management and planning functions as a re- Programs designed with the needs and capabil- suIt of changing circumstances. WhiIe eco- 12 ● Residential Energy Conservation nomic and social criteria encouraged rapid from present rates, indoor concentrations of energy growth in the years before 1973, more these polIutants will increase. recent phenomena — including rising fuel Control measures currently available to re- costs, massive increases in capital require- duce the concentrations include filters and ments for new capacity, uncertainty about electrostatic precipitators to reduce particu- future demand, and changing regulatory relate levels; kitchen ventilation to reduce cook- quirements – have all caused utilities to expect ing-generated polIutants such as CO, NO, NO , and even encourage diminished growth. 2 and SO2; spray washing, activated carbon fil- Activities authorized by the National Energy ters, and oxidizing chemicals to reduce air- Conservation Policy Act of 1978 should yield borne chemicals and odors; and forced ventila- usefuI data over the next few years. The effects tion with heat recovery (to minimize heat loss) of audit programs, cost-based rates, load man- to reduce concentrations of all indoor-gener- agement, and time-of-use pricing should be ated pollutants. A comprehensive approach carefully analyzed and the information widely should include reduction of emissions by im- shared. Following evaluation, Congress may proved maintenance and design of stoves and wish to consider removal of the prohibition furnaces, reduction in household use of pollut- against utility involvement in sale or installa- ing chemicals, and similar measures. tion of residential conservation measures. Evaluation of these control measures requires an understanding of health effects of Indoor Air Quality ambient levels of indoor pollutants and the concentrations of such pollutants with and Potential health effects of changes in the without controls in different housing situa- quality of indoor air caused by energy conser- tions. Thus far, the Federal Government does vation must be carefully monitored, and atten- not appear to have recognized the significance tion should be given to preventing negative ef- of indoor air quality as a potential health prob- fects as houses become tighter. As new stand- lem. The Department of Energy (DOE) and the ards lower the amount of “fresh” air moving Environmental Protection Agency (EPA) have through homes to reduce heat (and cooling) sponsored some early work in this area, but the losses, concentrations of undesirable sub- level of support has been very small. As might stances already present in indoor air will be in- be expected from the scarcity of research con- tensified. Technological control measures are ducted, the level of understanding of the ef- available to prevent the buildup of concentra- fects and causes of indoor air quality is insuffi- tions of pollutants indoors. cient to allow the definition of an optimum There is strong evidence that concentrations strategy for linking energy saving construction of several air pollutants tend to be high in- requirements and air treatment requirements. doors. Existing houses with gas heating and cooking appliances have been shown to experi- Federal Conservation Programs ence levels of carbon monoxide (CO) and nitrogen dioxide (NO2) that approach or exceed am- Federal programs support housing produc- bient air quality standards. Other pollutants tion and the maintenance of existing housing that may be significant in the indoor environ- by providing subsidies to certain classes of oc- ment include respirable particulate, partic- cupants, as well as mortgage loans, insurance, ulate sulfur and nitrogen compounds, nitric ox- and guarantees to lenders and property own- ide (NO), sulfur dioxide (SO2), radon, and ers. Federal programs affect housing through various organics. Aside from heating and cook- standards for construction and rehabilitation ing appliances, the sources of these pollutants of housing, regulation of the lending industry, include building construction materials, ciga- maintenance of a secondary market for mort- rettes, aerosol sprays, cleaning products, and gage lending, research and development other sources. If air exchange rates of new and (R&D), financial assistance for community existing houses are significantly decreased development, tax credits and incentives, and Executive Summary ● 13

programs specifically designed to provide in- solicit comments on draft standards, time formation or technical assistance to encourage pressures generated by the current schedule do conservation. Direct Federal construction, not allow for adequate review and thoughtful such as housing provided by the Department analysis. As a result, commitment to the cur- of Defense, affects the market for housing rent schedule will almost assuredly result in technology and appliances through the pro- litigation and dissatisfaction by both sup- curement process and the use of standards. porters and opponents of the standards. Because of the wide variety of programs in- A substantial period may be needed for fluencing both housing and conservation, review and field testing of the new standards in many mechanisms exist to affect energy con- certain areas and markets. Transition to per- sumption in homes. Recent legislative and ad- formance standards closely tied to existing ministrative changes will help to save energy. methods of analysis and review wilI increase Energy conservation has not been a major pri- the Iikelihood of compliance. ority for most Federal programs, and there has not been strong coordination of the various RESEARCH AND DEVELOPMENT departmental efforts. A stronger commitment to energy conservation, combined with im- The short-term focus of current DOE conser- proved technical work and more sophisticated vation R&D ignores some longer term options cost analysis, could mean a much stronger that also have high returns. The attention to response to conservation goals from both the commercialization strategies that characterize public and the private sector. the program is questionable, as rising prices should enable the private market to absorb Some of the most important Federal actions commercialization costs. Research on atti- are Iisted here. tudes, energy use patterns, institutional and legal barriers to conservation, and similar im- HOUSING STANDARDS portant areas have not received adequate emphasis. Research and policy decisions on ener- As a result of postembargo legislation, the gy technology do not adequately consider the Federal Government is now more deeply in- conservation applications of new technol- volved than ever in defining energy-based ogies; the potential of conservation to reduce housing standards, which will eventually influ- demand and provide time for shifting to new ence local building codes. Codes are an effec- energy systems is not fully appreciated. The tive mechanism for altering construction prac- policy appears to reflect an attitude by DOE tices, but they are implemented at the local level, and great care is needed to ensure that and the Office of Management and Budget that conservation should be viewed as a stop adequate time and resources for training ac- gap that merits little Federal research funding, company this new Federal-State-local ap- in sharp contrast to new production approach. proaches. States have been encouraged through Feder- al funding and training to adopt codes based TAX POLICY on an engineering approach. Existing legislation calls for the adoption of performance- Federal tax policy is probably the major ele- based standards by 1980. Performance stand- ment in decisions by owners of rental property ards offer a unique and valuable way to en- on construction and rehabilitation. Historical- courage energy efficiency while allowing in- Iy, the tax code has encouraged low first-cost novation and providing equal market access to (and therefore energy inefficient) housing, and all types of construction. This type of standard has protected owners to the extent that most is also a totalIy new method, and there is no program efforts to improve tenant energy use agreement on the correct methods for calcula- have been futile. Broader use of tax incentives tion and review, particularly for residential should increase the conservation response. At buildings. Despite a sincere desire by DOE to least, policies should be examined to ensure 14 ● Residential Energy Conservation that they do not continue to encourage energy- broadly, and raise special problems for energy- wasteful construction. conscious design approaches. Similarly, the tax system can be used to FEDERAL HOUSING PROGRAMS reward homeowners for investing in conservation. Critics of this policy believe that home- Federally owned and subsidized housing owners are sufficiently rewarded by the sav- represents both a special responsibility and a ings in fuel bilIs, and that the number of peo- special opportunity for saving energy and ple who invest because of the credit is small, lowering total costs. Energy conservation has while the number who claim the credit is large. had very low priority in most of this housing. This policy does not allow for the fact that Funds and authorizations recently approved many conservation investments can save much by Congress will help to improve the efficiency energy but are only a breakeven choice with- of these dwelIings. Improved levels of conser- out additional incentives. Early Internal Reve- vation wouId demonstrate real Federal com- nue Service decisions on the eligibility of items mitment, improve the comfort level of the under the recently authorized conservation tax housing, and save money as utility costs, which credits show a reluctance to interpret the law are frequently subsidized, continue to rise. Chapter I TRENDS Chapter I.—TRENDS

Page Trends in Residential Energy Use...... 17 Energy, Demographics, and Prices ...... 17 Analysis of Electricity and Natural Gas Use as Functions of Weather and Price ...... 20 Projections of Future Residential Demand ...... 22 Discussion of Projections...... 24 Technical Note—Residential Energy Consumption Analysis...... 26

Page I. Residential Energy Use by Fuel ...... 17 2. National Average Annual Heating Bills by Fuel :::: :: :::::.. 19

FIGURES

Page 2. Fuel Prices 1960-77...... 19 3. Energy Use per Household ...... 21 4. Comparative Energy Use Projections ...... 22 5. Comparative Price Projections...... 23 Chapter I TRENDS

TRENDS IN RESIDENTIAL ENERGY USE

This chapter analyzes residential energy use since 1960, gives energy use projections to the year 2000, and discusses the potential for energy savings in the residential sector. Aided by computer analysis of residential electricity and natural gas use since 1968, consumer response to changing prices is examined. Finally, computer projections are made of energy demand over a range of possible future energy prices assuming ideal economic behavior.

ENERGY, DEMOGRAPHICS, AND PRICES

Table 1 shows aggregate energy use for the Table 1 .–Residential Energy Use by Fuel (Quads) residential sector, adjusted for annual weather differences and broken down by fuel use and 1960 1970 1977 by function, for 1960, 1970, and 1977. From Electricity...... 2.41 5.36 7.80 1960 to 1970, adjusted residential energy use Oil ...... 2.37 2.81 2.98 Natural gas...... 3.34 5.31 5.83 increased at an average rate of 4.7 percent, Other...... 1.00 0.90 0.60 while from 1970 to 1977 it grew by only 2.6 per- Total ...... 9.12 14.38 17.21 cent. This substantial reduction has not been NOTE: The 1960 and 1970 figures are from “Residential Energy Use to the Year spread evenly through the 1970’s, however. Be- 2000: Conservation and Economics,” ORNL/CON-13, September 1977. tween 1970 and 1972, the average annual The 1977 figures are from the Energy Information Administration, De- partment of Energy. growth rate for weather-adjusted residential energy use was 3.4 percent; from 1972 to 1975 1977 Components of Residential Energy Use (Quads) consumption declined by 1.8 percent; and from 1975 to 1977 it leapt back up to a 3.7-per- Space Water cent average annual growth rate. heating Cooling heating Other* Electricity...... 1.55 1.13 1.16 3.96 Electricity use is growing fastest. From 1960 Oil ...... 2.67 0.31 to 1970 electricity use grew at an average an- Natural gas...... 3.97 1.03 0.83 nual rate of 8.3 percent; from 1970 to 1977 the Other...... 0.55 – 0.04 0.01 increase was about 5.5 percent. In 1977, elec- Total percent of national tricity represented 45 percent of all the energy consumption . . . . . 11.8 1.5 3.4 6.5 used in the residential sector. Unlike total energy use, however, the growth rate in elec- “Includes cooking, clothes drying, refrigeration and freezing, lighting, appliances, TV, etc. tricity use since the embargo has not departed NOTE: These are estimated from the 1977 figures using the relative breakdown for 1975 given by ORNL/CON-13. from that over the entire 1970-77 period. 1 Quad = 1.055 EJ.

Even though growth rates have declined for increased. This is a result of rapid expansion in both electricity and total energy use for electric heating over the period; about 50 per- 1970-77 compared with 1960-70, the ratio of cent of new homes have been constructed with electricity growth to total energy growth has electric heat since 1974, compared with less than 30 percent in 1970. The proportion of new ‘Data for total residential energy use are corrected for electrically heated homes using heat pumps is weather differences by assuming that 50 percent of the rising rapidly. This trend toward electric heat- total is for heating, and is therefore weather-sensitive, and by adjusting that portion using a ratio of the average ing may be slowing, however, as there appears number of annual degree days between 1960 and 1970 to be a resurgence of gas space-heating in new (4,869) to the actual number in each year. homes.

17 18 . Residential Energy Conservation

Many variables have contributed to the percent. At the same time, the average number gradual reduction in residential energy growth of persons in each household has declined. in this decade, but it is difficuIt to demonstrate One- and two-person households increased a cause-and-effect relationship between demo- their share of total households from 45.8 to graphic trends, prices, and other economic 51.2 percent between 1970 and 1976, while fluctuations on the one hand, and energy con- households with four or more persons dropped sumption statistics on the other. The sharp dip from 21.1 to 15.9 percent. The high rate of to an absolute decline in weather-adjusted household formation and smaller household residential energy use between 1972 and 1975 size result from the “coming-of-age” of baby- can probably be attributed to the dominant boom children and, to a lesser extent, higher events of that period —the Arab oil embargo divorce rates, greater longevity, and the in- and the 1974-75 national bout with “stagfla- creasing tendency of older persons to live tion,” or combined recession and double-digit alone. inflation. Beyond that, however, it becomes Smaller households, typically occupying more difficult to isolate causes of reduced smaller homes, use less energy. But each addi- consumption. tional household adds more energy consump- Demographic contributions to reduced tion to the total than the same number of per- home energy use can be glimpsed by reducing sons would use in a combined larger house- the consumption statistics to the individual hold, as each new household normally means household level. Between 1960 and 1970, an additional furnace and water heater and ad- energy consumption grew rapidly in each ditional appliances. Therefore, while energy household–that is, total residential energy use per household does not grow, total house- use grew considerably faster than either the hold energy use does increase faster than population or household formation growth popuIation. rates. While total weather-adjusted residential Projections of future population growth and energy use grew by 4.7 percent annualIy, popu- household formation suggest that the demo- lation increased at an annual rate of only 1.3 graphic trends of the 1970’s are likely to con- percent and the number of households rose by tinue. The Bureau of the Census medium- only 1.9 percent annually. The rapid increase growth projection (Series 11) for population in in each household’s energy consumption can 2000 is 260 million, or an average annual be attributed to the trend toward saturation in growth of 0.8 percent between 1976 and 2000. major energy-consuming home appliances A housing model developed by the Oak Ridge such as air-conditioners, dishwashers, and National Laboratory (ORNL)3 predicts a house- clothes dryers, and to increased energy-inten- hold formation rate that continues to outstrip siveness in such appliances as frost-free re- population growth; ORNL projects an average frigerators. growth of 1.6 percent in the housing stock be- The trend toward higher per-household ener- tween 1975 and 2000. The highest growth (2.1 gy consumption has been halted in the 1970’s. percent annually) will occur in the 1975-85 A recent study by the General Accounting Of- period, with a drop to 1.3 percent per year be- fice reports that total energy use per house- tween 1985 and 2000. Households in 2000 are hold has remained essentially constant in this expected to total approximately 106.5 million. 2 decade. Demographic trends help to explain Combined with the Series I I population projec- this reversal: as population growth has slowed tion, this would mean an average household to an annual increase of 0.6 percent, the rate size of 2.40 persons, compared to 2.95 persons of household formation has picked up to 2.4 in 1976.

‘The Federal Government Should Establish and Meet 3 “An Improved Engineering– Economic Model of Energy Conservation Goals, Comptroller General of the Residential Energy Use,’’ Oak Ridge National Laboratory, United States, June 30,1978, Washington D.C. Oak Ridge, Tennessee.

Ch. I—Trends . 19

Most observers agree that the price of ener- Since 1970, real oil prices have increased an gy, and particularly dramatic changes in price, average of 7.6 percent per year (with a 35-per- affect residential (and other) energy use. cent increase from 1973 to 1974); real natural Again, however, documenting the exact rela- gas prices increased 4.9 percent annually; and tionship between price changes and reduced electricity prices rose 3.4 percent per year. Be- household energy consumption is virtually im- tween 1960 and 1970, by contrast, all these possible, given the scanty data collected dur- prices decreased in real terms. ing the short period of time when price in- Viewing these price changes in another way, creases have occurred. Figure 2 shows prices table 2 presents national average annual heat- for electricity, natural gas, and heating oil ing bilIs (in 1976 dollars) for electricity, fuel oil, from 1960 to 1977 in constant 1976 dollars (to and natural gas, for the years 1960, 1970, 1975, remove the effects of inflation). The figure and 1977. These figures show that the real cost shows that all energy prices, in real terms, have of heating dropped substantialIy from 1960 to increased dramatically in the last few years. 1970 for all three fuels before beginning to grow. The greatest increase has occurred in the oil heating bill, which has increased 65 percent since 1970. Natural gas and electric heating Figure 2.— Fuel Prices 1960.77 bills have increased 37 percent and 27 percent (in constant 1976 dollars) respectively since 1970. Table 2.—National Average Annual Heating Bills by Fuel (1976 dollars)

Year Electricity Oil Natural gas 1960 ...... $690 $280 $220 1970 ...... 450 260 175 1975 ...... 510 400 200 1977 ...... 570 430 240

NOTE These estimates of electricity and natural gas were obtained by using the heating energy requirements for 1970, 1975, and 1977 shown in figure 3 and prices for all years from figure 2. The 1960 estimate of use per household is assumed equal to 1970 and the heating energy requirement for oil is assumed to be equal to that for natural gas. Keep in mind that oil heat is used largely in the coldest parts of the country.

The relative costs of the three fuels are also instructive. As expected, electricity is the most expensive, about 2.3 times that of gas in 1977 and about 32 percent higher than oil. In 1970, however, electric heat was about 73 percent more expensive than oil and 2.6 times higher than gas. If electricity prices continue to grow at a slower rate than oil and gas, and heat pumps capture a greater share of the electric 1960 1965 1970 1975 1977 heat market, these price differentials should Year continue to narrow substantially and could

SOURCE: U.S. Energy Demand: Some Low Energy Futures, Science, contribute to increased electrification of the vol. 200, Apr. 14, 1978, p. 144. residential heating market. 20 . Residential Energy Conservation

ANALYSIS OF ELECTRICITY AND NATURAL GAS USE AS FUNCTIONS OF WEATHER AND PRICE

I n an effort to isolate the impact of price in- has likely been a result of price. The non- creases on residential use of electricity and heating use of gas shows an even greater cor- natural gas, OTA employed regression anal- relation to price in that the decline has ac- yses that separated weather-related and non- celerated in the last 2 years, when price in- weather-related use of each energy source on a creases have been the greatest. The principal per-household basis. The analysis covered conclusion here is that some price response is 1967-77 for natural gas and 1970-77 for elec- evident but it is complex and extremely dif- tricity. The results of these analyses are shown ficult to demonstrate conclusively or quan- graphically in figure 3. Major conclusions from titatively. the analyses are: 1. The per-household use of natural gas for Electricity use shows a much weaker correla- heating, measured in 1,000 ft3 per degree tion to price. It must be noted that real elec- day, declined by about 10 to 15 percent tricity prices have increased the Ieast among between 1967 and 1977. (Similar results the residential energy sources—only 14 per- were obtained in a study by the American cent since 1973. In fact, the real price of elec- Gas Association.) tricity in 1977 was just equal to that in 1965. 2. Similar changes have occurred in non- Therefore, one would not expect to see as weather-related household use of natural much change in electricity use as in other gas (such as cooking) over the decade ex- energy sources. There has been a substantial amined. Interesting shorter term trends increase in weather-related electricity use per are also evident: consumption in this household since 1974 while non-weather-re- category rose about 10 percent through lated uses have declined about 25 percent. 1973, and dropped by about 25 percent While these trends are correct, it is possible between 1973 and 1977. that the size of the changes which have occurred is smaller than shown in figure 3. Ef- 3. Per-household weather-related use of fects due to changed thermostat settings and electricity, measured as kilowatthours weatherproofing could cause the linear model consumed per heating and/or cooling de- used to overstate the actual changes. Perhaps gree day, dropped sharply from 1971 to these changes indicate that the modest elec- 1974, but has been rising over the last 3 tricity price increases that have occurred have years. motivated users to conserve where conserva- 4. Conversely, non-weather-related uses of tion involves the least discomfort— in lighting, electricity per household increased steadi- cooking, and use of appliances — but not in the ly from 1970 to 1974 and then dropped basic amenities of heating and cooling. sharply from 1974 to 1977. The linear model used in OTA’s analysis was The ability of any model to document a rela- not able to indicate a quantitative relationship tionship between price and consumption in a between those consumption changes and price decade or less– and particularly in the post- changes over the same periods. This does not embargo period of sharp changes in both vari- mean that the price effect can be dismissed, ables — is Iimited. Analysis over a longer period however, as the above results do track with in- should shed further light on the price effects, creasing prices in most cases. In the case of especially since a longer period is required to natural gas, real prices have increased by 35 test for, the most significant response to price, percent since 1973 (see figure 2). The drop in a replacement of energy-consuming durable gas use per degree day that occurred in 1974 goods such as furnaces, refrigerators, water was probably caused largely by the embargo, heaters, and other appliances. While short- but the continued downward trend since then term behavioral changes such as setting back

Ch. l—Trends ● 21

Figure 3.—Energy Use per Household

Non-weather-related uses

1968 1970 1972 1974 1976 1970 1972 1974 1976

Weather-related uses

1968 69 70 71 72 73 74 75 76 77 1970 71 72 73 74 75 76 77 Year Year

SOURCE: Office of Technology Assessment. See Technical Note—Residential Energy Consumption Analysis, at the end of this chapter.

22 ● Residential Energy Conservation the thermostat and lowering the water heater the potential of a new and more efficient fur- temperature have some effect on total con- nace or water heater. sumption, this effect is small compared with

PROJECTIONS OF FUTURE RESIDENTIAL DEMAND

This section presents a series of projections Figure 4.—Comparative Energy Use Projections of residential energy demand — not to indicate (Residential sector) what is likely to happen, but to establish the Quads potential for residential energy conservation. 50 Demand is projected to 2000 along two curves as if 1960-70 and 1970-77 trends were to continue. Another projection shows potential de- 40 mand if all consumers behave in an economically optimum manner. The latter case is ap- 30 plied to a range of possible future energy prices.

The results of these projections are shown in 20 figure 4. The upper curve, showing residential use reaching 48.4 quadrillion Btu* (Quads) by 2000 if the growth rate resumes its 1960-70 10 value, is for illustrative purposes only and is not considered likely to occur. Although the growth rate has picked up over the last 3 years, 0 it still does not approach the 1960-70 levels, 1970 1975 1980 1985 1990 1995 2000 and it is unlikely to do so because energy Year prices are unlikely to fall and saturation is A– Residential consumption based on simple extrapolation being reached in a number of energy-intensive of 1960-70 trend. B– Residential consumption based on simple extrapolation appliances in the residential sector. of 1970-77 trend. c– Residential consumption based on constant level of The second trend curve, reaching 31.3 energy use per household; growth results from in- Quads in 2000, is more realistic because it rep- crease in number of households. resents continuation of the 1970-77 growth rate D-E – Range of “optimal economic response” based on assumption that energy saving devices are installed as of 2.6 percent per year. This projection implies they become cost-effective. Range is formed by price; that future response to increased prices and upper boundary represents response to lowest pro- supply uncertainty would follow 1970-77 pat- jected price, lower boundary represents response to highest projected price. (See figure 5—Price) terns, and energy prices would not increase relative to income for the remainder of the 1 Quad= 1.055 EJ. century. Because the last 3 years have shown a increase, it is probable that actual residential marked increase in the growth rate, a continua- energy demand will fall below 31.3 Quads. tion of the 1975-77 trend until 2000 would How far below is the key question, To test result in substantially more actual energy use. the conservation potential of hypothetical It is important to remember, however, that the consumer behavior based on maximum eco- trends of the last few years do not yield nomic self-interest, projections were calcu- enough information, especially in light of the lated from the residential energy demand enormous price changes that have occurred, to model developed by ORNL. The projections be considered accurate forecasts of the future. assume that consumers make selected in- Because energy prices are, in fact, expected to vestments designed to increase residential energy efficiency to a point where their *A Quad = 1 quadrillion Btu = 105 exajoule (EJ) marginal cost equals marginal savings — that is,

Ch. l—Trends 23 the point where an additional dollar invested Figure 5.—Comparative Price Projections (All prices in 1975 dollars) would return less than a dollar over the life of the investment— and then no more is invested. The resulting consumption levels range from 15.4 to 21.8 Quads in 2000. Certain assumptions about future energy prices, available equipment, and financial variables are inherent in the projections; the range of future energy prices used is displayed in figure 5. The low price projections correspond to the 1977 Department of Energy price projections. These curves from 1975 to 2000 show a growth rate for prices in 1975 constant dollars of 4.0 percent per year for natural gas, 1.0 percent per year for electricity, and 1.7 percent per year for fuel oil. The Department of Energy is currently revising its price projections up- ward. The high price projections are placed somewhat above the high Government projections prepared by the Brookhaven National Laboratory (BNL). The rationale for doing this is explained in the OTA report Application of Solar Technology to Today’s Energy Needs, Volume II, September 1978. According to this price range calculation, between 1975 and 2000 the average annual rate of increase in constant dollars is 5.0 percent for natural gas, 4.7 percent for electricity, and 4.8 percent for fuel oil. The 1978 prices (in 1975 dollars) are shown for each of these three fuels for easier comparison. This analysis assumes that a residential customer would decide to invest his money in a manner calculated to realize a maximum return while meeting his future energy needs. The customer would divide his available funds 1975 1980 1985 1990 1995 2000 between energy conservation technologies and ■ 1978 price (1975 dollars). Low = 1977 DOE projections. fuel purchases to minimize the amount of High = Arbitrary upper limit (see OTA Solar Report, vol. II) money spent over the useful life of his investment. Therefore the amount spent on the con- ing load by improving thermal integrity of new servation technologies would be less than the single-family homes (e. g., insulation, storm cost of energy saved. windows). This calculation shows that an ini- Another way of seeing this tradeoff is to con- tial investment of $550 in selected measures sider the equivalent cost of a barrel of oil would reduce the combined heating and cool- saved by an investment in residential conserva- ing load for a new home by about 52 milIion tion and compare it to the cost of the energy Btu per year in an average climate. Over a 20- purchased in the absence of the investment. year period (the life of the technologies pur- This computation may be made using the chased with the investment) the total energy ORNL model, which considers investments in savings wouId amount to 1.04 million Btu or technologies that reduce the heating and cool- the equivalent of 180 barrels of oil. Therefore 24 ● Residential Energy Conservation

the investment is equivalent to paying a little also assumes that investors will discount over $3.00 per barrel in 1977 dollars— a price future investments and savings using a dis- far lower than retail consumers actually pay count rate of 10 percent, after inflation. This, for oil. Thus, a clear advantage exists for in- too, is a conservative choice and tends to vestments in conservation as long as fuel understate the potential for conservation. prices stay above this value. Finally, the model accounts for the effect of legislation enacted prior to 1978 in carrying Even though the dollar savings in the above out the computations. It has not, however, ac- example would be substantial, investments in counted for the tax credits granted in the Na- improvements to the building shell alone may tional Energy Act of 1978. The effect of these not be the best way to maximize return from measures in this calculation would be to residential conservation investments. By put- change the ruIes governing computation of the ting some money into more efficient equip- optimal investment level. With the credit, the ment (e. g., appliances, air-conditioners, space investor wilI realize a greater return for a given heaters) an even greater return may be real- investment than without the credit. Therefore ized. Other calculations using the ORNL he can go to a higher level of thermal protec- model indicate this result. tion before the marginal costs and savings become equal. In essence, Congress decided The model also assumes that only technol- by enacting the tax credit that our national ogies now available will be purchased for in- energy situation requires energy savings creasing efficiency of buildings and equipment greater than those that could be achieved for the remainder of the century. In this sense through market price considerations without the model is quite conservative. The model Government intervention.

DISCUSSION OF PROJECTIONS

The range of projections based on the eco- The economically optimal projections do nomic optimum case shows annual residential show, however, what one could expect if con- energy growth rates of – 0.5 to 1.0 percent, sumers had access to all necessary information considerably below any value that could be and no other constraints existed. A residential verified as a present trend, and probably too consumer would then presumably make the in- low to be realistic future projections. Residen- vestment decisions assumed in the model, as tial consumers often fail to make economi- doing so would maximize economic return. Al- cally optimum investments in energy conserva- though these projections should not be consid- tion for many reasons, which are discussed ered as predictions of what will happen, they elsewhere in this report. Also, the model uses are a valid target, and a valid basis for policy as a payback period for each investment the measures to reinforce private decisions. entire life of the technology being purchased, while most residential conservation “inves- It is worthwhile putting these projections in tors” have a time horizon considerably shorter, another perspective. If one assumes that na- typically no more than 5 years. Finally, these tional average household energy use in 1977 projections assume continued energy price in- does not change for the remainder of the cen- creases at higher rates than inflation; if this tury, then the residential sector would use 24.7 should not occur, energy use in 2000 would fall Quads in 2000. This is based on the ORNL pro- between the economic optimum path and the jection of about 106 million residences in 2000. 1970-77 trend curve. (A thorough discussion of Therefore the 31.1 Quad projection from the the plausibility of future energy price increases 1970-77 trend line implies an increase in the is given in the OTA solar report previously average amount of energy used per household. cited.) From another point of view, energy use can be Ch. l—Trends Ž 25 estimated in 2000 if space-heating and cooling still more than 30 percent compared with the requirements were cut in half from the value extrapolation of 1970-77 experience. This sav- projected by the 1970-77 trends. A reduction of ings represents 9.2 to 15.6 Quads in 2000, or this size is reasonable as shown in the section the equivalent of about 4.6 million to 7.8 mil- on current technology, chapter II. In 1977 lion barrels of oil per day. The cumulative sav- about 57 percent of residential energy went for ings that couId be achieved from now until the space heating and cooling. Continuation of end of the century, compared to the 1970-77 that percentage, coupled with the 1970-77 trends extrapolation, range from 96.7 to 167.8 trends projection, would mean that about 18 Quads for the equivalent of about 16.7 billion Quads would be needed for heating and cool- to 28.9 billion barrels of oil — roughly coming in 2000. Reducing heating and cooling by parable to two to three Alaskan oilfields of the 50 percent to 9 Quads would give a total resi- size discovered in 1967. dential consumption of 22.3 Quads. Therefore, It is apparent that large savings are possible the projections made under the optimal invest- in the residential sector, and that they can con- ment assumption are not as far from reach as tribute substantially to reducing imported they may at first seem. energy needs. Although the potential savings may be too optimistic, because consumers are Going back to these latter projections, one not now likely to behave in a strict economi- can see a substantial potential for savings in cally optimum manner, they are not impossi- residential energy use. I n the highest price pro- ble and are worth reaching for. This study jection, a 50-percent reduction in energy use discusses many reasons why a gap between ac- from the 1970-77 trend is possible. For the tual and optimum savings exists and what lower price projection, the savings potential is might be done to narrow the gap. 26 . Residential Energy Conservation

TECHNICAL NOTE–RESIDENTIAL ENERGY CONSUMPTION ANALYSIS

Regression analyses was applied to total res- Gas usage was treated similarly except cool- idential consumption of gas and electricity to ing was not included in the regression. Data obtain figure 3. used was obtained from the following sources: Residential electric usage was separated Monthly electric sales: Edison Electric Institute, “An- into weather-related and non-weather-related nual Report, ” 1970-77 EIectric customers: Edison EIectric Institute, consumption by regressing consumption Electric heating customers: Bureau of the Census, against heating and cooling degree days in the “Characteristics of New One-Family Homes: 1973” form: and a “Characteristics of New Housing: 1977. ” EIectrlc cooling customers: Bureau of the Census. S = C + Bh Ceh Dh/Ce + Bb Cec Dc/Ce Monthly gas sales: American Gas Association, “Month- ly Bulletin of Utility Gas Sales," 1967-77. where S is total electric sales per residential Gas Customers: American Gas Association, “Gas customer; C is the non-weather-related use per Facts “ residential customer; Dh and Dc are heating- Gas heating customers: American Gas Association, and cooling-degree-days respectively; Ce, Ceh, “Gas Facts. ” and Cec are total residential electric, electric Monthly heating degree-days: “Monthly State, Re- gional, and National Heating Degree Days Weighted heating, and electric cooling customers, re- by Population, ” U.S. Department of Commerce, spectively; Bh is the electric heating use per NOAA Environmental Data Service, National residential electric heating customer per Climatic Center, Asheville, N.C. heating degree day; and Bc is the electric cool- Monthly cooling degree-days: Monthly State, Region- ing use per residential electric cooling custom- al, and National Cooling Degree Days Weighted by Population,” National Climatic Center, Asheville, er per cooling degree day. Monthly data was NC used to determine C, Bh, and Bc for each year. Annual customer data was interpolated to estimate customers on a monthly basis. Chapter H RESIDENTIAL ENERGY USE AND EFFICIENCY STRATEGIES

Chapter II.-- RESIDENTIAL ENERGY USE AND EFFICIENCY STRATEGIES

Page Page Heat Losses and Gains ...... , . . 30 The Thermal Envelope ...... 30 insulation Effectiveness ...... 37 The ACES System ...... 44 Heating, Ventilation, and Air-Condition- Energy Savings in Existing Homes — ing Systems . , ...... 39 Experiments ...... 46 Furnaces ...... 39 Integrating Improved Thermal Envelope, Furnace Retrofits . ., ...... 39 Appliances, and Heating and Cooling Heat Pumps...... 41 Equipment ...... 50 Air-Conditioners ...... 41 Lifecycle Costing ...... 52 Appliance Efficiency and Integrated Technical Note on Definitions of Performance Appliances ...... 42 Efficiency ..,...... 54 TABLES 20. Specifications and Disaggregate Loads for “1973” Single-Family

Page Detached Residence ...... 57 3. Disaggregate! Cooling Loads for a 21. Specifications and Disaggregate Typical 1,200 ft2 “1 973” House in Loads for “1976” Single-Family Three Different Climates...... 34 Detached Residence ...... 58 4. Sources and Amounts of Internal Heat 22. Specifications and Disaggregate Gain During the Cooling Season for Loads for Low-Energy Single-Family Chicago and Houston ...... 34 Detached Residence ...... 59 5. R-Value of Typical Building Sections 23. Disaggregated Energy Consumption and Materials ...... 35 for Different Combinations of 6. Performance Comparison for Three Thermal Envelope and HVAC Equipment Thermal Envelopes in Three Different for Houses in Houston, Tex...... 60 Climates ...... 36 24. Disaggregated Energy Consumption 7. Effective R-Values for Different Walls for Different Combinations of in a Range of New Mexico Climates . 38 Thermal Envelope and HVAC Equipment 8. The Impact of a 100 kWh/Year Reduc- for Houses in Baltimore, Md...... 61 tion in Appliance Energy Usage on 25. Disaggregated Energy Consumption Total Energy Consumption . . . . . 44 for Different Combinations of 9. Energy Consumption of Improved Thermal Envelope and HVAC Equipment Appliances for the Prototypical Home 44 for Houses in Chicago, Ill...... 62 10. Full-Load Performance of the ACES System...... 44 FIGURES 11. Actual Space- and Water-Heating

Energy Requirements of the ACES Page Demonstration House...... 46 6. Residential Energy Use in the United 12. Comparison of Reductions in Heat- States ...... , ...... 29 Loss Rate to Reductions in Annual 7. Disaggregate Energy Usage in the bleating Load...... 49 “Typical 1973” House Located in 13. Preretrofit Steady-State Winter Heat- Baltimore, Md., for Three Different Loss Calculations ...... 49 Heating and Hot Water Systems . . . . . 32 14. Postretrofit Steady-State Winter Heat- 8. Heat Losses and Gains for the Typical Loss Calculations ...... 49 1973 House in Chicago and Houston –– 15. Primary Energy Consumption for Heating Season . . . , ...... 33 Different House/Equipment 9. Heating Load/Cost Relationship–– Combinations ...... 50 Kansas City ...... , ...... 36 16. Equipment Used in Prototypical 10. Residential Heating Systems. . . . , . . . . 40 Baltimore Houses ...... 51 11 Performance of Installed Heat Pumps . 42 17. Levelized Monthly Energy Cost in 12, Handbook Estimates of Loss Rates Dollars for Energy Price Ranges Before and After Retrofit ...... 48 Shown (All electric houses) ...... 53 13. Disaggregated Point of Use Energy 18. Levelized Monthly Energy Cost in Consumption for the Low-Energy House Dollars for Energy Price Ranges With Heat Pump in Baltimore, Md. . . . . 51 Shown (Gas heated houses)...... 53 14. LifecycIe Cost Savings vs. Conservation 19, Structural and Energy Consumption Investment for a Gas-Heated and Parameters for the Base 1973 Single- Electrically Air-Conditioned House in Family Detached Residence . . . . 56 Kansas City ...... 54 Chapter II RESIDENTIAL ENERGY USE AND EFFICIENCY STRATEGIES

Technologies available now can substantially reduce home energy use with no loss in comfort. This chapter demonstrates that total energy use in new and existing homes can typicalIy be reduced by 30 to 60 percent and that these energy savings produce a large dollar saving over the life of the home. The review focuses on the “thermal envelope” —the insulation, storm windows, and other aspects of the building shell —the equipment used to heat and cool the home, and energy uses of the principal home appliances. This chapter presents calculations showing how new homes can be built that use sub- stantialIy less energy than those built just prior to the embargo. It then discusses experiments on existing houses which indicate that simiIar savings are possible through retrofit measures. Cost analyses are given that show these energy saving packages significantly reduce the cost of owning and operating these homes.

There is little measured data on energy use in a “typical” home. Experiments are difficult to perform because of individual variations in construct ion, equipment, and appliances; moreover, the living and working patterns of the occupants can change energy use by a factor of two. Most of the data on residential energy use is based on the interpretation of aggregate consumption data. Monthly gas sales are analyzed to determine the weather-dependent portion that is used for heating; information on light bulb sales is combined with the average bulb lifetime to determine the average household use of energy for Iighting; and simiIar determinations are made for other appliances and uses. The average residential use pattern as determined by Dole’ after reviewing previous studies and performing additional analysis is shown in figure 6. This figure shows “primary” energy usage, which accounts for distribution losses for all fuel types and for electric generation losses. Calculations based on aggregate consumption do not show the interactions that occur Residential primary energy consumption, 1970—13 quadrillion Btu between appliance usage and heating and SOURCE: Stephen H. Dole, “Energy Use and Conservation in the Residential cooling needs, nor do they show the sources of Sector: a Regional Analysis,” RAND Corporation, R-1641-NSF, June heat loss that greatly influence total energy 1975, p. vi. usage. It is necessary to consider a particular ‘Hlttman Associates, Inc. , “Development of Residen- tial Buildings Energy Conservation Research, Develop- ‘Stephen H. Dole, “Energy Use and Conservation in ment, and Demonstration Strategies, ” H IT-681, per- the Residential Sector: A Regional Analysis, ” (RAND Cor- formed under ERDA Contract No EX-76-C-01-2113, poration, June 1975),R-1641 -NSF August 1977

29 30 ● Residential Energy Conservation HEAT LOSSES AND GAINS

The first calculation is based on a single- Chicago and Houston cases. Internal heat gain story, three-bedroom, 1,200 ft2 home in Balti- comes from cooking, lighting, water heating, more, Chicago, or Houston. Identified as the refrigerator and freezer operation, other ap- “1973 house,” it has a full, unheated basement pliances, and the occupants themselves. Al- and is constructed of wood frame with brick though none of these internal gains is large, veneer. Insulation levels and other char- they combine to provide nearly one-fifth of the acteristics are shown in tables 19 through 25 at heat in the colder climates. Heat available the end of this chapter. It is sufficiently from sunlight depends primarily on the win- characteristic of the existing housing stock to dow area and orientation and can be consider- iIlustrate typical energy use patterns. ably Increased if desired. The energy use patterns of the 1973 house Everything (except the floor) that contrib- are shown in figure 7 for a variety of fuel sys- utes to the heating load also contributes to the tems. Figures 7(a), (c), and (d) show the energy cooling load. (The floor helps cool the house in used at the home and do not include losses in summer. ) Internal gains and solar gain from generation or production and transmission of windows that reduce the heating load require- energy. If these are included so that primary ments add to the cooling load, but in very dif- energy is shown instead, the percentage distri- ferent proportions. As shown in table 3 internal bution is changed dramatically. This is il- heat gains constitute about half the cooling lustrated in figure 7(b) for the fuel case cor- load There is less infiltration in summer than responding to figure 7(a). in winter, because of lower wind speed and smalIer indoor-outdoor temperature differ- Heat loss or gain through the building shell ences, but humidity removal requirements in- results primarily from heat conduction through crease. Thus, infiltration contributes about as the walls, windows, ceiling, and floors, and by much fractionally to the cooling effort as it infiltration through cracks around windows, does to heating. Additions to cooling load doors, and other places where construction from windows are much larger than to heating material is joined. Figures 8 (a) and (b) show, because their conductive heat gain adds to the for the typical house in two climates (Chicago solar radiation gain when cooling is consid- and Houston) that heat losses are well distrib- ered Other parts of the building shelI con- uted across the various parts of the thermal tribute only 9 to 13 percent of the cooling load envelope (as are infiltration losses). Thus, main the three simulated locations. The floor, jor reduction in heat loss will require that more however, does reduce cooling requirements than one part of the shell be improved. Houses significantly. will vary widely in this regard. For example, if the house used in figure 8 had been built with- Table 4 shows internal gains for the proto- out any attic insulation, roof losses would typical house in Chicago and Houston. Major have accounted for about 40 percent of total sources are the occupants, hot water, cooking, heat loss rather than the 12 to 14 percent lighting, and the refrigerator/freezer. All other shown. Even though substantial reduction in appliances together contribute about as much heat loss would occur if the attic were insu- as any one of the major sources. lated, there would still be room for substantial improvement in other parts of the shell as well. The Thermal Envelope Mechanical or electrical heating systems are generally the principal source of heat to make Current practice in residential energy con- up for these losses to keep a home at a com- servation often begins with attempts to reduce fortable temperature. Other sources of heat, the normal tendency of a house to lose heat however, are also significant. Figures 8 (c) and through the structure. The rate at which a par- (d) show the distribution of heat gain for the ticular component of a building loses heat

Ch. II—Residential Energy Use and Efficiency Strategies ● 31

Information dissemination centers were set up in each city. The trained specialist would utilize the conventional daytime photography to locate a particular family’s home on the IR pictures; would interpret the prints, pinpointing areas of needed roof insulation, and discussed many effective energy conservation options that would help the consumer. The cost was estimated to be approximately 30¢ per home. Thousands of Minnesota homeowners were reached through this program and informed on what they can best do to save energy and dollars.

Photo credits: U.S. Department of Energy

Since heat rises, poorly insulated attics usually result in situations like the one shown above

32 ● Residential Energy Conservation

Figure 7.— Disaggregated Energy Usage in the “Typical 1973” House Located in Baltimore, Md., for Three Different Heating and Hot Water Systems

Ch. II— Residential Energy Use and Efficiency Strategies ● 33

Figure 8.— Heat Losses and Gains for the Typical 1973 House in Chicago and Houston— Heating Season

Heat losses

(b) Houston (a) Chicago

Heat gains

c) Chicago

1 MMBtu = 1.05 gigajoule (GJ). SOURCE: Based on tables 19-25 34 ● Residential Energy Conservation

Table 3.—Disaggregated Cooling Loads for across the component. Different parts of a 2 a Typical 1,200 ft “1973” House in house have R-values differing by a factor of 10 Three Different Climates or more, as shown in table 5(a). Tables 5(b) and Baltimore Chicago Houston 5(c) show the R-values of a variety of common percent percent percent building materials and how they are added to Structural heat gains Roof ...... 4 4 5 obtain the R-value of a specific wall. Doors...... 1 1 1 Infiltration is described in terms of air Floor...... — — 2 Walls ...... 4 4 5 changes per hour (ACPH)— and 1 ACPH corre- Window conduction and sponds to a volume of outside air, equal to the radiation ...... 18 17 19 Infiltration ...... 22 19 24 volume of the house, entering in 1 hour. The rate of infiltration is affected by both the wind Total structural gains . . . . . 49 45 56 and the difference between indoor and out- Internal heat gains ...... 51 55 44 door temperatures; it increases when the wind Total heat gains ...... 100 100 100 rises or the temperature difference increases. Heat losses Floor ...... 33 40 — Less is understood about how to measure Cooling system ...... 67 60 100 and describe infiltration than about heat flow. Heat removed by cooling It is clear that specific actions can help lower system (MMBtu) ...... 18.0 14.0 56.9 infiItration such as using good-quality win- 1 MMBtu = 1.05 GJ dows and proper caulking and sealing. It is also SOURCE: Based on table 20. clear that the general quality of craftsmanship Table 4.—Sources and Amounts of Internal Heat throughout construction is important, and that Gain During the Cooling Season for Chicago there may be factors at work that are not yet and Houston (1973 House) welI understood. Half an air change per hour is considered very tight in this country, although Chicago Houston rates below 0.2 have been achieved in build- Percent Percent of total of total ings in the United States and Sweden. Many MMBtu heat gain MMBtu heat gain U.S. houses have winter air change rates of two Hot watera ...... 2.5 10 4.6 8 or more. Tightening houses must be combined Occupants ...... 2.8 12 5.2 9 with attention to possible increases in the in- Cooking ...... 1.3 5 2.4 4 door moisture level and quality of the indoor Lighting ...... 2.3 10 4.3 7 Refrigerator/freezer . 2.0 8 3.6 6 air (see chapter X). Miscellaneous ...... 2.3 10 4.2 7 What can be done to reduce the heating and 1 MMBtu = 1.05 GJ aHot water gains were assumed to be jacket losses PIUS 25 percent of the heat cooling energy use? As an example, the 1973 added to the water. home has been subjected to a number of boccupant heat gains were assumed to be 1,020 Btu Per hour for 3.75 months and 7 months respectively based on an average of 3 people in the house. changes in the building shell by computer sim- cThe remaining categories are based on usage levels shown in table 18 for 3.75 3 and 7 months for Chicago and Houston, respectively. ulation. Two levels of change have been ‘%his category includes the TV, dishwasher, clothes washer, iron, coffee maker, made, one improves the thermal envelope so it and miscellaneous uses of table 17. The clothes dryer input is neglected since it is vented outdoors. is typical of houses built in 1976 and another SOURCE: OTA. uses triple glazing and more insulation — it is described as the “low-energy” house. Each through conduction (and conversely, gains modification was done in the three climate heat in hot weather) is governed by the re- zones represented by Baltimore, Chicago, and sistance to heat flow (denoted by the R-value) Houston. and the indoor/outdoor temperature difference. Engineers and designers commonly The 1973 house uses R-1 1 wall insulation and express the R-value of various components in R-1 3 ceiling insulation and has no storm win- Btu per hour per ft2 per 0 F, which means the dows or insulating glass. The 1976 house in- number of Btu of heat that wouId flow through creases ceiling insulation to R-19 and features 1 ft2 of the component in an hour when a tem- weather-stripped double-glazing and insulated perature difference of 10 F is maintained ~ Ibid Ch. II—Residential Energy Use and Efficiency Strategies ● 35

Table 5.—R-Value of Typical Building Sections and Materials a) R-value of typical building sections

Building section R-value Building section R-value Exterior frame wail...... 4.5 Attic with 6“ blown fiberglass ...... 15.0 Exterior wall with 3½" fiberglass batts...... 13.0 Attic with 12” fiberglass batts ...... 40.0 Exterior wall with 5½” blown cellulose...... 22.0 Single-glazed window (excl. frame) ...... 9 Uninsulated frame floor ...... 4.6 Double-glazed window (excl. frame) ...... 1.6 Uninsulated attic ...... 4.0

b) Calculation of the R-value for an exterior wall

Resist- Resist- Construction ance Construction ance 1. Outside surface (15mph wind) ...... 0.17 5.½" gypsum board ...... 0.45 2. Brick veneer (4 in. face brick) ...... 0.44 6. Inside surface (still air) ...... 0.68 3. I/2” insulation board sheathing ...... 1.32 A.S1/2“ fiberglass batt — R-1 1, 2x4 stud— R-4.53 (insulation w/studs on 16” centers)* ...... 10.34 R-value of complete wall...... 13.40

‘The R-value of the studlinsuiation wall section IS the weighted average (1 518” width, 14 318” Insulation width) of the two component R-values. c) R-values of other common building materials

Component R-value Component R-value

1/2“ Plywood ...... 0.62 5½" fiberglass batt ...... 19.0 1x8 wood siding...... 0.79 3½" blown cellulose...... 13.0 4“ common brick ...... 0.80 3½" expanded polystyrene foam ...... 17.5 Single-glazed window ...... 0.94 3/4” still air space (nonreflecting surfaces) ...... 1.01 Double-glazed window (¼” air space)...... 1.54 4" still air space (nonreflecting surfaces) ...... 1.01 Single-glazed window plus storm window ...... 1.85

NOTE: The R-values given here are based on the values and methodology given in the ASHRAE Handbook of Fundarnenfa/s, Carl MacPhee, cd., American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Inc., New York, N Y., 1972, chs. 20,22. doors. The low-energy house is very heavily in- changed. ) Fractional savings for the 1976 sulated, with R-38 ceilings, R-31 walls, and R-30 house are even larger in Houston, for the same floors. It is carefully caulked and weather- reason. The “1976” summer heat gains are 8 to stripped to reduce infiltration and has triple- 10 percent lower than the 1973 house, and glazing and storm doors. Results of the com- cooling system loads are reduced by about 10 puter simulation of these houses are shown in to 12 percent. Reduction in the cooling load table 6. Detailed thermal properties and between the two houses is less than the reduc- energy flows are given in tables 19 through 25. tion in heating load, because the thermal im- (The computer program did not provide hourly provements do not affect the internal heat simulation; if it had, it is likely that the low- gains. energy house in Houston would have required Modifications in the low-energy house cut a smalI amount of heating. ) the heating requirements dramatically. Ther- mal losses are cut by more than 50 percent. Heat losses in winter are about 16 percent When this is done, the low-energy Houston less for the 1976 house than the 1973 house in house no longer needs a heating system (one Chicago and Baltimore, but the calculations burner of an electric range at high heat would show that the heat that must be supplied here keep this house warm in the coldest Houston by the furnace is reduced by more than 20 per- weather), and the heating requirements for cent. This is because the newer house receives Chicago and Baltimore are reduced by 75 and a higher proportion of its heat gain from sun- 82 percent from the 1973 levels. Cooling re- light, appliances, and other internal gains. (Ex- quirements in Baltimore and Chicago increase, tra glazing slightly reduces heat gain from as the heavily insulated floor no longer loses as sunlight, but other internal gains are un- much heat to the relatively cool ground. In 36 ● Residential Energy Conservation

Table 6.—Performance Comparison for Three Thermal Envelopes in Three Different Climates

Winter heat losses Heat system load Summer heat gains Cooling system load Percent of Percent of Percent of Percent of City MMBtu 1973 losses MMBtu 1973 losses MMBtu 1973 losses MMBtu 1973 losses Baltimore “1973” house ...... 794 — 554 — 269 — 180 — “1976” house ...... 661 83 437 79 247 92 158 88 Low-energy house . . . . 287 36 99 18 219 81 204 113

Chicago “1973” house ...... 1,057 — 811 — 236 — 140 — “1976” house ...... 887 84 647 80 218 93 123 88 Low-energy house . . . . 405 38 202 25 195 83 179 128 I Houston “1973” house ...... 211 — 84 — 569 — 569 — “1976” house ...... 153 73 52 62 513 90 513 90 Low-energy house . . . . — — 0 0 434 76 434 76

1 MMBtu = 1.05 GJ. SOURCE: Summarized from tables 19-21.

Houston, however, the cooling load is still Figure 9.— Heating Load/Cost Relationship—. lower for the low-energy home, as floor heat Kansas City losses do not aid cooling in this climate. A similar analysis was performed by Hut- chins and Hirst of ORNL.4 This study used the NBS heating and cooling load program to calculate changes in these loads for “typical” new construction of a 1,200 ft2 home in 11 cities of differing climates. The results of that analysis are in substantial agreement with those discussed here. Figure 9 shows the heating load reduction for a home in Kansas City, Kans. as more and more improvements are made to the building shell. The cost scale refers to the additional investment needed to instalI these improvements in a new home. It is a net investment in that it accounts for the 0 $500 $1,000 $1,500 $2,000 added cost of the additional materials (insula- Additional initial costs (1 975– $) tion, storm windows, etc. ) as well as the re- SOURCE Paul F. Hutchins, Jr., and Eric Hirst, “Engineering-Economic Analysis duced heating equipment cost that occurs be- of Single-Family Dwelling Thermal Performance, ” Oak Ridge National cause the heating system size is reduced as the Laboratory, ORNL/CON-35, November 1978, p. 16. heating load decreases. It is important to remember that these costs are for new homes; The Kansas City results show a possible heat similar changes for existing homes wilI be more load reduction of up to 70 percent with an inexpensive in some cases (e. g., adding walI investment of less than $2,000. (The baseline sulation). house for the case had no insulation.) These dollar levels compare well with those calculated for the two houses discussed above. In this case it was estimated that the low-energy ‘Paul F. Hutchins, J r., and Eric Hirst, “Engineering-Eco- nomic Analysis of Single-Family DwelIing Thermal Per- house would cost about $3,200 more than the formance” (Oak Ridge National Laboratory, November 1973 house while the 1976 house would be 1978), ORNL/CON-35. about $600 more expensive. I n nearly all cases, Ch. Il—Residential Energy Use and Efficiency Strategies ● 37

however, this added cost would be more than much attention when dealing with winter heat recovered in reduced fuel bills over the life of loss. When sunlight strikes a wall or roof, par- the home. ticularly a dark-colored one, it will be heated. If the wind is blowing hard, the solar heat will The results from these two models show be removed so rapidly that it will have a very that, within the limits of computer simulation, small effect on the surface temperature of the a substantial reduction in heating load is possi- walI and hence on the heat flowing from inside ble from homes built in the early 1970’s. When to outside. If the wind is relatively calm, the cooling is considered, additional energy is surface can be heated considerably, and if the saved in most cases. outdoor temperatures are mild enough, the flow will be greatly reduced and can even be Insulation Effectiveness reversed so that heat is flowing into the house What is possible for new homes based on when the outdoor temperature is below the computer simulation and the stated character- house temperature. istics of materials used to increase the efficien- The heat loss through building components cy of the building shell has been shown. A key and the economic value of insulation are gen- assumption is that the materials perform at erally calculated from the R-values discussed their specifications. For most of the items used earlier and the winter temperatures as ex- in improving the shell —weather-stripping, pressed in degree-days. (A measurement of the storm doors, and windows — the assumption is relative coldness of a location. ) [f the effect of a safe one. With insulation, however, prob- the Sun on a roof or wall as just described is lems, may arise. accounted for over the entire winter, the total Researchers have only recently begun to try heat loss can be much smaller than a calcula- determining the actual field effectiveness and tion based only on temperature. This led van durability of insulating materials. (For informa- der Meer and Bickle7 to propose the use of an tion on health and safety questions about ineffective R-value (reference discusses an effec- sulation, see appendix A). Van der Meer5 and tive U-value, which is the inverse of R-value; R- McGrew 6 contend that insulation is often less value is used here for consistency with the effective than commonly believed, owing to earlier discussion). If a wall had an R-value of 5 degradation over time, and to the effect of but lost only half as much heat as expected solar heat gain on the net heat loss through a over the course of the winter because of solar wall or attic over a heating season. It appears effects, it would have an effective R-value of from their work that uninsulated south walls or 10. attics, in particular, tend to collect significant Van der Meer and Bickle calculated effec- amounts of solar heat in the climates of Colo- tive R-values for a variety of different types of rado and New Mexico. The absorbed sunshine wall construction for 11 different climatic can offset a larger fraction of the heat lost regions of New Mexico, which ranged from through a wall if the entire winter season is 2,800 to 9,300 degree-days and received dif- considered. ferent amounts of sunshine. Their results are Sunshine striking the roof or walls of a build- summarized for three wall types in table 7. ing can significantly change the energy flows. Results are shown for north- and south-facing This is the basis for the use of “Solair” walIs and for Iight and dark colors. (Results for temperatures to calculate summer heat gains. other colors and orientations will be inter- However, similar concepts have not received mediate among those shown.) Clearly color is very important. The effective R-value of a 5Wybe van der Meer, j r,, “Energy Conservation Hous- light-colored south wall is very close to the lab- ing for New Mexico, ” Report No. 76-163, prepared for the 7Wybe van der Meer, Jr., and Larry W. Bickle, “Effec- New Mexico Energy Resources Board, Nov. 14,1977. tive “U” Factors— A New Method for Determining Aver- ‘George Yeagle, Jay McGrew, and John Volkman, age Energy Consumption for Heating BuiIdings, ” pre- “Field Survey of Energy Use in Homes, Denver, Colo. ” pared for the New Mexico Energy Resources Board, Con- (Applied Science and Engineering, Inc., July 1977). tract Nos. 76-161 and 76-164, Nov. 10, 1977. 38 ● Residential Energy Conservation

Table 7.—Effective R-Values for Different Walls in a Range of New Mexico Climates

Wall orientation North South II Light Dark Light Dark Brick veneer wall with 3%” insulation (R = 13.3) 11.6 -13.0 14.5 -17.2 12.8 -14.1 20.8 -90.9 Uninsulated frame wall (R = 3.7)...... 3.7- 4.0 4.5- 5.3 3.9- 4.4 6.3- 41.7 Brick veneer wall with 6“ insulation (R = 19.2) . . 16.4 -18.5 20.8 -23.8 17.9 -20.0 29.4-111

oratory value for all three walls shown. How- the insulation. The R-values of the mineral ever, the dark north walls all have an effective fiber (fiberglass and rock wool) insulation R-value slightly higher than the laboratory varied from 2.35 to 4.25 Btu-1 hr ft2 0 F; but the value. The effective R-values of dark south- wide variation was due to differences in the facing walls show dramatic increases above material itself rather than to differences in age the theoretical values. The extremely high ef- or thickness. McGrew9 measured the R-values fective values for uninsulated walls occur only of insulation installed in several houses and in the warmer parts of New Mexico. found that while thin layers of insulation had R-values corresponding to their laboratory Several caveats must be applied to the inter- values, thicker layers fell below their labora- pretation of this work. Effective R-values in most parts of the country will be closer to the tory values. Three inches of rock wool with a lab value of R-11 had a measured value of 9.9, steady state values than for the sunny New Mexico climate. These results consider only and 6 inches of fiberglass with a lab value of R-1 9 had a measured value of 13.4. These are the winter heating season, and unless over- consistent with the general trend of his other hangs or other shading measures are em- field measurements. ployed, increased heat gain in summer could offset much of the benefits of the winter gain. Neither of these studies can be regarded as definitive since both sample sizes were small This is another illustration of the need to and limited to particular geographic areas. It is make standards responsive to the site. Al- also possible that the moisture content and R- though increased amounts of insulation almost value wilI vary throughout the year in a signifi- always reduce the total heat loss of a house, it cant manner. More work is needed to establish will not have as large an effect as anticipated in some cases, and hence will be less cost ef- the long-term performance of different types of insulation in various climates. fective than calculated using standard values. A related problem, which seems to have re- Insulation can also degrade in several ways as it ages. Loose-fiII insulation in attics can set- ceived very little attention, is provision of vapor barriers for insulation retrofits, par- tle, foam insulation can shrink and crack, and moisture buildup can reduce the effectiveness ticularly walls. With the exception of foamed plastics, the insulations used to retrofit wall of different types of insulation. The Minnesota cavities are degraded by the absorption of Energy Agency recently measured the proper- water vapor. Exterior walls that were built ties of retrofitted insulation in 70 homes where without insulation seldom include a vapor bar- the insulation ranged in age from a few months 8 rier. This problem is now being investigated. to 18 years (with an average age of 2½ years). One solution may be the development and use The R-values of the cellulose and urea-formal- of paints and wallpapers that are impervious dehyde insulation were 4 percent lower on average than expected based on the density of ‘Jay L. McGrew and George P. Yeagle, “Determination ‘Minnesota Energy Agency, “Minnesota Retrofit In- of Heat Flow and the Cost Effectiveness of Insulation in sulation In-Site Test Program, ” HCP/W 2843-01 for U.S. Walls and Ceilings of Residential and Commercial Build- Department of Energy under Contract No. EY- ings” (Applied Science and Engineering, Inc., October 76-C-0202843, June 1978. 1977) Ch. II--Residential Energy Use and Efficiency Strategies “ 39

to water vapor. While some paints are mar- burned in home heating systems by 50 percent. keted with vapor barrier properties, most of DOE also determined that it would be possible the work on coatings impervious to water to achieve an industry-wide production- vapor appears to have been done by the paper weighted average seasonal efficiency of 81.4 industry for use in food packaging. Applica- percent by 1980. ” These improved furnaces tion of this work to products for the housing in- would incorporate stack dampers and im- dustry appears desirable. proved heat exchangers. While the efficiencies cited by DOE do not include duct losses, these Heating, Ventilation, and losses can be eliminated by placing the fur- Air-Conditioning Systems nace and the distribution ducts within the heated space. The efficiency of heating and air-condition- The average seasonal efficiency of gas fur- ing systems varies widely depending on the nace installations is 61.4 percent. This is much quality of the equipment and its installation closer to the seasonal efficiencies that DOE and maintenance, but the average installation found for 1975 gas furnaces –61.5 percent– is less efficient than generally realized. This is than would be expected. While gas furnaces partially due to the fact that efficiencies listed do not require as much maintenance as oil fur- by the manufacturer are those of the furnace naces and can be made more easily in small or air-conditioner operating under optimum sizes, duct losses would be expected to in- conditions. These estimates do not include the troduce a larger discrepancy than observed. losses from the duct system that distributes DOE estimates that use of stack dampers, conditioned air to the house. The confusion power burners, improved heat exchangers, and between potential and actual efficiency is in- the replacement of pilot lights with electric ig- creased by the fact that the performance of nition systems can improve the average sea- different equipment is defined in different sonal efficiency of new furnaces to 75.0 per- terms —the “efficiency” of a furnace, the cent. 2 “coefficient of performance” (COP) for heat pumps, and the “energy efficiency ratio” (EER) Steady-state and seasonal efficiencies above for air-conditioners. These different ap- 90 percent have been measured for furnaces proaches are explained in a note at the end of and boilers employing the “pulse combustion” this chapter. For purposes of comparison, this principle, A gas-fired pulse combustion boiler discussion will emphasize the seasonal system will be marketed in limited quantities during performance, which attempts to measure the the latter part of 1979 and an oil-fired unit has actual performance of the system in a real been developed by a European manufacturer home situation. who has expressed interest in marketing it in the United States. Research on a number of Furnaces fossil fuel-fired heat pumps is underway and is sufficiently advanced that gas-fired heat The average seasonal efficiency of oil fur- pumps with coefficients of performance of 1.2 nace installations is about 50 percent (in- to 1.5 may be on the market in as little as 5 cluding duct losses) as shown in figure 10. years. These furnaces and heat pumps are dis- However, the Department of Energy (DOE) has cussed in chapter Xl. determined that the seasonal efficiency of a properly sized and installed new oil furnace of Furnace Retrofits 1975 vintage is 74 percent, ’” which suggests that inadequate maintenance, duct losses, and A number of different organizations are con- oversizing may be increasing the amount of oil ducting tests of the improvements in furnace efficiency that can be achieved by retrofits, in- ‘“Department of Energy, “Final Energy Efficiency lm- provement Targets for Water Heaters, Home Heating cluding the American Gas Association (AGA), Equipment (Not Including Furnaces), Kitchen Ranges and Ovens, Clothes Washers, and Furnaces,” Federal Register, 1 I Ibid. vol. 43, no. 198 (Oct. 12, 1978), 47118-47127. “[bid.

40 ● Residential Energy Conservation

Figure 10.— Residential Heating Systems

(20 – new. laboratory test conditions) (429 – well maintained) (72 – as found

(conversion)

(MIT) I (Univ. of Wise

(62 — as foun

Average 61 .4% I

Brook haven National Laboratory (BNL), NBS, the data sample is small and not adequate for and the National Oil Jobbers Council. Only a generalizations. The savings provided by the few results are available now, but these in- adjusted system apparently depended on the dicate that meaningful savings can be initial condition of the heating system, the achieved by retrofits. degree of oversizing, the location, and the vent system design. The AGA program, which is known as the Space Heating System Efficiency improve- Northern States Power Company (Minne- ment Program (SHEIP), involves tests in about apolis, Minn. ) is participating in SHEIP and has 5,000 homes in all parts of the country. Prelimi- monitored 51 homes that had been retrofit nary findings based on the installations that prior to the winter of 1977-78.14 A variety of were retrofitted prior to the 1976-77 winter different retrofits were installed ranging from found that adding vent dampers, making the simply derating the furnace and putting in a furnace a more appropriate size, and other vent restrictor to replacement of the furnace. combinations all saved energy.13 The size of While the sample is too small to draw conclu- ‘American C-as Association, “The Gas Industry’s Space Heating System Efficiency Improvement Pro- 14 Northern States Power Company, “1977-78 Season gram — 1976/77 Heating Season Status Report." SHE I P Report “ Ch. II—Residential Energy Use and Efficiency Strategies ● 41

sions about most of the individual retrofits, it seasonal performance factor16 and four others is interesting to note that the retrofits resulted had a seasonal performance factor at least 90 in an average reduction in fuel use (adjusted percent of the theoretical value. Six of the for weather) of 14. I percent for a cost savings systems that performed near or above speci- of $42. The average installation cost of the fication were located in climates with less than retrofits was $163, but did not include the 3,000 heating degree-days, including all three markup on the materials, which would have that exceeded the theoretical value. (Duct added $20 to $25 per installation on average. losses were not included in either measure- These results were achieved on furnaces that merit. ) were all in good enough condition that they The deviation between the measured and were expected to last for at least 5 years, so it the theoretical performance did not correlate is Iikely that their annual efficiencies were with the age or size of heat pump model, but sIightly higher than average. Thus, it seems there was some indication that the theoretical probable that seasonal efficiencies of 70 per- performance underestimated the defrost recent can be achieved in gas furnaces that are 17 quirements. Measurements made by NBS on in condition adequate for retrofitting. These a single heat pump installation found a dif- retrofits did not include duct system insula- ference between measured and calculated tion, which is clearly effective if the exposed seasonal performance factors virtually iden- ducts are in unconditioned space. tical to that given by the equations on figure Heat Pumps 11 for Washington, D.C. Much of this difference was due to inadequate consideration The seasonal performance factor for 39 dif- of defrost requirements in the calculated ferent heat pump installations was recently seasonal performance factor. While it was not measured in a study conducted by Westing- possible to place a quantitative measure on in- house. ” The heat pumps studied were made by stallation quality, there seemed to be a several different manufacturers and were in- qualitative correlation between the experience stalled in 8 different cities. Figure 11 shows the of the installer and the performance of the in- actual performance of the installations (O and 18 stalIation. Inadequate duct sizing and im- 6) measured over two winters and the solid proper control settings appeared to degrade line represents the average measured seasonal the performance. Thus, it seems plausible that performance factor as a function of the heat- a combination of improved installer training ing degree-days. Manufacturers performance and experience and modest technical im- specifications were used together with the provements in heat pumps can result in more measured heating demands of each house to instalIations that achieve the theoretical per- calculate the theoretical seasonal perform- formance levels. ance factor for each installation, and the results were averaged to obtain the broken Iine Air-Conditioners shown in the figure. The horizontal dotted line represents the performance of an electric fur- The average COP of air-conditioners on the nace. The figure shows that the average instal- market in 1976 was 2.0 under standard test lation achieves 88 percent of the expected electricity savings in a 2,000 degree-day climate, but only 22 percent of the expected savings in an 8,000 degree-day climate. “Insufficient data was available to calculate the theoretical performance factor for one of these cases, but the The study also found that of the 39 installa- measured performance exceeded the theoretical per- tions, only three exceeded the theoretical formance of any other installation in that location. ‘ ‘George E. Kelley and John Bean, “Dynamic Per- ‘sPaul J. Blake and William C. Gernert, “Load and Use formance of a Residential Air-to-Air Heat Pump,” Na- Characteristics of Electric Heat Pumps in Single-Family tional Bureau of Standards, NBS Building Science Series Residences,” prepared by Westinghouse Electric Cor- 93, March 1977. poration for EPRI, EPRI EA-793, Project 432-1 Final 18Paul Blake, Westinghouse Electric Corporation, per- Report, vol. 1, June 1978, pp. 2,1-12,13, sonal communication, December 1978.

42 . Residential Energy Conservation

Figure 11 .—Performance of Installed Heating Systems

conditions. 9 However, some units were on the tional Energy Act, air-conditioners with larger market that had COPS of 2.6. California will condensers and evaporators, more efficient not allow the sale of central air-conditioners compressors, two-speed compressors, multiple with a COP below 2.34 after November 3, 1979, compressors, etc., are coming into the market. and 11 5-volt room air-conditioners must have a COP of at least 2.55 after that date. It is estimated that the cost of increasing the COP Appliance Efficiency and Integrated of air-conditioners from 2.0 to 26 is about $10 Appliances per MBtu of hourly cooling capacity.20 To meet these standards and the Federal stand- Although the discussion so far has concen- ards to be developed as directed by the Na- trated on the building shell and heating and cooling equipment, large savings can be “George D Hudelson, (Vice President-Engineering, achieved in other parts of residential use. I n Carrier Corporation), testimony before the California State Energy Resources Conservation and Development figure 7, it was seen that appliances, Iighting, Commission, Aug. 10,1976 (Docket No 75; Con-3). and hot water account for 36 percent of the bid. energy for the 1973 house. Therefore the Ch. II--Residential Energy Use and Efficiency Strategies “ 43

potential is great, particularly for retrofit, formance levels. A British study has estimated because of the accessibility of appliances that the average energy use of the appliances compared to some components of the buiIding shown in table 9 (other than water heaters) shell, such as the walls. could be reduced to 41 percent of present consumption. 23 The effect of appliances includes the energy used to operate them and changes in the As water heating is the second largest use of house’s internal heat gains that change the home energy (after heating) in most locations, heating and cooling load. As most appliances a number of methods are under study to re- are used in conditioned space, they exhaust duce this demand below the incremental im- some heat into that space. As with any other provements reflected in table 9. Heat pumps change in the house, a careful examination of designed to provide hot water are in the works, the system interaction must be made to deter- and proponents expect they may be able to mine the overalI effect of an apparently simple operate with an annual water heating COP of 2 change. to 3.24 Because a heat pump removes heat from the air around it, a typical heat pump The overall effect of an improved appliance water heater will also provide space cooling that consumes 100 kWh per year less than the about equal to that of a typical small window unimproved version is illustrated in table 8. air-conditioner (one-half ton) in summer. Such This figure shows the effect of such a change a heater is expected to cost about $250 more on two electric homes, one with resistance than a conventional water heater. heating and one with a heat pump, in two climates. I n Chicago, where heating is the Other approaches to the problem of heating largest need, the improved appliance reduces water include use of heat rejected from the total consumption only by half of the appli- condenser of an air-conditioner, refrigerator, ance savings when resistance heat is in use, but or freezer, or the recovery of heat from drain by 79 percent when a heat pump is used. This water. Air-conditioner heat pump recovery results from a drop in the appliance contribu- units now on the market cost $300 to $500 in- tion to heat gain, due to greater appliance effi- stalled. Estimated hot water production ranges ciency. I n Houston, where cooling is more im- from 1,000 to 4,600 Btu per hour per ton of air- portant, total savings are greater than the sav- conditioning capacity.25 The air-conditioner ings of the appliances alone, since internal heat recovery unit is identical in concept to heat gain is reduced. the heat pump water heater, but is fitted to existing air-conditioners or heat pumps. A unit The Department of Energy has published installed on a 3-ton air-conditioner in the Balti- what it has determined to be the maximum more area would reduce the electricity used feasible improvements, technically and eco- for heating hot water in a typical home by nomically, for major appliances by 1980.2’ 22 If 26 about 26 percent. appliances in the prototypical home were improved according to these estimates, the consumption of the improved appliance would be that shown in table 9. These target figures do “Gerald Leach, et al., A Low Energy Strategy for the not represent final technological limits, but United Kingdom (London: Science Reviews, Ltd., 1979), only limits the Department believes can soon pp. 104,105. “R. L. Dunning, “The Time for a Heat Pump Water be achieved industry-wide. Some appliances Heater,” proceedings of the conference on Major Home now on the market equal or exceed these per- Appliance Technology for Energy Conservation, Purdue University, Feb. 27- Mar. 1,1978 (available from NTIS). *’David W. Lee, W. Thompson Lawrence, and Robert P. 2’Department of Energy, “Energy Efficiency Improve- Wilson, “Design, Development, and Demonstration of a ment Targets for Nine Types of Appliances, ” Federal Promising Integrated Appliance,” Arthur D. Little, Inc., Register, vol. 43, p. 15138 (Apr. 11, 1978). prepared for ERDA under Contract No. EY-76-C-03-1209, “Department of Energy, “Energy Efficiency Improve- September 1977. ment Targets for Five Types of Appliances,” Federal “Estimate by the Carrier Corporation for a family Register, vol. 43, p, 47118 (Oct. 12, 1978), using 80 gal Ions of hot water per day. 44 . Residential Energy Conservation

Table 8.—The Impact of a 100 kWh/Year Reduction in Appliance Energy Usage on Total Energy Consumption

Chicago Houston Resistance Efficient Resistance Efficient heat heat pump heat heat pump Appliance savings...... 100 100 100 100 Cooling savings...... 19 12 39 22 Additional heating ...... 69 33 37 14 Total savings...... 50 79 102 108

NOTE: It is assumed that the resistance heating system has an efficiency of 0.9 (1O-percent duct losses) and a system cooling COP of 1.8. The heat pump system has a heating COP of 1.9 in Chicago and 2.36 in Houston with a cooling COP of 2.6. The heating season is assumed to be 7 months in Chicago and 4 months in Houston. The cooling season is assumed to be 35 months in Chicago and 7 months in Houston. SOURCE: OTA

Table 9.—Energy Consumption of Improved heat pump in conjunction with a large ice bin Appliances for the Prototypical Home that provides thermal storage. During the winter, the heat pump provides heating and Appliance Energy consumption hot water for the house by cooling and freez- Hot water heater -Gas...... 216 therms -Electric...... 3,703 kWh ing other water. The ice is stored in a large in- Cooking range/oven ...... 1,164 kWh sulated bin in the basement and used to cool Clothes dryer...... 950 kWh the house during the next summer. After the Refrigerator/freezer...... 1,318 kWh Dishwasher ...... 290 kWh heating season, the heat pump is normally NOTE: One therm = 29.3 kWh operated only to provide domestic hot water. SOURCE: OTA. However, if the ice supply is exhausted before the end of the summer, additional ice is made As knowledge of home energy use increases by operating the heat pump at night when off- and prices of purchased energy rise, the use of peak electricity can be used. appliance heat now wasted should become more common. Some building code provisions The efficiency of the system is higher in all may have to be adjusted to encourage these modes of operation than the average efficien- uses. cy of conventional systems. The “heat source” for the heat pump is always near 320 F so it is never necessary to provide supplemental re- The ACES System sistance heating and the ACES operates with a The Annual Cycle Energy System (ACES) is measured COP of 2.77 as shown in table 10. an innovative heat pump system that uses When providing hot water, the system has a substantially less energy than conventional COP slightly greater than 3, which is com- heat pump systems. ” A demonstration house incorporating the ACES system has been built Table 10.— Full-Load Performance of the near KnoxvilIe, Term., and uses only 30 percent ACES System as much energy for heating, cooling, and hot —— water as an identical control house with an Function Full-load COP electric furnace, air-conditioner, and hot water Space heating with water heating ...... 2.77 heater. Water heating only ...... 3.09 Space cooling with stored ice ...... 12.70 Space cooling with the storage The ACES concept, which was originated by > 32° F and < 45° F...... 10.60 Harry Fischer of ORNL, uses an “ice-maker” Night heat rejection with water heatinga. . . . . 0.50 (2.50) 27A, s, Holman and V. R. Brantley, “ACES DemonWa- aln the strict accounting used here, only the water heating is calculated as a tion: Construction, Startup, and Performance Report, ” useful output at the time of night heat rejection because credit is taken for the chilling when it is later used for space cooling. This procedure results in Oak Ridge National Laboratory report ORNL/CON-26, a COP of 0.5. If the chilling credit and the water-heating credit are taken at October 1978. the time of operation, then a COP of 2.5 results.

Ch. II--Residential Energy Use and Efficiency Strategies ● 45

Photo credit: Oak Ridge National Laboratory

The Annual Cycle Energy System (ACES) design is passive energy design utilizing, as its principal component, an insulated tank of water that serves as an energy storage bin

Photo credit: U.S. Department of Energy

Energy-saving constructed home in California utilizing solar energy 46 ● Residential Energy Conservation

parable to the heat pump water heaters under nace with no duct losses and an electric hot development and much better than the con- water heater. It used 35 percent less energy ventional electric hot water heater COP of 1. than the theoretical requirements of a conven- The system provides cooling from storage with tional heat pump/electric hot water heater a COP of more than 10. system. These measurements combined with estimates of the summer cooling requirements The ACES demonstration house is a 2,000- 2 show that the ACES system will use only 30 ft , single-family house. It is built next to the percent of the energy for heating, cooling, and control house that has a simiIar thermal envelope so both houses have nearly identical hot water that would be used by the control house with a conventional all-electric system. heating and cooling loads. Both houses are This is only 21 percent of the energy that well insulated although not as highly insulated would be used for these purposes by this house as the “low energy house” of this chapter. The if constructed to HUD minimum property thermal shell improvements reduce the annual standards (This is nearly identical to the reduc- heating requirements (20.3 MMBtu) to less tion shown for the low-energy house. ) than half those of a house insulated according to the Department of Housing and Urban De- velopment (HUD) minimum property stand- Table 11.—Actual Space- and Water-Heating Energy a ards (43.8 MMBtu) but increase the seasonal Requirements of the ACES Demonstration House cooling requirement from 22.7 to 24.1 MMBtu. ——. — Elec. furnace, Heat pump, The use of natural ventilation for cooling when elec. water elec. water practical lowers the cooling requirements of ACES heater heater Load consumption consumption consumption the ACES house to 17.1 MMBtu. (kWh) (kWh) (kWh) (kWh) Heating . - 10,546 10,546 5,021 The actual space- and water-heating energy 4,960 Hot water 2,657 2,657 2,657 requirements for the ACES house are shown in Total. . 13,203 4,960 13,203 7,678 table 11 for a 5-month period during the acovers period from Oct. 31, 1977 through Mar. 26, 1978. 1977-78 winter. The ACES system used 62 per- SOURCE: A. S. Holman and V. R. Brantley, “ACES Demonstration: Construc- tion, Startup, and Performance Report,” Oak Ridge National Labora- cent less energy than wouId have been re- tory, Report ORNUCON-26, October 1978, pp. 43,47. quired if the house had used an electric fur-

ENERGY SAVINGS IN EXISTING HOMES–EXPERIMENTS

Although the calculations of heating and townhouses in an area known as Twin Rivers, cooling loads discussed above were given for N.J. The results of this work suggest that large new homes, they hold as welI for retrofit of ex- savings are possible on real houses through isting homes to the extent retrofit is feasible. careful work but that much field work is As the majority of the housing stock between needed before the full impact of changes is now and the year 2000 is already built, how- understood. ever, it is important to examine the potential for savings by retrofit in more detail. To im- Thirty townhouses near Princeton, N. J., were prove the thermal qualities of the shell, con- improved with different combinations of four sumers are urged to weatherstrip, caulk, in- options thought to be cost-effective. The sulate the attic, and add storm windows, often houses were constructed with R-11 insulation in that order. This is correct for most homes, in the walls and attic, and some units had dou- but resulting savings will vary. Princeton Uni- ble glazing. Thus, they were more energy effi- versity and NBS have conducted extensive and cient than the average existing house built up thoroughly monitored “retrofits” of houses, to that time. Improvements used by the Prince- and Princeton has undertaken an extensive ton researchers were: 1 ) increasing the attic in- project involving retrofit and monitoring of 30 sulation from R-11 to R-30; 2) sealing a shaft Ch. II—Residential Energy Use and Efficiency Strategies ● 47 around the furnace flue, which ran from the This experience suggests that retrofit will be basement to the attic and released warm air most effective when based on an energy audit past the attic insulation; 3) weatherstripping by someone who can identify specific charac- windows and doors, caulking where needed, teristics of the structure, and it further suggests and sealing some openings between the base- the need for more carefully monitored experiment and fire walls that separate the houses; ments to identify other common design and 4) insulating the furnace and its warm air defects. distribution system and adding insulation to Princeton researchers also conducted an in- 28 the hot water heater. tensive retrofit on a single townhouse with These retrofits showed winter heating sav- careful before-and-after measurements. Attic ings averaging about 20 percent for the two at- insulation was increased to R-30 as in the tic retrofits and up to 30 percent for the total group retrofit, and the hole around the flue package. 29 30 Savings varied considerably; this and gaps along the firewall were plugged as was due to changes in temperature and sun- before. For this experiment, however, the old light combined with changing living patterns insulation was lifted and additional holes of the occupants (al I houses were occupied). around pipes and wires entering the attic were plugged. More holes along the partition walls The savings measured are consistent with at the attic were filled; the joint between the the reduction in heating required in 600 houses masonry and the wood at the top of the foun- that received attic insulation retrofit through dation was sealed, and basement walls were in- the Washington Natural Gas Company (Seat- sulated. Careful caulking and weather-strip- tle) in autumn 1973. These houses indicated an ping was used, and a tracer test to locate small average reduction of gas consumption of 23 air leaks identified tiny holes. Total labor in- 31 percent. volved in reducing infiltration was 6 worker- While the Twin Rivers retrofits were conven- days, and the final infiltration rate was less tional, there were some choices the average than 0.4 air changes per hour, even with winds homeowner would have missed. These choices higher than 20 mph. were important. Plugging the space around the Different treatments were used for windows. flue and the spaces along the firewall stopped Sliding glass doors were improved through heated air from bypassing the insulation. (Clos- adding a storm door. Windows not used for ing openings in the basement also contrib- visibility were covered with plastic bubble uted. ) Engineering analysis indicated that up to material placed between two sheets of glass. 35 percent of the heat escaping from the town- This type of window covering created an R- houses as built occurred via the insulation value of 3.8, compared with 1.8 for single glass bypass–heated air was flowing up and out of plus a storm window. The living room windows the house by direct escape routes! 32 were equipped with insulating shutters, to be closed at night. 28Davld T, Harrje, “Details of the First Round Retrofits at Twin Rivers,” Energy and Buildings 1 (1977/78), p. 271. Figure 12 shows engineering estimates of the *’Robert H. Socolow, “The Twin Rivers Program on losses through various parts of the house, Energy Conservation in Housing: Highlights and Conclu- before and after retrofit. Largest reductions sions,” Energy and Buildings 1 (1977/78), p. 207. came from lowered infiltration, but it is clear JoThomas H. Woteki, “The Princeton omnibus Experi- that total reduction in thermal losses was pro- ment: Some Effects of Retrofits on Space Heating Re- quirements” (Princeton University Center for Environ- duced by many small adjustments. Thermal mental Studies, 1976), Report No. 43, 1976. losses were reduced to 45.5 percent of their 3’Donald C. Navarre, “Profitable Marketing of Energy- preretrofit value, and annual heating re- Saving Services, ” Utility Ad Views, July/August 1976, p. quirements (calculated considering internal 26. heat gain and sunlight) showed the heating “Jan Beyea, Bautam Dutt, and Thomas Woteki, “Criti- cal Significance of Attics and Basements in the Energy system would have only one-third the load of Balance of Twin Rivers Townhouses, ” Energy and Bui/d- the original system. These impressive numbers ings 1 (1 977/78), p, 261. are especially significant because the house 48 ● Residential Energy Conservation

Figure 12.— Handbook Estimates of Loss Rates Before and After Retrofit Loss rate: W/” C o 20 40 60

Through attic Outside walls Front Back Front door

South windows: Living room Bedroom North windows: Family room Bedrooms

Basement: Walls above grade Walls below grade Floor

Air infiltration: Basement 1st & 2nd floors L 1 1 I i 1 1 1 1 I 1 1 1 0 50 100 Loss rate: Btu/° F-HR

SOURCE: F. W. Slnden, “A Two-Thirds Reduction (n the Space Heat Require- ment of a Twin Rivers Town house,” Energy and Bu//dirrgs 1, 243, 1977-78. Shaded areas indicate loss rate following retrofit

was built in 1972, and thus had lower thermal sulation, and uninsulated walls and floors. losses as built than most existing stock. Windows were single-glazed except for a Iiving room picture window. The house is surrounded The materials cost $425 and required some 20 worker days for installation. Some items by trees on all sides and has dense shrubbery were hand built, so labor requirements were along the north wall. It showed evidence of high. Since this work, additional loss mecha- above-average craftsmanship in construction. All these factors combined to produce air in- nisms have been discovered in the party walls 33 filtration rates ranging from one-quarter to of adjoining townhouses, and correction of two-thirds air change per hour in extreme con- these flaws should reduce the heating requirement to 25 percent of the original value. ditions; this is unusually low. The National Bureau of Standards moni- First retrofits were planned to reduce infil- tored the heating requirements of a 2,054 ft2 tration — careful caulking, weather-stripping, house (commonly called the Bowman house) in replacement, or reglazing of window panes. the winter of 1973-74, and continued to The fireplace damper was repaired, a spring- monitor during a three-stage retrofit the Ioaded damper was installed on the kitchen following winter.34 A single-story wood-frame vent-fan, and the house was painted inside and house with unheated half basement and crawl out. There was no measurable difference in in- space, the house was buiIt with R-11 attic infiltration after the retrofits. The next step was to install wooden-sash “Robert H Socolow, “1 ntroduction, ” Energy and ~ui/dif?gS 1 (1977/78), p. 203. storm windows, which cut the heat loss of the “D. M Burch and C M Hunt, “Retrofitting an Existing house by 20.3 percent. Wood-Frame Residence for Energy Conservation – An Ex- perimental Study,” NBS Building Science Series 105, July Finally, blown cellulose insulation was 1978. added to increase the attic to R-21, al I exterior Ch. Il—Residential Energy Use and Efficiency Strategies “ 49

walls were insulated (with blown fiberglass, Table 14.—Postretrofit Steady. State Winter blown cellulose, and urea-formaldehyde foam Heat-Loss Calculations in different walls), R-11 insulation was placed Heat-loss Heat-loss-rate Percent of under the floor over the basement, and R-1 9 path Btu/h total over the crawl space. The addition of this insulation cut the heat loss from the house by another 23 percent, but actually resulted in a slight increase in the infiltration rate, a result not fulIy understood. Table 12 shows the resulting reduction in thermal losses of the house, based on an assumed occupancy pattern. Thermal losses went down 43.3 percent, and the annual heating system load was reduced by 58.5 percent. Tables 13 and 14 show calculated steady-state heat losses before and after retrofit. Table 12.—Comparison of Reductions in Heat-Loss Rate to Reductions in Annual Heating Load

Reduction in Reductions in heat-loss rate annual heating The summer cooling load was slightly in- Retrofit stage % load, %. creased. Insulation added to the walls and Preretrofit (and Stage 1) . . 0 0 attic reduced heat gain and a polyethylene Stage 2 ...... 20.3 25.2 Stage 3 ...... 23.3 33.3 sheet placed in the crawl space reduced the Combination ...... ’. . . 43.3 58.5 moisture entering the house, but these reduc- SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-Frame tions were offset by the reduction in cooling Residence for Energy Conservation-an Experimental Study,” NBS Building Science Series 105, July 1978. resulting from the passage of air through the floor to the basement space. Table 13.—Preretrofit Steady-State Winter Heat-Loss Calculations The experiments at NBS and Princeton sug- Heat-loss Heat-loss-rate Percent of gest possible heating savings of at least 50 per- path Btu/h total cent through straightforward improvements, Walls...... 9,617 ; 28.0 even in well-constructed houses. They also Ceiling ...... 4,020 11.7 show that these levels will be reached only Floor Over crawl space. . 3,201 9.3 through careful examination of the structure, 3,493 Over basement . . . 292 } 0.9 and that our general knowledge of the dynam- Windows ics of retrofit is not very sophisticated. Addi- Single pane ...... 8,395 , 272 24.4 0 29.9 Insulating glass. . . 1,877} ‘ 5.5 } tional careful monitoring of actual houses is Doors ...... 924 2.7” needed. Such data will help us to obtain better Air Infiltration ...... 6,010 17.5 -l a values for public and private investments. (1 = 0.51 h ) Total ...... 34,336 100 aBased on Preretrofit air-infiltration correlation, indoor temperature of 68° F and outdoor temperature of 32” F. SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-Frame Residence for Energy Conservation-an Experimental Study,” NBS Building Science Series 105, July 1978. 50 ● Residential Energy Conservation

INTEGRATING IMPROVED THERMAL ENVELOPE, APPLIANCES, AND HEATING AND COOLING EQUIPMENT

The overall reduction in household energy the baseline 1973 performance. The low- use is not determined solely by the thermal energy, all-electric house starts with a well-in- envelope improvements; it is also influenced sulated and tight thermal shell, uses a heat by the type and efficiency of heating, cooling, pump installed to meet predicted perform- and water heating equipment used as well as ance, and improved appliances. The only the other appliances. This can be seen in table equipment not now commercialIy available in 15, which shows the total primary energy con- residential sizes is the heat pump providing the sumption for five different sets of equipment hot water. This house uses 36 to 39 percent of in the three different simuIation houses dis- the energy of the 1973 house. The low-energy cussed earlier. gas-heated house is comparably equipped, except that it uses an improved furnace, air-con- The equipment packages assumed range in ditioner, and hot water heater as shown in performance from that typical of many ex- table 16. It uses about 55 percent of the energy isting installations to systems with above of the baseline gas-heated house. The reduc- average but still below many existing commer- tion is smaller than for the all-electric house, cial facilities. Gas and electric heating equip- as heating represented a much larger fraction ment is used to illustrate around the country. of the primary energy consumption in the Price, availability or other considerations lead baseline all-electric house than in the gas- to the choice of oil, wood, or solar in many heated house. new homes. In Houston, the qualitative changes ob- The effect of the thermal envelope or equip- served are similar, but the absolute and frac- ment improvements is rather similar in Chi- tional reductions observed are generally con- cago and Baltimore. The extra attic insulation, siderably smalIer since heating and cooling are storm windows, and insulated doors of the initialIy a smaller fraction of the total con- 1976 house reduce consumption by 12 to 14 sumption. For the 1976 house, the heating load percent. Replacing the electric furnace with a is already small enough that the heat pump heat pump cuts consumption to 72 percent of cuts only 3 percent from total consumption. It

Table 15.—Primary Energy Consumption for Different House/Equipment Combinations (in MMBtu)

Chicago Bait i more Houston Percent of Percent of Percent of Consumption 1973 use Consumption 1973 use Consumption 1973 use All-electric houses “1973” house with electric furnace...... 491 100 400 100 294 100 “1976” house with electric furnace...... 424 86 351 88 271 92 “1976” house with heat pump ...... 353 72 286 72 261 89 Low-energy house with heat pump...... 176 36 154 39 161 55

Gas-heated houses “1973” house ...... 311 100 271 100 252 100 “1976” house ...... 277 89 244 90 240 95 Low-energy house ...... 168 54 150 55 160 63 NOTES: Primary energy consumption is computed assuming that overall conversion, transmission, and distribution efficiency for electricity is 0.29 and that processing, transmission, and distribution of natural gas is performed with an efficiency of 0.89 1 MMBtu = 1.05 GJ. SOURCE: OTA Ch. II--Residential Energy Use and Efficiency Strategies ● 51

Table 16.—Equipment Used in Prototypical Baltimore Houses — —.. Hot water Appliances House Heating system Cooling-. system— —— All electric “1973” house with electric furnace. Electric resistance furnace Central electric air-condition- Electric hot water Appliances and usage with 90°/0 system efficiency ing system with COP = 1.8 heater with 800/0 effi- as shown in table 19. incl. 10°/0 duct losses. incl. 10% duct losses. ciency. “1976” house with electric furnace...... Same as above. Same as above Same as above. Same as above.

“1976” house with heat pump ...... Electric heat pump with Electric heat pump with Same as above. Same as above. seasonal performance factor COP = 18 incl. 10% duct of 1.26 (Chicago), 1.48 losses, (Baltimore), or 1.88 (Houston) incl. 1OO/. duct losses. Low-energy house with heat pump...... Electric heat pump with sea- Electric heat pump with Electric heat pump with Same as above except sonal performance factor of COP = 2.6 and no duct losses. COP =2. Hot water sup- usage given by 1.90 (Chicago), 2.06 (Balti- plied by heat recovery table 9 for more), and no duct losses. from air-conditioner appliances listed Houston has no heating during cooling season. there. — system. — ——

Gas heated “1973” house ...... Gas furnace with 60% Central electric air-condi- Gas hot water heater Appliances and usage seasonal system efficiency. tioning system with with 44% efficiency. as shown in table 19. COP = 18.

“1976” house ...... Same as above. Same as above Same as above. Same as above

Low-energy house ...... Gas furnace with 75% Central electric air-condi- Gas hot water heater Same as above except seasonal system efficiency, tioning system with COP = 2.6 with 55% efficiency. usage given by and no duct losses. table 9 for appliances Iisted there.

is also interesting to note that in all three Figure 13.—Disaggregated Point, of Use Energy Consumption for the Low-Energy House With Heat cities, the primary energy requirement for the Pump in Baltimore, Md. gas-heated low-energy house is almost the same as that of the one with the heat pump. The changes that have been incorporated in the low-energy house vastly alter the fraction of total consumption that goes to each end use. Figure 13 shows that appliances and lighting now use 61 percent of the total (in Baltimore) while they used only 25 percent of the total for the 1973 house. Appliance use has been reduced slightly, but the total for other uses has been reduced by 80 percent. The disaggregate use for each house is shown in tables 23, 24, and 25. Part of the reductions shown in table 15 are due to the use of improved heating and cooling equipment. The low-energy gas-heated house uses a furnace with a seasonal efficiency of 75 percent while the 1976 house has an efficiency of only 60 percent. The improved 1 MMBtu = 105 gigajoule (GJ) furnace is equivalent to thermal envelope im- Source Based on tables 19-25 52 . Residential Energy Conservation

provements that reduce the heating load by 20 Cooling requirements could be reduced by percent, which points out that the retrofit of using outside air whenever temperatures and equipment needs to be considered for existing humidity are low enough. South-facing win- housing. It may pay to consider an improved dows could easily be increased to reduce the furnace before retrofitting wall insulation. heating requirements and it might be possible Each case must be decided separately, but to reduce the hot water requirements by lower- where insulation already exists in accessible ing the water temperature or using water-con- places (attic, storm windows) the heating sys- serving fixtures. Appliance usage could clearly tem offers considerable potential. be cut because no fluorescent lighting is used, and the “efficient” appliances used represent A number of additional steps— not con- only the industry-weighted average perform- sidered in the computer simulation — could be ance, which can be achieved by 1980. taken to reduce consumption even further.

LIFECYCLE COSTING

Dramatic savings in energy consumption est rate” assumes that three-quarters of the in- have been shown to be readily achievable vestment is financed with a 9-percent mort- through existing technology. However, most gage and that the homeowner will receive a 10- consumers are more interested in saving percent after tax return on the downpayment. money than saving energy. Comparison of It also considers payments for property taxes two alternative purchases— buying additional and insurance and the deductions from State equipment now and making smaller operating and Federal taxes for interest payments. Future payments versus paying less now but assuming operating expenses include fuel costs, equip- larger operating cost– is always difficult. Few ment replacement, and routine equipment op- homeowners resort to sophisticated financial erating and maintenance costs, all of which analysis, but they may consider the “payback” assume that inflation occurs at a rate of 5.5 time required for operating savings to return percent. The present value of these expenses is the initial capital investment. This figure is fre- calculated using a discount rate of 10 percent. quently calculated without considering future It is generally agreed that future energy costs inflation in the operating costs— and hence in will not be lower than now (in constant dol- operating savings —or interest on the money lars), but beyond that projections differ as a invested. result of the different actions possible by the Government, foreign producers, and consum- A more sophisticated approach involves ers. This study calculates Ievelized monthly “lifecycle costing,” which can be useful for costs for three different energy cost assump- policy purposes even if individual homeowners tions: 1) no increase in constant dollar prices; do not use it. Lifecycle costing, as used in this 2) oil and electricity prices increase by about section, combines the initial capital invest- 40 percent, while gas prices double (in cons- ment with future fuel and operating expend- tant dollars) by the year 2000 as projected by a itures by computing the present value of all Brook haven National Laboratory (BNL) study; future expenditures. The Ievelized monthly and 3) a high projection where prices approx- energy cost is then computed as the constant imately triple by the year 2000 (see figure 4, monthly payment that would amortize over 30 chapter l). The detailed assumptions about the years a loan equal to the sum of the initial in- energy costs are given in volume 11, chapter I I vestment and the present value of al I future ex- of the OTA solar study above. penditures. The methodology and assumptions used are described in detail in volume 11, The Ievelized monthly costs for each of the chapter I of the OTA solar study .35 The “inter- houses described in table 15 are presented in 35 Application of Solar Technology to Today’s Energy tables 17 and 18 for each of the energy price Needs (Washington, D. C.: U.S. Congress, Office of increase trajectories described above. Two dif- Technology Assessment, September 1978), vol. 11. ferent starting prices are assumed, correspond- Ch. II--Residential Energy Use and Efficiency Strategies . 53

Table 17.—Levelized Monthly Energy Cost in Dollars for Energy Price Ranges Shown - —(All electric houses) ‘ in 1976 dollarsb Primary energy — Price range 1976-2000 3.22-7.03 3.22-10.60 All-electric houses 4.4 4.4-6.4 4.4-14.4

Chicago “1973” house with electric furnace...... 491 183 492 293 398 828 “1976” house with electric furnace...... 424 170 442 268 362 743 “1976 house with heat pump. . . . . 353 175 408 260 341 668 Low-energy house with heat pump. . . 176 138 273 192 240 435

Baltimore “1973” house with electric furnace...... 400 158 416 252 341 703 “1976” house with electric furnace...... 351 150 381 235 315 641 “1976” house with heat pump ...... 286 156 351 230 297 573 Low-energy house with heat pump...... 154 136 257 185 229 407

Houston “1973” house with electric furnace...... 294 129 328 204 273 556 “1976” house with electric furnace...... 271 128 315 199 264 530 “1976” house with heat pump ...... 261 150 331 218 282 541 Low-energy house . . . . . 161 123 248 173 219 403

aprimaw ~nerqY ~On~umption is Computed assumina that overall conversion, transmission, and distribution efficiency fOr electricity is 0.29 and that processing transm”ission~and distribution of natural gas is perfor-med with an efficiency of 0.89 bGas prices in $/h.frd Btu and electricity in dkWh.

Table 18.— Levelized Monthly Energy Cost in Dollars for Energy Price Ranges Shown (Gas heated houses)

b Primary energy Price range 1976-2000 in 1976 dollars consumption Gas: 1.08 - 1.08-2.40 1.08-3.52 3.22 3.22-7.03 3.22-10.60 Gas-heated houses (MMBtu) Electricity: 2.5 2.5-3.6 2.5-8.2 4.4 4.4-6.4 4.4-14.4

Chicago “1973” house ...... 311 111 160 272 204 323 553 “1976” house ...... 277 111 155 261 193 298 511 Low-energy house . . . . . 168 117 144 232 168 225 387

Baltimore “1973” house ...... 271 106 148 257 188 288 507 “1976” house ...... 244 107 145 249 181 270 475 Low-energy house . . . . . 150 110 135 221 157 206 364

Houston “1973” house ...... 252 114 151 280 186 261 501 “1976’ ’house...... 240 115 150 274 184 254 484 Low-energy house . . . . . 160 117 142 238 169 217 397 aprimary energy consumption is computed assuming that overall conversion, transmission, and distribution efficiency for electricity is 0.29 and that Processing, transmission, and distribution of natural gas is performed with an efficiency of 0.89 bGas prices in $lMMBtu and electricity in ~lkwh 1 MMBtu = 1.05 GJ. 54 “ Residential Energy Conservation

ing to prices in different parts of the country. was done for the BNL fuel cost projection, and The price ranges shown at the top are those in if one used the higher price range, the invest- 1976 and in 2000, both expressed in 1976 dol- ment for minimum Iifecycle cost would be lars. Only in the case of gas-heated homes and much greater than $500 — meaning greater constant energy prices for low-priced gas energy savings. ($1.08/MMBtu) does it appear not to pay to go to the low-energy home. Thus, not only can in- Figure 14.— Lifecycle Cost Savings vs. vestment in conservation provide substantial Conservation Investment for a Gas-Heated and energy savings but also significant dolIar sav- Electrically Air-Conditioned House in Kansas City ings as well. It is interesting that heating re- = quirements for the 1976 house in Houston are so small that the added capital investment for a heat pump is not justified. It is important that although the low-energy home reduces Iifecycle costs it does not necessarily represent the combination of improvements that would have the lowest possible Ievelized monthly costs for a given set of economic assumptions. Although such a calculation has not been performed for this set of houses, one has been done for the houses mod- eled by ORNL discussed above. The ORNL cal- u o $500 $1,000 $1,500$2,000 culations show only improvements to the Investment dollars

building shell, rely on an uninsulated baseline IMMBtu = 105 glgajoule (GJ) house, and require a higher return on invest- SOURCE Paul F Hutchins, Jr., and Eric Hlrst, “Engineering-Economic Analysis ment than the OTA calculations. Figure 14 of SI ngle-Family DwelIing Thermal Performance, ” Oak Ridge National Laboratory Report ORNL/CON-35, November 1978, tables 7 and 8. shows the combined heating and cooling energy savings relative to the base case, and total costs (investment and fuel) over the life of the Although one could not reasonably expect a house plotted against the initial investment. person to go beyond the point that gives a While energy savings continue to increase as minimum Iifecycle cost (indeed, this is the investments grow, the total dollar savings point assumed in the projections discussed in reach a maximum (corresponding to minimum chapter l), additional energy savings are possi- lifecycle cost) at an investment of about $550. ble. If these savings are desirable from soci- After that the increase in investment to get ety’s point of view, then other economic incen- more energy savings grows faster than the in- tives, such as tax credits, are called for to crease in fuel cost savings. This calculation make the additional investments attractive.

TECHNICAL NOTE ON DEFINITIONS OF PERFORMANCE EFFICIENCY

At least eight different terms are used to a home installation. The Energy Policy and describe the energy efficiency of furnaces, Conservation Act (EPCA– Public Law 94-163) heat pumps, and air-conditioners, and the list as amended by the National Energy Conserva- could grow. Manufacturers have traditionally tion Act (NEPCA — Public Law 95-619) required used efficiencies based on operation under DOE to establish testing standards for the specified steady-state conditions, but there has determination of estimated annual operating been growing interest in seasonal measures costs and “at least one other measure which that would more nearly reflect performance of the Secretary determines is likely to assist con- Ch. II—Residential Energy Use and Efficiency Strategies ● 55

sumers in making purchasing decisions” for procedures37 but has also adopted the use of a heating and cooling equipment and a number seasonal energy efficiency ratio (SE E R) for cen- of appliances. Manufacturers are required to tral air-conditioners.38 The seasonal energy use these test procedures as the basis for any consumption of an air-conditioner is increased representations they make to consumers about by cycling the machine on and off since it does the energy consumption of their equipment. not operate at full efficiency for the first The test procedures developed by DOE em- minute or so after it is turned on. An offsetting phasize the use of seasonal efficiency meas- factor is provided by the increase in EER that ures. These should eventually be more useful occurs as the outdoor temperature drops. The to consumers but are likely to lead to in- seasonal energy efficiency ratio incorporates creased confusion at first. both of these effects and is defined on the basis of a typical summer use pattern involving The performance of furnaces is customarily 1,000 hours of operation, Use of the SEER described in terms of efficiency. The “steady became effective January 1,1979. state efficiency” of a furnace refers to the fraction of the chemical energy available from the A final word should be added about heat fuel (if burned under ideal conditions), which is pumps and their air-conditioning mode. The actually delivered by the furnace when it is proposed DOE standards for heat pumps de- properly adjusted and all parts of the system fine tests for the heating seasonal performance have reached operating temperature. An ac- factors (HSPF) in each of six different broadly tual home installation is seldom in perfect ad- defined climatic regions of the country. Cool- justment, heat is lost up the chimney while the ing seasonal performance may be specified by furnace is not operating, and the duct systems a cooling seasonal performance factor (CSPF) that distribute heat always have some losses or an SEER. In addition, an annual perform- unless they are completely contained within ance factor (APF) is defined as a weighted the heated space. Thus, the “seasonal system average of the HSPF and the CSPF based on efficiency” is typically much lower than the the number of heating and cooling hours in dif- steady state efficiency. DOE has developed ferent parts of the country.39 procedures for determining a seasonal effi- Since heat pumps, as their name implies, ciency, which is called the “annual fuel utiliza- pump heat into the house from outdoors, they tion efficiency. ” can provide more heat to the house than Air-conditioners “pump” heat out of the would be provided if the electricity were house and are able to remove more than a Btu “burned” in an electric heater or furnace. The of heat for each Btu of electrical input. The Coefficient of Performance (COP) is the ratio usual measure of air-conditioner performance of the heat provided by the heat pump to that has been a somewhat arbitrary measure called which would be provided by using the same the “energy efficiency ratio” or EER, which is amount of electricity i n an electric heating ele- defined to be the number of Btu of cooling ment. The COP of a heat pump decreases as provided for each watt-hour of electric input. the outdoor temperature drops, and the Air The standard conditions for determining the Conditioning and Refrigeration Institute has EER have been 800 F dry bulb and 670 F wet specified two standard rating conditions for bulb indoors and 950 F dry bulb and 750 F wet bulb outdoors.36 DOE has retained the use of the EER for room air-conditioners in its test “’’Test Procedures for Room Air Conditioners, ” Federal Register, vol. 42, 227, Nov 25, 1977, pp. 60150-7 and federal Register, vol. 43, 108, June 5, 1978, pp. 24266-9. ‘8’’Test Procedures for Central Air Conditioners, ” Federal Register, vol. 42,105, June ~, 1977, pp. 27896-7. JGAir-Conditioning and Refrigeration Institute, “Direc- “’’Proposed Rulemaking and Public Hearing Regard- tory of Certified Unitary Air-Conditioners, Unitary Heat ing Test Procedures for Central Air Conditioners In- Pumps, Sound-Rated Outdoor Unitary Equipment, and cluding Heat Pumps, ” Federal Register, vol. 44, 77, Apr. Central System Humid ifiers,” 1976 (Arlington, Va.), p. 85. 19, 1979, pp. 23468-23506. 56 “ Residential Energy Conservation

heat pump heating performance. ’” Both spe- are usually sized so that part of the heating cify indoor temperature of 700 F dry bulb and load must be met by supplementary resistance 600 F wet bulb with outdoor temperature for heat at lower temperatures, lowering the over- the “high temperature heating” condition all COP still further. A useful measure of the being 470 F dry bulb and 430 F wet bulb, and total heating performance is the “seasonal per- specifications for “low temperature” being formance factor,” which is the average COP 170 F dry bulb and 150 F wet bulb. Heat pumps over the course of the winter for a typically sized unit in a particular climate. The seasonal performance factor includes the effects of sup- 40 Air-Conditioning and Refrigeration Institute, op. cit., plementary resistance heating and cycling but pp. 8,85. does not include any duct losses.

Table 19.—Structural and Energy Consumption Parameters for the Base 1973 Single-Family Detached Residence ———

Structural parameters: Patio door(s): Type Aluminum, sliding Basic house design 3-bedroom rancher, one story, 8-ft Glazing Double stories. Area, ft2 40 Sq. ft. Foundation Full basement, poured concrete. Construction Wood frame, 2x4 studs 16“ on ctr. Energy consumption parameters:a Exterior walls: Composition Brick vener, 4" ½" insulation board Energy consuming equipment: 3½” fiberglass batts Heating system Gas, forced air ½" gypsum board Cooling system Electric, forced air Hot water heater Gas (270 therms/year) Wall framing area, ft2 203 sq. ft. Cooking range/oven Electric (1 200 kWh/year) Clothes dryer Electric (990 kWh/year) Total wall area, ft2 935 Sq. ft. Refrigerator/freezer Electric (1 830 kWh/year) Lights Electric-incandescent Roof: (21 40 kWh/year) Type Gable Color TV Electric (500 kWh/year) Composition Asphalt shingles, 3/8” plywood Furnace fan Electric (394 kWh/year) sheating, air space, 6“ fibreglass Dishwasher Electric (363 kWh/year) loose-fill insulation, ½” gypsum Clothes washer Electric (103 kWh/year) board Iron Electric (144 kWh/year) Coffee maker Electric (106 kWh/year) Roof framing area, ft2 78 sq. ft. Miscellaneous Electric (900 kWh/year)

Total roof area, ft2 1,200 Sq. ft.

Floor: 2 Total floor area, ft 1,200 Sq. ft. Heating/cooling load parameters:

Windows: People per unit Two adults, two children Type Double hung, wood Glazing Single Typical weather year 2 5 yr. average (1 970-75) Area, ft 105 Sq. ft. Monthly heating degree days b Exterior doors: Monthly cooling degree Type Wood frame days b Number Two Monthly discomfort 2 Area, ft 40 Sq. ft. cooling indexb ————— aFigure~ ~h~~n in parentheses represent energy input to Structure for each aPPliance. b~ependent On IOCdiOn. SOURCE: Hittman Associates, Inc., “Development of Residential Buildings Energy Conservation Research, Development, and Demonstration,” HIT-681, performed under ERDA Contract No. EX-76-C-01-21 13, August 1977, p. III-4.

Ch.!!– Residential Energy Use and Efficiency Strategies ● 57 . .

Table 20.—Specifications and Disaggregate Loads for “1973” Single-Family Detached Residence

‘Therm = 1 x Btu = 106 megajoule (MJ)

SOURCE: Hlttman Associates, Inc “Development of Residential Energy Research Development, and Demonstration Strategies, ” HIT-681, performed under ERDA Contract No EX-76-C-01-21 13, August 1977 p IV 9

58 . Residential Energy Conservation —

Table 21 .—Specifications and Disaggregated Loads for “1976” Single-Family Detached Residence

“Therm = 1 x 105 Btu = 106 megajoule (MJ)

SOURCE: Hittman Associates, Inc., “Development of Residential Buildings Energy Research, Development, and Demonstration Strategies,” HIT-681, performed under ERDA Contract No EX-76-C-01-2113, August 1977, p IV-9

Ch. II--Residential Energy Use and Efficiency Strategies ● 59

Table 22.—Specific etached Residence

“Therm = 1 x 105 Btu = 106 megajoule (MJ)

SOURCE Hittman Associates, lnc. “Development of Residential Research Development and Demonstration Strategies, ” HIT-681 performed under ERDA Contract No EX 76-C-01 -2113, August 1977 p

60 • Residential Energy Conservation . —.— —

Table 23.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and HVAC Equipment for Houses in Houston, Tex. (in MM Btu*)

consumption IS computed assure ng that overal I Conversion efficiency for electricity IS O 29 and that and of natural gas has an r? of O 89 bTh I on the electricity used t hot heat Pum P hot IV I heat recovery from the heat pump which heats and cools the house s the gas by the hot heater hot water IS provided b very from the alr-conditioner ‘1 MMBtu = 105 (GJ)

Ch.II--Residential Energy Use and Efficiency Strategies ● 61 — . .

Table 24.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and HVAC Equipment for Houses in Baltimore, Md. (in MM Btu*)

efficiency for IS and that processing, and of natural gas has an efficiency of O 89 figure only the hot water heat provided by heat recovery from the pump which heats and cools the house

figure the hot heater hot water j heat recovery from the air-conditioner = 105 (GJ) 62 ● Residential Energy Conservation — —.—— . —

Table 25.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and HVAC Equipment for Houses in Chicago, Ill. (in MM Btu*)

aprlmary energy ~on~umpt Ion Is computed asf f If ncy of O 89

bThls flgure ,nclud~~ only the electricity USerj ~ f ‘h’ ~1 1, A ~t~c heat pump Some hot wate t< I rI )V d( t ‘ I ~ heat recovery from the heat pump which heats and cools the house

cTh ,s figure in~(udes only the gas used by the hot ~ ~fer heater Some hot water IS prov(ded t ! hear r,+ {very from the alr-cond itloner ‘1 MMBtu = 105 glgajoule (GJ) * Chapter III-- CONSUMER

Page Lack of Reinforcement ...... 68 Disparity of Effects and Opportunities by Income Groups ...... , . 68 Conflicts Between Conservation and Other Coals...... , ...... 69 Distrust of Information Providers and Disbelief in Reality of Shortages 70 Lack of Specific Knowledge About How to Conserve ...... 70 Faith in “American Technological Know-How” to Solve the Energy Problem ...... 71 Consumers and the Building Industry ...... 71 Consumer Behavior and Energy Conservation in Home Operation . 73 Conclusions ...... 74

TABLES

26. Homebuyers Willing to Spend $600 or More at Outset to Save $100 or More Annually on Energy, by Family Income and House Price Range ...... 72 27. Percent of Homebuyers Desiring Energy-Saving Features in Five Major Housing Markets, 1978 ...... 73 Chapter Ill THE CONSUMER

Americans want to own their homes. Few social phenomena have been more influential in shaping present-day American society than this strong and widespread desire for a home — particularly for a detached single-family home— that has swept the country since World War 11. The result has been a profound impact on land use, transportation, community development, family life, and many other areas. Our present concern, however, is with the rapid growth in residential energy consumption that has accompanied the growth in household formation, population, and homeownership. Energy use in the home accounts for approximately 20 percent of our total energy use, and of that amount, about 60 percent is used for heating and cooling. Residential energy use grew about twice as fast as the number of households between 1950 and 1970, reflecting the increase in use within each household. Household consumption of fossil fuels and electricity grew from 7 quadrillion Btu* in 1950 to 16 quadrillion Btu in 1974; with the number of households increasing from 43 million to 70 million, this represents an increase of 65 MMBtu per household between 1950 and 1974.

The relationships between homeowners and consumer tastes have generally failed to catch other housing decisionmakers such as lenders, on and left builders with financial losses. Con- builders, architects, manufacturers of building sumers appear to be conservative in their hous- supplies, and contractors for heating and cooling tastes, resisting radical changes in the ing equipment installation, are very complex. design, comfort, or space of a home. The ma- No single group determines the ultimate ener- jor trade associations and publications of the gy consumption in a home. It is clear, however, building industry spend considerable time and that consumers are in control of a significant money surveying the attitudes and preferences portion of the decisions that affect consump- of buyers, with the result that builders, too, are tion directly or indirectly. Homeowners pay often conservative about major innovations the utility and fuel bills and adjust their con- that affect buyer perceptions. Efforts to lead, suming behavior when prices rise. They main- rather than follow, consumer tastes have not tain the heating and cooling equipment in their always succeeded. For example, the recent homes. They control thermostat settings and movement to buiId “no frilIs” housing in an at- window and door openings, and they choose tempt to bring families of modest means into appliances. They make— or fail to make— in- the new home market is now considered a fail- vestments to improve the energy efficiency of ure by the building industry. It appears that their homes, through structural or equipment buyers would rather wait a year or two longer, changes. In short, within the very real limits of if necessary, to buy the kind of house they real- finances, technical capabilities, and comfort, ly want–one with amenities such as a fire- they control the operational aspects of home place, a family room, a garage, and an extra energy consumption. bathroom. In a less well-recognized area, home con- In light of the rapid turnover of houses in the sumers affect residential energy use levels current-day real estate market, some of this through their influence on the homebuilding buyer conservatism can be attributed to pur- industry. There is evidence that builders ignore chasers’ concern with resale value. Homeown- consumer preferences at their peril, for at- ership represents the single largest financial in- tempted innovations that have run counter to vestment made by most families, and its attendant risks can be minimized by investing in *One Btu is equivalent to 1 kW-per-second or 1 kilo- “safe” properties— those with the largest ap- joule. peal. If the buyer decides to invest in extras, he

65 66 . Residential Energy Conservation wants to be sure that value will be easily ack- mistrust both Government and industry—es- nowledged by potential future buyers. pecially the oil industry–as sources of information about energy issues. This concern about resale values has implications for decisions about energy-conserving One major study by Jeffrey S. Milstein, of features. Until recently, homeowners would the Department of Energy’s (DOE) Office of undoubtedly have been correct in deciding Conservation and Solar Applications, indicates that extra insulation was not a feature likely to that although a majority of Americans in 1977 “turn on” later buyers. Now, however, with ris- did not believe that fuel shortages were real, ing energy prices and occasional spot short- an even larger majority did believe it was im- ages of some fuels, prospective buyers have portant to conserve energy.2 More than one- begun to demand information about utility half of the respondents in Milstein’s national costs, and to insist on more efficient houses. survey believed that fuel shortages were artificial, but 50 percent said the need to con- It is important to bear in mind, however, serve energy was “very serious” and another 33 that energy is only one of several items about percent believed it was “somewhat serious. ” which consumers are concerned. Efforts to Perhaps consumers find it important to con- conserve energy through design or construc- serve because of high energy costs rather than tion methods often conflict with other val- because energy shortages require it. ues–for example, the desire to take advantage of a fine view by installing large amounts Unfortunately, most consumer studies re- of north-facing glass. In determining which veal that even when the energy crisis is per- energy-conserving technologies will be attrac- ceived and accepted as real, this attitude does tive to consumers, builders and policy makers not necessarily lead to conservation behavior. need to keep these conflicting values in mind. Marvin E. Olsen of the Battelle Human Affairs Research Center concluded from his surveys Just as important as consumer attitudes that “with only a few minor exceptions, all the toward housing are their attitudes toward the research conducted thus far has found little or energy problem generally, and toward its no relationship between belief in the reality or causes, effects, and remedies as these relate to seriousness of the energy problem and any ac- their own lives. Social scientists have carried tual conserving behavior.”3 However, Olsen out considerable research on consumer atti- points out that consumers’ belief in the seri- tudes and behavior. ousness of energy problems may make them Many studies have been collected and ana- more accepting of Government policies requir- lyzed by Sally Cook Lopreato and her col- ing conservation. leagues at the University of Texas Center for A number of factors appear to contribute to Energy Studies. ’ Several of these studies indi- consumer inaction: a lack of practical knowl- cate that many consumers have serious doubts edge about what to do; a lack of sense of per- about the severity of our energy problem, and sonal involvement in the problem, a “them are more concerned about issues like inflation, first” approach to potential sacrifices, and a crime, and unemployment. Most people do not confIict with other personal goals such as com- share the official views of either Government fort and convenience. Not surprisingly, when or business regarding the causes of the prob- queried about their willingness to undertake lem. In fact, it appears that most consumers specific conservation measures, consumers indicate their highest levels of support for the ‘Compilations and analyses by Lopreato et al. are found in Sally Cook Lopreato and Marian Wossum Meri- 2Jeff rey Milstein, “How Consumers Feel About Energy: wether, “Energy Attitudinal Surveys: Summary, Annota- Attitudes and Behavior During the Winter and Spring of tions, Research Recommendations” (unpublished: 1976), 1976-1977” (unpublished: 1977). and in William H. Cunningham and Sally Cook Lopreato, 3Marvin E. Olsen, “Public Acceptance of Energy Con- Snergy Use and Conservation Incentives: A Stucfy of the servation, ” in Seymour Warkov, Energy Policy in the Southwestern Unitecf States (New York: Praeger Publish- United States: Social and Behavioral Dimensions, pp. ers, 1977). 91-109. Ch. Ill—The Consumer ● 67 easiest measures (like turning out lights), and “conserving energy saves money.”7 The Gal I up lowest support for measures that call for major Organization, in conducting a series of group changes in lifestyles. Governmental and discussions on energy during 1976 for the media-oriented public relations efforts, using Federal Energy Administration (FEA) (now part catchy slogans such as “Don’t Be Fuelish,” ap- of DOE), found widespread agreement that pear to result in passive responses (“Something monetary incentives are the critical conserva- should be done . . .“ ) rather than active ones tion motivator.8 A Texas study reached the (“1 will do the following . . ").4 same conclusion after surveying about 800 households before and after the oil embargo.9 Studies also show that consumers often de- ceive themselves (and policy makers) about Adding insulation is the most widely docu- conservation steps they claim to be taking or mented conservation action taken by cost-con- be willing to take. For example, the Gallup Or- scious consumers. About 80 percent of U.S. ganization sampled households nationwide in households were found to be insulated to February 1977 and found that the average tem- some extent in Milstein’s 1977 survey— up from 70 percent in 1976 and 62 percent in 1975. perature at which consumers said they set their home thermostats was 66° F during the day A Gallup survey conducted in January 1978 and 640 F at night. But pollsters for Gallup and found that 17 percent of those surveyed had for Louis Harris who actually measured tem- added some attic or crawl-space insulation peratures of homes 1 month later found aver- and 11 percent had added wall insulation in age temperatures were 700 F (plus or minus 20, the previous 12 months; less than one-third of during the day and 690 F (plus or minus 20, at the Gallup respondents had failed to take ac- night. Reflecting on this finding, Milstein con- tion to improve the energy efficiency of their cludes that the discrepancy “indicates a feel- houses in 1977. ’0 ing on the part of people that they ought to Studies suggest a wide variety of reasons for have lower temperatures.” He also notes that some consumers’ failure to take conservation 5 many thermostats may be miscalibrated. actions, including: 1 ) lack of social pressure or reinforcement for conserving behavior; 2) dis- Many consumer studies indicate that the parity in effects of the energy problem, as well prospect of real cost savings is the most effec- as in opportunities to conserve, among differ- tive factor in moving people to conserve ener- ent income groups; 3) conflicts between con- gy in their personal lives. Other motives, such servation objectives and other goals such as as altruistic concerns about the Nation’s future comfort, convenience, and “fairness;” 4) dis- energy supply, independence from OPEC car- trust of information providers and disbelief tel manipulation, or the quality of the environ- that shortages are “real;” 5) lack of practical ment are less successful in generating conser- b knowledge about how to conserve; 6) compla- vation action. cency caused by faith in a technical solution W. B. Doner, Inc., determined in a study to future energy supply problems. done for the Michigan Department of Com- ‘W. B. Doner, Inc. and Market Opinion Research, merce that among Michigan consumers the “Consumer Study– Energy Crisis Attitudes and Aware- ness” (Lansing, Mich.: Michigan Department of Com- single most powerfuI motivator for conserva- merce, 1975), cited in Cunningham and Lopreato, op. cit., tion is represented by the statement that p. 130. 8Gaiiup Organization, Inc., “Croup Discussions Re- garding Consumer Energy Conservation” (Washington, D. C.: Federal Energy Administration, 1974), cited in Cun- ningham and Lopreato, pp. 131-132. ‘Kenneth Novic and Peter Sandman, “How Use of ‘David Gottlieb, Socia/ Dimensions of the Energy Crisis Mass Media Affects Views on Solutions to Environmen- (Austin, Tex.: State of Texas Governor’s Energy Advisory tal Problems,” journalism Quarterly, vol. 51, no. 3, pp. Council, 1974), cited in Cunningham and Lopreato, pp. 448-452, cited in Cunningham and Lopreato, op. cit., p. 22 134-135. and p. 29. sMi Istein, op. cit., p. 5 ‘°Ca[lup Organization, Inc., “A Survey of Homeown- “ ers Concerning Home Insulation” (Washington, D. C.: U.S. ‘Cunningham and Lopreato, op. cit., p. 20. Department of Energy, 1978). 68 ● Residential Energy Conservation

LACK OF REINFORCEMENT

Robert Leik and Anita Kolman of the Minne- and conservation can enhance people’s efforts sota Family Study Center maintain in a 1975 to conserve. Summertime electricity consump- paper that social pressure could serve to rein- tion among households studied was reduced force conservation behavior. Without a strong by 10.5 percent when people were provided national ethic to conserve energy, little or no with almost daily feedback on their consump- social pressure for conservation exists. Conse- tion performance and were exhorted to con- quently, consumers rely almost exclusively on serve. In a separate study, residents given a economic reinforcement. However, Leik and goal of a 20-percent reduction in electricity Kolman maintain that much of the potential use actually cut back by 13 percent when pro- for economic reinforcement is lost because vided with frequent feedback. In still a third consumers pay for energy not as they use it but experiment, use of a light that flashed when- monthly or even less often. Also, because bills ever cooling could be achieved through open are usually paid by one member of a house- windows rather than air-conditioners led peo- hold, other members are not aware of econom- ple to conserve 15.7 percent of their electrici- ic savings or penalties unless informed by the ty. While these were relatively short-term ex- person who pays the bill. ’ periments (3 to 4 weeks), they do suggest that frequent feedback to the consumer could pro- Field studies conducted at Twin Rivers, N. J., vide substantial savings of energy. 2 revealed that feedback about consumption ‘ 2 Clive Seligman, John M. Darley, and Lawrence J. Becker, “Behavioral Approaches to Residential Energy “Robert Leik and Anita Kolman, “Isn’t It More Ra- Conservation,” Energy and Bui/dings, April 1978, pp. tional to be Wasteful ?,” in Warkov, op. cit., pp. 148-163. 325-337.

DISPARITY OF EFFECTS AND OPPORTUNITIES BY INCOME GROUPS

A 1975 Ford Foundation study, since con- household energy users varied sharply by in- firmed by several other consumer surveys, come group. Upper income households in- found that household energy use (including creased consumption despite rising prices; the transportation) rises with income and that the small impact on total household budgets was largest gaps in consumption between income not sufficient motivation for most to conserve. groups are accounted for by elective or luxury Lower income households showed very little uses. At the same time, the percentage of change in consumption because, the research- household income that is used for energy ers concluded, they are already at the mini- drops sharply as income rises. While the poor mum consumption level they can manage for spent 15.2 percent of their household income reasonable comfort in homes that lack ade- on direct energy use in 1972-73, the more af- quate insulation and efficient appliances. fluent spent only 4.1 percent. This means that Only among middle-income families were con- while lower income households have the great- sumption declines widespread in response to est need to conserve, they also suffer from a price increases. The authors conclude that the lack of opportunities to do so. There is very lit- middle-income group offers the greatest po- tle fat in the poor family’s energy budget. ’3 tential for conservation, since this group has both a margin for conserving and economic in- An Austin, Tex., study found that short-term centive to do so. 4 response to electricity price increases among “Nolan E. Walker and E. Linn Draper, “The Effects of ‘3 Dorothy K. Newman and Dawn Day, The American Electricity Price Increases on Residential Usage by Three Energy Consumer: A Report to the Energy Po/icy Project Economic Groups: A Case Study,” Texas Nuc/ear Power of the Ford Foundation (Cambridge, Mass.: Ballinger Pub- Po/icies 5 (Austin, Tex.: University of Texas Center for lishing Company, 1975), cited in Cunningham and Lopre- Energy Studies, 1975), cited in Cunningham and Lo- ato, pp. 145-146. preato, pp. 155-156. Ch. Ill—The Consumer b 69

CONFLICTS BETWEEN CONSERVATION AND OTHER GOALS

A number of studies suggest that the energy sick or elderly people in the house. In the Twin crisis—at least at recent levels of severity— is Rivers study, concern with health and comfort not a sufficient incentive to deter consumers correlated closely with levels of summer ener- from their pursuit of comfortable lifestyles. gy consumption; the stronger the respondent’s Participants in the Gallup Organization’s 1976 perception that energy conservation led to group discussions on energy represented a discomfort and illness, the greater was his cross-section of consumers, varying by income, energy consumption. The Twin Rivers research- education, place and type of residence, age, ers also found that participants who believed and sex. Summarizing the attitudes Gallup dis- that the effort involved in saving energy was cerned regarding Iifestyles, values, and conser- too great for the cost savings achieved —for vation, Cunningham and Lopreato wrote: example, that it was too much trouble to turn off the air-conditioner and open the windows Participants hear ‘Deny yourself’ as the im- plicit theme in most conservation communica- whenever it got cool enough outside— also tions and are answering with ‘1 have earned the had higher consumption levels. The third sig- right to indulge’ . . Convenience and imme- nificant predictor of energy consumption diate gratification are primary goals, limited found in the Twin Rivers research was the per- only by financial pressure. Saving energy when ception that the actions of individual home- it is ‘convenient’ provides a sense of contrib- owners could have only a negligible effect on uting and helps relieve guiIt.15 national energy consumption. 7 This factor of “convenience” does appear to Milstein’s respondents believed strongly that limit personal support for conservation meas- conservation policies must be “fair” to be ac- ures and actual conservation behavior. An Illi- ceptable. Sometimes, this concern with equity nois survey found that consumers, both before appeared to lead to support for contradictory and after the embargo and accompanying policies. For example, only 30 percent believed price increases, placed “high value emphasis that “consumers have the right to use as much on privacy, autonomy, and mobility.” The energy as they want to and can afford to, ” and researchers conclude that conservation cam- only 10 percent believed that “people should paigns affecting “deeper lifestyles” cannot be allowed to drive their cars and heat their succeed at present. ’b The fact that consumers homes as much as they want to even if we all value convenience and comfort, plus the fact become dependent on foreign countries.” that energy costs are still a small portion of the While these attitudes might suggest support cost of operating a home, indicates that prices for a strong regulatory approach, the same may need to rise much more dramatically respondents overwhelmingly believed that the before they will outweigh these competing best way to get people to save energy is by “en- values. couraging voluntary conservation” (70 per- Family welfare was also mentioned often by cent) rather than “passing and enforcing laws” consumers as a reason for not conserving. (20 percent). Nor did Milstein’s participants When Milstein asked certain consumers why favor a free-market approach: 70 percent they had not turned down their thermostats, agreed with the statement that “raising [the] price of fuel is not fair, because rich people many mentioned that their families would be 8 uncomfortable or that there were babies or wiII use all they want anyway.’”

‘Cunningham and Lopreato, p. 132. “Stanley E. Hyland, et al., The East Urbana Energy Study, 1972-1974: Instrument Development, Methodo- logical Assessment, and Base Data (Champaign, Ill.: Univ- ersity of Illinois College of Engineering, 1975), cited in ‘7 Milstein, op. cit., p. 5 Cunningham and Lopreato, p. 141. ‘81 bid., pp. 12-13. 70 . Residential Energy Conservation

DISTRUST OF INFORMATION PROVIDERS AND DISBELIEF IN REALITY OF SHORTAGES

In February 1977, a month with widespread A number of other studies also found that natural gas shortages, three-fifths of the con- consumers blame the energy problem on oil sumers in Milstein’s national sample believed companies, utilities, “big business,” and Gov- that fuel shortages were “real. ” By March, ernment. In one public opinion survey, re- however, fewer than half the sampled popula- spondents blamed “oil company actions” and tion thought so; this percentage has been con- “Government favoritism to the companies” sistent most of the time since the end of the most for fuel shortages, but also placed some Arab oil embargo. One-third of Milstein’s re- blame on “wasteful energy consumption. ” spondents said they believed shortages are Very few believed the world was running out contrived by vested interests for economic or of fossil fuel. z’ Nine out of ten in Milstein’s political gain. ’9 1977 survey agreed with the statement that the Government should investigate oil and natural The National Opinion Research Center at gas companies to make sure they do not hold the University of Chicago found in a year-long 22 back production. series of weekly surveys that consumers held a widespread belief that the Federal Govern- ment and the oil industry—two major sources of advertising campaigns urging conservation —were actually responsible for the energy crisis through mismanagement and/or design. 20 “Gordon L. Bultena, Pub/ic Response to the Energy ‘gIbid., p. 5. Crisis: A Study of Citizens’ Attitudes and Adaptive /3ef-tav- ‘“James Murray, et al., “Evolution of Public Response iors (Ames, Iowa: lowa State University, 1976), cited in to the Energy Crisis,” Science 184:257-63, cited in Cun- Cunningham and Lopreato, pp. 124-125. ningham and Lopreato, pp. 144-145. 22 Milstein, op. cit., p. 12.

LACK OF SPECIFIC KNOWLEDGE ABOUT HOW TO CONSERVE

Adding to this general mistrust of govern- though Milstein’s 1977 survey found that 20 mental and business advocates of conserva- percent of all homes had no insulation at all tion is the disincentive created by lack of con- and many more were inadequately insulated. sumer understanding about how to save ener- Consumers do know that lowering thermostats gy. Milstein found that 36 percent of the re- saves energy and money, but MiIstein found in spondents to a 1976 survey did not know that 1977 that half the public believed that thermo- lower wattage light bulbs use less electricity, stats must be turned down 50 or more to save and 59 percent thought that leaving a light energy. 24 burning used less energy than switching it on Government efforts to help consumers de- and off as needed. Although water-heating is termine savings potential and to provide prac- the second largest energy-consuming activity tical “how to” information have either been in the home (after heating and cooling), only 42 too complex or not been made widely avail- percent knew where to find their water heater able, owing to funding problems. The informa- controls or how to set them. Only 13 percent of tion problem is particularly challenging be- respondents to the 1976 survey believed their 23 cause of regional variations in prices, heating houses needed additional insulation, al- requirements, and fuel mixes, as well as infi- 23jeffrey S. Milstein, Attitudes, Knowledge and nite variations in the thermal characteristics of Behavior of American Consumers Regarding Energy con- the current housing stock. servation With Some Implications for Governmental Ac- tion (Washington, D. C.: Federal Energy Administration, October 1976), p. 6. Z4Mi Istein, How Consumers Feel (1977), P. 5. Ch. IlI—The Consumer ● 71

FAITH IN “AMERICAN TECHNOLOGICAL KNOW-HOW” TO SOLVE THE ENERGY PROBLEM

Americans are proud of the Nation’s techno- Bultena found consumers favoring “technological achievements, especially in producing logical solutions” much more strongly than “modern conveniences” and in glamorous ac- policies to reduce demand or promote effi- complishments such as putting men on the ciency. 26 This optimistic view may dampen moon. A 1975 study by Angell and Associates consumers’ motivation to conserve, as it found respondents optimistic about prospects places the burden of a remedy on others, spe- for solving the energy problem through Ameri- cifically the U.S. scientific community. can technological “know-how.”25 Similarly, ZsAngell and Associates, Inc., A Qualitative StuCfY of Consumer Att;tu~es Towarcf Energy Conservation (Chica- go, Ill.: Bee Angell and Associates, 1975), cited in Cun- ningham and Lopreato, pp. 121-122. 2’Bultena, op. cit.

CONSUMERS AND THE BUILDING INDUSTRY

The preceding discussion focused on con- aware of energy considerations as part of the sumer attitudes and behavior relative to the choice process, and are expressing willingness overalI energy problem and to conservation in to alter their buying habits somewhat to particular. It is appropriate now to turn to the realize cost savings in energy .27 area of the consumer’s role in the energy con- It has become commonplace to argue that servation aspects of decision making on hous- builders and buyers alike tend to look only at ing. first costs and ignore lifecycle costs when de- As noted earlier in this chapter, families pur- termining what features to include in a house. chasing new homes typically make a series of The Professional Builder survey suggests that judgments and comparisons, weighing such this may no longer be the case when it comes factors as attractiveness, size, location, con- to energy conservation. venience, comfort, and — not insignificantly— In querying families currently in the market affordability. Since very few homes are likely for newly constructed homes, Professional to be regarded as one’s dream house, buyers Builder asked this question in 1975,1976,1977, must weigh the pluses and minuses of each and 1978: potential choice. What role does energy conservation play in Suppose you were interested in a new home and a builder told you that by spending $600 these choices? Until recently, it would have more at the time of construction, he could cut been safe to say little or none. The presence of your heating and cooling bills by $100 per a fireplace, a family room, wall-to-wall carpet- year. What would be your reaction? ing, a picture window, a powder room —factors like these, along with external attractions In answering the question, respondents were such as convenience to schools, shopping, and given four choices: transportation dominated the choice of a new 1. I would spend the additional $600. home. Indeed, these factors remain very important in buyers’ perceptions. But a 4-year “Data from the Profession/ Builder Annual Consum- series of surveys conducted by Professional er/Builder Surveys of Housing can be found in the following issues of the magazine: 1975 data, January 1976; 1976 Builder magazine suggests that families enter- data, January 1977; 1977 data, December 1977; and 1978 ing the market for new homes are increasingly data, December 1978. 72 ● Residential Energy Conservation

2. I’d be willing to spend even more to save Table 26.—Percent of Potential Homebuyers Willing more. to Spend $600 or More at Outset to Save $100 or More Annually on Energy, by Family Income and 3. I would not spend the $600 because the House Price Range savings take too long to recover. 4. I would not spend the $600 because the 1975 data 1976 data savings are not believable. By family income Less than $15,000 ...... 89.2 87.9 Results were tabulated according to type of $15,000-$ 19,000. .., ...... 89.7 89.2 home sought (detached single-family, attached $20,000 or more...... 89.1 92.3 single-family, or multifamily), economic status By house price range (measured by family income and by price Under $25,000 ...... 90.2 88.8 range of home to be purchased), and geograph- $25,000-$34,999 ...... 90.8 90.1 $35,000-$44,999! ...... 88.9 85.5 ic region. The results, described below, suggest $45,000-$54,999 ...... 84.6 84.1 that buyer attitudes are not an impediment to $55,000-$64,000 ...... 90.6” 94.7 energy conservation, even when long-range $65,000 or more...... — 95.5 conservation requires an increased initial in- ‘1975 data available only as “$55,000 or more.” SOURCE: Statistical data on Professional Builder survey provided to OTA by vestment. Cahners Publishing Company. 1977 and 1978 data not available by income group and house price range. Among 248 potential buyers of single-family homes in 1975, 80.5 percent expressed their seriously in the future. Told that solar space willingness to spend $600 to realize an annual heating might cost them $7,000 in additional saving of $100 in energy costs, and another 8.8 first costs but could reduce fuel bills by 30 to percent said they would spend even more if 70 percent, only 8.4 percent of respondents the saving would be increased as well. In 1976, said they would purchase the solar option; the percentage willing to spend $600 or more another 35.6 percent indicated they would remained nearly constant (89.1 percent), but of consider purchasing it; 35.1 percent would not that fraction, a larger group than before (1 5.1 do so now but might in the future; and 20.4 percent of the total sample of 596) expressed a percent said a flat no to solar heat. Consumers willingness to pay even more than $600 for a were also asked to consider a solar water heat- greater annual saving. In 1977, 93.2 percent of ing system that would cost $1,200 and save be- respondents were willing to spend $600 or tween 50 and 80 percent of water heating more to save $100 or more in annual energy costs. Among those responding, 7.1 percent in- costs. In 1978, the fraction of willing energy dicated they would purchase the system; 37.7 savers returned to its 1975-76 level of 89 per- percent would consider the option; 39.5 percent. cent might do so later; and 14.0 percent would not be interested, period. It is particularly interesting to note that this willingness on the part of new-home consum- Looking at six major housing markets in ers to increase their first costs to save money mid-1 978, l-lousing magazine surveyed buyers on energy over the long run can be found in to learn what energy-saving options (among similar percentage of every income group and other housing choices) they wanted in the every house price-range group. This is shown in homes they would purchase. Costs for the op- table 26. tions varied from city to city; in showing the results in table 27, cost ranges are provided. In its 1977 survey, Professional Builder asked potential buyers whether they would purchase, Given the complex interplay between build- or consider purchasing either now or in the ers and buyers in determining what features future, solar heating and water heating sys- and designs will be included in new homes, it is tems in order to reduce their fuel bills. The re- useful to look not only at buyers’ opinions, but sults indicate that solar is an idea whose time also at builders’ perceptions of buyers’ opi- has not yet come, in terms of public accept- nions. Builders remain the primary decision- ability, but that homebuyers are keeping an makers in new construction, but their decisions open mind and might well consider solar more refIect what they find to be the dominant char- Ch. Ill—The Consumer ● 73

Table 27.—Percent of Homebuyers Desiring Energy-Saving Features in Five* Major Housing Markets, 1978

Market area Energy-saving feature Cost range Wash., D.C. Miami Chicago San Fran. San Diego Upgraded insulation...... $500-1,500 97 88 95 95 83 Double-glazed windows. . . . . $750-2,000 91 70 86 68 34 Solar water heater...... $1,800-2,000 34 58 25 41 36 Solar space and water ...... $7,000-13,000 32 48 21 42 24

“Phoenix, surveyed only with regard to upgraded insulation, is excluded from the table. SOURCE: “What Home Shoppers Seek in Six Major Markets,” Housing, October 1978.

acteristics of market demand. In early 1978, or “very important, vital to buying decision” Professional Builder asked housing contrac- (44 percent). Given this overwhelming evi- tors, “How important is energy conservation to dence, it is safe to say that purchasers of new your customer?” Ninety-seven percent said it housing are indeed energy-conscious, and that was either “somewhat important” (53 percent) builders are sensitive to this concern.

CONSUMER BEHAVIOR AND ENERGY CONSERVATION IN HOME OPERATION

Does consumer behavior really make a sig- Even more dramatic are certain observa- nificant difference in energy consumption? If tions about variable energy use levels in not, consumers will have Iittle incentive to cut houses of similar or identical design. Wybe back. But if so—and if the answer is measur- observed two houses, built by the same con- able in dollars and cents — a residential energy tractor, which were expected to have identical conservation campaign will find a receptive thermal characteristics. One used 2.2 times as audience. much heat and 75 percent more total energy than the other.28 Jay McGrew observed in a re- Data on the direct impact of behavior on lated analysis that the occupants’ knowledge energy consumption have only recently be- of proper energy management was generally come available—and the early returns, based more important in achieving low energy con- on utility bills and other records, along with sumption than the quality of the construc- the experience of fuel suppliers— indicate that tion. 29 the way a home is used makes a substantial difference in how much energy is used. There Princeton University researchers found simi- are savings to be had — and while they will not, lar evidence in the Twin Rivers Project. In a in the long run, compare with the vast savings sample of nine identically constructed town- derived from a house designed to save houses, each with similar orientation, con- energy—the savings are real and can play a sumption of gas for heating varied by as much large role in reducing energy use in existing as a factor of 2 to 1. When occupants changed, housing. gas consumption also changed. In the nine townhouses where gas consumption was moni- Thermostat and air-conditioner settings are tored from 1972-76, one house moved from the an obvious example. The use of hot water can highest consumer (1975) to the lowest consum- be a major energy drain. Opening or closing shades and curtains, using natural or mechanical ventilation, opening and closing doors, 2’Wybe J. van der Meer, “Energy Conservative Housing for New Mexico,” report 76-163, prepared for the New leaving windows open at night–all these and Mexico Energy Resources Board, 1977, p. 19. other choices combine to affect the total ener- *’Jay McGrew, President, Applied Science and Engi- gy consumption for any given family. neering, Inc., private communication. 74 ● Residential Energy Conservation er (1976) when occupancy changed, dropping Although it is clear that the way people live almost 50 percent. When these nine houses is important in residential energy consump- were retrofitted, the gas consumption of each tion, it is more difficult to determine how fell by an average of approximately 30 per- much energy could be saved by behavioral cent, but the ranking of the houses remained change, because the major determinants of essentialIy the same. 30 use are the number and age of occupants, combined with living and working patterns, Also, large savings reflecting purely behavioral

30R. H. ‘jocolOW, “The Twin Rivers program on Energy effects should drop as houses are better con- Conservation in Housing: Highlights and Conclusions,” structed and more energy sensitive from the Energy and Buildings, vol. 1, no. 3, April 1978, p. 225. beginning.

CONCLUSIONS

Using data from the large number of studies 3. Consumers are most easily motivated by that have been completed in the area of con- the prospect of monetary savings. Exhor- sumer attitudes and behavior with respect to tations about the need to reduce imports energy conservation, it is possible to state the or prevent energy-related environmental following general conclusions with policy im- problems do not move most people to plications: take conservation steps, 1. Consumer decisions on housing are com- 4. Consumers are undertaking minor adjust- plex, and it would be unrealistic to pro- ments (lights out, thermostats down) to pose energy conservation options that fail their energy-consumin practices, but are to recognize this. Homebuyers look for g displaying reluctance about major invest- many things besides energy efficiency in a ments or lifestyle changes. home. They are conservative about drastic changes in house design or in home 5. There are significant discrepancies in ac- lifestyles. There is, however, great latitude tual conservation opportunities (as well as for efficiency improvement in the struc- incentives) among different income ture and operation of the home within the groups. Low-income consumers have little confines of consumer tastes and needs. latitude to conserve, and upper income 2 Consumers are becoming more aware of families lack the financial incentive, leav- the need for conservation, but this ing conservation mostly in the hands of awareness does not necessarily lead to the middle-income householders. conservation behavior. Many consumers lack practical knowledge about how to 6. Impediments to consumer conservation accomplish conservation and harbor a include inadequate information, conflicts degree of mistrust about Government and with other goals, lack of perceived finan- industry as information sources. Much of cial reward, doubts about others’ motiva- the available technical information ap- tions and commitments, and complacen- pears to be too complicated or inaccessi- cy about forthcoming technological solu- ble for consumer use. tions Chapter IV LOW-INCOME CONSUMERS Chapter IV.– LOW-INCOME CONSUMERS

Page Introduction ...... 77 Weatherization ...... 81 Low-Income Tenants...... 83 Emergency Financial Assistance for Utility Payments...... 83 Utility Policies for the Poor and Near-Poor ...... 85 l-lousing, Energy, and the Poor...... 87

TABLES

Page 28. Consumption of Electricity and Natural Gas in U.S. Households by lncome Group, 1975...... 86 Chapter IV LOW-INCOME CONSUMERS

INTRODUCTION

Energy problems hit hardest in low-income households. About 17 percent of the U.S. population — or 35 million Americans— have incomes below 125 percent of the official poverty line, ’ and this group feels the most severe effects of inflation, unemployment, and high energy bills.2 Utility costs erode the meager budget of a low-income family. Utility costs account for 15 to 30 percent of the total available income for the low-income family,3 depending on the

‘This 17-percent figure includes approximately 25 mil- tion in poverty since then. See Statistical Abstract of the lion people whose incomes are below, and approximate- United States 1977, U.S. Bureau of the Census, 98th edi- ly 10 million people with incomes no more than 25 per- tion, Washington, D. C., 1977, table 733, p. 453. cent above, the poverty level, as based on a poverty in- 3These figures on average household expenditures for dex developed by the Social Security Administration in home fuels as a percentage of disposable income were 1964, modified by a Federal Interagency Committee in submitted by the Federal Energy Administration (FEA) to 1969, and revised in 1974. For a nonfarm family of four in the U.S. Senate’s Special Committee on Aging. The 1978, the poverty line was set at an income level of figures were taken from FEA’s Household Energy Expend- $6,200 per year. iture Model (HE EM). The H E E M data shows: Zusing Consumer price Index (C PI) data as a measure Table B.—Average Annual Household Expenditures on Home Fuels as a of inflation, gas, electricity, fuel oil, and coal costs rose Percent of Disposable Income by Age of Household Head, United States at rates 1.6 to 3.0 times the rate at which the CPI rose between 1972 and 1977. No other major CPI item had rates Household head of increase as high. under 65 65 and over Disposable income 1973 1976 1973 1976 Table A.—Consumer Prlce Index Increases, 1972-77 Less than $2,000 ..., ...... 34.1 50.1 34.5 50.7 $2,000-$5,000 ...... 10.1 15.9 10.3 15.1 Ratio of increase Increase in CPI of all items: 1972-77 to each item According to U.S. Census figures, 17.9 percent of all All items...... 55.3 — households have total incomes of $5,000 or under (1976). Food ...... 68.2 1.2 In other words, the first two brackets up to $5,000 in- Rent ...... , 33.0 .6 Home ownership...... 62.2 1.1 come correspond reasonably well to the 20 percent of Fuel oil and coal ...... 164.1 3.0 the population at poverty line or below. Thus, a range of Gas and electricity ...... 90.4 1.6 Apparel and upkeep ...... 31.1 .6 15 to 50 percent would seem to be justified. However, Transportation, public ...... , 38.1 .7 the percentages in the above tables were calculated Transportation, private...... 60.3 1.1 Medical...... 68.0 1.2 assuming the mean household incomes within each income bracket was equal to the midpoint of the bracket, i.e., that the mean household income within the less than The costs of food and medical care, for example, in- $2,000 bracket is $1,000. Given that welfare payments for creased at rates only 1.2 times greater than did the over- a single person are $177 per month or $2,124 per year, the all CPI, while the costs of rent, apparel, and public trans- number of households subsisting on $1,000 per year is portation increased at rates less great than did the over- probably very small. all CPI. (Ratios of increases in gas, electricity, fuel oil, Thus, only a small percentage of households within and coal costs from 1972-77 derived from table 770, p. that bracket are paying 50 percent of their incomes for 478. Statistical Abstract of the United States 1977.) energy. Twenty-five percent would be a more statistical- It is interesting to note the course of progress in the ly meaningful figure, giving a range of 15 to 25 percent. reduction of poverty since 1959. I n that year there were Middle-income families typically pay less for utility approximately 55 million persons below 125 percent of cost partly because most utility companies use some the poverty level, constituting about 31 percent of the variation of the declining-block rate structure; the first total population. The greatest reduction occurred in the block of energy consumed is charged the highest price, 1959-68 period, at the end of which 35.9 million persons per unit price additional increments of energy con- or 18 percent of the population, were below 125 percent sumed, the lower the average price that is paid. of the poverty level. There has been no significant reduc- (Continued)

77 78 ● Residential Energy Conservation

type of housing and the cost of different forms of energy in various parts of the country. Mid- dle-income Americans, on the other hand, spend only about 5 percent of their total available income on utility bills. Further, increases in welfare payments and other assistance tied to the Consumer Price Index have not kept up with escalating energy costs. In 1972-79, fuel oil prices rose 197.3 percent, and gas and electricity prices rose 134 and 78 percent; meanwhile, the Consumer Price Index rose only 68.6 percent.4 Hence the substantial and growing proportion of a low-income family’s budget that goes for utilities affects the family’s ability to pay for other essentials such as food, rent, and clothing. Data from crisis intervention and weatherization programs sponsored by the Community Services Administration (CSA) have shown a large number of poor families spending 40 to 50 percent of their household budgets on fuel and utility costs during the heating season.5 Some of these families face a choice between paying for food and having their utilities shut off. Low-income families lack discretionary income that they couId divert from other expenses to meet escalations in energy costs.

Nearly half (49 percent) of all low-income (Continued) households live in the Northeast and North- (See The Impact of Rising Energy Costs on Older Ameri- Central regions, where winters are cold and cans, Hearings before the Special Committee on Aging, prices for electricity and natural gas are high.6 U.S. Senate, 95th Cong., Apr. 7, 1977 (Washington, D. C.: More than half (54 percent) of all low-income U.S. Government Printing Office), stock #052-070-04230- 3), 1977, pt. 5, p. 259. families occupy single-family detached dwell- For corroborating information placing current U.S. ings, which require more energy to heat than low-income energy costs in the 15 to 25 percent of dis- apartments or rowhouses. Fifty-five percent of posable income range, also see Hollenbeck, Platt & the poor and near-poor rent their housing Boulding, An Analysis of the Effects of Energy Cost on Low-lncorne Households, table 2 submitted to the units; this tends to diminish their opportunities Bureau of Applied Analysis, Regional Impact Division, to control residential energy requirements or Department of Energy, on Apr. 6, 1978, in response to a to make conservation-related home improve- request by OTA; and Dorothy K. Hewman and Dawn ments. I n the colder Northeast, 59 percent of Day, The American Energy Consumer, ch. 5 and 7 (Cam- low-income families live in apartments, reduc- bridge, Mass.: Ballinger, 1975). ing their energy needs (relative to occupants of ‘See note 1. In 1973 (the last year for which data was available) before taxes, the poorest half of the U.S. low- free-standing homes) but also reducing their income population (those making less than $3,400 yearly) control over energy consumption. spent an average of 52.1 percent for food: an estimated 20.0 percent for rent; 21.4 percent for gas, electricity, and Forty-two percent of all low-income house- other fuels; and had 6.5 percent left for apparel, medical holds live in rural areas or in small towns. For care, and other expenditures. these 5.9 million families, home is often a Energy costs (see note 2) have risen at rates three times small, old, substandard, uninsuIated, and poor- that of other costs. Projections of energy costs for people ly heated single-family house. Only 51 percent with disposable income below the poverty line indicate that energy costs, which represented 20.5 percent of a have central heating, and 28 percent use sup- poor household’s disposable income in 1974, may repre- plementary room heaters. The large number of sent 31.8 percent by 1985 (Hollenbeck, Platt, Boulding, poor and near-poor families living outside met- op. cit., tables 2 and 8). Any little discretionary income ropolitan areas accounts for the fact that per- low-income people have will be eliminated and substitu- sons in this income group are five times as Iike- tions must be made from other cost categories, like food. (Derived from table 9.26, p. 472, Social Indicators: 1976 Iy as those in the middle and upper groups to (Washington, D. C.: U.S. Department of Commerce, 1977), use wood, kerosene, coal, or coke to heat their and communication with Eva Jacobs, Bureau of Labor homes instead of the more common oil, gas, or Statistics.) electricity. 5From testimony given by Mr. Tony Majori, Associate Director, Community Relations-Social Development ‘All statistics in this section describing energy-related Commission of Milwaukee County, Milwaukee, Wis., characteristics of low-income households are from before the U.S. House Select Committee on Aging, Sub- Eunice S. Crier, Colder. . . Darker: The Energy Crisis and committee on Housing and Consumer Interest, Sept. 26, Low-Income Americans (Washington, D. C.: Community 1978. Services Administration), #B6B5522, June 1977.

80 ● Residential Energy Conservation

About 37 percent of all low-income house- proportion of the poor and near-poor popula- holds are headed by elderly persons; converse- tion, are more susceptible than the general ly, about 37 percent of all elderly households population to health problems that are aggra- are classified as poor or near-poor. Just over vated by cold (e. g., respiratory ailments, arthri- half of these elderly low-income households tis, or hypothermia) and by heat, because their live in the Northeast and North-Central re- bodies are less able to adapt to extreme tem- gions. They tend to use more natural gas than peratures. 8 other low-income households — and to pay a higher portion of their incomes for it–while Three types of policy questions emerge: consuming much less electricity. This means ● How can it be ensured that the energy that a bigger share of the low-income elderly problems of the poor and the elderly are household’s energy use can be attributed to not overwhelming in either a financial or a space heating, the most essential use. health sense? Because low-income citi- The poor and the elderly are usually not in a zens are normally the last to move into position to lower fuel bills by reducing con- newer and more energy-efficient housing, sumption. Available data show that the aver- their proportion of residential energy con- age low-income household in 1975 used 55.4 sumption could actualIy increase over percent less electricity and 24.1 percent less time. natural gas than the average middle-income ● How can the financial hardships faced by U.S. household. In the aggregate, low-income the poor and elderly in purchasing ade- households used only 11 percent of total U.S. quate energy supplies be addressed with- residential energy, although they accounted out creating a dependency on long-term for 17 percent of population. These figures are Federal financial subsidies or relief pro- especially significant because at least 43 per- grams? How can a self-reliant approach be cent of low-income households have no insula- encouraged? tion, and 58 percent have no storm doors or ● How can low-income persons participate storm windows — factors that drive up the best in solving their energy problems, amount of home fuel use required to maintain perhaps acquiring skills and preparing minimum conditions of health and comfort. themselves for future jobs at the same Moreover, 39 percent of low-income house- time? holds have no thermostat or valve with which The questions are especially challenging to control their heat, and among low-income because policy makers face difficult choices. renters 49 percent lack such control. Given Given limited Government financial resources, these circumstances, recent increases in utility what criteria should be used to ensure that the and fuel bills severely penalize poor people neediest are reached first? How many Federal who cannot significantly cut consumption dollars should be directed toward helping poor without enduring health hazards in their households reduce energy consumption, and drafty, uninsulated homes. Similarly, lack of how many to help to pay utility and fuel bills? funds to pay for air-conditioning in hot cli- How should energy-related needs be coordi- mates has resulted in death from heat prostra- nated with other social needs such as day care tion for some low-income citizens. According centers, job training, or medical care? How to a newspaper account, the 20 persons who died from heat in Dallas, Tex., in July 1978 8See K H Collins, et al., “Accidental Hypothermia and were elderly, poor, and without air-condition- Impaired Temperature Homostasis in the Elderly,” 7 British Medical Journal, 1977, 1, 353-356; G. L. Mills, “Ac- ing. The elderly, who comprise a substantial cidental Hypothermia in the EIderly,” British Journal of ‘See Crier, ibid., p. 3; The Washington Post, “Life and Hospital Medicine, December 1973; Robert D. Rochelle, Death in the Heat,” July 22,1978, p. A8; and A. Henschel, “Hypothermia in the Aged,” Institute of Environmental et al., Heat Tolerance of Elderly Persons Living in a Sub- Studies, University of California, Santa Barbara; Fred Tropical Climate (Washington, D. C.: DHEW, Bureau of Thumin and Earl Wires, “The Perception of the Common Disease Prevention and Environmental Control, National Cold, and Other Ailments and Discomforts, as Related to Center for Urban and Industrial Health, Occupational Age, ’ International Journal of Aging and Human Devel- Health Program, February 1967). opment, vol. 6(1), 1975. Ch. IV—Low-income Consumers ● 81

does a national goal of raising energy prices to persons. Tax incentives and penalties also dis- levels that reflect true costs affect the poor? criminate against the poor. Direct subsidies, How could the Federal Government mitigate such as energy stamps patterned after food these adverse side-effects of an otherwise stamps, could address some of the problems desirable policy? the poor face in paying utility bills—at least temporarily. However, critics argue that such Price mechanisms that encourage conserva- subsidies fail to get at the sources of the prob- tion through the marketplace do indeed exac- lem and tend to become self-perpetuating. erbate the financial problems of low-income

WEATHERIZATION

The most effective way to cope with higher cent of all low-income housing in need of prices is to reduce energy requirements by weatherization to be retrofitted with conserva- “weather i zing” homes. Federally sponsored tion materials through October 1978.9 weatherization grant programs have demon- Several other problems also emerged in the strated the benefits of this approach. The first 2 years of Federal weatherization efforts, Federal Government operates three separate particularly in the DOE program. Among them but similar weatherization grant programs– in were overly restrictive Iimits on expenditures the Department of Energy (DOE), the Commu- for weatherization materials and transporta- nity Services Administration (CSA), and the tion of workers and equipment to the work Farmers’ Home Administration (FmHA). Before site, a firm Iimit of $400 in expenditures on passage of the National Energy Conservation each housing unit, and exclusion of all me- Policy Act of 1978 (NECPA), these three pro- chanical devices costing more than $50 from grams operated under varying eligibility re- the list of conservation materials to be in- quirements and other administrative rules. The stalled. A labor shortage plagued the pro- new law unifies the programs, all of which are grams; without special funding for labor, both designed to provide direct assistance to low-in- DOE and CSA relied almost exclusively on come homeowners and occupants by sending CETA workers, who were often unavailable. workers into the field to install insulation, Finally, because families had to be at the storm windows, and other conservation de- poverty level or below to be eligible for DOE vices. Recipients pay nothing for this service. weatherization services, many near-poor Labor is provided primarily through the De- households with substantial need for energy- partment of Labor’s Comprehensive Employ- saving improvements were excluded from the ment and Training Act (CETA) program. program. The weatherization program of FmHA was The recent National Energy Conservation limited, until passage of NECPA during the Policy Act of 1978 and Comprehensive Em- final days of the 95th Congress, to loans of up ployment and Training Act Amendments of to $1,500 at 8-percent interest to rural home- 1978 have remedied some of these difficulties. owners; no outright grants were available to those unable to afford to go into debt in order to save energy. The new energy law adds grants ‘This determination of the “total need,” or the total to FmHA programs on the same terms as those number of poor and near-poor housing units that could in the DOE and CSA programs, except that be weatherized, is based on the fact that there are approximately 14 million households below 125 percent of FmHA provides extra funds for labor when the poverty level. Sixty percent are single-family dwell- CETA workers are unavailable. ings and 22 percent are apartments of eight units or less, thus yielding approximately 11,480,000 potentially Unfortunately, low funding levels during the weatherization units. According to the Community Serv- early years of the weatherization grant pro- ices Administration, approximately 400,000 units had grams in DOE and CSA permitted only 3.5 per- been weatherized by October 1978, 82 . Residential Energy Conservation

The eligibility ceiling for DOE weatherization The chief difficulty in using CETA workers has been raised to 125 percent of the poverty for weatherization has centered on community line to include all those households generally action agencies’ inability to marshall the considered to be low-income. The legal defi- needed manpower when and where it was nition of weatherization materials has been ex- needed. Because CETA jobs have been statu- panded to include replacement burners for fur- torily limited to short periods of time, and be- naces, flue dampers, ignition systems to re- cause the CETA program as a whole has had to place pilot lights, clock thermostats, and other function with only 1-year lifespans (until ex- items that may be added by regulation. The tended by the new legislation), it has been vir- new law also calls for development of proce- tually impossible to plan ahead for adequate dures to determine the most cost-effective labor supplies. combination of conservation measures for Along with the difficulty of training and each home, taking into account the cost of materials, the climate, and the value of the scheduling CETAs, lack of authorization to use funds to hire supervisors as well as inadequate energy to be saved by the materials. The limit funds for training have resulted in limited on allowed expenditures for each dwelling has been raised to $800, an amount that includes skills. Program analyses at the local level have shown that little effective training has oc- materials, tools, and equipment; transporta- curred, and that the more extensive skills that tion; onsite supervision; and up to $100 in the trainee might have been able to Iearn and repairs to the house that are needed to make use in construction industry jobs (e. g., basic the energy improvements worthwhile. Most im- carpentry) have not been taught. Such factors portant, the DOE program funding authoriza- have limited the trainee’s effectiveness on the tions have been increased to $200 million an- job and eventual desirability as an employee. nually for FY 1979 and 1980. The new FmHA grant program is authorized at $25 million for The 1978 CETA Amendments direct the Sec- FY 1979. retary of Labor to facilitate and extend proj- Weatherization programs are especially ap- ects for work on the weatherization of low-in- pealing because they can help low-income per- come housing, providing adequate technical sons not only to save energy, but in some cases assistance, encouragement, and supervision to also to obtain job training and improve their meet the needs of the weatherization program permanent employment prospects. Title VI of and the CETA trainees. According to Gaylord CETA authorizes county and local govern- Nelson, chairman of the Senate Subcommittee ments or private nonprofit “prime sponsors” to on Employment, Poverty, and Migratory Labor, hire unskilled, underemployed, or hardcore un- the weatherization provisions of the CETA bill employed labor for public service work, in- were needed to prevent three-quarters of the cluding weatherization. The primary objective 1,000 active weatherization projects in the Na- of the program is to facilitate private employ- tion from shutting down for lack of workers. ment for CETA workers after a 6-month or 1- In spite of the difficulties confronting CETA year training experience. Marriage between the weatherization, some programs have been ef- weatherization and CETA programs, born of fective if not outstanding. For many others, convenience and fraught with difficulties, however, continued effort by the Department nonetheless has the potential to make some of Labor, DOE, and CSA will be necessary if headway against two of the Nation’s most the program is to effectively meet its several pressing problems –the energy crisis (includ- goals. ing inflation in energy prices) and unemployment. More than 30,000 low-income unem- Weatherization is not a panacea; this ap- ployed persons had received training in weath- proach offers little help to those beyond the erization skills— installation of home insula- program’s reach who face immediate hardship tion, storm windows, and other conservation trying to pay high utility bills. Those least like- devices– by the end of 1978. ly to receive weatherization assistance are the ‘“Public Law 95-524, sec. 123 (c). 55 percent of all low-income families who live Ch. IV—Low-income Consumers ● 83

in rental housing and those living in severely cost-effective use of Federal funds. But given deteriorated housing for which bandaid im- the emphasis that Federal assistance programs provements cannot be justified. For these per- usually place on ownership as a precondition sons, a number of additional policies may be to any housing development activity, perhaps required. programs in individual or cooperative ownership might be developed. In any event, What additional policy options might be whether these, or other options for renters considered? The development of weatherized such as continuing emergency financial and rehabilitated public and private housing is assistance are chosen, some action should be one possibility. Or, if the rehabilitation of taken to address the problems of low-income some housing is too costly, considering its renters in housing whose energy inefficiency is useful life, the construction of new energy- continually increasing. efficient housing for the poor might be a more

LOW-INCOME TENANTS

The problems of low-income families living Energy costs, along with property taxes and in rental housing are especially difficult to ad- escalating maintenance costs, contribute in a dress. Those whose units are metered and major way to the tendency of slum landlords billed individually have reason to seek ways to to abandon substandard buildings. Tenants are reduce energy consumption, but their opportu- seldom well-enough organized to pressure mu- nities to do so are limited. Even if they can af- nicipal governments into enforcing building ford to invest in conservation measures– codes or retrofitting and renovating buildings which most cannot—their investments bring that cities acquire through tax liens. them no personal benefits unless they con- Federal weatherization programs have of- tinue living in the unit for a long time. Most fered little help to low-income renters, particu- tenants are understandably reluctant to im- larly those living in apartments. CSA regula- prove properties they do not own. Many ten- tions prohibited use of the agency’s funds for ants cannot even control the thermostats or retrofitting multifamily housing until recently. water heaters that serve their units. Individual The laws governing DOE and FmHA weather- tenants’ relatively low levels of energy con- ization require that multifamily weatheriza- sumption mean that they pay the highest rates tion projects be designed to benefit tenants in the standard declining-block rate design. rather than landlords and direct the program (See chapter VI.) Landlords who pay utility managers to ensure that rents are not raised as bills for their properties and pass the cost a result of weatherization improvements and along to tenants through rent have little incen- that no “undue or excessive enhancement” of tive to invest in weatherization improvements. the property results from weatherization ac- When they do make such investments, they tivities. While these provisions are laudatory, pass those costs along, too--so that tenants implementing them is difficult. who move before the payback period is complete fail to receive the financial benefit of the lower utility bills.

EMERGENCY FINANCIAL ASSISTANCE FOR UTILITY PAYMENTS

Because of the slow pace of weatherization ant choice of either sacrificing other necessi- efforts and the severity of recent winters, many ties to meet utility and fuel costs or finding low-income families have faced the unpleas- their gas, oil, or electricity cut off. To avoid 84 ● Residential Energy Conservation

these difficulties, three Federal programs have come persons for payment of utility and fuel been used to help low-income consumers pay bills in emergencies. This provision has been utility bills. They are the Department of controversial because HEW officials have ex- Health, Education, and Welfare’s (HEW) Emer- pressed a concern that utility payments could gency Assistance and Title XX programs, and consume such a great portion of title XX funds the much larger CSA Special Crisis Interven- that too little would remain for more tradi- tion Program (SCIP). tional social services. 3 Furthermore, at Ieast one State– North Dakota–found title XX an HEW’s Emergency Assistance (EA) Program impractical tool for utility payments because is available to poor families with one or more of the requirement that bills be paid in full children through the welfare system in 22 before reimbursement funds are released. ” States. Emergency assistance payments are These problems, particularly the issue of com- made to prevent imminent hardship, such as peting needs for limited funds, may jeopardize loss of fuel services. Close to 90 percent of the the availability of title XX funds for energy-re- EA caseload is carried by only seven States, lated financial assistance. however. The Federal Government provides a matching share of 50 percent to States that of- The Community Services Administration’s fer the program. Some States find the required SCIP was initially funded by a supplemental 50-percent non-Federal share too expensive. appropriation of $200 million in March 1977. Welfare officials often find it difficult to The program was intended to make available a document the legitimacy of emergency needs variety of financial assistance mechanisms claimed by applicants. ’ Litigation in some that included grants, loans, fuel vouchers, or States has resulted in court rulings that some stamps; payment guarantees, mediation with State restrictions on the use of EA funds are il- utility companies or fuel suppliers, and finan- legal; State response has sometimes been to cial counseling; and maintenance of emergen- stop offering emergency assistance. 2 cy fuel supplies, warm clothing, and blankets. In practice, assistance was limited to emergen- Other factors have also limited this pro- cy grants in most cases. gram’s effectiveness. The program is available only to families with children, and only to Although funded for $200 million, SCIP did public-assistance recipients. Further, a family not come close to helping all those in need. may not receive EA payments for more than 1 The maximum payment to individuals or fam- month during any 12-month period. ilies, limited to $250 by Federal regulations, was often too low to cover the total bill, and Funds available through title XX of the some States set lower ceilings because the Social Security Act of 1975 may also be used number of applications was too high for the to permit low-income consumers to pay fuel available money. When consumers could not bills. Title XX funds have traditionally been meet their entire bills with SCIP payments, used for such social-service purposes as pro- utilities sometimes failed to establish deferred- viding clothing and groceries for needy fam- payment plans and proceeded instead to shut ilies, or for meeting the needs of handicapped, off gas or power. Some utilities reportedly mentally ill, retarded, or other poor persons failed to reduce their customers’ bills to reflect with special problems. HEW regulations were SC I P payments. amended in January 1978 to permit the use of title XX funds for reimbursement of low-in- SCIP’s major problems in the first year resulted from poor timing. Congress’ action in appropriating funds in March was aimed at ‘ ‘Consumer Federation of America, Low-Income Con- sumer Energy Problems and the Federal Government’s Re- assisting with bills accumulated during the sponse, report to the Office of Technology Assessment, winter just ending, yet funds did not become 1978, p. 135. available to community action agencies for ‘zSee, for example, Kozinski v. Schmidt, D.C. Wis., 1975, 409 F. Supp. 215; Williams v. Woh/gemuth, D.C. Pa., ‘3Consumer Federation of America, op. cit., p. 139 1975,400 F. Supp. 1309. “ibid., p 138. Ch. IV—Low-income Consumers ● 85

distribution until late summer. By then, many ating informally—for example, farmers who poor families had already had their utilities sold wood to their neighbors to earn extra win- shut off or had sacrificed other essential needs tertime income— and failed to provide such to pay their bills. When funds finally became notice. Their customers were therefore ineligi- available, they had to be distributed in the ble for SC I P assistance. short time remaining in the fiscal year or else revert to the CSA weatherization program, a Many local SCIP coordinators objected to worthy program but one that could not meet the program because they felt it forced their the immediate and critical financial needs of agencies into an uncomfortable role: handing many poor families. Of the amount appropri- out money (like a social service agency) to try ated in FY 1977, 82 percent was actually dis- to alleviate the effects, rather than the causes, tributed to the needy population. of a problem. They saw this as restraining them from focusing their efforts to do something Community action agencies functioned with about the causes of the local energy problem, a frenzy of activity in order to handle SCIP and as providing local people with an errone- funds in August and September 1977. With no ous perception of the agencies’ role in their funds provided for administration of the pro- communities: that is, as surrogate welfare de- gram, the agencies operated with staff hastily partments rather than as organizations which borrowed from other community action proj- help people become more self-sufficient. ects. They undertook efforts to communicate with eligible persons through newspaper, Some local antipoverty workers also took of- media, and poster advertising, but some failed fense at the practice of making payments from to reach enough people to use all available Federal CSA funds to private utility companies funds, despite evidence of a large target popu- and fuel oil distributors. They saw SCIP as a lation. Others succeeded in their public rela- continuing subsidy to utilities, and not as a tions efforts but found potential recipients help to the poor. ” discouraged by long waiting lines for applica- CSA’s second-year financial assistance pro- tion processing and lack of transportation gram, also funded at $200 million, was known assistance, particularly in rural areas. as the Emergency Energy ‘Assistance Program To be eligible for SCIP payments, utility and (EEAP). In FY 1978, funds were made available fuel customers were required to show written sooner and program administrators were able notice from their suppliers of intent to termi- to benefit from many of the first year’s experi- nate service. Many small dealers in propane, ences. butane, and wood were accustomed to oper-

UTILITY POLICIES FOR THE POOR AND NEAR-POOR

Emergency payments to low-income per- vide necessary amounts of heat, light, refrig- sons, discussed in the previous section, are in- eration, cooking, and water heating— are sold tended to forestall utility shutoffs and ensure 1 ‘Data derived from telephone interviews with 44 CAP enough energy to meet basic needs. A number weatherization, energy, and overall program directors, of governmental jurisdictions have imposed and interviews with community leaders at OTA. Tele- additional policies, however, to protect low- phone interviews discussed the structure and problems income consumers in their dealings with util- encountered with CSA energy education programs, ities. which included extensive discussion of weatherization activities and problems with CSA/DOE and other pro- In California, all utilities have been required grams, and SC I P, while additional interviews at OTA with by law since 1975 to design their electric and local energy personnel visiting in Washington centered on the effect of and improvements that could be made in gas rate structures so that the first blocks of SCIP and other community energy conservation pro- energy consumed — the amount needed to programs, 86 ● Residential Energy Conservation at reduced rates. Utility revenues lost through Other studies of electricity and gas con- the so-called “lifeline” subsidy are recovered sumption among low-income users indicate, by charging higher rates for energy consumed however, that looking at average household above the minimum allowance. This policy consumption patterns may not be the best way represents a reversal of the traditional utility to evaluate the effectiveness of lifeline rates in “declining block” rate structure. meeting social welfare goals. Looking instead at the number of households in various income The California law is premised on a finding groups that exceeded lifeline allowance levels, that “light and heat are basic human rights and the Pacific Gas & Electric Company (PG&E) must be made available to all people at low found that significant numbers of low-income cost for minimum quantities. ” Lifeline rates households exceed not only the lifeline con- are discussed in the context of utility policy for sumption levels, but also the utility system’s energy conservation in chapter VI of this re- average consumption per household. For ex- port. Here, they are discussed in terms of their ample, PG&E determined that nearly 50 per- purpose in meeting social welfare goals—that cent of its low-income customers in the San is, in preventing severe hardship caused by Francisco Bay area outside San Francisco con- high energy prices or by termination of essen- sume more than the area’s average monthly tial utility services as a result of inability to household level of 300 kWh.17 High consump- pay. tion levels among low-income customers were For lifeline rates to function as effective in- found to be very weather-sensitive and espe- come-transfer devices, low-income households cially prevalent during winter peak-heating must hold their electricity and gas consump- periods, probably because of the poor thermal tion at or near the low levels needed to meet integrity of many homes occupied by low-in- only essential needs. Available data indicate come consumers. PG&E concluded that large that on the average, low-income households numbers of low-income consumers were being do indeed consume less energy than house- penalized, rather than helped, by lifeline holds in higher income brackets. A study by rates.18 the Washington Center for Metropolitan In a recent critique of the California lifeline Studies found that in 1975, the average low-in- policy, Albin J. Dahl expressed a doubt that come household consumed 60.6 million Btu* landlords receiving lifeline allowances for of electricity and 110.1 million Btu of natural units in master-metered buildings would in all gas, compared with an average of 94.2 million cases pass on utility cost-savings to their ten- Btu of electricity and 136.3 million Btu of ants through lowered rents. He also pointed natural gas for all households. Table 28 indi- out that California residential gas consumers cates how gas and electricity consumption in were paying for much of the gas they con- low-income households compared with use of sumed at rates far below the costs borne by these energy sources in middle- and upper-in- utilities in purchasing and delivering that gas. come households.16 Dahl argued that the tax and welfare systems Table 28.—Consumption of Electricity and Natural were more appropriate vehicles for solving the Gas in U.S. Households by Income Group, 1975* energy-based financial problems of low-in- (millions of Btu) come persons. 19 Income Other utility-related policies that might $25,000 Low- $14,000- and assist low-income persons include prohibitions income 20.500 above on wintertime utility shutoffs, legal aid to indi- Electricity...... 60.6 111.3 137.5 gent utility customers, and requirements of Natural gas...... 110.1 137.4 190.5 third-party notification prior to shutoff.

● Average annual Btu per household. SOURCE: Washington Center for Metropolitan Studies, National Survey of “j, Dahl Albin, “California’s Lifeline Policy,” Public Household Energy Use, 1975. Utilities Fortnight/y, Aug. 31,1978, p. 20. *One Btu is equivalent to 1 kilojoule. ‘81 bid., p 18. “Crier, op. cit., p. 11 “I bid., pp. 13-22. Ch. IV—Low-income Consumers . 87

HOUSING, ENERGY, AND THE POOR

For low-income persons, problems of energy ● Mortgage insurance and interest subsidies use in the home are a subset of the larger prob- made available under section 235 of the lems of poor housing quality in general. Op- National Housing Act to permit low- and portunities to lower residential energy con- moderate-income persons to purchase sumption — and reduce utility bills — are sharp- new and existing housing under afford- ly limited for people who live in substandard able financing terms; housing, unless a way can be found to rehabil- ● FmHA’s Section 502 Homeownership itate or replace such housing. Weatherization Loan Program, offering either loan programs, financial assistance, and preferen- guarantees or direct loans for the pur- tial utility rates cannot provide full remedies chase or rehabilitation of homes under for either owners or renters of low-quality, financing terms that vary depending on energy-guzzling homes. A number of Federal the recipient’s income; and programs address the housing needs of low- ● FmHA’s Section 504 Home Repair Pro- income persons. Efforts are directed at both gram, which offers loans and grants to tenants and homeowners. elderly rural low-income homeowners to remove certain dangers to health and Programs affecting rental housing include: safety. Federal assistance to local housing authorities for construction, maintenance, Programs that can affect both rental and and subsidization of rents in public hous- owner-occupied housing are: ing projects; ● Community development block grants Rent subsidies under section 8 of the Na- made available annually to local govern- tional Housing Act which make up the dif- ments to meet broadly specified Federal ference between 25 percent of recipient objectives (which include the provision of families’ incomes and the fair market rent adequate housing, a suitable living envi- for the private housing units they occupy; ronment, and expanded economic oppor- Mortgage insurance, interest and rent sub- tunities for low-income groups) through sidies, and energy-related home improve- projects designed at the local level; and ment financing for rental housing under ● HUD’s urban development action grants section 236 of the National Housing Act, designed to stimulate new construction as amended; and and economic development in low-in- FmHA’s Section 515 Rental and Cooper- come areas. ative Housing Loan Program, which finances housing for low- and moderate- All these programs have helped low-income income families developed by public, persons to acquire “decent, safe, and sanitary private, or nonprofit organizations. housing” without the expenditure of an unreasonable portion of their incomes for housing. It Programs aimed at owner-occupied housing is not clear, however, that the programs have include: helped in a noticeable way to make poor families’ homes more energy-efficient. For most ● The Department of Housing and Urban programs, energy conservation is a concern far Development’s (HUD) section 312 pro- from the minds of program administrators in gram, providing loans at 3-percent interest Washington, D. C., and in the field; similarly, to low-income homeowners in certain des- lenders, builders, owners, developers, non- ignated areas, for the purpose of rehabili- profit groups, and others on the receiving end tating their homes and bringing them into of Federal housing funds have only rarely in- compliance with current local building cluded energy efficiency in their planning or codes; cost calcuIations. 88 . Residential Energy Conservation

Public housing projects, for example, were difference between 25 percent of their family constructed without effective thermal stand- incomes and the fair market rent for the hous- ards until 1963, and from 1963 to 1973, Federal ing units they occupy. Tenants in both public guidelines for thermal standards were volun- and private housing are eligible for section 8 tary. In recent years, the emphasis within the subsidies if their incomes do not exceed 80 per- public housing program has shifted from new cent of the median income in their geographic construction to rehabilitation of existing proj- areas; nearly a third of all recipients earn less ects, and energy efficiency has been desig- than half of the median income. As with the nated as a “priority expenditure category” as public housing program, section 8 guidelines part of rehabilitation. Since utility costs have pay little attention to energy efficiency. Only been estimated by HUD to account for be- in the case of newly constructed apartments tween 20 and 30 percent of project operating are section 8 subsidies tied even indirectly to expenses, in many cases upgrading insulation, requirements for thermal integrity in the build- windows, and energy-consuming equipment in ings; newly built homes must meet HUD mini- public housing units is a cost-effective use of mum property standards to be eligible for par- public funds. Unfortunately, however, HUD ticipation in the section 8 program. Older units cannot supply accurate estimates of the level are not subject to any energy standards for of energy-related improvements being made in eligibility the public housing sector, or of the energy sav- Chapter Vlll describes each of the Federal ings that are resuIting. housing programs listed above, and evaluates The rental assistance program under section their effectiveness (or lack thereof) in encour- 8 of the National Housing Act assists over aging energy efficiency to keep utility costs 350,000 low-income families by making up the down for low-income owners and tenants. Chapter V HOUSING DECISIONMAKERS Chapter V.— HOUSING DECISIONMAKERS

Page Introduction ...... 91 39 Characteristics of the Existing Housing Inventory ...... 91 40 Characteristics of New Housing ...... 93 Housing Processes and Participants . . . . 94 New Construction...... 95 Retrofit ...... 97 Manufactured Housing. .,,. . . . 98 41 The Existing Housing Stock. . . . 99 Trends in Housing and Conservation ~ ~ ...101 42 Trends in Housing Costs .. ...101 Trends in Utility Costs .. ...104 43 Findings and Opportunities for Energy Conservation...... 112 44 Builders’ Attitudes ...... 113 Property Owners’ Attitudes...... 113 ls the Cost of Adding Energy Conservation 45 Features to New or Existing Housing an impediment to Conservation? 114 Are Problems of Financing Impeding the 46 Pace of Residential Conservation? 114 47 What Are the Current and Potential Roles 48 of the Federal Government in Encouraging Residential Conservation? 115 49 Directions for the Future .116

TABLES

51 29 Structure Type: Year-Round Housing Units, 1976 ...... 91 52 30 Tenure and Number of Units by Type of Structure, 1976 . . . 91 31 Year-Round Housing Units by Location, 53 1976...... , . . . . 92 32. Tenure by Location, 1976 . . . . 92 54 33. Income by Type of Occupancy, 1976 . 92 34. Age of Housing Units, 1976. . 92 35. Sales of Existing Single-Family Homes for the United States and Each Region by Price Class, 1977 ...... 93 36. Private Housing Starts by Type of Structure, 1977 ...... 93 15 37. Private Housing Completions by Location, 1977...... 94 16 38. Sales Price of New One-Family Homes Sold, 1977 ...... 94 Chapter V HOUSING DECISIONMAKERS

INTRODUCTION

This chapter assesses the efforts to improve the energy efficiency of new and existing housing. It identifies the opportunities for and impediments to more residential conservation. The characteristics of residential buildings, the factors that influence property owners’ attitudes and behavior toward energy conservation, the participants and processes involved in new housing development and improvement of existing housing, and trends and institutional factors that encourage or discourage conservation are examined. Based on those judgments, some policy options and considerations that might further energy conservation are noted.

CHARACTERISTICS OF THE EXISTING HOUSING INVENTORY

To understand the context within which resi- Table 30.—Tenure and Number of Units dential conservation actions occur, it is useful by Type of Structure, 1976 to review the general characteristics of existing (units in thousands) housing. The types of units, tenure arrange- Owner Renter ments, the age of the housing stocks, and the occupied occupied Total income of property owners all influence the Occupied units ...... 47,904 26,101 74,005 need, potential, and feasibility of energy con- l-unit structure ...... 42,136 8,477 50,613 servation. In 1976 the inventory totaled nearly 2- 4-unit structure ...... 2,143 7,116 9,259 5 or more unit structures . 638 9,867 10,505 81 million units, of which more than 79 million Mobile homes ...... 2,987 640 3,627 were all-year housing units and 74 milIion were SOURCE’ U.S. Department of Commerce and U.S. Department of Housing and occupied. The housing stock is diverse, varying Urban Development, Annual Housing Survey, 1976 U S. and Regions, by age, construction quality, size, design, and Part A Genera/ Housing Characteristics, p 1 amenities. Most structures are single-unit buildings and most housing is occupied by can families are owner-occupants; 47.9 million owners. As shown by table 29, 53.6 million units or 64.7 percent are owner-occupied; and units or 67.6 percent are one-unit structures. only 26.1 mill ion units or 35.3 percent are oc- Only 11.9 million units or 15.0 percent are in cupied by renters. The percentage of owner- buildings with five or more units. occupied housing is increasing, with the big- gest changes having occurred in the 1940’s and Table 29.—Structure Type: 1950’s. In 1940, owner-occupied units repre- Year-Round Housing Units, 1976 sented only 43.6 percent of all units; by 1960, ——. Units in they accounted for 61.9 percent of all units. Type thousands Percent 1 unit...... 53,611 67.6 Most one-unit structures and mobile homes 2-4 units ...... 10,189 12.8 are owner-occupied, but a significant number 5 or more units...... 11,888 15.0 are rented. Only 14 percent of all units are in Mobile homes or trailers...... ———3,627 4.6 buildings with five or more dwellings. Total ...... 79,315 100 —————.—. SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Most housing is located in urban areas. Urban Development, Arrnua/ Hous/rrg Survey, 7976 U S and Regions, More than two-thirds of all housing is in stand- Part A‘ Genera/ Housing Characteristics, p 1 ard metropolitan statistical areas (SMSAs). But Table 30 gives information on tenure and as shown in table 31, only 31.0 percent of the structure size. Nearly two-thirds of all Ameri- housing stock is found in central cities, and

91 92 . Residential Energy Conservation most housing in SMSAs is not in central cities Table 33.—income by Type of Occupancy, 1976 but in suburban areas. (numbers in thousands) Table 31 .—Year-Round Housing Units Number Number by Location, 1976 of owner of renter Family income occupants occupants Units in Total ...... 47,904 26,099 Location thousands Percent Less than $3,000 ...... 3,001 3,938 Inside SMSAs ., ...... 53,606 67.6 $3,000-4,999 ...... 3,625 4,074 Within central cities ...... (24,547) (31.0) $5,000-6,999 ...... 3,644 3,301 Not in central cities...... (29,059) (36.6) $7,000-9,999 ...... 5,061 4,252 Outside SMSAs...... 25,710 32.4 $10,000-14,999 ...... 9,574 5,318 Total ...... 79,315 100.0 $15,000-24,999 ...... 14,046 3,948 $25,000 or more...... 8,953 1,268 SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Median income in dollars ... ..$14,400 $8,100 Urban Development, Annual Housing Survey, 1976 U.S. and Regions, —— Part A: General Housing Characteristics, p 3 SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Urban Development, Annual Housing Survey, 1976 U.S. and Regions, Housing tenure varies by location. As shown Part A General Housing Characteristics, p. 10. by table 32, the incidence of rental housing is Table 34.—Age of Housing Units, 1976 greater in SMSAs than outside SMSAs and (units in thousands) more prevalent in central cities than in suburban areas. Nearly half the housing in central Units in cities is rented, but in suburban areas of Year structure built structure Percent SMSAs rental housing makes up only 29 per- April 1970 or later...... 12,493 15.8 1965-70 (March) ...... 9,581 12.1 cent of all units. The Northeastern section of 1960-64 ...... 8,093 10.2 the country has the largest percentage of ren- 1950-59 ...... 13,840 17.4 tal housing and the North-Central section the 1940-49 ...... 8,103 10.2 1939 or earlier ...... 27,206 34.3 smallest. SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Table 32.—Tenure by Location, 1976 Urban Development, Annual Housing Survey, 1976 U.S. and Regions, (units in thousands) Part A General Housing Characteristics, p. 1.

Percent Owner- Percent A significant amount of the housing stock Rental within occupied within changes hands each year. In 1977, more than Location units location units location 3.5 million existing homes were bought and Inside SMSAs ...... 19,557 38.8 30,895 61.2 sold. The cost of existing housing has been ris- Within central cities (11,581) (1 1,349) Not in central cities. ( 7,976) (19,546) ing rapidly. The median price in 1972 was Outside SMSAs. . . . . 6,544 27.8 17,009 72.2 $27,100; in 1977, it was $42,900. The median Total ...... 26,101 47,904 sales price disguises a significant variety of

SOURCE: U.S. Department of Commerce and U.S. Department of Housing and home prices, generally and by region. Nearly Urban Development, Annual Housing Survey, 1976 U S. and Regions, 15 percent of all existing houses sold for less Part A: General Housing Characteristics, p 3 than $25,000, but nearly 16 percent of all sales Owner-occupants earn more than renters, exceeded $70,000. Table 35 provides a break- but a significant number of homeowners have down of sales by price class and region for low or moderate incomes. (See table 33.) Near- 1977. Housing in the West is substantially more ly 35 percent of homeowners had an income of expensive than in other parts of the country. less than $10,000 in 1976; this group could be The incidence of lower cost housing is greatest expected to be particularly affected by the in- in the North-Central and Southern sections of creasing costs of homeownership. the country. More than one-third (34.3 percent) of the Based on this data it would appear that the stock predates 1940, even with the high level focus of a residential conservation program of construction over the past three decades. As should be on owner-occupants, most of whom noted in table 34, a large fraction of the stock occupy single-unit properties. Even though is new: 27.9 percent of the inventory has been they own their own homes, many owner-occu- built since 1965. pants have limited incomes. Homes of many Ch. V—Housing Decisionmakers “ 93

Table 35.–Sales of Existing Single-Family Homes for the United States and Each Region by Price Class, 1977 (percentage distribution)

Price class United States Northeast North-Central South West Under $14,999 ...... 2.9 2.3 4.3 3.2 0.5 $15,000-19,999 ...... 4.6 3.5 6.8 5.7 1.0 $20,000-24,999 ...... 7.2 5.7 9.9 8.6 2.2 $25,000-29,999 ...... 10.0 9.4 12.8 11.5 4.6 $30,000-39,999 ...... 20.4 20.8 24.3 21.4 13.3 $40,000-49,999 ...... 17.3 19.1 18.2 16.4 16.3 $50,000-59,999 ...... 12.9 14.0 10.5 12.2 16.6 $60,000-69,999 ...... 9.0 9.1 6.1 8.2 14.2 $70,000-79,999 ...... 5.5 5.4 3.1 4.8 9.7 $80,000 and over ...... 10.2 10.7 4.0 8.0 21.6 Total ...... 100.0 100.0 100.0 100.0 100.0 Median price...... $42,900 $44,400 $36,700 $39,800 $57,300 — SOURCE: National Association of Realtors, Existirtg HomeSales, 1977, p. 32. types and classes are available in spite of sig- half the occupants are renters. Differences in nificant inflation in the cost of existing hous- Location, tenure, price, and age of housing and ing. Most housing is located in metropolitan in the resources and interests of occupants in- areas, but most homeowners live outside cen- fluence the incentives and barriers to energy tral cities in suburbs. In central cities nearly conservation in residential buildings.

CHARACTERISTICS OF NEW HOUSING

The construction industry is a cyclical in- Nearly 70 percent (1 .377 million of the total dustry whose production varies widely year by 1.986 million housing starts) were located year. In recent years, production has ranged within SMSAs. Housing construction activity is from a low of 1.2 million units in 1975 to 2.4 greatest in the South and West, where the million units in 1972. In 1977 nearly 2 million population is growing fastest. New construc- units were started, and 277,000 mobile homes tion is heavily concentrated in fast-growing were shipped to dealers. As might be expected, metropolitan areas. Ten market areas are ex- singl e-f am i I y construction predominated. pected to account for 372,289 units or nearly Table 36 provides a breakdown of housing 19 percent of all construction starts in 1978, starts by type of structure. More than 73 per- with Houston and Dallas-Fort Worth alone ac- cent were single-unit structures, only 21 per- counting for nearly 109,000 units. cent were in structures of five or more units. Table 37 shows the regional distribution of completed housing construction for single- Table 36.—Private Housing Starts by Type of Structure, 1977 family and multifamily housing. Over 38 per- (units in thousands) cent of the completions occurred in the South. More than one-third of all multifamily comple- Number tions were located in the West, an area with Type of units Percent only 27 percent of total completions. The 1 unit...... 1,451 73.1 2 units...... 61 3.1 3-4 units ...... 61 3.1 5 or more units...... 413 20.8 ‘ National Association of Home Builders’ estimate. The Total ...... 1,986 100 top 10 markets are Houston, 62,706; Dallas-Fort Worth, Mobile homes or trailers...... 277 46,000; Chicago, 44,000; Phoenix, 40,000; Los Angeles- Long Beach, 38,500; Riverside-San Bernardino, 35,000; NOTE: Totals may not add to 100 due to rounding. Seattle-Everett, 31 ,320; San Diego, 28,000; Denver- SOURCE: Department of Housing and Urban Development’s Office of Housing Statistics. Boulder, 23,400; and Detroit, 23,360. 94 ● Residential Energy Conservation

Table 38.—Sales Price of New One-Family Homes Sold, 1977

Price class Percent Under $30,000...... 7 $30,000-39,000. . ~ ...... 0.0...... 21 $40,000-49,999 ...... 24 $50,000-59,999 ...... -18 $60,000-69,999 ...... 11 $70,000 or over...... 18 —.— SOURCE Bureau - o~the–C~n;;s~nd the Department of Housing and Urban Total...... 1,656 1,258 398 Development, Characteristics of New Housing, 1977

SOURCE: Department of Housing and Urban Development Office of Housing Statistics. range, but 18 percent sold for more than Northeast had a small fraction of activity $79,000. relative to its popuIation. New homes sold in 1977 totaled 819,000, of The cost of new housing has been rising which 782,000 were financed. More than three- rapidly and is significantly higher than the fourths of these homes were financed by average cost of existing housing. In 1977, the banks, savings and loans, and other mortgage average sales price of a new home was lenders without the involvement of the Federal $54,200, but the price of housing varied by Government. The Federal Government’s role in region of the country. As is the case with ex- housing finance is relatively modest except in isting housing, the highest average costs are in the case of lower income home purchasers, but the West and East. In the Northeast, the aver- Federal insurance programs and secondary fi- age sales price was $54,800; in the South nancing mechanisms provide important lever- $48,100; and in the West $60,700.2 age on the financing actions. Table 39 provides data on the role of Federal financing activities In 1978 prices have continued to escalate and shows that the average federally assisted and to reflect a diversity in housing costs. loan is much smaller than the average conven- Housing magazine reported that in the first tional mortgage. half of 1978 new single-family detached houses sold and conventionally financed aver- Table 39.—New Homes Sold, Sales Price aged $60,100. San Francisco had the highest by Type of Mortgage Financing, 1977 prices at $88,200 per unit, followed by Los — Angeles ($83,800), San Diego ($80,600), and Number of New York City ($78,000). Type of mortgage units in Median financing thousands Percent sales price Table 38 presents a breakdown by price FHA insured...... 73 9 $37,700 class of housing sold in 1977. A majority of the VA guaranteed...... 93 12 41,600 Conventional ...... 592 76 53,400 housing sold was in the $30,000 to $60,000 Farmers Home...... 24 3 25,800 ‘Characteristics of New Housing (Bureau of the Census Total ...... 782 100 and Department of Housing and Urban Development, —. SOURCE Bureau of the Census and the Department of Housing and Urban 1977). Development, Characteristics of New Housing, 1977.

HOUSING PROCESSES AND PARTICIPANTS

To assess the barriers to and opportunities types of housing markets—new construction, for energy conservation in the housing sector, retrofit, and manufactured housing— and the it is important to understand the attributes and attitudes and interrelationships of the key institutional structure of the three general decisionmakers in each market. The design, Ch. V—Housing Decisionmakers . 95

construction, financing, and operation of ing market. There are more than 100,000 housing involve a multitude of participants. builders. The largest single-family builder in Each of these participants operates under dif- 1977 produced only 8,830 units and the largest ferent circumstances and conditions and each multifamily builder 3,974 units.3 In 1976 the attempts to maximize profits and Iimit risks. top 419 builders built 21 percent of all new housing. The average builder operates a small New Construction business and builds fewer than 20 houses a year.4 A 1970 survey of the building industry The development of new housing is a com- found that three-fourths of all builders who plex entrepreneurial activity, involving many built only single-family housing built less than participants whose interactions and coopera- 25 houses, and 46 percent built less than 10 tion are necessary for its successful comple- houses a year. Only 2.5 percent of these build- tion. The manner and extent of participation ers constructed more than 100 houses annual- and interaction differ between single-family ly. Firms that built both multifamily and single- and multifamily construction and between family housing tended to be larger. As a result housing constructed on behalf of an owner only 57 percent of them built less than 25 units and that constructed on a speculative basis, each year and 11.7 percent built more than 100 which is more common. Participants in the units. Firm’s that handled only multifamily process include the builder or developer’ who housing were the largest. Only 17.6 percent plans, initiates, and carries out the develop- constructed less than 25 units a year and 52.6 ment; lenders who provide construction and percent buiIt more than 100 units. mortgage financing; specialized subcontractors who undertake construction activities; No builder dominates or controls a par- construction workers; architects and engineers ticular housing market, and the competition who design the housing; local government of- among builders is intense. Except in the largest ficials who establish and administer local land housing development firms, the planning, de- use regulations, including zoning and building sign, construction management, and financing codes; realtors who assist in the sale or rental functions are carried out by different parties. of the housing; and the homeowner, owner- Most builders have few full-time employees. occupant, or investor. (An average builder employs 2.8 full-time ex- A new residential construction project, ecutives, 3.4 office personnel, and 24.8 super- regardless of type, involves five basic steps: 1 ) visors and tradesmen).5 The size of the firm determining whether the project is financially and the precise role of the builder vary with feasible and marketable; 2) detailed planning the type of housing being constructed, as does and securing the site and financial commit- the role of the builder and his relationship to ments; 3) detailed design and engineering and other participants. Some builders only coor- the organization and securing of labor and dinate the developmental process; they rely materials; 4) construction; and 5) sale or rental fully on specialized subcontractors to con- of the completed project or home. At each struct the various building elements. Others step the builder works closely with one or carry out all or some part of the construction more of the participants. process. Some builders only build for clients The building industry is fragmented into on a custom basis. Most, however, build spec- many small producing units, none of which ulatively. A speculative project may involve a controls a significant percentage of the hous- single lot or a large subdivision. Sixty-one per-

3“California Builders Still Going Strong,” Housing, No- *The term builder is typically used in single-family vember 1978, p. 18. construction. In multifamily construction the builder “’Housing Giants on the Grow Again,” Professional may be the developer or may only build the project for Builder, July 1977. the developer. In this study the terms are used inter- ‘Michael Sumichrast and Sara A. Frankel, Profile of the changeably. Builder and His Industry. 96 ● Residential Energy Conservation

cent of the single-family housing started in homebuilders belong–and material suppliers 1976 was built for sale or rent; the remainder alert builders to new trends and products. was built by the owner or by a contractor for the use of the owner. Homebuilders tend to use stock plans, draft their own plans, or modify designs they or The builder is involved in a high-risk, highly competitors have used previously; most homes leveraged situation, with his success or failure are not directly designed by architects or engi- dependent on his ability to judge market de- neers. Only 27 percent of homebuilders re- mand and conditions accurately. Builders try ported they used staff or consultant archi- to avoid situations that increase risk or that tects. 7 Architects and engineers are more fre- may hurt the marketability of the housing they quently used in multifamily projects because produce. To be successful the builder must re- of their greater complexity. spond to local tastes and produce housing that is competitively priced. During the construc- Builders are adaptable and willing to change tion process decisions must be made quickly the characteristics of the housing they build, to deal with a constant stream of unforeseen but only as a result of proven market demand. events. Most builders are reluctant to pioneer un- proven changes that may adversely affect the An analysis of the building industry commis- marketability of housing and may meet con- sioned by OTA noted: sumer resistance. Builders must be concerned about the cost of their product and the cost of Despite apparent outward similarities, the adding standard features will be carefully resulting product is quite heterogeneous in weighed against the advantages of those nature. It must be produced for al I types of features in helping to sell the housing. First unique building sites and in an incredible cost is given more consideration than Iifecycle range of community types and climatic re- cost. Large builders are in a better financial gions. Viewed in this light, the production of position to take risks–but even they must housing would seem to demand a significant carefully assess the risks and opportunities in- combination of market sensitivity and man- agerial/organizational talent. This suggests volved in deviating from established market that entrepreneurship is almost more ‘impor- practices. tant’ than the other inputs because it is the entrepreneur who must organize, become at The builder of custom homes is in a different least practically responsible for, and eventual- position and need not make all the market ly commit those resources. b judgments of the speculative builder. Many decisions will be made by the owner, perhaps As the entrepreneur, the builder or devel- on the builder’s advice. The builder does have oper determines the character of the housing. to manage the construction process so that If he is building on a speculative basis, the costs fall within the budget of his client while builder must decide what type of house is in the builder earns a profit. demand and will sell at a profit within the local market and price class. The builder must not The role of the builder and the financial only weigh and evaluate the multitude of management is different in the multifamily features that might be used but must gauge his market. In the case of multifamily housing the market correctly in terms of price, style, and builder may or may not be the owner/devel- amenities, and compete with other builders oper of the project. The owner/developer serving the same market. Typically a builder assumes the key decision making role and de- keeps track of local market conditions and termines the character of the project. Project competitive projects. The National Associa- design is based on an estimate of the rents that tion of Home Builders (NAHB)–to which most

71 gT6 HUD s~~tjstjcal Yearbook (Washington, D. C.: 61 bid. Department of Housing and Urban Development), p. 284. Ch. V—Housing Decisionmakers ● 97

can be charged for that location and type of of the borrower to afford the expense of home- unit. Rent projections determine an accept- ownership. Appraisers play a key role in deter- able level of construction cost, which in turn mining the availability of financing by estimat- serves to determine the features to be included ing the value of the property to be financed. in the project. The terms and conditions of Appraisals are intended to reflect market available financing determine the ultimate values, so appraisers discount any housing feasibility of multifamily construction. Most features they believe are not accepted in the developers build multifamily projects with marketplace. Because multifamily loans are only a token equity so that project characteris- larger, plans and specifications for multifamily tics and features are determined by the extent projects are scrutinized more carefully than to which lenders believe they add to the value for single-family homes, but typically lenders of the project and are willing to finance their would not review indepth the specifications inclusion. Multifamily property is an invest- for the project. Lenders make financial judgment, and decisions are based on their impact ments based on appraisers’ estimates of value on profit. The profit to be realized can be in and, perhaps to some degree, on the demon- the form of cash flow, depreciation, future ap- strated skills and experience of the devel- preciation, or amortization of debt. Additional oper/owner. cash investment to add a special feature may Funds for housing construction are made be avoided, in some cases, even if such an in- available by banks, savings and loan associa- vestment would be profitable over the long tions, life insurance companies, and federally run. Developers seek to achieve maximum lev- related credit agencies such as the Federal Na- erage; thus f rent-end costs may be more impor- tional Mortgage Association (FNMA) and the tant to them than Iifecycle costs. Federal Home Loan Mortgage Corporation These concerns, combined with the require- (FHLMC). For multifamily lending, savings and ments of local codes and regulations, provide loan associations and Federal credit agencies the context within which the builder selects a are the most active lenders; for single-family site, determines what he can pay for the site, housing, savings and loan associations are the and makes decisions about the housing design dominant lenders. There are more than 23,000 and the specifications and quality of the dif- lending institutions throughout the country. ferent construction components. Other participants play less central roles in Lenders are key participants in the housing development. Subcontractors and workers construction process. Housing normalIy in- working under the direction of the builder volves long-term debt financing. Lenders pro- carry out specified construction tasks. Ar- vide interim financial assistance to builders, chitects and engineers may be involved in the developers, and subcontractors during the design of housing. Government agencies may development process, and long-term mortgage be involved in a number of ways: the Federal loans to house purchasers or multifamily in- Government for example, may provide subsi- vestors. Lenders seek to make profitable loans dies, loans, or mortgage insurance to lenders to and protect themselves against default. Be- assist in the development or financing of hous- cause they lend money, by nature and circum- ing. Such housing must be designed to Federal stance they tend to be conservative. Typically, construction standards. These programs are lenders do not examine homebuilders’ plans in discussed in detail in chapter IX. Local govern- detail. They rely instead on the experience and ments establish and administer local building reputation of the builder in deciding whether codes to which most new housing must con- to provide short-term financing. In terms of a form. Realtors may be employed to sell or rent level of mortgage debt, lenders base their will- completed housing. ingness to finance particular homes on appraisers’ estimates of value, on the perceived Retrofit risk of the investment over the term of the The home-improvement or retrofit market, loan, and on the credit-worthiness and ability which involves upgrading or improving existing 98 “ Residential Energy Conservation

housing, functions differently from the new In terms of conservation improvements, the construction market. Typically, the property average firm instalIs $58,000 worth of insula- owner determines what improvements should tion annually, and on an average each firm in- be made to the property and how the work stalIs 663 storm windows and 152 storm doors. should be done. As might be expected, contractors are pre- dominantly involved in installing blown-in in- Improvements can range from minor paint- sulation. In 1978, contractors were expected to up/fix-up activities to substantial modifica- carry out 647,000 jobs involving blown insulations to a building’s structure or condition. tion, 375,000 jobs using foam insulation, and Work can be accomplished by hiring a home- 91,000 using batt insulation. Approximately improvement contractor or installer, or by the three-fourths of all remodelers install storm do-it-yourself approach. Home-improvement windows and doors, and about 13,000, or 43 contractors are not normally involved in new percent, install insulation. ’ construction projects. Property owners often look to hardware stores, lumber yards, or home Financing is less important in retrofit work supply centers for information on particular than in new construction because most proj- products or names of contractors. An esti- ects are small. The most common energy im- mated one-half of all property improvements provements represent relatively small sums of are done on a do-it-yourself basis. The property money, ranging from $100 to $1,000 for most owner usually specifies the work to be done, homes. Improvements may be made all at although some contractors promote and solicit once or over an extended time. In 1976, the business for particular types of work. This average maintenance and improvement ex- means that the homeowner must be knowl- penditure for owner-occupants of single units edgeable about what improvements he or she was $450 per property. Expenditures varied wants or have access to reliable information or widely by income group; those with incomes of contractor advice. The most common types of less than $5,000 averaged $203; those whose in- retrofit energy-saving improvements are income exceeded $25,000 averaged $822. As a stallation of insulation, storm windows, caulk- result of the smalI sums involved, most im- ing and weatherstripping around doors and provements are paid for by cash on hand, windows, and furnace replacement or im- short-term credit, or savings. It is estimated provements in furnace efficiency. that only 17 percent of home improvements are financed by lending institution home-im- Qualified Remodeler magazine estimates provement loans. Small loans are not profit- that professional remodelers will be responsi- able to these institutions because of the high ble for $21.5 billion of remodeling in 1979,8 in- overhead costs in relation to the interest cluding both residential and commercial activ- earned. Many lenders do not make home-im- ity. Nearly 31,000 firms do remodeling work. provement loans for less than $1,000 or even Firms vary from large and sophisticated enter- $1,500. As a result they are not involved in prises capable of undertaking any type of most home-improvement projects. renovation work, to one-person outfits special- izing in a particular trade such as electrical work or storm window instalIation. Most firms Manufactured Housing are small; the average remodeler employs only nine full-time and two part-time employees. Manufactured housing, including mobile Most projects are also small, and contractor homes and modular housing, is built in a fac- profits as a percentage of overall cost are tory Construction and sales processes for higher than in new construction. More than manufactured housing bear little resemblance half do less than $250,000 worth of business a to onsite construction. The housing is con- year, while only 11.6 percent have an annual structed by factory workers, rather than by volume in excess of $1 million. 9Booz, Allen, and Hamilton, l?ui/cfing l-lousing Out/ine: Energy Conservation Assessment Study for the Office of 8“Market Report: Five Year Forecast for Remodeling is Technology Assessment, p. I I I-10. Rosy,” Qualified Remodeler, September 1978. IOM. Sumichrast, op. cit. Ch. V—Housing Decisionmakers ● 99

subcontractors. As a result, the manufacturer Besides the manufacturer, the other key par- maintains total control over the construction ticipants are the distributors or dealers who process. sell mobile homes and arrange financing, commercial banks who finance the manufacturing About 276,000 mobile homes were shipped firms, and commercial banks, finance compa- in 1977. Single-width homes range in price nies, and other lenders who finance the pur- from $7,000 to $25,000; double-widths cost chase of mobile homes. Manufacturers some- $13,000 and up. All mobile homes built since times help distributors with financing. Mobile June 1976 conform to the Federal Mobile homes are considered personal property, al- Home Construction Standards, which preempt though there is a growing trend to consider earlier and inconsistent State requirements. them real property. Mobile home loans, which Homes are typically designed by company are considered chattel mortgages, commonly staff or consultants who might be draftsmen or run for 7 to 10 years at 12- to 1 3-percent in- engineers who have specialized in mobile terest. home design.

THE EXISTING HOUSING STOCK

How existing houses are built must be ally available. Tabulated information on the known before realistically assessing how much thermal characteristics of houses is shown in their thermal envelopes can be improved in a table 41. Nearly three-fourths of the homes cost-effective manner. Very Iittle information have at least some attic insulation, with more exists about the thermal characteristics of ex- than two-thirds of the houses in all parts of the isting housing. A good deal of information country reporting attic insulation. Over half about the generaI characteristics of the hous- the homes have at least some storm windows ing stock is contained in census data and in in- or other double glazing, but these are largely formation collected by the Federal Housing concentrated in the Northeast and North-Cen- Administration (FHA) for houses with FHA tral regions. Similar results hold for storm mortgages. But the only study of the thermal doors. characteristics of existing houses seems to be 12 11 Rowse and Harrje point out that insulation that of Rowse and Harrje, which combines in- was rare in homes built before 1940, and even formation from census data, FHA data, and for the 27 percent of the homes built between historical trends in insulation use in the con- 1940 and 1960, the standard attic insulation struction industry to estimate the potential for was 2 inches of mineral wool. Thus all of these upgrading the thermal shells of existing hous- homes are potential candidates for retrofit. ing. The situation is further complicated by the Additional savings are possible even for hous- lack of information about the massive retrofits ing constructed in the 1970’s, as illustrated by that have been underway for the last 3 or 4 the experiments at Twin Rivers, N.J. Rowse and years. Harrje conclude that more than two-thirds of Nearly two-thirds of the houses existing in the existing housing stock is ripe for additional 1975 were built after 1940; almost a quarter attic insulation. were built in the 1960’s. (See table 40.) Thus a From a practical viewpoint, it is likely that majority of the housing stock has been con- considerably less than the 90 percent of houses structed since insulation materials were gener- noted by Rowse and Harrje will actually be 1‘R. E. Rowse and D. T. Harrje, “Energy Conservation: retrofitted, as the payback for the homes con- An Analysis of Retrofit Potential in United States Hous- taining some insulation is not likely to appear ing” (unpublished) (Center for Environmental Studies, Princeton University). ‘21bid. 100 ● Residential Energy Conservation

Table 40.—The Original 1975 Annual Housing Survey Data Plus Tabulated Data for Years Prior to 1940 Expressed as a Percentage of the Total Housing Units in the United States

Year built United States Northeast North-Central South West 1970-75 ...... 14.5 1.8 3.1 6.1 3.4 1960-70 ...... 23.1 3.8 5.5 8.7 5.0 1950-59 ...... 17.5 3.2 4.2 6.1 4.0 1940-49 ...... , ...... 10.3 2.0 2.3 3.9 2.1 1930-39 ...... 6.5 1.5 1.7 2.1 1.2 1920-29 ...... 8.4 2.6 2.5 2.0 1.3 1910-19 ...... 5.8 1.7 2.0 1.3 .8 1900-09 ...... 5.7 2.0 2.1 1.1 .5 1890-99 ...... 3.5 1.4 1.5 .4 .2 1880-89 ...... 2.0 .8 .9 .2 1879-earlier...... 2.7 1.6 .8 .3 :: Total ...... 100.0 22.5 26.6 32.3 18.6

NOTE: Totals may not add to IOO due to rounding. SOURCE: R. E. Rowse and D.T. Harrje, “Energy Conservation: An Analysis of Retrofit Potential in United States Housing’’ (unpublished~ Center for Environmental Studies, Princeton University.

Table 41.—Thermal Characteristics of Houses: Regional Summary (percent)

a) Attic or Roof Insulation

United States Northeast North-Central South West Yes ...... 74.0 78.7 84.0 67.3 67.4 No ...... 16.5 13.8 9.0 22.5 18.8 Don’t know ...... 7.8 5.7 5.4 8.5 12.0 Not reported...... 1.7 1.8 1.6 1.7 1.8

b) Storm Windows or Other Protective Coverings All occupied units ...... 100.0 100.0 100.0 100.0 100.0 All windows covered ...... 46.0 76.3 80.5 21.7 11.9 Some windows covered ...... 10.0 14.6 10.7 8.5 7.2 No windows covered...... 42.9 8.0 7.6 68.9 79.7 Not reported...... 1.1 1.2 1.2 1.0 1.2

c) Storm Doors All occupied units ...... 100.0 100.0 100.0 100.0 100.0 All doors covered...... 47.8 77.9 82.0 25.0 11.1 Some doors covered ...... 11.7 12.7 9.2 14.6 8.9 No doors covered...... 39.4 8.1 7.6 59.4 78.8 Not reported...... 1.2 1.3 1.3 1.1 1.3

debasement All year round units ...... 100.0 100.0 100.0 100.0 100.0 With basement...... 47.9 85.2 70.5 18.3 21.7 No basement ...... 52.1 14.8 29.5 81.7 78.3

SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Urban Development, Annual Housing Survey, 1976 U.S. and Regions, PartA: Genera/ Housing Characteristics, p.1. attractive to many owners, and the 15.6 per- isting housing.13 Its studies indicate that ap- cent of homes that have masonry or concrete proximately three of every four owner-occu- walls are considerably harder to retrofit. pied dwellings had accessible attics and that the remainder had either no attic (15.1 percent) Owens-Corning Fiberglas Corporation has developed estimates of the potential for 13Owens-Corning data are taken from presentation to energy conservation through reinsulating ex- the Federal Energy Administration, Feb. 25,1977. Ch. V—Housing Decisionmakers ● 101

or an inaccessible attic. In this part of the hous- electricity are the predominant fuels used for ing market only 10.9 percent of respondents cooking. reported their dwelling had no insulation, but the majority of homes appear underinsulated, Table 42.—Heating Equipment and Fuels for Occupied Units, 1976 with less than 4 inches of insulation in the at- (in thousands) tic. Only 15.3 percent of respondents had more than 6 inches of attic insulation. Number Percent Total occupied units ...... 79,315 A Gallup survey for the Department of 100 Warm air furnace...... 40,720 51.3 Energy (DOE) in early 1978 is generally consist- Steam or hot water ...... 14,554 18.3 ent with the Owens-Corning findings. Nearly Built-in electric units. ., ...... 5,217 6.6 three-fourths of all homeowners reported that Floor, wall, or pipeless furnace ...... 6,849 8.6 Room heaters with/without flu...... 8,861 11.2 they have attic insulation or some storm win- Fireplaces, stoves, portable heaters. . . . 2,398 3.0 dows or storm doors. None...... 716 .9

In 1977, Construction Reports conducted a Total occupied housing units...... 74,005 100 study of insulation requirements and esti- House heating fuel: mated that the market for additional insula- Utility gas...... 41,219 55.7 tion totaled 25.5 million single-family and two- Fuel oil, kerosene ...... 16,451 22.2 Electricity...... 10,151 13.7 to four-family units. The report notes, how- Bottled gas or LP gas ...... 4,239 ever, that there is no agreement on the actual Coke or coal/wood/other...... 1,482 ;:: number of homes or properties that need in- None...... 463 .6 sulation or on how many owners could cost-ef- Cooking fuel: fectively reinsulate their homes. Utility gas...... 32,299 43.6 Electricity...... 35,669 48.2 Table 42 characterizes the types of heating Other...... 5,748 7.8 None...... 287 .4 equipment and fuel used in occupied units. The majority of housing units are heated by SOURCE. U.S. Department of Commerce and U.S. Department of Housing and Urban Development, Annual Housing Survey, 1976 U.S. and Regions, warm air furnaces. Gas is the dominant heating Part A: General Housing Characteristics, pp. 7,8. fuel, followed by fuel oil or kerosene. Gas and

TRENDS IN HOUSING AND CONSERVATION

Trends in Housing Costs Interest in conservation coincides with rapidly rising costs both for new and existing It is clear that property owners and the housing. Builders have been particularly con- building industry have become more aware of cerned about the negative impact that rising the importance of energy conservation and, as costs may have on the ability of purchasers to knowledge has improved and the cost of ener- afford housing. Table 43 provides a breakdown gy has risen, have taken steps to improve the of changes in the Consumer Price Index during energy efficiency of housing. This trend is ap- the period 1968-76, when the costs of home- parent in both new construction and in the ownership nearly doubled. Fuel and utilities retrofit market. represent a rapidly rising element in housing costs over the past few years, although their total contribution to owning a home is still “Gallup Organization, Inc., A Survey of Homeowners Concerning Home Insulation, conducted for the Depart- well below other factors. ment of Energy, April 1978. Figure 15 portrays the relationships among ‘5 Bureau of Census, “Estimates of Insulation Require- ments and Discussion of Regional Variation in Housing the increases in median housing costs, owner- Inventory and Requirements,” Construction Reports, ship costs, income, and the Consumer Price In- August-September 1977. dex between 1970-76. For the median-price 102 ● Residential Energy Conservation

Table 43.—Selected Housing Series of the Consumer Price Index: Selected Years (1967 = 100)

Home ownership Home First mortgage Property maintenance Fuel and Year Sheltera Rent Total b interest rates insurance rates and repairs utilities 1968...... 104.8 102.4 105.7 106.7 104.7 106.1 101.3 1969 ...... 113.3 105.7 116.0 120.0 109.3 115.0 103.6 1970...... 123.6 110.1 128.5 132.1 113.4 124.0 107.6 1971 ...... 128.8 115.2 133.7 120.4 119.9 133.7 115.1 1972 ...... 134.5 119.2 140.1 117.5 123.2 140.7 120.1 1973 ...... 140.7 124.3 146.7 123.2 124.4 151.0 126.9 1974 ...... 154.4 130.6 163.2 140.2 124.2 171.6 150.2 1975 ...... 169.7 137.3 181.7 142.1 131.4 187.6 167.8 1976...... 179.0 144.7 191.7 140.9 144.3 199.6 182.7

‘Includes rent, homeownership, and hotel and motel room rates. blnc[udes home purchase, mortgage interest, real estate taxes, property insurance, and home maintenance and repairs. SOURCE: Department of Housing and Urban Development, 1976 HUD Stafistica/ Yearbook, p 258

. Figure 15.—lncreases in Housing Costs, Income, and Consumer Price Index, 1970-76

I 1 1 1 1 !! I 1 . -1-. I J n II I I u 46.047.0 65.4 73.4 88.9 102.3 ’10

Percent increase, 1970-76

SOURCE: Joint Center for Urban Studies of MIT and Harvard University, The Nation’s Housing, 1970-76, p. 119. homebuyer, new housing operating costs have creased only 47 percent. In 1970, 46 percent of doubled (102.3 percent), and for the existing all families could afford the median-price new homebuyer they have increased 73.4 percent. home and 36 percent the median-price existing During the same period median income in- home. By 1976 only 26 percent of all families Ch. V—Housing Decisionmakers ● 103

could afford the median-price new home and Table 44.—Percentage Distribution by Income 36 percent the median-price existing home. ’G of Homebuyers Exceeding the 25. Percent Rule

A recent Department of Housing and Urban Percentage of Development (HUD) study of housing costs Annual income all homebuyers also determined that housing costs outpaced Less than $15,000 ...... 30 $15,000-19,999 ...... 30 family income in the period 1972-76. ’7 During $20,000-24,999 ...... 19 that period median family income increased at $25,000 or more...... 21 an average annual rate of 7.05 percent. During Total...... 100 the same period the average annual rate of in- SOURCE: U.S. League of Savings Associations, Homeownership: Affording the crease in the median sales price of new one- Single Family Home, p. 32. family homes was 12.49 percent, and the me- There are two general types of homebuy- dian sales price of existing one-family homes ers–first-time homebuyers and repeat home- increased 9.30 percent. buyers. Repeat homebuyers tend to be older, Even with the rapid escalation of housing have higher incomes, and have an equity from costs demand for both new and existing homes their old house to invest in the purchase of has been strong. Several reasons explain why their new home. As a result they can afford to demand continues in the face of rapidly rising buy more expensive housing. The median price prices. Homeownership provides attractive tax for first-time homebuyers is $37,500 but for re- advantages over rental housing. Buyers an- peat buyers it is $48,500. First-time homeown- ticipate that owning a home is a sound and ers are often able to afford a home because profitable investment and will cost more in the they are willing to buy existing housing. future. Many home purchasers buy existing About 43 percent of first-time homebuyers housing rather than newly constructed hous- purchase housing constructed before 1955, ing. Americans are willing to devote more of compared with 25 percent of repeat buyers. By their income to housing than would be ex- contrast, 29 percent of repeat buyers purchase pected based on traditional income/housing new housing, versus 18 percent of the first-time cost guidelines. As a result, the majority of buyers. Table 45 describes the difference be- Americans has been able to afford a house. In tween the two types of buyers. 1977, nearly 60 percent of all homebuyers had incomes of less than $25,000 and nearly 40 per- Table 45.—Percentage Distribution of Age of Homes cent less than $20,000.18 Purchased by First-Time and Repeat Homebuyers Several factors have enabled families to Year of construction of First-time Repeat All continue to afford housing. A traditional in- home purchased buyers buyers buyers dustry rule of thumb has been that housing Before 1945...... 26.5 16.2 19.9 1945-54 ...... 16.0 8.8 11.5 cost should not exceed 25 percent of gross in- 1955-64 ...... 17.8 16.0 16.7 come. In fact only 52 percent of all home- 1965-69 ...... 8.1 9.7 9.0 owners spend less than 25 percent, 24 percent 1970-75 ...... “ 13.3 19.9 17.5 New homes...... 18.3 29.4 25.4 spend 25 to 30 percent, and 14 percent spend more than 30 percent. Table 44 breaks down SOURCE: U.S. League of Savings Associations, Homeownership: Affording the Single Family Homes, p. 46. the percentage of buyers who exceed the 25- percent income rule. First-time homebuyers are able to purchase housing partly because of the availability of liberal financing. Forty-five percent make “The Nation’s Housing: 1975-1985 (Joint Center for Ur- downpayments of less than $5,000, and 73 per- ban Studies of the Massachusetts Institute of Technol- cent put down less than $10,000. Forty-seven ogy and Harvard University, 1977), p. 103. percent of first-time buyers make downpay- ‘7Fina/ Report of the Task Force on Housing Costs ments of less than 20 percent of the purchase (Washington, D. C.: Department of Housing and Urban Development, May 1978), p. 3. price. By contrast, only 11 percent of repeat “Homeownership: Affording the Single Family Home buyers make downpayments of less than 20 (U.S. League of Savings Association, 1978), p. 27. percent of the purchase price. 104 ● Residential Energy Conservation

It is also important to recognize that hous- ers and consumers were not concerned, until ing costs and markets vary significantly by recently, about the energy efficiency of hous- region of the country and community size. ing. While utility costs have been rising sub- Table 46 shows the substantial cost variation stantially, so have other elements of home- in new housing by metropolitan localities of ownership, particularly in larger communities. different sizes. As shown in table 47, utility costs are not Table 46.—Median Home Purchase Price, 1977 uniform and also vary by region. They are highest in the South and lowest in the West, Median home particularly California. Metropolitan area purchase price All U.S. metropolitan areas with Table 47.—Median Utility Costs by Region population of 1.5 million or more . . . $49,500 All U.S. metropolitan areas with Median utility costs populations between 250,000-1.5 Region Monthly Annual million ...... $42,900 All U.S. metropolitan areas with Northeast...... $60 $720 populations of less than 250,000 . . . $37,000 North Central...... 60 720 All of the United States ...... $44,000 South ...... 70 840 West ...... 50 600 SOURCE: U.S. League of Savings Associations, Homeownership: Affording the Single Family Home, p. 13. SOURCE: U.S. League of Savings Associations, Homeownerahip Affording the Single Family Home, p. 22. The increase in housing costs is pricing most Table 48 documents that utility costs still lower middle-income families out of the new represent a relatively small fraction of month- housing market; they must purchase existing ly housing expenses. In metropolitan areas the housing or improve the dwellings they are cur- mortgage payment is the largest element of rently living in. Only 3.7 percent of all house monthly costs, followed by utilities and taxes. purchasers in 1975-76 earned less than $10,000, But in small communities, where taxes are low, although this income bracket represents 32 utilities represent a much larger cost element percent of the population. Families earning than real estate taxes. $10,000 to $14,999 represent more than 22 percent of the population but bought only 13.4 Buyers seem to be demanding reasonable percent of the new housing. ’9 While the pace levels of insulation and double-glazing or of construction has remained high, much of storm windows in most housing markets. the housing is being built for upper income Because of this demand, builders are including groups. Families earning more than $25,000 these features in their homes and appraisers comprise 14.1 percent of the population, but and lenders are recognizing the added costs in they bought 32.4 percent of the new housing.20 their lending judgments. Although the larger downpayments and increased carrying costs Trends indicate that the new construction may affect the ability of the marginal pur- market is increasingly oriented to the upper in- chaser to buy a home, the overall marketabili- come buyer. In 1965-66 the top quarter of the population, in terms of income, bought 58 per- ty for housing has not been significantly affected by including such features, which cent of the new homes. By contrast the lower builders view as adding to the appeal and third of the population bought only 4 percent salability of their homes. of the new housing in 1975-76, but bought 17 percent of the new housing in 1965-66.2’ Trade publications report strong buyer interest in energy-saving features. As noted in Trends in Utility Costs chapter 11, surveys by Professional Builder in 1974-77 indicate that the proportion of home- Historically, utility costs have been a small buyers willing to spend $600 or more initially component of housing costs. As a result, build- to save $100 per year in energy costs increased from 78 to 93 percent.22 As figure 16 shows, ‘gIbid. 201 bid. *z’’ Consumers Tell What They Want in Housing,” Pro- 2’ Ibid. fessional Builder, December 1977. Ch. V—Housing Decisionmakers ● 105

Table 48.—Percentage Distribution of Median Expenditures for Major Elements of Monthly Housing Expenses

Total Mortgage Real estate Hazard monthly Metropolitan area payment taxes insurance Utility costs expenses All U.S. metropolitan areas with populations of 1.5 million or more ...... 67.6 15.8 2.9 13.6 100 All U.S. metropolitan areas with populations between 250,000 and 1.5 million ...... 69.1 11.8 3.4 15.7 100 All U.S. metropolitan areas with populations less than 250,000 ...... 69.8 9.4 3.7 17.7 100 All of the United States ...... 68.3 13.5 3.3 15.0 100

SOURCE: U.S. League of Savings Associations, Homeownership: Affording the Single Family Home, p. 25. generally similar attitudes are apparent in all Buyers are clearly concerned about energy parts of the country. costs and will invest in energy-saving improvements. Housing magazine recently conducted A survey of builders reported by Professional a survey of approximately 400 prospective new Builder confirms this trend. It documents homebuyers in five market areas around the strong consumer interest in and builder re- country to determine their attitude toward dif- sponse to energy conservation features in new 23 ferent features including energy-saving im- homes. Builders report that buyers believe 26 provements. While the estimated costs of energy conservation is an important consider- these improvements varied by region, the ation in buying a home— and that for a majori- survey revealed some attitudinal similarities ty of buyers in some regions it is a very impor- and some clear-cut differences among the tant consideration. Such interest does not vary market areas. The willingness to pay $500 to significantly by housing price. $1,500 for upgrading insulation was strongly The Professional Builder study reports that evident in all five markets. Outside California, double-glazed windows are now a standard a large majority of respondents were willing to feature employed by almost 7 out of 10 builder pay for double-glazed windows. Both types of respondents. Almost three of every four build- improvements seem well accepted by consumers use some type of attic ventilation, and ers and would appear to be viewed as a worth- nearly two out of three use a zoned heat- while investment. Table 49 presents the data ing/cooling system with separate thermostats on the five markets. —— in different rooms.24 As a result, about half of The National Association of Home Builders the builders indicated they have been able to Research Foundation conducted detailed reduce the size of the heating and cooling sys- surveys of members of NAHB in 1974, 1975, tems used, thus mitigating the added costs of and 1976 to gain a comprehensive summary of other energy-conserving features. the thermal characteristics of homes built in Simple conventional equipment and materi- recent years. Table 50 compares the average als are most typically used by builders to up- levels of insulation and the glazing character- grade the energy efficiency of their homes. The istics of more than 120,000 homes built in 1974 most common features used in the past 2 years and more than 112,000 homes built in the last are: increased attic (ceiling) insulation (83 per- half of 1975 and the first half of 1976. cent), double/triple glazing (67 percent), im- The data show a rather remarkable jump in proved weatherstripping/caulking (50 percent), the levels of insulation and in the use of roof overhangs (50 percent), heat pumps (39 25 double- and triple-glazing. The levels of both percent), and attic fans (29 percent) . ceiling and wall insulation increased in all nine census regions and now show surprisingly little

23’’ Energy and the Builder,” op. cit. 241 bid. *b’’What Home Shoppers Seek in Six Major Market,” 251 bid. Housing, October 1978.

Ch. V—Housing Decisionmakers ● 107

Table 49.—Consumer Attitudes Toward Conservation Improvements in New Homes in Selected Localities

Washington, D.C. Miami Chicago San Francisco San Diego Upgraded insulation % want...... 97 88 95 95 83 % don’t want...... 3 12 5 5 17 Double glazed windows % want...... 91 70 86 68 34 % don’t want...... 9 30 14 32 66 Solar water heater % want...... 34 58 25 41 36 % don’t want...... 66 42 75 59 64 Solar water heater and house heater % want...... 32 48 21 42 24 % don’t want...... 68 52 79 58 76 Heat pump % want...... 92 — 44 — — % don’t want...... 8 — 52 — —

SOURCE: Housing, October 1978, p. 54.

variation by region, with the average R-value (vs. 4.3).27 The F. W. Dodge Co. surveyed 1,000 of the wall ranging from 10.9 in the South randomly selected homes built in 1961 and Atlantic region to 12.2 in New England and the found that 65 percent contained exterior wall East North Central (States bordering on the insulation, 92 percent had ceiling insulation, Great Lakes) regions. Somewhat more varia- and 7 percent had perimeter insulation.26 By tion is shown for attic insulation, with a low of contrast, 99 percent of the houses built in 16.9 in the South Atlantic region and a high of 1975-76 had both ceiling and wall insulation 22.5 in the Mountain States. These data reflect and 11 percent had perimeter insulation .29 the greater variety of materials used in attics The percentage of homes built in 1975-76 and the ease of installing different amounts. with various levels of insulation is shown in The use of insulation between the floor joists table 51. Almost 100 percent have ceiling in- actually showed a decrease, but this may re- sulation of some kind, with 83 percent having flect the fact that the 1976 survey separately R-1 3, R-19, or R-22. Nearly 100 percent of the tabulated basement wall insulation and insula- houses have wall insulation, with 93 percent tion of the crawl space walls, rather than an ac- having either R-11 or R-13 because of the tual decrease in the amount of floor insula- almost universal use of 2x4 studs. It may seem tion. A significant decline in the use of single- surprising that only 20 percent of the houses glazed windows is also evident, with only the have insulation between the floor joists, but East South-Central States (Kentucky, Tennes- this may be due to the fact that in many areas see, Mississippi, and Alabama) showing an ap- substantial cooling is provided through the preciable increase in the use of single glazing. floor in summer, offsetting the winter heating Triple glazing was not tabulated separately in savings of floor insulation to a considerable the 1974 survey, but it is now being used in a degree. However, it is clear that a large small number of homes in the Midwest and number of houses with ventiIated crawl spaces East. would benefit from insulation; increased in- It should not be inferred that similar increases have occurred every year since the oil 27 Therma/ Characteristics of Sing/e Family Detached, embargo of 1973, because the NAHB survey of Single Family Attached, Low Rise Multi-Family, and houses built in 1973 showed insulation levels Mobile Homes for the Office of Technology Assessment (National Association of Home Builders, October 1977). very similar to 1974, with weighted average R- (See appendix C.) values for the walls of 10.0 (vs. 9.2 in 1974), “Ibid. 14.4 for the ceilings (vs. 15.8), and 4.0 for floors “Ibid. Table 50.—Comparison Between Average Insulation and Glazing Characteristics of New Single-Family Detached Houses Built in 1974 and in 1975-76

East West East West New Middle North North South South South England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S. Average exterior wall insulation R-value 1974...... 10.3 9.3 10.6 11.3 7.2 10.3 10.3 6.7 8.8 9.2 1975-76 ...... 12.2 11.8 12.2 12.0 10.9 12.0 11.9 11.0 11.4 11.7

Average ceiling or roof insulation 1974...... 17.9 17.9 15.7 16.6 14.8 15.1 15.1 18.1 14.6 15.8 1975-76 ...... 18.2 18.7 18.5 19.3 16.9 18.0 18.4 22.5 18.0 18.4

Average insulation R-value between floor joists 1974...... 4.8 4.8 2.8 5.2 5.4 5.2 6.6 1.8 1.8 4.3 1975-76 ...... 5.0 6.7 5.0 4.8 3.7 2.9 0.1 1.8 1.4 2.6

Windows 1974 Single glazing...... 37.1 40.7 28.3 34.3 69.4 42.4 92.7 74.1 85.1 52.0 Double glazing (insulation glass or single w/storm) ...... 62.9 59.3 71.7 65.7 30.6 57.6 7.3 25.9 14.9 48.0

1975 Single glazing ...... 37.6 26.6 5.8 14.3 58.8 49.6 80.2 22.6 76.0 44.0 Double glazing (insulation glass or single w/storm) ...... 62.2 71.6 89.5 82.8 41.1 49.4 19.8 76.6 23.5 55.0 Triple glazing (insulation w/storm. .,... 0.2 1.7 4.8 2.9 0.1 0 0 0.8 0.5 1.0 SOURCE: NAHB Research Foundation, inc. See appendix B of this volume for this and all other referenced NAHB data. Table 51.– Insulation Characteristics of 1975-76 Single= Family Detached Housing Units

East West East West New Middle North North South South South England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S. Ceiling (% of all houses) None...... 0.7 0 0.6 0.6 1.4 1.5 0 5.6 0.7 1.0 R-7 & R-11 ...... 7.0 12.3 4.5 3.0 9.8 4.2 3.0 0.7 2.8 5.4 R-13...... 24.1 7.8 30.6 25.7 23.6 25.6 20.7 13.4 12.8 20.4 R-19...... 52.7 46.7 28.4 25.5 51.1 42.6 59.5 42.8 80.9 50.0 R-22...... 8.1 14.2 25.3 22.8 5.3 17.0 6.8 22.9 0.9 12.3 R-25, R-26, R-30, R-31, & more than R-31 . 7.2 12.4 9.2 18.7 6.9 8.1 7.8 24.5 1.5 9.3 Other ...... 0.2 6.6 1.4 3.7 1.9 1.1 1.2 0.1 0.4 1.8

Exterior wall (% of all houses) None ...... 0 0 0 0 0.6 0 0 0.2 0.2 0.2 Less than R-7 ...... 0 0 0 0 8.0 0 0 2.0 0 1.4 R-7...... 0.4 0.5 0 0 0.9 0.3 0.2 8.7 1.1 R-Ii ...... 58.2 73.0 61.1 63.8 69.3 64.5 77.8 62.8 8!; 71.0 R-13...... 35.6 21.7 33.7 32.5 18.6 30.0 15.5 22.1 8.9 21.8 R-19...... 4.5 4.0 3.4 3.4 2.1 4.6 5.9 2.6 3.0 3.5 Other ...... 1.3 0.8 1.8 0.3 0.5 0.6 0.6 0 0 1.0

Between floor joists (% of all houses) None ...... 63.0 51.0 63.1 65.7 75.0 75.7 99.1 88.3 88.9 80.1 2-1/4’’ batts R-7...... 0.9 1.7 1.9 1.1 1.8 4.4 0.1 0.4 1.1 1.4 3-1/2’’ batts R-n...... 16.5 32.9 18.5 14.3 16.8 11.5 0.4 4.1 7.3 11.2 R-13, R-19&Other ...... 19.6 14.4 16.7 18.9 6.4 8.4 0.4 7.4 2.7 7.3

Crawl space walls(% of all houses) None ...... 99.6 98.7 98.7 99.7 97.1 97.5 99.8 98.2 93.6 98.2 lnsulated (R-7 through R-19)...... 0.4 1.3 1.3 0.3 2.9 2.5 0.2 1.2 6.4 1.8

Basement walls (% of all houses) None ...... 87.0 93.5 93.0 81.8 97.4 95.1 99.8 93.9 97.7 96.0 insulated (mostly R-7, 11, 13, & 19)...... 13.0 6.5 4.6 18.2 2.6 4.9 0.2 6.1 2.3 4.0

Slab-on-grade perimeter (% of all houses) None ...... 99.3 96.7 92.6 99.3 86.3 88.8 89.0 93.3 91.9 89.3 1" rigid ...... 0.4 2.6 5.1 0.6 11.0 9.3 9.1 6.1 2.6 8.3 2" rigid ...... 0.2 0.7 2.2 0.1 2.3 1.3 0.9 0.1 0.8 2.1 Other ...... 0.5 0 0.5 0 0.4 0.6 1.0 0.5 0 0.3 SOURCE: NAHB Research Foundation, inc. 110 ● Residential Energy Conservation

sulation of basement walls and increased use to rewrite homeowner loans and lend 100 per- of insulation between the floor joists are the cent of the cost of adding a solar system most obvious areas where added insulation without raising the interest rate on the home would be useful in new construction. mortgage and normally without increasing the total monthly payments. A bank in Washing- The window and door characteristics of the ton State offers preferential terms for loans on houses built in 1975-76 are shown in table 52. It homes that meet certain energy conservation shows that 42 percent of the entrance doors requirements. 31 A Minnesota bank promotes were insulated. its conservation program as “the way lenders Table 53 shows the percentage of homes by can help, ” while an IIlinois bank group offers a price that have R-11 or greater levels of insula- home inspection at a $50 cut-rate fee to detect tion in the exterior walls and R-13 or greater heat-loss problems.32 A survey by the Savings levels of insulation in the ceiling. More than 94 Institutions Marketing Society of America in- percent of all houses had exterior insulation dicated that 20 percent of the 656 institutions levels of R-11 to R-19, and the incidence of less surveyed featured energy-related homes in than R-11 levels does not seem to correlate their 1977 advertising. 33 But while lenders have with housing price. The data related to ceiling launched many types of programs, many have insulation are similar. Nearly 90 percent of all dropped them or lowered their expectations in houses had ceiling insulation levels of R-13 or the face of weak consumer response. Below- greater, and housing price does not seem to af- market interest rates appear to offer only a fect the levels of insulation. limited incentive to take conservation actions. There appears to be some buyer resistance Presumably, this reflects the general low-level to expensive conservation packages; many of demand for small home-improvement loans homeowners would prefer to invest in addi- (see Retrofit, page 97). tional amenities rather than more conservation 30 Data on retrofit are less precise, but many improvements. A Los Angeles Times article homeowners have been improving the energy about Chicago builders indicated that while efficiency of their homes. As noted in table 54, most builders provide R-11 exterior wall insula- Building Supply News estimated that in 1977 tion and R-19 ceiling insulation, customers 4.2 million jobs involved insulation and 1.3 mil- pass up beefed-up conservation packages for lion jobs involved storm windows and doors. such luxury options as extra rooms or garages. One builder offered a $3,800 optional energy Extensive retrofit is confirmed by Owens- package, but only 18 of 77 homebuyers bought Corning data. To monitor the extent of ceiling it. Another reported a lack of interest in an op- reinsulation activity by homeowners, Owens- tional feature to double the amount of insula- Corning conducted surveys in 1975 and 1976. tion in the homes in one subdivision. During this period the average insulation installed increased from 4¼ to 5½ inches. The While builders have responded to consumer extent to which reinsulation occurred did not demand for energy-saving improvements, lend- vary widely across income groups: in fact, ers have begun to promote saving in lending. households with incomes under $10,000 had a Some lenders have promoted energy conserva- slightly higher rate of activity than their per- tion through advertising the advantages of centage of the population. Based on other conservation - and providing special arrange- studies Owens-Corning estimated that between ments and rates for conservation loans. Many 1974 and 1976, 8 million homeowners ap- lenders have offered conservation home-im- peared to have reinsulated their ceilings, an provement loans at interest rates below nor- additional 7 million did so in 1977. In 1978, 5 mal market rates. One California bank offers 31 Urban and Community Economic Development (American Bankers Association, May 1977). 30 Don Debat, “Lending Institutions Say That Energy 32 I bid. Expenses May Exceed Monthly Mortgage Payments,” Los 33 Energy Savings Is Good (Savings Institutions Market- Angeles Times, Oct. 8,1978. ing Society of America). Table 52.—Window and Door Characteristics of 1975-76 Single-Family Detached Housing Units

East West East West New Middle North North South South South England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S. Window glazing (% by region) Single glaze ...... 37.6 26.6 5.8 14.3 58.8 49.6 80.2 22.6 76.0 44.0 Single w/ storm ...... 25.3 21.6 27.2 40.6 15.5 22.7 12.1 22.7 4.9 20.0 Insulating glass...... 36.9 50.0 62.3 42.2 25.6 26.7 7.7 53.9 18.6 35.0 Insulating w/ storm ...... 0.2 1.7 4.8 2.9 0.1 0 0 0.8 0.5 1.0

Window (ft2 per unit by region) Single glaze ...... 81.7 47.8 7.5 23.4 105.4 84.1 123.4 49.7 152.8 82.0 Single w/ storm ...... 55.0 38.7 42.0 66.9 25.8 35.1 16.4 55.1 9.2 32.6 Insulating glass...... 80.3 89.8 104.9 71.0 44.8 41.7 11.1 92.7 35.8 58.9 insulating w/storm ...... 0.5 3.1 8.2 4.9 0 0 0 1.2 0.9 2.1 Totals ...... 217.5 179.4 162.6 166.2 176.0 160.9 150.9 198.7 198.7 175.6

Sliding glass doors Number per unit...... 0.88 1.02 0.88 0.93 0.89 0.68 0.84 1.00 1.26 0.95 Square feet per unit...... 35.2 40.8 35.2 37.2 35.6 27.2 33.6 40.0 50.4 38.0

Exterior doors (% by region) (Entrance) Not insulated ...... 41.0 16.1 23.1 46.1 69.6 69.2 78.8 56.5 89.4 57.9 Insulated...... 59.0 83.9 76.9 53.9 30.4 30.8 21.2 43.5 10.6 42.1

SOURCE. NAHB Research Foundation, Inc.

Table 53.—Single-Family Detached Homes Wall and Ceiling Insulation by Housing Price

Exterior wall insulation Ceiling insulation Price range Less than R-1 1 R11-19 Other Less than R-13 R-13 or Greater Other Less than $30,000 ...... 2.7 96.7 .6 3.7 95.8 .5 $30,000 -34,999 ...... 4.6 94.8 .6 7.4 89.7 2.9 $35,000 -39,999 ...... 3.5 94.1 2.4 8.3 89.8 1.9 $40,000 -44,999 ...... 2.6 96.5 .9 6.4 93.4 .2 $45,000 -49,999 ...... 1.3 98.0 .7 4.7 92.2 3.1 $50,000 -54,999 ...... 4.2 94.8 1.0 6.7 91.3 2.0 $55,000 -59,999 ...... 1.9 97.6 .5 4.0 94.4 1.6 $60,000 -64,999 ...... “. . . . 1.7 97.6 .7 4.9 95.0 .1 $65,000 and over...... 1.3 98.2 .5 4.8 93.6 1.6 SOURCE: NAHB Research Foundation, Inc. 112 ● Residential Energy Conservation

Table 54.—Estimates of Insulation and Storm Door/ Energy conservation is a concern for the Storm Window Activity in the Retrofit Market, 1977 mobile home industry. The Federal standards under which all mobile homes are built include Dollar Average volume Number cost thermal performance standards. Three differ- Type of activity ($000) of jobs per job ent thermal performance standards are used Additional insulation $1,035,292 4,243,000 $244 depending on the zone of the country. The Storm windows & NAHB study of 175,000 mobile homes built in doors ...... $ 212,901 1,339,000 $159 1976-77 shows that most homes had R-13 to SOURCE: Building Supply News, Homeowners Remodeling/Modernization Study, 1978. R-18 levels of insulation in the ceilings, though sizable portions had R-19 to R-21. Walls and million to 5.5 million more homeowners were floors were typically insulated to an R-11 expected to invest in ceiling reinsuIation. standard. Most units had single-glazed windows with storm windows, but in units to be The Gallup survey conducted for DOE in sold in southern areas single-glazed storm win- early 1978 found that 1 out of 6 respondents dows were common. The Federal standards said that they had added insulation and 1 out have had a positive effect in raising insulation of 10 installed storm doors or windows in the standards in mobile homes. Most existing previous 12 months. Thirty-six percent of those mobile homes have some insulation but its ef- with insulation believe more is needed.34 fectiveness is not known. Few mobile homes Ninety-three percent believe their bills will be have storm windows or storm doors. Due to the lower-–(but only 44 percent know how large nature of the industry, Federal regulation has the savings will be). More than 80 percent of been welcomed, and improved standards the homeowners said they know the type of in- shouId not represent a major barrier. sulation they want, where to buy it and how to install it. On the other hand, only 50 percent know what a fair price would be.

FINDINGS AND OPPORTUNITIES FOR ENERGY CONSERVATION

Operating practices and market conditions There is no single national housing market; largely determine the incentives for and obsta- each locality has its own characteristics and cles to energy conservation. Opportunities for features. Practices, attitudes, and require- energy conservation differ among the three ments vary by such factors as geography, sup- housing submarkets– new construction, man- ply and demand for housing, climate, tradi- ufactured housing, and existing housing. These tion, cost and availability of fuel, patterns of differences must be considered in setting tenure, community size, and type of construc- energy conservation goals and programs. Dif- tion. As a result, housing costs and characteris- ferences in practices, levels of knowledge, and tics differ widely depending on locality or attitudes toward conservation vary depending region. These variations, true of both the ex- on whether the housing is investor-owned and isting housing stock and the new construction rented or owner-occupied, and whether the market, affect the attractiveness of investing housing is single-family or multifamily. These in energy conservation improvements and de- differences affect the economic circum- termine in part the building industry response stances, attitudes, and characteristics of the to conservation. The attitudes of property participants in the housing sector and the in- owners toward energy costs and energy conser- centives needed to motivate property owners vation have changed significantly over the to take energy-saving actions. past 5 years. In response, many builders have raised their standards for energy efficiency in homes and are now actively promoting energy 34 Gallup Organization, Inc., op. cit. features in sales. Persons owning homes have Ch. V—Housing Decisionmakers ● 113

begun to alter their homes to save energy; this Although most builders now seem generally effort is being augmented and supported by aware of opportunities for conserving fuel, contractors, utilities, and some lenders. their expertise is limited. Most building companies do not have design or engineering skills, Despite the growing response of the building but rely on architectural and engineering industry and individuals, a great deal more can firms, utilities, design reviewers, and lending be accomplished. New construction offers institutions to make decisions on energy-based more energy-saving potential per dwelling than changes. Designing energy-efficient housing re- existing housing, as many improvements possi- quires consideration of climate, site, style, mable during construction cannot be added, or terial costs, and specifications, financing can be added only at high cost, after the costs, and taxes. Builders often cannot afford building is finished. Because most new con- to hire experts in all these areas. Without prop- struction must conform with local building er engineering and design, housing can contain codes, a system is in place to inspect plans and many “energy saving” features and yet fail to construction practices. operate efficiently.

Because of the size of the existing housing Builders appear willing to experiment with stock — some 80 million units — retrofit wilI be new materials, particularly if others in their most productive in saving energy in the short area are also experimenting. I n 1978, a Profes- run. The level of thermal performance of the sional Builder survey found that 25 percent of total housing stock will change only slowly as the builders had tried 2x6 framing with 6 a result of new construction, with annual starts inches of insulation to obtain an R-19 wall; this of 2 million units on the average. number was up from 20 percent of the builders surveyed in 1977.35

Builders’ Attitudes The other factor that determines how builders build is the local building code, Inspections The construction industry responds to wide- normally include both design review and on- ranging changes in taste and demand. Since site inspection. As code requirements relating the new construction market is highly com- to energy use become more stringent, builders petitive, and most firms are relatively small, will presumably comply. Most homes are con- builders must compete in terms of price, de- structed by builders who use prescriptive sign, and amenities as demanded by the public codes; i.e., acceptable materials and practices at a given time. Builders therefore add energy are clearly specified. These builders will easily conservation improvements to their houses to cope with most new codes that can be trans- the extent they expand or improve the market- lated into simple, easy to follow formats. (See ability of the house. the section in chapter VI 1 I on standards.) In addition to watching buyer demand close- Iy, builders also stay in close touch with building material suppliers, and some follow the Property Owners’ Attitudes research and publications of NAHB and similar The price of energy seems to be the most groups. From such marketer’s associations and powerful incentive to conserve, and future other builders, they learn of new industry conservation will depend on property owners trends, practices, and products. Features like realizing increased economic benefits. Where air-conditioning, once considered a luxury, fuel costs are high and climatic conditions ex- became standard in a short time in response to treme, it appears that consumers are especially buyer demand and technology transfer. Thus, wilIing to invest in energy efficiency. education through building trade groups, combined with growing public concern over energy cost, should work to accelerate the use of conservation options by builders. 35’’ Energy and the Builder,” op. cit. 114 ● Residential Energy Conservation

A Iifecycle costing analysis, while common- Is the Cost of Adding Energy ly used to make investment decisions of cer- Conservation Features to New or tain types, is not typically used by the home- Existing Housing an Impediment owner. The commercial real estate investor to Conservation? may conduct a lifecycle cost analysis in an informal manner, balancing the analysis with The inclusion of conservation improvements judgments about the future of the property, in new housing is tempered by market condi- the investment required, and other investment tions and considerations. The dramatic rise in plans. Short ownership periods and investment the price of housing in recent years has made horizons mitigate against adoption of Iifecycle builders sensitive to increases in first costs or costing approaches. in carrying charges. Including energy conservation features in a The marketplace makes distinctions be- new home often increases downpayment re- tween conservation improvements that are quirements and fixed monthly charges. While clearly cost-effective and those which return it does not follow that if builders choose to the investment over a longer pried. This par- upgrade the energy-saving characteristics of tially explains the greater interest in insulation their housing and increase the price according- and double-glazed windows than in, for exam- ly, households are priced out of the market ple, solar energy systems. The difference in at- altogether, marginal buyers might have to titude may also reflect consumers’ and build- scale down their expectation. For example, ing professionals’ different levels of awareness assuming a 10-percent interest rate and 30-year and information about various conservation term, a house cost of $50,000 and $45,000 loan, technologies. and a $5,000 downpayment, a monthly mortgage payment of $394.91 would be required. Homeowners and investors assess energy Extra improvements of $2,000 financed on the conservation opportunities differently. Home- same terms would increase the downpayment owners view conservation improvements in $200 and the monthly payment would rise to terms of their potential for reducing energy $410.18. The $15.27 monthly increase would costs, effect on the downpayment and the add $183.24 a year to housing costs. Using the monthly carrying costs, and the possibility of rule of thumb (which is no longer universally future maintenance difficulties. Investors in used) that a purchaser shouId spend 25 percent rental housing consider conservation improve- of his income for housing, a purchaser would ments in terms of improved profitability, re- have to earn an additional $733 of annual induced risk, or additional income or profit. If income to afford the house. This additional cost creased energy costs can be directly passed on might affect the marketability of the home; to tenants by increasing rents, conservation NAHB estimates that 39.8 percent of the pub- may not be an attractive investment. (See the lic–22,771,000 households–could afford a section in chapter VI I I on tax policy.) $50,000 home with the financing described above. Increasing the price to $52,000 reduces the number of households who can afford the The principal opportunity for additional house to 21,283,000 households or 37.2 percent conservation activity in the retrofit market of all households, according to NAHB. The centers on ways to motivate the homeowner to builder therefore makes a decision to increase improve the efficiency of his home. The home- cost with great care. owner can be made more aware of conservation opportunities through the media, utility advertising and energy audit programs, and Are Problems of Financing Impeding publicity by manufacturers and suppliers of the Pace of Residential Conservation? building materials. Realtors and lenders can also encourage homeowners and homebuyers Lenders generally have been willing to to take conservation action. finance the added cost of energy-efficient Ch. V—Housing Decisionmakers ● 115

housing. Financing has not been a problem for Few lenders are concerned with the energy the credit-worthy borrower. Lenders rely on ap- efficiency of the homes they finance. Since praisers to make judgments about the extent to financing is essential to homeownership for which conservation improvements add to the most Americans, a change in the attitude of value of a property; standard conservation im- lenders could quickly facilitate a shift to much provements are not seen as valuation prob- higher levels of conservation. If review of lems. Houses based on “solar passive” prin- mortgage applications included a review of ciples or other design approaches may not be energy costs, much greater investments in sav- acceptable to lenders if the houses have an ing energy couId be expected. unusual appearance or require no purchased energy; they are considered experimental. Lenders appear increasingly willing to make What Are the Current and Potential conservation-related home improvement loans, although most conservation improve- Roles of the Federal Government in ments are inexpensive and not profitable for Encouraging Residential Conservation? banks to finance. Most homeowners, however, The Federal Government currently affects pay for home improvements through cash on the housing sector through programs that regu- hand, savings, or short-term credit arrange- late lenders, through tax policy, programs that ments such as credit cards. Those who do need provide housing subsidies, insurance, and guar- financing may not meet requirements for in- antees, and standards setting. The impact of come and established credit. Low-income Federal actions is much greater than the level homeowners have more difficulty financing of Federal insurance, guarantees, or subsidies conservation improvements and may need would suggest. The role and impact of Federal some form of subsidy to make those improve- programs are reviewed in chapter VllI. ments. The Community Services Administra- tion (CSA) and DOE weatherization program The implementation of HUD’s Building Effi- partially meets the needs of low-income home- ciency Performance Standards (BEPS) and the owners, but many may fail to qualify for or be adoption of federally sponsored “model code” reached by weatherization assistance. Newly standards should raise the energy efficiency of authorized utility audit programs may also new housing. By using nationally developed assist those who need financial help. energy standards and enforcement guidelines Lenders have limited interest in promoting for all new construction, builders and local energy conservation and do not consider it a building code officials will be in a better posi- significant factor in lending decisions. On the tion to understand and implement conserva- other hand, some financing institutions esti- tion actions. The process of reviewing and im- mate utility costs in calculating the monthly plementing standards should improve consum- housing expenses of a potential borrower. er awareness of energy conservation. (See Some lenders may view energy-conserving im- chapter VII l.) provements as potential means of reducing lending risks by reducing fuel costs, or as ways Other Federal initiatives that will affect to improve resale value, but most do not energy efficiency in the residential sector have evaluate the energy efficiency of housing they been mandated by the National Energy Policy finance. Many lending institutions have initi- and Conservation Act of 1975 and the Housing ated special, below-market interest-rate loan and Community Development Amendments of programs to promote conservation activity. 1978, which established programs to finance These programs have not generated strong energy-conserving improvements and promote consumer response. Lenders therefore give solar energy and energy conservation in HUD- these programs a low priority, treating them assisted housing. Tax credits for conservation primarily as public relations endeavors. improvements have been enacted. 116 . Residential Energy Conservation

DIRECTIONS FOR THE FUTURE

Much remains to be done to upgrade resi- tions. A cautious approach is warranted to dential structures and to encourage property avoid Federal actions that may be unnecessar- owners to adopt energy-conserving practices. ily costly, provide windfalls, or have a negative Tens of millions of homes require reinsulation impact on housing costs. Actions that increase and other energy-saving improvements. The housing costs must be weighed carefully in design and features provided in new housing terms of costs and benefits. could be significantly upgraded even beyond Assuming that the availability and price of current levels to improve their energy efficien- energy remain about as expected, it may be cy. most efficient to focus on improving the qual- The key issue is whether the current pace of ity or expanding the coverage of existing con- change is satisfactory, or whether additional servation programs, and to monitor the impact Federal actions directed to property owners or of the new initiatives, before mounting any the building industry are required to increase major new efforts. Priority should also be either the pace or the direction of current given to modifying policies or practices that trends. Available information provides no con- act as barriers to conservation. clusive answer, but signs indicate that increas- Efforts to inform the building industry and ing energy prices, greater awareness among property owners about the opportunities and property owners and industry participants, and techniques for saving energy need to be im- previously enacted Federal legislation are en- proved. Industry needs better technical in- couraging property owners to invest in conser- formation, and the average homeowner needs vation. Legislation enacted in 1978, recent simpler, more useful information. The quality changes in Federal policies and practices, and of information now available varies widely and the promised issuance and implementation of is disseminated unevenly. The expanded BEPS promise to bring about further improve- energy audit program appears to be a promis- ment in the energy efficiency of residential ing educational approach. The Government buildings. Other new incentives for energy should continue to work closely with trade conservation in both the public and private groups to assure that building professionals housing sectors are described in detail in are not only aware of the importance of con- chapter VII I. sidering energy costs in making housing deci- These new initiatives, plus those related to sions, but know how to design and construct other aspects of residential energy conserva- more energy-efficient houses. Demonstration tion discussed elsewhere, should help to ex- efforts promote the market for energy-saving pand the awareness and knowledge of prop- improvements and should be continued. erty owners and building industry participants More research should be directed to conser- about energy conservation, and stimulate fur- vation. Promising technological approaches ther investments in conservation improve- must be encouraged. More information is ments. In the context of rising energy prices, needed about the thermal efficiency of the further conservation can be expected. housing stock and the extent and character of Given the breadth of these recent Federal retrofit actions. A better understanding of real initiatives and the market dynamics of the estate investors’ attitudes and motivations, housing industry, it seems appropriate to move and the extent to which they are making con- cautiously in terms of proposing additional ac- servation improvements, is needed. Chapter VI UTILITIES AND FUEL OIL DISTRIBUTORS Chapter Vl.– UTILITIES AND FUEL OIL DISTRIBUTORS

Page Page Electric and Gas Utilities ...... , 119 Factors That InfIuence and Limit introduction ...... 119 Market Entry ...... 144 Electric Utility Industry Structure and Fuel Oil Customer Accounts ...... 144 Historical Development ...... 119 Technical Notes–Computer Simulation: The The Regulatory Environment ...... 120 Effect of Conservation Measures on The Problems of Recent Changes for the Utility Load Factors and Costs ...... 145 Electric Utility Industry...... 121 The Question ...... 145 Gas Utility Structure and Regulatory Background ...... 145 Environment ...... 123 OTA Analysis of Conservation Impact on Recent Changes in the Gas Utility Utility Loads and Costs ...... 147 Industry...... 124 Results ...... 148 Utilities and Residential Consumers .. ..125 Discussion...... 149 Utility Activities in Residential Energy Conservation...... 126 Information Programs...... 126 Conservation Investment Assistance TABLES Programs...... 127 Rate Reform for Electric Utilities ...... 130 Page Lifeline Rates ...... 131 55. Residential Natural Gas and Electric Load Management ...... 132 Prices ...... 125 Federal Programs and Opportunities in 56. Percentage Changes in Real Utility Utility-Based Issues...... 133 Prices, Selected Periods, 1960-77...... 125 New Legislation on Conservation 57. DOE EIectric Rate Demonstration Investment Assistance. . . . .134 Program kWh Consumption Effects . . .136 New Legislation on Utility Ratemaking 58. DOE EIectric Rate Demonstration and Load Management . . .134 Program kW Demand Effects ...... 137 DOE Electric Utility Rate 59. Average Yearly Demand for Distillate Demonstration Program ...... 135 Fuel 011 ...... 141 DOE Load Management Activities . . .138 60. 1985 Projection of Heating Unit Mix and Conservation Programs of the Federally Basic Loads ...... 148 Owned Power Authorities ...... 138 61. 50-Percent Electric Resistance Heating Conclusions for Utility Policy .. ..139 by 1985 ...... 148 The Fuel Oil Distributors ...... 139 62 Simulated Utilities’ Load Factors, Peaks, Industry Size...... 139 Summer-Winter Ratio by 1985 ...... 148 Fuel Oil Marketers ...... 140 Sales of Distillate Fuel Oils...... 140 FIGURES Service Activities ...... 140 New Construction ...... 143 Page The Role of Oil Heat Distributors in 17. Sales of Distillate Fuel Oil Use as Energy Conservation Practices . . . .143 Percent of Total ...... 142 Introduction ...... , 143 18. Dispatching Generation to Meet a Marketing of Energy Conservation Cyclical Load , ...... 146 Products ...... 143 19. Daily Load Curve ...... 146 Reduction in Annual Fuel 20. Electrlc Energy Output and Annual Load Consumption...... 143 Factors ...... 147 Chapter VI UTILITIES AND FUEL OIL DISTRIBUTORS

ELECTRIC AND GAS UTILITIES

Introduction Electric Utility Industry Structure and Historical Development The electric and natural gas utility industries serve as the conduit through which American The electric utility industry is a diverse households receive most–and sometimes group of more than 3,500 companies, both all —of the energy used in their residences. publicly and privately owned, collectively Sharp increases in utility bills in recent years, comprising one of the Nation’s largest in- along with such emergencies as blackouts and dustries. Some companies engage in all three brownouts, have made American homeowners of the industry’s major functions —the genera- and renters increasingly aware of the critical tion, transmission, and distribution of electric role that utility companies play. power. Most, however, serve only as local dis- Probably no industry — not even the petrole- tributors of power. Publicly owned municipal um industry— has experienced the profound and cooperative companies, in particular, tend impact on its operations and policy decisions to purchase electricity from generating com- felt by the utility industry in the wake of the panies that may be investor-owned or federally energy crisis of the 1970’s. Other industries operated entities such as the Tennessee Valley have experienced increased prices and or cur- Authority (TVA). The term “electric utility,” as tailed supplies; so have the utilities. But utility used here, refers to a distributor of electricity, companies have also come up against societal regardless of whether the company generates demands for change in their fundamental pur- its own power. EIectric utilities may also serve poses, plans, financial management, and de- as distributors of natural gas. livery of service. Although publicly and cooperatively owned Thus, the entire relationship between utili- electric companies outnumber private inves- ties and their residential customers has shifted. tor-owned firms by almost 10 to 1, the private After years of enjoying declining or stable real companies dominate the industry in terms of prices, promoting greater energy use, and re- generating capacity and quantity of electricity sponding to rapid growth in residential energy delivered. Furthermore, the largest 200 (out of consumption, utilities are suddenly being a total of 400) investor-owned companies ac- asked to help their residential consumers use count for three-quarters of the Nation’s total less gas and electricity. electric-generating capacity and serve 80 percent of all electric customers. To understand the role of electric utilities in the consumption and conservation of energy The electric utility industry is the Nation’s in the home, it is useful to review briefly the most capital-intensive industry. In 1977, inves- structure and historical development of the in- tor-owned electric power companies had ag- dustry and the regulatory environment in gregate plant investments of $190.4 billion and which it operates. Following a discussion of annual revenues of $58.8 billion, or a total in- these items, this chapter examines utility ac- vestment of $3.24 for each dollar of annual 2 tivities as they relate to residential energy con- sales Attracting the capital needed for plant servation. Information programs, energy ‘ Booz, Al Ien & Hamilton, Inc., Utility Role in Residen- audits, conservation investment assistance, tial Conservation, report to OTA, May 1978 rate reform, and load management are exam- 2Energy Data Reports, Department of Energy, CRN ined. 78032 )9919, Mar. 22,1978

119 120 ● Residential Energy Conservation

expansion was not difficult for the utility section of which could be planned, financed, and tor until recently, as the industry’s high, carried out in a few years. steady, and seemingly predictable growth, and The result of all these advantages, in the its regulated return, were attractive to inves- period before the mid-1970’s, was long-term tors seeking secure earnings. security in the electric power sector. Today, by contrast, utility companies find themselves Before the oil embargo of 1973-74, personal facing high costs for new capacity and for fuel; incomes and retail prices paid for consumer new regulatory requirements for environmen- goods in the United States grew much faster tal protection, nuclear safety, and energy con- than retail electricity prices, so that “real” servation; and uncertain future growth projec- power prices — adjusted for inflation —fell. tions and capital availability prospects. While the Consumer Price Index rose 31 percent and real family income rose 34 percent between 1960 and 1970, the price of electricity The Regulatory Environment grew by only 12 percent. By contrast, medical For investor-owned utilities, most regulation care cost 52 percent more in 1970 than in 1960, while the increase for food was 31 percent and occurs at the State level. The Federal Energy for homeownership 49 percent.3 The growth of Regulatory Commission (FERC), formerly the Federal Power Commission, regulates only the electricity use in the United States, closely interstate transmission of power and the sale related to these economic trends, was also en- of power for resale (wholesale sales). State couraged by the promotional activities of the regulation is carried out by public utility com- electric utilities. missions whose members are either elected or, Low fuel costs for power generation have more commonly, appointed by Governors been one reason for traditionally low electric- (sometime with legislative consent) to serve ity prices. Another reason is that utilities have, fixed terms. The commissions function as until recently, enjoyed increases in productivi- quasi-judicial bodies and hand down decisions ty through economies of scale in generating on rates and powerplant sitings after public equipment and improvements in thermal effi- hearings. Municipally owned utilities are usu- ciency of boilers. The prospect of scale econ- ally regulated by local government officials, omies made the utilities’ promotion of electric- while cooperatively owned power systems are ity beneficial to both shareholders and con- regulated by elected boards representing the sumers during the pre-embargo period. As fall- consumer-owners. Regardless of ownership, all ing real prices and promotional activities en- utilities are constrained from the arbitrary use couraged growth, steady increases in con- of their monopoly power by the regulators, sumption led to lower unit costs and, inciden- who require them to perform certain duties tally, made future planning a straightforward (such as providing a reliable power supply to process of extrapolating from past trends. all those who pay for it) in exchange for au- thorizing a “fair and reasonable” rate of As long as the electric utilities enjoyed rising return. productivity, they remained a declining mar- Electric utility rate regulation involves two ginal cost industry —that is, the incremental major steps. The first step is to approve a level cost of electricity generated to meet new de- of revenues adequate to cover costs for opera- mand was lower than the average costs in- tion and maintenance, debt service, deprecia- curred by the power companies to meet ex- tion, and taxes, plus a “fair and reasonable” isting demand. This situation facilitated the rate of return on invested capital. The utility financing of new powerplants, the construc- commission attempts to establish a rate of return that is high enough to attract capital for future expansion, yet not so high as to over- 3Statistica/ Abstract of the United States (Washington, charge consumers or violate the “fair and rea- D. C.: 1977). sonable” standard. Ch. V/—Utilities and Fuel Oil Distributors ● 121

The second step in utility regulation is to recovered. Power companies usually charge a establish the rates at which electricity is to be minimal fee even when no power at all is used, sold in order to produce the allowed revenues. to cover these fixed customer costs. Conse- The ratemaking process is normally based on a quently, the first blocks of power are more ex- “cost-of-service study,” a tool used by utilities pensive than additional blocks consumed in to break down their total costs over a specified the same month and the most common rate de- time period among the different functions sign is called a “declining block” rate. Until (generation, transmission, and distribution), recently, most utility commissions have left customer classes (residential, commercial, and the details of this second regulatory step, the industrial), and cost classifications (customer, design of rates, largely to the discretion of the demand, and energy). utilities, with pro forma commission approval.

Cost classifications require some explanation. Customer costs include such expenses as The Problems of Recent Changes for meters, distribution lines connected to the the Electric Utility Industry customer’s service address, billing, and marketing. As a general rule, customer costs vary In recent years, utilities have experienced hardly at all with consumption levels. Demand changes — many of them traumatic — in every costs are fixed costs reflecting the company’s aspect of their operations. Like all fossil fuel investment in plant capacity and a portion of consumers, utilities have faced drastic in- the transmission and distribution expenses; creases in the price of fuel, particularly oil. they represent the cost of providing the max- While utility fuel cost rose 24 percent between imum (or peak) amount of power required by 1965 and 1970, they jumped a startling 248 per- 4 the system at any time. Energy costs are vari- cent between 1971 and 1976. In the face of able; they depend directly on the amount of such rapid cost increases, regulators have per- power used by the system’s customers. This mitted the electric companies to pass on cost category includes fuel costs, costs in- higher fuel costs to their electric customers volved in running and maintaining the boilers, through automatic “fuel adjustment clauses,” or in producing hydroelectric power (including without waiting for normally lengthy ratemak- pumped storage), and certain costs incurred in ing proceedings before increasing rates. These purchasing power from other generating com- clauses have reduced hardships that utilities panies. would otherwise have experienced by shorten- ing the regulatory lag and eliminating the need Assigning customer costs and energy costs for constant repetition of hearings and findings to different classes of customers is a fairly in response to requests for rate increases. straightforward exercise, but allocating de- Whether fuel adjustment clauses have also mand costs is more difficult. Here, a degree of served as disincentives to energetic utility judgment is required. Once the total contribu- searches for inexpensive fuels or alternative tion of each consuming class to the functional energy sources is a question currently under and classified costs is estimated, the totals are review in many State utility commissions. They divided by the number of billing demand units have been major contributors to continuous in- in each class and translated into rates. In most creases in residential electric customers’ bills, cases — and in almost all situations involving making the utilities the target of resentment residential customers — the customer, energy, and suspicion. Low-income customers and per- and demand charges are not identified sep- sons on fixed incomes have suffered particu- arately for the customer. Rather, they are larly from large increases in their bills. De- lumped together in a single kilowatthour rate. linquent accounts have increased, as have For residential consumers, the customer charges are usually included in the rate ‘Electric Utility Rate Design Study, Rate Design and charged for the first increments (or blocks) of Load Control; Issues and Directions, A Report to the Na- power consumed each month (measured in kil- tional Association of Regulatory Utility Commissioners, owatthours), in order to ensure that they are November 1977, p. 10. 122 ● Residential Energy Conservation

meter tampering and theft. In the two suc- tracted licensing procedures, inflation in labor cessive cold winters of 1976-77 and 1977-78, costs, added hardware for safety and environ- there were occasional news accounts of poor mental protection, and higher interest rates all people freezing to death after utility shutoffs add to plant costs. I n 1950, the average interest for nonpayment of bills. Some States enacted rate paid by utilities on newly issued bonds emergency relief programs that prohibited was 2.8 percent; in 1970, the rate was 8.8 per- such shutoffs, and the Federal Government of- cent, and by 1975 it had reached 10.0 percent.8 fered grants and loans to help pay the bills. Utilities must now look to external sources for most of their capital needs. As a result of all Utility managers have expressed surprise at these factors, the electric utility sector is now their apparent fall into disfavor with many an industry of increasing marginal costs—that customers as rates have risen; typically, the is, the incremental cost of producing one more electric (and gas) companies see themselves as demand unit is higher than the average unit analogous to the Greek messenger who was ex- cost for meeting existing demand. ecuted for bearing bad tidings. Public opinion surveys document a widespread public belief Regulatory changes have also caused some that the utilities are profiting from the energy discomfort for the utilities. While the electric crisis and are highly suspect as sources of in- light and power industry could hardly be con- formation about the crisis and its remedies. ’ sidered a textbook illustration of the free Many consumers appear not to understand the enterprise system at work — marked, as it is, by reasons behind their higher bills, and they at- governmental regulation of profits and prices, tribute all rate increases to attempts to in- as well as by its own monopoly control of mar- crease profits.6 kets and the power of eminent domain – utility managers have nonetheless tended to identify Fuel prices accounted for approximately 60 with business interests and to resent the expan- percent of all rate increases in 1974, but they sion of Government power. They have, conse- are not the only reason for rising utility bills. quently, found themselves in an increasingly Plant costs have also risen sharply, According adversary relationship with regulators at both to figures compiled by the Department of En- the State and Federal levels, as utility commis- ergy (DOE), a single 1,000-MW nuclear plant sions and Federal agencies have reached ever begun in 1967 and brought online in 1972 cost deeper into their operations. an average of approximately $150 million to build, while a similar plant begun in 1976 and Utility regulators have responded to newly expected to be ready in 1986 will have total felt public needs to conserve energy, protect projected costs of $1.15 billion–10 times as the environment, and deal with new consumer high. A coal-fired plant begun in 1966 and activism. Some State commissions began in placed in service in 1972 cost $100 million, the earl y 1970’s to disallow the costs of promo- whiIe a comparable plant constructed between tional advertising as operational expenses. 1976 and 1986 will cost $950 million—again Some attempted to prohibit advertising alto- almost a tenfold increase. ’ A greatly length- gether. A few have required experiments in ened period of planning and construction ac- new rate designs, such as peakload (time-of- counts for a significant portion of these higher day and seasonal) pricing and “lifeline” rates plant costs. Caused in part by what John H. to subsidize poor and elderly consumers. Many Crowley calls an “exponential increase in regu- commissions, most notably the California Pub- latory requirements,” these delays contribute lic Utilities Commission, have begun to take a in turn to massive increases in interest paid on closer look at requests for new generating borrowed capital during construction. Pro- capacity, to see if energy conservation programs could delay or eliminate the need for 5Electric Utility Rate Design Study, op. cit., p. 83. proposed additional powerplants. Some have ‘Ibid. required utilities to initiate conservation pro- ‘John H. Crowley, “Power Plant Cost Estimates Put to the Test,” Nuclear Engineering International, July 1978, p. 41. 8Electric Utility Rate Design Study, op. cit., p. 11. Ch. VI—Utilities and Fuel Oil Distributors ● 123

grams involving the sale, installation, or fi- utility commissions of States in which the gas nancing of insulation and other energy-con- is produced and consumed. With passage of serving features for consumers. These new ini- the Natural Gas Policy Act of 1978, intrastate tiatives have come both from aggressive inter- prices have been slated to come under Federal pretations of existing mandates and from new reguIation. State legislation. The separate regulatory systems for intra- Utilities are also being asked to meet new restate and interstate gas have contributed, over quirements imposed at the Federal level. Air the years, to imbalances in both price and sup- and water quality standards mandated by Con- ply. Intrastate gas, which is not regulated at gress and enforced by the Environmental Pro- the wellhead, has generally been priced closer tection Agency have accelerated the retire- to competitive or substitute fuels such as dis- ment of some older plants and required the in- tillate fuel oil. Interstate wellhead prices, on stallation of sophisticated control equipment the other hand, which are subject to cost- on both existing and new pIants. Many com- based Federal regulation, have been lower panies have altered their boiler fuels more priced than substitute fuels. As a consequence, than once to respond to Federal directives; producers have kept as much gas as possible after shifting from coal to oil or gas to meet air within the producing States which has helped quality requirements, they have been asked by bring about an imbalance in supply between the Federal Energy Administration (and the the two systems. Even though wellhead prices more recent DOE) to convert back to coal to are generally higher in producing States, the avert oil and gas shortages and cut imports. As prices residential consumers pay is lower with nuclear power has begun to produce an impor- some exceptions. This discrepancy in part is tant share of the Nation’s total generating due to higher transmission costs for those liv- capacity, power companies have found it nec- ing far from the producing regions and the essary to deal at great length and expense with need to supplement the flowing gas supply in the Nuclear Regulatory Commission (formerly the nonproducing regions in times of shortage. the Atomic Energy Commission). The intrastate/interstate price discrepancies have increased during the last few years, as Gas Utility Structure and gas-short utilities in the nonproducing States Regulatory Environment have had to turn to high-priced supplemental gas sources such as imported liquefied natural Most gas utilities serve only as retail dis- gas (LNG) or synthetic natural gas (SNG) and tributors, purchasing natural gas at wholesale propane just to meet their existing customers’ rates from a relatively small number of 13 needs. Expansion of their markets has been pipeline companies, which purchase in turn precluded in many areas by the supply short- from producers. Among the 1,600 retail natural ages. Industrial customers in some consuming gas distributors, private companies predomi- States have wearied of constant interruptions nate in terms of both their share of the industry in their gas service and have permanently (two-thirds of all gas companies) and the quan- turned in large numbers to other fuels, par- tity of gas they sell, as a percentage of total ticularly distillate fuel oil. Ironically, industrial sales (90 percent). Many of these companies fuel shifts have freed up enough gas in some are combination gas-and-electric companies; places to cause pocket surpluses. But where these account for 40 percent of all natural gas utiIities were prohibited from providing service saIes. 9 to new customers, they had no market for this surplus gas and had to relinquish it to other Almost two-thirds of the natural gas sold by distributors. utilities comes from the interstate market, where its price is regulated by FERC. Intrastate Historically, the gas utility industry has gas prices have been regulated by the public relied primarily on long-term debt to finance its capital needs. Its capital intensity has 9Booz, Allen & Hamilton, op. cit. declined over the last 25 years, going from 124 ● Residential Energy Conservation

$3.00 in total investment per $1.00 of sales which large industrial customers using gas as a revenues in 1950 to $1.75 in total investment boiler fuel will bear the full additional price per $1.00 of sales in 1975. ’0 burden –to a point. When incremental pricing causes industrial gas rates to exceed the cost Recent Changes in the Gas of alternative fuels, the burden of higher gas Utility Industry prices in excess of alternative fuel costs will be shared by al I gas consumers. Like the electric utilities, gas companies Just how soon residential gas users feel the have experienced a number of traumatic impact of the new legislation on their monthly changes in recent years. In many regions, utility bills is a matter of considerable debate. utilities have been totally unable to take on The number of industrial customers subject to new customers and have had to curtail not the incremental pricing provisions is limited only their large industrial customers whose somewhat by the new law; only interstate cus- contracts anticipated interruptions in service at times of peak demand, but also some customers, and only those who use gas as a boiler fuel (as opposed to a process feedstock), are tomers whose contracts and rates were based affected. If rising industrial gas prices or re- on more expensive “firm” service. Allocations quirements of the coal conversion legislation of scarce gas supplies by Federal and State cause many industries to shift to alternative agencies have caused some utilities to lose gas fuels (including, perhaps, imported fuel oil), to other companies. While the need to con- then the fixed costs associated with gas pipe- serve gas has been obvious from a national line transmission and storage must be shared policy standpoint, the most immediate and by the remaining customers. The smaller the direct benefits of such conservation have not group of industrial customers subject to in- always been available to the companies that cremental pricing, the sooner the peak price— were able to save supplies, only to see them allocated to others. on a par with alternative fuels — is reached and the high-cost burden becomes dispersed Recent passage of the National Gas Policy among residential and commercial customers Act has brought a prospect of major changes as welI as industries. for gas utilities and their customers. The new law paved the way for gradual deregulation of As residential natural gas prices continue to most gas prices and brought intrastate gas rise steeply —and the Energy Information Ad- under Federal regulation for the first time, ministration estimates that they could reach reducing the price gap between interstate and $3.31 per mcf in 1976 dollars by 1985–home- intrastate gas. High-cost gas is to be deregu- owners will have an even stronger incentive to lated first, and the regulated price of other gas conserve and overall consumption growth in will be allowed to rise gradually from legis- the residential sector will continue to decline. latively mandated ceiling prices, using annual On the other hand, the higher prices could inflation rates as guides for increases. Deregu- cause special hardships for the poor and the lation will be virtually complete by 1985. elderly. Even without direct increases in gas prices, families will bear indirect costs through Utilities will pay much higher prices for gas higher prices for products of industrial gas under the new legislation. Interstate pipeline users subject to incremental pricing. companies will pass on to utilities the higher prices paid by pipelines for gas supplies, and Also uncertain is the effect the new legisla- the utilities will pass on the increases in turn to tion will have on gas supplies for utilities and their own customers. Residential gas utility residential users. Experts in the producing in- customers will be sheltered initially, however, dustry believe that the new higher prices will from the increase in natural gas prices because stimulate exploration and production in fields of a provision for “incremental pricing” under previously inaccessible for economic reasons, and that ample supplies will tend to hold down ‘“I bid. prices to some extent. Consumer advocates, on Ch. V/—Utilities and Fuel Oil Distributors ● 125 the other hand, dispute the claim that dereg- utility industry’s sales of 14.8 quadrillion Btu ulation will stimulate growth in production (Quads) in 1976, bringing in revenues of $9.9 before 1985 and that a competitive market is billion, or 41.9 percent of the industry’s total at work which will restrain price increases. revenues of $23.6 billion. Gas was the heating fuel for 56.4 percent of all occupied housing Utilities and Residential Consumers units in 1976.3 The 74 million U.S. households accounted Utility bills, like taxes, are a continuing for one-third of the electric utility industry’s source of particular unhappiness to consum- sales of 1.85 trillion kWh of electricity in 1976, ers. I n fact, however, utility price statistics and for just under 40 percent of the utility reveal just how great a bargain electric and gas revenues of $53.5 billion. The average Ameri- consumers have enjoyed, at least until recent- can family consumed 8,400 kWh of electricity ly. Using constant 1976 dollars, which take ac- in 1976, spending $288, or 3.45 cents per kWh count of inflation, table 55 indicates that real (as compared with 2.89 cents per kWh for utility prices fell steadily during the 1960’s. customers who heat electrically). Virtually all Although that trend has since been reversed, homes in the United States are served by elec- real gas prices in 1977 were still only 12.2 per- tricity, with 12.6 percent of all occupied hous- cent higher than their 1960 levels, while real ing units heated electricalIy in 1976.2 electricity prices were still 17.7 percent lower in 1977 than in 1960. Table 56 shows the per- Forty-one million households with natural centage change over certain indicated periods. gas service accounted for one-third of the gas

Table 55.–Residential Natural Gas and Electric Prices (1976 dollars, selected years, 1960-77)

Natural gas ($/mcf) Electricity (¢/kWh) Year 1976 dollars Current dollars 1976 dollars Current dollars 1960 ...... 1.97 1.03 $.043 $.024 1965 ...... 1.76 1.05 .035 .022 1970 ...... 1.58 1.90 .028 .021 1971 ...... 1.58 1.15 .028 .021 1972 ...... 1.64 1.21 .031 .022 1973 ...... 1.64 1.29 .031 .023 1974 ...... 1.69 1.43 .031 .028 1975 ...... 1.77 1.70 .032 .032 1976 ...... 1.98 1.98 .034 .034 1977 ...... 2.21 2.34 .035 .037

SOURCE: Adapted from Demand and Conservation Panel of the Committee on Nuclear and Alternative Energy Systems, “U.S. Energy Demand: Some Low Energy Futures,” Science, Apr. 14, 1978, pp. 142-153.

Table 56.—Percentage Changes in Real Utility Consumer ire can best be accounted for by Prices, Selected Periods, 1960-77 the suddenness of the increases and the degree to which they have contradicted long-term his- Period Natural gas Electricity torical experience. For consumer activists who 1960-65 ...... – 10.7 -17.6 follow utility rate increase proceedings, the ag- 1965-70 ...... – 10.2 – 21.1 1970-75 ...... + 12.0 + 14.3 gregate amounts requested in recent years also 1975-77 ...... + 24.8 + 10.6 boggle the mind. Total annual rate increases

SOURCE: Adapted from Science, Apr. 14,1978, pp. 142-152. granted to electric utilities across the country between 1961 and 1968 came to $16 million. ‘l factbook on the Proposed Natura/ Gas Bill, prepared From 1969 to 1976 the annual total was $1.4 by the Citizen Labor Energy Coalition, Energy Action, billion, almost a tenfold increase. ” and the Energy Policy Task Force, Sept. 25, 1978, p. 21, supra. 1‘Ibid. 12 Statistical Abstract of the United States, 1977. “Electric Utility Rate Design Study, op. cit., p, 13. 126 . Residential Energy Conservation

The high prices consumers are paying (and these information programs and consumers’ to a lesser extent, the perceived threat of short- actions in undertaking conservation measures. ages) have created a new interest in the possi- More concrete information is provided to bilities of conservation. Investment in insula- residential consumers by utilities that provide tion, weatherstripping and caulking, thermo- “energy audits” of individual homes. Making stats with automatic nighttime setbacks, and use of specially trained staff members and furnace efficiency improvements have all computer programs, utility audits include a begun to look attractive to homeowners. survey of the home to determine the current Many utility companies have tried to help level of insulation, the presence or absence of their residential customers to conserve by initi- storm windows, and other structural details. ating a variety of conservation programs, rang- The audits also include information about the ing from simple “bill-stuffers” providing in- historical energy consumption and costs asso- formation on how to conserve to extensive pro- ciated with energy use in the home. They gen- grams of insulation financing and installation, erally conclude with information about the rate reform, and load management. The bal- cost of upgrading the thermal integrity of the ance of this section describes these programs structure through investments in insulation and analyzes the policy issues they raise for and other features, estimates of the energy and utiIities and their consumers. money that could be saved, and the amount of time needed to amortize the conservation investment through savings on utility bills. Utility Activities in Residential Energy Conservation Many utility companies conduct audits for all requesting homeowners in their service Information Programs areas regardless of the fuel used for heating The simplest (and often the first) conserva- the home. Gas and electric companies, for ex- tion activity undertaken by utility companies ample, audit homes that are heated by oil. In is to promote conservation by providing, in such cases they must rely on estimates or on flyers sent to customers with their monthly customers’ records (often incomplete) for his- bills, “how-to” information and reasons for torical heating cost data, and, inaccuracies in cutting down on waste. These efforts, now projected savings may be a problem. Even common among gas and electric companies when relying on complete past billing records, throughout the Nation, are natural substitutes auditors may either overestimate or under- for the “bill-stuffers” of earlier years. Only the estimate both the potential savings and the products have changed: while the brochures of lifecycle costs of insulation investments. Utili- the 1950’s and 1960’s urged homeowners to in- ty managers are concerned about the credibili- vest in electric heating and air-conditioning, ty and liability problems they may incur if frost-free refrigerators, and other energy-con- customers are dissatisfied after relying on suming commodities, the current promotional utility-conducted audits for promises of sav- literature extolls the merits of insulation and ings of energy or dollars that do not mate- weatherstripping, along with practices such as rialize. Despite the imperfections inherent in lowering thermostats and cooking one-dish home energy audits, they are valuable tools for meals. This kind of information dissemination homeowners seeking practical guidance in im- costs the utility little and can be useful to con- proving the energy efficiency of their dwell- sumers. Attitudinal surveys provide evidence, ings however, that consumers generally regard util- Other conservation information programs ities as suspect sources of information, ’ 5 Un- carried out by utilities may include guidance fortunately, there are no easy ways to measure for builders about energy-efficient construc- the cause-and-effect relationship between tion and efficient appliances and heating systems. The Tennessee Valley Authority, for example, offers free seminars on heat pump de- ‘‘I bid., p. 83. sign and installation for builders and contrac- Ch. VI—Utilities and Fuel Oil Distributors ● 127 tors. Some companies offer special awards to sidizing hookups for new customers in order to builders who construct energy-conserving benefit all customers through economies of houses. Seattle’s Washington Natural Gas scale.16 Company contacts all builders who obtain Washington Natural Gas Company has local building permits, urging them to use ener- taken a different approach in its ambitious gy-efficient structural materials and heating, energy conservation program. It offers not ventilating, and air-conditioning (HVAC) only ceiling insulation, but also sidewall in- systems, A few utilities have constructed sulation, night setback thermostats, storm win- demonstration homes to display the latest in dows, furnace ignition devices (to eliminate energy-conserving construction and systems pilot lights), and new furnaces and water and to improve their own conservation in- heaters that meet certain efficiency standards. formation through research and monitoring. Because of the large total expense incurred by Conservation Investment Assistance Programs customers who buy several of these items, 45 percent of Washington Natural Gas’s conser- A more direct involvement in conservation vation customers take advantage of the com- can be seen with utilities that offer customers pany’s financing arrangements. Even this num- installation and financing services for in- ber is lower than the company expected at the sulating their homes. Typically, loans offered outset; it suggests a greater-than-anticipated by the utilities may be repaid through regular consumer ability to pay for energy improve- monthly bills. Michigan Consolidated Gas ments. The utility’s conservation business is Company, an early entrant into the insulation carried out as a merchandising operation, business, offers its customers up to $700 in which recoups its own costs and earns a loans to purchase ceiling insulation, with no modest profit. Hence, the gas company’s nor- downpayment requirement, at 12-percent an- mal operations and rates are not affected by nual interest, with 3 years to pay. Actual in- its conservation activities. The company uses stallation is done either by utility-approved independent contractors to install the conser- contractors or by the homeowners themselves. vation devices, and the utility’s management The company estimates that approximately believes its program has benefited these small 140,000 homes within its service area have businessmen by stimulating a substantial been insulated since its program began, but volume of business. 7 only 800 customers have taken advantage of the financing opportunity. Michigan Consoli- A number of policy issues emerge from this dated considers its insulation program a public new area of utility activity. The companies service and the State’s public service commis- themselves have expressed concern about pos- sion concurs; as such, its administrative costs sibly adverse legal, financial, and management are included among the company’s allowable effects of conservation investment assistance operating expenses. This means that all cus- programs, particularly if company participa- tomers, whether or not they participate in the tion were to be made mandatory by State or insulation program, share these costs in their Federal legislation. Insulation manufacturers utility bills. Some experts believe this situation have worried about potential supply problems constitutes unjust discrimination in rateset- and consequent “demand pull” inflation stem- ting, while others find it justifiable since all ming from utility-produced demand for their customers presumably benefit from the util- products. (See appendix A for a discussion of ity’s increased supply of gas acquired through the insulation supply problem.) And some con- conservation. One proponent of the Michigan sumer advocates fear that utilities will use Consolidated approach, the former chairman of the Michigan Public Service Commission, “William G. Rosenberg, “Conservation Investments by points to the similarity between the practice of Gas Utilities as a Gas Supply Option,” Public Utilities Fortnight/y, Jan. 20,1977, p.19. including conservation program costs in the ‘ ‘Information provided to OTA by Don Navarre, Vice utility’s revenue requirement and the now- President for Marketing, Washington Natural Gas Com- defunct policy– upheld in the courts—of sub- pany 128 . Residential Energy Conservation

their conservation programs to realize windfall dealers used by the utility as installation con- profits, extend their monopoly powers into a tractors were found to be engaging in fraud- currently competitive market, justify unfair or ulent activities, “puffing up” blown-in insula- unnecessary rate increases, or otherwise work tion to make it appear more substantial in in ways contrary to the public interest. volume (and, hence, in insulating value), and installing insulation that was a dangerous fire Little empirical information is available to hazard. The problem appears especially acute substantiate or refute these concerns. The in the cellulose insulation industry, which is debate about utilities’ roles in residential characterized by large numbers of small man- energy conservation is primarily theoretical. It ufacturers and installers who are outside any is useful, however, to review the major points recognized regulatory authority. Cellulose in- of concern and outline the Iimited avaiIable insulation is normally mixed on the job site, mak- formation about the corporate, societal, and ing quality control virtually impossible. Recent consumer impacts of utility conservation recognition of the need for standards of quali- assistance programs. ty and performance has produced voluntary In recommending the installation of sup- certification programs developed by the in- plemental insulation and other conservation sulation industry (and in a few cases by utiIities devices, utilities are often asked to estimate or State government agencies) in some areas. the amount of energy and money that could be Yet the impossibility of guaranteeing absolute saved by the proposed conservation invest- quality control is likely to necessitate utility ments. Utility spokesmen fear they will be held actions such as disclaimers and liability in- legally liable if customers later fail to achieve surance to protect themselves from responsi- the promised savings. A discrepancy between bility for contractors’ fraud or safety failures. projected and actual savings is not unlikely in Logically, if many of an electric utility’s some cases, given the difficulty of accounting customers decide to take advantage of the for individual families’ energy-consuming company’s conservation investment assistance habits and keeping pace with the moving tar- program (hereafter referred to simply as an “in- get of rising electric and gas rates. In fact, sulation program”), they will use less electrici- however, there is no record of any liability ty individually and reduce the utility rate of suits being filed or of judgments being made load growth collectively. A vigorous insulation against utilities for failing to deliver promised program may reduce the utility’s peakload savings, and the likelihood of such suits seems temporarily, but the long-term effect will most low. Utilities should be able to protect them- likely be a reduction in the growth rate, not an selves through careful explanation of their absolute demand drop. methods of estimating savings and of the residual uncertainty that invariably remains. An important question remains: Will the utility’s total costs be reduced by this change A more serious liability threat may lie in the in demand patterns, allowing the savings to be “implied warranty” offered by utilities who passed on to consumers in the form of lower sell, finance, or even simply recommend bills–or at least slower growing bills? The specific insulation products or contractors. answer appears to depend on a number of fac- Managers have expressed concern about the tors, which vary from utility to utility. A con- quality control that customers may expect sulting group commissioned by OTA to survey them to exercise over the efficacy and safety utilities’ experiences with and attitudes toward of insulation materials and the integrity of insulation programs found this area of uncer- manufacturers and installation contractors. tainty to be a matter of major concern among This matter has arisen with at least one utility’s the companies surveyed. ’9 active conservation program. Some insulation In planning for future capacity and capital “Ken Bossong, “The Case Against Private Utility In- needs, as well as for revenue and rate re- volvement in Solar/lnsuIation Program s,” Solar Age, January 1978, pp. 23-27. ‘9Booz, Allen & Hamilton, op. cit. Ch. VI—Utilities and Fuel Oil Distributors ● 129

quirements, utilities must consider the varia- are far more expensive than old ones, this, tions they typically experience between aver- delay should also retard rate increases. age and peakloads. If insulation programs tem- Another corporate concern about utility in- porarily reduce their average (or base) loads, sulation programs is peculiar to the gas com- revenues will be reduced accordingly. How- panies. This problem centers on whether the ever, if peakloads are not reduced as well, gas utilities will be permitted to add new capacity requirements will remain as great as customers to provide a market for any gas the they would be without the insulation program. company saves through existing customers’ In such a case, the utility must still operate ex- conservation efforts. As residential customers pensive peaking plants during peak periods– save natural gas through improved insulation and with lower revenues, they must raise rates and other conservation measures, they free up to meet the fixed costs. Such an occurrence gas supplies for possible use by an expanded could wipe out consumer savings. number of customers. Until recently, however, A technical note at the end of this chapter many gas companies were prohibited from contains a detailed discussion of this per- adding new customers, and during periods of ceived problem and of an OTA computer simu- especially short supply companies often lost a lation that tests the likelihood of insulation portion of their available supplies to other programs having an adverse effect on utility companies through mandatory allocation pro- load factors and costs. Using a model devel- grams. Without a promise of being able to oped for the recent OTA study, Application of keep and sell “conservation gas” at attractive Solar Energy to Today’s Energy Needs, OTA had prices — a so-called “finder-keepers” policy— simulated the total loads of hypothetical util- gas companies correctly perceive their cus- ities in four cities that represent a cross-section tomers’ gas-saving efforts as not necessarily of climatic variations throughout the United beneficial to their operations. Indeed, conser- States. The utilities were designed to be typical vation in the absence of a “finders-keepers” in their heating and cooling loads, with a mix policy means the companies will have to of single-family homes, townhouses, low- and spread fixed-distribution costs over reduced high-rise apartments, shopping centers, indus- sales. try, and streetlighting. The model tested the ef- Although a large number of utilities have ini- fect of altering the insulation levels and tiated insulation programs either voluntarily or heating and cooling equipment for certain in response to State requirements, the major fractions of each utility’s 1985 residential load. trade associations representing both publicly The results suggest that insulation programs and privately owned utilities have gone on have only a small effect on a system’s load record to oppose detailed uniform national factor–that is, on the ratio of its baseload to directives for such programs. They fear that its peakload—and by extension, on total sys- such requirements, which were included in dif- tem costs. The effect is, in most cases, positive ferent forms in the House and Senate versions (a higher load factor). The impact of insulation of the National Energy Act before being modi- in each case depends on such things as the fied substantially by the Conference Commit- utility’s air-conditioning load, service area tee, fail to recognize each company’s unique climate, and electric-heating load. Table 62 in needs arid circumstances. the technical note illustrates the findings, which still need to be verified through actual Some utilities are also reluctant to under- experience. If they prove to be correct, they take the new roles of moneylenders and sellers should reduce the fear that insulation proof hardware, although in fact neither activity is grams will lead to higher costs and higher totally new to the industry. (In former days, rates. many utilities sold appliances to their customers and permitted them to make install- The long-term picture is clearer. By slowing ment payments on their utility bills.) The elec- demand growth, insulation programs should tric and gas companies’ strange bedfellows, in delay new capacity needs. As new powerplants this viewpoint, are the consumer activists. 130 ● Residential Energy Conservation

Consumer groups are particularly fearful The basic argument for peakload pricing is that small businessmen in the conservation- clear: A utility’s costs vary with the season and device and insulation businesses would suffer the time of day, due to the equipment and fuel from unfair competition at the hands of the mix that must be used to meet different levels utilities.20 The Washington Natural Gas ex- of demand. These cost variations have in- perience suggests, however, that the opposite creased in recent years, with the result that the effect could also result. WNG made extensive highest operating costs are now incurred when use of small businessmen to install conserva- reserve plants are pressed temporarily into tion materials. service to provide peak power levels. Although these peaking plants require lower capital cost Rate Reform for Electric Utilities than baseload plants, they employ expensive fuels such as petroleum distillates, and they The area of electric utility rate design may operate less efficiently than baseload plants. eventually represent the most significant As a result, peak power costs run as much as departure from past practices brought about four times higher than base power costs, thereby the changed circumstances of recent years. fore, the premise that rates should be related Declining-block rates, the rate structure usual- to costs in order to achieve objectives of equi- ly applied to residential users, came into ty and efficiency leads to the conclusion that widespread use during the early days of elec- rates shouId vary with time. trification when lighting comprised most of the Each utility’s peakload pricing system must utilities’ loads. Since the utilities had to main- be “custom made” to reflect the company’s tain adequate capacity to meet a sharp peak in load characteristics, peak patterns, weather demand during evening hours, it made sense to conditions, and generational equipment. The promote other uses of power to fill the “val- time-differentiated rate design recently of- leys” of demand. Customers and utilities alike fered by the Virginia Electric Power Company benefited from the economies of scale, and (VEPCO) to its residential customers is fairly the load leveling that came with growth that was encouraged through declining-block rates. typical: 2,000 VEPCO customers, chosen from among 17,000 who volunteered for the pro- Now, however— as new capacity costs and fuel gram, have had special meters (which cost the costs exceed average system costs, and as growth exacerbates peaking problems—pro- company $250 apiece) instaIled at their homes to record their total kilowatthour usage and motional rates cease to be beneficial. their consumption during peak hours (9:00 a.m. A number of State utility commissions have to 9:00 p.m. e.s.t., or 10:00 a.m. to 10:00 p.m. begun requiring utilities to experiment with e.d.t., Monday through Friday). The meters departures from their traditional declining- also measure each customer’s peak demand block rate structures, using “peakload pric- during any 30-minute onpeak period of the billing,“ or “time-of-use rates” that rise at times of ing period; the demand figure, in kilowatts, is peak seasonal and/or daily demand, to encour- not calculated during off peak hours. The age users to change their habits and reduce customer’s monthly bill is broken down into peak loads. three separate parts: The area of innovative rate design — and par- 1, A basic customer charge of $11.50 per bill- ticularly time-differentiated rate structure— is ing month; complex and controversial. This report can 2. A kilowatt demand charge for onpeak de- only touch briefly on the subject, yet its significance for residential electricity use is great mand, calcuIated at the following rates: enough to warrant a limited discussion of the –$.031 per kW of onpeak demand during issues surrounding peakload pricing. billing months of June through Septem- ber; –$.022 per kW of onpeak demand during 2oBossong, OP. Cit billing months of October through May; Ch. VI—Utilities and Fuel Oil Distributors . 131

3. An energy charge calculated on the basis Electricity savings at the point of end-use of the following rates: may or may not occur as a result of time-differentiated rates; however, energy savings at the –$.023 per kWh of on peak use. “input” end of the utility could be substantial. –$.01 5 per kWh of off peak use. This is because most utilities use their newest, The kilowatthour charges may be adjusted most efficient and economical powerplants to for changes in fuel costs (i.e., fuel adjustment generate their baseloads. Although these clause). recently built plants typically represent large capital investments (and hence, high fixed Because VEPCO’s time-of-use experiment costs) for the companies, their efficient ther- has only recently begun, the company does not mal performance makes them the least expen- yet have data on the effects of the experimen- sive to run because they require fewer Btu of tal rates on participants’ electricity consump- energy input per kilowatthour of output than tion or bills, or on the VEPCO system’s peaks, do the usually older, smaller, less efficient costs, or revenues. The Virginia utility is also peaking plants. Furthermore, baseload plants experimenting with time-of-use rates that are are more likely to use nuclear energy or coal, applicable to water heaters only, and with while peaking plants generalIy rely on im- voIuntary time-differentiated rates for ported oil or scarce natural gas. churches and other charitable organizations whose electricity demand tends to be greatest To the extent that shifts in demand caused during evenings and weekends. VEPCO has by peakload pricing can minimize use of the also identified 9,000 residential customers with peaking plants and increase the proportional histories of substantial summer electricity con- use of the efficient baseload plants, a net sav- sumption (at least 3,500 kWh during at least ings of energy and of operational costs should one summer month of 1976 or 1977); these result. Over the long run, leveling peak de- customers have been required to participate in mand could also save on fixed costs by reduc- a metering experiment in which they are not ing the need for construction of new plants. AlI actually charged according to time-of-day these savings —of scarce fuel input, of fixed rates, but are given monthly statements com- and operating costs, and perhaps of end-use paring their electricity bills under traditional electricity — represent conservation in the pricing (which they actually pay) with costs broad sense of the word. under peak load pricing.

Because peakload pricing of electricity Lifeline Rates reflects the higher costs associated with generating and distributing power during the If the trend toward time-differentiated rates periods of highest demand on a utility system, reflects a growing belief in the appropriateness such rate structures provide customers with of cost-based rates, a countervailing belief has “fair” and “appropriate” price signals. The ac- affected some utility rates differently. “Light tual level of demand elasticity—that is, cus- and heat are basic human rights and must be tomer response (through behavior changes) to made available to all people at low cost for price differences — is not well-understood at basic minimum quantities,” says section 1 of this time, but federally funded rate experi- the California Energy Lifeline Act of 1975. ments are beginning to produce empirical Based on this premise, the Act required Cali- data. (These experiments are discussed below.) fornia utilities to set rates below cost for cer- The reasons for shifting to such innovative tain minimum quantities of gas and elec- rates go beyond a desire of economists to tricity—the estimated amount needed by an perfect the workings of the marketplace. From average family of four living in a well-insulated the standpoint of national policy, such rates 1,000 ft2 single-family house to provide enough are desirable if they resuIt in an energy savings, Iighting, cooking, refrigeration, water, and particularly of scarce and expensive fuels such space heating to maintain health and a as oil and gas. reasonable level of comfort. 132 “ Residential Energy Conservation

So-called lifeline rates, which have also management that are under the consumer’s been implemented in Ohio, Georgia, and Col- (rather than the utility’s) control are called in- orado but were rejected on a national scale direct load management. during the congressional debate over the Pub- lic Utilities Regulatory Policy Act of 1978, The term “direct load management” refers have two essential goals. First, they are in- to actions under the direct control of the utili- tended to provide financial relief and avoid ty company. With the consumer’s prior con- hardship for low-income families who consent, the utility installs electromechanical sume only the minimum essential amount of means by which it can manipulate a certain energy in their homes. Second, they are in- portion of the customer’s load. When the sys- tended to promote conservation by reversing tem approaches peak levels, preceded signals the traditional declining-block rate structure transmitted over high-voltage wires or radio and charging progressively higher rates for waves can be used to disconnect certain ap- greater quantities of gas and electricity con- pliances such as hot water heaters, air-condi- sumed. The California experience to date in tioner compressors, and heat pumps. Custom- striving to achieve the first purpose is dis- ers are sometimes given compensation for any cussed in chapter IV, “Low-Income Con- inconvenience caused by load management, in sumers.” With regard to the second objective, the form of credits against their utility bills. By that of promoting conservation, the California carefully designing the patterns in which these experience is not encouraging. The Pacific Gas appliances are cycled on and off throughout and Electric Company found virtually no the utility system, the electric company can change in the average residential use of elec- shave the sharp spikes in demand that require tricity during the first 2 years of the lifeline the expensive operation of peaking plants. In rate policy and determined that there was “lit- certain cases, it may also be possible to use tle conclusive evidence as to the link between load management as a means of deferring or lifeline and conservation . . . customers re- eliminating the addition of new capacity; this spond more to their total bill than to any prospect however, is considerably less certain marginal price for the block in excess of than the probability of saving fuel costs lifeline (allowances).”21 associated with short-term operations. Load management has been practiced wide- Load Management ly in Europe for many years. There, mechanical Load management is the deliberate manipu- cycling or timing devices have been combined lation of electricity demand at the point of end with time-differentiated rates and energy stor- use, in order to maximize cost savings for the age systems to expand the use of load manage- consumer, the utility system, or both. When a ment practices to heating. At least one U.S. customer alters his energy-consuming habits to utility, the Central Vermont Public Service take advantage of time-differentiated rates, (CVPS) Company, has also experimented with a that customer is practicing a simple form of heat storage/load management combination. load management. His actions might include Twenty-five of CVPS’s customers have in- deferring dishwashing, clothes washing, and stalled electric heating systems that heat water drying to off peak hours. On a slightly more during off peak hours (11 p.m. to 7 a.m.), cease sophisticated level, the homeowner might in- heating during onpeak hours, and keep the stall a timer on the water heater to limit its customers’ houses warm during the daytime by operation to off peak hours. Forms of load circulating the preheated water throughout the house. The company calculates that in 1974-75 2“’Lifeline Electric Rates in California: One Utility’s each customer paid approximately the same Experience,” presented by William M. Gallavan, vice amount for this system as he would have ex- president, rates and valuation, Pacific Gas and Electric pended for oil heat, but that a customer who Company, to the ninth annual Conference of the In- stitute of Public Utilities, Graduate School of Business would have spent $724 per year for electric re- Administration, Michigan State University, Dec. 14,1977, sistance heat paid only $348 under the heat p. 9. storage option. For the utility, the important Ch. VI—Utilities and Fuel Oil Distributors “ 133

result of the experiment was the finding that atures exceeded 750 F, Detroit Edison was able each customer reduced his onpeak demand an to achieve a 25-percent reduction in these average of 22 kW, or a total of 565 kW for the customers’ air-conditioning demand. The utili- system as a whole.22 ty’s systemwide savings achieved through management of both air-conditioning and water One danger associated with the combina- heating were limited, however, by the fact that tion of load management and time-of-day its summer peaks tend to be broad —that is, a rates is the possibility that their appeal to con- high demand level is sustained for many hours sumers will be so successful that they will during the day. While savings through water simply “chase the peaks around the clock,” as heater control amounted to 200 MW in the a Wisconsin utility regulator put it. I n Ger- winter, they were only 50 to 60 MW in the sum- many, preferential rates induced such a large- mer. scale shift to storage heating systems that higher nighttime peaks occurred and the rates A 1977 study by the Federal Energy Admin- had to be altered, thereby reducing the eco- istration (FEA) indicated that a simulated coal- nomic benefits enjoyed by consumers.23 burning utility’s load management program could achieve a substantial shift from peaking Direct load management, keyed to mecha- plants to baseload plants, and could result in nisms such as temperature readings, is being significant fuel cost savings. Furthermore, tried by a number of utilities. Compared with when adequacy of reserve margin is the cri- peakload pricing, direct load management has terion for planning new capacity additions, the the advantage of assured response; the utility hypothetical utility could justify the delay of knows for certain that it can reduce a peak- some construction plans. FEA cautioned, how- Ioad by a specific amount through mechanical ever, that such delays probably could not be means, rather than hoping for an estimated price elasticity. achieved in real-life situations because of the ever-growing problems of rising costs, financ- Residential consumers account for an esti- ing problems, and delays in Iicensing and con- mated average of 30 percent of U.S. utility struction. 26 peakloads.24 Detroit Edison estimated that Load management represents a significant residential cooling accounts for 50 percent of departure from utilities’ historical obligations summer temperature-sensitive load, the frac- 25 to provide electrical service in any quantity tion of total system load that is most volatile. Only a fraction of this load can be eliminated customers desire and are willing to pay for. It through management. A typical arrangement represents a form of rationing, a practice that shuts off air-conditioner compressors and out- economists argue is unnecessary when a free side fans for 10 to 15 minutes for each hour, in marketplace employing cost-based prices allo- two periods, while leaving inside fans running cates resources. Increasingly, however, utilities to circulate air throughout the participating and their regulators are coming to view load houses. The cycling signal is activated, typical- management as one more tool in the diverse collection of policies that can aid in encour- ly, when outside temperatures are high enough aging utility-based residential energy conserva- to generate a substantial systemwide demand for air-conditioning. By shutting down air-con- tion. ditioners in 50 homes for 15 minutes per hour between 2 and 5 p.m. on days when temper- Federal Programs and Opportunities in Utility-Based Issues ‘z’’Storage Heat Shifts Load on Time at Central Ver- mont,” Electric Light and Power, Mar. 15,1976, p. 3. Because responsibility for utility regulation 23 Gordon C. Hurlbert, improved Load lvlanagement– rests, for the most part, with States, Federal op- New Emphasis, Sept. 24,1975. “’’Survey Scrutinizes Load Management,” Electrical World, July 15,1976. ZGFederal Energy Administration, The /mPaCt of Load *s’’ Cooling-Demand Controls Look Good,” Electrical Management Strategies UporI E/ectric Utility Costs and Wor/d, July 15,1976. Fuel Consumption, June 1977. 134 ● Residential Energy Conservation

portunities to encourage utility actions to reasons for not doing so. The Federal standards stimulate residential energy conservation are applicable to residential buildings are: limited. However, recent Federal legislation 1. rates that reflect the cost of service to and programs do provide a framework of sorts various classes of electric consumers, to for such utility activities. the maximum extent practicable; 2 prohibition of declining-block rates for New Legislation on Conservation Investment the energy component of electric rates, Assistance except where such rates can be demon- The National Energy Policy Act of 1978, strated to refIect costs that decline as con- although not as ambitious as President Carter’s sumption increases for a given customer original proposal to Congress, does require class; utilities to establish conservation programs for 3 time-of-day rates reflecting costs of serv- residential buildings of four units or less. ing each customer class at different times Under the new law, utilities must inform their of the day, except where such rates are customers of suggested conservation measures not cost-effective with respect to a and of available means of purchasing and fi- customer class; nancing investments in such measures. Util- 4 seasonally variable rates, to the extent ities must offer onsite audits and services to that costs vary seasonally for each assist homeowners in finding instalIation con- customer class; and tractors and lenders. If the customer chooses, 5 load management techniques offered to a utility must permit repayment for conserva- consumers when they are determined by a tion investments on the regular monthly utility utility to be practicable, cost-effective, bill. Gas and electric companies may them- reliable, and advantageous to the utiIity in selves lend customers up to $300 each for con- terms of energy or capacity management. servation investments, but they are prohibited A second set of standards under the Act from direct involvement in the installation of deals with master metering of multifamily conservation measures other than furnace effi- buildings, automatic adjustment clauses, in- ciency modifications, clock thermostats, and formation to be provided to consumers about load management devices. Utilities already rates applicable to them, procedures for ter- engaged in installation of other conservation mination of electric service, and limitations on measures as of the date of enactment are ex- the inclusion in rates of costs attributable to empt from this prohibition. utility promotional and political advertising. Utilities are also prohibited, under the new The new law’s most significant opportunity law, from incorporating the administrative for Federal participation in utility ratemaking costs of their residential conservation programs may well be its provision for intervention in ad- in their rates. Instead, they must charge those ministrative proceedings. The Secretary of customers who use their conservation services. Energy (along with affected utilities and consumers) is allowed to “intervene and partic- New Legislation on Utility Ratemaking and ipate as a matter of right in any ratemaking Load Management proceeding or other appropriate regulatory The Public Utilities Regulatory Policies Act, proceeding relating to rates or rate design (P. L. 95-617), passed in October 1978 as part of which is conducted by a State regulatory au- the overall energy legislative package, in- thority.” (16 U.S.C. §2601) According to the creases the level of Federal involvement in report of the conference committee on the leg- electric utility ratemaking activities. The new islation, such intervention is for the purpose of law does not preempt State authority, but it re- participating in the consideration of the quires State utility regulators to consider the Federal standards “or other concepts which adoption of certain federally proposed stand- contribute to the achievement of the purposes ards in their rate determinations, and either to of the title. ” The report also states a congres- adopt such standards or to state in writing the sional intent that the phrase dealing with Ch. VI—Utilities and Fuel Oil Distributors “ 135

“other concepts” be construed broadly “so ● customers have uniformly been found to that no one will have to prove his case in ad- respond significantly to changes in elec- vance before being allowed to intervene. ” I n tricity prices at all hours of the day, in- effect, this provision for Federal intervention cluding peak periods; affords DOE a means of monitoring and en- ● peak period kilowatthour price elasticity couraging effective state implementation of (i.e., “responsiveness”) appears to exceed the Act through direct involvement in State off peak elasticity; regulatory proceedings. ● t i me-of-use rates reduce residential customer peak demands even on the hot DOE Electric Utility Rate Demonstration test days of the year; and Program ● customer attitudes toward time-of-use rates are decidedly positive. Because empirical data on consumer response to alternative rate structures are More specifically, DOE has observed sur- scarce, the Federal Government’s most helpful prisingly uniform—and encouraging—results role may be in providing such data. among the various time-of-use demonstration programs, even though the study designs The electric utility rate demonstration pro- varied considerably from test to test. Some gram, initiated by FEA in 1975 and continued studies metered consumption and demand to the present by DOE seeks to analyze the during two different periods–onpeak and off- results of 16 experiments with innovative rates peak –while others employed at least one ad- undertaken by utiIities across the country. ditional rating period, a “shoulder” or The rate demonstration program, on which “intermediate” time of the day. The duration $9.2 million in Federal funds (supplemented by and the time used for each period varied ac- at least 10-percent State and local funding) cording to different utilities’ peakloads. While were expended through FY 1978, has focused some time-of-day customers were compared primarily on time-of-use rates applied to with their own utility records from a year residential customers. Approximately 18,000 earlier, others were examined in comparison to households have been studied, either as testing groups of control customers with similar units or as control points. DOE, along with demographic, economic, and historical elec- cooperating State utility commissions, util- tricity consumption characteristics. The ities, and consulting analysts, has been watch- number of participating customers in each ing customers’ total electricity consumption, study ranged from fewer than 100 to several kilowatt demand peaks, and temporal use pat- thousand. Some experiments lasted only a terns to determine the degree of price elas- year, while others are continuing for up to 5 ticity among residential users over a period of years. Finally, the ratios of onpeak to off peak 2 to 3 years. Although the analytical phase of rates differed substantially among the studies. the rate demonstration program is still under- Specific results of time-of-use tests in six way, some results have become available and States, dealing with kilowatthour consump- preliminary conclusions have been drafted by tion, kilowatt demand, and shifts among rating DOE. periods, are summarized in tables 57 and 58. Tables 57 and 58 list the projects in DOE’s In a few cases, utilities attempted to esti- rate analyses and describe the innovations mate actual or potential effects of time-of-use tried in each test. On the basis of complete test pricing on their system loads and fuel costs. data from two States and partial data from Connecticut Light & Power Company, for ex- four more, DOE has arrived at the following ample, perceived an actual reduction in tentative general findings:27 system peak of 8 to 13 MW in its peak winter month, and 70 to 83 MW in its peak summer month. Arkansas Power & Light projected a “’’Electric Utility Rate Demonstration Program Fact fuel cost saving of $20 million “over the short Sheet,” Economic Regulatory Administration, November run” if the experimental rate design were to be 1977. implemented on a systemwide basis. Table 57.—DOE Electric Rate Demonstration Program kWh Consumption Effects— Onpeak “Shoulder” period Off peak Net change in State consumption consumption consumption consumption Arizona T-O-D customers reduced, Increased slightly, compared Inconclusive evidence compared with same with year earlier, suggests slight decline customers a year earlier according to inconclusive evidence Arkansas T-O-D customers reduced Slight decline on to level 18-26% below average summer days, larger control customers on average larger decline on peak day summer days, and 15-59% below control customers on system annual peak day California T-O-D customer reduced Increased, compared with compared with same year earlier customers a year earlier Connecticut T-O-D customers reduced T-O-D reduced to “sign if i cant- T-O-D consumed “significantly T-O-D consumed 9-13% “considerably” compared with Iy less” than control in more” than control in winter, less than control in control customers i.e., con- summer, but consumed at same level as control summer, was “not sig- sumption 23% lower same level in winter in summer nificantly different” in winter Ohio - – T-O-D customers reduced T-O-D consumption increased T-O-D customers consumed “considerably” compared with in winters; no noticeable 3.5% less overall than control control customers change in other months Vermont T-O-D customers reduced T-O-D increased some from T-O-D increased about 3% some compared with year year earlier compared with year earlier earlier (amount not quantified) (not quantified) Six-State summary T-O-D customers reduced T-O-D customers increased in T-O-D consumed 15-30% compared with comparison with control 5-8% less overall than control control customers or year customers or year earlier customers. Exception: Vermont, earlier Most reductions occur in summer. Some increases occur in winter Ch. VI—Utilities and Fuel Oil Distributors ● 137

Lu 138 . Residential Energy Conservation

Much analysis of the rate demonstration function as models for programs in energy con- program data remains to be done, but the ini- servation. tial findings appear to confirm the usefulness of time-differentiated rates as means of en- The Tennessee Valley Authority encourages couraging more efficient, cost-effective elec- conservation among its customers in a number tricity delivery. Evidence of consumer accept- of ways. TVA offers consumers interest-free ance of such rates may well be among the loans, payable over 3 years, for purchasing and more important observations to date. It should installing insulation in their attics. The insula- be emphasized, too, that long-term implemen- tion program will soon expand to allow 7-year tation of time-differentiated rates can be ex- interest-free loans of up to $2,000 for a number pected to produce greater consumer response of conservation measures, including storm than the present experiments. This is because windows, floor insulation, caulking and short-term response relies almost entirely on weather-stripping, and insulation of duct work. behavioral changes in the usage rate and time TVA will determine which measures are cost- of use of presently owned appliances, while effective for each customer and will inspect long-term response could include widespread the installation before releasing funds. Addi- changes in capital stock, such as purchases of tionally, TVA offers customers now using elec- water heaters with timing devices to limit their tric resistance heating systems a means of con- operation to off peak hours. verting to heat pumps by providing 81/2-percent loans repayable over 10 years. DOE Load Management Activities [n the area of rates, TVA asserts that its rate The Department of Energy encourages load structure is based on cost of service and en- management through a small program in the courages conservation by applying automatic Department’s Economic Regulatory Admin- adjustment clauses only to that portion of a istration (ERA). DOE provides States with customer’s electricity consumption that ex- funds and technical assistance to advance cur- ceeds 500 kWh in any billing period. TVA is rent knowledge and experimentation with load also experimenting with four different rate management programs, and will monitor the structures designed to encourage conserva- States’ compliance with the new requirements tion. In one study, time-of-use rates are being for consideration of Federal standards (includ- applied, with kilowatthour consumption billed ing load management) in future ratemaking at 9 cents per kWh during onpeak periods and proceedings. The Department’s Electric Energy 1.5 cents per kWh during off peak periods. Systems Division and Energy Storage Division Analysis of the results of the study is just also carry out research and development ac- beginning. tivities to assist the development of new load The Bonneville Power Administration has management technologies. concentrated its conservation efforts on its Conservation Programs of the Federally own Internal operations and on information Owned Power Authorities dissemination among its employees, its utility customers, and end-users. The Bonneville out- The federally owned segment of the electric reach effort has included workshops on insula- power industry, which accounts for about 10 tion, energy audits, and training sessions for percent of the Nation’s installed generating ca- CETA workers employed in weatherization pacity and 5 percent of total kilowatthour programs. Bonneville has also undertaken cer- sales, has always served as a “yardstick” for tain research programs aimed at conservation; certain national policies. For most of the his- these include experimental use of aerial and tory of the two largest Federal power authori- ground-based infrared sensors to detect heat ties–the Tennessee Valley Authority (TVA) loss from buildings, and the installation of and the Bonneville Power Administration — wind data recording stations to determine they have served as models for effective ex- where wind-driven electric generator systems pansion of electricity service to rural areas at couId be installed to supplement hydroelectric low cost. More recently, they have begun to energy in the Bonneville service area. Bonne- Ch. VI—Utilities and Fuel Oil Distributors “ 139

vine has not developed an insulation financing remain to be clarified. The opportunities for en- program or experimented with conservation- couraging conservation through utility actions oriented rates. appear promising, but the adjustments to new methods of operation are proving difficult in Conclusions for Utility Policy some cases for both the utilities and their customers. In response to the dramatically different cir- The great diversity among the Nation’s 3,500 cumstances in which utilities have had to electric utility companies and 1,600 retail operate in recent years, electric and gas com- natural gas distributors precludes the develop- panies are undertaking a number of new ac- ment of a single national policy for conserva- tivities to encourage residential users to tion. Rather, there must be a flexible approach reduce their consumption and aid in leveling enabling each utility to design a residential system peakloads. Because many of these conservation program around its unique sys- activities — including energy audits, insulation tem load, supply and cost situation, climate, programs, rate reforms, and load manage- and other variables. An examination of Federal ment — are recent in origin and used by only a programs and opportunities suggests that relatively small number of companies, impor- recently enacted legislation and programs of- tant areas of uncertainty about their efficacy fer a good start.

THE FUEL OIL DISTRIBUTORS

The distribution of home heating oil, as an Unlike the utilities with whom the industry industry, was developed by oil appliance competes for space-heating markets, most fuel manufacturers and their retail installers. oil marketers do not have captive customers, Today, nearly 80 percent of heating oil de- nor do they have a monopoly on product or mand in the United States is served by inservice territory. The marketers are forced to dependent fuel oil marketers. compete within the oil industry for product Although the heating oil industry operates supply, advantageous pricing, and customers. nationwide, about 90 percent of the heating As marketers are in direct contact with the oils are sold in only 28 States, principally along consumers, the success of their business the northern tier of the United States from the depends entirely on customer satisfaction. Pacific Northwest to New England and down One of the major concerns of fuel oil mar- 28 keters is the need to maintain customer good- the east coast to Florida. Over 16 million resi- will in light of national energy and conserva- dential buildings depend on fuel oil for space 29 tion policies that could conceivably discrim- heating. inate against fuel oil consumers and jeopard- Historically, the fuel oil industry has not ize the competitive position of the marketers. been regulated. In recent years, however, the industry has been subject to Federal regulations on pricing and allocation during periods Industry Size of short supply. No such regulations are In 1972, the Bureau of the Census of the presently in effect. Department of Commerce estimated that there were 7,276 fuel oil dealers with payrolls. This

a estimate, however; includes only those fuel oil ‘ Sales of Fuel Oil and Kerosene in 1977 (Department dealers who list the sale of fuel as their prin- of Energy, Energy Information Administration, 1978), p. 6. cipal business. However, in many markets, par- zgAnnua Housing Survey, 7976 (Department of com- ticularly nonurban markets, petroleum market- merce, Bureau of the Census, 1978), p. 6. ers may distribute both gasoline and heating 140 “ Residential Energy Conservation

oil, with gasoline predominant. According to Sales of Distillate Fuel Oils industry estimates, the total number of fuel oil suppliers, including those who distribute more Figure 17 represents sales of distillate fuel gasoline than fuel oil, falls between 10,000 and oil by end use sector for the period 1973-77. As 12,000 marketers. indicated by the table, nearly 50 percent of all sales of distillate fuel oil goes to heating. The The predominant distillate oil consumed in data presented does not indicate what percent- residential space heating is No. 2 fuel oil. age of total sales is earmarked for the residen- Heavier heating oils (No. 5 and No. 6 oil) are tial sector. However, according to one DOE of- used primarily by industrial accounts, and are ficial, approximately 85 to 90 percent of No. 2 usually purchased directly from refineries or heating oil is sold in the residential sector. terminal facilities. Consumption of No. 2 fuel in 1977 amounted to 1.2 billion barrels.30 No. 1 In general terms, fuel oil marketers deliver fuel oil (kerosene) and No. 4 oil are also used more than 2 million barrels of distillate oil for space heating. The demand for these distil- daily from November through March to meet late oils in 1973-77 appears in table 59. residential space-heating needs. The delivery schedules are temperature-sensitive and established according to the calculated “degree Fuel Oil Marketers days.” The average consumption per heating season for residential home heating varies About 85 percent of independent heating-oil from about 900 gallons in the South-Atlantic marketers sell directly to consumers. There- region to about 1,600 gallons per heating sea- fore, they are regarded as retailers rather than son in the New England region. jobbers. However, a dual petroleum marketer will often have different suppliers or brands for its heating oil and its gasoline. It is not Service Activities unusual for a distributor to be a jobber for one product and a retailer of the other. For the 1977-78 heating season, about 67 percent of all fuel oil consumers had their oil heat A marketer may service from several hun- equipment checked and serviced as part of an- dred to 50,000 or more customer accounts. Ac- nual efficiency checkups. About 40 percent of cording to a 1978 survey, 16 percent of the fuel oil consumers have service contracts pro- marketers had more than 3,000 customers; viding for annual efficiency checkups. These their share represented 55 percent of the annual service calls are generally considered customers recorded .3’ Forty-seven percent of essential to maintain furnace efficiencies and the companies had between 1,000 and 3,000 promote fuel conservation. accounts, representing 41 percent of the customers. Forty-two percent of the marketers In the same heating season, the average had fewer than 1,000 customer accounts, ac- serviceman was responsible for 440 customers and managed to make six calls per day, exclu- counting for approximately 14 percent of the 32 customers. The survey also indicated that all sive of efficiency checkups. About 53 per- fuel oil marketers sold No. 2 fuel oil, about cent of the servicemen serviced burners exclusively. The remainder either installed burners half sold No. 1 fuel oil (kerosene), and less than 10 percent sold other fuel oils. The survey in- only or serviced and installed them. dicated that about 80 percent of marketers The lifetime of oil heat equipment is approx- sold and serviced oil heat equipment, account- imately 20 years while other equipment— such ing for 62 percent of that end of the business. as gas furnaces — may be in place much longer. Seventy-eight percent of the heating oil mar- Improvements in oil burner efficiencies over keters surveyed operate a bulk plant (large the years have acted as an incentive for more storage) facility. rapid replacement of oil furnaces. 30Sa/es of Fue/ Oil, op cit., p. 1. ‘I Margaret Mantho, “Margins Improve to Offset Rising 32 Margaret Mantho, “Annual Service Management Costs,” Fuel Oil and Oil Heat, September 1978, p. 35. Analysis, ” Fue/ Oi/ and Oi/ l-feat, May 1978, p. 36. Ch. VI—Utilities and Fuel Oil Distributors . 141

Table 59.—Average Yearly Demand for Distillate Fuel Oil (in thousands of barrels)

Domestic demand Production Imports Stocks 1972 Average...... 2,913 2,629 181 alsd,zad 1973 Average...... 3,092 2,820 392 alg6,@l 1974 January...... 3,835 2,880 464 181,179 February ...... 3,849 2,399 306 149,125 March ...... 3,164 2,226 287 128,822 April...... 2,852 2,522 220 160,645 May ...... 2,450 2,704 268 141,806 June...... 2,377 2,783 220 160,645 July ...... 2,309 2,792 221 182,458 August ...... 2,309 2,705 125 198,673 September ...... 2,385 2,552 152 208,269 October ...... 2,887 2,700 237 209,908 November ...... 3,157 2,801 454 212,875 December ...... 3,853 2,924 515 223,717 Average ...... 2,948 2,668 289 1975 January ...... 3,953 2,852 324 199,715 February ...... 3,967 2,679 302 176,696 March ...... 3,293 2,531 256 161,111 April ...... 3,094 2,486 110 146,214 May ...... 2,382 2,431 136 152,027 June...... 2,266 2,574 68 163,306 July ...... 2,112 2,589 106 181,472 August ...... 2,173 2,592 92 197,323 September ...... 2,163 2,812 129 220,732 October ...... 2,675 2,744 103 226,113 November ...... 2,544 2,767 96 235,749 December ...... 3,778 2,783 124 208,787 Average ...... 2,849 2,653 153 1976 January ...... 4,298 2,734 164 165,428 February ...... 3,687 2,961 207 150,439 March ...... 3,336 2,793 151 138,306 April ...... 2,788 2,655 96 137,249 May ...... 2,519 2,738 97 147,057 June...... 2,436 2,885 151 165,064 July ...... 2,255 2,959 126 190,861 August ...... 2,237 2,982 131 217,930 September ...... 2,618 2,947 147 232,230 c October ...... 3,028 2,995 141 235,599 November ...... 3,714 3,180 135 223,648 November FEA/APl ...... 3,724 3,199 136 221,178 December FEA/APl ...... 4,654 3,273 166 183,500 Average FEA/APIC ...... 3,130 2,925 142 1977 January FEA/APIC...... 5.237 3.374 471 145.490 . —’ a Total as of December 31. b 1976 average is based on Bureau of Mines data for January through November and FEA data for December January 1977 data are from American Petroleum lnstitute (APl). c= Revised.

SOURCES: Bureau of Mines, Federal Energy Administration, and American Petroleum Institute.

New burners installed today are expected to 84 percent. To date, there has been little Feder- operate at seasonal efficiencies of 80 percent, al support for development of high-efficiency and new promising technologies have pro- oil heat equipment. Furthermore, most market- duced burners with seasonal efficiencies up to ers cannot afford to establish R&D programs

Figure 17 –-Sales of Distillate Fuel Oil Use as Percent of Total (millions of dollars]

Vessels and railroads

Electric ❑ utilities Heating $1,2310

$1,150.9 5.1% 2

1973 “ 974 1976 Ch. VI—Utilities and Fuel Oil Distributors ● 143

for high-efficiency equipment; research efforts The Role of Oil Heat Distributors in are therefore centered in the furnace manufac- Energy Conservation Practices turing industry. Introduction New Construction Given the relatively small and highly concentrated nature of the residential oil-heating In 1971-77, from 8 to 11 percent of new market, a number of factors affect— and lim- homes were heated by oil. The following chart it — the role of fuel oil distributors in residen- compares the relative position of oil, gas, and tial energy conservation. This section outlines electricity in the new home market: the industry’s assessment of its current role in the energy conservation practices of its cus- Percent of New Homes by Type of Heating Fuel33 tomers. The assessment is the product of a Oil Gas EIectricity questionnaire that was mailed to 48 fuel oil 1971 ...... 8 60 31 distributors and 19 State, regional, and local 1972...... 8 54 36 trade associations in late November 1977. 47 42 1973...... 10 Twenty-one distributors and five trade associa- 1974...... 9 41 49 1975...... 9 40 49 tions responded from all regions of the country 1976...... 11 39 48 where fuel oil is consumed for space heating. 1977...... 9 38 50 In the Northeast, however, the figures indi- Marketing of Energy Conservation Products cate an increase in the oil share of the new Very few fuel oil distributors are actively home market in 1971-76. The following chart selling residential insulation, storm windows shows the comparisons for the Northeast: and doors, and other conservation hardware. However, most fuel oil distributors are in- Percent of New Homes by Type of volved in helping their customers reduce the 34 Heating Fuel amount of fuel oil consumed. As mentioned Oil Gas Electricity earlier, about 69 percent of the residential con- 42 26 971...... 31 sumers of fuel oil have their heating equip- 972...... 33 36 29 973...... 35 34 28 ment checked and/or tuned at least once a 974...... 32 29 38 year through a direct service offered by the 975...... 41 24 33 distributors and many of the refiner markets. 976...... 51 15 31 977...... ,.. 49 17 31 More fuel oil distributors use independent Thus, while oil heat has grown slowly in the contractors to provide insulation and other national new home market, stilI accounting for energy conservation products to their custom- only slightly over a tenth of the units, oil heat ers than sell these materials directly. in new homes in the Northeast has grown from Besides the basic energy hardware (e.g., re- just under a third of the market in 1971 to over placement burners, boilers, furnaces, insula- half in 1976. The decline of the gas share in the tion, etc.) that is being marketed by fuel oil early- to mid-1 970’s, both nationwide and in distributors, some have attempted to market the Northeast, can be attributed to prohibi- other energy conserving equipment such as tions on new gas hookups by several State pub- automatic stack dampers, stack heat reclaim- lic utility commissions in response to supply ers, outdoor temperature controls, humidifiers, shortages. Recent increases in gas supply and attic vents, fireplace heaters, and other related termination of moratoria on new hook-ups items. may reverse this trend. Reduction in Annual Fuel Consumption More than half of the respondents reported qJC~aracterjStjcS of New Housing 7977 (Department of Commerce, Bureau of the Census, 1978), p. 28. that 50 percent or more of their customers 341 bid. have reduced their annual consumption by 144 . Residential/ Energy Conservation

more than 15 percent since the 1973 price rise. runs from a low of 10 percent to a high of 90 States in the colder climates reported the percent of advertising budgets. Radio is also highest percentage of customers conserving used, but it accounts for a relatively low fuel oil. percentage of the total advertising budget. In the 1972-73 heating season (adjusted for A number of marketing choices that are ex- actual rather than average degree days), resi- ercised by fuel oil distributors are based on dential oil consumption reflected predictable technical information about energy conserva- regional patterns, influenced by climate—for tion. Some of the most frequently cited example, a low of 800 gallons in South Caro- sources include State trade associations, lina to a high of 1,750 gallons in northern New magazines and other publications of general England. It should be noted that homeowner circulation, and local industry trade associa- consumption can vary widely even within a tions Suppliers and manufacturers of energy community. This divergence is largely attrib- conservation materials, however, are consid- uted to variables such as living-space size, ered the most reliable sources of technical in- thermal characteristics of the housing unit, formation and consumer behavior patterns. Fuel Oil Customer Accounts Factors That Influence and Limit Market Entry Since 1973, when costs of fuel oil began to Why have a few fuel oil distributors entered rise, oil distributors’ delinquent customer ac- the business of marketing insulation and storm counts (past due by more than 30 days) have in- windows and doors, while most have not? The creased significantly. Many distributors re- reasons most often cited include the expecta- ported increases of about 15 percent or tions of increased profits, increased service of greater, and some distributors have reported existing customers, and the prevention of cus- an increase in delinquent accounts by 50 per- tomer switches to other fuels. cent or more. Obviously, customers with delinquent accounts cannot normally finance addi- What prevents fuel oil distributors from mar- tional expenditures, such as conservation im- keting insulation and other related items? Rea- provements. A large number of delinquent ac- sons most frequently cited include the lack of counts affects the ability of distributors to set available qualified independent contractors to aside capital or to acquire financing for the service the distributor’s customers, and the purpose of developing energy conservation lack of capital to get into the conservation guidelines. business. Furthermore, most competing distributors are simply not marketing this hardware. One of the most significant problems facing Other disincentives include the apparent short- fuel oil distributors in terms of their ability to age of insulation and other energy materials, carry delinquent accounts or to offer credit the inability of homeowners to pay for or terms for financing conservation efforts is the finance energy conservation measures, and the elimination by wholesale suppliers of discount limited public interest in energy conservation. terms for payments. Another problem frequently cited is the increased interest charges Advertising is one of the major vehicles by associated with financing more expensive in- which fuel oil distributors penetrate the mar- ventory. Furthermore, increases in insurance ket. Bill-stuffers are the most popular form, ac- costs have also contributed to oil distributors’ counting for 5 to 30 percent of total advertis- cash flow problem. ing budgets. Direct mail to potential customers Ch. VI—Utilities and Fuel Oil Distributors ● 145

TECHNICAL NOTES–COMPUTER SIMULATION: THE EFFECT OF CONSERVATION MEASURES ON UTILITY LOAD FACTORS AND COSTS

The Question daily variations in the demand for electricity, and on the possibility that insulation and other Will widespread adoption by residential conservation measures could magnify these electric customers of conservation measures, variations in uneconomic ways. EIectric com- particularly insulation, result in utility load panies must have available to them at any changes that are economically counterproduc- given time enough generating capacity to meet tive to the utilities and/or their customers? the highest level of demand expected at that time, plus a reserve margin of capacity to use Background in the event that some powerplants are shutdown by emergencies or for routine mainte- Many residential consumers of electricity nance. But since the peak demand level may are investing in energy-saving materials and be reached on only a few days each year, and devices for their homes in hopes of reducing for only a few hours even on those days, util- their utility bills, or at least stemming the rapid ities are Iikely to have a considerable fraction increases they have experienced recently. Add- of their total generating capacity idle much of ing insulation to existing homes is the action the time. most commonly taken, but some homeown- Idle generating capacity is expensive, and ers — and builders of new homes— are also certain kinds of powerplants are more expen- choosing HVAC systems with energy efficiency sive to keep idle than others. Although a com- and cost savings in mind. Electric heat pumps pany pays for fuel and other operating costs are becoming widely used for this reason. Con- only when the plant is operating, many fixed sumer attitudinal surveys indicate that electric costs — such as interest on the capital bor- customers investing in conservation measures rowed to build the plant— must be paid regard- are motivated primarily by the hope of saving less of how much the plant is used. It follows, money. then, that newer, bigger, more capital-inten- Whether or not consumers experience lower sive plants (particularly nuclear plants) are the or even slower growing utility bills in the most expensive to shutdown, while older, future depends ultimately on whether or not smaller plants (like oil-fired turbines) are the their utility companies can achieve cost sav- least expensive to hold in reserve. Conversely, ings that can be passed on, in turn, to rate- new plants are often the least expensive to payers. Many factors affect utility costs, and operate, while the older ones (which usually consumer conservation actions will not be the use the most expensive fuels) are the most only determinant of the direction in which costly to run. rates will go in the next few years. But utility A utility’s daily or yearly “load’ ’-the total managers have raised questions about the pos- amount of electricity it must generate during sibility that conservation practices could have that time— is usually thought of as having some adverse effect on load factors and sys- three components. The baseload–-that which temwide costs, thereby contributing to a need is demanded nearly all the time— is the largest for higher rates. From the consumer’s stand- component and is usually generated with the point, this would surely be the ultimate exam- company’s newest, largest, and most techno- ple of “Catch-22.” logically advanced plants. The intermediate The fear of cost increases caused by conser- load–an increment that is demanded less of vation actions is based on the fact that utility the time— is typically derived from slightly costs are positively correlated to seasonal and older and smaller plants, fired with fossil fuels.

146 ● Residential Energy Conservation

The peakload — a sharply greater demand com- ● Peakload plants — low fixed costs, very ponent that may be demanded only occasion- high operating costs, resulting in the high- alIy — is usually met with small oil- or gas- fired est overalI costs when in operation. turbines, or with pumped-storage hydroelectric plants, or by purchasing power from other Figure 19.— Daily Load Curve companies sharing the same distribution grid. Figures 18 and 19 illustrate a typical system load and the three major generating components.

Figure 18.—Dispatching Generation to Meet a

6,000 Cycling generation

4,000

3,000 o 12M 4-8 12N 4 8 12M Time of day 2,000

1,000 = 0.73 = 73 %

SOURCE. Electrlc Utility Rate Design Study, Rate Design and Load Control: 0 Issues and Direct/ens, a Report to the National Association of 12M 4812N 4 8 12M Regulatory Utility Commissioners, November 1977. Time of Day A major determinant of total utility costs SOURCE: Electric Utility Rate Design Study, Rate Design and Load Control: Issues and Directions, a Report to the National Association of and generating capacity needs is a company’s Regulatory Utility Commissioners, November 1977 “annual load factor, ” which is the ratio of the average utility load over the year to the peak- Ioad during any time period (usually 15 The costs of keeping and operating these dif- minutes] during the year. The higher the load ferent kinds of plants vary, typically, as fol- factor, the less total downtime the company lows: experiences in its generating capacity. Up to a certain point, the utility benefits from keeping ● Baseload plants–high fixed costs, low its plants running, generating sales revenues operating costs, resulting in the lowest with which to cover both fixed costs and oper- overall costs when in operation. ating costs. Some idle capacity is needed, how- ● Intermediate-load plants— medium fixed ever, to allow normal maintenance operations costs, medium-to-high operating costs, re- to take place, to substitute for other plants in sulting in medium overalI costs when in emergency outages, and to meet the peaks. operation. When all plants are operating and additional

Ch. VI—Utilities and Fuel Oil Distributors ● 147

OTA Analysis of Conservation Impact family homes are initially set to the same level on Utility Loads and Costs of Insulation, which the model can increase to a higher value. The insulation levels in the A model developed for OTA’s recent study, other buildings do not vary. The change for Application of Solar Energy to Today’s Energy single-family homes corresponds to a heat load Needs, analyzed the impact of conservation reduction of 31 to 49 percent, depending on measures on utiIity operations. the location. In addition to the insulation OTA’s model simulates utilities in four U.S. level, the type of heating equipment can be cities. The utility loads, shown in table 60, con- changed to allow the possibility of varying the sist of a mix of single-famiIy homes, town- percentage of homes that are electrically houses, low- and high-rise apartments, shop- heated. Diversity is built into the model so that ping centers, industry, and streetlighting. Each the peakloads of the individual homes do not of the four cities has the same number of units alI occur simultaneously. 35 although the heating and cooling loads are To determine the effects on utility loads of determined by the weather conditions, taken increased insuIation among resident i al from 1962 data, of each city. The residential heating and cooling equipment mix is initially details about the model and the hypothetical set to match conditions in 1975 and then fore- ut I I loads can be found in Application of Energy cast. to 1985 using a residential energy use Energy Needs, vol. 1, chapter V, and vol. 11, model developed by ORNL. All the single- chapter V 1. 148 ● Residential Energy Conservation

Table 60.—1985 Projection of Heating Unit Mix shown in table 60. Table 61 shows the number- and Basic Loads (number of buildings) ing of buildings assumed to have electric heat Albu- Fort in the case when it was assumed that 50 per- querque Boston Worth Omaha cent of residences use electric heat. Single family units Electric heat...... 10,470 8,080 11,790 7,720 Fossil heat...... 45,450 47,840 44,130 48,200 Results Electric cooling. . . 43,613 34,863 55,920 55,920 The load factor and seasonal peak demands 55,920 55,920 55,920 55,920 Total ...... are given in table 62 for the reference and the Townhouses ...... 6,960 6,960 6,960 6,960 high insulation cases for both mixes of residen- Low rise units ...... 2,160 2,160 2,160 2,160 tial heating —1 985 projection and high electric High rise units...... 600 600 600 600 Shopping centers . . . 30 30 30 30 resistance. The results show that an increase in insulation does not change the load factor sig- Annual industrial loads (all cities) —2.54 billion kWh. nificantly. In all but two situations, the load Annual streetlight load (all cities) —98.78 million kWh. factor Increases as insulation is added, but the increase does not exceed 4 percent. The two customers, the model was run first with all exceptions are the utilities with 50-percent single-family homes at the baseline insulation electric resistance heat that still experience level and again at the high insulation level, their peak loads in the summer. using the forecast 1985 mix of home heating systems initially, and then using an assumption Table 61 .—50-Percent Electric Resistance Heating that 50 percent of the homes were electrically by 1985 (number of buildings) heated. (The latter case was included to simu- Electric Fossil late utilities with winter peaks.) All other load City heat heat Total characteristics remained constant throughout Albuquerque, Boston, the analysis. The heating and cooling mix for Fort Worth, and Omaha . . . . 27,960 27,960 55,920 single-family homes for the 1985 forecast is — — —

Table 62.–Simulated Utilities’ Load Factors, Peaks, Summer-Winter Ratio by 1985 — . . . Albuquerque Boston Fort Worth Omaha —— Reference High Reference High Reference High Reference High case insulation case insulation case insulation case insulation —— . . Base case Load factor...... 0.534 0.537 0.498 0.505 0.470 0.475 0.448 0.453 Winter peak (MW, 1,359 1,315 1,316 1,263 1,562 1,472 1,453 1,397 month)...... Jan. Jan. Feb. Feb. Jan. Feb. Feb. Feb. Summer peak (MW, 1,386 1,352 1,354 1,320 1,942 1,873 1,823 1,768 month)...... Aug. Aug. Jul. Jul. Aug. Aug. Jul. Jul. Summer-winter ratio . . 1.02 1.03 1.03 1.05 1.24 1.27 1.25 1.26

50-percent electric resistance heating case Load factor...... 0.472 0.485 0.466 0.492 0.483 0.481 0.483 0.467 Winter peak (MW, 1,677 1,569 1,600 1,433 1,842 1,594 1,787 1,603 month)...... Jan. Jan. Feb. Feb. Jan. Jan. Feb. Feb Summer peak (MW, 1,368 1,348 1,392 1,362 1,958 1893 1,847 1,805 month)...... Aug. Aug. Jul. Jul. Aug. Aug. Summer-winter ratio . . 0.79 0.86 0.87 0.95 1.06 1.19 1.03 1.13

50-percent heat pump case Load factor...... 0.465 0.484 0.446 0.483 0.470 0.476 0.463 0.457 Winter peak (MW, 1,632 1,528 1,587 1,426 1,778 1,569 1,787 1,599 month)...... Jan. Jan. Feb. Feb. Jan. Jan. Feb. Feb. Summer peak (MW, 1,373 1,351 1,400 1,368 1,976 1,906 1,861 1,815 month)...... Aug. Aug. Jul. Jul. Aug. Aug. Jul. Jul. Summer-winter ratio . . 0.85 0.88 0.88 0.96 1.11 1.21 1.04 1.14 Ch. VI—Utilities and Fuel Oil Distributors ● 149

The effect on the summer-winter peak dif- average loads by the addition of insulation. On ference, shown in table 62, is more pro- the other hand, two of the simulated utilities — nounced. For all summer peaking utilities, for those with summer peaks accompanied by either mix of heating systems, the ratio of the large electric heating loads–experienced summer to winter peak increases as a result of moderate drops in their load factors after in- increased insulation. These increases range sulation was added. Summer-winter peak from 1 to 12 percent and are greatest for the ratios change very Iittle — under 2 percent— in utilities with the highest percentage of electric the cases for which the electric heating load is heat. For the winter peaking utilities, the ratio small, but as that load increases, the change in decreases by about 8 percent when the resi- the ratio also grows until the winter peak dential insulation level is increased. begins to exceed the summer peak.

In sum, OTA’s simulation indicates that Discussion most utilities will not be measurably affected These simulations indicate that the effect of by the widespread addition of insulation by extensive additions of insulation by residential residential customers, unless at Ieast a third or customers depends greatly on the amount of so of their residential customers use electric residential electric heat in the utility’s load, heat If more than half use electric heat, the since adding insulation affects heating loads utility will still experience an improved load more than cooling loads. Utilities that have factor as long as its peak comes in the winter. winter peaks or small electric heat loads (rela- In such cases, the increase in load factor and tive to their cooling loads) experienced in- the leveling of differences between summer creases in their load factors; this means that and winter peaks can assist in bringing about their peakloads were reduced more than their more efficient use of generating capacity. Chapter Vll STATES AND LOCALITIES Chapter Vll.— STATES AND LOCALITIES

Page EPCA/ECPA: Legislative Foundation ...... 154 Federal Energy Policy Leadership and Federal Funds for State Energy Conservation Programs Will Continue to be Necessary to Stimulate Many State Activities...... 160 WeII-Defined State Energy Policy Has Not Emerged . . . .161 Energy Production Is the Predominant Concern of Energy-Rich States .161 New State Organizations Are Emerging to Grapple With Current Energy Problems ...... 162 Information Flow From Federal to State and From State to State Government Requires Attention ...... 162 State Legislatures Have Focused on Seven Major Issues in Energy Conservation ...... 163 Four Residential Energy Conservation Programs Serve as the Foundation of State Efforts ...... 164

TABLES

Page 63. Residential Energy Conservation Legislation, 1974-77 ...... 155 64. Residential Energy Conservation Programs ...... 157 65. State Issues in Residential Energy Conservation ...... 158 Chapter Vll STATES AND LOCALITIES

The problems of federalism have a special bearing on residential energy conservation. States are the vehicles used to implement many of the federally defined programs aimed at reducing residential energy consumption, and States are the mechanism through which localities receive Federal dollars for many efforts. But the wide differences among States in attitudes, resources, climate, geography, population, size, governmental organization, and history combine to remind the policy maker of the diversity of the American political fabric. Policies that fail to recognize these differences face difficulty from the beginning. It is not possible to examine a “representative sample” of States, but some information can be gleaned from viewing the States in the aggregate and a few States more carefulIy. This chapter reflects a close look at 10 States, with some information about all 50. Although conservation programs have been in place only a short time, it is possible to make some clear statements about areas of difficuIty and areas of promise. All States, plus the trust territories, have submitted plans for Federal approval under the Energy Policy and Conservation Act (EPCA) and the Energy Conservation and Production Act (ECPA). The eight mandatory areas defined in these laws form the core of State activities. Some States have launched broad and imaginative programs and seem to have achieved success. In these States, such as Minnesota, Iowa, and California, State agencies, localities, interest groups, and others have joined to produce innovative and fruitful responses to the problem. On the other hand, many States have done very Iittle.

Most States have simply responded to the Beyond these complaints, which character- Federal initiative and available Federal fund- ize the early stages of many Federal efforts, ing for the mandatory programs. Thus, the are problems relating to the States’ energy Federal Government tends to define State and viewpoint. States with substantial energy re- local solutions. As the energy problems have sources are less concerned with conservation been defined as a national problem and Con- than with obtaining a “fair shake” in the solu- gress has indicated that national policies will tion of the problems. States with large re- be forthcoming (and indeed are in effect), most sources of fossil fuels place conservation in a States have been hesitant to initiate policy in- secondary role compared to production issues. dependently. Many States feel that the pro- Legislative attention in these States tends to be grams initiated and the organizations set in directed toward resource extraction and devel- place, while responsive to the Federal view, are opment. inappropriate to the particular State. Most States have substantial problems in program Of particular difficulty to the States has integration, technical assistance, and funding. been the need to measure the energy savings Too few persons are trained to deal with the the ‘approved State plan” will produce. This varied and overlapping aspects of energy con- problem is well stated by one of the leading servation, and State agencies need more tech- State energy agency directors, John Millhone nical help than they are receiving. The usual of Minnesota: problems—the pacing of Federal programs, The requirement that the State plan save at uncertainties about guidelines and reguIations, least 5 percent of the 1980 energy consump- communications problems, late release of Fed- tion presumed a statistical sophistication that eral funds, and changing players in national doesn’t exist. Most rudimentary State energy and regional Department of Energy (DOE) data systems have an error of plus or minus 5 off ices — add to the confusion. percent or more. The Act provided that part of

153 154 ● Residential Energy Conservation

a State’s grant would be based upon its pur- conservation program required energy savings ported energy saving, stimulating exaggeration equivalent to about 800 million barrels of oil when accuracy about the real energy savings is by 1980, and provided only $150 million in sorely needed. The emphasis was placed on funding authority. This meant that the Federal Btu savings alone, penalizing States that Government was trying to buy a barrel of oil sought conversion from precious to more through the program for 10 cents. 2 abundant fuels — natural gas to coal, for example—when conversions meant more Btu A review of the findings from the 10-State wouId be used. 1 study sample reveals a number of useful find- Another problem with the 5-percent goal ings. More specific information appears in relates to the funding level. The State energy tables 63, 64, and 65.

EPCA/ECPA: LEGISLATIVE FOUNDATION

The Energy Policy and Conservation Act A State may propose other activities to (Public Law 94-163) and the Energy Conserva- receive Federal funding. The proposed pro- tion and Production Act (Public Law 94-385) grams must cumulatively achieve a 5-percent provide the foundation for Federal energy con- reduction in energy demand by 1980. servation policy. (The former Federal Energy Every State, plus the trust territories, has Administration (FEA) weatherization program submitted plans for Federal approval. Each has been brought under these Acts.) These acts authorize funding to States that develop ap- State plan outlines many programs, but relatively few program elements have been proved State energy conservation plans (SECP). started Some programs rely on State legisla- The plans must address eight mandatory areas: tive action. In most cases the legislatures have not passed legislation specified in the plans. ● mandatory Iighting efficiency standards; Most of the Federal funds for programs, more- ● programs promoting vanpools and public over, were not dispersed until January 1, 1978. transportation; Planning activity predominated prior to that ● mandatory standards on energy efficiency date that govern State and local procurement practices; Seven major conclusions emerge from ex- ● mandatory thermal efficiency standards amination of these States. They include orga- and insulation requirements; nizational or administrative difficulties as a ● laws permitting a right-turn-on-red; result of funding characteristics, the emer- ● public education; gence of new agencies in fields previously ● intergovernmental coordination in energy dominated by existing organizations, and prob- matters; and lems in providing qualified technical expertise. ● energy audits for buildings and industrial None of these is trivial in the development of plants. successfuI conservation programs.

‘John Millhone, Analysis of Energy Conservation Pro- ‘Iblci Much of the information in this chapter is based grams, paper prepared for the annual meeting of the or, state ~es;~ent;a/ Energy Conservation: Attitudes, ~0/- American Association for the Advancement of Science, [c e~ an(~ Programs, prepared for Office of Technology February 1978 AC se$srnent by Booz, Allen& Hamilton, May 1978 Table 63. -– Residential Energy Conservation Legislation, 1974.77

Ione

~...... --- . .- .- . . . 156 ● Residential Energy Conservation —. . . . — -...... — ——.— ——— . ...———

Table 63.— Residential Energy Conservation Legislation, 1974-77—continued

Appliance efficiency standards

None

None None

Requires listing of None energy consumption information and average operating cost of appliances before sale (1975)

Requires disclosure of energy consumption & efficiency info. of appliances {1975)

None None 1 I ..— —. . . -.— — .———. -.. Ch. VIl—States and Localities ● 157 ...... ————. —...... — . . - . . .=. . ..—— —. . . . . —-—.———

Table 64.— Residential Energy Conservation Programs’

1-P4

----- 158 ● Residential Energy Conservation .——— .“...... ——. . - --- —— ... ..—— ———. . . ——————- -.— ——

Table 65 –State Issues in Residential Energy Conservation —— ...... Intergovernmental Policymakfng Attitude Conservation as an Energy producer interaction responsibility toward State issue (Residential vs. importer (& local interaction in State gov’t Federal program<

California Conservation is of Energy importer There appears to be Lack of comprehensive Strong belief primary concern to — Heavily depend- extensive cooperation energy policy has among all actors Calif. as an energy ent on natural among the actors in slowed conservation that the Federal issue gas California although efforts Government has - CPUC & ERCDC — Dependent on CPUC & ERCDC not been the im- have stated a supplemental gas appear critical of one Seems that the energy petus for Calif. ’s policy that con- both foreign & other’s actions commission & legisla- aggressive conservation is the domestic ture play the key role! servation efforts equiv. of an All agencies appear in formation of energy alternative committed to the same policy The State wants source of supply goal of achieving max. — very strong energy the Fed’s not to of energy conservation & work commission preempt - Very concerned together toward this about finders- goal Lack of under- keepers issue standing by Feds & natural gas of State problems —lack of cooperation with States on Important Is- sues In pursuing conservation

Feds. can play a role in setting materials

Georgia Energy conserva- Georgia is a very There is relatively little The Ga. SEO (Office c There exists a tion does not seem strong energy import- interaction among the Energy Resources) we positive attitude to be a major issue. er; it imports 97% of SEO, PSC, and LEG. created by executive w/in Ga. govt. to- Has been given its energy. However PSC focuses on rate order & maintains a ward Fed, inter- relatively Iittle Historically low ener- structure and the close relationship w/ vention in State attention gy prices & a mild Iegislature considers the governor Policy programs. The cIimate make it diffi- energy to be of minor is formulated in the OER expressed cult to convince the Importance. Energy is Governor s office w/ the view that the public that conserva- left, for the most part, strong dependence Fed’s are flexi- tion is necessary [o the SEO on the OER ble w/respect to their program re- The GMA (Ga. Munici- quirements, pal Association is an even the’ they extremely powerful may not address body in Ga. & GPC is the most crucial working w/govt. at the energy issues local level to implement conservation programs

Illinois Coal conversion & None None Division of Energy Infrared ffyovers exploration, nuclear waste management ICC in lead (according & disposal are most to the ICC and Gov- important: conser- ernor’s Office of vation a secondary Manpower & Human issue Development)

Iowa Conservation con- Imports 80-90% of All agree that All agencies see the sidered an impor- s energy intergovernmental Energy Policy Council ant issue by relationships are & the Iowa Commerce Rate structures government cooperative Commisslon as major actors Other major issues are: SecondariIy. State Bottle biii geological survey & nuclear facility council on Coal usage study siting environmental quality Natural gas availability & curtailment Life aye@ costing

Schc@ retrofit

$ona

, ——.....-L. . . . 1 ———— ! –1 —- ..— ..—. 1. . — –. .L — .–.

FEDERAL ENERGY POLICY LEADERSHIP AND FEDERAL FUNDS FOR STATE ENERGY CONSERVATION PROGRAMS WILL TO STIMULATE TIES Ch. VII—States and Localities ● 161

missions, which may have many employees, tion has been the prime motivation for the have generally not devoted themselves to development of conservation programs in questions beyond ratemaking. States appear to most States. have trouble stimulating public support for in- Two other aspects of Federal action are of creased State energy research funding. Most of concern to States: program flexibility and tech- the individuals interviewed suggested it would nical assistance. States want Federal programs be imprudent for the State either to duplicate to provide sufficient flexibility to accommo- Federal analytical efforts or the ability of Fed- date individual State needs. States view eral laboratories to perform technical re- guidelines more favorably than strict stand- search. This viewpoint has its notable excep- ards, for example. States are also receptive to tions: California, for example, has established technical assistance from the Federal Govern- a large agency in addition to the existing ment. Georgia officials suggested that the lack Public Utilities Commission. The agency has of technical staff to develop lighting standards been charged with conducting research and could be accommodated by Federal technical developing material, building, and appliance support. Only in Minnesota was it determined standards, as well as performing independent that DOE had provided someone to assist with energy forecasting. One of the largest energy- conservation program design. Although Feder- producing States, Texas, has garnered suffi- al assistance in both manpower and funding cient revenue from energy expiration activ- are desirable from the State viewpoint, most ities to be able to invest State money in seek- State officials interviewed were critical of the ing solutions to State energy problems. accountability requirements, which involve a Federal funding is a mainstay of State con- significant amount of paperwork. These of- servation programs. Without this support ficials felt that Federal reporting procedures many States would be limited in their pro- were an unreasonable burden given the num- grams. Most States provide some contribution ber of persons and amount of time required to to conservation programs; some— like Colo- comply with Federal procedures. rado — rely on Federal funds. Federal legisia-

WELL-DEFINED STATE ENERGY POLICY HAS NOT EMERGED

Many States can reach political consensus stances, States have been able to coalesce on nonenergy matters, such as education, and their concerns on some (but not all) issues, present that consensus to Federal decision- such as California’s position on the importance makers. In such cases, it is quite clear what a of liquefied natural gas, Texas’ views on natu- State wants from Washington. But with energy, ral gas deregulation, or Pennsylvania’s stand no State has developed well-defined, compre- on coal extraction. But these are the excep- hensive programs and policies. In some in- tions.

ENERGY PRODUCTION IS THE PREDOMINANT CONCERN OF ENERGY-RICH STATES

States with large reserves of coal, oil, or gas coal. I n contrast, States that must import ener- are far more concerned with production than gy perceive domestic energy resources as a na- conservation. Moreover, States with plentiful tional resource, rather than a State commodi- resources desire to exploit and maintain State ty. These States, such as Maine and Georgia, discretion over allocation. Thus, Louisiana want to ensure that domestic energy products disagrees with policies requiring it to distribute are equitably distributed. gas out of the State and convert some users to 162 ● Residential Energy Conservation

NEW STATE ORGANIZATIONS ARE EMERGING TO GRAPPLE WITH CURRENT ENERGY PROBLEMS

Many organizations play a role in State State Energy Off ices (SEOs) and Public Serv- energy policymaking. These bodies may create ice Commissions (PSCs) share responsibility for new laws or rules to suit existing authority. The the conduct and implementation of conserva- Governors, legislatures, and public service tion programs. The PSC utility regulatory commissions are traditional participants in responsibility and the SEO role in residential energy policy formulation. However, these energy conservation programs provide a basis organizations have accumulated new duties or for interaction between these two State agen- new considerations for the conduct of their ac- cies. It is not uncommon, however, to find tivities. Others have begun to consider issues these agencies communicating very little with previously left to administrative agencies, one another. PSCs are addressing the subject private enterprise, or the Federal Government. of rate reform and encouraging voluntary par- The functional relationships between these ex- ticipation by utilities in energy conservation. panding and new organizations are not fully SEOs, on the other hand, are primarily respon- established. Uncertainty may disappear as sible for developing and implementing energy Federal policy becomes established, State en- conservation programs. Many proposed SEO tities gather more experience, and as issues programs promote utility involvement in in- become more clearly defined for State, local, forming customers of conservation options, and Federal decisionmakers. Meanwhile, State providing audits and, in some cases, financing. decisionmakers may tend to defer difficult The lack of coordination between PSCs and issues for study, or to shift highly sensitive SEOs can be a problem for utilities as well as issues to other decision makers (e. g., the Feder- consumers. al Government). Moreover, State energy policy will continue to be developed on a case-by- case basis.

INFORMATION FLOW FROM FEDERAL TO STATE AND FROM STATE TO STATE GOVERNMENT REQUIRES ATTENTION

Though Federal agencies gather a lot of in- must be disseminated. The Energy Extension formation, States have limited access to and Service and the Solar Heating and Cooling In- benefit from this information. State officials formation Center are examples of ways to do reported their inability to secure information this. The Extension Service is designed to work that they believed would be useful. No Federal with individuals and organizations to define effort was identified to discern State needs problem areas and to provide informational and uses for federally derived information. and technical assistance. The Information Center is a federally funded repository for in- The same informational problems exist formation on specific issues available to among States. Thus, each State must address a anyone who desires it. More trained individ- problem from scratch, without significant uals who can work directly with groups are benefit from previous similar efforts at the needed. Federal level or in other States. Information Ch. VII—States and Localities “ 163

STATE LEGISLATURES HAVE FOCUSED ON SEVEN MAJOR ISSUES IN ENERGY CONSERVATION

● Thermal efficiency standards. States are sidered similar legislation. States have not required to develop thermal efficiency moved ahead strongly and appear to be standards in order to receive funds for waiting for Federal action. SECP. In some cases, this may be done ad- ● Minnesota and California have enacted ministratively (as in Massachusetts); in appliance efficiency standards. Pennsyl- others new legislation is required. Most of vania and Tennessee require disclosure in- the State effort here has been to adopt formation to assist consumers in selecting directly or to model one of three model energy-efficient appliances. Here, too, codes, American Society of Heating, Re- most States are deferring to Federal ac- frigeration, and Air Conditioning Engi- tion. neers 90-75, National Conference of ● Insulation programs have been enacted in States on Building Codes and Standards, 4 of the 10 States studied. Many other or the Department of Housing and Urban States have passed similar legislation. Development (HUD) minimum property Most of the legislation authorizes State standards. Twenty-six States have the leg- expenditures for weatherization for low- islative authority to establish energy con- income and elderly homeowners. In Cali- servation standards for new buildings. fornia, the legislature directed the Public Twenty-one States have authority to es- Utilities Commission to authorize utility tablish standards for all new buildings, insulation and financing programs. and one State, Washington, has authority ● to establish residential standards only. Tax incentives to encourage homeowner One more State, New York, has adminis- conservation are being considered by trative authority to set standards for lowa, Missouri, and Nevada. Alaska has homes. Only six States have explicit legis- made a $200 tax credit available since lative authority to enforce the standards 1977. when local jurisdictions do not. Enforce- ● Utility rate reform has been a major issue ment has traditionally been a local, volun- in most States. Maine, Tennessee, and tary choice. State legislation has been in- California have enacted legislation requir- troduced to adopt one of the approved ing consideration of conservation rates by codes, usually in a modified form as part the State PSCs. of a State building code. I n many cases, ● Solar energy has been a popular legisla- proposed thermal efficiency code legislative topic. Many States have passed or tion refines existing law, such as in Ten- considered legislation on sun rights, tax nessee and California. credits, and solar system testing. Most ● California has adopted insulation material States view the use of solar energy as an standards; several other States have con- element of conservation policy.

164 ● Residential Energy Conservation

FOUR RESIDENTIAL ENERGY CONSERVATION PROGRAMS SERVE AS THE FOUNDATION OF STATE EFFORTS

States have emphasized four programs in ● Energy audits –Utility-sponsored audits residential energy conservation. have been one of the most successful and widely used programs. Audits have been Consumer education –The complexity of instrumental in the encouragement of ret- energy issues may be the most significant rofit insulation activities by homeowners. obstacle to motivating consumer action in ● Insulation retrofit– State energy office conservation. States have placed much media presentations and utility bill-stuff- emphasis on the development of con- ers have provided strong motivation for sumer education materials and programs. consumer participation in retrofit programs. Many consumers are financing Weatherization programs–These pro- their retrofits through the utilities. grams were initially sponsored by FEA. State conservation plans have, in many in- Besides these four programs, a few States stances, provided for the continuation of have studied the need for State-determined these programs. In some cases, State heating, ventilating, and air-conditioning funds have been used to augment the Fed- standards and for time-of-sale insulation re- eral allocations. Weatherization programs quirements. Neither of these issues has re- have received the most Federal energy ceived sufficient support to warrant State pro- conservation dollars. grams.

Educating the consumer on energy conservation through brochures and bill stuffers is being undertaken by States and utilities Chapter Vlll FEDERAL GOVERNMENT AND ENERGY CONSERVATION

Chapter VllI.— FEDERAL GOVERNMENT AND ENERGY CONSERVATION

Page Page Introduction ...... 167 Mortgage and Home Improvement Department of Housing and Urban Insurance Programs ...... 175 Development ...... 169 Section 203(b) and (i) One- to Four- Housing Programs Directed to Low- Family Home Mortgage and Moderate-Income Families . . . . . 169 Insurance. . . , ...... 175 Low-Rent Public Housing ...... 169 Section 221(d(2) Homeownership Section 8 Low-Income Rental Assistance for Low- and Moderate- Assistance ...... , 170 Income Families ...... 175 Section 236 Rental and Cooperative Section 233 Experimental Housing Housing Assistance for Lower Program...... 175 Income Families ...... 171 Section 207 Multifamily Rental Section 202 Direct Loans for Elderly Housing...... 175 and Handicapped Housing . . . . . 171 Section 221(d)(3) and (4) Multifamily Section 312 Rehabilitation Loans .. 171 Rental Housing for Low- and Section 235 Homeownership Assistance Moderate-Income Families . ., .. 176 for Low- and Moderate-income Section 223(e) Housing in Declining Families...... 171 Neighborhoods ...... 176 Conservation Policies and Title I Home Improvement and opportunities ...... 172 Mobile Home Loan Program .. ..176 Public Housing . . , ...... , .. 172 Conservation Policies and Section 8, Section 202, and Section opportunities ...... 176 236 Projects...... 173 other HUD Programs ...... 177 Section 312 Rehabilitation Loans .. 174 Community Development Block Section 235 Homes ...... 174 Grant Program...... 177 Page Page Acquired Property Management and Federal Home Loan Mortgage Disposition ...... 178 Corporation ...... 89 GNMA Guaranteed Mortgage-Backed Conservation Policies and Securities and Special Assistance Opportunities ...... 189 Mortgage Purchases ...... 178 Energy Conservation and Federal Tax Research and Demonstration Policy ...... 190 Projects ...... 178 Present Law (Prior to the Energy Tax Act Minimum Property Housing of 1978) ...... 190 Standards ...... 179 1 he Effect of Present Law on Energy Conservation Policies and Conservation...... 191 Opportunities ...... 179 1 he Energy Tax Act of 1978...... 191 Community Development Block Further Changes to Encourage Energy Grant Program...... 179 Conservation Expenditures ...... 192 Acquired Property Management and Investment Tax Credit. . . ., ...... 193 Disposition ...... 180 Rapid Amortization ...... 193 Government National Mortgage Conservation R&D Activities, Office of Corporation...... 181 Conservation and Solar Applications, Minimum Property Standards .. ...181 Department of Energy...... 194 Farmers Home Administration ...... 181 Program Objective and Strategy. . . . . 194 Section 502 Homeownership Loan Budget Allocation...... 194 Program...... 182 Activities of the BuiIdings and Section 504 Home Repair Loan and Community Systems Program ...... 196 Grant Programs...... 182 Program Evaluation ...... 197 Section 515 Rural Rent and Cooperative Conclusion ...... 199 Housing Loans...... 182 Standards and Codes ...... 200 Conservation Policies and Opportunities 182 Minimum Property Standards...... 200 Veterans Administration...... 184 Farmers Home Administration Thermal VA Loan Guarantee and Direct Loan Performance Standards...... 202 Programs...... 184 Model Code for Energy Conservation in Conservation Policies and Opportunities 184 New Buildings ...... 203 Other Federal Departments and Programs .185 Building Energy Performance Standards. 204 CSA Emergency Energy Conservation Program...... 185 DOE Weatherization Assistance TABLES Program...... 185 DOE Division of Buildings and Page Community Systems ...... 186 66. Federal Housing Programs Delivery DOE Obligations Guarantee Program. 186 Systems...... 168 Department of Defense...... 186 67. New Privately Owned and Publicly Treasury Department: Tax Policy . .. .187 Owned Housing Units Started, Including Conservation Policies and Farm Housing, 1977...... 169 Opportunities ...... 187 68. New Privately Owned Housing Units Housing Secondary Mortgage Market and Started by Type of Financing 1977 .. ..169 Regulatory Agencies ...... 187 69. Originations of Long-Term Mortgage Regulatory Agencies...... 188 Loans 1977 ...... 187 Federal Home Loan Bank Board .. .188 70 Net Acquisitions of Long-Term Mortgage Federal Deposit Insurance Loans on Residential Properties by Corporation...... 188 Lender Groups...... 188 Conservation Policy and 71. FY 1979 Budget Estimates for Residential Opportunities ...... 188 and Commercial Components of DOE’s Secondary Mortgage Market ...... 188 Conservation Mission ...... 196 Federal National Mortgage 72. FY 1979 Budget Estimates for DOE Association ...... 189 Energy R&D...... 196 Chapter Vlll FEDERAL GOVERNMENT AND ENERGY CONSERVATION

INTRODUCTION

The Federal Government exerts substantial influence on the character of the Nation’s existing housing and on the location, type, and level of new construction activity. It would be logical to conclude that Washington is thus a leader in the drive for energy conservation in residential housing. But the Federal record is a mixed one. The Federal Government has not developed a coordinated or standardized policy to encourage residential energy conservation. The level of interest in promoting conservation varies by agency and program. Although there is evidence of greater concern and sensitivity about conservation by Federal agencies and important additional legislative authority was enacted in 1978, there are opportunities for accelerating conservation and for developing more systematic agencywide approaches. This section of the report examines the major Federal agencies involved in housing and energy conservation and reviews what they are doing or could do to promote conservation. The important conservation-related programs are described in terms of their key features, authorization, and program activity. How these programs and activities affect lending institutions, the building industry, State and local governments, and property owners—and how they influence the knowledge and awareness of all of these sectors about energy conservation — is explained.

The Federal Government has been actively ● demonstration projects to pioneer new ap- involved in promoting the objective of “a de- proaches; cent home and a suitable living environment” ● research related to residential buildings; for all Americans through a variety of housing ● regulation of housing, financing, and mar- programs and regulatory activities. The De- ket support activities; and partment of Housing and Urban Development ● direct construction and ownership of (HUD), the Farmers Home Administration housing (by the Department of Defense (FmHA) of the Department of Agriculture (DOD)). (USDA), the Veterans Administration (VA), and the agencies that regulate lending institutions Federal assistance involves a number of Fed- are the major Federal agencies bearing on the eral agencies and programs, private lenders, housing industry. Federal activities are and State and local governments. Table 66 il- directed to lenders, property owners, develop- lustrates the fragmented nature of the delivery ers, and lower income tenants and homeown- system. The types of lenders and agencies dif- ers< Types of activity and assistance include: fer depending on the type of construction and the housing occupants. ● loan insurance for private lenders; ● subsidies to lower income families and For all of its regulations and standards– owners of lower income housing projects; which do affect general housing activities — ● direct Government loans to property own- the direct Federal role in housing development ers; is relatively small in relation to nonfederally ● establishment of construction standards; assisted housing. (The exceptions are low- ● grants to local Government for housing in- income housing development and providing frastructure; mortgage insurance or guarantees for the

167 168 “ Residential Energy Conservation

Table 66.—Federal Housing Programs Iower end of the market.) Publicly owned hous- Delivery Systems ing is a small fraction of new construction starts as table 67 shows. Number of field offices/ Type of institution participating institution: Most housing is built and financed without Federal assistance. [n 1977 only one in six 1. Federal agencies privately owned housing starts were insured by HUD HUD’s Federal Housing Administration (FHA) Area/insuring offices ...... 76 Regional offices ...... 10 or guaranteed by VA (table 68). FmHa financed FmHA an additional 126,000 units. Federally assisted County offices...... 1,760 housing totaled 435,000 units or 22 percent of FNMA regional offices...... 5 all starts in 1977. VA Regional offices ...... 49 Even though most housing is conventionally Federal Home Loan Bank Board financed and developed without direct Federal Regional banks ...... 12 assistance, the Federal Government’s influence on housing is significant and its role in 2. State and local government agencies promoting energy conservation can be impor- States tant. Whether or not energy conservation is State housing agencies ...... 39 made a priority concern, Federal housing pro- Local government agencies grams and policies affect residential energy CDBG recipients...... 3,200 CDBG recipients proposing housing/ conservation. In assisting in the development, rehab type programs...... 1,470 maintenance, and financing of housing, the Section 312 agencies ...... 200-250 Federal Government is in a position to influence directly and indirectly the thermal 3. Private institutions (categories overlap) characteristics of a significant portion of the Lenders Commercial banks ...... 14,697 existing housing inventory and plans for new Savings and loan associations ...... 4,858 construct ion. Mutual savings banks...... 473 Credit unions...... 22,421 In terms of reducing energy consumption, Title I lenders the Federal Government has an opportunity Approved ...... 10,000 not only to promote energy conservation Active...... 4,600 through requiring high thermal standards for FHA mortgages newly constructed federally assisted housing Approved ...... 11,700 Active ...... 7,500 or by retrofitting existing structures in which FNMA originators HUD has an interest, but it can also promote Approved ...... 3,000 the adoption of energy conservation standards Active ...... 1,500 in State building codes and encourage mort- Very active...... 400-500 gage lenders and secondary market mortgage FHLMC originators Federally supervised savings & loans.... 2,048 purchasers to consider energy costs and the Active ...... 1,400 energy conservation characteristics of residen- GNMA originators tial properties they finance. These latter ac- Approved (all are FNMA approved tivities could have a larger impact on the hous- originators) ...... 1,000 ing sector than many more direct Federal hous- VA mortgages ing support activities. But as the following ex- NA No approval system ...... amination of agencies and programs indicates, SOURCE: RUPL Federal incentives for Solar Homes, 1977, table lV.7. National conservation may be given inadequate priority Association of Mutual Savings Banks, 1977 National Facfbook of MutualSavings Banks, 197LP. 12. in Federal programs and in funding decisions. Ch. Vlll—Federal Government and Energy Conservation “ 169

Table 67.—New Privately Owned and Publicly Owned Housing Units Started, Including Farm Housing, 1977 (in thousands)

Type of structure Inside Outside Total 1 unit 2 units 3 to 4 units 5 units or more SMSAS SMAS Total ...... 1,990 1,452 61 —. 61 415 1,378 612 Privately owned. 1,987 1,451 61 61 414 1,377 610 — — Publicly owned . 3 1 — 1 1 2 NOTE: Figures may not total due to rounding. SOURCE: HUD Office of Housing Statistics.

Table 68.—New Privately Owned Housing Units Started by Type of Financing 1977 (in thousands)

Number of housing units Number Percent of total starts Percent FHA FHA ...... 9 Homes...... 100 VA ...... 7 Projects...... 78 Total FHA & VA...... 16 VA ...... 131 Other ...... 84 Total FHA & VA...... 309 SOURCE: HUD Office of Housing Statistics. Other ...... 1,678 Total...... 1,987 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

The Housing and Urban Development Act of tion does not appear to be a priority depart- September 9, 1965, established HUD. It is the mental concern and the role of the Energy principal Federal agency responsible for pro- Conservation Office is limited. Individual programs concerned with housing needs and im- grams have established policies toward energy proving and developing the Nation’s commu- conservation but the Department has no over- nities. It operates programs in all parts of the all policy or consistent priority for meeting country except that for rural and small-town conservation goals. areas served by FmHA. HUD administers a The Senate, Banking, Housing, and Urban variety of housing programs, including mort- Affairs Committee and the House Banking, gage insurance programs for private lenders, Currency, and Housing Committee handle rental and homeowners hip subsidy programs HUD’s legislation. for lower income families, and programs to improve the availability of mortgage credit and The most important HUD programs are re- policy research support programs. Local devel- viewed below. Housing programs designed to opment activities are assisted by the communi- benefit low- and moderate-income families are ty development block grant program. Through discussed first. Subsequent sections discuss its promulgation of minimum property stand- the principal mortgage insurance programs ards, HUD sets construction standards for all and other types of HUD programs with energy HUD-assisted, VA-guaranteed, and FmHA- conservation potential. Each program’s conser- assisted housing. vation policy is described, and its level of activity noted. HUD operates through a field structure of 10 regional offices and 82 field offices including 39 area offices. Housing Programs Directed to Low- The Assistant Secretary for Neighborhoods, and Moderate-Income Families Voluntary Associations, and Consumer Protec- LOW-RENT PUBLIC HOUSING tion is the Department’s principal energy conservation officer. An Office of Energy Conser- This program provides financial and techni- vation has been established. Energy conserva- cal assistance to local public housing agencies 170 ● Residential Energy Conservation

(PHAs) to develop, own, and operate low- In FY 1978, $685 million was appropriated income housing projects. Projects are financed for operating subsidies. through the sale of tax-exempt local obliga- Authorization.– U.S. Housing Act of 1937 tions that are guaranteed by the Federal Gov- (Public Law 75-412) as amended. ernment. HUD provides annual contributions to pay the debt service of PHA obligations so SECTION 8 LOW-INCOME RENTAL ASSISTANCE as to assure low rents and maintain adequate services and reserve funds. Rents, based on the This program, which is HUD’s main assisted- residents’ ability to pay (25 percent of adjusted housing program, makes rental subsidies avail- gross income), contribute to the cost of manag- able to help lower income families rent standing and operating the housing. ard privately owned housing. Eligible families Additional public housing can be developed must earn less than 80 percent of the median by PHAs acting as the developer, by private de- income for the area. Thirty percent of the velopers under the “turn key” program, or families assisted must earn less than so per- through acquisition and rehabilitation of ex- cent of the median income for the area. isting housing. The program makes up the difference be- Two related programs–modernization and tween what a lower income household can af- operating subsidies – provide financial sup- ford (no more than 25 percent of adjusted port to the existing public housing inventory. gross income) and the fair market rent for an adequate housing unit. Housing thus subsi- Under the modernization program, HUD dized must meet certain standards of safety finances capital improvements in public hous- and sanitation, and rents for these units must ing projects to upgrade living conditions, cor- fall within the range of fair market rents as rect physical deficiencies, and achieve oper- determined by HUD. This form of rental assist- ating efficiencies and economies. The develop- ance may be used in existing housing or newly ment cost is amortized through annual Federal constructed or substantially rehabilitated contributions toward the debt service. I n addi- units Project sponsors may be private owners, tion, the National Energy Act authorized a profit-motivated, nonprofit or cooperative special program to finance the cost of energy- organizations, public housing agencies, and conserving improvements for public housing. State housing finance agencies. HUD also provides operating subsidies to Local PHAs administer the existing housing help PHAs maintain and operate their projects, program. They certify eligible tenants, inspect retain minimum operating reserves, and offset the units proposed for subsidy, and contract certain operating deficits. The operating sub- for payment with landlords whose units have sidies are based on the Performance Funding been approved. Proposals for new construc- System, a formula designed to calculate oper- tion or substantial rehabilitation are submitted ating subsidies based on what it costs a well- for approval to HUD or State housing finance managed PHA to operate its units. agencies. Program Activity. –As of December 1977, more than 4,000 localities had public housing Program Activity. -Through December 1977, programs; 1,187,693 units were available for reservations had been established for 982,439 occupancy, of which about 25 percent were units. As of that time, 25,636 new units, 4,341 designated for the elderly. In 1977, an addi- rehabilitated units, and 327,797 existing units tional 6,229 units were made available for oc- were occupied. A significant portion of pro- cupancy, and 6,321 were placed under con- gram funds were being used to assist families struction or rehabiIitation. living in HUD-financed projects that have been reacquired or assigned to HUD or are in finan- In FY 1978, some 800 PHAs were expected to cial difficuIty. participate in the modernization program, $42.6 million in contract authority was allo- Authorization.– Section 8 of the U.S. Hous- cated to finance capital costs of $475 million. ing Act of 1937 (Public Law 73-379) as amended Ch. Vlll—Federal Government and Energy Conservation ● 171

by the Housing and Community Development Authorization. – Section 202 of the Housing Act of 1974 (Public Law 93-383). Act of 1959 (Public Law 86-372).

SECTION 236 RENTAL AND COOPERATIVE SECTION 312 REHABILITATION LOANS HOUSING ASSISTANCE FOR LOWER The section 312 program provides rehabilita- INCOME FAMILIES tion loans in federally aided community devel- The section 236 program provides mortgage opment block grant, urban homesteading, and insurance and interest subsidies to lenders to neighborhood strategy areas. The program reduce the rent that lower income households makes available direct Federal loans to pay for housing. No additional commitments finance the rehabilitation of residential, are now being made under the program. Under mixed-use, and nonresidential properties. A section 236, HUD insures mortgages and loan may be used to insulate or weatherize makes monthly payments to lenders on behalf properties. Loans may not exceed $27,000 per of project owners to reduce mortgage interest dwelling unit or $50,000 for nonresidential costs to as low as 1 percent. The amount of properties. The interest rate is 3 percent except subsidy provided is based on the income of the for families whose income is above 80 percent occupants. Projects are developed by nonprof- of the median family income when the rate is it, limited-dividend, or cooperative organiza- tied to the Treasury borrowing rate. The loan tions. In 1974 HUD began to pay additional term is for a period up to 20 years or three- subsidies to cover the differences between the fourths of the property’s remaining useful life. tenants’ contribution and the actual costs of The applicant must evidence the capacity to operating the projects. repay the loan and be unable to secure necessary financing from other sources on compar- Program Activity. – In 1977, 561 units were in- able terms and conditions. Preference is given sured. The program has financed more than to low- and moderate-income applicants. 393,000 units since its inception. Program Activity.– Through December 1977, Authorization. — Section 236 of the National $430 million of rehabilitation loans involving Housing Act (1934) (Public Law 73-479) as 80,327 units had been approved. In 1977 alone, amended by section 201 of the Housing and 5,787 loans were made, involving 7,942 units Urban Development Act of 1968 (Public Law with a total loan amount of $65.3 million. 90-448). Authorization. – Section 312 of the Housing SECTION 202 DIRECT LOANS FOR ELDERLY and Urban Development Act of 1964 (Public AND HANDICAPPED HOUSING Law 88-560). The section 202 program for the elderly and handicapped provides long-term direct loans SECTION 235 HOMEOWNERSHIP ASSISTANCE to eligible, private, nonprofit sponsors to FOR LOW- AND MODERATE-INCOME FAMILIES finance rental or cooperative housing facilities The section 235 program provides mortgage for elderly and handicapped persons. The in- insurance and interest subsidies to lenders. terest rate is based on the average rate paid on HUD insures mortgages and makes monthly Federal obligations during the preceding fiscal payments to lenders on behalf of low- and year. A minimum of 20 percent of the section moderate-income homebuyers to reduce their 202 units must also be assisted by the section 8 mortgage interest costs to as low as 4 percent. program. The program originally enacted in 1968 was A household of one or more persons, the significantly revised in 1975. head of which is at least 62 years old or handi- The homeowner must contribute 20 percent capped, is eligible to live in section 202 proj- of his adjusted gross income to the monthly ects. mortgage payments and must make a down- Program Activities.– In 1977, reservations for payment of 3 percent of the cost of acquisi- 32,801 units were made and projects involving tion. The income limit for initial occupancy is 10,322 were started. 95 percent of the area median income. Mort- 172 ● Residential Energy Conservation

gage limits are $32,000 ($38,000 for homes for ings resulting from the grants must either bene- five or more persons) and in high-cost areas fit tenants in the form of reduced rent or $38,000 ($44,000 for homes for five or more reduced Federal operating subsidies. persons). HUD has an opportunity to influence energy Program Activity. — In 1977, 6,485 loans were conservation in assisted housing in two general insured for a total value of $174 million. The ways: as a part of the approval of the plans and program has financed nearly 485,000 units. specifications of new construction or substantial rehabilitation projects and, once the hous- Authorization. — Section 235 of the National ing is built, in conjunction with the provision Housing Act (1934) (Public Law 73-479) as of annual subsidies that maintain the low- and amended by section 101 of the Housing and moderate-income character of the housing. Urban Development Act of 1968 (Public Law Because of the manner in which the program 90-448). functions, the opportunities to promote conservation in the section 312 program are more Conservation Policies and Opportunities limited and are explained below. Legislation enacted in 1978 and changes in All assisted housing programs have similar program policies have made energy conserva- policies governing the inclusion of energy- tion a more important policy concern in savings improvements in new construction or assisted housing programs than it had been substantialIy rehabiIitated projects with the ex- previously. Recent legislative changes and the ception of the section 312 loan programs. All conservation policies of the different programs newly developed assisted housing must con- are discussed below. form to HUD’s minimum property standards (MPS) Improvements financed by section 312 The 1978 National Energy Conservation Pol- loans must conform to local building code re- icy Act and the Housing and Community quirements. The conservation requirements of Development Amendments of 1978 enacted the MPS have been raised periodically and will important new energy conservation authorities be made more stringent as a result of the and funding. I n the Housing and Community future adoption of the building energy per- Development Amendments the Secretary of formance standards. The upgrading of the MPS HUD is encouraged to promote cost-effective may increase the capital costs of new projects, and economically feasible solar energy sys- which wilI over the short-run increase the tems in housing assisted through sections 8, 312, and 202. The Secretary is also directed to amount of Federal subsidies required. Over the long run, however, the energy savings that will promote cost-effective and economically fea- result from improved thermal performance sible solar energy instalIations in residential wiII decrease Federal subsidy requirements. housing in general, taking into account the interests of the low-income homeowners and The opportunities for improving conserva- renters. The Act requires that section 312 fi- tion activities and saving energy in existing nanced improvements and section 8 substan- housing are significant. HUD policies related tial rehabilitation projects meet cost-effective to conservation are in the process of being energy conservation standards. The National upgraded. Some of the specific policies and Energy Conservation Policy Act included sev- issues are reviewed on a program by program eral provisions that affect assisted housing. A basis. $10 million authorization of contract authority specifically for the purchase and installation PUBLIC HOUSING of energy conservation improvements was au- Concern for energy conservation in the man- thorized. A $25 million grant program was au- agement of public housing projects has been a thorized to finance conservation improve- distinct and often stated HUD policy. Conser- ments for sections 236, 221(d)(3), and 202 proj- vation improvements for existing projects can ects that are in financial difficulty as a result be financed through the modernization proof energy costs. The law requires that the sav- gram, and conservation has been identified as Ch. Vlll—Federal Government and Energy Conservation “ 173 one of five areas for priority funding. The practices. Increased utility expenses were extent to which modernization funds are used simply funded by the operating subsidies pro- for conservation is not known but it appears gram. Operating subsidy funding decisions that significant numbers of projects involve were not reviewed in order to determine how some conservation activities. Some PHAs have outlays could be reduced by making cost ef- funded conservation projects out of their own fective conservation improvements to proj- surplus funds without looking to HUD for spe- ects. cial funding but few PHAs have significant The conservation potential in public housing surplus reserves and most must rely on HUD is large for a number of reasons. Many projects for funds to make conservation improvements. are not now energy efficient. The information The energy efficiency of the public housing in- chain between HUD and PHAs is relatively ventory is not known but because of historic short. Information can be easily distributed construction cost limitations and the age of through established communication channels. the housing stock it can be assumed that a Financing is a relatively modest problem. The large portion of public housing is not energy modernization program could become primar- efficient. Recently HUD has encouraged PHAs ily an energy conservation program through to install individual utility meters in projects if administrative action. it was judged cost effective. The operating subsidies program could be HUD has proposed new regulations that reoriented to give greater consideration to would expand and extend energy conservation energy conservation. The performance funding efforts in public housing and involve PHAs in system, the formula used to allocate operating systematic conservation programs. All PHAs subsidies, could be revised to provide incen- would be required to conduct energy audits of tives for conservation. Operating data could their projects within 3 years. Based on the be reviewed to provide a clearer picture of the audits, PHAs would have to establish a list of energy conservation potential of particular conservation improvements ranked by their projects. Incentives could be created for PHAs degree of cost effectiveness and to make im- to encourage them to give energy conservation provement decisions based on the priority more attention and priority. ranking. The scope of the audits would have to cover an assessment of certain specialized SECTION 8, SECTION 202, AND types of improvements. The regulations would SECTION 236 PROJECTS require PHAs to buy appliances with the These projects are largely owned by private highest energy efficiency, thermostats would nonprofit or limited dividend-for-profit cor- have to be set at no more than 750 F, water porations. Because of debt service payments heaters would have to be set at 1200 F, and in- and operating cost requirements owners have dividual utility check meters would have to be very limited cash flow or reserve funds avail- installed unless other actions were considered able to finance energy conservation improve- more cost effective. ments. Most sponsors are unwilling to increase Adoption of these requirements could result their equity in projects even if the investment in significant energy savings. PHAs currently will result in reducing operating costs. spend $400 milIion for utilities and the in- Although the relationship between HUD and crease in the cost of utilities has been a major these private housing owners is not as direct as factor in the large operating losses sustained in with public housing agencies, owners should public housing. be sensitized and encouraged to make conservation improvements. Prior to the development of these regulations, HUD and PHAs had not established ener- Motivating owners to retrofit their projects gy conservation standards and goals. PHAs may be difficult. Project owners may not have had been encouraged to include conservation an incentive to make conservation improve- projects in their modernization activities but ments because many have little investment or there was no HUD review of conservation personal interest in the projects. Because util- 174 . Residential Energy Conservation ities in many projects are paid by the tenants, Recently proposed regulations would en- owners have no financial incentive to invest in courage PHAs to provide technical assistance, conservation improvements. work writeups, and cost estimates to landlords participating in the section 8 existing program HUD might use its authority to approve rent to help them determine what energy savings increases to get owners to make conservation improvements wouId be cost effective. improvements. The extent to which proposed increases in rent represent utility cost in- Proposed regulations for the section 8 creases could be ascertained and, in situations moderate rehabilitation program would allow where improvements would be cost effective, owners to make conservation improvements such improvements couId be required as a con- such as installing storm windows and storm dition of the rent increase. A similar require- doors as long as the improvements are judged ment might be made as a condition of receiv- cost effective over the 15-year term of the sub- ing section 236 operating subsidies. In granting sidy contract. operating subsidies HUD does not evaluate the Because virtually all section 202 elderly energy efficiency of projects nor determine the projects are on a sound financial footing and impact of energy costs on operating costs. owned by experienced church and union spon- Prior to 1978 there was no funding available to sors, retrofitting existing projects offers an ex- finance such improvements but the National cel lent opportunity for saving energy. The area Energy Conservation Policy Act authorized a of prime potential for unrealized conservation grant program to assist section 236 and section measures in this program relates to projects 202 projects, and loans for conservation im- built before 1973 when thermal standards were provements, solar energy systems, and installa- lower. Separate financing might be required to tion of individual utility meters can be insured enable sponsors to make conservation im- under section 241 of the National Housing Act. provements, but given the nature of the tenant Although HUD requires reserves for capital group and the financial sources of these proj- improvements in properties with HUD income ects, such financing, especially if backed by a mortgages, and those reserve funds might, in Government guarantee, should be readily some cases, represent a source to cover con- avaiIable. servation capital expenditures, that resource has limited potential. Many projects are in SECTION 312 REHABILITATION LOANS financial difficulty and many do not have ade- Borrowers can make conservation improve- quate reserves. Applying stringent policies ments with proceeds from section 312 rehabili- about making conservation improvements tation loans. The program has not specifically could increase the cash flow problems of proj- promoted conservation but consideration is ects and couId bring about increased mortgage being given to establishing energy conserva- defaults and foreclosures. tion guidelines. Since properties assisted In the section 8 existing housing program, through section 312 must be brought up to HUD does not evaluate the energy efficiency local code standards, the effectiveness of the of the units occupied by program benefici- program in terms of saving energy could be im- aries, Assistance is calculated based on pro- proved by the upgrading of local energy con- totype utility costs and fair market rent deter- servation codes. Since most loans go to low- minations. As a result, actual energy costs are and moderate-income property owners there not considered in approving units and deter- are tradeoffs that have to be made in establish- mining subsidy payments in the program. ing standards between additional energy sav- Although it would pose many administrative ing and the ability of property owners to afford problems, the section 8 housing standard the extra costs. could be modified to require consideration of the energy characteristics of units eligible for SECTION 235 HOMES assistance or consideration of the actual costs No special conservation policies or opportu- of utiIities. nities have been identified for the section 235 Ch. Vlll—Federal Government and Energy Conservation ● 175

homeownership program beyond those relat- SECTION 233 EXPERIMENTAL HOUSING ing to acquired property disposition and those PROGRAM which would result from changes to the MPS. The section 233 program provides insurance for experimental single-family and multifamily Mortgage and Home Improvement projects involving unconventional housing sys- Insurance Programs tems or subsystems without the requirements that they adhere to normal HUD-FHA process- SECTION 203(b) AND (i) ONE- TO FOUR-FAMILY HOME MORTGAGE INSURANCE ing and MPS requirements. The program is intended to assist in lowering housing costs and The section 203(b) and (i) program provides improving housing standards, quality, livabil- mortgage insurance to lenders for loans to ity, or durability of neighborhood design finance the purchase, construction, or rehabili- through the use of experimental technology or tation of one- to four-family properties — up to experimental property standards. The ra- 97 percent of the property value up to $25,000 tionale for the program is to develop ex- and 95 percent for the value in excess of perience with a concept before the concept is $25,000–for terms up to 30 years. The loans written into the MPS. OccasionalIy, cases be- may finance homes in both urban and rural ing considered by FmHA or VA that cannot be areas (except farms). The maximum mortgage approved under their procedures are referred loan on a single-family home is $60,000. to the section 233 program for final action. No example of this procedure being used to facil- Program Activity.– In 1977, 42,760 new con- itate processing of energy-conservation-ori- struction and 241,504 existing home loans were ented loans has been identified. insured for a total value of $7.7 biIIion.

Authorization.– Section 203(b) and (i) of the Program Activity. -Through September 1977, National Housing Act (1934) (Public Law $8 million in insurance on single-family hous- 73-479). ing had been issued, and $97 million in insurance on multifamily projects had been SECTION 221(d)(2) HOMEOWNERSHIP issued. I n 1977, 14 single-famiIy loans were in- ASSISTANCE FOR LOW- AND MODERATE- sured at a total value of $399,300. No multi- INCOME FAMILIES family projects were insured in 1977. The section 221 (d)(2) program provides mortgage insurance to lenders for loans to finance the purchase, construction, or rehabilitation of SECTION 207 MULTIFAMILY RENTAL HOUSING low-cost, one- to four-family housing. The max- The section 207 program provides mortgage imum insurable loan for an owner occupant is insurance to lenders for loans to finance the $31,000 for a single-family home (up to $36,000 construction or rehabilitation of multifamily in a high-cost area). For a large-family home rental housing (eight or more units) by private $36,000 (or up to $42,000 in a high-cost area) is or public developers. The housing project must the maximum insurable loan. Higher mortgage be located in an area approved by HUD for limits apply to two- to four-family housing. A rental housing and in which market conditions downpayment of 3 percent is required, and show a need for such housing. The mortgage mortgage terms are for up to 30 years. cannot exceed the lesser of 90 percent of value Program Activity. — In 1977, 1,039 new con- or unit-size cost limitations. The mortgage struction and 33,594 existing units were in- term is Iimited to 40 years. sured for a total value of $736.2 million. Program Activity.– In 1977, 2,884 units were Authorization. – National Housing Act (1934) insured at a value of $49 miIIion. (Public Law 73-479) as amended by section 123 and section 221(d)(2) of the Housing Act of Authorization. — Section 207 of the National 1954 (Public Law 83-560). Housing Act (1934) (Public Law 73-479). 176 ● Residential Energy Conservation

SECTION 221(d)(3) AND (4) MULTIFAMILY and Urban Development Act of 1968 (Public RENTAL HOUSING FOR LOW- AND Law 90-448). MODERATE-INCOME FAMILIES This program provides mortgage insurance TITLE I HOME IMPROVEMENT AND MOBILE HOME LOAN PROGRAM to lenders for loans to finance the construction or rehabilitation of multifamily (5 or more The title I home improvement and mobile units) rental or cooperative housing for low- home loan program provides co-insurance to and moderate-income or displaced families. lenders for loans to finance major and minor The insured mortgage amounts are controlled improvements, alterations, and repairs of in- by statutory dollar limits per unit, which are individual homes, nonresidential structures, and tended to insure moderate construction costs. mobiIe homes. Section 221(d)(3) mortgages may be obtained Title I loans may be made in amounts up to by public agencies, nonprofit, limited-divi- $15,000 for a term of up to15 years at an inter- dend, or cooperative organizations. Section est rate not to exceed 12 percent. Loans of less 221(d)(4) mortgages are limited to profit-moti- than $7,500 are generally unsecured personal vated sponsors. Under section 221(d)(3), HUD loans, Under the program HUD reimburses may insure 100 percent of total project cost for lenders for 90 percent of any loss under the cooperative and nonprofit mortgages, but it program. may insure only 90 percent under section 22 I (d)(4) irrespective of the type of mortgage. Under title 1, mobile home loans may be made in amounts up to $16,000 and 12 years The National Energy Conservation Policy on single-module units and up to $24,000 and Act authorizes a grant program to finance the 15 years for double-module units at any inter- cost of energy-conserving improvements in est rate up to 12 percent. section 22 I (d)(3) projects. Program Activity.– More than 32 million Program Activity. — In 1977, 70,809 units were loans, of which more than 60,000 are mobile insured for a total value of $1.57 biIIion. home loans, for a value of over $26 billion, Authorization. — Section 221(d)(3) and (4) of have been insured under the program since its the National Housing Act (1934) (Public Law inception. Program activity in 1977 was 73-479) as amended by the Housing Act of 1954 345,579 loans with a value of $1,341 million. (Public Law 83-560). Authorization. — Section 2, title I of the Na- tional Housing Act (1934) (Public Law 73-479) SECTION 223(e) HOUSING IN DECLINING as amended by the Housing Act of 1956 (Public NEIGHBORHOODS Law 84-1020). The section 223(e) program provides mort- Conservation Policies and Opportunities gage insurance to lenders for loans to finance the purchase, construction, or rehabilitation of Conservation efforts in HUD mortgage in- housing in older, declining, but still viable ur- surance programs occur primarily through the ban areas where conditions are such that nor- requirements imposed by HUD’s MPS (in the mal requirements for mortgage insurance can- case of new construction) and standards of ac- not be met. The terms of the loans vary accord- cepted practice (in the case of existing ing to the HUD/FHA program under which the buildings). These standards are implemented mortgage is insured, but the loan must be an through the relationships among area office acceptable risk. staff, lenders, and applicants for mortgage insurance. Field staff are sensitized to conserva- Program Activity.– In 1977, 8,511 loans were tion measures through formalized training of insured under this authority. technical personnel (architects and engineers) Authorization. –Section 223(e) of the Na- who interact with the field representatives and tional Housing Act (1934) (Public Law 73-479) applicants. An applicant who wants to incor- as amended by section 103(a) of the Housing porate a novel or first-cost intensive system in Ch. Vlll—Federal Government and Energy Conservation ● 177

new construction can generally secure a full not seem to be used as aggressively as they hearing for his case before local office person- might be for transmitting information on con- nel. If his costs are higher than those generally servation techniques and opportunities. accepted for the kind of structure in that particular area, he will be persuaded to modify his approach to conform to accepted costs. [f his Other HUD Programs approach involves a system or a technique not COMMUNITY DEVELOPMENT BLOCK GRANT provided for in the MPS, he may elect prefer- PROGRAM ential processing under the experimental program (section 233 described above). The community development block grant program (CDBG) makes available block grants It is difficult to evaluate the impact the title to local governments to fund a wide range of I home improvement loan program has on en- community development activities. Metropoli- ergy conservation since this activity is admin- tan areas–generally cities over 50,000 popula- istered primarily by lending institutions with tion — and qualified urban counties—those HUD-FHA carrying out postaudits of insurance with populations in excess of 200,000— are claims. Although the written instructions to the guaranteed an annual grant or “entitlement” lending institutions are broad enough to allow based on needs. Smaller communities compete practically any kind of conservation loan, no for the remaining “discretionary” funds. specific attempt is made to generate loans for Spending priorities are determined at the local conservation purposes. Further, there appears level, but the law enumerates general objec- to be no effort to determine whether such tives that the block grants are designed to ful- loans are being made, and if so, what problems fill, including the provision of adequate hous- might exist. The 1974 Housing and Urban De- ing, a suitable Iiving environment, and ex- velopment Act specificalIy authorized title I to panded economic opportunities for lower in- insure loans for energy conservation improve- come groups. Grant recipients are required to ments. The MPS do not apply to title I loans estimate their lower income housing needs and but HUD has specified standards for solar address them in the overall community devel- energy installations. The National Energy Con- opment plan they submit. servation Policy Act authorizes Federal secondary market institutions to buy and selI title Funds may be used to finance or subsidize 1 loans that financed energy conservation im- housing improvement and rehabilitation. provements. CDBG rehabilitation assistance is provided in a The National Energy Conservation Policy variety of forms, including direct loans, loan Act has increased the opportunity for insuring guarantees to private lenders, interest sub- homes and multifamily projects with solar sidies, and loan writedowns to reduce the size energy systems. Section 248 of the act author- of privately made loans. izes HUD to increase the size of insured loans under sections 203 and 207 by up to 20 percent Program Activity.– Under the program due to increased costs for the installation of $10.95 billion was authorized for FY 1978-80. solar energy systems. The FY 1978 appropriation was $3.6 billion, and some 3,200 local governments received The dissemination of conservation informa- grants, of which 1,300 received entitlement tion by HUD to the portion of the housing mar- grants. The amount of funds earmarked for re- ket that relies on HUD mortgage insurance ap- habilitation was estimated at $418 million in pears potentially effective, despite the number FY 1977, and about 1,500 communities ex- of participants involved, because of the large pected to have rehabilitation programs. number of HUD area offices, the regular contacts that owners and the housing industry Authorization. –Title 1 of the Housing and have with HUD staff and the variety of HUD Urban Development Act of 1974 (Public Law publications going to the different parts of the 93-383) as amended by the Housing and Urban housing industry. These channels, however, do Development Act of 1977 (Public Law 95-128). 178 . Residential Energy Conservation

ACQUIRED PROPERTY MANAGEMENT AND mortgages. The guarantee is backed by the full DISPOSITION faith and credit of the U.S. Government. Appli- In the course of its activities, HUD acquires cants must be FHA-approved mortgagees in title to many properties it insured or assisted good standing and generally have a net worth because of mortgage defaults by property in excess of $100,000. owners. HUD’s policy is to Iiquidate properties Program Activity. –GNMA guaranteed more in such a manner as to assure the maximum than $152 billion in mortgage-backed, pass- return to the mortgage insurance funds exist- through securities in FY 1978. In FY 1978 it ent with the need to preserve and maintain made tandem commitments of $2.1 billion. residential areas and communities. Authorization.— Tandem plan activities were Program Activities.– At the end of FY 1978 it authorized by the Housing and Urban Devel- is estimated that HUD will own 63,119 proper- opment Act of 1968 and 1969 (Public Law ties of which 25,701 would be houses and 90-488 and 91-1 52), the Housing and Communi- 37,418 multifamily units. Total acquisitions for ty Development Act of 1974 (Public Law 1978 are estimated at 50,575. 93-838), the Emergency Home Purchase Act of Authorization. — Not applicable. 1974 (Public Law 93-449), the Emergency Hous- ing Act of 1975 (Public Law 94-50), and the GNMA GUARANTEED MORTGAGE-BACKED Housing Authorization Act of 1977 (Public Law SECURITIES AND SPECIAL ASSISTANCE 95-1 28). GNMA’s guarantee authority is author- MORTGAGE PURCHASES ized by the Housing and Urban Development The Government National Mortgage Associ- Act of 1968 (Public Law 90-44). ation (GNMA), a corporate entity within HUD, was originalIy established to provide a second- RESEARCH AND DEMONSTRATION PROJECTS ary market for federally insured residential Solar Heating and Cooling Demonstration.– mortgages not readily salable in the private As part of the national solar energy program market. These mortgages generally financed administered by the Department of Energy housing for special groups or in areas of (DOE), HUD is responsible for a demonstration special needs. Prior to September 1, 1968, of the practical application of solar energy in GNMA’s functions were carried out by the Fed- residential heating and cooling. The program eral National Mortgage Association (FNMA). includes 1) residential demonstrations in More recently GNMA was authorized to pur- which solar equipment is installed in both new chase both federalIy insured and conventional and existing dwelIings, 2) development of per- mortgages at below-market interest rates to formance criteria and certification procedures stimulate lagging housing production. These for solar heating and cooling demonstrations, mortgages are then resold at current market 3) market development to encourage accept- prices, with the Government absorbing the loss ance of solar technologies by the housing in- as a subsidy under the “tandem” plan. HUD-, dustry, and 4) data gathering and dissemina- FNMA-, or Federal Home Loan Mortgage Cor- tion of demonstrations and market develop- poration (FHLMC)-approved lenders may apply ment efforts. to sell mortgages to GNMA. Program Activity. –As of December 1977 the Twenty-five special assistance programs first four of five funding cycles have been have been implemented since 1954. Between completed. A total of 325 grants valued at January 1974 and September 1977 GNMA $13.5 million, involving 6,924 dwelling units, issued $20.5 billion in commitments to pur- had been made. chase below-market interest rate mortgages. Authorization. – Solar Heating and Cooling GNMA also guarantees the timely payment Act of 1974 (Public Law 93-409). of principal and interest to holders of securities issued by private lenders and backed by Energy Performance Standards for New Build- pools of HUD-insured and VA-guaranteed ings. –The purpose of this research, managed Ch. Vlll—Federal Government and Energy Conservation “ 179

by HUD, is to develop energy performance Anyone may suggest modifications to the standards for new buildings. It is divided into MPS; important changes are issued for com- three phases: an assessment of how much ener- ment through the Federal Register. gy buildings are designed to use; an assessment Program Activity. – Not applicable. of how much less energy buiIdings could be designed to use; and the testing and evaluation Authorization. — National Housing Act (1934) of standards. For analysis purposes buildings (Public Law 73-279). were divided into two major groups — nonresidential buildings, including multifamily Conservation Policies and Opportunities homes, and low-rise multifamily housing, and mobile homes. COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM The work is being carried out by the AIA Energy conservation activities are not spe- Research Corporation and its subcontractors. cifically promoted nor precluded as one of the eligible activities under CDBG. Localities may Data is being collected on 6,254 buildings, choose to assist virtually any list of projects, which were constructed in 1975 and 1976 in provided there are community improvement different metropolitan areas. activities and are primarily oriented toward helping low- and moderate-income families. Program Activity. –The Phase I report has Many approaches to energy conservation been completed. In November 1978, a draft set could be justified under these conditions; the of standards and regulations and target most obvious would be an energy conservation numbers for different climatic regions were CDBG-funded component tied into a housing issued by DOE, and HUD issued draft imple- rehabilitation or a public housing moderniza- mentation regulations for comment. After pub- tion program. Because individual communities lic review and comment, standards will be select and design the projects they will under- promulgated. Approximately $10 million has take, HUD has no easy way of knowing to what been devoted to standards development. extent energy conservation improvements are current] y encouraged. Authorization. –Title I I I of the Energy Con- servation Production Act of 1976 (EC PA) (Pub- The use of CDBG funds for conservation im- lic Law 94-385). provements in rehabilitation financing programs has been made explicit in draft regulations issued by HUD. The regulations would MINIMUM PROPERTY HOUSING STANDARDS allow CDBG rehabilitation financing to be HUD has established MPS for its programs, used for measures to increase the efficient use which prescribe minimum levels of design and of energy in structures through such means as construction. The preamble of the National installation of storm windows and doors, Housing Act (1934), which established FHA, au- siding, wall and attic insulation and conver- thorized the agency to promote the upgrading sion, modification or replacement of heating of housing standards. There are MPS for one- and cooling equipment, including the use of to two-family new construction, multifamily solar energy equipment. The regulations also new construction, nursing homes, and rehabil- propose that in considering discretionary itation. The rehabilitation standards are more grants for new communities, HUD will give in the form of guidelines than standards. The some weight to proposals that demonstrate the MPS are used not only by HUD but by VA and potential of energy conservation. FmHA, except that the latter’s standards for The CDBG program could give greater atten- insulation differ somewhat from HUD’s MPS. tion to how its funds could be used to save (See later section on Housing Standards.) The energy. Better coordination of efforts between construction of all mobile homes is governed CDBG and the Community Services Admin- by HUD’s Mobile Home Construction and istration’s weatherization program could be an Safety Standards. effective approach to promoting residential 180 . Residential Energy Conservation conservation. The weatherization program tated and then marketed. For those properties could be administered to dovetail with HUD- that are fully repaired before resale, there are financed rehabilitation projects, thus meeting no statutory maximums placed on the dollar particular needs. amount of improvements aIlowed per struc- Many jurisdictions, especially suburban and ture. A major goal of HUD, FmHA, and VA, in- small communities, have had little involve- sofar as their reacquired housing inventory is ment in HUD programs but may be eligible for concerned, is to dispose of the units as quickly discretionary CDBG grants. The situation sur- as possible with the highest dolIar return. rounding the planning of an application or ex- In 1978, HUD modified its property disposi- penditure of CDBG funds in such communities tion policies so that all single-family homes may be fluid, and—with encouragement— have to include certain energy conservation they might find the promotion of energy con- features, or the purchaser has to agree to add servation in housing worthwhile. I n this con- the features to the home as a condition of sale. text, energy conservation would appear to be The only exceptions to the policy are homes an ideal activity for the CDBG program to scheduled to be demolished, properties sold in foster. conjunction with section 312 financing for In larger cities CDBG funds can and fre- rehabiIitation by the purchaser, and properties quently do go to agencies or organizations that transferred to local governments. Local may be particularly interested in energy con- governments, however, are required to agree servation. These agencies are frequently neigh- that conservation measures will be included borhood-oriented, close to citizens, and may in their repair requirements for the homes. be willing to launch energy conservation activ- HUD required energy-savings features include ities. Such groups could be encouraged to pro- weatherstripping and caulking as needed, remote conservation. Urban planning activities, placement of warped or ill-fitting doors and now supported by the block grant program, windows, Insulation of the attic, air ducts, and could be directed toward articulating the need hot water heating pipes, and installation of for and scope of energy conservation pro- storm doors and windows in certain climatic grams. zones. If heating or air-conditioning equipment is replaced, proper sized equipment must There appear to be few procedural road- be selected. blocks to encouraging conservation in CDBG rehabilitation programs. HUD and local gov- Multifamily properties are not required to ernment personnel do not seem to be opposed conform to a specific conservation standard. to an energy efficiency emphasis but need en- Field offices have discretion in determining couragement and greater awareness of the what should be done or in the case of “as is” magnitude of the opportunity and potential to sales whether the making of conservation im- use the CDBG program to achieve energy con- provements should be a condition of sale. servation objectives. An energy conservation emphasis by HUD may, in fact, have greater utility in helping pre- ACQUIRED PROPERTY MANAGEMENT AND vent mortgage default and housing reacquisi- DISPOSITION tion by the Government than in rescuing prop- Although three Federal agencies (HUD, erties once defaulted. The major area of con- FmHA, and VA) administer housing acquired cern for HUD (and FmHA) revolves around due to default on Government-financed mort- multifamily projects that are heading for but gages, HUD has the largest inventory con- have not yet defaulted and been acquired. A sisting of both single- and multi-famiIy units. possible first step might be for the agency to review its lists of publicly financed low- and HUD and VA closely coordinate their activ- moderate-income housing, using annual re- ities in administering and disposing of reac- ports submitted for the projects as well as quired properties. Field offices determine audit reports to identify those projects ap- whether properties are sold “as is” or rehabili- proaching default. Those projects where Ch. Vlll—Federal Government and Energy Conservation “ 181

energy cost factors are the major financial ceed $8,000 and total purchases and commit- problem could be identified and targeted for ments cannot exceed $100 million at any one immediate action to improve the energy man- time. The interest rate can range from a rate agement situation. While it might or might not that is not less than the average yield on out- be possible to influence tenant attitudes standing interest-bearing obligations of the toward saving energy, pinpointing such prob- U.S. Government of comparable maturities lem projects could encourage project man- then forming a part of the public debt to the agers to display a greater conservation con- maximum rate authorized by title 1. The Act sciousness. If escalating energy costs are the also provides standby authority to buy and sell prime cause of the financial difficulty and ma- title I or section 241 loans made for the pur- jor conservation expenditures are indicated, pose of installing energy-conserving improve- secondary financing could be made available ments. and the financial problems that led to mortgage default might be lessened or eliminated. MINIMUM PROPERTY STANDARDS This approach may be particularly appropriate Section 526 of the Housing and Community for projects using electric heat. Development Act of 1974 required that–to the maximum extent feasible— HUD promote GOVERNMENT NATIONAL MORTGAGE CORPORATION energy conservation through the MPS. The Na- tional Energy Conservation Policy Act required Because all its purchases are federally in- under the Energy Conservation Standards for sured or guaranteed, HUD’s MPS determine New Buildings Act of 1976 becomes effective. ” the energy efficiency of housing financed The MPS have been upgraded recently. (See through GNMA. GNMA would presumably ac- section on standards.) HUD believes any up- cept whatever increased standards and energy- grading of conservation standards requires a savings priorities were established by HUD. balancing of the need to keep down construc- The National Energy Conservation Policy tion costs and the potential fuel savings that Act provides authority to GNMA to purchase will result from energy conservation improve- title I insured loans made to low- and moder- ments, and tends to look with disfavor on addi- ate-income families to finance the instalIation tional requirements that might increase the net of solar energy systems. Such loans cannot ex- monthly housing costs of borrowers.

FARMERS HOME ADMINISTRATION

The Farmers Home Administration of USDA fices in rural areas (usually county seats) na- provides housing assistance in open country tionwide. Unlike HUD, most of FmHA’s pro- and rural communities with populations up to grams are not dependent on banks or other ap- 10,000. Its programs are also available in cities proved lending institutions. FmHA makes of 10,000 to 20,000 population that are outside loans directly to families or sponsors using standard metropolitan statistical area funds secured by issuing Certificates of (SMSA) and have a serious lack of mortgage Beneficial Ownership placed with the Federal credit as determined by the Secretaries of Financing Bank. FmHA also has the authority HUD and USDA. The Federal Housing Act of to insure loans made by commercial lenders. 1949 gave FmHA authority to make housing loans to farmers; that authority has been Housing developed under FmHA programs broadened to serve other groups over the must be modest in size, design, and cost and years. must meet HUD’s MPS. The programs are administered by county The Senate Banking, Housing, and Urban Af- agents through a system of 1,760 county of- fairs Committee and the House Banking, Cur- 182 . Residential Energy Conservation rency, and Housing Committee handle FmHA on the amount. Loans cannot exceed $5,000. housing legislation. Loans of less than $2,500 need only be evi- denced by a promisory note. A combination Section 502 Homeownership Loan Program loan grant is made to applicants if they can The section 502 homeownership loan pro- repay only part of the cost; if the applicant gram provides loan guarantees to private lend- cannot repay any of the cost a 100-percent ers or direct loans to individuals to buy, build, grant is made. or rehabilitate homes. FmHA guarantees 90 Program Activity. –During 1977, 3,843 loans percent of the principal and interest on were made at a value of $9. I million. privately financed housing loans. The maximum repayment period is 33 years. New Authorization. –Title V of the Housing Act homes and homes older than 1 year may be of 1949 (Public Law 81-171) as amended. financed with 100-percent loans. The interest rate depends on adjusted family income and Section 515 Rural Rent and Cooperative can vary from 1 to 8 percent. Although there is Housing Loans no maximum amount that an applicant can The section 515 program provides loans to borrow, the loan is limited by FmHA’s require- private, public, or nonprofit groups or in- ment that the housing be modest in size, de- dividuals to provide rental or cooperative sign, and cost and what an eligible family can housing of economic design for low- and afford for mortgage payments, taxes, and in- moderate-income families and the elderly. surance within 20 percent of its adjusted in- Funds may be used to construct new housing, come. purchase new or existing housing, or repair ex- In addition to the use of “regular” section isting housing for rental purposes. The interest 502 loans for housing repair, families earning rate on loans varies from 1 percent to the less than $7,000 annually are eligible for FmHA market rate, depending on the housing another type of home improvement loan under sponsor and the incomes of the occupants. section 502. Under the 1:2:4 program a family Loans up to 50 years are made to elderly proj- can borrow up to $7,000 over a period of 25 ects; for all other projects the term is up to 40 years at an interest rate of 1 to 4 percent years. Section 8 assistance provided by HUD depending on family income for improvements can be used in conjunction with section 515 that would bring its home up to standard con- projects. ditions. Program Activity.– In 1977, 1,509 loans were Program Activity. — In 1977, 121,614 loans made with a value of $647 m i I I ion. were made with a total value of $2,678 m i I I ion. Authorization. --Title V of the Housing Act Authorization. –Title V of the Housing Act of 1949 (Public Law 81-171) as amended. of 1949 (Public Law 81-171) as amended.

Section 504 Home Repair Loan and Conservation Policies and Grant Programs Opportunities The section 504 home repair program provides loans and grants to low-income home- The FmHA loan programs have no specific owners with grants restricted to the elderly to energy conservation goals. They rely on con- remove certain dangers to their health and servation measures that may be integrated into safety. An applicant must lack the income HUD’s MPS. Innovative approaches are dis- necessary to repay a FmHA section 502 loan couraged in the new construction programs. As and must own and occupy a home that has with solar applications, any measure requiring conditions hazardous to health and safety. All capital costs out of the ordinary must be sepa- loans are made at an interest rate of 1 percent. rately financed and requires special review Loan terms vary from 10 to 20 years depending and approval from Washington. Ch. Vlll—Federal Government and Energy Conservation . 183

The National Energy Conservation Policy Most FmHA financing is direct Government Act requires the Secretary of Agriculture to lending, sometimes at a subsidized interest promote the use of energy saving techniques rate. Conservation measures that exceed nor- to the maximum extent feasible. Such stand- mal construction costs will therefore represent ards should be consistent as far as practical an additional cost to the Government in the with the HUD standards and be implemented latter case. FmHA rental projects typically as soon as possible. have only one-third the number of units of a typical urban project, so larger apartment The FmHA section 504 program (grants and builders and architects are not attracted to the low-interest loans for modifications to existing program and technical resources may be housing) has made an effort to promote the limited. weatherizing of single-family homes generalIy Several steps could be taken to make hous- wherever local community action agencies ing built through FmHA more energy-efficient. have been aware of FmHA’s program. A much closer utility cost analysis could be required of every rental project applicant to Housing assistance of FmHA is very person- assure that alI feasible energy options are con- alized. FmHA, unlike HUD, is decentralized down to the county level. Applicants always sidered. Although FmHA has issued new insula- meet directly with the FmHA county agent and tion thermal efficiency standards, the Wash- ington-level system for handling novel energy continue that relationship throughout the life of the loan. The county agent inspects con- conservation questions and for simplified and struction in progress and manages the loan sympathetic processing of such applications payment process. County agents have relative- does not appear to have generally penetrated ly complete authority, provided they deal with to the field level within the agency. Field staff conventional building systems and techniques. couId be encouraged to combine single-family loans and grants (section 504) with the weath- On the other hand, the agents are not techni- calIy expert in housing, and agency resources erization grants administered by local poverty are limited. FmHA usually has only one archi- programs. The importance of energy conserva- tect per State office. Several State offices, in tion could be more actively promoted by fact, cover more than one State, further re- FmHA. The county agents could be provided ducing the technical attention that can be with more extensive information on conserva- given to individual projects. tion opportunities and given more extensive technical support. Because of the rural nature of the program, The FmHA State and county personnel ap- there is heavy reliance on electric heat so that pear to be diligent and service-oriented and energy costs are an important concern. How- will respond to Government policy that en- ever, FmHA does not actively promote certain courages conservation if authority and direc- kinds of buildings or utility systems. FmHA tion are given. The message on energy conser- reacts to what is proposed by builders, many vation has so far been muted and very unclear, of whom previously built single-family homes with the exception of the recently published only. thermal efficiency standards for insulation. 184 ● Residential Energy Conservation

VETERANS ADMINISTRATION

The Veterans Administration provides a vari- struction. Existing properties are approved on ety of benefits to veterans and their depend- the basis of “value.” There is no statutory limit ents, including housing financing assistance on on the value of structures the agency will more liberal terms than is available to the non- guarantee, but energy-conserving improve- veteran. The assistance is in the form of loan ments wilI not be recognized if those costs ex- guarantees to private lenders. Where private ceed the appraiser’s notion of the “value” of capital is not available direct loans are made. the structure. As the VA operates its program The VA uses HUD’s MPS in evaluating proper- through “approved lenders, ” (commercial ties. banks and mortgage Iending institutions), the first consideration is the “approved lender’s” The VA operates through 49 regional offices. policies. If the lender is liberally inclined In the Senate and House, the Veterans Af- toward financing a house that includes extra fairs Committees handle VA housing legisla- costs due to energy conservation equipment or tion. materials not fully recognized in the appraisal, VA Loan Guarantee and Direct the lender must then be willing to seek VA approval of the particular case. The VA may then Loan Programs review the appraiser’s statement of “value,” The Veterans Administration provides loan and the questionable costs may be included guarantees to private lenders and direct loans with in the mortgage. However, this is relatively to veterans to finance the purchase, construc- difficult because the VA housing program is tion, or rehabilitation of homes, mobile homes, too thinly staffed for the case-by-case per- or condominiums. One- to four-unit owner- sonalized attention this approach requires. occupied properties are eligible for assistance. As far as new construction is concerned, VA The maximum guarantee is $17,500 or 60 per- follows HUD’s MPS; therefore, any initiative or cent of appraised value, whichever is less. the raising of energy efficiency requirements There are no limits on the value of properties in this area is up to HUD. that can be guaranteed. No downpayment is required and loans up to 30 years are eligible I n the existing home market, the determina- under the guarantee. tions of value are largely made by fee appraisers — local real estate personnel who Program Activity. — In 1977, 392,557 guaran- are not Government employees. Reaching tee commitments were issued with a total such a large group concerning energy conser- value of $13.9 billion. In addition 2,566 direct vation and influencing their thinking may be loans were made for a total amount of $63.2 best accomplished through the appraisal or million. Of the total program activity 369,024 professional organizations and through HUD involved home purchases, 12,206 refinancing, channels, as these appraisers usually do FHA 2,638 condominiums, 3,459 mobile homes, and appraisal work, as well. 5,230 direct loans sold and guaranteed. The Veterans Administration could also play Authorization. – Servicemen’s Readjustment Act of 1944 as amended, title 30 U.S.C. 1, an important role in educating VA lenders and originators about the importance of consider- chapter 37. ing energy conservation in lending decisions. Conservation Policies and As VA does not guarantee the entire loan, but Opportunities just a portion, many lenders may have a different and more conservative attitude toward VA The Veterans Administration has no formal loans than toward FHA loans. Moreover, VA is system for promoting energy conservation in proud of its relatively low default rate and its home loan guarantee program. VA follows believes this is due to its conservative policies HUD’s MPS in approving loans for new con- in analyzing risk and judging “value.” Ch. Vlll—Federal Government and Energy Conservation ● 185

OTHER FEDERAL DEPARTMENTS AND PROGRAMS

A number of other Federal departments play power training funds provided under the Com- important roles in supporting residential prehensive Employment and Training Act energy conservation or housing production (CETA) are used. and can have a significant impact in promoting The emergency energy conservation pro- energy conservation. HEW’s Community Serv- gram also funds a variety of research and dem- ices Administration (CSA) administers the onstration activities related to energy conser- emergency energy conservation program, vation in various sectors of the economy. which includes research and development activities and a program to weatherize the homes Program Activity. –Approximately 800 CAAs of low-income families. The DOE’s Division of participate in the weatherization program. Buildings and Community Systems funds a About $39 million was appropriated for weath- wide variety of residential conservation erization grants in fiscal year 1978. As of research and demonstration activities. The De- December 31, 1977, 268,252 households had partment also administers a weatherization been assisted. The average grant was approx- assistance program for low-income families imately $233. The research and demonstration and is authorized to operate a loan guarantee activities were funded at a level of $24 million program for energy conservation improve- in FY 1978. ments. The Department of Defense is an im- Authorization. –Section 222(a)(12) of the portant developer of residential housing for Economic Opportunity Act of 1964 (Public the military and is involved in energy conserva- Law 88-452) as amended. tion demonstrations. The Department of the Treasury affects energy conservation practices and housing production and maintenance DOE Weatherization Assistance Program through its formulation and administration of tax and fiscal policies. The DOE weatherization assistance program is intended to supplement other Federal CSA Emergency Energy Conservation Program weatherization efforts. Grants are provided to the States, based on climate and the extent of The emergency energy conservation pro- poverty. The States contract with community- gram of CSA includes a weatherization compo- based organizations, which in turn weatherize nent, which provides grants to low-income the homes of low-income families, particularly families (up to 125 percent of the Office of the homes of the elderly and handicapped. Pri- Management and Budget’s (OMB) poverty in- ority is given to contracts with community ac- come guidelines) for housing repair and tion agencies. The income of recipients cannot energy-savings i m prove merits that will exceed 125 percent of the OMB poverty in- minimize heat loss and improve thermal effi- come guideline. Normally, grants cannot ex- ciency. Renters as well as homeowners are ceed $400 per household. Of the funds granted eligible. Funds are allocated to States, which in 90 percent must be used for program costs. turn allocate funds to community action agen- Labor, supervision, and transportation are ex- cies (CAAs) or CSA can fund CAAs directly. pected to come from other sources, particular- Funds may be used for insulation, storm doors ly CAAs and manpower training funds pro- and windows, repairs of sources of heat loss, vided under CETA. and repair of heating systems. Of the funds granted, 80 percent must be used for materials. Program Activity. -The program was initi- Expenditure limits per unit vary from region to ated in the fall of 1977 and 501 homes were region and, since November 1977, can range weatherized in 1977. About 1,000 organiza- up to $800. CAAs are encouraged to attempt to tions are participating. The FY 1978 appropria- secure labor, supervision, and transportation tion was $65 million; the FY 1979 appropriation costs from other sources; most frequently man- $199 million. 186 ● Residential Energy Conservation

Authorization. – Title IV, part A, of the one of the allowable uses of loan guarantees, Energy Conservation and Production Act of the program appears to be only incidentally a 1976 (Public Law 94-385). (See chapter III for housing program. To implement the housing current information.) portion a system to service the housing market would have to be established. Guarantees DOE Division of Buildings and couId be made if credit would not otherwise Community Systems be available. The program has never become operational. The Division of Buildings and Community DOE has had second thoughts about whether Systems supports a variety of research projects it would be useful. Potential demand for the and demonstrations designed to: 1 ) encourage assistance is under study. and support the installation of energy-efficient technologies, 2) develop and commercialize Program Activity. – None. systems to reduce the dependence on petroleum and natural gas, 3) develop and dissemi- Authorization. – Section 451 of the Energy nate information about energy-efficient tech- Conservation and Production Act of 1976 (Pub- nologies, 4) promote the use of energy-conserv- lic Law 94-385). ing technologies and practices, 5) develop and implement energy-efficient standards for new Department of Defense buildings and appliances, and 6) implement the weatherization assistance program. Activ- The Department of Defense owns and oper- ities include such projects as the testing of ates 385,000 units of family housing within the heat pumps, energy feedback meters, and insu- continental United States. DOD also leases lation; a nine-city demonstration to improve some units off base, but these leases typically the availability of energy conservation im- are short term to handle emergency situations. provement financing; distribution of an energy retrofit manual to homeowners and home im- Since 1976 DOD has operated a comprehen- provement contractors; and the encourage- sive energy conservation investment program ment of State adoption of the NationaI Con- (EClP) designed to save energy in all types of ference of States on Building Codes and Stand- DOD-owned buildings. Approximately $13 mil- ards (NCSBCS) Model Code (Model Code for lion a year has been used for residential retro- Energy Conservation in New Building Con- fit The ECIP requirements for FY 1976-84 are struction). estimated to be $1.5 bilIion. Initially retrofit projects had to show a 5- Program Activity. —The 1979 appropriation year payback period to be selected for imple- was $79.55 million. In 1978 it was $52.3 million. mentation, but a Btu-saved formula is now being used. In FY 1979 al I projects must average Authorization. –The Department was estab- 58 million Btu saved per $1,000 of investment, lished by the Department of Energy Organiza- but a project designed to save as low as 23 tion Act of 1977 (Public Law 95-91) pursuant to million Btu will be considered. Translated into Executive Order 12009 of September 13, 1977. a payback formula, this approach results in (See p. 194 for discussion of program.) consideration of projects with payback periods as long as 15 years.

DOE Obligations Guarantee Program The DOD program is goal-oriented and implemented through the chain of command, This program would provide loan guarantees and apparently the goals are being achieved. for a wide range of conservation or renewable Information access is regular and there are no resource activities for existing commercial, in- peculiar financing problems because all con- dustrial, and multifamily buildings. While servation is funded from Iine item appropria- multifamily housing is specifically included as t ions. Ch. Vlll—Federal Government and Energy Conservation ● 187

Under a DOD solar demonstration project, Conservation Policies and DOD has retrofitted four houses. Opportunities Also, DOD appears to have a well-conceived Both the CSA and DOE programs directly and relatively thorough training program for support energy conservation. Tax policies are upgrading housing managers and sensitizing discussed in another part of the report. tenants in day-to-day conservation measures. To expand its conservation activities, DOD Program Activity. — Retrofit activity has aver- might consider using the annual appropri- aged approximately $13 million a year during ations for debt service dollars instead of direct the FY 1977-79 period. expenditure dollars. In that way, it could accelerate the conservation program and realize the Authorization. – Not applicable. per unit savings of volume contracting at today’s costs rather than future costs, thus ac- Treasury Department: Tax Policy celerating all the energy cost savings into 1 The Treasury Department has a significant year rather than realizing them incrementally. impact on the development and maintenance These earlier realized energy cost savings, plus of the Nation’s housing inventory and invest- avoidance of contracting cost increases due to ment in conservation improvements through inflation in future years, might be cost effec- its administration and enforcement of internal tive. Such an approach, which commits Con- revenue laws. These laws and their present and gress to appropriations in advance, would re- potential impact on energy conservation are quire specific legislative approval but would discussed in detail at the end of this section. not require additional appropriations.

HOUSING SECONDARY MORTGAGE MARKET AND REGULATORY AGENCIES

Nearly all of the capital for the housing in- Lending practices are affected by the policies dustry is provided by a Variety of private lend- of lending regulatory agencies and the activ- ing institutions. Savings and loan associations, ities of secondary mortgage market institu- banks, and mortgage companies are the pri- tions. mary loan originators as shown by table 69.

Table 69.—Originations of Long-Term Mortgage Loans 1977 (dollars in billions) 188 ● Residential Energy Conservation

Regulatory Agencies leverage to encourage its members to adopt an energy conservation policy as it regulates but Most lenders are subject to Federal and/or does not provide liquidity to banks as does State regulations. The two most important in FHLBB. terms of their impacts on the housing industry are the Federal Home Loan Bank Board (FHLBB) and the Federal Deposit Insurance Secondary Mortgage Market Corporation (FDIC). A number of Government-sponsored agencies have been established to provide liquidity FEDERAL HOME LOAN BANK BOARD to the mortgage market by purchasing loans The Federal Home Loan Bank Board is an in- originated by private lenders. As noted earlier, dependent executive agency that supervises the Government National Mortgage Associa- and regulates savings and loan associations, tion (GNMA) purchases selected types of FHA which are the country’s major private source and VA mortgages. The Federal Home Loan of funds for financing housing. The Board gov- Mortgage Corporation provides a secondary erns the Federal Savings and Loan Insurance market for conventional mortgages made by Corporation, which provides deposit insurance savings and loans and other lenders, and the to savings and loan institutions. The Board Federal National Mortgage Association directs the Federal Home Loan Bank System, (FNMA) purchases mortgages originated by ap- which provides reserve credit and ancillary proved lenders. The important role of federally services to member saving and loans. There are supported loan pools can be noted in table 70, 12 regional Federal Home Loan Banks in the which breaks down net acquisitions of long- system. term mortgage loans on residential properties for 1977. The pools acquired 15 percent of the FEDERAL DEPOSIT INSURANCE CORPORATION one- to four-family loans made and 5.7 percent The Federal Deposit Insurance Corporation of the multifamily loans made. (Comparing is an independent executive agency that super- this table to table 68 documents that mortgage vises and regulates certain activities of Na- companies particularly make use of the sec- tional and State banks that are members of the ondary market to selI off loans they originate. ) Federal Reserve System and State banks that apply for deposit insurance. FDIC provides de- Table 70.—Net Acquisitions of Long-Term Mortgage posit insurance to banks. The management of Loans on Residential Properties by Lender Groups (dollars in billions) the corporation is invested in a three-person Board of Directors, one of whom is the Comp- 1-to 4-family Multifamily troller of the Currency. There are 14 regional Type homes projects FDIC offices in the system. Savings and loan associations...... 84.2 6.5 Mutual savings banks . . . . . 10.3 1.7 Conservation Policy and Opportunities Commercial banks...... 31.6 1.4 Life insurance companies. . .6 .9 The Federal Home Loan Bank Board has no Non insured pension funds. .1 .1 specific conservation policy. It is cooperating State & local retirement with DOE’s attempt to sensitize all financial funds...... 3 .2 State & local government institutions to energy efficiency in their resi- credit agencies...... 2.6 1.0 dential lending practices. These activities in- Credit unions ...... 7 — clude structured group interviews, discussions Mortgage investment trusts...... (a) .1 about revision of loan appraisal procedures, Federal credit agencies. . . . 4.5 1.1 and investigations of different financing incen- Mortgage pools ...... 22.5 1.2 tives. State chartered credit unions...... — .3 The Federal Deposit Insurance Corporation Total ...... 158.4 14.6 has no apparent energy conservation policy. It aunder $50 milllon. NOTE Figures may not total due to rounding. does not believe that it has the authority or SOURCE: HUD Office of Housing Statistics. Ch. Vlll—Federal Government and Energy Conservation ● 189

These secondary market institutions are im- FEDERAL HOME LOAN MORTGAGE portant to energy conservation not only in that CORPORATION they provide liquidity to lenders, but because The Federal Home Loan Mortgage Corpora- they employ appraisal and mortgage credit tion (the Mortgage Corporation) promotes the standards, forms, and policies that are com- flow of capital into the housing market by monly used in the lending industry and have establishing an active secondary market in energy conservation implications. Generally, mortgages for savings and loans and other appraisal forms have not explicitly (with the lending institutions. It operates under the exception of the HUD/FHA forms) required an direction of FHLBB. The corporation’s pur- estimate of energy costs. No forms require an chase programs cover conventional mortgage appraisal of the energy efficiency of the prop- loans, participations in conventional mortgage erty. Neither FNMA nor FHLMC requires ener- loans, and FHA-insured and VA-guaranteed gy costs to be considered to evaluating a bor- loans. Its sources of funds are borrowings from rower’s credit. Federal Home Loan Banks, the issuance of GNMA mortgage-backed securities, the is- FEDERAL NATIONAL MORTGAGE ASSOCIATION suance of participation sale certificates, and direct sales from its mortgage portfolio. The Federal National Mortgage Association Program Activity. –At the end of 1977, the is a Government-sponsored private corpora- Mortgage Corporation held $4.1 billion in tion regulated by the Secretary of HUD. It pro- mortgages. Outstanding commitments totaled vides supplementary assistance to the second- $5.5 billion. ary market for home mortgages by supplying a degree of liquidity for mortgage investments, Authorization. — Emergency Home Finance thereby improving the distribution of invest- Act of 1970. ment capital available for home mortgage financing. FNMA buys FHA-insured, VA-guar- Conservation Policies and Opportunities anteed, and conventional mortgages. FNMA The National Energy Conservation Policy makes mortgage funds available through peri- Act authorized the Mortgage Corporation to odic auctions of mortgage purchase com- purchase title I loans whose proceeds were mitments on home mortgages in which lending used to finance energy conservation improve- institutions, such as mortgage companies, ments and authorized FNMA to buy and sell banks, savings and loan associations, and in- conservation and solar energy-related home surance companies, make offers to FNMA, improvement loans. generally on a competitive basis. It also offers to issue standby commitments for both home FNMA and FHLMC have taken some actions and multifamily mortgages on proposed con- to promote conservation. They have issued a struction at approved prices based on its auc- new home mortgage appraisal form requiring tion prices. The Secretary of HUD may require appraisers after March 1, 1979, to determine that a reasonable portion of the corporation’s whether insulation exists and is adequate, mortgage purchases support the national goal whether the home has storm windows, and to of providing adequate housing for low- and note any special energy features, their costs moderate-income famiIies. and contribution to the property’s value. The FHLMC has announced that it will purchase Program Activity.– In 1977, FNMA made refinance loans with loan-to-value ratio’s of up commitments of $10.92 billion and as of De- to 90 percent rather than 80 percent if its pro- cember 31, 1977, had a net mortgage and loan ceeds will be used for rehabilitation, renova- portfolio of $33.2 billion. tion, or energy conservation improvements. Authorization. – Housing and Urban Devel- FNMA and FHLMC are in a position to pro- opment Act of 1954 (Public Law 83-560) as vide leadership to sensitize lenders to energy amended by the Housing and Urban Develop- conservation considerations in lending. Their ment Act of 1968 (Public Law 90-448). influence on lending practices is substantial 190 . Residential Energy Conservation

because lenders commonly follow secondary costs as a factor in determining the ability of market practices and requirements so that the purchaser to afford a home. These actions mortgages will be readily salable if the lender would make homebuyers more aware of wants to dispose of them. Their forms are energy conservation issues and would provide widely used in the industry. DOE has tried to financial incentives to purchasers of energy- encourage these institutions to induce lenders efficient properties. to require energy-efficiency information on The Mortgage Corporation is in a particular- mortgage applications, to consider energy ly strong position to change lender practices costs in approving properties and judging the because it can require sellers to repurchase credit of borrowers, and to revise their mortgages if it is determined that prescribed guideforms and lending guidelines according- procedures and practices were not followed in ly. A number of actions could be taken to pro- originating the loan. On the other hand, ap- mote conservation. Forms and procedures praisers and lenders are reluctant to to use in- could require more explicit considerations of formation on the past energy consumption of a the energy efficiency of properties. Appraisals home because of the importance of lifestyle could take into account the actual energy and family size in determining energy costs costs of specific homes. Appraisers could iden- and because of potential issues of liability that tify and give greater consideration to the ex- might arise. istence or absence of conservation improvements. Lenders could be required to use energy

ENERGY CONSERVATION AND FEDERAL TAX POLICY

Federal tax policy can do much more than it cific tax incentives for energy conservation ex- has to stimulate energy conservation. Taxes penditures. have substantial impact on individual decisions about the construction, rehabilitation, Present Law (Prior to the improvement, and ownership of all kinds of residential property in the United States. Until Energy Tax Act of 1978) very recently, existing law has not encouraged Under present law, four types of tax law pro- expenditures for energy conservation. visions principally affect the construction, The tax laws may be used –as they have rehabilitation, improvement, and ownership of been in a number of similar situations–to af- residential property. They relate to the deduc- fect certain investment decisions and to re- tions available for the payment or incurrence quire certain behavior as a prerequisite to the of: 1 ) interest on indebtedness, 2) real property availability of a financial benefit. If energy taxes, 3) depreciation, and 4) the costs of conservation is accepted as a valid national operating residential property. Section 163 of objective, long-term conservation goals may the Internal Revenue Code (the “Code”) pro- be assisted substantially by changes in the tax vides a specific deduction for all interest paid laws that affect the building and improvement or incurred on indebtedness. Section 164 of the of residential housing. Code provides a specific deduction for real estate taxes paid or incurred. Section 167 of Some tax law changes have already been the Code is the basic depreciation provision — made to encourage energy conservation ex- providing various methods of depreciation for penditures, and others could be made to the owners of rented residential property, in- strengthen the incentives. These changes fall cluding a special 5-year amortization provision into two categories: 1 ) Iimiting tax benefits to for the rehabilitation of low- and moderate- cases where energy conservation needs have income residential property. For certain prop- been considered, and 2) providing new, spe- erties having historic significance, Congress Ch. Vlll—Federal Government and Energy Conservation Ž 191 added in 1976 a special 5-year amortization sults in the availability of the Federal tax provision for rehabilitation expenditures (sec- deduction to renters. tion 191 of the Code). With respect to the cost of operating rental residential property, sec- The interest and real property tax deductions 162 and 212 of the Code provide deductions are available to the owners of multi- tions for all of the ordinary and necessary ex- family residential property, with similar penses related to the operation of such proper- economic effects. I n addition, such owners ty. have the opportunity to recover the cost of energy conservation expenditures through Single-family homeowners (whether the depreciation —ordinarily, over the useful life dwelling is a freestanding house, a condomini- of the capital equipment or structural feature um unit, or a unit in a cooperative) who oc- involved. While the depreciation deduction cupy their own homes may take only the in- does afford cost recovery, it does not provide terest and real estate tax deductions. Owners any greater incentive to make an energy con- of multifamily residential property (without re- servation expenditure than to make any other gard to the number of rental units) are entitled, capital equipment or structural expenditure. additionally, to the benefits available under While the knowledge that energy operating the depreciation provisions and to deductions costs will be reduced by such expenditures for the costs of operating the property. may affect certain decisions concerning newly constructed buildings, those costs have a The Effect of Present Law on Energy much lower priority in rehabiIitation and im- Conservation provement decisions, particularly when utility costs are simply passed on to tenants.

The interest and real property tax deduc- Overall, therefore, it may be concluded that tions are both important factors in decisions tax laws enacted before 1978 have provided made by individuals to build, rehabilitate, im- very Iittle encouragement to the owners of prove, or purchase a single-family home. The residential property considering decisions to interest deduction reduces the real cost of the make energy conservation expenditures. mortgage loan. The real estate tax deduction reduces the cost of providing shelter. The in- The Energy Tax Act of 1978 terest deduction indirectly encourages expenditures for capital equipment or structural To stimulate energy conservation expendi- changes that conserve energy. For example, to tures by those homeowners who are not en- the extent that the cost of original construc- titled to depreciation, the Energy Tax Act of tion or later rehabilitation or improvement is 1978 provides certain new Federal income tax financed by a mortgage loan, the interest de- credits. The credits may be applied only duction reduces the real cost of the energy against investments relating to a taxpayer’s conservation expenditures. To the extent that principal place of residence (whether owned or such expenditures increase the appraised rented), which must be located in the United value of single-family homes — and thus, the States and –to be eligible for the first category applicable real property taxes —the real estate of credits— have been “substantially com- tax deduction reduces shelter costs. pleted” before April 20,1977.

While neither of these deductions is now The new law permits tax credits amounting available to renters, an effort is underway to to 15 percent of the cost of energy conserva- make the real property tax deduction avail- tion investments of up to $2,000 (i. e., a max- able. Under a recently enacted New York imum credit of $300) made during a taxable statute, a renter would become directly re- year between 1977 and 1985. Eligible invest- sponsible for the real property tax allocable to ments include insulation, furnace efficiency his dwelling unit. The Internal Revenue Service improvements, clock thermostats, storm win- is considering whether this new State law re- dows and doors, caulking and weatherstrip- 192 Ž Residential Energy Conservation

ping, utility meters that show the cost of serv- 2. Providing new, specific tax incentives for ice, and any other items “of the kind which the energy conservation expenditures. Secretary specifies by regulations as increasing the energy efficiency of the dwellings.” Draft Two special provisions of present law allow regulations specifically exclude heat pumps, owners of multifamily residential property to according to Internal Revenue Service sources. recover their costs of rehabilitation and improvement over a 5-year period (rather than A second provision of the Energy Tax Act the much longer useful life of the rehabilitated provides tax credits amounting to 30 percent or improved property). of the cost of investments of up to $2,000 in renewable energy sources, and 20 percent of Under section 167(k) of the Code, owners of up to $8,000 in additional costs of such renew- rehabiIitated low- and moderate-income resi- able energy sources (i. e., a maximum credit of dential property may recover their rehabilita- $2,200). The renewable-energy tax credit, tion expenditures — to the extent of $20,000 per which may be used for newly constructed as residential unit—over a 5-year period. The well as pre-1 977 dwellings, may be applied availability of this special provision should be against an investment in active or passive solar conditioned upon making energy conservation systems, geothermal energy, wind energy, or expenditures that meet HUD standards. AS the “any other form of renewable energy which present $20,000 limitation on rehabilitation ex- the Secretary specifies by regulation, for the penditures to which this special provision now purpose of heating or cooling such dwelling or applies often does not cover the full cost of providing hot water for use within such dwelI- the actual rehabilitation, the present provision ing.” At this writing, the draft regulations are might be amended to provide simiIar treat- expected to prohibit application of the credit ment for up to an additional $2,000 per unit of to wood-burning stoves. They are also ex- “certified energy conservation expenditures” pected to be restrictive with respect to passive made in connection with such a project. Such solar features; they will exclude such things as a requirement would produce a long-term greenhouses, draperies, special materials used budgetary benefit through its reduction of the in roofing, siding, or glazing, and any construc- long-range increase in section 8 housing tion components that serve structural func- assistance payment costs in section 167(k) tions as welI as passive solar functions. housing projects. It would, thereby, offset the The new credits may be used only to reduce revenue losses in early years from such a tax liability, not to gain a refund. However, if change in tax policy. the eligible expenditures exceeds a taxpayer’s Under sections 191 and 167(o) of the Code, tax liability for the year in which the invest- the owners of substantially rehabilitated his- ment is made, the amount of the tax liability toric properties have been afforded the ability may be carried over to the next taxable year. to deduct rehabilitation expenditures, without This provision seeks to avoid discrimination limit, over a 5-year period (under section 191) against low-income persons with Iittle or no tax or to claim depreciation with respect to such liability. costs in the same manner as would the owner of newly constructed residential property (sec- Further Changes to Encourage Energy tion 167(o)). The availability of these special Conservation Expenditures provisions should also be conditioned upon making energy conservation expenditures that Further changes in tax policy would encour- meet H U D standards. I n the case of owners age additional energy conservation expend- who make an election under section 191, no itures. Two broad categories of change deserve new tax incentive is required, as all rehabilita- considerate ion: tion expenditures are deductible over a 5-year 1. Requiring that certain existing tax benefits period. I n the case of section 167(1) elections, be available only if energy conservation a substantial tax incentive already exists and it needs have been taken into account. seems improper to increase it at this time Ch. Vlll— Federal Government and Energy Conservation ● 193

before any experience has been accumulated isting commercial and industrial structures, it concerning its use. would seem equally important to extend such policy to “certified energy conservation ex- Somewhat different considerations apply to penses” — including structural components owners of residential property who use it in a and capital equipment— in both newly con- trade or business, or hold it for the production structed and rehabilitated residential struc- of income and are, therefore, entitled to claim tures. While the definition of “certified energy depreciation deductions. In such cases, the tax conservation expenditures” would require laws have been utilized in two ways to encour- careful drafting to avoid abuse, the principle is age particular types of investments — either the the same as in the expansion of the investment provision of an investment tax credit or the credit. provision of a form of rapid amortization of the costs of the investment. Either technique could be selected to encourage investments in Rapid Amortization energy conservation. An alternative tax incentive to the expansion of the scope of the investment credit provi- Investment Tax Credit sions is the enactment of a special rapid amortization provision for “certified energy conser- The existing investment tax credit provisions vation expenditures. ” The technique of a 5- do not encourage energy conservation expend- year amortization provision has been used in itures in that they do not now provide a credit the past to encourage investments in such for the cost of buildings (or the structural com- areas as soil and water conservation (section ponents of buildings) or for any tangible per- 175), fertilizer (section 180), the clearing of sonal property used in connection with resi- land (section 182), the rehabilitation of low- dential property (see section 43 of the Code). It and moderate-income housing (section 167(k)) wouId be necessary to amend the provisions of and, most recently, the rehabilitation of his- present law to provide for an exception for toric structures (section 191 ). Such a technique “certified energy conservation expenditures” seems particularly adaptable to encouraging to encourage such investments. investments in energy conservation. Indirectly, Congress has given such a provi- Congress has, in more recent years, ex- sion active consideration for expenditures in pressed the belief that incentive tax provisions connection with the rehabilitation of certain should not become permanent parts of the In- commercial and industrial buildings. Under ternal Revenue Code, but should be readily section 314 of H.R. 13511 (which passed the susceptible to review, change, and elimination House and reached the Senate Finance Com- as necessities and priorities change. Thus, for mittee in the 95th Congress), the investment example, the 5-year amortization of expend- tax credit would be available for qualifying itures for the rehabilitation of historic energy conservation and al I other expenditures buildings applies only to expenditures made made in connection with a qualified rehabili- between June 15,1976, and June 15,1981. Such tated building. These expenditures include in- provision may be thereafter extended by Con- vestments in structural components of the gress, as has the section 167(k) rehabilitation building as well as capital equipment expend- expense deduction for further periods (general- itures that constitute personal property. ly, of 2 years each in duration). A separate 5- Having recognized the importance of mak- year amortization provision for energy conser- ing avaiIable the investment credit in such cir- vation expenditures should be easiIy suscepti- cumstances to encourage the recycling of ex- ble to such treatment. 194 ● Residential Energy Conservation

CONSERVATION R&D ACTIVITIES, OFFICE OF CONSERVATION AND SOLAR APPLICATIONS, DEPARTMENT OF ENERGY

The buildings and community systems pro- 2 develop and commercialize systems that gram of the Office of Conservation and Solar will reduce dependence on petroleum and Applications is the major division within DOE natural gas; that conducts R&D activities related to energy 3 develop and disseminate information conservation in the residential sector. Under about new and existing technologies con- this program, there are a variety of sub- cerning energy-efficiency utiIization im- programs which address specific areas of con- provements; servation R&D. The purpose of this discussion 4 promote the use of energy-conserving is to provide a general description of the technologies and energy-conserving prac- various subprograms and to address some of tices in the facilities and operations of the the problem areas in the R&D component of Federal Government; residential energy conservation. 5 develop and implement energy efficiency standards for new buildings and appliances; and Program Objective and Strategy 6 implement the weatherization program to Specifically, the near-term objective of the meet certain energy needs of low-income 2 buildings and community systems program, “is citizens. to produce total energy savings through the Another important objective of the build- development and implementation of new tech- ings and community systems program is to in- nology equal to 2.4 million barrels of oil volve nongovernmental groups in research, equivalent per day by 1985 by lowering unit development, demonstration, and implemen- energy consumption 20 percent in existing tation activities to facilitate the transfer of buildings and community systems; and 30 per- technology and information to potential users cent in new buiIdings, community systems, and as soon as the technology has been demon- 1 consumer products." strated to be economically and technically feasible. A majority of the funds that support The program is aimed at increasing energy these activities are spent with industry on a utilization efficiency, providing options to large number of cost-sharing projects. The pro- substitute energy forms such as coal for gram also works closely with various trade and natural gas, and providing technologies that non-Federal organizations to obtain comments decrease the need for energy to satisfy human from a variety of sources, including the Na- needs. AlI activities are directed toward pro- tional Governors Conference, the National viding these new technologies within an eco- Conference of States on Building Codes and nomicalIy and environmentalIy sound frame- Standards, the League of Cities, Public Tech- work. Also, activities focus on preparing for nology, Inc., the National Association of Home transfer of energy-efficient technologies fol- Builders, the American Institute of Architects, lowing demonstration to the residential and the American Society of Heating, Refrigerating commercial sectors. and Air Conditioning Engineers, Inc., and the The strategy for attaining program objec- National Savings and Loan League. tives is to: 1. encourage and support the installation of Budget Allocation energy-efficient technologies as soon as possible; Table 71 presents a summary of budget estimates (in thousands of dollars) by program ac- ‘Management Review and Control Document, Office of Conservation and Solar Applications, p. 1, Mar. 23, 2U S Department of Energy, FY 1979 Congressional/ 1978 Budget Request, Jan. 23,1978, p. 1.

Ch. Vlll— Federal Government and Energy Conservation ● 195

Photo credit: U.S. Department of Energy Energy-saving homes— Construction of homes in Mission Viejo, Calif., designed to use less than half the energy of surrounding conventional houses in a research project Disseminating information on residential energy efficiency supported by DOE, Southern California Gas company, and involves cooperation within the executive branch. This the Mission Viego Company, a real estate firm publication was a joint effort of HUD and DOE

Photo credit: Department of Energy by Jack Solar heating and cooIing—This house in Baltimore County, Md., designed by architect Peter Powell, uses passive solar concepts to provide “natural” heating and cooling. DOE is studying passive solar heating concepts to determine how well they can work to save energy and money in buildings 196 ● Residential Energy Conservation

Table 71.— FY1979 Budget Estimates for Residential As the figures suggest, conservation R&D re- and Commercial Components of DOE’S mains a high priority in the Federal energy Conservation Mission agenda. (in thousands of dollars)

Activity— FY 1978 FY 1979 Residential & commercial Activities of the Buildings and Buildings & community systems Community Systems Program Building systems ...... $ 19,500 $ 17,600 Community energy utilization. . . . 12,800 19,400 Building Systems. –The building systems ob- Urban waste...... 11,000 8,500 jective is geared toward development and 9,200 20,350 Technology & consumer products commercialization of energy-efficient design, Analysis & technology transfer. . . 2,590 2,800 methods of construction and operation, and Subtotal...... 55,090 68,650 the development of standards for new and ex- Mandatory appliance standards . . . . 4,267 3,750 isting residential and commercial buildings. Other commercial...... 200 500 For the residential sector, R&D attempts to Weatherization ...... 64,166 198,950 Capital equipment ...... 170 1,200 provide cost-effective and acceptable technologies for retrofit of existing buildings (e. g., ap- Total, residential & commercial. ... .$123,893 $273,050 plications of revised mechanical ventilation Estimate, residential & commercial, FY 1979. . . . $27,050 Estimate, residential & commercial, FY 1978. . . . 123,893 and redesign of existing equipment to improve overall seasonal performance). Another major — INCREASE ...... $149,157 priority is the improvement of installation tivity for the residential and commercial com- practices for mechanical equipment and the ponent of DOE’s conservation mission. building envelope.

As the table indicates, the FY 1979 budget Community Systems.– There are three major authority for $273,050,000 represents an in- thrusts to the community systems program: 1 ) crease of $149,157,000 from FY 1978. Part of integrated systems, 2) planning design and this increase occurs in the community energy management, and 3) implementation mecha- utilization program where projects are moving nisms. All of these programs are moving from from the feasibility and design stages to feasibility studies and initial design into demonstration. However, most of the increase demonstration activity, and the work is being occurs in the weatherization program to pro- performed cooperatively with other programs vide for weatherization of approximately within other Federal agencies. 857,000 homes. The program essentially represents a balance between efforts which start to Some of the technological options of the in- accumulate savings in the near-term (i. e., ar- tegrated systems focus on energy sources chitectural and engineering systems, consumer (coal, solar), scaling (small to large), kinds of products, weatherization, and utility retrofit applications (new and retrofit), and targets of programs) and the mid-term (i. e., community implementation (municipalities, utility com- systems, urban waste, and technology develop- panies, etc.). ment). The planning, design, and management ac- Table 72 represents a comparison of FY 1979 tivities focus on the development and testing budget estimates for a variety of energy R&D of concepts, tools, and methodologies that activities within DOE. identify and define relationships between urban forms and functions and energy utiliza- Table 72.—FY 1979 Budget Estimates for DOE Energy R&D tion. For example, many case studies are being conducted on the tradeoffs between energy Activity FY 1979 conservation measures and other community Energy conservation R&D ...... $707,101,000 Fossil energy R&D ...... 576,888,000 services, Iifestyles, and economic activities. Solar energy R&D ...... 441,900,000 Geothermal R&D...... 156,200,000 The implementation activity is intended to Fuels from biomass ...... 42,400,000 provide data and develop strategies for imple- Fusion R&D...... 348,900,000 mentation of the community energy systems Ch. Vlll—Federal Government and Energy Conservation ● 197

and energy-conserving community design ac- concepts in comparative shopping for more ef- tivities. Projects include market analysis for ficient appliances. the integrated community energy systems, as Weatherization Assistance Programs,— This well as development of financial strategies and activity provides grants to the States for management techniques for minimizing capi- weatherizing the homes of low-income per- tal and operating costs and maintenance of sons, particularly the elderly and handicapped. community systems. At least 90 percent of the grant funds are ex- Technology and Consumer Products. -This pended on weatherization materials and re- activity strives to develop and encourage the lated costs. In 1979, approximately 857,000 commercialization of more energy-efficient homes will be weatherized. new technologies in heating, cooling, and ventilating equipment and systems; lighting and Utility Insulation Service.– This effort is designed to guide the programs of insulation windows; appliances; building controls; and diagnostic equipment for determining energy service that will be offered to the customers of large electric and gas utilities, and home heat- efficiency in buildings. Major activities are ing suppliers, as directed by the National directed at the development and commercialization of advanced heat pumps and the devel- Energy Act of 1978. Implementation funding to State regulatory agencies, intervention in some opment and testing of improved oil- and gas- hearings, and technical assistance to State fired furnace components and systems. Other agencies and utilities is involved. projects include the development and commercialization of high-efficiency gas- and oil- Other Programs.– Other activities include fired space-conditioning systems and the de- the Energy Extension Service, designed to pro- velopment and testing of an integrated high- vide information and technical assistance to efficiency space heating/domestic hot water building owners and renters on reducing ener- heating system. Laboratory investigation and gy use; the State Energy Programs mandated testing will continue to measure various prop- under EPCA and EC PA; and the schools and erties of insulation materials. hospitals program that assists these institutions in retrofitting buildings. Analysis and Technology Transfer.– The goal of this activity is to encourage early acceptance of new means for improving energy effi- Program Evaluation ciency through the development of information and technology transfer methods, to con- Activities in DOE represent a broad ap- duct research that will encourage consumer proach covering a number of technologies, in- purchase of more energy-efficient products, stitutional factors, and surveys of consumer at- and to encourage more energy-efficient prac- titudes. The R&D program employs extensive tices in the home. Major effects are the provi- analytical techniques to choose priorities, in- sion of information on savings for energy-effi- cluding cost/benefit calculations and projec- cient products, information on Iifecycle cost- tions of energy savings from proposed new ing and the cost effectiveness of energy-effi- technologies based on a sophisticated engi- cient products, and the provision of informa- neering-economic model. Despite this broad tion on new technologies to the builder, home- approach and strong analytical base, there are owner, and manufacturer. significant problems that are a result of both the general R&D philosophy in the executive Appliances. –The major objectives of this branch and program operation. program include the development of test procedures, minimum efficiency standards, and Problem Areas in Conservation R&D.--This re- certification methods for a variety of appli- port has identified four areas with short- ances that include furnaces, central and room comings in the current DOE conservation pro- air-conditioning, water heaters, etc. I n addi- gram. First, there is too much concentration on tion, a consumer education program is under- projects for the short term (5 to 15 years). Sec- way to introduce the use of Iifecycle costing ond, there is an insufficient connection be- 198 ● Residential Energy Conservation

tween supply R&D programs, particularly There is currently very little incentive to ex- solar, and the goals of the conservation pro- plore more efficient ways to use energy that gram. Third, there is an inadequate amount of will not be economical for decades. This could basic R&D relevant to increasing energy pro- involve technologies requiring substantial ductivity. Fourth, there is no clear relationship modification of existing construction prac- between the R&D activities and the policy and tices, extensive use of solar or other onsite other program (weatherization, energy exten- generation, or new lighting, water heating, or sion service, etc. ) portions of conservation. space-conditioning methods. Work in these areas is not Iikely to gain support in the private 1. Time Horizon. As stated earlier, the cur- sector, because the risk is so great and the rent buildings and community systems R&D potential payoff too far in the future. program relies very heavily on sophisticated 2 Relation to Supply R&D. One of the prin- cost/benefit analyses and energy use projec- cipal guidelines of an R&D program on de- tions to determine its direction. While this has mand technologies is that it should address the merit in choosing between projects of near- likely energy supply options. Currently, na- term (5 to 15 years) application, it tends to bias tional research efforts are focused on syn- against choice of anything that may have long- thetic fuel production from coal and biomass, term (25 to 50 years) potential. The reason is solar thermal and electricity, geothermal, and that the only way to calculate the payoff of a electricity from nuclear and thermonuclear project under this procedure is to estimate its resources. All of these options will be expen- likelihood of success, its use, and the amount sive, and therefore it is important that new of energy it wilI save. Such estimates became ways be found to use these sources efficiently. harder and harder the more speculative a proj- This coordination of goals is not apparent in ect and therefore tend to be more readily dis- the conservation R&D program. In particular, missed when making funding decisions. there is little work going on to explore appliance technologies, building construction A certain portion of the research budget techniques, and lighting schemes that would devoted strictly to more speculative proposals make use of solar energy in novel ways. Most would help solve this problem, if it was based of the work is directed toward conventional on a review process that did not have the short- heating and cooling methods with solar replac- term bias built into the one just described. For ing fossil combustion or electricity. Are there example, the appropriate technology program photochemical processes or passive solar de- not within the buildings and community sys- signs that would dramatically reduce the tems division is designed to take some amount of solar energy that needs to be col- chances; the principal technical requirement is lected, and therefore collector and storage that the proposal not violate the laws of costs? The OTA solar report indicated commu- physics. Beyond that, the review process spe- nity solar energy systems couId be economi- cificalIy goes after innovative and novel pro- cally attractive even using today’s technol- posals. The procedure involves considerably ogies if conventional energy prices continue to more risk than the standard approach, and the rise. Might not there be novel community frequency of failure will naturally be high. designs and/or construction techniques that Change is needed because near-term technol- could reduce material costs for such systems? ogies, such as the direct-fired heat pump, will Although somewhat speculative, these pro- be undertaken by private interests as energy posals offer the potential for large economic prices continue to rise. The acceleration of benefits several decades from now. Similar technology development, which is supposedly arguments can be made about exploring ways the main reason for Government involvement to use expensive synthetic fuels, direct heat with such R&D, may be of marginal value in from geothermal steam, and electricity energy. the residential sector, particularly when the in- To reiterate, the important points are that herent difficulties of commercialization are long-term, more speculative research should considered. receive greater emphasis, and that it should be Ch. VIII-- Federal Government and Energy Conservation ● 199

directed at the “inexhaustible” energy sources energy conservation in buildings. These in- that will eventually be used. clude the weatherization and State energy management programs, and the energy exten- 3. Basic R&D. Basic R&D in the conservation sion service. I n addition, the Assistant Secre- sector should be increased. Areas of im- tary for Policy of DOE is charged with Federal portance include materials research for ther- energy conservation policy. The issue here is mal insulation, optical coatings for windows, the manner in which conservation R&D is used energy storage, air handling, and distribution in carrying out the programs and developing to increase the overall efficiency of heating and cooling systems, and electro- and photo- policy. Currently there is no indication that chemical processes for more efficient use of this is done in a systematic fashion. The pro- electric and solar energy. Some work is under- grams offer a unique opportunity to test new way in optical coatings and energy storage results coming from the near-term aspect of materials, but is only loosely connected to the the R&D programs. If the latter had a specific residential conservation program, thus reduc- goal for assisting Federal conservation pro- ing the chances for application of results. grams, rapid commercialization of new technologies and more cost-effective conservation Other basic research areas concern nonhard- assistance could be possible. ware issues. For example, what constitutes The policy area is where the link between comfort? A better understanding of the psy- supply and demand R&D can be best made. By chological mechanisms could suggest more efficient ways of delivering or removing heat. As seeing to it that R&D on demand technologies associated with long-term supply options is suggested in the environmental section, indoor given top priority, greater emphasis could be air quality may become very hazardous as placed on long-term research in conservation. buildings become tighter. Research on chemi- The policy could then be directed at encourag- cal pollutants that may be released in the ing the most economically efficient energy home and ways to control them could be very systems rather than just supply options. If R&D useful in removing a potentialIy severe con- results identify technologies that use “inex- straint to energy conservation. haustible” resources in novel and efficient More work needs to be done to learn how ways, a national energy policy that better ac- people actually use energy in their homes. A counts for the contribution of conservation better understanding of use patterns is impor- R&D can be outlined. The philosophy here is tant for identifying areas for governmental ac- that there might be cases where development tion in education and information. Technologi- of new end use technologies could lower oper- cal decisions must be initiated not solely on ating costs below that by improvement in ener- the basis of technical feasibility, but on gy production. For example, consider a home whether or not consumers will accept and use using solar energy to supply its needs. New the technology. construction techniques and materials might lower its energy requirements and improve the The basic R&D efforts described here do not necessarily have to fall within one division of economics well below that resulting from any improvement in the energy production and conservation for an effective program to exist. What is important is that basic conservation conversion technologies. If policy is designed research be part of a comprehensive plan that to encourage only the latter, however, the is guided in part by the principals discussed most economic solution would be missed. Therefore energy conservation R&D should be above. Basic R&D is an essential part of any research effort that attempts to develop long- a major part of policy design with particular term, innovative technologies. emphasis on looking for means to use the long- term energy source most effectively. 4. Relation to Conservation Policy and Pro- grams. Under the Assistant Secretary for Con- Conclusion servation and Solar Applications in DOE there These problem areas appear to be more re- are several programs directed at increasing lated to the general philosophy of conserva- 200 . Residential Energy Conservation

tion apparently held by administration of- tractive enough to be undertaken by private in- ficials rather than to the management of the terests. residential R&D programs. An excessive con- As a result, there is probably a considerable cern for quick results has contributed to this posture. Part of the responsibility lies with amount of shifting that could take place within the program’s current budget Iimits and OMB. It is in OMB that the decision to pursue near-term R&D is most prevalent. This rests in still meet the objectives discussed above. This part on the need for OMB to maintain control would seem to satisfy the OMB goals of budg- over the Federal budget. As we have argued, et restraint while simultaneously emphasizing however, if energy prices continue to rise, the important long-term and basic research many of the DOE projects wouId become at- needs of residential energy conservation.

STANDARDS AND CODES

Building codes represent an obvious mecha- Building codes have been used for nearly nism for improving the energy-use characteris- 4,000 years, to protect the safety and health of tics of new housing. In light of the growing occupants. The earliest known example is the awareness of concern over energy cost and Code of Hammurabi, which dates from about availability, the Federal Government, both 1750 B.C. Codes apply to new structures (or to Congress and the executive branch, has taken very substantial alteration of a structure) and an increased interest in codes. This section define acceptable materials and methods of reviews the current level and extent of Federal construction. In this country, the emphasis of activities that influence building codes with most codes has been to ensure a structurally regard to energy. Because of congressional ac- sound building, reasonably resistant to deteri- tion, this is an area of much activity and con- oration over time, and reasonably protected troversy. The effort of the Federal Government against sanitation and fire hazards. to directly influence local building codes rep- Two principal Federal programs have influ- resents a new role in Federal-State-local rela- enced building codes for a number of years: a) tionships and raises many questions of equity, Minimum Property Standards and b) Building compliance, measurement, regulatory philos- Energy Performance Standards. ophy, and enforcement. The energy-consciousness of the post- Minimum Property Standards embargo era triggered a number of congressional initiatives for encouraging greater The Department of Housing and Urban De- energy efficiency in housing. Agencies with velopment’s MPS define and describe the housing responsibility also turned to standards minimum levels of acceptability of design and and codes. Building codes are adopted by construction of housing built under HUD mort- States and/or localities, normally in concert gage insurance and low-rent public housing with codes endorsed by one of the three na- programs. Although some of the requirements tional code groups. Without exception, the permit flexibility of design, the bulk of the principal responsibility for enforcement lies standards are specified. In other words, they with localities. (1 n some States, the State may tell a builder what materials and methods are act if localities do not.) Thus, the Federal acceptable. This type of standard is known as a Government does not write building codes. “prescriptive” standard, and is the type of The Federal Government does, however, deter- standard of code in widest use today in the mine standards for participation in a number homebuilding industry. Designers, builders, of federally funded housing programs. These and local code enforcement officials can refer standards have often influenced codes and to MPS and be certain that a given design or practice. building is in compliance. Ch. VIII—Federal Government and Energy Conservation ● 201

Minimum Property Standards are mandatory altered will be a much more energy-efficient national standards that cover one- and two- standard than those currently in use. family dwellings, multifamily housing, and cer- HUD employed a National Bureau of Stand- tain care facilities insured or financed under ards computer model that uses a prototypical HUD or FHA programs. MPS are also used to house with 15 different possible shell modi- determine loan eligibility by VA and, until fications to reduce heat transfer. The modi- recently, FmHA. fications include various levels of attic, wall, Minimum Property Standards grew out of and floor insulation, double- and triple-glaz- the National Housing Act of 1934. The purpose ing, and storm doors. The prototypical house of that Act was to encourage improvement in has an unfinished attic and an unheated crawl housing construction and provide a base level space below the slab. The National Bureau of of acceptability for mortgage insurance as the Standards load determination program country began the great, federally supported (NBSLD) was used to calculate heating and housing expansion. Since that time, standards cooling requirements of the house with various have been developed for a variety of housing modifications for 14 cities with different types and a variety of factors. However, it is climates. Cost data was determined by present only recently that the use of MPS as a direct market levels and fuel prices were determined method to encourage energy efficiency has by DOE price data for 10 regions. (These prices been perceived as a policy tool. assume increases until 1990 and a constant real price level thereafter. ) A 6-percent infla- A decentralized network of HUD field of- tion rate is assumed throughout, and a IO-per- fices (approximately 82) administers MPS in cent discount rate. The computer program which architectural analysis and construction combines all the variables, and calculates a inspections are performed by architectural and cost-benefit figure for each modification, in engineering personnel. Working drawings and each location, based on a 30-year Iifecycle plans are reviewed and checked for compli- cost. Separate calculations are made for elec- ance, and inspections are made during con- tric resistance heat, gas heat, oil heat, and heat struction. If the construction does not meet pumps. Results indicate whether each modi- the standard, Federal funding can be refused fication is cost-effective (savings over time ex- or withdrawn. This system of inspections has ceed costs) or not. served to ensure a high level of compliance with MPS. It requires a substantial amount of The resulting new MPS thus attempts to bal- time. ance costs, benefits, climates, and available In 1977, about one in six private housing technology to reach an optimum level of rea- starts were insured by HUD’s FHA or guaran- sonable energy conservation for new housing. teed by VA. There are three pathways for compliance with the standard. Over the past 2 years, HUD has been involved in upgrading MPS in response to new The first method is the “component per- emphasis on energy conservation. The altera- formance” approach, which defines the ther- tions to the standards have been controversial, mal transmission (U-value) through each of the and as of February 1979 final action was not components in the buiIding. This approach sets complete. a target for heat transmission through any component and allows flexibility in selecting The revised MPS reflect a decision to deter- materials. For example, a certain level of heat mine the acceptable level of certain measures transfer for wall insulation, etc. Most home- in houses—those measures that reduce heat- builders are expected to select this approach. ing or cooling requirements —on the basis of costs over a 30-year period; the normal life of The second method is called an “overall the mortgage. In addition to this time period, envelope approach;” the overall thermal trans- the DOE projected fuel costs are used. The use mission of the dwelling must meet a stated of these price projections means that MPS as value but components can be combined and 202 . Residential Energy Conservation manipulated within the structure. For instance, builders has argued that conservation invest- increased levels of insulation in the walls ments should payback over a 7-year period, might be used to compensate for high heat the time in which most homes are resold.) losses through large window areas. This approach is the same conceptual method used in Farmers Home Administration Thermal the ASH RAE 90-75 standard (see Model Code, Performance Standards below) but the standards as drafted appear to The Farmers Home Administration adopted be more stringent. Some builders are expected MPS in 1971 as the minimum design and con- to use this approach, particularly those build- struction criteria for all residential structures ing innovative housing and multifamily units. constructed or purchased with FmHA loans or Masonry industry builders generally favor this grant funds. At that time, FmHA found MPS approach, as it provides greater leeway for provided adequate protection for its low- and compliance and suits the particular needs of moderate-income borrowers. However, esca- masonry structures. lating fuel costs and other economic pressures The third avenue of compliance is “overall caused many FmHA borrowers to experience structural performance.” Builders using this serious financial difficulties in the 1970’s. approach must demonstrate that they can There was an increase in the rate of fore- meet or improve on the energy uses deter- closures, abandonments, and voluntary trans- mined by either of the other two methods. fers of FmHA housing units. Given what was Builders of manufactured housing and some then perceived to be HUD’s lag in revising masonry buiIders are expected to favor this ap- MPS, FmHA decided to act independently. proach. I n March 1978, FmHA issued its thermal per- The revised MPS are expressed in two forms; formance standards. The goal of the standards one for homes heated by electric resistance is to conserve energy and to control the units and one for homes using heat pumps or heating and cooling costs for its borrowers. fossil fuels. Approximately 49 percent of HUD- The economic rationale behind the thermal financed buildings are estimated to use elec- performance standards closely parallels that tric resistance heat, close to 50 percent are used by HUD for the revised MPS. However, thought to use natural gas and only 0.5 percent FmHA elected to standardize its basic energy use oi1. costs at 80 cents per 100,000 Btu delivered, and did not adopt a dual fuel standard, as The new MPS will clearly mean an increase most of their units (85 percent) are serviced by in first-costs as a result of increased amounts electric resistance heating. of insulation, more use of double- and triple- The standards are more stringent than the glazing, and possible increases in labor costs. proposed new MPS for fossil fuels, but are ap- They are designed, however, to effect a net proximately the same for electric resistance. savings in total costs through reduced energy Higher levels of insulation are required in the bills, and to lower the consumption of fossil ceilings, walls, and floors of dwellings. The fuel. choice of compliance paths is the same as for A number of conservation groups, repre- MPS – component performance, envelope per- sented principally by the Natural Resources formance, or overall structural performance. Defense Council, have objected to various Criticisms of the 1978 standards have been aspects of the standards as not sufficiently ef- similar to the criticisms of MPS; conservation fective in light of the necessity for lowering and some consumer groups have argued for consumption of fossil fuel. The homebuilding strong standards to protect residents against industry has objected on the basis that the new rising costs; builders and some consumer MPS will be overly stringent, require levels of groups have argued for keeping first costs low. thermal protection that are not cost-effective, and will present technical difficulties for One of the major differences between the builders. (The National Association of Home- FmHA and the MPS programs is the approval Ch. VIII—Federal Government and Energy Conservation ● 203

process. FmHA activity occurs primarily at the compatible with the language and approach of county level; some 1,800 county offices serve existing codes. Selection of this approach the national constituency of the agency. Appli- represented a major success for the engineer- cant interviews, review of plans, appraisals, ing profession. and inspections are provided from the county The provisions of the Code “regulate the off ice. design of building envelopes for adequate The Farmers Home Administration accounts thermal resistance and low air leakage, and the for approximately 6 percent of the annual na- design and selection of mechanical, electrical, tional housing starts. With the adoption of the and illumination systems and equipment that new standards, FmHA estimates that the num- wilI enable the effective use of energy in new ber of new housing starts for FY 1978 will de- building construction. ” Three compliance crease by up to 12 percent. paths are offered:

1. Model Code for Energy Conservation Specified Acceptable Practice Provisions. A basic component approach, allowing the in New Buildings builder to check all materials and practices In 1975, Congress enacted the Energy Policy against guidelines. and Conservation Act (Public Law 94-1 63). One 2. Subsystem Approach. Various building of the numerous provisions of the measure is elements can be combined to make a whole, an authorization for funds to assist States in i.e., the thermal performance and energy use reducing the growth rate of energy consump- of the envelope must be acceptable but there tion. States must initiate certain programs to can be variation within the several parts of the receive the funding. (See chapter VII for structure [chapters IV through IX). discussion.) One of the requirements is the adoption of mandatory thermal efficiency 3. Systems Approach. Entire building and its standards and insulation requirements. energy using systems. This approach allows credit for the use of nondepletable resources In implementing this legislative mandate, (chapters X and XI). DOE had to determine a measurement of acceptability for the standards chosen by the Once the Model Code was endorsed by States. This process led to creation of the DOE, it began to enter the State and local Model Code, and launched a major Federal ini- building code system through the various tiative affecting local building codes. The adoption processes. It is now estimated that by Department entered into a contractual agree- the end of 1979, 42 States will have adopted ment with NCSBCS. NCSBCS acts as a coor- the Model Code or a similar methodology, dinator and an agent for uniformity and/or either through direct adoption by the State or compatability between the major code groups. by reference. The major code groups are the Building Offi- cials and Code Administration International, The Department of Energy has provided Inc. (BOCA), the International Conference of funding for training programs for State and Building Officials, (ICBO), and the Southern local officials on the Model Code. The code Building Codes Congress International (South- groups and NCSBCS have been the principal ern). The Model Code reflects the technical instruments for training and test efforts, along provisions of ASH RAE 90-75, “Energy Conser- with engineering groups and other interested vation in New Building Design, ” a document trade groups. Basic training documents have prepared by the American Society of Heating, been prepared and tested in a few States. Refrigeration and Air Conditioning Engineers. Much of the training material developed thus ASH RAE 90-75 as a consensus standard. far is quite technical in nature. Early evaluation of training efforts conducted by some The provisions of the Model Code reflect its States on an informal basis has indicated that, basis in standard engineering analysis. It is due to the complexity of the provisions and the 204 ● Residential Energy Conservation difference from existing practice, training will 6. The structural performance path, charac- be needed for a long time. terized as the most flexible compliance approach, is felt by some to be not suffi- It is not possible to conclude from the ciently flexible to allow for real innova- number of States that are in some stage of ap- tion in building design. proving the Model Code the actual level of code enforcement. There is very little information available on code enforcement in general, Building Energy Performance in some jurisdictions a code is defined as en- Standards forced when it is adopted. This relieves the jurisdiction of the necessity for granting In 1976, Congress once again turned to waivers. WhiIe local code inspectors have ex- building standards in enacting the Energy Con- perience with traditional health and safety servation and Production Act (Public Law aspects of codes, the energy provisions are 94-385). This law requires that States and localities adopt building energy performance new and require learning new calculations and practices. Building inspection as an activity is standards (BEPS). Such a standard is to con- traditionally underfunded, and inspectors fre- sider the total energy performance of a building design and set energy use parameters quently have very large work burdens and slight technical preparation. I n the past few without regard to specification of materials or years, budget trimming measures have often type of construction. As normally defined, a kept the number of officials at low levels performance-based standard specifies a goal despite increasing construction activity. (There without specifying the methods, processes, or are about 50,000 local code officials in the materials used to reach the goal. The stated country. ) Building inspectors work for local purpose of the Act is to: governments and must be responsive to the (1) redirect Federal policies and practices to desire of the locality and local builders to assure that reasonable energy conservation move quickly through the inspection process. features will be incorporated into new commercial and residential buildings receiving In addition to the normal range of objec- Federal financial assistance; tions to the Model Code (as being either too le- (2) provide for the development and imple- nient or too demanding), the following prin- mentation, as soon as practicable, of perform- cipal technical objections are often raised: ance standards for new residential and commercial buildings which are designed to 1. The Code is not based on a clear measure achieve the maximum practicable improve- of cost-effectiveness and therefore does ments in energy efficiency and increases in the not truly serve the interests of the con- use of nondepletable sources of energy; and (3) encourage States and local governments sumer. to adopt and enforce such standards through 2. The Code is deficient in that the building their existing building codes and other con- envelope requirements are based entirely struction control mechanisms, or to apply on heating degree days, with no con- them through a special approval process. sideration given to cooling loads. (Public Law 94-385, sec. 302(b)) 3. The Code does not provide incentives for The adoption of such a standard as a na- reducing the size of heating and cooling tional target was understood to represent the systems. most modern and far-sighted approach to 4. The Code allows the same building enve- energy conservation in buildings. Proponents lope requirements whether the fuel source of such standards, principally representatives is gas, oil, electric resistance, or heat of the architectural profession and certain en- pump. vironmental groups, expressed the conviction 5. The Code does not deal adequately with that performance standards would allow free the important issues of siting, orientation, reign to new, innovative design approaches, or dynamic effects. promote the use of nonrenewable resources, Ch. Vlll—Federal Government and Energy Conservation c 205

focus on energy consumption rather than over the accuracy of various computer pro- materials or techniques, and in general raise grams and calculations used to derive energy the level of utility of standards. The adoption budgets. While initial calculations have been of performance standards was a victory for the expressed in Btu/ft2/degree day, some critics architects, just as adoption of ASH RAE 90-75 suggest that the function of various areas of as the basis for the Model Code had been a the structure must be included (different triumph for the engineering profession. It also budgets for homes with lots of bedrooms and marked a very new approach to measuring the little communal space, for example). Thus, a energy use of building design. (No steps to re- question exists as to whether the state-of-the- quire the building to actually meet the design art is adequate to determine a valid energy energy level have been authorized.) budget equation, (not whether housing can be improved). In November 1978, the “Advanced Notice of Proposed Rulemaking” (ANPR) containing the I n addition to this issue, the draft statement initial DOE statement on BEPS appeared in the released by the Department in the ANPR con- Federal Register. Because of the legislative tains provision for RUFs – Resource Utilization origin of BEPS, the new approach to standard Factors—and RIFs — Resource Impact Factors. setting BEPS represents, and the involvement The Resource Utilization Factor weighs the of numerous interest groups in this issue, a relative efficiency of total energy used in the great many important issues have emerged in various typical home fuels, and assigns a the debate. Numerous studies and analyses higher thermal integrity requirement to homes have been prepared by the Government and using electric heating. Traditional codes have private groups. This report does not attempt to measured energy from the input of the home restate the many complicated and thoughtful rather than from the point of origin. While reports and analyses that are available on this there are clearly different supply situations topic. Six principal issues have been selected and different thermodynamic characteristics for specific discussion. These issues are likely of various fuels, this issue has not been fully to figure prominently in congressional de- addressed by Congress. RI F, which has not bates. been used as a meaningful factor as yet, represents an attempt to quantify the social, envi- 1. The Unique and Complex Nature of the ronmental, and similar “external” costs of Standard. A performance standard approach to using certain fuels. Reaching agreement on a building design does offer the widest range of quantitative value for RIF will be extremely options to a designer. It appears to provide im- difficult. Both RUFs and RIFs reflect an at- portant freedom for innovation, particularly in tempt to design a standard that measures im- the area of energy-conscious design (“passive pacts well beyond the simple heat use of build- solar”), where the structure itself acts as the ings. Both RUFs and RIFs represent areas of heating and cooling mechanism. It also assures great controversy and fuel the debate over a focus on the energy consumption as a prin- BEPS. cipal characteristic of the structure. It does not, automatically, ensure that a structure will 2. Regulatory Philosophy. I n any standard-set- use less energy than a comparable structure ting process, there will be varying opinions on designed by standard code techniques. The the regulatory philosophy to be employed. Re- practical side of the question, however, is that garding BEPS, proponents of rapid energy con- it has proven quite difficult to draw a per- servation, including many environmental formance standard that satisfies all the objec- groups, wish to have the initial standard set at tives and yet is correct for the majority of a level attainable by the construction industry buildings and agreed on by all players. There but well above the current level of practice. are still many unanswered questions about the Building industry representatives contend that dynamic performance of buildings. An accu- the existing codes are adequate, that the in- rate figure is difficult to determine for likely dustry is responding to consumer demand for actual infiltration rates. There is disagreement energy conservation as quickly as possible, 206 ● Residential Energy Conservation

and that to require a higher level of per- ticipation. A proprietary computer program formance would be injurious to the industry was used for commercial building calcula- and cross the “reasonable” boundary. tions. Since not only the specific formulas used in BEPS but the assumptions and Resolution of this controversy is related to premises of the supporting analysis are many other problems in home energy conser- presumably open to review, the time allowed vation. No established and consistent strategy appears totally inadequate. Interestingly, the exists to reduce residential energy consump- Federal experience seems to be paralleling the tion over time. No schedule has been estab- experience of the State of California. Califor- lished for upgrading MPS, the Model Code, or nia prepared an energy conservation code, in- BEPS regularly, and no second- or third-level cluding some energy budget standards. The targets have been created. An example of tar- standards were drawn quickly, and there was get setting exists in the automobile industry. not enough time to fulIy consider comments or Manufacturers were put on notice as to the ac- objections. The standard has met with resist- ceptable levels of fleet average fuel consump- ance and litigation. While an agency cannot tion that would be expected over a number of protect against litigation by taking a long time years. Some similar set of goals might be to act, the consequences of releasing a stand- useful for the housing industry. (The State of ard of such potential impact as BEPS without Wisconsin has adopted such an approach.) very thorough and sincere public review and Goal setting is particularly necessary if some involvement seem dire. form of sanctions is to be invoked for non- compliance, either now or in the future. Simi- 4. Implementation. Once agreement has been larly, incentives that could be added to the reached on the determination of the standard, program could be tied to reaching certain very substantial problems will remain regard- energy use levels prior to the required date. ing Implementation. Implementation issues In any event, the first BEPS levels were need to be faced from the beginning, in order based on 1974 construction data. Since 1974, that the standard as eventually promulgated there has been a considerable improvement in can be as productive as possible. Federal the level of insulation, use of double- and standards that must be enforced by State and triple-glazing, and other factors influencing local officials face many problems of compli- energy use. (See “Housing Decisionmakers,” ance There is no indication that the problems chapter V and appendix B.) To establish a of implementation have been given the appro- standard based on 1974 data may well be priate level of consideration. Implementation drawing a standard below current industry problems are critical because DOE, through the level of practice. Model Code, has already launched States on a very different code course. Several factors 3. BEPS Timetable. Many of the problems that stand out: now characterize the debate over BEPS appear to result from DOE’s attempt to respond to an A) Preparation for the New Standard. Due to unrealisticalIy accelerated timetable for the existing DOE State grant program, preparation and publication of a standard. The States have put considerable effort and first BEPS draft regulations were to appear at resources into adopting the Model Code least 1 full year prior to rulemaking, to allow or simiIar, engineering-based standards. for full comment and review. This schedule The training that has been done by code was not met. ANPR appeared on November 21, and professional groups has concentrated 1978, and hearings began on December 1, on that approach. No training has been 1978. This timing has resulted in understand- done to prepare States for BEPS. While able cynicism from critics of ANPR regarding some HUD and DOE research studies and the openness of the process. Principal con- contracts have been initiated to prepare sultation during the drafting period for BEPS for the new standards, OTA interviews was with the construction industry, despite a with State officials and people working in legislative requirement for full public par- code enforcement indicates that there is Ch. Vlll—Federal Government and Energy Conservation ● 207

essentially no understanding of the per- a performance-based standard is desig- formance standard, and almost no aware- nated as the only acceptable path of com- ness that the standard is about to be pliance, will the new approach be phased adopted. The response of States con- in over time? States and towns cannot tacted during the OTA study has been one modify building codes quickly. Tradi- of surprise that such a standard was in the tional processes of review and approval pipeline, and skepticism about the seri- must be followed. Many States are still ousness of the Government in implement- moving through this process on the Model ing it. Code effort. Who will train the building inspectors, State energy office techni- B) Equivalency. The enabling legislation cians, and others who will bear the brunt states that States must adopt BEPS or a of the effort? standard that will “meet or exceed the requirements” of the Federal standard. No 5. Sanctions and Incentives. The enabling leg- determination has been made as to how islation requires that the Secretary of DOE rec- the equivalency requirement will be de- ommend to Congress whether or not to adopt fined. It could mean that all States and lo- the authorized sanction of the program. This calities would have to adopt a perform- sanction is the withdrawal of Federal funding ance standard using the same or similar mechanisms for housing, including FHA fund- methodology as BEPS. It could also mean ing and Federal lending programs. If adopted, that the localities must have in place, a the sanction would be extremely strong. If the standard that results in limiting energy sanctions are not adopted, it is unclear what consumption in buildings to approximate- mechanism or leverage would be available to ly the same level. If this is the case, for ex- encourage compliance. The use of incentives ample, changes in the Model Code to in- for the early periods has been suggested; crease the level of effectiveness could homes meeting low energy standards could meet the equivalency test. Without an in- receive favorable loan terms from Federal pro- dication of how the equivalency require- grams or other forms of assistance. The new ment will be interpreted, States have little standard could simply be adopted and guidance as to how to prepare. Will there localities encouraged to incorporate it into ex- be two separate, overlapping standards? isting codes, so that those wishing to use this If only a pure performance standard is ac- approach could take advantage of it. Data ceptable, by whom will the design draw- could be collected on houses designed by this ings be certified? Will computer analysis approach and this data could be used to deter- be made available by DOE, or will build- mine if broader application is desirable. Feder- ers be required to obtain the imprimatur al property, or property directly assisted by of an architectural and engineering firm Federal programs, could be required to meet for certification? Will local code officials BEPS criteria. The Minimum Property Stand- be expected to interpret the BEPS ards could be revised to incorporate BEPS. criteria? Will special assistance or review Special grants could be made available to be provided by DOE or HUD area offices? localities to test BEPS and experiment with Who will monitor the progress of the in- alternative methods for measuring compli- dustry? What sort of financial and ance. Awards for design competitions might technical assistance will be provided to encourage BEPS usage. Congress couId consid- localities for additional inspections? er adding any one of a number of options to These problems are resolvable, but deci- the existing legislation either in addition to or sions must be made with the involvement in Iieu of the authorized sanctions. of State and local officials if compliance is expected. 6. Special Problems of Housing. The energy consumption in commercial-sized buildings is C) Transition. This issue relates once again to better understood than the consumption of target setting, as well as to preparation. If most houses. The principal involvement of ar- 208 ● Residential Energy Conservation

chitects and engineers is with larger buildings Advanced Notice of Proposed Rulemaking on rather than housing. Most housing in the BEPS, the residential sector was simply United States is constructed by small builders directed to follow the National Association of who have little technical training or access to Home Builders Thermal Performance Guide- technical assistance and few resources (see lines. No rationale was given for this decision. chapter V). Most small builders use the sim- A number of technical problems exist within plest approach to meeting code approval; they the Thermal Performance Guidelines, although follow accepted practice for their area and the they do appear to be more responsive to prescriptive aspects of codes. Given the dif- climate and local conditions than the draft ficulties of determining an energy budget for a BEPS, which rely on seven climate zones. house, and the problems of training small builders to comply, it may be necessary to pro- If housing is to be included under BEPS, vide a simple methodology for the housing sec- more thoughtful attention must be given to the tor, such as previously approved designs that special needs of the sector. have been translated into specifications. In the Chapter IX ECONOMIC IMPACTS Chapter IX.– ECONOMIC IMPACTS

Page Unemployment, Inflation, and Real Economic Growth...... 211 The Total Number of Jobs ...... 211 Labor Productivity and the Distribution of Jobs and Income Among Workers ...... 213 Inflation ...... , ...... 214 Real Economic Development ...... 214

TABLES

Page 73. Full-Time Employment Equivalents per $100,000 Expenditure. . . . .212 Chapter IX ECONOMIC IMPACTS

UNEMPLOYMENT, INFLATION, AND REAL ECONOMIC GROWTH

Home energy conservation may be evaluated for its impact on unemployment, inflation, and the general performance of the domestic economy in the long run. As throughout this report, this chapter assumes that real energy costs are rising and will continue to rise in the future, and that eventually energy consumers or society as a whole will pay prices that reflect these higher real costs. Given these assumptions, it is important to realize that this changing supply situation has a variety of economic impacts that cannot rightly be attributed to energy conservation in the home.

Higher real costs and prices have several ef- higher energy prices and uncertain supplies. fects. They mean that individual energy con- This chapter examines the broader economic sumers and the United States as a Nation can effects of this response. Besides saving dollars, buy fewer goods and services than otherwise. residential conservation has other economic Money previously available for other pur- implications because it redirects expenditures chases must now go to pay for energy. Higher away from fuel to other goods and services. energy prices also redistribute income from Production of nonenergy goods and services energy consumers to owners and producers of generates income and it is important to see energy resources. Some of this redistributed in- how this income is distributed compared to the come now goes abroad to pay for fuel imports distribution generated by energy production. and this further reduces domestic income. This comparison will be made in terms of the Higher energy prices also change the mix of proportion of national income going to job opportunities to reflect the buying patterns workers, which is determined by the total of those who benefit from energy sales, includ- number of jobs and by labor productivity. ing fuel-exporting foreign countries. Finally, After the issue of who benefits, there are im- real domestic income may fall if energy prices portant questions about whether these bene- jump too abruptly, causing short-term unem- fits are proper economic incentives. Do they ployment and other economic dislocations. help or hinder the national economy in adjust- Home energy conservation, by the substitu- ing to the depletion of oil and gas supplies? tion of more energy-efficient devices and Does this redistribution of income improve the structures or by behavioral changes, is the utilization of labor and capital or does it economic response by the residential sector to aggravate infIation?

THE TOTAL NUMBER OF JOBS

Home energy conservation can increase the sumption expenditures beyond what they number of jobs in three ways: could if old energy consumption patterns had been maintained. 1. by the substitution of domestic labor for imported fuels; Each of these three factors is discussed 2. by the substitution of labor-intensive below and the order of discussion reflects the goods and services for capital-intensive, sequence in which they arise. When energy- domestically produced energy; conserving investments are made, employment 3 by yielding a net return or savings out of caused by this investment substitutes for which families can increase personal con- employment in energy production (1 or 2).

211 212 . Residential Energy Conservation

After energy-conserving improvements have Table 73.—Full-Time Employment Equivalents per been installed, consumers begin to accumulate $100,000 Expenditure” (1967 input/output data) net income from their profitable investments and this can be spent elsewhere (3). Sector 1. Home energy conservation may reduce Manufacturing household appliances...... 8.6 General maintenance and repair ...... 8.8 the demand for imported fuels directly as All investment in fixed capital ...... 9.2 in New England where most home heating Residential construction ...... 9.2 oil is imported. It may also reduce imports Personal consumption expenditure (average) .. ..10.2 Natural gas...... 2.7 indirectly by freeing up domestically pro- Coal...... 3.2 duced fuels that can substitute for im- Fuel oil #2...... 3.3 ports elsewhere in the economy. In either Electricity...... 5.5 case, jobs created by conservation are not ● See Donna Amado, “Creation of Labor Data for 1963, 1967, and 1972,” Center for Advanced Computation, technical memo No. 77, University of Illinois at offset by jobs lost anywhere else in the Urbana-Champaign, September 1976, pp. 66-72. Data includes both direct and indirect labor Inputs. domestic economy, and total employment clearly increases, assuming there are can be safely inferred that new fuel unemployed people avail able.’ Further- sources would not greatly increase labor more, keeping income within the country utilization over conventional supplies indirectly increases employment by an ad- since the former involve technically com- ditional amount due to resending. One plex, capital-intensive stages of produc- dollar of additional (real) domestic in- tion added on to present fuel-producing come generated by import substitution activities. yields at least another in secondary expenditures, if unemployment is at a high Compared to fuel production, home level, and on the average 75 percent of energy-conserving activities are relatively this is spent on wages and salaries.2 labor intensive. A comparison to home ap- 2. Home energy conservation also reduces pliance manufacturing is pertinent when the need for more domestically produced conservation is accomplished by more energy. This would apply mainly to high- rapid turnover of the stock of heating, cost supply alternatives since any lower ventiIating, and air-conditioning equip- cost supplies saved from residential use ment as well as other home appliances. A would reduce the need for new higher comparison to residential construction is cost alternatives elsewhere in the econ- pertinent when conservation is accom- omy. High-cost energy supplies include plished by more rapid turnover or in- electricity and new sources of oil, gas, and creased investment in housing stock. coal. Finally, a comparison to general repair and maintenance is pertinent when con- Labor intensities in terms of jobs are servation is accomplished by more rapid either indicated or can be inferred from turnover or increased investment in hous- the data presented in table 73. These are ing stock. Finally, a comparison to general average data for existing enterprise, but it repair and maintenance is pertinent when conservation is accomplished by retrofit- ‘Of course payments abroad may be recycled in terms ting homes. In all of these comparisons, of U.S. exports but on the margin this is probably not im- based on the actual or inferred informa- portant since there is a general dollar surplus among fuel exporting countries. tion contained in table 73, home energy 2 For a recent discussion of muItiplier effects, see conservation is relatively labor intensive. Albert A. Hirsch, “Policy Multipliers in the BEA Quarter- 3 After energy-conserving investments ly Econometric Model,” Survey of Current Business, June begin generating savings for families, 1977, pp. 60-71. The estimate that 75 percent of second- private consumption expenditures for all ary expenditures goes to labor is based on the fact that the average labor share in national income is 75 percent. goods and services can increase, offset- See Statktica/ Abstract of the United States, 1978, table ting to some extent the loss in real income 718, p. 444. caused by rising energy prices. These ex- Ch. IX—Economic lmpacts ● 213

penditures create more jobs per dollar that home energy conservation will solve the than any other type shown in table 73. The national employment problem. Direct energy size of this third effect depends on the expenditures account for only about 5 percent profitability of home energy-conserving of gross national product and residential con- investments, and OTA analysis above sumption only for a fraction of that. However, clearly suggests that these profits may be we can say that some jobs will be created and substantial. (See chapter I I.) this should make it easier to reduce the rate of unemployment. Despite these three positive conclusions about job creation, it should not be implied

LABOR PRODUCTIVITY AND THE DISTRIBUTION OF JOBS AND INCOME AMONG WORKERS

In analyzing labor productivity, it is impor- mouth, or at the electric power station. Home tant to reemphasize the distinction between energy conservation involves more extensive rising real energy costs and prices and subse- downstream operations (distribution, sales, quent conservation efforts. The former clearly construction, installation, and maintenance), reduces average product per worker as it re- which means that employment opportunities duces real national production. Energy conser- are spread out geographically in a pattern de- vation on the other hand should increase both termined more by the location of the final con- by moving to a more productive mix of energy, sumer. This decentralization is beneficial capital, and labor. This overall positive impact because it spreads income from employment of home energy conservation is clear, based more evenly across the country and, in particu- entirely on the fact that it is profitable. If lar, it reduces the outflow of wealth from ener- prices of capital, labor, and energy all reflect gy poor regions and districts that have suffered real costs, then profitability is synonymous the most due to rising energy prices. with getting more total product and larger average product per worker out of the same Second, the threat of job or income loss for package of resources. presently employed people may not be significant if the national economy can reduce its Not all workers, however, will benefit from energy consumption per dollar of product and reduced energy consumption in the home. In stilI continue to grow apace with the size of particular, workers in displaced energy supply the labor force. If it can, and energy conserva- activities may lose their jobs or be asked to action is one of the engines for such growth, then cept lower incomes, and this prospect raises high-cost energy supply activities may not ac- issues that must be resolved politically. How- tually contract, but merely not grow as fast, ever, in these political discussions, two points and present workers can stay on the job. In should be kept in mind. other words, home energy conservation has First, a major advantage of home energy more impact on the locus and kind of new jobs conservation, when compared to increasing than on jobs that already exist. This situation energy consumption, is that jobs are less likely obtains in part also because most of the ener- to be concentrated at centralized points of gy-conserving options considered here will re- production such as at the wellhead, the mine quire a decade or more to accomplish. 214 ● Residential Energy Conservation

INFLATION

Home energy conservation, as defined here, relatively profitable. There are exceptions of is anti-inflationary because it costs less (for course, and new supply technologies might roughly the same convenience and comfort) to come along which are very profitable, but the conserve or save a Btu of energy in the home current situation is illustrated by comparing in- than to produce it. This saving is partly due to vestment payoff periods. New electric power- the substitution of less expensive domestic generating stations are commonly amortized goods and services for imported fuels. Since over 20 to 30 years because it takes that long the United States has a serious balance of to accumulate sufficient revenues above oper- payments problem, this reduces downward ating costs. Investments in home energy con- pressure on the dollar and domestic inflation servation typicalIy pay off within 10 years and caused by currency devaluation. may yield revenues above debt service costs right from the very beginning. In other words, a Anti-inflationary savings also derive from given stock of real resources and finance capi- the relatively broad geographical distribution tal can support a greater total amount of in- of energy-conserving jobs, compared to jobs in vestment activity if home energy conservation energy supply, which makes them accessible reduces Investment in energy supply, and this to a larger number of potential workers. A means less pressure on interest rates to rise. large fraction of energy-conserving jobs can also be accomplished by people with skills in maintenance and repair. Such skills are fairly Second, for the approximately 65 percent of widespread and can be acquired without ex- dwelling units that are owner occupied, home tensive training. Consequently, it is unneces- energy-conserving investments have many at- sary to bid up wages very far before large num- tractive aspects. A dollar of payoff in terms of bers volunteer for work, including many from reduced expenditures for energy is worth more the large pool of chronically unemployed. than a dollar of income to buy energy because only the latter is subject to income tax. The Finally, labor is substituted for energy home owner/investor, in other words, has a tax without bidding up wages and salaries when incentive to save rather than to buy energy. families do a better job of housekeeping. The Also, energy-conserving investments, unlike factor of two difference in energy use among savings accounts and other securities available people with the same basic energy services to small investors, do not have fixed rates of (see chapter III) suggests that this form of in- return that can be wiped out by inflation. Fur- creased self-employment may be quite impor- thermore, rates of return in terms of reduced tant in increasing real incomes while decreas- energy expenditures are very likely to increase ing infIation and energy consumption. faster than inflation because price increments In capital markets, home energy conserva- for energy are likely to be above average. Both tion has two distinct advantages when com- of these factors are inducements to increase pared to alternative investments that would savings beyond what homeowners might other- otherwise have to be made in energy supply. wise and, again, this takes pressure off of in- First, home energy-conserving investments are terest rates.

REAL ECONOMIC DEVELOPMENT

As defined in this report, home energy con- serves as an economic incentive toward reduc- servation saves money and so it can occur ing unemployment and inflation because it largely as the result of private market redirects spending toward relatively plentiful behavior. In addition, this profitability also supplies of labor and capital, and results in a Ch. IX—Economic Impacts “ 215 situation overall in which goods and services tal markets (e. g., labor must be trained and in- are delivered at a lower total cost. Home terest rates may be temporarily very high), but energy conservation, in other words, can be in the long run the progressive economics of recommended both on the basis of its payoffs home energy conservation cannot be denied. to the Nation as a whole as well as its profits The fundamental point is that energy supplies for residential consumers. cannot be expanded without rapidly increasing real costs, while cost increments for the expan- Qualifications might be made based on sion of labor and capital, as substitutes for short-run adjustment rates for labor and capi- energy, are much smaller. Chapter X INDOOR AIR QUALITY Chapter X.— INDOOR AIR QUALITY

Page Indoor Air Quality ...... 219 Energy Conservation Effects on Indoor Air Quality...... 220 Expanding Our Understanding of indoor Air Quality ...... 221 Protecting the lndoor Environment...... ,...... 222 Air Change ...... 222 Air Purification ...... 223 Pollution Source Reduction ...... 223

TABLE

Page 74. Characteristics of Some Indoor Air Pollutants...... 220

FIGURE Page 21. Nitrogen Dioxide Concentrations in a 27m3 Experimental Room at Various Air Exchange Rates ...... 221 Chapter X INDOOR AIR QUALITY .

Energy conservation measures that decrease air exchange rates in buildings may increase problems associated with indoor air quality. Without appropriate control measures, a “tighter” house may allow a significant buildup of air pollutants — carbon monoxide, nitrogen dioxide, hydrocarbons, respirable particulate, and others–that are generated within the structure. An increase in indoor concentrations of these pollutants may have a serious effect on the comfort and health of the occupants.

INDOOR AIR QUALITY

The air pollution control effort in the United ● Danish scientists have found high levels States has generally considered the pollutant (up to nearly twice the legal occupational concentrations of outdoor air as the appro- exposure limit) of formaldehyde in homes priate measure for population exposure. Ex- that have substantial quantities of parti- ceptions to this emphasis have been the atten- cle board in their structure.2 Similarly high tion given the industrial workplace environ- levels of formaldehyde concentrations ment and building codes for office and public have been found in mobile homes in the buildings, which require minimum ventilation United States. rates. The indoor residential environment, to ● Several studies have shown that smoking the extent that it has been considered, has gen- seriously affects the indoor environment. erally been assumed to shelter the occupants The particulate from cigarette smoking from exposure to higher pollutant concentra- are in the respirable size range; nicotine is tions found outdoors. the second largest component of the smoke. 3 Moderate smoking (a pack a day) It is now clear that indoor levels of several can cause particulate concentrations to important air pollutants can be as high as or exceed the 24-hour ambient air quality higher than outdoor levels. (See table 74.) Con- standard. 4 sider the results of a few recent research projects: Internal sources of pollution include gas stoves, a variety of building construction ● Several studies have shown that house- materials including wallboard, paint, and insu- hold gas stoves can cause high indoor con- lation, cigarette smoking, aerosol spray, clean- centrations of carbon monoxide, nitrogen ing and cooking products, and products used oxides, and fine particuIates. Lawrence for hobbies and crafts. Even the concrete and Berkeley Laboratory’ and other sources stone in the floors and walls of homes add have shown that nitrogen oxide emissions quantities of radon “daughters” (a fission from such stoves are sufficiently high to cause kitchen concentrations to exceed the range of recommended 1-hour nation- ‘1 Andersen, “Formaldehyde in the Indoor Environ- al ambient air quality standards (NAAQS). mental-Health Implications and the Setting of Stand- Some studies have also indicated that car- ards, ” /nternationa/ /ndoor C/imate Symposium (Copen- bon monoxide levels may be raised to lev- hagen, Aug. 30- Sept. 1, 1978). els above the short-term ambient stand- ‘W C. Hinde and M. S. First, 1975, “Concentrations of ards, but results have been extremely vari- Nicotine and Tobacco Smoke in Public places, ” New England )ourna/ of Medicine, 292:844-5. able from study to study. ‘For example, see S. J. Peakale and G. De Oliverira, ‘Craig D. Hollowell and C. W Traynor, Combustion- 1975, “The Simultaneous Analysis of Carbon Monoxide Cer?eratecf Indoor Air Pollution (Lawrence Berkeley Lab- and Suspended Particulate Matter Produced by Ciga- oratory, April 1978) Report LBL-7832 rette Smoki rig,” Environment/ Research, 9:99-114.

219 220 ● Residential Energy Conservation

product of radon)-–potential causes of lung fects, and exposure levels of the important air cancer–to the indoor environment. Table 74 pollutants found in significant quantities in provides a brief summary of the sources, ef- indoor air. Table 74.—Characteristics of Some Indoor Air Pollutants

— Pollutant Major sources Impacts Exposure indoors -. . , . ,, Sulfur dioxide (SO2) . . . . Outside air Risk of acute and long-term Usually somewhat lower than respiratory problems in outdoors conjunction with particulate Carbon monoxide (CO). . Outside air (autos), gas stoves, Headache, dizziness at lower Can be high from indoor smoking, infiltration from concentrations; nausea, sources; much outdoor garage vomiting, asphyxiation, concentration is passed death at higher concen- indoors trations

Nitrogen dioxide (NO2). . Outside air, gas stoves, oil Risk of acute respiratory Can be very high, especially or gas furnaces (when problems, possible long-term when gas stove is operating imperfectly vented) respiratory problems, possible increased mortality from cardiovascular disease and cancer Photochemical oxidants Outside air Eye irritation, respiratory Lower than outdoor concen- discomfort; long-term prob- tration lems not well-understood Total suspended Outside air and resuspension Risk of short-term pulmonary Can be very high, especially particulate (including from physical activity; effects; some toxic com- from smoking; particles trace elements)...... smoking, asbestos insulation, ponents can have severe and in respirable size range gas stoves, etc. varied effects dominate Hydrocarbons...... Outside air, smoking, pesti- Risk of a variety of severe Can be high, also can have cides, spray can propellants acute and long-term effects continuous low-level concen- (fluorocarbons), cleaning sol- t rations vents, building materials, etc. Radon & radon Cement, stone, bricks, etc. Enhanced risk of lung cancer, May be sign if i cant daughters ...... other cancers Bacteria & spores...... Coughing, sneezing Spread of respiratory illness Higher than outdoors — —

ENERGY CONSERVATION EFFECTS ON INDOOR AIR QUALITY

A principal strategy for conserving energy in quality show a clear and strong inverse rela- homes is to lower the rates of air exchange tionship between pollutant levels and air ex- from infiltration and exfiltration, as this air exchange rates. For instance, figure 21 demon- change is a major heat loss mechanism (and a strates a very strong inverse relationship be- major source of cooling loss in hot weather) in tween air exchange rates and nitrogen dioxide buildings. Lowering air exchange rates is ac- concentrations in the presence of an operating complished by sealing the structure, e.g., by gas oven. 5 weatherstripping, caulking, sealing cracks, and Many of the indoor air quality problems tight construction. were discovered only when air exchange rates Lowering the air exchange rates in a struc- were drastically reduced and the pollution ef- ture also slows the diffusion of indoor-gener- fects became obvious to the building’s inhabi- ated air pollutants to the outside. In other tants. These effects tend to be odor and mois- words, the pollutants tend to be trapped inside the structure. Many of the studies of indoor air 5Hollowell and Traynor, op cit. Ch. X—Indoor Air Quality ● 221

ture buildup rather than health problems, as the former are more commonly associated with the housing environment. Problems of this 2 nature are not uncommon in Scandinavia, where recently built housing is far tighter than average new homes in the United States. Such 1 difficulties could seriously impair the credibility of energy conservation programs in the same way that problems of flammable cellulose insulation have recently discouraged buyers,

Promotion of energy conservation measures for buildings may exacerbate an existing indoor air quality problem whose present dimensions are largely unknown. Thus, it is crucial that the conservation effort be closely coupled with a program to expand our understanding o Hours 2 of indoor air quality as welI as with measures NOTE: Gas oven operated for 1 -hour at 350° F. to protect the indoor environment.

*Range of recommended 1 hr. air quality standard. ACPH = air change per hour.

EXPANDING OUR UNDERSTANDING OF INDOOR AIR QUALITY

The Federal research effort on indoor air limit the credibility of central-station-based ex- quality has been limited to a few small, piece- posure estimates. meal contracts. The total Federal effort appears to have been on the order of $1 million As a result of these errors in measurement: yearly for the past several years. The Depart- ● The current enforcement of air quality ment of Energy (DOE) has funded most of its standards based on central station pollu- small effort through Lawrence Berkeley Lab- tion monitors may not be adequately pro- oratory in California; the Environmental Pro- tecting the public. tection Agency’s (EPA) major effort was with ● The emission control strategies designed Geomet, Inc., in Gaithersburg, Md. Neither of to support these standards may be either these series of studies can be characterized as too lenient, too strict, or else simply badly a comprehensive, systematic effort to increase skewed. our knowledge about the sources, character- c Epidemiological studies of pollutant istics, and effects of indoor air polIution. health effects suffer from severe errors in This low level of effort is particularly diffi- measurement of popuIation exposure. cult to understand because both DOE and EPA have ample evidence to demonstrate that the Thus the lack of understanding of indoor air current system of air polIution monitoring quality is part of a larger problem of determin- based on central measurement stations is ing total environmental exposure to air pollu- often not measuring true exposure. Besides the tion. Any Government program designed to im- obvious problem of indoor air pollution, the prove our understanding of the indoor environ- exposure measurement problems that arise ment should take care to integrate this re- from nonuniform pollution distribution, com- search with research into the total exposure muting activities, and other factors severely problem. 222 “ Residential Energy Conservation

In the past few years, a number of excellent ● Exposure data that is necessary to con- personal air pollution monitoring instruments duct credible statistical studies of the have been developed for selected air pollut- health effects of low levels of pollution. ants. If monitors were available for a wider Various experts estimate the cost of devel- range of indoor and outdoor air pollutants, oping a personal monitor for a particular pol- field studies could use them to measure real lutant at $250,000. ’ A 1975 workshop’ at exposures of a representative sample of the Brookhaven National Laboratory recom- urban population. The relationship between mended a national development program at existing air pollution monitors and actual ex- the level of $1.5 million per year for 5 years. posures might be better understood, with the Such a program probably would suffice to pro- following benefits: duce the prototype personal monitors needed for the most important pollutants. ● A more accurate, uniform, and meaningful measure of air quality than is possi- Given the existence of personal monitors for ble with today’s data. This would provide industrial applications, the first step of any a more realistic measure of the success of such development program should be a rigor- present control strategies. ous quality assurance testing and evaluation of the existing technology to determine its ap- ● Identification of critical portions of the plicability to exposure assessment studies. As population –by occupation, location, or monitors for critical pollutants become avail- other factors — that require special atten- able, they can be deployed to provide the as- tion, especially during episodes of ex- sessments described above. These assess- tremely high polIution concentrations. ments, if conducted with careful attention to discovering the socioeconomic and physical ● Development and validation of models characteristics that govern the variation of pol- capable of predicting pollution exposure lution exposure within an area, should provide to other than ambient pollutant concen- the understanding of indoor air quality that is trations. currently lacking.

PROTECTING THE INDOOR ENVIRONMENT

There are three basic approaches to protect- recovering system as part of the home ven- ing the indoor air environment: tilating system. An advantage of such controlled air change is that air removal points 1. maintenance of an adequate level of air can be located near the major sources of mois- change, ture, odor, and pollutants. For example, the 2. air purification, and kitchen can be ventilated at a higher rate than 3. reduction of indoor sources of air pollu- the remainder of the home. Also, development tion. of inexpensive monitoring equipment will allow the rate of air change to be varied ac- Air Change cording to the (air quality) need. However, the ‘Lance Wallace, “Personal Monitors,” in vol. IVa (Envi- Because energy conservation involves delib- ronmental Monitoring Supplement) of Analytical Studies erately reducing air infiltration and exfiltra- for the U S Environmental Protection Agency, National tion — natural air exchange—the maintenance Academy of Sciences, Washington, D. C., November of a satisfactory level of indoor air quality in- 1977 volves artificially inducing an air exchange ‘M. G. Morgan and S. Morris, “Individual Air Pollution Monitors An Assessment of National Research Needs,” with some mechanism to recapture the heat in report of a workshop held at Brookhaven National Lab the exhaust air. In Europe, and particularly in oratory, July 8-10, 1975, Energy Research and Develop- Sweden, it is not uncommon to provide a heat- ment Administration, January 1976. Ch. X—Indoor Air Quality ● 223

critical factor in avoiding the loss of the con- 1. Absorption by dissolving the pollutants in servation benefits of reducing natural infiltra- liquids. Spray washing, which can also tion is still the exhaust air heat recovery. A capture particulate and provide a dehu- number of devices in varying stages of devel- midifying function, is often used in large opment are capable of extracting this heat and buildings. transferring it to the incoming air. These in- 2 Adsorption of the odors and chemicals on clude heat pumps, heat pipes, interpenetrating a solid, usually activated carbon. This ducting, heat wheels, and runaround systems method should have the greatest residen- (see volume 11, p. 548, for a description of how tial application. these systems work). The interpenetrating 3 Chemical reaction by oxidation to an inert, ducting systems, which are heat exchangers odorless state. The oxidizing chemical can with the incoming and exhaust air streams in be added to the water in a spray washer or parallel but opposite directions, are presently to the activated charcoal in an adsorption available, can be extremely efficient, and are filter for a combined effect. the simplest of the systems; they appear to be the most feasible systems for residential use. Much work remains to be done on all these technologies.

Air Purification Pollution Source Reduction Air purification is an alternative or a com- Much indoor air pollution occurs because of plement to air change as a method of assuring (or is increased by) poor maintenance or im- good indoor air quality. Ventilation with heat proper manufacturing techniques. For exam- recovery may be inadequate to maintain ade- ple, levels of formaldehyde emissions from quate air quality if the outside air is polluted. walIboard depend on proper curing of the ma- Without air purification devices to screen the terial. Carbon monoxide emissions from gas incoming air, the ventilation system can com- stoves can be increased by several orders of promise the building’s “sheltering” effect in magnitude by improper burner adjustment or protecting its occupants from outside pollu- maintenance. Defects in the venting of gas and tion. oiI furnaces can and often do contribute to indoor air pollution. Many of the chemicals used Indoor air pollutants vary sufficiently to rein cleaning and in hobby work are extrava- quire a variety of devices to ensure thorough gantly and/or improperly used, and their con- control. The pollutant categories that require tribution to degrading of indoor air quality different methods of control are moisture, par- could be substantially reduced through in- ticulates, and airborne chemicals and odors. creased awareness of their adverse effects. It Moisture can be controlled by dehumidifica- seems Iikely that many chemicals in use in the tion equipment in the heating season and air- home environment are inappropriate except conditioning in the cooling season. Particulate under carefully controlled conditions and control is accomplished in most homes with should be controlled; however, no analysis of forced-air heating and cooling by inserting a the appropriateness of such controls was con- filter in the ducts. These filters are not efficient ducted during this study. collectors of finer respirable particulate. Elec- trostatic precipitators can be added to allow A strategy for pollution source reduction control of a greater range of particle sizes; this should clearly include an added emphasis on equipment is available today. combustion equipment maintenance and design, as well as far greater Government atten- Reduced infiltration rates will most affect tion to the composition of common household the need for control of airborne chemicals and chemicals and their packaging and labeling, odors. Aside from ventilation, the control tech- plus the pollution-causing properties of nology categories are: materials used inside the home. Chapter Xl TECHNICAL OPTIONS

Chapter XI.--TECHNICAL OPTIONS

Page Page Improved Building Envelopes...... 227 Summary. , ...... 254 Insulation ...... 227 Controls and Distribution Systems ...... 254 Interior and Exterior Cladding for Passive Solar Design ...... 256 Wall Retrofit ...... 228 Direct Gain Systems ...... 257 Installation Quality ...... 229 Indirect-Gain Passive Buildings ...... 259 Wall Sandwich Configuration...... 229 Hybrid Passive Systems...... 263 Infiltration Control ...... 229 Cost of Heat From Passive Solar Heating Window Technology...... 231 Systems...... 264 Improved Windows...... 233 Cost of Heat From Fossil Fuels and Heating and Cooling Equipment...... 240 Electricity ...... 268 Direct Fossil-Fired Heating Equipment .. 240 Summary...... 270 Oil arid Gas Furnace Efficiency Technical Notes–– Fossil Fuel Prices...... 272 Improvements. . , ...... , ...... 241 Advanced Fuel-Fired Equipment...... 242 Pulse Combustion Furnaces and Boilers...... 242 Fuel-Fired Heat Pumps ...... 244 TABLES Electric Air-Conditioners and Heat Pumps ...... 244 Page Gas-Fired Heat Pumps and Air- 75 Summary of New Fenestration Conditioners ...... 250 Technologies...... 239 Absorption Air-Conditioners ...... 250 76 Heating Equipment and Fuels for Absorption Heat Pumps ...... 250 Occupied Units in 1976...... 240 Other Gas-Fired Heat Pumps...... 250 77 Refit Modifications for Efficiency Integrated Appliances ...... 252 Improvement of Oil-Fired Boilers . . . .. 241 Air-Conditioner/Water Heater...... 252 78 California Standards for Cooling Furnace/Water Heater Systems...... 253 Equipment ...... 249 Refrigerator/Water Heater ...... 253 79 DOE Room Air-Conditioner Energy- Drain Water Heat Recovery ...... 253 Efficiency Improvement Target ...... 249 Page Page

80. DOE Central Air-Conditioner Energy- 42. The Seasonal Performance of Heat-Pump Efficiency Improvement Target ...... 249 Units as a Function of Local Climate. .. 248 81. Estimated Performance of Carrier Hot 43. Estimated Cost of Increasing the Shot@ Heat Recovery Unit With a Performance of Air-Conditioners From 3-Ton Air-Conditioner and a Family of the Industry Average COP of 2.0 to Four...... 253 the Performance Levels Indicated. . .249 82. Cost of Heat From Passive Solar Heating 44. Modified Saltbox Passive Solar Design Installations ...... 268 Home ...... 257 83. Cost of Heat Supplied to Houses From 45. The Fitzgerald House Near Santa Fe, Fossil Fuels and Electricity ...... 269 N. Mex., is 95-Percent Solar Heated by a Direct-Gain System at a 5,900 Degree Day Site ...... 258 46. The Kelbaugh House in Princeton, N.J., FIGURES Receives 75 to 80 Percent of Its Heat From the Trombe Wall and the Small Page Attached Greenhouse...... 260 22. Air Leakage Test Results for Average 47. The Crosley House in Royal Oak, Md., Home of 1,780 sq. ft...... 230 Comblnes a Trombe Wall System With 23. The Double-Sided Blind ...... 234 Direct Gain and a Massive Floor, to Provide 24. Triple Blind, Winter Day Mode...... 234 50 to 60 Percent of Its Heating Needs . . 261 25. Shades Between Glazing With Heat 48. The Benedictine Monastery Off ice/ Recovery...... 235 Warehouse Near Pecos, N. Mex., Uses 26. Between Glazing Convection and Direct Gain From the Office Windows and Radiation Control ...... 235 Warehouse Clerestories Combined With 27. Multilayer, RoIl-Up Insulating the Drumwall Below the Office Windows Window Shade ...... 235 to Provide About 95 Percent of Its 28. Insulating Window Shade ...... 236 Heating Needs...... 262 29. Window Quilt Insulating Window 49 The PG&E Solarium Passive Solar Home in Shade ...... 236 (California Uses the Large Skylight to Heat 30. Skylid ...... 236 Water-Filled Tubes on Three Walls of the 31. Beadwall...... 237 Solarium ...... , ...... 263 32. Beam Daylighting ...... 237 50 This Retrofit Sunspace is Manufactured by 33, Selective Solar Control ...... 237 the Solar Room Co. of Taos, N. Mex.. . .264 34. Heat Mirror...... 238 51 This Retrofit Greenhouse is an Example of 35. Optical Shutter ...... 238 Those Built by the Solar Sustenance 36. Weather Panel@ ...... 238 Project...... 265 37. Typical Energy Flow for a Gas 52. The Balcomb Home Near Santa Fe, Furnace System...... 241 N. Mex., Combines the Use of a 38. Principles and Operation of the Hydro- Greenhouse With a Rock Storage Bed Pulse Boiler Which Uses the Pulse- to Provide 95 Percent of Its Heating Combustion Process ...... 243 Needs ...... 266 39. A Typical “Split System” Heat Pump 53. This Home in Los Alamos, N. Mex., Installation ...... 245 Combines a Large Trombe Wall With 40. Air-Conditioning COP of Heat Pumps Small Direct Gain Windows and a Rock and Central Air-Conditioning Units Storage Bed...... 267 Shipped in 1977 ...... 246 54. Solar Feasibility for Trombe Wall With 41. Performance of the Carrier Split-System Night Insulation Alternative Fuel – Heat Pump ...... 247 Natural Gas...... 271 Chapter Xl TECHNICAL OPTIONS

Technology is already available to at least double the energy efficiency of housing, but further improvements in technology promise a significant impact on savings. Conservation, possible with specific combinations of existing technology, is illustrated in chapter 11. This chapter discusses a much broader set of technical options, including many still in the developmental stage.

Design of an energy-efficient house usually starts with a tightly built and well-insulated thermal envelope (exterior walls, windows, etc.) and adds efficient equipment for heating, cooling, hot water, and other energy needs. The thermal envelope and equipment technologies, which must be combined to build an efficient house, are considered individually in this chapter. Interactions between different types of energy-using equipment, which were treated earlier, are not repeated. Additional information about most of these topics appears in volume 11 of this report.

Many improved window systems and passively heated buildings represent marked departures from present building technology and practice; most of the other technical changes identified in this chapter are incremental improvements of existing materials or equipment. This does not mean that further research and development is unimportant. Figure 14 in chapter I I shows that the total cost of owning and operating a house with energy-saving improvements changes very little over a wide range of investment, so incremental improvements in technology would substantially increase the optimum investment level and energy savings. Improvements being developed would also greatly increase the options available for meeting a performance standard, such as the building energy performance standards (BEPS). These added options could greatly increase the willingness of the housing decisionmakers to invest in energy efficiency and hence lessen the institutional resistance to building energy- ef- ficient houses.

IMPROVED BUILDING ENVELOPES

Insulation tually all new houses contain at least some insulation to reduce heat loss. Many different in- Minimizing the amount of heat lost from the sulating materials are used including rock interior is usually the first step toward con- wool, fiberglass, cellulose, cellular plastics structing an energy-conserving house. This ap- (such as polystyrene, urethane, and ureafor- proach is almost always taken when the retro- maldehyde), perlite, vermiculite, glass foam, fit of a building is considered as well. It is fre- and aluminum multifoil. The characteristics of quently assumed that this merely means add- these materials and insulation standards are ing more insulation in the walls and over the discussed in appendix A. That discussion in- ceilings, using storm windows and doors, and cludes insulation properties, health and fire caulking and weatherstripping all of the cracks safety issues, and production capacity. in the building. However, new ways of using The choice of insulation depends on cost, these techniques are being implemented, and application, availability, and personal prefer- significant new products are being developed. ence. New wall cavities are generally filled Thermal transmission through walls, ceil- with rock wool or fiberglass batts while plastic ings, and floors is the single largest source of foam sheathing may be added to the exterior. heat transfer in a typical house. While many Retrofit of walls built without insulation is older homes were buiIt without insulation, vir- generally accomplished by drilling holes be-

227 228 ● Residential Energy Conservation tween each pair of studs and blowing in fiber- 5. The quality of installation is a major prob- glass, cellulose, or ureaformaldehyde. Insula- lem and may be the area in which insulation is occasionally added to the exterior if tion effectiveness can be most improved new siding is installed. Attics are insulated over the next decade. with batts or loose-fill insulation. Fiberglass, Each of these areas provides a range of new rock wool, and cellulose are widely used, but opportunities, but institutional constraints perlite and vermiculite are also used in attics. may limit implementation. The technical ad- Floors are seldom insulated, but fiberglass vances that are likely may be only incremen- batts are the most frequent choice for this ap- tal, but this could result in houses with sub- plication. Foams such as polystyrene or ure- stantially less energy consumption and lower thane are generally used when foundations or Iifecycle cost. basements are insulated. The price of insulation has increased sharply Cost-effective levels of insulation can sub- in the last 4 years, but this is largely due to a stantially reduce heat losses as illustrated in temporary lack of capacity in the industry, and chapter II. future increases should be more directly re- Thus it might seem that new insulation mate- lated to cost increases. However, it does not rial and techniques wouId represent a new appear that ways will be found to make signifi- technology area of substantial importance. cantly cheaper insulation, as the materials already used are quite inexpensive. It is ex- It appears, however, that this is not the case. pected that the price of insulating materials Contacts with industry and with national lab- will generally keep pace with inflation. oratories indicate that new technology developments will not make a large contribution to Improved materials for retrofitting wall insulation materials and practices. What ad- cavities would be useful since all of the materi- vances do occur by 1985-90 wilI primarily aug- als now in use have at least one drawback. The ment existing techniques; not represent major labor cost is typically one to two times as great new directions. A basic difficulty in assessing as the material cost for these retrofits. Thus, this area is that major companies carefully any dramatic drop in the installed price would keep their new product developments to them- require a less expensive material that also of- selves. Nevertheless, the following points fered simplified installation. emerge:

1 Major breakthroughs in the cost per unit Interior and Exterior Cladding for of insulating value of major insulating ma- Wall Retrofit terials are not expected, and no funda- mentalIy new materials of high cost-effec- In retrofitting exterior walls for improved tiveness are anticipated. thermal performance, an alternative to filling the wall cavity is the application of a layer of 2. In frame wall cavity retrofit, incremental insuIation over the exterior or interior wall sur- improvements may be expected in the face, followed by re-covering of the wall. The handling and performance characteristics advantage of this approach is that the insula- of the major materials, but no fundamen- tion layer is monolithic (rather than broken by tal breakthroughs are anticipated. framing members) and that a wide range of 3 New systems for reinsulating the exterior durable and highly effective insulating materi- surfaces of walls are being developed, als is available for this application. This ap- but, again, no fundamental change is ex- proach also has its disadvantages. If an interior pected. insulating layer is used, the available interior 4. Changes in wall sandwich configurations space is reduced, the Iiving space must be dis- for new buildings are being developed rupted, and there are refinishing problems. If that will result in more efficient wall per- an exterior cladding is used, a sound weather- formance. proof finish must be applied over it. Generally, Ch. X/—Technical Options ● 229 exterior systems are more practical and have Wall Sandwich Configuration received more attention in the marketplace. The typical exterior residential frame wall is A number of complete insulation and siding insulated by glass or mineral fiber insulation systems are already on the market. None of with a thermal resistance value of R-11 or R-13, these, however, is cost-effective purely as an fastened between 2x4 framing members. The energy-conserving measure; they are cost-ef- interior and exterior wall surfaces and framing fective only on the assumption that it is neces- are composed of materials of low to moderate sary to re-side the buiIding anyway. There is no insulating value. Exclusive of openings, 15 to promising technical breakthrough on the hori- 20 percent of the area in such a wall is given zon. Thus, it appears that wall cladding as a over to framing. This portion of the wall area, method of retrofit will not become a major insulated only by standard building materials, energy strategy. accounts for a disproportionate amount of the total wall heat loss; a framing area of 15 per- Installation Quality cent accounts for approximately 30 percent of It is well known that installation quality in the total heat loss through the wall. both new and retrofit insulation application is A number of improved wall configurations a major and continuing problem. and details have been developed and are find- In new construction, common defects in- ing increasing use. These, in general, involve clude the failure to fill smalI or narrow cavities increasing the total amount of insulation, usu- with insulation, the failure to pack insulation ally from about R-1 3 to about R-20, and chang- properly around and behind electrical and ing the wall sandwich to either reduce the size plumbing fixtures, and the incomplete cover- of framing areas or to insulate them. Several of age of cavities with insulation. The last prob- these configurations are described on pp. 500- lem is particularly serious if the defect extends 505 of volume I 1. vertically for a significant distance because convection currents are thereby set up that Infiltration Control result in rapid heat transfer. I n general, the per- Infiltration has traditionally been a major centage increase of heat loss is dispropor- source of thermal inefficiency in homes. Ac- tionate to the area of the defect, because of cording to various estimates, it accounts for the action of air infiltration and internal air between 20 and 40 percent of all heat transfer currents. through the building envelope, in both old and In the retrofit of existing construction, seri- new construction. While the absolute magni- ous problems exist in reinsulation of wall cavi- tude of infiltration losses has declined with the ties. As the framing pattern is not easily ap- advent of tighter building components and parent from the outside of the building, it is techniques, the decline has been comparable common to miss small cavities entirely. Even to the reduction in conductive losses. There is when a cavity is located, the filling may be in- clear potential for large energy savings from complete or the insulation may be hung up on further infiltration control. internal obstructions. The fact that the extent Infiltration depends on how a house is built of coverage of the completed installation can- and used. It increases whenever the wind not be seen results in a basic quality-control speed or indoor-outdoor temperature differ- problem. ence increases and may vary from near zero on It is likely that increased understanding of a calm spring day to several air changes per these problems will result in corrective efforts hour (ACPH) on a windy winter day. These by conscientious builders and inspectors. ln- basic facts are well known, but overall infiltra- frared thermography can be used to detect in- tion behavior is rather poorly understood and stallation defects by taking a “heat-loss pic- documented. A review of the literature several ture” of a house, but the cost of the equipment years ago determined that the average infiltra- and other factors have limited its use to date. tion rate for most houses in the United States 230 ● Residential/ Energy Conservation

maximum leakage rate that corresponds to about 0.3 AC PH. It is enforced by measuring the leakage in a sample of the homes by each builder.

Insulation standards can be very specific and simple visual checks can determine whether the standard has been met. By contrast, infiltration reduction requires the use of materials and techniques in places that are inherently inaccessible and invisible. It appears that the only way to ensure compliance with an infiltration standard is to measure it as part of the inspection process. There are two basic approaches to infiltration measurement. In the first, a small amount

of sulfur hexafluoride (SF6) or some other tracer gas is circulated through the house with the furnace blower and its concentration is measured several times during the next hour or two. Analysis of these measurements determines the infiltration rate for the specific wind and temperature conditions at the time of the measurement. The air samples can be taken in plastic bags and analyzed in a laboratory, so no elaborate equipment is required at the house. The other technique uses a large fan to suck air out of the house and measures the volume exhausted at different indoor-outdoor pressure differences (fan speeds). This provides Dryer vent - 3°/0 Fireplace - 5% a “leakage” measurement of the house that is relatively independent of the weather condi- SOURCE: “Reprinted with permission from the American Society of Heating, tions and individual leaks can be located with Refrigerating, and Air-Conditioning Engineers “ the use of a smoke source such as incense. Sev- 4 It is possible to build a house very tightly if eral investigators have attempted to correlate the builder uses the right materials with suffi- these measurements with actual infiltration cient care. The “Saskatchewan Conservation rates. The results have been highly variable so, House” in Regina, Canada, has uncontrolled in a strict sense, these measurements should infiltration of only 0.05 ACPH.2 However, it is only be considered leakage measurements. not known whether the average builder could The leakage test is used for standards enforce- build houses this tightly. The present Swedish ment in Sweden where it requires about 2 building standard3 requires that a house have a hours to test a house. ’ The equipment used in the test can be purchased for about $500.

‘T. H. Handley and C. J. Barton, “Home Ventilation ‘Investigators who have worked with air infiltration Rates: A Literature Survey” (Oak Ridge National Labora- and leakage measurements include Richard Grot, Na- tory, September 1973), ORNL-TM-4318. tional Bureau of Standards; Robert Socolow, Princeton 2Robert W. Besant, Robert W. Dumont, and Greg University; Robert Sonderegger, Lawrence Berkeley Lab- Schoenau, “Saskatchewan House: 100 Percent Solar in a oratory; Maurice Gamze of Gamze, Korobkin, and Severe Climate,” So/ar Age, May 1979, p. 18. Caloger, Chicago, Ill.; and Gary Caffey, Texas Power and 3Svensk Bygnorm 1975, Statens Planverks Forfattnings- Light Company samling, Liber Tryck Publications (Stockholm, Sweden, 5Stig Hammarsten, National Swedish Institute for 1978), PFS 1978:1, 3rd edition. Building Research, private communication, May 1979. Ch. X/—Technical Options ● 231

A house would use less energy if there were and cracks, weatherstripping, and attention to no infiltration, but the occupants would ne- the tightness and quality of construction. Exist- gate this strategy whenever they opened the ing products are being used more extensively windows. Alternatively, fresh air could be pro- and others are being used in different ways; vided with very little loss of heat by a simple plastic sheeting is increasingly used to provide heat exchanger. The Saskatchewan Conserva- a vapor barrier instead of paper or foil insulation House heats incoming air with outgoing tion backing. Following the identification of air by running both through interpenetrating electrical outlets as a major infiltration source, ducts made of plastic sheets separated by simple foam plastic gaskets that are placed wooden spacers. This recovers over 80 percent under the outlet covers have come on the mar- of the heat. Many Swedish houses that meet ket.7 Improved sealants and caulking materials the present building standard have experi- that are easier to use have become available in enced air quality problems (such as those dis- recent years. A foam plastic sealant that can cussed in chapter X) and excessive humidity be squirted into a crack much like shaving levels. The standard is presently being re- cream is now available; it expands slightly as it viewed and, according to one observer, it will cures to ensure a tight seal.8 Other devices and likely be modified to require the installation of configurations used to reduce infiltration in- a heat exchanger. G Minimum acceptable air clude outside combustion air intakes for fur- change rates for homes are not well defined, naces, water heaters, and fireplaces, and tight- but a number of people active in the field ly sealable exhaust vents. Each of these believe that heat exchangers or some other changes makes it easier to build a tight house method of purification are needed if infiltra- or retrofit an existing house. Further improve- tion is below about 0.5 AC PH. ments of this nature are likely.

The “technology” for infiltration control is ‘Three manufacturers of such gaskets are the Vision and will remain primarily the plugging of holes Co In Texas, KGS Associates in Greenville, Ohio, and the Armstrong Cork Co. ‘One manufacturer of such a foam is the Coplanar Corp , Oakland, Cal if.

WINDOW TECHNOLOGY

Windows serve multiple functions. They side. All of the invisible infrared rays (over half allow daylight to enter, provide a view of the of normal sunlight) would be excluded. outside with its changing weather patterns, can The windows in most houses are quite effi- be opened to provide ventilation, and admit cient at admitting sunlight—80 to 90 percent heat in the form of sunlight. They also allow of the light striking them passes through. In the heat to escape, both by infiltration around the frame and by the normal radiative/conduc- summer, shade trees and shades and awnings on the windows limit the heat admitted. But tive/convective heat transfer processes. windows have the poorest thermal loss behavior of any part of the building shell. Typically, From the standpoint of energy-efficient windows have an R-value of 0.9 to 2, while insulated walls have an R-value of 10 to 15 and building operation, the ideal window would insulated attics have an R-value of 15 to 20. allow all the sunlight to enter the building There is clearly room for vast improvement. whenever heating is needed, and would have very low thermal losses. During the summer Early windows were a simple hole in the wall when no heating is needed, it would admit only to admit sunlight and allow the occupants to visible light, and only in the quantities needed see out, or a translucent material that would for lighting and providing a view of the out- admit some light and exclude cold air was 232 ● Residential Energy Conservation

used. Glass was a great advance, since it simul- amount of glass added as a storm window will taneously let in sunlight and prevented drafts. cut the heat loss in half. The combination of an Double-glazing and shutters have now been additional dead air space and layer of glass used for many years to reduce the heat loss cuts both radiative and convective losses. It is from windows, and shades can prevent over- generally true that the heat loss through a win- heating in the summer. During the last few dow will be divided by the number of panes decades, most of the development of glass for (e. g., the heat loss through triple-glazing is one- architectural uses has concentrated on making third that through single-glazing). windows that would admit less sunlight and In addition to multiple-glazing, the basic heat while still providing an adequate view. methods of conduction and convection con- The early solar control glasses simply absorbed trol have been various forms of blinds, shut- part of the sunlight in the glass with the result ters, and curtains. Some sunscreen devices that part of the heat entered the building, but have the effect of baffling the outer air layer much of it stayed outside. Then manufacturers and reducing surface convection. Relatively began to put very thin reflective coatings on little attention has been paid, in existing win- glass. These reflect most of the sunlight, and in dows, to the control of convection between some cases actually cut down on the winter glazing layers. One technique that has been heat loss through the glass because they also studied is that of filling the interglazing space reflect the infrared heat waves back into a with heavier molecular weight gases. Use of room. The vastly decreased amounts of sun- gases such as argon, sulfur hexafluoride, or light admitted to the building are considered carbon dioxide can result in a significant satisfactory because they still permit a good reduction of conduction. It is also possible to view and greatly reduce glare. These reflective make “heat mirror” coatings that allow most glasses are marketed on the basis of their of the sunlight to pass through but which reduction of air-conditioning loads in the sum- reflect heat back into the room. mer and their reduced heat loss in the winter, ignoring the fact that the additional sunlight Room temperature radiation is a major con- kept out in the winter would in some cases be tributor to heat loss, but sunlight has an even helpful. They are generally used on large build- larger effect on the energy impact of many ings that have large air-conditioning loads in windows. Solar radiation at the Earth’s surface both summer and winter. is approximately 3 percent ultraviolet, 44 percent visible, and 53 percent infrared. The pri- In the last 3 or 4 years, increasing attention mary intent of glazing is to admit daylight and has been devoted to new window products permit a view. Daylight is “free” lighting from that will add to the flexibility of window use a renewable source and has a more desirable and substantially improve their overall effect “color” than most artificial light. As with ar- on the energy requirements of houses. The suc- tificial light sources, sunlight, both visible and cessful commercialization of these products invisible, is converted to heat energy when ab- should make it possible for windows to gener- sorbed by materials. One property of sunlight, ally lower the overall energy requirements of a however, is that its lighting “efficiency” is house for space-conditioning. higher than that of artificial light. In other words, for a given level of lighting, sunlight Windows lose heat by all of the basic heat produces one-sixth the heat of incandescent loss mechanisms discussed earlier: radiation, light and slightly more than one-half the heat convection, and conduction. As the contribu- of fIuorescent light. tion of radiation and of convection/conduction is comparable in most windows, reduction The use of daylighting is particularly desir- of the losses attributable to either of these able in the summer because it can cut the use mechanisms can be important. One factor that of electricity for both lighting and cooling. In has very little effect on heat loss is the thick- winter, the heat from the lights is often useful, ness of the glass. Doubling the glass thickness but daylighting is still beneficial since it has a barely perceptible effect, but the same reduces the use of nonrenewable sources. Ch. Xl—Technical Options ● 233

In the typical design approach to small resi- . insulating shades and shutters, dential buildings, little attention is paid to the ● the Skylid® , use and rejection of solar radiation. Windows . the Beadwall® , are treated simply as sources of conductive . beam daylighting, heat loss in winter and of cooling load in sum- ● selective solar control reflective film, and mer. I n reality, summer heat gain can be great- . the heat mirror (Iow-emissivity film), ly reduced and winter heat gain can be signifi- ● the optical shutter, and cantly increased by appropriately specified ● the Weather Panel® . and properly oriented windows. It is likely that Some of these technologies have been de- the sizing and orientation of windows will be veloped by industry while others have been more carefully specified in the future. supported by the Department of the Energy Shading to keep out heat from the Sun is ac- (DOE) through its energy-efficient windows complished most effectively by an exterior program managed by the Lawrence Berkeley shade or reflector. An outer reflective surface Laboratory. This program has provided sup- is almost as effective, an interior refIector (e. g., port for work on shades between glazing with a shade) is still quite effective, and absorbing heat recovery, between-glazing convection glass is generally less effective. and radiation control, multi layer insulating shades, beam daylighting, selective solar con- At night, when sunlight and view are not fac- trol films, heat mirrors, and optical shutters. tors, movable insulation that cuts the heat loss Testing and evaluation of other concepts and to that of an ordinary wall section can be ex- products has been performed. tremely useful. A single-glass window combined with nighttime insulation can exceed the Traditional blinds provide protection from overall performance of even a triple-glazed glare and overheating near the window. The window. 9 blinds illustrated in figures 23 through 26 all provide this protection but also allow the heat Many variations on these ideas are being de- to be used elsewhere if desired, reduce the win- veloped and some products are already on the dow heat losses, or both. market. Improved Windows The devices shown in figures 27 through 37 all serve to reduce the heat losses from win- Enormous improvements in the energy effi- dows when the Sun is not shining, and general- ciency of windows could be achieved through ly do it quite effectively. They can also be used the proper use of conventional materials and as shades to exclude sunlight when it isn’t components. (Some of these approaches are wanted. The shades shown in figures 27 presented in the discussion of Passive Solar through 29 incorporate design features that at- Design at the end of this chapter.) In many tempt to eliminate air leakage around the cases “new” technologies are simply a revival edges. The same convective processes that of old ideas and practices. Several technol- enable the double-sided and triple blinds to ogies and devices of recent origin that appear distribute heat into the room will effectively to provide significantly improved window effi- cancel the insulating value of a shade if the ciency are illustrated and described in figures edges are not tightly sealed. Figure 32 illus- 23 through 36. These are: trates one approach to increased utilization of daylighting, while figures 33 through 36 illus- ● the double-sided blind, trate the use of some highly innovative materi- ● the triple blind, als. The materials in figures 33 and 34 share the ● shades between glazing with heat recov- property of transmitting some radiation and ery, reflecting others, but their uses are very dif- ● between-glazing convection and radiation ferent. The heat mirror primarily reduces cool- control,

‘D. Claridge, “Window Management and Energy !5av- ~ Registered trademark of Suntek Research A=OCi- ings,” Energy and Bui/dings 1, p. 57 (1977). ates, Inc., Coite, Madera, Cal if. 234 . Residential Energy Conservation

Figure 23.— The Double-Sided Blind Figure 24.—Triple Blind, Winter Day Mode

Reflecting Absorbing side side

-: Exterior Interior

The double-sided blind is used on bright winter days when shading is needed to prevent overheating or glare from large windows. It absorbs and distributes to the room heat that would be reflected outside by an ordinary shade. It functions as an ordinary shade in the summer with the reflective side out. ing loads while maintaining daylight availability for lighting. The heat mirror wiII be marketed by a subsidiary of Suntek Research Asso- ciates next year. The optical shutter is a passive shading material also under development by Suntek. It works well, but the economics The triple blind is functionally similar to the double-sided blind, are not considered promising if the shutter ma- but the clear shade keeps more of the absorbed heat in the terial is enclosed in glass. Some work has been house. At night, thermal resistance of R5 is achieved by pulling all three shades, according to the manufacturer, done on developing a suitable method for Ark-tic-seal Systems, Inc., Butler, Wis. encapsulating it in less expensive plastics. The Weather Panel® (figure 36) is a logical combination of heat mirror and optical shutter Cloud Gel® material can be made to turn reflective at any temperature in the range from technology that could be a major advance in passive heating technology if it can be pro- 00 to 1000 C. (An essential requirement for sys- duced at low cost. A discussion of this system tems like this is for all parts to last 15 years or was presented at the Second National Passive more or be readily replaceable.) Solar conference. ’” Weather Panel® combines None of these new technologies is the single the advantages of high thermal resistance and “best” approach for all conditions. They differ shading in a completely passive system. The radically from each other in cost, effectiveness, and range of applicability. Table 75 summarizes the salient features of these new tech- @ Registered trademark of Suntek Research Associ- nologies. This table presents the performance ates, Inc., Coite, Madera, Calif. parameters, operating requirements, estimated ‘“Day Charoudi, “Buildings as Organisms,” Proceed- ings of the Second National Passive Solar Conference, cost-effectiveness, applicability to retrofit, Mar. 16-18, 1978, p. 276 (Philadelphia, Pa.: Mid-Atlantic and current status of each new technology. Solar Energy Association). The estimates of the level of cost-effectiveness Ch. Xl—Technical Options . 235

Figure 25. —Shades Between Glazing With Figure 27.—Multilayer, Roll-Up Insulating Heat Recovery Window Shade r. \ Cover with double head seals TO north side l\ \ or storage

Black side & expand ~o form dead air spaces

7 Reflective surfaces Reflecting side :0 develop high 7 resistance to heat transfer 7 Spacers collapse 7 when rolled up yet expand when 7 pulled down

(.~ r 11- / Cover with double jamb seals

Thermally effective summer thru winter at windows and sliding doors

This multilayer shade stores in a compact roll and utilizes flexible spacers to separate the aluminized plastic layers and create a series of dead air spaces when in use. The five-layer shade used with double glazing offers thermal resistance of R8 according to the manufacturer, Insulating Shade Co., Guilford, Corm.

Figure 26.—Between Glazing Convection and Radiation Control Privacy Acceptance

(Exterior) ss (Exterior) ss

The horizontal slats between the glass suppress convective heat loss. In the “privacy mode,” light is excluded and heat loss is reduced further. R3.5 has been achieved and R5 is believed possible with better design and construction. 236 ● Residential Energy Conservation are qualitative and approximate. They are another. Important factors in their sale in- based only on the length of payback period. clude:

It must be remembered that windows are ● The desire for privacy. Shades, drapes, generally installed primarily for esthetic rea- and blinds are sold primarily for the pri- sons. While there are a host of window acces- vacy they afford. Exterior shutters such as sories and modifications, probably only storm the Rolladen, which are widely used in Eu- windows and double-glazing have historically rope, offer both privacy and increased been marketed primarily on the basis of energy security. savings. Many of these accessories and improvement solve one “problem” and introduce

Figure 28.— Insulating Window Shade Figure 29.—Window Quilt Insulating Window Shade

2nd air space

Flexible /4

barrier

Hollow ) still air b A

II core attach

This roll-up shade is a fabric covered quilt whose edges slide in a This roll-up shade is made of hollow, lens-shaped, rigid white PVC track to reduce infiltration. It offers a thermal resistance of R5.5 slats with minimal air leakage through connecting joints. It can be when used with a double-glazed window according to the operated manually or automatically and is manufactured by manufacturer, Appropriate Technology Corporation, Brattleboro, Vt. Solar Energy Construction Co., Valley Forge, Pa.

Figure 30.–Skylid

Open Shut

The sky lid is an insulating shutter that operates automatically. It opens when sunlight heats freon in the outer cannister causing it to flow to the inner cannister, and closes by the reverse process. It provides a thermal resistance of R3 when used with single-glazing according to the manufacturer, Zomeworks, Inc., Albuquerque, N. Mex. Ch. XI— Technical Options c 237

● The need for improved comfort is a major ● Drapes, shades, blinds, and shutters are factor in the sale of “solar control” opaque. By contrast, heat mirrors, selec- glasses. While they also reduce the need tive solar control films, and between-glaz- for air-conditioning, it is virtually impossi- ing convection/radiation control devices ble to provide comfort in the full glare of provide both daylighting and outlook the summer Sun. This is another important even when in operation. consideration in the purchase of shades, drapes, and blinds. The “solar control” Since reduced energy consumption is only glasses also exclude useful winter sun- one factor in the choice of window improve- light. ments, it is entirely possible, and perhaps Iike- ● The ultraviolet rays in sunlight shorten the Iy, that some of the “less cost-effective” im- life of fabrics and home furnishings. The provements that offer other advantages will opaque window covers and some coatings uItimately become most widely used. reduce this problem.

Figure 32.—Beam Daylighting

Figure 31.—Beadwall

This beam daylighting approach uses adjustable reflective blinds to reflect light off the ceiling far into a room to extend the area where daylight.- levels are acceptably high.

Figure 33.—Selective Solar Control

Selective control film

\ Visible sunlight

Infrared sunlight

The beadwall uses automatic controls to pump small expanded polyurethane beads between the two layers of glass to provide a nighttime thermal resistance of R8. Beadwall is a registered trademark of Zomeworks, Inc. u

The selective solar control film transmits most of the visible sunlight while reflecting most of the infrared sunlight. This can reduce cooling loads while utilizing available daylight. 238 ● Residential Energy Conservation

Figure 34.-Heat Mirror Figure 35.—Optical Shutter Glazing contains Heat mirror on optical shutter Clear inner surface glass Wall \ /

Room temperature infrared 1

The heat mirror transmits almost all of the visible and invisible infrared sunlight but reflects almost all of the thermal infrared radiation back into the room. The overall effect can be similar to The optical shutter is a heat-activated sunshade made from a adding another pane of glass. temperature sensitive polymer material which is transparent below a critical temperature (76°F in this example) and becomes a milky-looking diffuse reflector of 80% of the sunlight above that temperature.

Figure 36.—Weather Panel®

I I I ~ Light reflected if interior too hot Ch. Xl—Technical Options . 239

Table 75.—Summary of New Fenestration Technologies

Effect on Winter Summer lighting/ Opera- Estimated Applica- Name of Radiative Heat loss Radiative Other outlook when bility cost- bility to Current gain (all types) operating retrofit technology gain gains effectiveness status — — = 90% Of Un- manual; 1. Double-sided shaded; U.V. moderate moderate moderate no outlook, seasonal very very ready for blind is controlled reduction reduction reduction very low reversal of high high commercial i- ———. Iight blind required zation = 90% Of un- moderate- no outlook: manual, 2. Triple blind shaded; U.V. high moderate moderate very low somewhat high high on market is controlled reduction reduction reduction light complex 3. Shades some loss some outlook; between but distribu- moderate- lighting pos- ready glazing with tion/storage moderate high moderate sible when manual high low commerciali- heat recovery capability; U.V. reduction reduction reduction I n operation zation is controlled 4. Between = 90% of un- no outlook or glazing con- shaded; slats moderate- Iight: some vection and can direct high high high degradation none moderate- Iow early radiation Sun away from reduction reduction reduction of outlook at high R&D furnishings all times control —————— — 5. Insulating very high manual; shades and N/A very high high reduction no outlook, or low- low- products if closed no light automatic moderate shutters reduction reduction —— moderate marketed 6. Skylid® N/A high high high reduction reduction reduction no outlook, automatic low- Iow on market if closed no light moderate

high very high 7. Beadwall® N/A very high reduction reduction no outlook, automatic low- Iow on market reduction if filled if filled no light moderate Increased manual; 8. Beam beneficial reduced daylighting; only daylighting distribution N/A no effect lighting affects up- seasonal low- Iow advanced effects and load per part of adjustment moderate R&D u.v. control ——. W indow only is essential 9. Selective solar control significantly moderate- high in pre- reflective reduced N/A high N/A none none dom, cooling very R&D film reduction climates high low- on market; 10. Heat mirror low moderate low some none none moderate- very retrofit reduction reduction reduction reduction high high package near — — marketing 11. Optical no outlook shutter low N/A high N/A when automatic probably probably R&D translucent reduction reduction — low low low reduction 12. Weather unless very high high very high passive/ panel® overheating reduction reduction reduction no outlook automatic R&D occurs 13. Optimization significant high of fenestra- optimization reduction tion design over N/A through reduction N/A N/A very high very early (size, ori- current proper shad- low R&D entation) practice ing, etc. 240 . Residential Energy Conservation HEATING AND COOLING EQUIPMENT Direct Fossil-Fired Heating Equipment* divided by the heating value of the fuel. ” Typi- cal values for direct-combustion furnaces are Most residential and commercial buildings 70 to 80 percent; heat loss principally results in the United States are heated with direct- from heated stack-gases lost during combus- fired gas and oil furnaces and boilers, as shown tion. This definition does not give a complete in table 76. Considerable controversy arises measure of the fuel required to heat a living over the typical operating efficiencies of these space over the heating season. A definition Table 76.—Heating Equipment and Fuels for that does, and one that is increasingly being Occupied Units in 1976 used, is the seasonal performance factor or (in thousands) seasonal efficiency. This measure is defined as Number Percent the ratio of (a) the useful heat delivered to the Total occupied units...... 79,316 100.0 home to (b) the heating content of the fuel Warm air furnace...... 40,720 51.3 used by the furnace over the entire heating Steam or hot water...... 14,554 18.3 season. Typical gas furnaces have seasonal ef- Built-in electric units ...... 5,217 6.6 Floor, wall, or pipeless furnace. . . 6,849 8.6 ficiencies in the range of 45 to 65 percent (see Room heaters with/without flu . . . 8,861 11.2 figure 37) Seasonal efficiency accounts for all Fireplaces, stoves, portable factors affecting the heating system’s perform- heaters...... 2,398 3.0 None...... 716 .9 ance in its actual operating environment. In Total occupied housing unit . . . 74,005 100.0 addition to stack-gas losses these factors in- House heating fuel: clude loss of heated room air through the 55.7 Utility gas...... 41,219 chimney while the furnace is off (infiltration), Fuel oil, kerosene...... 16,451 22.2 Electricity ...... 10,151 13.7 cycling losses, pilot light (gas furnaces only), Bottled gas or LP gas...... 4,239 5.7 and heat losses through the air distribution 1,482 2.0 Coke or coal/wood/other ...... ducts when in unheated spaces. ” Cycling None...... 463 .6 Cooking fuel: losses are a result of operation at part loads, Utility gas...... 32,299 43.6 which causes heat to be lost in raising the tem- Electricity ...... 35,669 48.2 perature of the furnace before useful heat can Other ...... 5,748 7.8 None...... 287 .4 be delivered to the living space. Most existing SOURCE: Bureau of Census, Construction Reports, “Estimates of Insulation homes have furnaces oversized by at least 50 Requirements and Discussion of Regional Variation in Housing In- ventory and Requirements,” August, September 1977. percent, so they are always operating at relatively inefficient part-load conditions. ’ 3 The systems. One reason is that remarkably little is oversizing is greater still in homes that have known about their performance in actual oper- had insulation, storm windows, or other ther- ating environments, and the literature in the mal envelope improvements added since the area is replete with inconsistent information. furnace was installed. (Figure 10 in chapter II illustrates the problem.) Performance undoubtedly varies with the type In addition to the fossil fuel required for the of unit, its age, size, installation, position in burner, gas and oil furnaces and boilers require the building, and a number of other variables. electric energy to operate fans and pumps. Another reason for the controversy is the in- consistency in the definition of efficiency. Un- til recently, the most common value quoted was the steady-state or full-load combustion efficiency, which is defined as the ratio of 1‘E. C. Hise and A. S. Holmn, “Heat Balance and Effi- useful heat delivered to the furnace bonnet ciency Measurements of Central Forced Air Residential Gas Furnaces” (Oak Ridge National Laboratory). 1*C. Samuels, et al., “MIUS Systems Analysis— Initial Comparisons of Modular-Sized Integrated Utility Sys- *Some parts of this section are taken from “Applica- tems and Conventional Systems, ” ORNL/HUD/MIUS-5, tions of Solar Technology to Today’s Energy Needs,” Of- June 1976, p. 24. fice of Technology, June 1978. ‘‘H ise and Holman, op. cit.

Ch. Xl—Technical Options ● 241

Figure 37.—Typical Energy Flow for a Gas Furnace Oil and Gas Furnace Efficiency System Improvements

Furnaces with improved efficiency levels are now available and new devices are being developed. Table 77 summarizes the approxi- Infiltration loss (o-lo%) mate energy savings and costs of a number of oil boiler improvements, most of which are now available. Corresponding tables of measured improvements for oil furnaces and gas furnaces and boilers are not available, but similar levels of improvement can be expected.

Several of these improvements reduce the heat lost when the furnace cycles on and off frequently. As most furnaces are now sized to supply at least one and one-half times the maximum anticipated heating load, reducing the furnace capacity, either by installing a smaller nozzle or a smaller furnace, will also substan- tialIy cut off-cycle losses. loss Periodic adjustment of oil burners will improve their combustion efficiency and lower fIue-gas temperatures. This service is available from heating oil distributors and furnace repair services. Variable firing rate furnaces represent an attempt to provide reduced output for near continuous operation and thus cut off-cycle losses; development of a reliable and afford- able technology for accomplishing this goal

Table 77.—Refit Modifications for Efficiency Improvement of Oil-Fired Boilers 242 ● Residential Energy Conservation

has proven difficult. Such furnaces are not ex- corrosive fIue-gas condensate and scaling on pected to be commercially available until the the heat exchanger. Neither version is ex- late-l 980’s. pected to appear on the market for several Automatic fIue dampers close the flue after years. the furnace shuts off to drastically reduce the Pulse Combustion Furnaces and Boilers amount of heat that escapes up the chimney while the furnace is not operating. Flue damp- The pulse combustion burner is a unique ap- ers have been used in Europe for many years, proach that uses mechanical energy from an but concern over safety questions delayed explosive combustion process to “power” the their acceptance in this country. They are now burner and permit condensation of the flue coming into use. gases without the need for a fan-driven burner. Flame-retention head burners improve com- The operation of the pulse combustion bustion efficiency by causing turbulence in the burner is illustrated in figure 38. Initially, a combustion air, enhancing air-fuel mixing. smalI fan drives air into the combustion cham- These burners are on most oil furnaces sold ber through flapper valves along with a small now, but improved versions are being devel- quantity of gas and the mixture is ignited by a oped. spark plug. The explosive force of ignition Sealed combustion units reduce flue-gas closes the valves and drives the exhaust gases losses during both on and off cycles by using out the tailpipe. The combustion chamber and outside air for combustion. This means that tailpipe are acoustically “tuned” so the ex- the warm interior air is not exhausted up the haust process creates a partial vacuum that flue. These improvements can result in fur- opens the intake valves and sucks air and gas naces with seasonal efficiencies of 75 to 81 into the combustion chamber without use of percent. 14 15 the fan. Residual heat from the previous combustion ignites this mixture without need for Advanced Fuel-Fired Equipment the spark plug. The exhaust gases are cooled to about 120° F, recovering nearly all of their Several types of equipment that should provide substantially higher seasonal efficiencies heat including the latent heat in the water are under development. These include con- vapor. densing flue-gas furnaces, pulse combustion The pulse combustion principle has been burners, and several different fuel-fired heat known for many years and some development pumps. occurred in the 1950’s and 1960’s. The prin- Conventional furnaces maintain flue-gas cipal problems were related to muffling the in- temperatures of 4000 to 7000 F to avoid con- trinsically noisy combustion process and mate- densation and attendant corrosion and to rials problems related to the extremely high maintain the nature draft. heat releases in small volumes. ” While these problems were not insolvable, the promise of The near-condensing flue-gas mechanism higher efficiency was insufficient to offset would reduce this temperature to nearly 3000 higher production costs. Further development F, and thus capture a great deal of the flue-gas work has occurred and Hydrotherm, Inc., has heat; the condensing version would place the started an initial production run of 300 residen- flue temperatures below 300° F and thus re- tial boilers with full production to begin after capture the latent heat in the water vapor as 17 mid-1979. Hydrotherm has measured effi- well. Problems with this approach relate to ciencies of 91 to 94 percent for this boiler and “j. E. Batey, et al., “Direct Measurement of the Over- seasonal efficiencies are expected to be simi- all Efficiency and Annual Fuel Consumption of Residen- tial Oil-Fired Boilers” (Brookhaven National Laboratory, “J C. Griffiths, C. W. Thompson, and E. J. Weber, January 1978), BNL 50853. “New or Unusual Burners and Combustion Processes,” “Department of Energy, “Final Energy Efficiency lm- American Gas Association Laboratories Research Bulle- provement Targets for Water Heaters, Home Heating tin 96, August 1963. Equipment (Not Including Furnaces). Kitchen Ranges and “Richard A. Prusha, Hydrotherm, Inc., Northvale, N. J., Ovens, Clothes Washers and Furnaces, ” Federal Register. private communication, Mar. 30,1979. Ch. XI— Technical Options ● 243 . . - .—.————.— ——.— -—

Figure 38.—Principies and Operation of the Hydro-PulseTM Boiler That Uses the Pulse-Combustion Process.

1. To start the boiler, a small blower 2. A spark plug is used on the first forces outside air into a sealed cycle only to ignite the mixture. chamber where it is mixed with gas.

3. The pressure resulting from 4. As the hot gases are cooled below 5. Condensation collects in the base of the combustion process forces the hot the dew point, condensation of the the boiler and is removed by a con- gases through tubes in the heat ex- water vapor in the flue gases takes densate drain. changer where surrounding water place, releasing the latent heat of absorbs the heat. vaporization ...amounting to about 9010 of the fuel input.

6. Residual heat from the initial com- 7. Air is drawn into the combustion 8. Water is circulated through Hydro- bustion ignites the second and chamber from outdoors by the vac- Pulse TM in much the same manner as in subsequent air/gas mixtures without uum caused by the velocity of the a conventional boiler. the need for the spark plug or exiting exhaust gases...both through blower...at a rate in excess of 25 small diameter plastic pipe. No flue or cycles per second. chimney is needed

SOURCE: Hydro Therm, Inc., Northvale, N.J. brochure for hydro-pulse boiler 244 ● Residential Energy Conservation

Iar since outdoor combustion air is used and Electric Air-Conditioners and off-cycle flue losses are virtually eliminated. 18 Heat Pumps* Due to the low flue temperatures, the flue gases are exhausted through a 1½-inch PVC A typical residential air-conditioner/heat- plastic pipe and no chimney is needed to pro- pump installation is illustrated in figure 39. vide natural draft. The cost of this boiler will These systems usually cool and dehumidify be about twice that of conventional gas boil- room air directly while the systems used in ers. An oil-fired pulse combustion boiler is now large apartments and commercial buildings manufactured in Europe (“TurboPuls”) and the typically produce chilled water, which is piped manufacturer is apparently interested in mar- to fan-coil units in various parts of the build- keting in the United States if certification can ing. Cooling systems have three basic compo- be obtained. nents: 1 ) a unit that permits a refrigerant to expand, vaporize, and absorb heat from the Both the noise problem and the materials room air (or water system); 2) a compressor problems are more severe for hot air furnaces, that compresses the heated vapor (increasing but Lennox Industries is developing a pulse its temperature); and 3) a condenser, located combustion furnace in a joint project with the outside the building that rejects the heat ab- Gas Research Institute. Laboratory efficiencies sorbed from the room air into the atmosphere above 95 percent have been achieved and a (condensing the compressed vapor to a liquid). preproduction prototype has been installed in In “single-package” units, all three functions a home but additional work on noise reduction are provided in the same unit and can be con- and controls development is needed. ’9 Major nected directly to the ductwork (or chilled field testing will be conducted before the fur- water system) of the buiIding. In “split-system” nace is marketed, perhaps in the mid-1 980’s. devices, refrigerant is sent to an air-handling unit inside the building. Another distinction involves the technique used to compress the re- Fuel-Fired Heat Pumps frigerant vapor. Smaller units typically use a Heat pumps, as their name implies, pump simple piston system for compression and are heat from a cooler space to a warmer space. called “reciprocating” units. Larger units may All refrigerators and air-conditioners are ac- use centrifugal pumps or screw compressors tually heat pumps, but the term “heat pump” for this purpose. is generally reserved for a device that is de- Heat pumps use the same three basic com- signed to provide heating by pumping heat ponents as the air-conditioners described from the outdoor air or a water supply. Most above, but the cycle is reversed. In the heating heat pumps can also be reversed and used as cycle, the indoor air absorbs heat from the re- air-conditioners. The heat pumps now on the market are electricalIy driven but develop- frigerant and heat is acquired by the refriger- ment of gas-fired heat pumps is underway. ant from the outdoor fan unit (the “condenser” Most gas-fired designs could be modified and in the cooling model). produced as oil-fired units as well. The designs Heat pumps that can extract useful energy being developed should provide seasonal per- from outdoor air temperatures as low as 00 F formance factors of 1.1 to 1.5 for heating, or are now on the market, although system per- use about half the fuel consumed by present formance is little better than electric furnaces furnace installations. Three of these designs at low temperatures. The electricity used by are discussed in the Heat Pump section. the system can be considerably reduced if a source of heat with a temperature higher than that of the outside air can be found. Lakes or

‘8Hydro-Pulse Boiler product literature, Hydro Therm, I nc:. *Some parts of this section are taken from “Applica- 197978 Annual Report (Chicago, I Il.: Gas Research Insti- tion of Solar Technology to Today’s Energy Needs,” Of- tute). fice of Technology Assessment, June 1978.

I Figure 39.—A Typical “Split. System” Heat Pump Installation SOURCE: Carrier Corporation.

246 ● Residential Energy Conservation ground water, for example, are usually above The performance of heat pumps and air-con- ambient air temperatures during the winter ditioners now on the market varies greatly. and can be used to provide a source of input Figure 40 indicates the performance of central heat if they are available. Solar energy can air-conditioners smalIer than 5 I/z tons now on also be used to provide a source of heated the market. The difference in performance water. Systems that extract heat from water refIects both the quality of design and the cost are called “water-to-air” heat-pump systems; of the unit. High-performance units may also units extracting energy from the air are called result from a fortuitous combination of com- “air-to-air” systems. 20 ponents. Manufacturers cannot afford to design condensers optimally suited for all com- In 1976, 51 percent of the housing in the pressors to which they may be attached, and United States was equipped with room air-con- some combinations of these units may there- ditioners or central air-conditioning, up from fore result in a high-efficiency system. As a 47 percent in 1973.2’ Housing units with central result, while there are a few units on the mar- air-conditioning increased from 16.8 to 21.5 ket with very high efficiencies (figure 40, for percent from 1973 to 1976 while the fraction example, indicates that 5 percent of the units with room air-conditioners showed very little on the market have a coefficient of perform- change, going from 30.1 to 29.6 percent. From ance (COP) greater than 2.5), this performance 1973-77, the fraction of new homes with cen- is not available in all size ranges. (The defini- tral air-conditioning has ranged from 46 per- tion of COP, energy efficiency ratio, and other cent in 1975 to 54 percent in 1977.22 Thus, it is difficult to say whether growth in demand for central air-conditioning in new housing was merely slowed by the Arab embargo, or whether it is approaching saturation. Figure 40.— Air-Conditioning COP of Heat Pumps Less than 5 percent of U.S. homes currently and Central Air-Conditioning Units Shipped in 1977 have heat pumps, but 20 to 25 percent of new housing starts in 1978 used the system, The growth of the market has been slowed by the sensitivity of buyers and builders to the initial cost of the equipment (which is higher than conventional electric-resistance heat), and by the fact that regulated gas prices and promotional electric prices have made the cost of operating competitive heating systems artificially low. Concerns about reliability have also been a problem. Some of the heat pumps marketed in the early 1960’s were extremely unreli- able, and sales of the units fell steadily between 1965 and 1970. While most of the reliability problems have been resolved, a recent study showed that the problem has not van- ished.

20 Cordial Associates, Inc., “Evaluation of the Air-to- Air That Pump for Residential Space Condition ing,” pre- Less than 1.6-1.9 1.9-2.2 2.2-2.5 2.5-2.8 2.8-3.1 3.1-3.3 pared for the Federal Energy Administration, Apr. 23, 1.6 1976, p. 114. COP Breau u of the Census, “1976 Annual Housing Sur- vey. ” SOURCE and Institute Includes only units of z u rider 135,000 Btuh Data has been converted from to COP and ‘ Bureau of the Census, “Characteristics of New Hous- values rounded to nearest tenth ranges were ‘‘5 4 and under ing: 1977, ” Construction Reports, C25-77-13, 1978, p. 12. 6574 75.84 85.94, 95104, and 105.11 4

Ch. Xl—Technical Options . 247

efficiency measures are discussed in a techni- Figure 41.— Performance of the Carrier Split- cal note to chapter 1 I.) The 1976 industry aver- System Heat Pump age COP was 2.00.23

Heat pumps in the cooling mode were about 5-percent less efficient than the average air- conditioner, for a variety of reasons. Heat pumps cannot be optimized for maximum cooling performance as somewhat more complexity is required in the coolant piping, and the valve that switches the direction of the refrigerant when the system is changed from heating to cooling introduces some inefficien- cies.

The performance of electric-cooling and heat-pump systems also varies as a function of the temperature and humidity of both the inside and outside air. This is because the theoretical capacity of a unit varies as a function Ambient Temperature of these parameters, and because most small Model 38CQ020 ARI ratings: Heating mode nominal capacity units must be either fully on or fully off. The 21,000 Btu/hour. COP at high tem- load control achieved by “cycling” the system perature is 2.9, COP at low temperature IS 1.7 from full capacity to zero output requires Cooling mode nominal capacity is heating or cooling large parts of the system 19,000 Btu/hour. COP is 2.1, before useful space conditioning can be per- Assumptions used in computing Heating mode entering indoor air system performance IS 70° F (db) heating demand informed. Using energy to heat or cool the units cludes energy used for defrost decreases the system’s efficiency, The depend- balance point at 30° F. Cooling mode entering indoor air ence of a typical residential heat-pump unit is 80° F (db) and 67° F (wb). Fan COP on the outdoor temperature is shown in power iS 0.2 kW. Energy use includes: compressor motor demands; resistance heat; figure 41. The fact that the heat pumps capaci- the demands of indoor and outdoor fans, and the energy used in ty to produce heat decreases as the outside defrost cycles. The air-flow was assumed to be 700 cfm. Assumptions made about decrease in efficiency due to part load conditions were temperature decreases results in a highly not explained in the literature. temperature-dependent heating mode. A sys- SOURCE Career Heat Pump Outdoor Carrier Corporation 1976 Form tem large enough to provide 100 percent of the country. As discussed in chapter 11, the per- heating load at the lowest anticipated tem- formance of heat pump installations has gener- perature would be prohibitively expensive in alIy been lower than predicted. most locations, and a common compromise is to assist the heat pump with electric-resistance The performance of water-to-air heat-pump heat whenever its capacity falls below the systems can be significantly higher than air-to- heating demand. The average COP of a heat- air systems if heated water is available. When pump system during the winter season is called 600 F water is available, most commercial the seasonal performance factor (SPF). This units have COPS in the range of 2.5 to 3.5, but parameter is shown in figure 42 as a function units with COPS as low as 2.0 and as high as 3.7 of local climate. As expected, the average COP are on the market. of heat pumps is lower in northern parts of the There are a number of straightforward changes that can improve the performance of 23 George D. Hudelson (Vice President-Engineering, Carrier Corporation), testimony before the California air-conditioners without changing the basic State Energy Resources Conservation and Development design. Legislative actions and rising fuel costs Commission, Aug. 10,1976 (Docket No. 75; CON-3). have produced a number of higher perform-

248 ● Residential Energy Conservation

Figure 42.—The Seasonal Performance of Heat-Pump Units as a Function of Local Climate

SOURCE: What is a Single-Packaged Heat Pump... and How Can it Save You Money?, Carrier Corporation, Catalog No. 650-069

ance units. Some of the steps being taken to establish energy-efficiency improvement tar- improve performance include: gets for appliances. These targets for air-conditioners, shown in tables 79 and 80, represent ● use of more efficient compressors, targets for the production-weighted average ● use of two compressors or multiple-speed performance of all air-conditioners sold rather compressors to improve part-load effi- than a minimum standard. The National Ener- ciency, gy Act has mandated the setting of efficiency ● improved heat exchangers for both the standards that will be proposed in October condensor and evaporator, 1979. ● more efficient motors to drive the compressor and fan, Looking further into the future, a number of ● automatic cycling of the fan with the systems have been proposed that could in- compressor, and crease the COP of air-conditioning systems ● improved airflow. and heat pumps by as much as 50 percent. Re- searchers at General Electric believe that it One estimate for the cost of these incremen- would be possible to achieve an approximate tal improvements is shown in figure 43. Califor- 50-percent increase in the average COP of both nia has legislated performance standards in a heating and cooling for an increase in the ini- two-step process; standards were first effective tial cost of the unit of about 20 to 30 percent. during 1977 and become more stringent in It should be noted that performance can be late-1979. These standards, which specify the improved by increasing low-temperature per- minimum performance of any unit that can be formance, high-temperature performance, or sold in California, are shown in table 78. both. The speed with which these new units ap- The Energy Policy and Conservation Act pear on the market will depend strongly on the (EPCA–- Public Law 94-163) as amended by the company’s perception of whether the public is National Energy Conservation Policy Act willing to invest in equipment that can reduce (NECPA–- Public Law 95-619) required DOE to their annual operating expenses over the long

Ch. Xl—Technical Options ● 249

Figure 43.— Estimated Cost of Increasing the Performance of Air-Conditioners From the Industry Average COP of 2.0 to the Performance Levels Indicated (estimates assume production rates equivalent to current production rates)

100

2.0 2.1 2.2 2.3 2.4 2.5 2.6 System Coefficient of Performance

SOURCE George D Hudelson (Vice President—Englneerlng, Carrier Corp.) presentation to the Solar Energy Resources Conservation and Develop- ment Commission of California, Aug. 10, 1976, Docket No 75-CON-3

Table 79.—DOE Room Air. Conditioner Energy- Efficiency Improvement Target Table 78.—California Standards for Cooling Equipment 1972 energy- 1980 energy- efficiency ratio 1972 efficiency ratio 1980 Btu/watt-hour COP Btu/watt-hour COP Standard Standard 7.94 as of after 6.2 1.82 2.33 System type 11/3/77* 11/3/79* SOURCE: Department of Energy, “Energy Efficiency Improvement Targets for Nine Types of Appliances,” F.R. 43, No. 70, Apr. 11, 1978, p. 15143. Central Air-Conditioners

Heat pumps (cooling mode) 1.96 2.2 Air-conditioners 2.05 2.34 Table 80.—DOE Central Air-Conditioner Energy. Room Air-Conditioners Efficiency Improvement Target

All systems with capacity greater 1975 1975 1980 1980 than 20,000 Btu’s 2.05 — SEERa COPb SEERa COPb Other heat pumps 2.08 — Central air- Other air-conditioners 2.20 — conditioners All systems using voltages (aggregate)...... 6.5 1.90 8.0 2.34 greater than 200 v. — 2.40 Single package . . . . . 6.2 1.82 7.2 2.11 Other heat-pump systems — 2.43 Split system...... 6.6 1.93 8.1 2.37 Other air-conditioners — 2.55 efficiency ratio in as defined in chapter coefficient of performance = SEER/3.413. ‘No system may be sold in the State after this date with a COP below the standard. SOURCE: Department of Energy, “Energy Efficiency Improvement Targets for Nine Types of Appliances,” F.R. 43, No, 70, Apr. 11, 1978, p. 15145. 250 ● Residential Energy Conservation term. These attitudes may be influenced by The Iron-Firemen double-effect chiller, legislative initiatives, such as the National which was manufactured for a time, was able Energy Act. to achieve a COP of 1.2 (not including boiler losses and electric energy requirements). Some engineers believe it would be possible to in- Gas-Fired Heat Pumps and crease this COP for double-effect absorption Air-Conditioners devices to the range of 1.35.

Absorption Air-Conditioners Absorption Heat Pumps

The only systems now available that use An absorption heat pump is being developed direct thermal input to operate a heat pump or for residential use by Allied Chemical Corpora- air-conditioner are the “absorption-cycle” air- tion and Phillips Engineering under sponsor- conditioners that have been used for decades. ship of the Gas Research Institute. The current The refrigeration cycle is very similar to cycles goals for operating COP of this unit are 1.2 for used in other types of air-conditioning systems heating and 0.5 for cooling.24 Further improve- (vapor-compression). A chilled liquid (usually ment in heating COP could be obtained by re- water instead of a refrigerant) is permitted to covering the waste heat from the generator expand and cool air. This water is then recom- section of the unit. It is believed that signifi- pressed and the absorbed heat is rejected into cant advances in fluids, fluid pumps, and heat the atmosphere. The absorption cycle accom- exchangers have overcome problems that hin- plishes this recompression by absorbing the dered earlier efforts to develop an absorption low-pressure water vapor in a concentrated heat pump. salt solution. This concentrated solution is This unit has reached the preproduction pro- continuously produced in a distilling unit totype stage and negotiations are underway to driven by the heat from the fuel. accelerate commercialization by involving Absorption air-conditioners are inherently DOE and a major manufacturer in further de- more expensive than electric systems because velopment. After further development and ex- 1 ) of the larger number of heat exchangers re- tensive field testing, this system could be on quired, and 2) the unit’s cooling surface must the market in about 5 years.25 Similar units are be large enough to reflect both heat from the being developed in Europe by the British Gas combustion process and heat removed from Corporation and others.26 This system is ex- the space that was cooled. (In electric systems, pected to cost about 15 percent more than a the heat from generation is rejected at the gas furnace/electric air-conditioner combina- electric generator site.) Absorption units had a tion and will probably be most competitive in lower operating cost than electric chillers in areas where heating is the major requirement. the era of cheap gas, and are still competitive in some areas, but their use was limited by first Other Gas-Fired Heat Pumps cost. A different approach to the use of fossil A typical single-effect absorption chiller has fuels to operate a heat pump has been under a COP of 0.52; double-effect units can have investigation for some time. These designs COPS of 0.88. These COPS must, however, be burn fuel to operate a small onsite heat engine, carefully qualified, as they do not include the which in turn drives the heat-pump compres- electricity used for fans and pumps. They can- sor. A number of advanced, gas-fired, heat- not be directly compared with the COPS of electric chillers since fuel costs are different 24 James Drewry, “Gas-Fired Heat Pumps,” G/?/ Digest, and the COP of electric units does not include September 1978, pp. 1-5. *’James Drewry, Gas Research Institute, private com- powerplant losses. It is reasonable to expect munication, May 1979. that improvements in current designs could *’Gerald Leach, et al., A Low Energy Strategy for the lead to significant improvements in perform- United Kingdom (London: Science Reviews, Ltd., 1979), p. ance. 25 Ch. XI—Technical Options ● 251

pump systems are being examined by the in- at a price that will allow payback from energy dustry with the support of DOE and the Gas savings in less than 3 years.29 30 Research Institute. These include: Stirling and Ericsson cycle, free-piston de- ● A concept that uses a subatmospheric gas vices may be able to achieve efficiencies on turbine is being developed by the Garrett the order of 60 to 90 percent of ideal Carnot ef- A i Research Corp. ficiency. An engine operating between 1,400° and 1000 F could therefore achieve a cycle ef- ● A free-piston Stirling engine is being developed by General EIectric. ficiency of 40 to 63 percent.

● Systems based on diesel engines and ERG, Inc., has reported a measured indi- Rankine-cycle devices are also being cated efficiency that represents 90 percent of examined. Carnot in a free-piston device operating in roughly this temperature region. The Garrett An interesting feature of the heat-fired, heat- Corp. has reportedly achieved a cycle efficien- pump systems is that their performance does cy of 38 percent, using a small regenerated gas not decrease with temperature as fast as the turbine. 31 performance of conventional heat pumps. If it is assumed that seasonal performance The gas turbine heat pump development em- factors for heat pumps can be in the range of phasizes commercial or multifamily applica- 2.5 to 3.0, the overall system COP (or ratio of tions. A “breadboard” system has been oper- heat energy delivered to the living space to the ated and development of a commercial proto- heating value of the fuel consumed) of a heat type is underway. Commercial production is pump combined with a heat engine that is 38- expected by the mid-1 980’s, with units ex- to 60-percent efficient can be in the range of pected to range from 7.5 to 25 tons in capacity. 0.95 to 1.8. If waste heat from the engine is The expected COP is 1.4 to 1.5 in the heating used, the effective COP can be as high as 2.2. mode and about 1.0 in the cooling mode.27 28 The installed cost is expected to be 15 to 20 A 38- to 60-percent efficient engine com- percent higher than existing systems with pay- bined with an air-conditioning cycle with COP back in fuel savings in about 2 years. of 2.5 could achieve system COPS of 0.95 to 1.5. These coefficients cannot be compared The free-piston Stirling engine heat pump directly with COPS of electric heat pumps. In seems to be at a similar stage of development, order to obtain comparable “system efficien- but is thought to be more applicable to the cy” for an electric system, the electric COPS residential market. One prototype has been must be reduced by the efficiency of convert- built and another will be completed during ing primary fuels to electricity and transmit- 1979. The design goal for the prototype is a ting this energy to a heat-pump system. The heating COP of 1.4 to 1.5 and a cooling COP of average generating efficiency of U.S. utilities 0.9. This requires an engine efficiency of 30 is approximately 29 percent; the average trans- percent and the present prototype operates at mission losses, approximately 9 percent. Under 22 to 25 percent. This design is potentially very these assumptions, an electric heat pump with reliable since there are only two moving parts a heating COP of 3.0 and a cooling COP of 2.5 in the engine and one in the compressor. It is would have an effective “system” COP of 0.79 expected to be on the market in the mid-1 980’s for heating and 0.66 for cooling. A number of

“L, L. Dutram, J r., and L. A. Sarkes, “Natural Gas Heat Pump Implementation and Development,” presented at z71 rwin Stambler, “Working on New Gas Turbine Cycle Conference on Drives for Heat Pumps and Their Control, for Heat Pump Drive,” Gas Turbine World, March 1979, Haus der Technik, Essen, West Germany, Sept. 6-7,1978. pp. 50-57. 30J ames E. DreWry, oP. cit. - 28 James Drewry, “Gas-Fired Heat Pumps,” CR/ Digest, 31 Patrick C, Stone (Garrett Corporation), private com September 1978, pp. 1-5. munication, December 1976. 252 ● Residential Energy Conservation

questions remain about system performance A major question concerning any onsite sys- as an integrated unit: reliability, safety, noise, tem requiring oil or gas is whether they will ease of maintenance, etc.; these can be re- continue to be less costly than electricity. The solved only after more experience. The devices heat-engine devices just discussed could, at do offer the prospect of a much more efficient least in principle, be used in connection with a approach to converting fossil fuels to useful coal-burning, fluidized-bed boiler or a solar space-conditioning. heat source, and thus might present a promising long-term alternative.

INTEGRATED APPLIANCES

Heating and water heating are the major Costs and potential savings given in the follow- energy users in homes today. As discussed in ing discussion are from the Arthur D. Little chapter 11, the use of “waste” heat from other study unless another source is given. appliances already makes a significant contribution to heating and the relative contribu- Air-Conditioner/Water Heater tion increases as the house is made tighter. Several sources of “waste” are not presently This system heats water with the super- being used and others could be used more ef- heated refrigerant vapor whenever the air-con- fectively by “integrated appliances.” Most of ditioner operates. It consists of a vapor-to- these appliances would recover heat (that is water heat exchanger inserted in the refrig- now completely wasted) for either heating or erant loop just ahead of the condensor (the fin- water heating (e. g., air-conditioner/hot water ned radiator-like part of the air-conditioner heaters), while others would heat water with located outside), The heat recovered is ordi- heat that now heats the house whether heat- narily rejected outdoors. This system can be ing, cooling, or neither is needed (e. g., refrig- retrofit rather easily by qualified personnel, erator/water heaters). WhiIe other applications and if added to an air-conditioner whose per- of waste heat in the home can be imagined, formance is limited by a small condensor, it cost of recovery and coincidence between can actually improve the COP by a few per- availability and demand are expected to result cent. in selected heating and hot water combinations. This system can also be used with a heat pump and when operated in the heating mode, Of the many possible combinations, this sec- the heat used is not waste heat, but is provided tion discusses four systems identified in a at the operating COP of the heat pump. This 32 study by Arthur D. Little, Inc., as particularly still offers substantial savings compared to a promising, with brief mention of some other resistance heater. possibilities. The four promising systems iden- This is the only integrated appliance that is tified are: commercially available. It is made by at least ● air-conditioner/water heater, six manufacturers. The installed cost of these ● furnace/water heater, units ranges from $200 to $500, and several air- . refrigerator/water heater, and conditioner manufacturers allow installation ● drain water heat recovery. of one or more of these systems without void- ing their warranty.

3ZVV, David Lee, W. Thompson Lawrence, and Robert The estimated savings expected from use of P. Wilson, “Design, Development, and Demonstration of the Carrier Hot Shot® unit (about $400) with a a Promising Integrated Appliance, ” Arthur D. Little, Inc., performed by the Energy Research and Development Ad- ministration under contract no. EY-76-C-03-1209, Septem- @ Registered trademark of the Carrier Air Condition- ber 1977. ing Corporation. Ch. Xl—Technical Options ● 253

3-ton air-conditioner in each of several cities is the heating season, this helps heat the house shown in table 81. Dollar savings would be but only part of it reduces consumption for greater for a larger family that used more hot space heating since it typically keeps the kitch- water. Most sales of these units have been in en at a slightly higher temperature than the areas with high air-conditioning loads such as rest of the house. The Arthur D. Little study Florida and the deep South. Use of these units considered this fact and estimated that a hot on heat pumps would probably double the sav- water recovery unit on the refrigerator could ings shown for more temperate climates. save about 14 MMBtu of primary energy per year if an electric hot water heater is used with Furnace/Water Heater Systems electric heat. The estimated cost of the heat recovery unit was $142 with a payback of 3 to 4 Combining the furnace and hot water heater years (8 years with gas). These savings could be offers several potential advantages. The most reduced very substantially, perhaps by a factor compelling is that it should be possible to of two or more, by more efficient refrigerator build a high-efficiency unit that incorporates designs. features Iike intermittent ignition, vent damper, and forced draft for less money than would be possible for two separate units incorporating comparable features. Some oil fur- Drain Water Heat Recovery naces have been equipped with hot water heaters, but they have a reputation for high fuel Most of the heat added to hot water simply use so many homes with oil heat use electric runs down the drain. Existing homes mix drains hot water. A high-efficiency combined system from showers, sinks, and washing machines could provide significant savings over such sys- (gray water) with toilet drains (black water). It tems. There is also the potential for reduced appears that heat recovery will be more prac- standby losses from use of a smaller storage tical if the “gray” water is kept separate from tank (perhaps 10 to 20 gallons) since present the “black” water since there is less difficulty furnaces often have 100,000 Btu per hour with sedimentation and the black water is capacity or greater. This is more than twice the always cold water. One proposed system that capacity of typical water heaters. This advan- has been tried in a demonstration house in tage could disappear as tighter houses reduce Europe would run the gray water into a drain the necessary furnace sizes. tank (about 50 gallons) and use a water source heat pump to extract heat. Such a system Refrigerator/Water Heater could result in primary energy savings of 46 MMBtu per year for a first cost of $440. This The refrigerator generates heat that could cost does not appear to include any additional be recovered and used to heat water. During cost for separate drain systems.

Table 81.—Estimated Performance of Carrier Hot Shot® Heat Recovery Unit With a 3-Ton Air-Conditioner and a Family of Four

Water heating Electric rate* Annual electric cost with Hot City (¢/kWh) water heating cost Shot® Savings Savings percent Boston, Mass. . . . 5.0 $304 $264 $39 13% Baltimore, Md. . . . 4.0 229 170 59 26 Atlanta, Ga...... 3.0 172 115 57 33 Houston, Tex.. . . . 3.0 161 78 82 51 Chicago, Ill...... 4.0 243 199 44 15 Sacramento, Cal if. 4.0 214 173 41 19 Boise, Idaho . . . . . 2.0 61 48 13 21

0 Registered trademark of the Carrier Corporation. “The electric rate is not necessarily the rate charged in each city but is representative of the region. SOURCE: Carrier Corporation 254 ● Residential Energy Conservation

Summary ers should be similar to refrigerator systems and ingenuity may make other systems practi- Many other systems are possible. One of the cal. All of these systems must compete with simplest would be a simple filter (for lint other improvements in hot water and heating removal) and damper that would permit use of as they reach the market, and it is unlikely that the clothes dryer output for heating during the more than one system to augment hot water winter months. Frequent filter changing would production would be practical in a single be required and considerable humidity would house. be added to the house. Freezer/hot water heat-

CONTROLS AND DISTRIBUTION SYSTEMS

Controls and distribution systems can play a The discussion of indoor air quality in critical role in the efficiency and effectiveness chapter X indicated the need for several dif- with which furnaces, air-conditioners, active or ferent sensors and controls. Powered ventila- passive solar systems, refrigerators, ranges, tion that responds to odors and other indoor etc., function individually and as a complete pollutants is needed. Other equipment that system to maintain comfortable conditions may be adapted for residential use provides and provide other amenities in a house. For particulate control, and removes airborne purposes of this discussion, controls will be chemicals and odors by means of filters, pre- considered in two categories: 1 ) those that con- cipitators, adsorption, absorption, and chemi- trol individual equipment, and 2) those that cal reaction systems. control comfort conditions in the house. Instruments to provide rapid feedback on Houses contain a surprising array of con- the cost of consumption and to show the ef- trols, some manual and some automatic. The fect of changes initiated by the occupants are most frequently used manual control is prob- not avaiIable now. They couId significantly im- ably the light switch, but all of the major approve occupant behavior as discussed in chap- pliances in the home contain automatic con- ter IIl. trols and/or manual controls. Refrigerators, freezers, toasters, ovens, and water heaters all A number of the losses associated with fur- contain thermostats. Furnaces contain a ther- naces are related to nonoptimal controls. The mostat (in addition to the room thermostat) fans (or pumps in hydronic systems) are shut that controls the blower shutoff. Furnaces and off while the furnace is well above room tem- gas water heaters have flame sensors and perature. It is necessary to shut off fans before valves to control the flow of fuel. the air reaches room temperature to avoid uncomfortable drafts, but this contribution to A number of the new or improved technol- off-cycle losses could be reduced. The savings ogies being developed require additional con- that could be realized without compromising trol circuitry. Solar hot water heaters and ac- comfort by lowering these set points are ap- tive heating systems use controls of varied so- parently not known. phistication and several companies now manufacture these controls. Automatic flue damp- The only systems control found in most ers (considered under furnace improvements) homes is the thermostat, which controls the are themselves a control and require addi- heating (and possibly the cooling) system. The tional controls and sensors for operation. The registers in each room usually have a damper pulse combustion furnace is likely to require so that the air flow in individual rooms can be more sophisticated controls for safe operation shut off manually if desired, but these dampers since the combustion process is not continu- are generally designed for infrequent use. ous. Fuel-fired heat pumps can also be ex- There are at least three potential changes in pected to have their own control requirements. thermostats. Instruments that allow one or Ch. Xl—Technical Options ● 255

more temperature setbacks are increasingly the iceberg” in the cost of such systems.33 The available; at least one of these can be set for a purchase and installation of the sensors, addi- different temperature each hour of the week. tional valves, and dampers that such a system Most thermostats contain an “anticipator” would require greatly exceeds the cost of the that shuts the furnace off slightly before the logical unit. It seems likely that other im- set temperature is reached. The heat remaining provements in houses will obviate the need for in the furnace jacket then brings the house up some of these functions while making others to the set temperature. Houses often over- more acute, so it is difficult to predict the sav- shoot the set temperature when the thermostat ings that couId be achieved or the potential for setting is increased, resulting in added Iosses the use of such systems. from the house. The extent of these losses is Distribution systems transfer hot or cold air not really known, but improved “anticipators” from a central furnace or air-conditioner to the could reduce them. One of the sources of fur- rooms where heating or cooling is needed. The nace inefficiency is the loss associated with principal losses from these systems occur frequent cycling of the system on and off. The when they are run through unconditioned frequency of this cycling is related to the tem- space in the basement, attic, or exterior walls. perature band within which the thermostat These losses can best be eliminated in new keeps the house. The narrower this band, the construction by running ducts entirely within more frequent the cycling and the greater the the conditioned space. The design of such sys- cycling losses. This is another problem that is tems is facilitated if smaller ducting, designed very prevalent, but the extent of the losses and for use with high velocity air, is substituted for the practical potential for reduction by chang- standard ducting. Such ducting has been used ing the thermostat band-width is not known. in large buiIdings for many years. SmalIer duct- Heating unoccupied rooms obviously wastes ing can be readily used in tight, highly insu- energy. It may be possible to reduce this loss lated houses since heating requirements are either through the use of timed controls or greatly reduced. through active occupancy sensing. However, Conflicting needs suggest larger distribution the widely varying use patterns of different systems in some cases. The heating mode effi- rooms seem likely to limit the utility of this approach. As thermal envelopes are made tight- ciency of heat pumps could be improved by lower distribution temperature. Similarly, the er, the savings from such controls will also be efficiency of simple solar collectors is much reduced. higher at low temperatures than at high tem- The rapid development of integrated circuit peratures. The same is true of passive solar sys- technology has led to sophisticated small com- tems, where very low-temperature heat must puters that control energy use in some com- be circulated from the rooms receiving sun- mercial buildings. Such systems could also be light to other rooms. Some homes are being adapted for use in homes. Excess heat could be built with most of the rooms opening onto a circulated from the kitchen when the range common area so that heating can be accom- was in use, outside ventilation could be plished much as it was in homes heated only brought in through a heat exchanger as with a central wood stove in the past. It is like- needed, an economizer unit could cool with ly that several approaches to efficient distribu- outside air when practical, space conditioning tion will evolve to satisfy the requirements of could be provided only in occupied rooms, etc. different housing designs. However, the computer itself is only the “tip of

JJMarvin L, Menka, “control Iers and process APp I ica- /rnprovecf Contro/s, Boston, Mass., May 10, 1976, DOE tions,” Proceedings of the Conference on Technica/ Op- publication CONF 7605138, p. 218. portunities for Energy Conservation in f3ui/dings Through 256 ● Residential Energy Conservation

PASSIVE SOLAR DESIGN

The concept of using sunlight and winds to They are typically situated on the south face help heat and cool houses is rapidly being “re- of a rock cliff with an overhang to shade the discovered” in the wake of today’s new con- summer sun. The dwellings, built into the wall sciousness about the use of energy. Features of the cliff, use heavy adobe materials in con- that were standard construction practices junction with space hewn directly out of before the introduction of central heating and rock — thus providing tremendous capacity for cooling systems are making a comeback. New moderating the huge swings in outdoor tem- refinements are being added so that some perature occurring in this area. houses now being built without collectors on In more recent times traditional southern ar- the roof get as much as 90 percent of their heat chitecture incorporated a variety of methods from the Sun. As these houses generally do not to enhance the summer cooling of homes, use the pumps, blowers, storage tanks, and most prominently the use of huge porticoed associated controls typical of solar houses, porches. they are generally referred to as “passive” solar houses, or houses with “energy-conscious With the advent of inexpensive gas and oil design.” heating and electric cooling, these traditional regional practices were quickly discarded, as These houses use natural phenomena to minimize their use of conventional fuels for they limited design and were often less “effective” than the mechanical systems that re- heating and cooling. Overhangs are used to ad- placed them. A few architects and engineers mit sunlight in the winter and provide shade in experimented with passive solar design in the the summer. Deciduous trees are another reli- 1940’s and 1950’s, but encountered problems able method of ensuring summer shade and with overheating on mild winter days. By the winter sunshine. Windbreaks can be used to time OPEC tripled the price of oil in 1974, most temper the effect of winter winds. While these engineers were not only unaware of passive de- techniques reduce the need for heating and sign principles, but they believed that every cooling, the key to the success of passive solar window was an energy loser and that any ener- design lies in the fact that over the course of a winter, a good south-facing double-glazed win- gy-efficient building should limit the window area to the minimum level allowed by the es- dow will admit more heat from the Sun than it thetic demands of the occupants. will lose both day and night. Thus south-facing (or nearly south-facing) windows can be used Following the OPEC embargo, new advo- to supplement the heating requirements of cates of passive solar design appeared, many homes in virtually any climate in the continen- after independently rediscovering that win- tal United States. The most effective use of dows really could reduce the fuel consumption this solar heat requires that massive compo- of a house. These new advocates were largely nents such as concrete or masonry floors or people from outside the mainstream of engi- walls be incorporated into the house. These neers and architects—typically solar energy components absorb heat and thus reduce tem- “nuts” with little formal training or scientists perature swings inside the dwelling. with no design experience. As in any change of technology, the early supporters received little The benefits of proper orientation toward attention or Government funding. Another the Sun have been recognized for centuries; complication was the “site specific” nature of the forum Baths in Ostia (near Rome) were these designs; as each dwelling must be de- built with large openings to capture winter fined by its site, the technology was not sunlight nearly 2,000 years ago. perceived as broadly applicable. Only very The classic examples of ancient passive recently has passive solar design begun to re- solar design in North America are the cliff ceive significant research and demonstration dwellings of the Indians of the Southwest. money.

Ch. Xl—Technical Options . 257

There are just about as many approaches to near Brunswick) and does not contain any fans, design of a passive solar house as there are de- blowers, or heavy concrete walls to help store signers; it may be as simple as planting a shade and distribute the heat. It does incorporate tree or so complex that it stretches the concept sliding insulating shutters that cover the win- of “passive” design. This description makes no dows at night to reduce the heat loss. The shut- attempt to provide exhaustive coverage of the ters also make the house more comfortable by ideas that have been proposed or even built; reducing the window chill. The upstairs bed- rather it attempts to provide some feel for the rooms have skylights angled with the roof to breadth of ideas which lend excitement to the colIect more winter sunlight than a simiIar area field. of vertical windows. Direct Gain Systems If most of the south wall were covered with windows, the typical frame house would often The simplest passive solar design simply be too hot, even in cold weather, because of adds larger south-facing windows to a house. the limited capacity to absorb and store heat. The slightly modified saltbox design (figure 44) As more windows are added it becomes neces- is a good example of the “direct gain” ap- sary to add massive features to the construc- proach to passive solar heating. This house tion of the house so more heat can be stored contains substantially larger windows on the with small increases in the interior tempera- south wall than is typical for this style of house ture The house shown in figure 45 has win- in the New England area (Wiscasset, Maine, dows covering the entire south wall, but it also

Figure 44.—Modified Saltbox Passive Solar Design Home

Photo credit Christopher Ayres, Pownal, Maine

Co., at a 5,900 Degree Day Site Figure 45.—The Fitzgerald House Near Santa Fe, N. Mex., is 95 Percent Solar Heated by a Direct Gain System Reprinted with permission” William A Shurcliff, Brick House Ch. XI—Technical Options ● 259

has lo-inch thick adobe walls with urethan in- house is 50- to 60-percent solar heated and on sulation outside the adobe and a brick floor sunny winter days, the occupants open win- resting on 16 inches of sand. The sand has a 1- dows when the interior temperature reaches inch layer of styrofoam insulation beneath it 86° F.34 and the house has an overhang that limits the Barrels of water may be substituted for the amount of summer Sun which enters. This brick wall; computer calculations have shown house, in Santa Fe, N. Mex., receives about 95 that they will actually increase slightly the percent of its heat from the Sun. This is not an amount of heat that can be gained by a storage area of mild winters—the location is at an wall. The building shown in figure 48 is a com- elevation of 6,900 feet and the heating require- bination off ice/warehouse used for editing and ments are comparable to those of upstate New storing books by the Benedictine monastery York. Supplementary heat is provided by two near Pecos, N. Mex. This building combines fireplaces and a small electric heater in the direct gain with the use of a “water wall.” The bathroom. windows on the first floor and the clerestories Such direct-gain systems are the ultimate in on the second level provide direct gain. Below simplicity as they use no fans or dampers and the windows on the first level is a window-wall the heat “stays on” when the electricity goes with 55-gallon drums of water behind the win- off. However, the large windows can produce dows. Reflective panels lying on the ground uncomfortable glare, and if the floor is to be below the water wall serve to increase the effectively used to store heat, it must not be amount of sunlight striking the wall. They can carpeted. If the house does not effectively in- be closed at night to reduce the heat losses corporate massive components, the tempera- from the water barrels. This system has pro- ture swings resulting can be uncomfortably vided more than 90 percent of the heating large– as much as200 to 250 F in a day. needs of this large buiIding. A variation on the mass wall approach is the Indirect-Gain Passive Buildings “greenhouse” or “attached sunspace” design. Sunlight provides all of the heat for the sun- The problems with glare and the wide tem- space and part of the heat for the rest of the perature fluctuations experienced in many house. The sunspace is a large, live-in collec- “direct-gain” buildings have led to the use of a tor, and the storage wall is placed between the variety of simple approaches where the Sun sunspace and the living quarters. The storage does not directly heat the living space. walI mass evens out the temperature variations One is illustrated in figure 46 where a for the living quarters, while the temperature massive concrete or masonry wall is placed in the sunspace undergoes wide swings. Such a directly behind a large glass surface. (This con- sunspace can be used as a greenhouse, a sunny cept is called a thermal storage wall or a play area for children, an enclosed patio, or Trombe wall after its French inventor.) The any use compatible with substantial tempera- sunlight is absorbed by the wall. Heat is trans- ture shifts. ferred to air against the inside surface, this air Figure 49 illustrates the use of a solarium in becomes buoyant and sets up circulation loops a rather conventional appearing house specifi- that move hot air into the house through the calIy designed to be mass-produced in a stand- vents. Part of the heat is stored in the wall; the ard California tract development. The house interior surface of concrete walls will actually incorporates direct gain through the windows reach its highest temperature well after the on the south wall and water tubes near these Sun has set. The house in figure 47 illustrates windows to add storage. The skylight in the the use of this approach in combination with roof lights a square solarium in the center of direct gain. Behind the left awning is a brick wall 8 inches thick; the windows on the right- ~qAndrew M. Shapiro, “The Crosley’s House–With hand portion of the house have a concrete/ Calculations and Results,” Solar Age, November 1977, p. brick floor 4 inches thick behind them. The 31

260 . Residential Energy Conservation .— — .—— . —

Figure 46.—The Kelbaugh House in Princeton, N. J., Receives 75 to 80 Percent of Its Heat From the Trombe Wall and the Small Attached Greenhouse

footings of building and many Straight segment other details

Rounded N greenhouse

Ch. Xl— Technical Options ● 261 — Figure 47. —The Crosley House in Royal Oak, Md., Combines a Trombe Wall System With Direct Gain and a Massive Floor, to Provide 50 to 60 Percent of Its Heating-Needs

South elevation

262 Residential Energy Conservation—.-— —- — .

Figure 48.—The Benedictine Monastery Office/Warehouse Near Pecos, N. Mex., Uses Direct Gain From the Office Windows and Warehouse Clerestories Combined With the Drumwall Below the Office Windows to Provide About 95 Percent of Its Heating Needs

55 gallon drums

Photo credit: Laboratories

Ch. Xl—Technical Options 263

Figure 49.—The PG&E Solarium Passive Solar Home in California Uses the Large Skylight to Heat Water-Filled Tubes on Three Walls of the Solarium. The Tubes Then Radiate the Solar Heat to the Surrounding Areas

Photo credit: Pacific Gas arid Company the house. Three walls of the solarium have sired. The Solar Sustenance Project has con- water-filled tubes. As this house was built in ducted workshops at numerous locations in Stockton, Calif., where summer day tempera- the Southwest teaching simple greenhouse tures are frequently in the 90’s but night tem- construction and promoting the benefits of peratures regularly drop to the 50’s or low 60’s, both food and heat that can be derived from it also incorporated a gravel bed 14 inches retrofit greenhouses such as the one shown in deep under the entire house The rock bed is figure 51. The materials for the greenhouses cooled by the earth and by circulating cool built in these workshops cost from $395 to night air through it. (The use of fans to cir- $652. Simple retrofits like those shown are culate the air would cause some to regard this generally built over an existing door or win- as a hybrid passive home ) Another feature of dow, which can be opened to circulate heat in- the skylight is the use of insulating panels, to the house. They use the mass of the house which are moved over the top of the solarium for any storage and can supply 10 to 20 at night to reduce the heat loss. MMBtu of useful heat annually in most U.S. locations. An attached sunspace or greenhouse can be added to many existing homes. While most of the commercial lean-to greenhouses now avail- Hybrid Passive Systems able are single glazed, an increasing number of manufacturers offer double glazing. The Solar The definition of passive systems is the ob- Room Co. emphasizes the heating benefits and ject of some controversy; the term passive im- muItipurpose nature of their inexpensive dou- plies lack of machinery and controls, but some ble-glazed rooms (see figure 50) in their mar- such houses also incorporate a storage bed to keting. These units, which are designed for sim- William F Yanda, “Solar Sustenance Project Phase I I ple installation, use ultraviolet inhibited Report, ” proceedings of the Conference on Energy plastic coverings for extended life and can be Conserving Solar Heated Greenhouses (Marlboro, Vt.: easily taken down during the summer if de- College, Nov. 19-20, 1977), p. 16.

264 . Residential Energy Conservation

Figure 50.—This Retrofit Sunspace is Manufactured by the Solar Room Co. of Taos, N. Mex.

Photo credit: Room improve the system’s performance. Fans and less than 1,000 kWh of electricity for sup- controls circulate heat to and from the storage plementary heating (the equivalent of 30 to 40 bed. Strictly speaking, the Pacific Gas and gallons of heating oil) during a 6,400 degree- Electric house in Stockton could be consid- day winter). 36 ered hybrid, as it utilizes, some controls and The house shown in figure 53 is an example motors. of a dwelling with a storage wall and a rock The house shown in figure 52 successfully storage bed. combines a greenhouse with a rock storage bed to provide additional heat storage. The Cost of Heat From Passive Solar wall between the greenhouse and the living Heating Systems quarters is a heavy adobe wall; blowers force air through the rock storage bed whenever the It is clear that a variety of passive heating temperature in the greenhouse goes above a systems are capable of providing substantial certain point. This heat is used to warm the heat to buildings, that these systems are simple house after the adobe has exhausted its heat. Douglas Balcomb, “State of the Art in Passive This house is near Santa Fe, N. Mex., where Solar Heating and Cooling,” proceeding of the Second subzero winter temperatures occur; it required National Passive Solar Conference, March 1978, p. 5-12.

Ch. Xl—Technical Options 265

Figure 51 .—This Retrofit Greenhouse is an Example of Those Built by the Solar Sustenance Project

Photo credit: Sandia Laboratories

and that they can be built from rather ordinary cost. Alternatively, the cost of this heat could construction materials. The experience of be computed based on the difference between many people who have lived in passively the cost of a blank wall and the cost of the wall heated homes suggests that consumer accept- containing windows. Attached sunspaces can ance can be enthusiastic, although present be treated in the same manner in that the cost owners are largely a self-selected group of of heat they provide depends on how the in- innovators. As with any other new energy sys- trinsic value of the sunspace is treated. tem, the installation cost and the value of the Passive systems may change the appearance energy savings will be a major factor in general of a house, and this further complicates the consumer acceptance. costing. The addition of slightly larger win- The cost of heat from passive solar heating dows to increase heat gain may be welcomed, systems depends on the system and the costing but if they are too large then glare becomes a methodology used. As an example, consider problem. Inclusion of a greenhouse in a home the role of windows in a residential building. can be a distinct plus if the owners enjoy Most free-standing houses have windows on plants and indoor gardening, but would not be their south wall that were installed purely for a strong selling point for others. The use of the light and view they provide. If they are un- massive construction to provide heat storage shaded they will also reduce the heating bill in the winter and retention of coolness in the slightly, and it can be argued that this heat is summer can be done in tasteful ways that free since the windows were installed for other should add to the value of the home, but floors reasons. Similarly, some of the windows that that are used for thermal storage lose efficien- would ordinarily be placed on the north wall of cy if carpeted. Thus, a passive solar heating a new house can be put in the south wall, re- system may increase the value of a home as a ducing the heat needed, again at no additional heating system and for other reasons if it is

266 ● Residential Energy Conservation —.— .-. -.. . — -. Figure 52.—The Balcomb Home Near Sante Fe, N. Mex., Combines the Use of a Greenhouse With a Rock Storage Bed to Provide 95 Percent of Its Heating Needs

Photo Laboratories

Photo New Mexico Energy The adobe wall separating the greenhouse from the interior of the house is clearly visible in this photo.

268 “ Residential Energy Conservation

esthetically pleasing, but a poorly designed in the survey. It is assumed that the systems system could decrease a home’s market value have no intrinsic value other than as heating while reducing heating costs. systems. (This probably overcharges for the heat from attached sunspaces.) If a single en- These subjective reasons make it difficult to try is given instead of a range, only one system estimate the total costs of the heat from of that type was included in the survey. Results passive solar heating systems. of monitored and unmonitored systems are The most comprehensive survey of the cost shown separately and there do not appear to and performance of passive solar heating in- be major discrepancies. The ranges shown stallations now available is that performed by refIect variation in both quality of construc- Buchanon of the Solar Energy Research lnsti- tion and climate. The systems pictured earlier tute).37 It presents information on the installa- in this section span most of the range of costs tion cost and useful heat delivered by 32 ac- shown in the table. tual systems and 18 simulated installations. The heat delivered by 20 of the systems was determined from monitoring of the building Cost of Heat From Fossil Fuels performance while engineering estimates have and Electricity been made of the heat delivered to the other buildings. These estimates exclude heat that The simplest comparison for the costs must be vented outdoors during the heating shown in table 82 is against the cost of gas, oil, season because of insufficient thermal storage and electricity to residential customers. How- in the building. ever, it is also necessary to include the effects of equipment efficiencies such as furnaces and Table 82 presents the cost of delivered heat distribution systems to provide a meaningful for the systems surveyed. The cost of delivered comparison. The policy maker may also wish to heat was calculated using an annual capital compare the costs shown in table 79 with the charge rate of 0.094 and an annual mainte- marginal cost of new supply such as liquefied nance estimate of 0.005 of the initial system natural gas or electricity from new generating cost, based on the average maintenance cost and transmission faciIities.

Table 82.—Cost of Heat From Passive Solar Table 83 shows the cost of fuels and heat Heating Installations supplied to houses from a variety of present and future sources of fossil fuel and from elec- Cost of heat tricity. The fuel prices shown were assembled Installation type ($/million Btu) from a variety of sources as described below Direct gain: Monitored ...... $3.00-13.80 and reflect ranges of present or expected costs Unmonitored ...... $3.30-12.60 for fuel delivered to a residential customer. Thermal storage wall: The cost of heat delivered to the house is the Monitored ...... $3.60-24.20 Unmonitored ...... $8.80-15.40 cost of a million Btu of heat delivered to the Thermal storage roof: interior of the house after considering the fur- Monitored ...... $8.20 nace losses and ownership costs. It is thus com- Greenhouse/attached sun space: Unmonitored ...... $1.20-11.90 parable to the cost shown in table 82. It is ex- Hybrid: pected that for modest increases in initial cost, Monitored ...... $2.60-16.60 the efficiency of conventional furnaces and Unmonitored ... , ...... $11.90 SOURCE: Based on Deborah L. Buchanon, “A Review of the Economics of heat pumps will be improved in the future. The Selected Passive and Hybrid Systems,” Solar Energy Research In- third column of this table shows cost estimates stitute publication SERI/TP-61-144, January 1979. The information on combined cost and performance has been converted to a cost of for this case. The fourth column shows cost delivered heat using an annual capital charge rate of 0.094 and an annual maintenance cost of 0.005 of the initial cost. with improved equipment Ievelized over 30 years; fuel costs are assumed to increase at a jTDeborah L. Buchanon, “A Review of the Economics general inflation rate of 5.5 percent. The basis of Selected Passive and Hybrid System s,” Solar Energy for the energy prices shown and the equipment Research Institute, SERl/TP161-144, January 1979. efficiencies and costs used in preparing table Ch. Xl—Technical Options ● 269

Table 83.—Cost of Heat Supplied to Houses From Fossil Fuels and Electricity

cost of Levelized cost of heat heat to houses to houses using 1977 residential cost of using improved improved equipment fuel prices heat to houses equipment (5.5% inflation) ($/MMBtu) ($/MMBtu) ($/MMBtu) ($/MMBtu) Natural gas...... $2.00-4.00 $4.80-8.10 $4.40-6.90 $6.60-11.30 Intrastate gas...... 2.50-4.00 5.60-8.10 5.00-6.90 7.80-11.30 Synthetic gas...... 4.00-8.00 8.10-14.80 6.90-12.00 11.30-21.00 LNG...... 3.00-6.10 6.50-11.60 5.70-9.50 9.00-16.00 Gas from “exotic” sources*. . . 3.25-7.50 6.90-14.00 6.00-11.00 9.30-20.00 Oil at 500/gallon...... 3.60 9.50 8.00 12.50 Electrical resistance heat electricity at 3-5¢/kWh . . . 8.80-14.60 10.10-16.00 10.00-16.00 18.00-29.00 electricity at marginal cost of 7¢/kWh ...... 20.50 21.80 21.80 40.00 Heat pumps electricity at 3-5¢/kWh . . . . . 8.80-14.60 8.30-12.00 7.00-9.90 11.00-16.00 electricity at marginal cost of 7¢/kWh ...... 20.50 15.80 12.90 22.00 “Gas from tight formations, Devonian shales, geopressurized aquifers, etc.

83 are discussed in a technical note at the end teresting of their results are those showing how of this chapter. a Trombe wall system will compete with gas Comparison of tables 82 and 83 show similar and electricity in different parts of the coun- cost ranges that suggest that passive solar try. heating is now competitive with conventional The group considered a double-glazed ther- heating fuels in at least some cases. It is in- mal storage wall with storage provided by 18 teresting to note that the low end of the cost inches. of concrete. An engineering firm esti- ranges shown for passive solar heating are mated that such a system would have an incre- lower than present cost of heat from gas. This mental installed cost of $12 per square foot. simple comparison of costs indicates that pas- For comparison, the thermal storage wall sys- sive systems will often be competitive, but tems used in table 82 ranged from $5 to $21 per gives no indication of the geographic range of square foot with a single exception. A variation competitive behavior. Furthermore, the cost of heat from the passive solar systems will not in- (Continued) crease with inflation, leading to a substantial (c) Fred Roach, Scott Nell, and Shaul Ben-David, cost advantage for the passive systems after “The Economic Performance of Passive Solar the first few years of operation. Lifecycle Heating: A Preliminary Analysis,” AIAA/ASERC costing can be used to provide a better meas- Conference, Phoenix, Ariz., November 1978. ure of the competitive advantage or disadvan- (d) Fred Roach, Scott Nell, and Shaul Ben-David, tage of passive solar heating systems. Most of “Passive and Active Residential Solar Heating: A Comparative Economic Analysis of Select De- the work in this area has been performed at the signs, ” submitted to Energy, the International Los Alamos Scientific Laboratory and the Uni- )ourna/, January 1979. versity of New Mexico. 38 Among the more in- (e) Scott A. Nell and Mark A. Thayer, “Trombe Wall vs. Direct Gain: A Macroeconomic Analysis for Al- buquerque and Madison,” The Third National — 38 References on solar passive Passive Solar Energy Conference, San Jose, Cal if., (a) Scott A. Nell, “A Macroeconomic Approach to January 1979. Passive Solar Design: Performance, Cost, Com- (f) Scott A. Nell, J. Fred Roach, and Shaul fort, and Optimal Sizing,” Systems Simulation Ben-David, “Trombe Walls and Direct Gain: Pat- and Economic Analysis Workshop/Symposium, terns of Nationwide Applicability,” The Third Na- San Diego, Cal if., June 1978. tional Passive Solar Energy Conference, San Jose, (b) Scott A. Nell, “Testimony Prepared for the U.S. Cal if., January 1979. House of Representatives Subcommittee on (g) Scott A. Nell, “Thermal Mass Storage and Oversight and Investigations, Committee on In- Glazings Show Effectiveness in New Modeling,” terstate and Foreign Commerce, ” Aug. 11, 1978. Solar Engineering, January 1979, pp. 29-31. 270 “ Residential Energy Conservation

on this system was considered that assumed petitive illustrates this. Systems that supply a that the Trombe wall was equipped with mov- significant fraction of the total heating needs able insulation, which increases the R-value of are competitive with electric resistance heat- the collector surface to R-10, between 4 p.m. ing in much of the country. Other passive de- and 9 a.m., at an added cost of $4 per square signs such as attached sunspaces that offer foot. This insulation allows a smaller system to other benefits in addition to heating may be meet the same fraction of the heating load and more broadIy applicable. is often found to be cost-effective. Results of the State-by-State analysis are Summary shown in figure 54, maps 1 through 5 for five different combinations of system, backup fuel, “Passive solar” buildings, which obtain 20 to and incentives. The first two maps show that 95 percent of required heat from the Sun with- Trombe wall systems with night insulation are out active solar collectors, have been built and now feasible in three States when natural gas is are operating in many parts of the country. the backup and would be expected to be eco- While data are sketchy, it appears that such nomic in one more within the next 10 years if housing is clearly competitive with electric-re- no incentives are provided. The inclusion of sistance heating in terms of cost, and is com- Trombe wall systems in the solar energy tax petitive with oil and gas in some parts of the credit contained in the National Energy Act of country. In addition to the heat provided, 1978 would make such systems economical in many passive solar homes provide additional 29 of the 48 States shown by 1985, when natu- space, good natural Iight, and a pleasing view; ral gas is used for backup. It is interesting to these characteristics may be as important to note that the system is not economic in several homeowners as the savings in fuel costs. An ad- Sun Belt States due to the relatively small ditional benefit is that the systems are simply heating requirements. constructed and have few moving parts, so Iit- tle maintenance is required. In some such The feasibility of Trombe wall systems using homes, the daily swings in temperature are electric-resistance heating as backup is ex- greater than commonly acceptable in houses amined in maps 3 through 5. Map 3 shows that using conventional heating/cooling systems. Trombe wall systems are now feasible in every State except Washington, where electric rates Additional research and development is are extremely low and there is relatively little needed in this area, including the collection of sunshine. Systems that provide about half of field data on operation of homes now in place. the heating are feasible in California, Arizona, It is likely, however, that the principal barriers and South Carolina. The addition of night in- to widespread use of these techniques (careful sulation to the system makes it feasible to in- siting, construction, and landscaping) are increase the fraction of the heat provided by the stitutional rather than technical. (This is gener- solar system as shown in map 4. (The night in- ally true for home energy conservation issues. ) sulation is generally most effective in the cold- First costs of such a system will be higher than er States. ) The addition of the recent tax credit conventional systems. Code barriers may be a incentives would increase the fraction of solar problem in some areas; for instance, some heating that is feasible by 0.05 to 0.20 in about code changes implemented over the past 5 two-thirds of the States as shown in map 5. years in the name of energy conservation require extensive engineering justifications of The importance of this analysis lies not in such homes on a case-by-case basis. the specific States and solar fractions shown to be feasible, but rather in the trends. Passive Passive heating systems are largely conven- solar heating is shown to be marginally com- tional building materials in an unconventional petitive on a Iifecycle cost basis with gas combination rather than new products. Ac- heating in parts of the country. The large cordingly, industrial promotion of passive number of States where the addition of the tax solar has been slow to materialize. Glass and credit incentives makes small systems com- plastics industries are potential proponents,

Ch. Xl—Technical Options ● 271

Figure 54.—Solar Feasibility for Trombe Wall With Night Insulation Alternative Fuel—Natural Gas

Map I Map 2 No incentives NEP tax credit incentive

I/o Night Insulation (Resistance) Map 3 No incentives (30-year life cycle cost basis)

Solar Feasibility for Trombe Wall with Night Insulation Alternative Fuel — Electricity (Resistance)

Map 4 Map 5 No incentives NEP tax credit incentive (30-year life cycle cost basis) (30-year life cycle cost basis)

Source: Fred Roach, Scott Nell and Ben-David; Economic Performance Solar a AIAA/ASERC Conference, November, 1978, Phoenix, Arizona 272 ● Residential Energy Conservation

but large industries such as these typically do systems that have received adequate engineer- not become active in a new market area until it ing analysis to meet local building code re- has been established by small entrepreneurs. quirements. Such approaches could lead to the acceptance of “rules of thumb” for use by Manufacturers of movable insulation are designers and builders in each part of the natural marketers for passive solar construc- country. The recently concluded Passive Solar tion. This area is characterized by a number of Design competition should provide a useful small companies that have experienced diffi- start on this task. culty in developing durable, reliable products and have not had extensive marketing experi- A number of homes could be built in varying ence. climates and subjected to detailed and precise performance monitoring. This work could be The Internal Revenue Service interpretation coordinated with continued development and of the solar energy tax credits (and conserva- verification of computer programs designed to tion credits) recently authorized effectively ex- predict energy usage. Simple computer pro- cludes many passive systems. This places the grams that are cheap and accessible are passive approach, which can drastically re- needed for field use by designers and builders; duce heating requirements, at a strong disad- programs of greater precision and accuracy vantage to conventional supply technologies. are needed for research. Accelerating the use of passive solar tech- Some applied research areas, such as im- niques calls for a vigorous information and proved glazing methods and infiltration moni- demonstration effort, as the technology is not toring, will be useful to passive solar. Passive widely understood and does not have strong cooling has received very Iimited attention and private sector support. Rapid and credible needs work. Possibilities for combining passive demonstration of a variety of systems in all systems with active solar to further reduce de- regions of the country would help. These dem- pendence on conventional fuels have not been onstrations could parallel the development widely explored. and distribution of a design catalog, showing

TECHNICAL NOTES–FOSSIL FUEL PRICES

These assumptions were used for comparing $1.50 to $2.00 per MMBtu. Synthetic gas prices conventional fuel and solar passive heating were compiled from a variety of sources used costs in this chapter. in the OTA solar study,41 while LNG prices are based on current and pending LNG projects.42 In 1977, natural gas prices for residential Prices for “exotic sources” are based on the customers ranged from $2.00 per MMBtu in the OTA Devonian shale study43 and a recent pres- Southwest to $4.00 per MMBtu in New Eng- entation by Henry Linden44 of the Gas Re- land, 39 where gas is piped over long distances search Institute. or derived from supplemental sources, such as liquefied natural gas (LNG) or synthetic natural A substantial quantity of fuel oil is imported gas (SNG) from naphtha. In comparison, the and apparently is not affected by crude oil en- average 1977 price for wellhead interstate gas was $0.93 per MMBtu and $1.54 per MMBtu to “office of Technology Assessment, “Application of 40 gas distributors. Although comparable aver- Solar Technology to Today’s Energy Needs,” June 1978. age prices for wellhead intrastate gas are not 42 American Gas Association, “Gas Supply Review, ” known, typical new contracts ranged from June 1978. “(lffice of Technology Assessment, “Status Report on the Gas Potential From Devonian Shales of the Appa- “American Gas Association, “Quarterly Report of Gas lachian Basin, ” November 1977. Industry Operations– Fourth Quarter 1977 “ “Henry Linden, presentation at the Second Aspen En- ‘“Department of Energy, April 1978. ergy Conference, July 1978. Ch. Xl—Technical Options ● 273 titlements. Consequently, increasing the price to 70 percent at a cost of about $500 per fur- of U.S. crude oil to world levels would not nace. Typical heat pumps have a seasonal per- result in a large increase in fuel oil prices. Also, formance factor of 1.55–an efficiency of 155 the delivered price of $0.50 per gallon equals percent — in a 5,000 degree-day climate.45 A $21.00 per barrel delivered. heat pump with “improved” installation was assumed to have a seasonal performance of Typically, the price of electricity for residen- 2.0 at no additional cost. The performance of tial customers ranged from 3 to 5 cents/kWh. the heat pump with “improved” installation Exceptions to this are the Northwest where corresponds to the performance of some heat electricity costs are less than 3 cents/kWh and pumps manufactured today and suggests that the Northeast where it costs more than 5 cents/ typical heat pump performance can be in- kWh. The delivered price of electricity from creased to the 2.0 level. new capacity was calcuIated within a few mills of 7 cents/kWh for each of the four cities Conventional systems ownership costs, treated in the OTA solar report. which include capital costs, annual maintenance costs, and a pro-rated replacement cost Different efficiency values were used for gas (for heat pumps that have a typical lifetime of and oil furnaces, baseboard heaters, and heat only 10 years), are based on the OTA solar pumps. Seasonal efficiency for gas furnaces is study. 60 percent; for oil furnaces, 50 percent; and 100 percent for baseboard electric heaters. 4~Westinghouse Electric Corporation, “Load and Use Gas furnace efficiency can be increased to 80 Characteristics of Electric Heat Pumps in Single-Family percent at a cost of about $400 per furnace, Residences,” EPRI EA-793, Project 432-1, Final Report, while oil furnace efficiency can be increased June 1978. Appendixes Appendix A INSULATION

INTRODUCTION

In his National Energy Plan presented to Congress on April 20, 1977, President Carter set as a national goal the insulation of 90 percent of existing homes in the United States by 1985. Given spiraling energy costs and a new tax credit, Americans have been insulating their homes in record numbers. According to the Department of Energy (DOE), 25 million to 47 million homes will be reinsulated by the end of 1985.

Nationwide increases in thermal insulation have, however, resulted in a number of actual and potential problems. For example, the absence of uniform safety standards and testing methods among various levels of government and the absence of Federal and State laws on home insulation have contributed to the risks of consumer injury, illness, and death. Although some basic laws do exist with respect to the manufacture and installation of insulation materials, their effectiveness remains questionable. This appendix outlines and discusses some of the major problems associated with the increased use of insulation.

TYPES OF INSULATION MATERIALS

The principal applications and market Rock Wool and Slag Wool segments for insulation materials in the residential sector are shown in tables A-1 and A-2. Rock wool and slag wool are terms used to A number of properties influence the thermal denote glassy fibers that are produced by melt- performance of insulating materials. Thermal ing and fiberizing slags obtained from smelting performance is expressed in terms of thermal metal ores (“slag wool”) or by melting and resistance (R-value), which describes the abiIity fiberizing naturally occurring rock (“rock of a particular material to restrict heat flow. I n wool”). Rock and slag wool products appear in addition to thermal performance, this section the form of batts and loose-fill for blown or includes a brief overview of other important poured application. The reported R-values for properties, such as corrosiveness and degrada- rock wool batts are 3.2 to 3.7, and 2.9 per 1- tion. Tables A-3 through A-1 O provide a more inch thickness for blowing wool. The thermal extensive Iist of properties. performance of this product is reportedly

Table A-1. —Principal Residential Applications ——- Rock Cellular Reflective Locations Fiberglass wool Cellulose plastics Perlite Vermiculite — surfaces New construction Roof/ceiling...... x x x x Walls ...... x x x x Floors/foundation. . . . x x x x

Retrofit Roof/ceiling...... x x x x x Walls ...... x x x x Floors/foundation. . . . x x x x SOURCE: U.S. Department of Energy, An Assessment of Therma/ /nsu/at/on Mater/a/s and Systems for /3u//ding App//cations, prepared by Brookhaven National Laboratory, Publication No. BNL-50862, June 1978, p. 9

277 278 ● Residential Energy Conservation

Table A-2.—Market Segments and Product Usage Table A-3.—Rock and Slag wool

Products used Material property Value Location or — building section New buildings Retrofit Residential buildings (wood. framed)

Ceilings ...... Fiberglass batt Fiberglass Batt Thermal resistance (R-value) 3.2-3.7 (batts) Fiberglass loose Fiberglass loose per 1" of thickness at fill fill 75° F...... 2.9 (loose fill) Rock wool batt Rock wool batt Water vapor permeability . . >100 perm-in Rock wool loose Rock wool loose Water absorption...... 270 by weight fill fill Capillarity ...... none Fire resistance...... Cellulose loose Cellulose loose noncombustible fill fill Flame spread ...... 15 Vermiculite Fuel contributed ...... 0 Smoke developed...... 0 Toxicity ...... none Sidewalls ...... Fiberglass batt Fiberglass loose Effect of age fill Rock wool batt Rock wool loose Dimensional stability. . . . none (batt) fill settling (loose-f ill) Cellular plastic Cellulose loose Thermal performance . . . none Fire resistance ...... none sheathings fill Wood fiber Degradation due to sheathings temperature ...... none none Reflective Cycling surfaces Animal. . . none Moisture ...... transient Floors ...... Fiberglass batt Fiberglass batt Fungal/bacterial...... does not support growth Rock wool batt Rock wool batt Weathering...... none Reflective Reflective Corrosiveness ...... none Odor ...... none surfaces surfaces SOURCE U S Department of Energy, An Assessment of Thermal Insulation SOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/ation Mater/a/s and Systems for Building Applications, prepared by Materials and Systems for Building Appl/cat/ens, prepared by Brookhaven National Laboratory, Publication No BNL-50862, June Brookhaven National Laboratory, Publlcatlon No BNL-50862, June 1978, p 81 1978, p.10

unaffected by age. Its thermal conductivity of the line and packaged. Fiberglass is usually can be affected by moisture content, although sold in the form of batts and blankets (with or the material, after drying, regains its original without a vapor barrier) or shredded, lubri- properties. When dry, rock wool does not sup- cated, and packaged as blowing wool. The R- port fungal growth, bacteria, or vermin; exudes value for fiberglass batts or blankets is about no odor; and is noncorrosive. 1 3.2; the R-value for loose-fill is 2.2 per inch. It appears that fiberglass batt insulation does not Fiberglass settle or shrink with age, but loose fill may settle. The thermal performance of this material Fiberglass is manufactured in a high-technol- is reportedly unaffected by age. Fiberglass ogy process in which glass raw materials are does not promote bacterial or fungal growth combined and melted in a furnace, then led and provides no sustenance to vermin. Insula- out through a forehearth to the fiberization tion materials made from fiberglass are non- 2 devices. Phenolic resin is a commonly used corrosive and have no objectionable odor. binder that is applied to the fiber as it flows through a collection chamber. The fiber with Cellulose resin is collected on a moving beIt and passed through an oven to cure or set the resin, and Cellulose insulation is manufactured by con- the finished product is removed from the end verting used newsprint, other paper feedstock, or virgin wood to fiber form with the incor- ‘An Assessment of Thermal /nsu/ation Materia/s and poration of various chemicals (e. g., boric acid, Systems for Building A~~/ications, prepared by Brook- borax, or aluminum sulfate) to provide flame haven National Laboratory, Publication No. BNL-50862 (U.S. Department of Energy, June 1978), p. 82 ‘Ibid , p 79 Appendix A —Insulation ● 279

Table A-4.— Fiberglass Table A-5.—Cellulose

Material property Value Material property Value 3 Density ...... 0.6-1.0 lbs/ft Density ...... 2.2-3.0 lbs/ft3 Thermal conductivity y Thermal conductivity (k factor) at 75° F...... varies with density (k factor) at 75” F...... 0.27 to 0.31 Btu-in/ft2hr°F Thermal resistance (R-value) Thermal resistance (R-value) per 1" of thickness at 3.16 (batts) per 1“ of thickness at 75° F...... 2.2 (loose fill) 75° F...... 3.7 to 3.2 Water vapor permeability . . >100 perm-in Water vapor permeability . . high Water absorption ...... <1 % by weight Water absorption...... 5-200/. by weight Capillarity ...... none Capillarity ...... not known Fire resistance...... noncombustible Fire resistance...... combustible Flame spread ...... 15-20 Flame spread ...... 15-40 Fuel contributed ...... 5-15 Fuel contributed ...... 0-40 Smoke developed...... 0-20 Smoke developed...... 0-45 Toxicity ...... Some toxic fumes could Toxicity...... develops CO when burned develop due to combustion of Effect of age binder. Dimensional stability. . . . settIes 0-20%0 Effect of age Thermal performance . . . not known Dimensional stability. . . . none (batt) Fire resistance...... inconsistent information settling (loose-fill) Degradation due to Thermal performance . . . none Temperature...... none Fire resistance ...... none Cycling ...... not known Degradation due to Animal...... not known Temperature...... none below 180 ‘F Moisture ...... not severe Cycling ...... none Fungal/bacterial...... may support growth Animal...... none Weathering...... not known Moisture ...... none Corrosiveness ...... may corrode steel, aluminum, Fungal/bacterial...... does not support growth copper Weathering...... none Odor...... none Corrosiveness ...... none SOURCE U.S. Department of Energy, An Assessment of Thermal /nsu/ation Odor...... none Mater/a/s and Systems for Bu//d/ng App/icat/ens, prepared by SOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/at/on Brookhaven National Laboratory, Publication No. BNL-50862, June Materials and Systems for Building Applications, prepared by 1978, p. 83 Brookhaven National Laboratory, Publication No. BNL-50862, June 1978, p. 78. materials. Foamed-in-place and board stock retardancy. Cellulose products are usually foams exist. As differences exist in the available as Ioose-filI or spray-on. The thermal chemical composition of these materials, a resistance values for celIulose insuIation are in separate discussion is necessary for each the range of 3.7 to 3.2. However, compaction celIular plastic insulation. (caused by vibration and settling under its own weight) can decrease its R-value in two ways: Polystyrene Foam loss in thickness and an increase in conductivi- Polystyrene is a thermoplastic material pro- ty due to the increase in density. If cellulosic duced by the polymerization of styrene in the material is properly treated, its weight gain presence of a catalyst. Polystyrene foam can from water absorption will not exceed 15 per- be produced by either intrusion or extrusion.3 cent. However, poor quality control and im- Foam produced by extrusion has a more con- proper selection of flame-retardant chemicals sistent density than foam produced by the may increase the level of absorption. Some molding process, in which variations in density chemicals added to cellulose to provide flame average about 10 percent. The R-value for retardancy are known to cause corrosion on molded polystyrene foam (3.85 to 4.35) is lower metals such as steel, aluminum, and copper. than the R-value for extruded polystyrene (5.0) Fungal and bacterial growth can be a problem, as the former has air in the cells and the latter unless chemicals are added to inhibit such has a mixture of air and fIuorocarbon. growth. Polystyrene foam must be protected from Cellular Plastics direct exposure to ultraviolet (UV) light, which can cause it to yellow and turn to dust. Its in- A variety of different plastics, when produced as foams, are useful as insulation ‘Ibid , p 21 280 “ Residential Energy Conservation

Table A-6.— Expanded Polystyrene Foam Table A-7.—Polyurethane/Polyisocyanurate Foams

Material property Value Material property Value Density ...... 0.8-2.0 lbs/ft3 Density ...... 2.0 lbs/ft3 Thermal conductivity 0.20 Btu-in/ft2hr°F (extruded) Closed cell content ...... 90% (k factor) at 75° F...... 0.23-0.26 Btu-in/ft2hr°F Thermal conductivity 0.16-0.17 Btu-in/ft2hr°F (molded) (k factor) at 75° F...... (aged & unfaced or spray Thermal resistance (R-value) applied) per 1“ of thickness at 5 (extruded) 0.13-0.14 Btu-in/ft2hr° F 75° F...... 3.85-4.35 (molded) (impermeable skin faced) Water vapor permeability . . 0.6 perm-in extruded Thermal resistance (R-value) 6.2-5.8 1.2 to 3.0 perm-in molded per 1" of thickness at (aged unfaced or spray applied) Water absorption...... C 0.7°/0 by volume extruded 75° F...... 7.7-7.1 < ().020/0 by volume extruded (impermeable skin faced) < 4% by volume molded Water vapor permeability . . 2-3 perm-in < 2% by volume molded Water absorption ...... Negligible Capillarity ...... none Capillarity ...... none Fire resistance...... combustible Fire resistance...... combustible Flame spread ...... 5-25 Flame spread ...... 30-50 polyurethane Fuel contributed ...... 5-80 { 25 polyisocyanurate Smoke developed...... 10-400 Fuel contributed ...... 10-25 polyurethane Toxicity...... develops CO when burned { 5 polyisocyanurate Effect of age Smoke developed...... 155-500 polyurethane Dimensional stability. . . . none i 55-200 polyisocyanurate Thermal performance . . . k increases to .20 after 5 yrs. Toxicity ...... produces CO when burned extruded Effect of age Fire resistance...... / none molded Dimensional stability. . . . 0-120/. change ( none 0.11 new Degradation due to Thermal performance . . . 0.17 aged 300 days Temperature...... above 165° F Fire resistance ...... none Cycling ...... none Degradation due to Animal...... none Temperature...... above 250 ‘F Moisture ...... none Cycling ...... not known Fungal/bacterial...... does not support growth Animal...... none Weathering...... direct exposure to UV light Moisture ...... limited information available degrades polystyrene Fungal/bacterial...... does not promote growth Corrosiveness ...... none Weathering...... none Odor...... none Corrosiveness ...... none SOURCE: U.S. Department of Energy, An Assessment of Thermal /nsu/ation Odor...... none Materials and Systems for Building Appl/cat/ens, prepared by SOURCE U S. Department of Energy, An Assessment of Thermal Insulation Brookhaven National Laboratory, Publication No BNL-50862, June Mater/a/s and Systems for Building Applications, prepared by 1978, p. 86 Brookhaven National Laboratory, Publication No. BNL-50862, June 1978 p 89 sulating properties, however, are not affected by short-term exposure to UV light. Polysty- polyurethane are prepared by mixing or rene foam can tolerate temperatures up to metering the components and manually or 1650 F, but higher temperatures may cause it automatically dispensing them. Specially de- to soften. Polystyrene does not promote fungal signed units are now available for spray-on ap- or bacterial growth, and is odorless and non- plications. corrosive. 4 The R-value for polyurethane is around 6. Because of the closed cell structure of this Polyurethane material, water absorption and permeability Polyurethanes are plastics produced are very low. I n curing and aging, polyurethane through the reaction of isocyanates and alco- foam is reported to demonstrate a dimensional hols. Either rigid or flexible foam can be pro- change. The degree to which this foam ex- duced. For example, slab stock is produced by pands or shrinks is related to conditions of mixing the necessary components and meter- temperature and humidity and the duration of ing the mixture onto a moving conveyor. The exposure to extreme conditions.5 One Ameri- mixture forms a continuous foam that can be can Society for Testing of Materials (ASTM) cut to predetermined lengths. Foamed-in-place test procedure indicated a change in volume

‘I bid., p. 85 5 I bid. Appendix A —Insulation ● 281

Table A-8.—Urea-Formaldehyde and Table A-9.—Perlite Urea-Based Foams Value Material property Value Material property Loose fill Perlite concrete 3 Density ...... Wet - approximately 2.5 lb/ft3 Density ...... 2-11 lb/ft Dry -0.6 to 0.9 lb/ft3 K app at 75°F ...... 0.27-0.40 0.50-0.93 Thermal conductivity Thermal resistance (R-value) 2 per 1“ of thickness at 75° F. . . . 3.7-2.5 2.0-1.08 (k factor) at 75° F...... 0.24 Btu-in/ft hr°F Water vapor permeability ...... high high Thermal resistance (R-value) Water absorption ...... low per 1“ of thickness at Capillarity...... none none 75° F...... 4.2 Fire resistance...... noncombustible noncombustible Water vapor permeability . . 4.5 to 100 perm-in Flame spread ...... 0 o at 50% rh 73° F Fuel contributed ...... 0 0 Water absorption ...... 32% by weight (0.35% volume) Smoke developed ...... 0 0 95% rh Toxicity...... not toxic not toxic Effect of age 18% by weight (0.27% volume) Dimensional stability ...... none none 60% rh 68° F Thermal performance ...... none none 180 = 3,800% by weight Fire resistance ...... none none (2-42% volume) immersion Degradation due to Capillarity...... slight Temperature...... none under none under Fire resistance...... combustible 1,200” F 500” F Flame spread ...... 0-25 Cycling ...... none none Fuel contributed ...... 0-30 Animal...... none none Moisture ...... none none Smoke developed...... 0-1o Fungal/bacterial...... does not pro- does not pro- Toxicity...... no more toxic than burning mote growth mote growth wood Weathering...... none none Effect of age Corrosiveness ...... none none Dimensional stability. . . . 1 to 4% shrinkage in 28 days Odor...... none none due to curing 4.6 to 10% shrinkage at 100” F SOURCE U.S. Department of Energy, An Assessment of Thermal Insulation Materials and Systems for Building Applications, prepared by 100% rh for 1 week Brookhaven National Laboratory, Publication No. BNL-50862, June 30 to 45% shrinkage and 158° F 1978, p. 94. 90 to 100% rh-10 days Thermal performance . . . No change catalyst (or hardening agent), and air. In the Fire resistance mixing or foaming gun, compressed air is Degradation due to mixed with the foaming agent to produce Temperature...... decomposes at 415° F Cycling ...... no damage after 25 small bubbles which are expanded and coated freeze-thaw cycles with the urea-formaldehyde resin. The foam is Animal...... not a feed for vermin delivered at about 75 percent water by weight Moisture ...... not established 6 Fungal/bacterial...... does not support growth and immediately begins to cure.” Weathering...... none Corrosiveness ...... none Urea-formaldehyde has an R-value of 4.2. Odor...... may exude formaldehyde According to a National Bureau of Standards until cured (NBS) study, shrinkage and resistance to high SOURCE: U.S. Department of Energy, An Assessment of Therma/ Insulation Materials and Systems for Building Applications, prepared by temperature and humidity may be a problem. Brookhaven National Laboratory, Publication No. BNL-50862, June The magnitude of the shrinkage and the time 1978, p. 91. period over which it occurs are subjects of debate. The study presented some data on mate- of up to 12 percent after 14 days. This material rial that had been installed in a wall of a test will begin to decompose at temperatures house. Periodic inspections were made of the above 2500 F. Polyurethane foam is resistant insulated wall and in about 20 months the to fungal and bacterial growth, and is odorless foam had undergone an average linear shrink- and noncorrosive. age of 7.3 percent. 7 The NBS data are only preliminary; until more studies are concluded on Urea-Formaldehyde Foam the inservice performance of this material, the Urea-formaldehyde foam is produced at the question of durability will remain unanswered. site of application “by the combination of an ‘l bid,, p. 23, aqueous solution of a urea-formaldehyde 7Urea-Based Foam Insulations: An Assessment of Their based resin, an aqueous solution foaming Thermal Properties and Performance, Technical Note 946 agent which includes a surfactant and acid (National Bureau of Standards, July 1977), p. 34. 282 “ Residential Energy Conservation

Table A-10.—Vermiculite highly resistant to water and to moisture. The R-value of perlite is between 3.7 and 2.5. As an inorganic material it resists rot, vermin, and termites. Perlite is noncorrosive and odorless. It is primarily used as loose-fill insulation, or as aggregate in insuIating concrete.

Vermiculite

Vermiculite is a generic name for micalike minerals. When subjected to high temperatures it expands to a corklike consistency. The R-value for this material is 3.0 to 2.4. Ver- miculite is water repellant and noncombustible. As an inorganic material it is resistant to vermin, rot, and termites and is not affected by age, temperature, or humidity. Vermiculite is noncorrosive and does not exude an odor. Like perlite, it is primarily used as loose-fill insulation, or as aggregate in insuIating concretes.

Aluminum Multifoil

Aluminum multifoil insulation consists of several sheets of aluminum foil separated by air spaces. The outer layers of the foil sandwich are usually backed with kraft paper for strength. The foil reflects infrared heat radia- An odor of formaldehyde may occur during tion, and the air spaces add to the insulation the application of ureaformaldehyde-based value. The R-value of this material depends on foam insulation. Under normal circumstances, specific location. Three Iayers of foil with 4 air the odor should dissipate quickly and linger spaces can have an R-value of 29 under the for only a few days. According to one major floor, 14 in a wall, and 9.8 in the ceiling in manufacturer, “formaldehyde gas is emitted winter. In summer, the same ceiling insulation from the foam, in the part per million range, can have an R-value of 29 for keeping the air- during the drying and curing process, which conditioned house cool .9 Foil insulation will be over in 2 weeks.”8 weighs less and is less expensive than fiberglass Perlite Glass Foam Perlite is a glossy volcanic rock mineral, in- digenous to the western United States. It con- Glass foam insulation is a rigid, closed-cell tains between 2 and 5 percent water by weight. foam that is entirely resistant to water, fire, Perlite ore is composed primarily of aluminum decay, vermin, and chemicals. [t can be made silicate. When heated to a suitable point from recycled glass. Its R-value is 2.6 per (1,000 0 C), the crushed ore particles expand to inch. Present costs are about 20 times as high between 4 and 20 times their original volume ‘J R Schwartz, President, Foil Pleat Inc., personal and contain numerous cavities. It is then communication, January 1979. treated with nonfIammable siIicone to become ‘°Foarrrg/ass /risu/ation (Baltimore, Md.: Pittsburgh Corning Product Literature, Publication No F1-132 (rev.), ‘I bid., p. 58. Apr-1 I 1 975) Appendix A— Insulation ● 283 as the more common insulation materials. tions requiring its noncompressibility, mois-

Therefore r it is limited to specialized applica- ture resistance, or chemical inertness.

PRODUCTION CAPACITY OF THE U.S. INSULATION INDUSTRY

This section attempts to summarize the pres- future. Decisions will depend on their percep- ent production capacity of the insulation in- tions of the market at a given time, and those dustry, the Ieadtime for new insulation manu- perceptions will depend to a large extent on facturing facilities, and any roadblocks to Government actions to encourage energy con- large increases in production capacity. Table servation and other future events. As an alter- A-11 summarizes the data. Various projections native to existing projections, this section gives of future insulation production capacity are Ieadtimes and constraints to capacity in- not included here because they are so depend- creases to illustrate just how fIexible the future ent on what manufacturers decide to do in the can be.

Table A-1 1 .—Production Capacity of Insulation Industry and Leadtime for New Capacity

The “present capacity” figures presented total production or just residential insulation, here must be regarded with some caution since so some figures in table A-11 may be less than the references did not always distinguish be- full production capacity. Finally, most of these tween the amount of insulation produced in a figures are for capacity in January 1977, and year and the amount that could be produced if capacity has been growing steadily since that the factory were running at fuII capacity. Since time insulation has been in short supply recently, factories have probably been operating close Fiberglass to full capacity, and any differences are probably not very great. Production capacities Fiberglass insulation production is a high- given include all the material produced, not technology, capital-intensive industry. The just that sold for residential use. This gives a four manufacturers are Owens-Corning Fiber- better idea of actual capacity for making the material. In several cases, the references did ‘‘ Porter-Hayden Company, personal communication, not make clear whether they were presenting January 1979. 284 ● Residential Energy Conservation glas Corporation, Johns-Manville Corporation, ing different formulations requiring less boric Certain Teed Corporation, and Gebr. Knaut acid. ” 8 12 Westdeutsche Gipswerke. Owens-Corning Urea-Formaldehyde Foam has about half of the fiberglass insulation market, and Johns-Manville has about a quarter. Urea-formaldehyde foam is produced at the Even for an established firm, an additional house using a specially designed foam gun. fiberglass plant can cost about $25 million. ’3 Considerable skill is required to apply the “Industry estimates of the time required for foam properly. Poorly installed urea-formal- adding an additional line to an existing plant is dehyde foam can shrink and crack within a few about 12 to 18 months. A new plant would re- months, and can release formaldehyde fumes quire 24 to 36 months to become fully oper- for many months. The limited number of 4 ational once ground breaking has occurred.’” trained installers could limit rapid expansion of the near-term market. 19 Cellulose Most of the chemicals are produced by four companies, and one of them, RapperswilI Cor- It is fairly easy to get into the cellulose in- poration, reportedly has 80 percent of the U.S. sulation manufacturing business, and many market for urea-formaldehyde insulation .20 people are doing it. Between 70 and 100 new The other major producers are Borden Chemi- manufacturing companies were started in cal, Brekke Enterprises, and C. P. Chemical 197715 and by mid-1978 there were over 700 Company. 21 Based on a projected tenfold in- companies in business. Most of these are very 22 16 crease in production within 2 years, it ap- small businesses. It is possible to get into pears that the leadtime for new capacity “is business for less than $10,000 with a small rough y a year. machine on the back of a truck, but some larger manufacturers claim that it takes at least $300,000 to set up a factory capable of Boric Acid and Borax producing cellulose that can meet safety standards consistently.17 Boric acid and borax are used in the manufacture of both cellulose and fiberglass insula- Concern is frequently expressed that short tion. I n the manufacture of fiberglass, borax is supplies of borax and boric acid, used as fire used to reduce the drawing temperature of the retardants, could constrain rapid growth in the fibers to less than 1,0000 C as well as to capacity of celIulose production. However, if strengthen the fibers. In the production of cel- shortfalls are met with imports, capacity could lulose, borax improves the fire-retardant capa- grow rapidly. Furthermore, “several chemical bilities of boric acid and reduces its acidity. companies . . . are in the process of investigat- Both chemicals have recently been reported to be in short supply nationally. Therefore, prices may go up as more is imported. ‘2An Assessment of Thermal Insulation Materials, op. Total U.S. boric acid production capacity in cit, p. 32. ‘ ‘R. Kurtz, U.S. Consumer Product Safety Commission, 1978 was around 180,000 metric tons, of which memorandum to H. Cohen, CPSC, on “Potential Effects U.S. Borax and Chemical Corporation was re- of CPSC Regulations Upon Supply, Demand, and Utility sponsible for about 65 percent.23 Kerr-McGee of Home I nsu]ation: Initial Speculation, ” Dec. 29, 1977, Chemical Corporation and Stauffer Chemical p. 4. “Report on Insulation: Supply, Demand, and Related Issues, Office of Conservation and Solar Applications, “An Assessment of Thermal Insulation Materials, op. preliminary draft, prepared by the Task Force on Insula- cit., p 34 tion (U.S. Department of Energy, May 1978), ch. 6, p. 6. “Report on Insulation, op. cit., p, 6, ‘ “’Home Insulation Sales are Almost Too Hot, ” Busi- 20Energy Users Report, Aug. 18,1977, 210:16, ness Week, September 1977, p. 88 2’ An Assessment of Therma/ /nsu/ation Materia/s, op. “Report on Insulation, op. cit , p. 5 cit., p 36 ‘ ‘R. Kurtz memo on “Potential Effects of CPSC Regula- 22 I bid tions,” pp. 3-4. 2‘ I bid , p 34. Appendix A— Insulation ● 285

Corporation share the remainder of the pro- Iy, BOM is surveying the three borax producers duction. The major foreign producers are to obtain specific end-use data on their sales to France, U. S. S. R., Turkey, Chile, and Italy. In manufacturers, Domestic shortages of borax 1977, the United States exported 33,000 metric may occur in the future “if a producer alters its tons and imported 13,000 metric tons.24 process to consume borax and produce additional boric acid by using the borax it other- Boric acid has been used as an important wise wouId have produced.”28 fire retardent chemical in cellulose insulation. Some cellulose manufacturers and chemical Concern over the possibility of a boric acid companies are investigating fire-retardant for- shortage led to the formation of an Inter- mu [as that use less boric acid and borax.25 agency Task Force which pointed out four obvious options for increasing supply. The During 1977, U.S. production of boron amount of minerals mined could be increased. minerals and compounds was estimated to be This would not necessarily solve the problem 1.3 million metric tons. Exports were 241,000 as large amounts of berates are presently used tons and imports about 46,000 tons. The three for other products. A second option would be U.S. producers of borax are U.S. Borax and to increase refinery capacity and expand pro- Chemical Corporation, American Borate Cor- duction of boric acid. This is seen as an unlike- poration, and Kerr-McGee Chemical Corpora- 26 ly response since long-term demand for tion. berates is uncertain and boric acid refineries Since 1975 there has been a growth in de- are not easily convertible to other uses. Some mand for borax and other berates attributable of the berates now going elsewhere in the to increased demand for fiberglass, mineral market could be reallocated to boric acid pro- wool, and celIulosic insulation. Current data is duction, or more boric acid could be im- not avaiIable on how much borax is used in the ported .29 At present, market forces are re- manufacture of these products. However, the sponding adequately to meet boric acid de- Bureau of Mines (BOM) estimates 35,000 tons mand, so Federal intervention does not appear of borax and other berates were used to manu- necessary. facture cellulosic insulation n 1976.27 Current-

HEALTH HAZARDS

The real and potential health hazards associ- characterized by bronchitis, rhinitis, sinusitis, ated with various types of insulation materials pharyngitis, and/or laryngitis. These irritations have attracted much attention. This section are caused by mechanical injury to the skin addresses some of the major health-related and mucous membranes by small glass fibers problems. and are “considered to be transitory since symptoms disappear without treatment when 30 Fiberglass and Mineral Wool exposure to fiberglass is ended.” As there is a fairly well-established link be- It has been known for a long time that fiber- 31 tween asbestos and several types of cancer, a glass can produce eye and skin irritation. It is number of researchers have been attempting classified by the Occupational Health and Safety Administration (OSHA) as a nuisance 281 bid. 29 I bid., pp. 4-5. dust. Furthermore, fiberglass workers some- ‘“Memorandum by Dr. Rita Orzel, Acting Director, times experience respiratory tract irritation Division of Human Toxicology and Pharmacology, Of-

fice of the Medical Directorr Consumer Product Safety Commission, Dec. 2,1976, p. 1. J I Nat iona [ Ca ricer Institute, Asbestos: A n Information Resource, ed. by R, J. Levine, prepared by SRI international, Publication No. N I H 79-1681, May 1978, p, 1, 286 . Residential Energy Conservation

to determine if other inorganic fibers act like Because the latency period for cancer can asbestos fibers in contributing to cancer. be 20 to 50 years, there has been in sufficient Studies of the relationship between fiberglass time to assess fully the effects of exposure to or rock wool and cancer have produced mixed small glass fibers and the newer resin systems. results. Glass fibers surgically implanted in the Several American studies are underway, but lungs of rats have produced cancers, but the the resuIts are not in. 37 implantation process is artificial and does not allow the natural cleansing actions of the lung Until more studies and tests are completed, 32 to remove the fibers. Several early studies it seems prudent to minimize exposure to fiber- found that workers in glass wool plants did not glass, especialIy where smalI particles are have any higher cancer rates than similar per- prevalent. Areas calling for special care in- 33 sons who did not work with fiberglass. To clude: date there is no evidence that fiberglass as normally manufactured and used is related to the . factories where fiberglass and fiberglass occurrence of cancer in humans. products are produced, ● handling during installation, However, over the years, the average diam- ● a i r ducts that couId bring fiberglass par- eter of manufactured glass fibers has been de- ticles into the house, and creasing. In the case of the implanted fibers, it s unwanted materials and debris from is the small diameter fibers (0.5 to 5 microns) demolition or renovation of buildings. that have caused the most concern.34 In the 1930’s, the average fiber diameter of insulating rock and slag wool and fiberglass was 15 microns or more. Today, the average diameter is Cellulose 6 microns with a fraction of the fibers falling Cellulose fiber appears to present no signifi- below 3.35 Over the years, manufacturers have cant health problems. However, the borate been changing the composition of the binders salts that are used to impart flame retardancy and lubricants coating the fibers,36 so the fiber- to the shredded paper can be toxic if ingested. glass handled by workers 30 years ago was not The estimated lethal dose is 15 to 20 grams for the same material that is manufactured today. adults and 5 to 6 grams for infants; young infants are particularly susceptible. Acute borate exposure can affect the central nervous 32M. F. Stanton, “Fiber Carcinogenesis: Is Asbestos the system and cause persistent vomiting and diar- Only Hazard?” )ourna/ of the Nationa/ Cancer /nstitute, rhea, followed by profound shock and coma. 51 :633-636. Cited by J. Milne, “Are Glass Fibers Car- Borate salts can be absorbed through the skin. cinogenic to Man? A Critical Appraisal, ” British )ourna/ of Industrial Medicine, 33:47, ‘Jcrjteria for a Recommended Standard . . OCCLJPa- Investigators have so far determined cellu- tiona/ Exposure to Fibrous Class, prepared by Tabershaw- lose dust to be a nuisance. That is, it does not Cooper Associates, Inc., Publication No. NIOSH-77-I 52 (National Institute for Occupational Safety and Health, have the potential to produce pathologic April 1977), pp. 30-40. changes However, as the handling of cellu- “M. F. Stanton, “Some Etiological Considerations of Iosic material can generate considerable Fiber Carcinogenesis, ” Biological Effects of Asbestos, amounts of dust, the user is advised to wear Proceedings of a Working Conference, published by the gloves, cover up, and wear a mask. International Agency for Research on Cancer, Lyon, France, IARC Scientific Publation No. 8, October 1972, ed. by P. Bogovski, et al., pp. 289-294 Cited by J. T, Mad- dock, et al., Sma// Fiber /nha/ation, Publication No. AA I-238 3I2384-1OO-TR-2 (U.S. Consumer Product Safety Commission, December 1976), p, 9. 35J. W. Hill, “Health Aspects of Man-Made Mineral Fibres, A Review,” Ann. Occup. F/yg., 20:1 61-162 361 bid., p. 162. 37M Sloan, personal communication, ) anuary 1979. Appendix A—Insulation . 287

Cellulose Plastics membranes of the eyes, nose, and upper respiratory tract. The level of irritation is a func- Polystyrene tion of the formaldeyhde concentration and of According to the Consumer Product Safety individual sensitivity. With increased concen- Commission (CPSC), finished foam resins such trations, these irritations become more pro- as polystyrene generally do not produce ad- nounced and tolerable for onIy a few minutes. verse health effects.38 Although Sax classifies Repeated exposure may increase sensitivity polystyrene as a “suspected carcinogen” when in the body,39 there appears to be no hazard to formaldehyde. Skin problems have also from normal use. been reported after exposure to even small amounts in the air. Polyurethane After the curing process, odor normally dis- Polyurethane foam is an isocyanate-polyol- appears, but it has been known to recur— in resin blend to which flame-retardant chemi- some cases persisting for 10 to 12 months. cals are usually added. As the isocyanates are Some consumers have complained of formal- toxic, extreme caution must be exercised dur- dehyde released from wallboard, particle ing application. Application must be per- board, or fiberboard bonded with urea-formal- formed by qualified persons using appropriate dehyde resin. The continued odor has required safety equipment such as goggles, gloves, head that the wallboards be removed from the in- covers, and respirators. teriors of homes in some cases. It appears that the health hazards associ- The safe application of this material re- ated with polyurethane foam are in the han- quires a qualified person who knows how to dling, mixing, spraying, and other application handle, mix, and use the chemicals involved. procedures encountered in occupational situations. Sax classifies polyurethane as a “suspected carcinogen.”40 Perlite and Vermiculite Urea-Formaldehyde No potential health hazards have been associated with the use of perlite or vermiculite as Formaldehyde is a strong irritant. Exposure an insulation material. A DOE study indicates to its vapors can cause irritation of the mucous that both are nontoxic and odorless. ”

FIRE HAZARDS

Data on the fire hazards associated with Fiberglass various insulation materials are plentiful but sketchy. Most fire data identify only the first Fiberglass itself is considered nonflammable material ignited and do not indicate those in- until subjected to very high temperatures. In stances where insulation may play a significant flammability test procedures, however, flam- role in the growth of a fire started by another mable backing or vapor barrier materials are material. often not included. In the manufacturing of fiberglass, flammable oils and resins are in- troduced to reduce dust and solidify the insulation material. But often the flammability qaMemorandum by Dr. Rita Orzel, P. 3. tests are performed on fiberglass that doesn’t 39N. 1, Sax, Dangerous Properties of /ndustria/ Materi- contain these organic materials. Additionally, a/s, fourth cd., Van Nostrand Reinhold Co,, 1975, pp. 1037-1038. “An Assessment of Therma/ lrtsu/ation Materia/s, op. ‘“I bid., p. 1038. cit., p 92. . .

288 ● Residential Energy Conservation the absence of appropriate practices in the by the petitioner to be related to the fires in- 43 manufacture and installation of this material clude: can increase the risk of fire and resulting 1. Poor quality control, which contributes to smoke inhalation. wide fluctuations in fire retardancy. 2. Inadequate knowledge about levels of fire CPSC has discussed the potential flammabil- retardancy necessary for proper protec- ity and organic burden of fiberglass insulation tion. with representatives of Owens-Corning, Johns .3 . Uncertainty about the permanency of the Manville, Certain Teed, and NBS and has con- flame-retardant chemicals. cluded:42 4. Certain fire retardants utilized and the extent to which sublimation and moisture 1. Most paperbacking (foil and kraft) on the affect the permanency of these fire re- market today is fIammable. tardants as the insuIation ages. 2. Most paperbacking is situated underneath 5. Failure to add proper amounts of fire re- batts or blankets of fiberglass insulation tardants at the manufacturing or installa- and is unexposed to likely ignition tion stages, coupled with the absence of sources. But NBS has indicated that if onsite testing. fiberglass is improperly instaIled (e.g., 6. Variance of flame spread requirements faceup in an attic space) or left exposed and, the lack of smoldering-resistance re- (e.g., in a garage beneath the second story quirements. of a house), it might be exposed to an igni- 7. Lack of uniform test methods, hence un- tion source. satisfactory flame spread and smoldering 3. There is currently no requirement to test read i rigs. fiberglass insulation with paperbacking intact. Some manufacturers do test fiber- This petition was rejected by CPSC on March glass insulation with paperbacking intact 5,1979. and measure a higher flame spread than Improper installation of cellulose insulation fiberglass insulation alone. on or near electrical wiring, recessed lighting 4. Phenolic binder, although combustible, fixtures, attic furnaces, heating ducts, and does not promote flame spread in fiber- other heat-bearing and heat-producing ele- glass insulation. ments can cause fires. The absence of regulations by industry or Government is to be noted. Cellulose There are no standard test methods used for determining the toxicity of combustible prod- According to a petition filed by the Denver ucts. District Attorney’s Consumer Office with CPSC, several fires have been observed and related to cellulosic insulation. Factors believed Other Materials Polystyrene and polyurethane foams are combustible; rock wool, vermiculite, and perlite are not.

‘*Paul Lancer, U.S. Consumer Product Safety Commis- ‘ ] Petition filed by the Denver District Attorney’s Of- sion, memorandum to Bernard Schwartz, CPSC, on fice of Consumer Affairs with the U.S. Consumer Product “Home Insulation,” Jan. 31,1977 Safety Commission, Oct. 8,1976, pp. 3-4 Appendix A— Insulation . 289

MATERIAL STANDARDS AND ENFORCEMENT

Testimony before Congress, the Federal the structure of the fibers. It could provide a Trade Commission, and the CPSC has source of fungal spores which might penetrate demonstrated a great need for new and im- the living area and cause health problems. It proved materials standards and test pro- could increase the corrosive action of the in- cedures to ensure the efficacy, durability, and sulation material through the accumulation of safety of residential insulation materials. metabolic products.”44

The General Services Administration (GSA) Other changes include a requirement that and the ASTM are the principal bodies respon- all “cellulose tests be conducted at the prod- sible for the testing of insulation materials and uct’s settled density, i.e., the density of the the promulgation of materials standards. With product that would be expected to be found in one exception, however, these standards are the field sometime after installation.”45 This not mandatory for residential insulation. would eliminate the current practice of some cellulose manufacturers of having their products tested at an arbitrary density to enhance GSA Standards and Specifications their chances of passing the corrosion test or to obtain a better fire safety test result. The GSA sets standards and specifications for new standard for cellulose also includes a goods purchased directly by the Federal Gov- smoldering test that is not included in the HH- ernment. This program encompasses 4,500 Fed- 1-515C specifications. This test is to determine eral specifications and 1,500 standards. Includ- whether cellulose will continue to smolder ed in this program are specifications for cellu- beyond the area of an initial heat source, such Iosic or wood fiber loose-fill insulation (HH-l- as a hot electrical wire or a recessed lighting 515C), mineral fiber loose-fill insulation fixture. (H H-I-1030), and mineral fiber blankets and batts (H H-I-521 ). Further revisions to the existing HH-I-515C specifications for cellulose insulation include These specifications, however, do not have a new tests for flammability. The GSA based its direct application to thermal insulation pur- decision to switch to a radiant panel flam- chased by consumers. They apply only to Fed- mabiIity test and to adopt a smoldering test on eral procurement of thermal insulation for a number of factors: Government-owned buildings, etc. Never- theless, it is the practice of many manu- 1. The poor relationship between the Steinen facturers of insulation for residential use to tunnel flammability test and an actual claim that their products meet current GSA attic situation. specifications. There is no enforcement 2 Failure of the Steinen tunnel test to ad- mechanism to discourage false claims. dress a small open flame or a smoldering ignition source. GSA began in 1976 to upgrade its insulation 3 Unsuitability of the Steinen tunnel test for specifications. In November 1977 it issued its low-density materials such as cellulose. proposed new standards for insulation pur- 4 NBS fire data that demonstrate that chased by the Federal Government. covered electrical or heating devices or Some of the most important changes pro- wiring hot spots may cause ignition of exposed by GSA were contained in its proposed posed insulation, factors which are not specifications for loose-filI cellulose insulation simulated in the Steinen tunnel test. (H H-I-515 D). For example, the new specifications include a requirement concerning fungal “U.S. Congress, House Committee on Interstate and Foreign Commerce, Subcommittee on Oversight and ln- growth, as it is now recognized “that this con- vestigations, Home /nsu/ation, 95th Cong., 2d sess., Apr. dition could cause the degrading of the ther- 26, 1978, p. 24. mal properties of the insulation by destroying “lb Id, 290 . Residential Energy Conservation

DOE estimates that while 80 percent of the the material meets the applicable minimum manufacturers can pass the existing GSA C Federal flammability standard. The statement specifications, perhaps only 10 to 30 percent must also indicate that the standard is based can pass the new version. The president of the on laboratory tests that do not reflect actual Society for the International Cellulose Insula- conditions in the home. tion Manufacturers (SICIM) disagrees. It was Until a final consumer product safety stand- reported that most of the SICIM member com- ard takes effect, CPSC will incorporate into the panies recently passed both the radiant panel interim safety standard for cellulose insulation and smoldering tests performed by Certified each revision superseding the requirements for Laboratories of Dalton, Ga. However, these flame resistance and corrosiveness as promul- tests appear to be silent on the manufacturers’ gated by GSA. ability to meet the D standard if the fire-retardant formulae were changed.46 The adoption of the “C” standard by CPSC thus marks the first federally supported ini- In June 1978, GSA issued the new HH-I-515D tiative to protect the consumer against various specifications for Ioose-filI cellulose insula- hazards associated with cellulose insulation. tion. They reflect only slight alterations to the At this writing, however, it is difficult to deter- originally proposed specifications. The pro- mine whether other thermal insulation materi- posed specifications for mineral wool, which als will be covered by the Interim Consumer include similar testing requirements, have Safety Rule Act of 1978. been resubmitted for additional comments.

Problem Areas in Materials Testing Enforcement of GSA Standard and Standards HH-I-515C for Residential Application One of the major bodies responsible for the As discussed earlier, there are almost no development of materials testing and stand- mandatory performance standards for residen- ards is ASTM Committee C16 on Thermal and tial insulation. One exception, however, ap- Cryogenic Insulation Materials. The commit- plies to the most recent enforcement of the tee was established by the American Manufac- “C” standard for cellulose insulation. turing Industry about 40 years ago. The development of ASTM standards is based on “con- The Interim Consumer Product Safety Rule sensus” documents, which reflect the views of Act of 1978, which establishes an interim con- the “manufacturer,” “user,” and “general in- sumer product safety standard, went into ef- terest members. ” After a standard is produced, fect September 8, 1978. Under this Act, CPSC it is usually reviewed every 5 years and revised will adopt the requirements for flame resist- as current technology and knowledge dictates. ance and corrosiveness as set forth in GSA’s One criticism of this process is that the gesta- HH-I-515C specifications for cellulose insulation period for a standard is at times too long. tion. The “C” standard is to be enforced in the same manner as any other consumer product Many testing methods are currently being safety standard. revised or discarded in light of the critical problems now appearing. Given the number Accordingly, any cellulose insulation and variety of testing methods and standards, material that is produced or distributed for only general comments will be offered in this sale to the consumer is to have a flame spread discussion. rating of 1 to 25, as such rating is set forth in GSA’s specification HH-I-515C. Each manufac- Although a number of adequate testing turer or private labeler of cellulose insulation methods do exist for determining the mechani- is required to include on any container of cel- cal, thermal, and physical performance char- lulose insulation a statement indicating that acteristics of a material under laboratory conditions, there is an immediate need for the ex- “Ibid., pp. 25-26 tension of this knowledge to real life condi- Appendix A— Insulation . 291 tions and for complete systems. That is, the in- currently available to undertake the volume of terrelationships between materials and overall testing and evaluation that will be required in system performance must be investigated. the future, and the reliability of the results that such organizations can obtain. There appears The development of new test methods or to be great dissatisfaction in the insulation technical revisions to existing methods is field over these factors. lengthy and expensive and until recently has been beyond the means of any organization Widely divergent claims are made about outside of the major manufacturers and Gov- material properties, such as thermal perform- ernment bodies. Given the existence of new ance. In some cases, it has been found that testing needs, it is argued by some that in- such claims are made with no physical basis. In creases in public funding will be necessary to general, however, the common view is that the support the level of effort that is needed in a test methods are not at fault; rather, some short time (5 to 10 years), and to develop test organizations make unsubstantiated perform- methods that can be used in actual field condi- ance claims. Moreover, equipment or ap- tions. paratus for testing has been designed that does not meet specified guidelines. I n other cases, Another problem has been the absence of a the testing technique employed is often not general set of testing procedures that pertain the appropriate technique for the material. In to all materials. As is often the case, materials view of these concerns, the Cl 6 Committee in are compared with each other based on the mid-1 976 recommended to the Department of results of different test methods used to Commerce that a voluntary laboratory accred- evaluate their properties. It becomes impor- itation program be established in order to tant, therefore, that material standards contain resolve some of the current problems of mate- the correct and relevant test methods and rials testing and standards. specifications.

Two of the immediate concerns about materials testing are the adequacy of organizations Appendix B Thermal Characteristics of Single-Family Detached, Single-Family Attached, Low-Rise Multifamily, and Mobile Homes—1975-76 by the National Association of Home Builders Research Foundation, Inc., October 1977

This report contains information on thermal characteristics of single-family detached, attached, and multifamily homes built in the last half of 1975 and the first half of 1976 and of mobile home units built July 1976 through June 1977.

Scope and Method Building Type Number of Units Single-family detached 112,942 In the last half of 1976, the National Associa- Single-family attached 12,990 Low-rise multifamily 44,960 tion of Home Builders (NAHB) Research Foun- dation conducted a survey of the builder members of NAHB to determine construction prac- In addition, a survey of mobile home ther- tices for homes and apartments built in 1975 mal and general characteristics was conducted and 1976. Included in the survey were ques- in the summer of 1977. Response was received tions on general characteristics, thermal char- for almost 175,000 units, two-thirds of which acteristics, and specific material use practices. were “single-wide” units and one-third Data were summarized by nine (9) census re- “double-wide” units. This represented about gions. Responses by building type was as fol- 60 percent of all mobile home units built dur- lows: ing that period.

1975-76 SINGLE-FAMILY DETACHED UNITS

This section contains characteristics of Included are tables which show national use almost 113,000 single-family detached homes of insulation by house price and size. built in 1975-76, summarized by nine census regions.

292 Single-Farnily Detached Housing Units East West East New Mid- North North South south U.S. England Atlantic Central Central Atlantic Central Mountain Pacific Total

1. Number of Stories (% by region)

One story 35 34 41 46 Two story 31 37 29 12 Bi-level 30 21 14 28 Split level 4 8 16 14

2. Foundation Type (% by region)

Basement 67 68 53 81 Partial basement 29 16 21 15 Crawl space 2 8 11 2 Slab 2 8 15 2

3. Floor Area By Type (averages by region)

One story 1,280 1,420 1,500 1,490 Two story 2,010 2,100 2,110 2,110 BI-level 1,710 1,685 1,660 1,680 Split level 1,860 1,820 1,860 1,850 Overall average 1,658 1,760 1,757 1,667

4. Average Selling Price (averages by region) (Including lot) 41,300 60,500 45,500 52,200 46,3o6

5. Price Per Square Foot (averages by region)

One story 31.1 29.2 27,5 27.7 Two story 29.0 28.6 29.1 28.7 Bi-level 25.7 26.6 27,2 27.1 Split level 26.6 26.8 28.3 28.2 All houses 28.5 28.2 28.1 27.8 1975-76 HOUSlNG CHARACTERISTICS Single-Family Detached Housing Units East East West New Mid- North South South South England Atlantic Central Atlantic Central Central Mountain Pacific

6. Size In Increments of 200 SF-% By Region

Less than 800 800 - 999 1000 - 1199 1200 - 1399 1400 - 1599 1600 - 1799 1800 - 1999 2000 - 2199 2200 - 2399 2400 - 2599 2600 - 2799 2800 and more

7. Insulation (% by region)

Exterior Wall

None o Less than R-7 o R-7 0.4 R-n 58.2 R-13 35.6 R-19 4.5 Other 1.3 1975-76 HOUSING CHARACTERISTICS Single-FamiIy Detached Housing Units East West East West New Mid- North North South South South Us. England Atlantic Central Central Atlantic Central Central Mountain Pacific Total 7. (continued)

Ceiling

None 0.6 1.4 5.6 0.7 R-7 0.4 3.8 0.4 0.3 R-11 6.0 0.3 2.5 R-13 23.6 13.4 12.6 R-19 51.1 42.8 80.9 R-22 5.3 22.9 0.9 R-25 1.6 1.0 0 R-26 0.2 0 R-30 20.3 0.8 R-31 1.1 0.3 More than R-31 1.9 0.4 Other 0.1 0.4

Between Floor Joists (% of all houses)

63.1 65.7 75.0 75.7 99.1 88.3 88.9 80.1 1.9 1.1 1.8 4.4 0.1 0.4 1.1 1.4 18.5 14.3 16.8 11.5 0.4 4.1 7.3 11.2 6.5 7.7 2.5 4.3 0.1 0.9 0.3 2.6 8.9 11.2 3.6 4.1 0.3 6.2 1.3 4.2 1.3 .0 0.3 0 0 0.1 1.1 0.5 IIU

1975-76 HOUSING CHARACTERISTICS Single-Family Detached Housing Units East East West New Mid- North South South England Atlantic Central Central Central Mountain Pacific 1975-76 HOUSING CHARACTERISTICS Single-Family Detached Housing Units East West East New Mid- North North South South Us. England Atlantic Central Central Atlantic Central Mountain Pacific Total

8. Heating/Cooling % by Type by Region

Heating Equipment

Gas warm air 71 59 64 41 Electric warm air 12 15 21 29 Oil warm air 2 o o 5 Gas hot water 1 2 i 2 Oil hot water 0 0 o 2 Heat pump 6 15 2 13 Elec.baseboard or radiant ceiling 8 9 12 8 Solar 0 0 o 0

Heating Fuel

Gas 72 61 65 43 Electric 26 39 35 50 Oil 2 0 0 7 Solar 0 0 0 0

Cooling Equipment

None 23.3 47.2 65.5 36.7 Central 70.0 24.4 28.9 46.9 Heat pump 6.0 15.0 2.0 13.5 Evaporative cooler 0.6 13.4 3.3 2.3 Window or wall 0.1 o 0.3 0.6 lfu

1975-76 HOUSING CHARACTERISTICS Single-Family Detached Housing Units East West East West New Mid- North North South South South U.S. England Atlantic Central Central Atlantic Central Central Mountain Pacific Total

9. Window Glazing % by Region

Single glaze 37.6 26.6 14.3 58.8 49.6 80.2 22.6 44.0 Single w/storm 25.3 21.6 40.6 15.5 22.7 12.1 22.7 20.0 Insulating glass 36.9 50.0 42.2 25.6 26.7 7.7 53.9 35.0 Insul. w/storm 0.2 1.7 2.9 0.1 0 0 0.8 1.0

10. Window Square Feet by Region

Single glaze 81.7 47.8 23.4 105.4 84.1 123.4 49.7 82.0 Single w/storm 55.0 38.7 66.9 25.8 35.1 16.4 55.1 32.6 Insulating glass 80.3 89.8 71.0 44.8 41.7 11.1 92.7 56.9 Insul. w/storm 0.5 3.1 4.9 0 0 0 1.2 2.1 175.6 Totals 217.5 179.4 166.2 176.0 160.9 150.9 198.7

11. Sliding Glass Doors

Sliding glass doors Number per unit 0.88 1.02 0.93 0.89 0.68 0.84 1.00 0.95 Square feet per unit 35.2 40.8 37.2 35.6 27.2 33.6 40.0 38.0

12. Exterior Doors (% by region) (Entrance)

Not insulated 41.0 16.1 46.1 69.6 69.2 78.8 56.5 57.9 Insulated 59.0 83.9 53.9 30.4 30.8 21.2 43.5 42.1 Single-Family Detached Housing Units 13. Insulation By Price and By Size

Exterior Wall Insulation Insulation Percent Less Price Range No. of Units None Than R7 R7 R11 R13 R19 Other — — Less than $30,000 7,252 0.8 0.9 71.8 0.6 $30,000- 34,999 17,126 0.1 0.9 76.2 0.6 35,000 - 399999 20,722 0 3.3 67.0 2.4 40,000 - 44,999 18,837 0.1 1.3 69.7 0.9 45,000- 49,999 14,265 0 1.0 70.0 0.7 50,000 - 54,999 11,512 0 1.3 73.3 1.0 55,000 - 59,999 7,072 0.4 0.6 67.4 0.5 60,000 - 64,999 5,063 0.2 0.9 72.4 0.7 $65,000 and over 9,282 0.2 0.6 65.8 0.5

Ceiling Insulation More Than Price Range None R7 R11 R13 R19 R22 R25 R26 R30 R31 R31 Other

Less than $30,000 0.5 0.7 2.5 21.1 52.5 0.5 $30,000- 34,999 1.1 0.3 6.o 18.8 52.3 2.9 35,000 - 39,999 0.7 0.7 6.9 14.7 47.9 1.9 40,000 - 44,999 1.6 0.5 4.3 20.1 55.8 0.2 45,000 - 49,999 1.0 1.4 2.3 16.1 54.7 3.1 50,000 - 54,999 1.1 3.4 2.2 25.9 38.4 2.0 55,000 - 59,999 1.0 0.2 2.8 25.2 37.6 1.6 60,000 - 64,999 1.0 0.3 3.6 22.9 53.2 0.1 $65,000 and over 1.4 1.2 2.2 19.9 51.4 1.6 Single-Family Detached Housing Units 13. (continued)

Exterior Wall Insulation Insulation Percent . . Size Range (SF) R-19 Other Less than 1000 2.2 0.5 1000 - 1199 22.8 1200 - 1399 22.0 1400 - 1599 25.0 1600 - 1799 15.1 1800 - 1999 21.8 2000 - 2199 24.1 2200 - 2399 20.0 2400 - 2599 24.9 2600 - 2799 22.3 2800 and over 31.7

Ceiling insulation More Than Size Range (SF) R13 R26 R30 R31 R31

Less than 1000 22.1 23.1 0.2 0.2 2.4 0.7 0.7 1.7 1000 - 1199 18.3 17.0 1.3 0.8 3.8 0.8 2.6 1.9 1200 - 1399 21.4 13.9 2.6 0.4 6.0 0.5 2.0 1.9 1400 - 1599 18.9 12.9 1.9 0.6 2.3 0.6 3.6 2.1 1600 - 1799 14.1 9.8 1.2 0.5 2.6 0.1 3.1 1.2 1800 - 1999 20.4 13.5 2.8 0.1 2.9 0.7 2.9 1.9 2000 - 2199 22.7 13.1 1.8 0.2 1.2 1.8 2.5 2200 - 2399 22.1 6.8 2.2 0.3 1.1 3.1 1.9 2400 - 2599 32.9 10.0 3.1 0.9 0.9 4.0 0.9 2600 - 2799 12.0 10.7 1.6 0.2 1.7 1.9 0.4 2800 and over 16.0 12.3 2.3 2.4 0.1 6.4 0.1 Appendix B—Thermal Characteristics of Homes Built in 1975-76 ● 301

1975-76 SINGLE-FAMILY ATTACHED UNITS

This section contains data on almost 13,000 single-family attached housing units. East East West New Mid- North South South South England Atlantic Central Atlantic Central Central Mountain Pacific 1. Type of Unit - Percent by Region Town Houses 58.2 61.2 68.8 76.6 46.1 77.7 Two Family Units 15.1 19.1 20.8 24.7 14.4 Three Family Units 6.4 4.5 0.9 1.3 1.2 Four Family Units 20.3 15.2 1.7 27.9 6.7

2. Foundation Types - % by Type by Region Town Houses Full Basement 29.7 61.4 0.9 34.5 6.7 Partial Basement 0 2.4 4.4 4.3 0.7 Crawl Space 52.4 23.1 13.1 28.5 14.2 Slab 17.9 13.1 81.6 32.7 78.4 Two Family Units Full Basement 100.0 42.8 0 26.4 20.6 Partial Basement 0 6.7 0 6.4 0 Crawl Space 0 15.2 0 6.8 20.1 Slab 0 35.3 100.0 60.4 59.3 Three Family Units Full Basement 11.1 22.4 0 0 0 Partial Basement 0 24.5 0 0 Crawl Space 42.9 0 76.; 100.0 Slab 88.; 10.2 100.0 23.1 o Four Family Units Basement 7.0 1.8 0 0 Partial Basement 0 7.2 0 0.5 Crawl Space 2.3 0 13.7 Slab 90.7 91.: 100.0 85.8 East West East West New Mid- North North South South South Us. England Atlantic Central Central Atlantic Central Central Mountain Pacific Total 3. Number of Stories % by Type by Region

Town Houses

One Story 10.8 15.6 11.5 32.5 6.0 21.4 17.3 44.5 25.0 17.6 Two Story 59.5 83.2 86.1 38.6 84.8 69.2 72.9 55.5 72.8 74.6 Three Story 29.7 1.2 2.4 26.8 8.7 9.4 9.8 0 2.2 7.6 More than 3 0 0 0 2.1 0.5 0 0 0 0 0.2 Two Family Units

One Story 4.7 6.0 41.0 51.5 18.5 36.1 75.7 38.8 72.5 48.0 Two Story 80.5 71.2 59.0 22.4 81.5 10.7 24.3 57.2 23.4 39.5 Three Story 14.8 22.8 0 26.1 0 53.2 0 4.0 1.2 11.9 More than 3 0 0 0 0 0 0 0 0 2.9 0.6 Three Family Units

One Story 29.6 0 49.0 47.5 100.0 0 85.7 76.9 27.3 47.5 Two Story 70.4 0 51.0 52.5 0 0 14.3 23.1 72.7 52.5 Three Story 0 0 0 0 0 0 0 0 0 0 More than 3 0 0 0 0 0 0 0 0 0 0 Four Family Units

One Story 25.6 14.3 4.8 92.7 77.2 13.3 61.5 36.o 34.2 38.4 Two Story 72.1 85.7 95.2 7.3 22.8 59.1 38.5 59.0 65.8 57.7 Three Story 2.3 0 0 0 0 27.6 0 5.0 0 3.9 Four Story 0 0 0 0 0 0 0 0 0 0 East West East West Mid- North North South South South Atlantic Central Central Atlantic Central Central Mountain Pacific

4. Finished Floor Area - % by Region

Square Footage

Less than 800 1.4 o 0 800 - 999 21.3 1.0 17.8 1000 - 1199 47.1 21.9 27.1 1200 - 1399 10.0 56.1 27.1 1400- 1599 11.4 1.5 11.0 1600 - 1799 3.3 5.2 5.8 1800 - 1999 1.2 12.9 4.8 2000 - 2199 1.9 0.9 6.4 More than 2200 2.3 0.5 0

5. Window Glazing - % by Region

“Regular” Windows Single Glaze 22.1 40.6 28.6 Single w/Storm 27.8 45.9 2.6 Insulated Glass 48.4 13.5 68.8 Insul. w/Storm 1.7 0 0 “Picture” Windows Single Glaze 25.3 36.0 12.8 Single w/Storm 30.6 48.1 5.6 Insulated Glass 44.1 15.9 81.6 Insul. w/Storm 0 0 0 East West East West Mid- North North South South South Atlantic CentraI Central Atlantic Central Central Mountain Pacific

6. Window Square Feet by Region

Single gIaze 18.9 Single with storm 26.5 Insulated glass 56.8 Insul. with storm 1.4 Totals 103.6 7. Sliding Glass Doors

S.G.D. per unit 0.97 Square feet per unit 38.8

8. Exterior Doors - Percent by Type by Region

Not insulated 37.8 insulated 62.2 Storm doors 26.8

9. Exterior Wall Structure % by Region

First Floor 2x4, 16’’o.c. 90.8 2x4, 24’’o.c. 9.2 2x6, 24’’o.c. 0 Steel stud 0 Concrete block 0 Load-bearing brick 0 Other 0 East East West Mid- North South South South Atlantic Central Atlantic Central Central Mountain Pacific

9. (Continued)

Upper Floors 2x4,16’’o.c. 2x4,24’’o.c. 2x6,24’’o.c. Steel stud Concrete block Load bearing brick Other Not applicable

10. Exterior Wall Sheathing

None 1/2” fiberboard 25/32 “ 1/2” plywood 3/8” II Alum. foil faced 1/2” gypsumboard 3/4” polystyrene 1" II 1“ urethane 1 x boards Other West South Central Mountain Pacific

11. Insulation-Percent by Location by Region

Ceiling

R7 R9 Rll R13 R19 R22 R25 R26 R30 More than R30 Other

Exterior Walls

None R7 R11 R13 R19

Between Floor Joists

None 2-1/4’’batts R-7 2.7 3-1/2” u R-11 7.6 3-5/811 ~ R-13 31.8 6“ II R-19 13.7 Other o East East West Mid- North South South South U.S. Atlantic Central Atlantic Central Central Mountain Pacific Total

11. (Continued)

Basement Walls

None 83.2 97.6 86.1 2-1/4” batts R-7 7.1 0 2.8 3-1/2" II R-11 9.7 0 3.8 3-5/8" !1 R-13 0 0 5.8 6“ tl R-19 0 0 0 Other 0 2.4 1.5

Crawl Space Walls None 94.5 97.6 63.8 2- 1/4” batts R-7 2.4 0 0 3-1/2" II R-11 1.5 0 28.5 3-5/8" II R-13 0 2.4 5.9 6“ II R-19 1.1 0 0 Other 0.5 0 1.8

Slab Perimeter

None 14.3 96.9 62.5 One-inch 76.2 3.1 37.5 Twc-inch 0.6 o 0 Other 8.9 0 0 Change From 1975

No change 38.7 89.8 40.7 Increased 61.3 10.2 59.3 Decreased 0 0 0 East East New Mid- North South South England Atlantic Central Atlantic Central Mountain Pacific —. ——

12. Heating/Cooling % by Type by Region

Heating Equipment

None o o i.2 0.6 0.2 Warm air furnace 24.1 57.1 74.5 82.7 67.3 Hot water system 27.5 2.8 0.1 0 0.8 Heat pump 5.2 10.2 22.0 11.5 15.5 Elec. baseboard or radiant ceiling 43.2 29.9 2.2 5.2 16.2

Heating Fuel

Gas 2.6 35.9 43.0 37.5 67.4 Electric 69.7 46.4 56.7 62.5 32.6 oil 27.7 17.7 0.3 0 0

Cooling Equipment

None 59.0 26.6 10.4. 1.0 37.8 Port of heating equipment 26.0 50.5 66.7 78.1 i4.9 Separate from heating 9.8 12.7 0.9 9.4 30.1 Heat pump 5.2 10.2 22.0 11.5 15.5 Evaporative cooler 0 0 0 0 1.7

Cooling Fuel

Gas 3.6 8.7 0 0.6 Electric 41.: 69.8 80.9 99.0 61.6 None 59.0 26.6 10.4 1.0 37.8 310 ● Residential Energy Conservation

1975-76 LOW-RISE MULTIFAMILY UNITS

This section contains data on almost 45,000 low-rise multifamily

dwelling units. East West East West New Mid- North North South South South Us. England Atlantic Central Central Atlantic Central Central Mountain pacific Total

1. Type Units - Percent by Region

Efficiencies 21.2 4.6 5.4 2.9 8.3 2.2 11.5 6.0 One Bedroom 35.4 38.2 24.7 25.0 44.0 37.2 33.8 38.1 Two Bedroom 37.5 50.5 64.7 61.0 39.0 50.1 48.9 47.0 Three or more Bdrm. 5.9 6.7 5.2 11.1 8.7 10.5 5.8 8.9

2. Foundation Types - Percent by Region No Basement 73.1 77.6 75.9 52.7 95.0 98.2 61.5 92.6 82.8 Live-in Basement 12.2 5.1 6.4 30.2 3.7 29.5 2.5 7.7 Live-in/Utility Bsmt 4.3 1.0 1.0 0.4 1.1 0.8 1.7 2.1 Utility Basement 10.4 16.3 16.7 16.7 0.2 1.8 8.2 3.2 7.4

3. Finished Floor Area - Percent by Region

Square Footage

Less than 400 0.9 0 2.5 1.0 1.6 1.7 0.8 400 - 599 21.9 15.5 4.6 1.8 13.2 18.3 10.0 600 - 799 23.1 26.8 25.5 33.2 47.8 33.7 800 - 999 32.7 30.4 34.8 27.3 25.2 31.1 1000 -1199 14.9 19.6 20.2 16.6 9.5 16.8 1200 and more 6.5 7.7 16.7 8.1 7.5 7.6 East West East West New Mid- North North South South South U.S. England Atlantic Central Central Atlantic Central Central Mountain Pacific Total

4. Window Glazing - Percent by Region Single Glaze 6.3 4.2 19.5 43.6 86.5 98.9 79.3 Single w/Storm 33.4 50.6 35.0 48.2 0.6 0.6 0 Insulated Glass 60.3 45.2 33.4 8.2 12.9 0.5 20.7 Insul. w/Storms 0 0 12.1 0 0 0 0

5. Window Square Feet by Region Single Glaze 4.3 4.9 0.3 51.2 90.0 Single w/Storm 29.4 51.1 12.5 0.3 23.7 Insulated Glass 44.9 44.0 66.7 7.7 0 Insul. with Storms 0 0 0 0 Totals 78.6 100.0 59.2 6. Entrance Doors - Percent by Region Unit Entrance Not Insulated 50.1 34.1 52.0 53.7 30.8 89.4 97.2 Insulated 49.9 65.9 48.0 46.3 69.2 10.6 2.8 . .

East West East West New North North South South South U.S. England Central Central Atlantic Central Central Mountain Pacific Total

7. Exterior Wall Sheathing % by Type by Region None 18.9 1/2” fiberboard 35.1 25/32” fiberboard 3.8 1/2” plywood 6.9 3/8” plywood 6.3 Alum. foil-faced board 1.1 1/2” gypsumboard 24.0 3/4” polystyrene 0.7 i“ polystyrene 0.9 3/4” urethane 1.0 l“ urethane 0.5 Other 0.8

8. Insulation - Percent by Location by Region Ceiling Insulation 2-1/4” batts R-7 3-1/2” batts R-11 3-5/8” batts R-13 6" batts R-19 6-1/2” batts R-22 8-1/2” batts R-26 9-1/2” batts R-30 4" loosefill R-9 0.5 5“ Ioosefill R-11 0.2 6“ loosefill R-13 8-3/4 H loosefill R-19 10” Ioosefill R-22 12” looseflll R-25 13-3/4” Ioosefill R-30 14” Ioosefill R-31 Other East East West New Mid- North South South South England Atlantic Central Atlantic Central Central Mountain— Pacific.

8. Exterior Wall Insulation (continued) None 0 21.1 0 2-1/4” batts, R-7 0 15.2 2.7 3-1/2" batts, R-11 40.9 32.3 93.3 3-5/8” batts, R-13 58.4 9.2 1.2 6" batts, R-19 0 8.9 2.4 Pleated aluminum 0 0 0 Other 0.7 13.3 0.4

Insulation Between Joists None 70.7 66.5 59.6 2-1/4" batts R-7 1.4 2.6 0 3-1/2" batts R-n 14.6 30.7 29.5 3-5/8" batts R-13 9.6 0.2 1.4 6" batts R-19 3.7 0 9.5 Other 0 0 0

Crawl Space Walls None 55.8 94.5 96.6 2-1/4” batts R-7 10.0 0.9 0 3-1/2” batts R-11 19.4 4.4 2.5 3-5/8” R-13 1.1 0.2 0.9 6" batts R-19 10.1 0 0 Other 3.6 0 0

Insulation Basement Walls

None 96.5 87.9 94.2 2-1/4” batts R-7 0.5 1.2 0 3-1/2” batts R-n 1.8 10.2 5.8 3-5/8” batts R-13 0.9 0 0 6" batts R-19 0.3 0 0 Other 0 0.7 0 East West East West New Mid- North North South South South U.S. England Atlantic Central Central Atlantic Central— Central .— Mountain Pacifi c. Total

8. (continued) Practice Change from ’75

No change 89.8 80.7 35.2 73.0 60.3 95.2 69.9 Increased 10.2 19.3 64.8 27.0 39.7 4.8 30.1 Perimeter Slab-on- grade

None 18.6 25.2 21.9 30.3 56.8 64.9 56.0 One Inch 13.9 57.2 35.3 32.8 43.2 35.1 29.7 Two Inch 67.5 17.6 34.2 33.1 0 o 12.8 Other 0 0 8.6 3.8 0 0 1.5

9. Heating/Coollng % by Type by Region

Heating By Equipment

Central boiler w/air handler 0 10.8 0 8.3 11.0 0.2 6.2 Central boiler w/fan coils 0 0 0 0 0.7 0 1.5 Central boiler w/hot water baseboard 46.5 4.7 12.4 5.1 0 2.6 7.1 Ind. warm air furnace 7.3 52.3 64.3 45.5 54.7 78.8 57.2 Ind. hot water system 0 0 0.3 0 0 0 nd. heat pump 1.1 3.2 9.1 1.8 11.6 2.9 5.4 Ind. elec. baseboard or radiant ceiling 45.1 18.9 14.2 39.3 0.9 15.5 18.0 Other 0 10.1 0 0 21.! 0 4.6 West South Central Mountain Pacific

9. (continued) Heating Fuel

Gas Electric Oil

Cooling Equipment

None Central systems chiller/alr handler chiller/fan coils Ind.unit systems Part of heating equip. Separate from heat equip. Heat pump Evaporative cooler Room units

Cooling Fuel

None Gas Electric Appendix B—Thermal Characteristics of Homes Built in 1975-76 . 317

This section contains data on about 175,000 mobile home units. MOBILE HOME UNITS

East East West New Mid- North South South South Us. England Atlantic Central —Atlantic Central. Central. Mountain —Pacific Tota—l

1. Average Size (SF)

Single wide 935

Double wide 1249

2. Insulation (Percent of units)

Single wide Ceilings

R11 to R12 R13 to R18 R19 to R21 R22 or more Single wide Walls R7 7.1 R11 92.9 R12 0 R13 0 R19 0 Single wide Floors

R7 0 R9 0 R11 100.0 R13 0 R14 0 R15 0 R19 0 1976-77 HOUSING CHARACTERISTICS

MOBILE HOME UNITS

East East West Mid- North South Us. Atlantic Central Central Mountain Pacific Total

Double Wide Ceilings

R11 to R12 R13 to R18 R19 to R21 R22 or more

Double Wide Walls

R7 R11 R12 R13 R19

Double Wide Floors R7 R9 R11 R13 R14 R15 R19 MOBILE HOME UNITS East West East West New Hid- North North South South South Us. England Atlantic Central Central Atlantic Central— Central . Mountain Pacific Total

3. Windows & Doors

Single Wide

Average number 11.7 12.4 11.3 11.5 10.3 11.0 11.4 Average size (SF) 102.0 118.7 115.9 113.5 109.0 107.1 113.4

Double Wide

Average number 11.8 12.4 12.2 12.3 11.5 12.3 11.9 Average size (SF) 131.0 140.0 157.7 137.1 145.9 137.1 145.6

Glazing (percent)

Single no storms 14.8 30.8 21.3 41.5 38.5 60.6 37.8 Single with storms 59.2 69.2 76.2 58.5 61.1 28.9 58.1 Insul. no storms 0 0 2.5 0 0.2 10.2 2.3 Insul. with storms 26.0 0 0 0 0.2 0.3 1.8

Doors (percent of units)

Insulated 50.5 50.5 47.3 48.0 37.9 37.9 46.1 Not insulated 49.5 49.5 52.7 52.0 62.1 62.1 53.9 1976-77 HOUSING CHARACTERISTICS MOBILE HOME UNITS East West East West New Mid- North North South South South Us. England Atlantic Central Central Atlantic Central Central Mountain —Pacific Tota—l

4. Heating/Cooling

Heating fuel source (percent)

Gas 27.4 oil 53.9 Electric 18.7

Cooling equipment plant installed (percent) Appendix C Thermal Characteristics of Homes Built in 1974, 1973, and 1961

by the National Association of Home Builders Research Foundation, Inc., July 1977

INTRODUCTION

This report contains information in thermal characteristics of homes built in 1973 and in 1974, and thermal insulation data for 1961 homes. In addition, comments from 83 builders regarding levels of insulation being installed in 1976-77 are included.

Scope and Method In 1961, F. W. Dodge Corporation conducted a detailed material inventory of 1,000 random- In 1974, the Research Foundation conducted ly selected dwellings. Data from this inventory a national survey of builder practices for the are included in this report. National Association of Home Builders (NAHB). The study covered a wide range of Another extensive survey is being conducted home builder practices for homes built in 1973. by the Research Foundation for homes built in Results represented a composite of about 1975 and 1976. Data from this survey are not 84,000 homes built by over 1,600 builders se- yet available but a review of several thousand lected at random from NAHB membership questionnaires revealed many builders are in- rolIs. Data were summarized for four (4) census stalling more insulation than the average and regions. some builders are installing less insulation than the average. Eighty-three of these un- I n 1975, a survey of over 120,000 single fami- typical builders were surveyed in an attempt to ly dwellings was completed for homes built in discover what causes builders to make 1974. This survey was taken from the entire changes related to energy conservation. membership of NAHB and was summarized by Results of that survey are included. nine (9) census regions. Housing characteristic data were collected in sufficient detail for thermal characteristics to be analyzed.

1974 HOUSING CHARACTERISTICS

Percent This section contains characteristics of Region of homes about 120,000 single family detached homes New England (N. E.) ... 3 built in 1974, summarized by nine census Middle Atlantic (M.A.). ... 10 East North Central (E. N. C.) 15 regions. Following are the regions and the West North Central (W.N.C.). 7 percentage of the total number of homes South Atlantic (S. A.) 20 with in each region. East South Central (E.S.C.), ., 6 West South Central (W. S. C,) ., 15 Mountain (M ) ... 9 Pacific (P. ) 15

322 1974 HOUSING CHARACTERISTICS

la. Finished Floor Area - Percent by Region

Square Footage N . E . M.A. E.N.C. W.N.C. S.A. E.S.C. W.S.C. M. P. Total U.S.

Under 800 5 1 2 I 800 - 999 7 2 5 I 1000 - 1199 23 14 16 12 1200 - 1399 27 24 21 17 1400 - 1599 13 17 22 26 1600 - 1799 5 11 11 16 1800 - 1999 7 12 5 10 2000 - 2199 5 10 10 8 2200 - 2399 3 4 3 5 2400 - 2799 3 3 3 3 Over 2800 2 2 2 I

Total 100 100 100 100 100 100 100 100

Average SF 1,518 1,570 1,507 1,429 1,584 1,535 1,604 1,585

1b. Finished First Floor Area - Percent by Region (Estimated)

Percent on 1st Floor 72.3 67.5 76.0 79.9 89.2 87.7 83.3 84.2 Sq. Footage 1,098 1,060 1,145 1,141 1,413 1,346 1,336 1,334

1c. Wood Frame vs. Concrete Slab 1st Floor, by Region

49 44 52 660 588 694 51 56 48 686 748 640

;’: Less than 1% 2. Number of Stories - Percent by Region

Type House N.E. M.A. E.N.C. W.N.C. S.A. E.S.C. W.s.c. M. P. Total U.S.

One Story 36 35 48 53 77 69 87 73 65 Two Story 31 33 24 12 13 11 12 6 18 Bi-Level 26 25 12 20 4 12 1 10 10 Split Level —7 ——7 16 15 6 8 1 11 7 Total 100 100 100 100 100 100 100 100 100 100 Average Stories/House* 1.4 1.4 1,4 1.3 1.2 1.2 1.1 1.2 1.3 1.3

3. Square Footage of Exterior Wall - by Region

Opaque Wall 1,190 1,221 1,188 1,087 1,134 1,201 1,193 1,091 1,194 1,162 Windows & Doors —287 ——296 282 282 - 297 294 324 297 298 295

Total SF 1,477 1,517 1,470 1,369 1,431 1,495 1,517 1,388 1,1192 1,457

;: Bi-level considered one story, split leveI two story 4. Heating and Cooling Equipment - Percent by Type

E.S.C. P. Total U.S. Heating Equipment N.E. 69.0 81.2 Warm air furnace 28.2 0 1.2 37.9 Hot water system 22.2 11.6 Heat pump 0 3.9 4.2 Electric baseboard 33.9 Electric radiant 4.3 1.6 ceiling 0 0.6 0.2 None 0

Heating Fuel 34.2 55.7 Gas 39.3 42.9 38.5 65.2 Electric 0 1.2 Oil 22.2

Cooling Equipment 6.o 33.3 None 81.8 Combination heating & cooling (cooling part of heating 36.5 14.2 51.3 system) 0.8 Individual room 2.1 5.9 Split system (cooling separate 14.2 9.1 from heating) 1.9 22.6 11.6 Heat pump 0 0 8.7 Other 0

Cooling Fuel

Gas 0 2.2 3.5 63.2 Electric 18.2 91.8 5. Thermal Resistance (R) Values of Insulation - Percent

Exterior Walls N.E. M.A. E.N.C. W.N.C. S.A. E.S.C. w . s . c . M. P. Total U.S.

R-VaIues

None 1.9 6.0 R-3 0 9.6 R-7 0 15,1 R- I 1 90.5 69.2 R-19 5.7 0 Other 1.9 0. 1

Ceiling/Roof

None 0 1.6 2.3 4.8 R-9 2.8 0.7 8.9 4.5 R-11 0 11.4 16.3 R-1 3 20.7 9.3 28.2 R-18 6.9 3.6 4.4 R-19 32.7 46.0 41.6 R-22 29.1 27.2 0.1 R-26 4.8 0.2 0 Other 3.0 0 0.1

Floor Joists

None R-7 R-11 R-19 Other 6. Average Number of Windows and Sliding Glass Doors Per House

Windows by Glazing N.E. M.A. E.N.C. W.N.C. S.A. Total U.S. Single glaze - no s term 4.6 5.7 4.1 4.7 8.6 6.4 Double insulating g I ass 1 .6 3.6 4.1 2.7 1.6 2.9 Single glaze with storms 6.2 4.7 6.3— 6.3 2.2 3.0 Total 12.4 14.0 14.5 13.7 12.4 12.3

Sliding Glass Doors 0.6 0.8 0.5 0.8 0.6 0.7

Windows by Frame Type

Wood 11.9 10.5 9.4 10.2 6.6 5.6 Aluminum 0.3 2.5 5.1 3.5 5.8 6.7 Other 0.2 1.0 0 0 0 0

Total 12.4 14.0 14.5 13.7 12.4 11.4 12.3

7. Average Number of Exterior Doors Per House Doors by Type

Wood 2.74 1.84 1.69 2.94 2.75 2.83 2.57 Steel (Insulated) 0.71 1.48 1.72 0.53 0.71 0.31 0.79 Other 0.03 0.06 0.04— 0.10 0.16 0.03 0.05

Total 3.48 3.38 3,45 3.57 3.62 3.66 3.17 3.41

Storm Doors 1.90 1.20 1.80 2.70 1 .50 1.70 1.10 1.50 . .

8. Weighted Average Thermal Resistance (R) Values of All Other Materials in Walls, Ceilings and Floors Total Exterior Wall “R” Values N.E. S.A. W.S.C. —M. P. —Us.

Outside surface film 0.17 0.17 0.17 0.17 0.17 0.17 Siding 0.71 0.67 0.51 1.02 0.48 0.57 Sheathing 0.68 0.69 0.82 0.55 0.44 0.82 Interior surface material material 0.44 0.44 0.45 0.44 0.46 0.44 Interior surface film 0.68 0.68 0.68 ——0.68 0.68 —0.68

Subtotal 2.68 2.65 2.63 2.86 2.23 2.68

Insulation 10.30 7.20 10.30 ——6.70 8.80 9.20 —

Total 12.98 9.85 12.93 9.56 11.03 11.88

Ceiling/Roof

Outside surface film 0.61 0.61 0.61 0.61 0.61 0.61 Interior surface material 0.44 0.44 0.45 0.44 0.46 0.44 Interior surface film 0.61 0.61 0.61 0.61 0.61— 0.61 —

Subtotal 1.66 1 .66 1.67 1.66 1.68 1.66

Insulation 17.90 14.80 15.1O —18.10 ——14.60 15.80

Total 19.56 16.46 16.77 19.76 16.28 17.46

Wood Floor

Inside surface film 0.92 0.92 0.92 0.92 0.92 0.92 Finished flooring 0.98 1.20 1.25 1.24 1.25 1.22 Underpayment & sheathing 1.19 1.13 1.21 1.17 1.46 1.19 Underfloor surface 0.92 4.17 5.40 9.57 Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 329

1973 Housing Characteristics

This section contains characteristics of about 84,000 homes built

in 1973, a pre oil embargo year. Data are summarized by four census districts: Northeast, North Central , South and West. 1973 HOUSING CHARACTERISTICS la. Finished Floor Area By Region North

Under 1,000 SF 1,000 - 1,199 23 1,200 - 1,399 26 1,400 - 1,599 17 1,600 - 1,799 6 1,800 - 1,999 6 2,000 - 2,199 6 2,200 - 2,399 3 2,400 - 2,799 4 Over 2,800 3

Total 100 100

Average SF 1,514 1,515

;: Less than 1% 2. Number of Stories Percent by Region

North North Total East Central South West Us. Type House

One Story 34.3 47.9 76.5 66.2 57.8 Two Story 32.7 20.4 12.2 17.6 18.9 B i - LeveI 25.7 15.4 5.8 7.8 13.8 Split Level 7.3 16.3 5.5 8.4 9.5

Total 100.0 100.0 100.0 100.0 10.0

Average Stories/House 1.4 1.4 1.2 1.3 1.3

3. Square Footage of Exterior Wall, by Region

Opaque Wall 1,187 1,178 1,186 1,133 1,171 Windows and Doors 286 287 312 291 298

Total SF 1,473 1,465 1,498 1,469 4. Heating and Cooling Equipment - Percent by Type

North North East Central west Heating Equipment

Warm air furnace 43.3 93.? Hot water system 21.4 2.0 Heat pump 0.1 0.4 Electric baseboard 30.3 2.0 Electric radiant ceiling C.4 1.2 Other 4.5 1.3

Heating Fuel

Gas 38.7 70.4 31.6 80.9 Electric 42.2 28.9 67.2 19.0 Oil 19.1 0.7 1.2 O.1

Cooling Equipment

None 59.2 37.9 47.5 Central system 36.2 61.4 46.4 Individual room 4.5 0.3 1.8 Heat pump 0.1 0.4 4.3

Cooling Fuel

Gas 1.0 Electric 51.5 5a . Thermal Resistance (R) Values of Insulation - Percent

North North Total East Central South West Us. Exterior Walls

R-Values

None o 0.1 3.5 2.5 2.1 R-3 0,6 0.3 2.3 0.5 1.2 R-7 27.0 26.7 6.6 20.9 17.1 R-n 70.6 71.4 81.9 70.4 76.1 Other 1.7 1.5 5.7 5.7 4,5

Ceiling/Roof

None 0.5 0.2 3.0 R-7 1.8 0.8 0.2 R-9 2.6 5.6 17.0 R-11 30.O 16.8 11,5 R-13 11.7 39.4 38.5 R-18 4.6 15.4 1.2 R-19 46.7 16.1 16.8 Other 2.1 5.7 11.8

Wood Floor

None 53.9 70.5 44,9 82.0 61.4 R-7 6.2 3.6 28.2 10.2 14.1 R-n 35.1 18.5 16.0 6.9 17.6 R-19 3.7 6.3 6.5 0.2 4.8 Other 1.2 1.1 4.4 0.7 2.1

5b. Weighted Average “R” Values

Walls 9.8 9.9 10.1 9.6 10.0 Ceiling 15.2 14.2 15.2 12.7 14.4 Floor 5.0 3.5 5.2 1.5 4.0 North Total Central U.S.

4.0 8.7 9.2 7.5 7.8 1.7 1.5 3. 1 2.4 1.8 0.5 2.0

14.2 12.2 11.2 12.6

Wood 10.7 9.6 0.1 Aluminum 2.0 4.6 10.8 Other I .0 0 0.3

Tota1 13.7 12.2 11.2 12.6

7. Average Number of Exterior Doors Per House

Doors by Type

Wood 1 .8 I .9 2.5 2.5 2.3 Steel (insulated) 1.6 1.6 0.7 0.5 “1 .0 Other 0.1 0.1 0 0.1 0.1

Total 3.5 3.6 3.2 3.1 3.4

Storm Doors 0.4 1.2 0.5 0.3 0.6 8. Weighted Average Thermal Resistance (R) Values of All Materials in Walls, Ceilings and Floors

North North Total East Central South west U.S.

Exterior Wall Materials 2.5 2.9 2.7 2.5 2.7 lnsulation 9.8 9.9 10.1 9.8 10.0

Total 12.3 12.8 12.8 12.3 12.7

Ceiling/Roof Materials 1.7 1.7 1.7 1.7 Insulation 15.2 14.2 15.2 12.7

Total 16.9 15.9 16.9 14.4 16.1

Wood Floor Materials 4.0 4.2 4.3 4.4 Insulation 5.0 3.5 5.: 1.5

Total 9.0 7.7 9.5 5*9 8.3 336 . Residential Energy Conservation

1961 Housing Characteristics

This section contains a summary of housing characteristic data for

1,000 randomly selected homes built in 1961. Data were collected

by F.W. Dodge and are summarized by four census districts. Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 337

1961 HOUSING CHARACTERISTICS

Two or More Split-Level

Crawl Space Concrete Slab

Ceilinq/Roof Perimeter

92 100 85 70 -- 92 338 “ Residential Energy Conservation

5. Heating Fuel Percent By Region

Region Gas Electric Oil

49 17 14 5 22 Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 “ 339

Builder Survey

This section contains the results of a survey of eighty-three single

family home builders. An in-depth survey of all homes built in 1975

and 1976 revealed the names and locations of many builders who are

installing more insulation than average and some builders who are

installing less insulation than average. Following are comments from eighty-three of these builders. 340 ● Residential Energy Conservation

BUILDER SURVEY RESULTS

1. Sharon, MA builder of ten $87,000 homes.

Uses R-19 in walls and R-30 in ceiling with insulating glass windows. May consider more insulation if fuel costs continue to increase.

2. Warwick, RI builder of fifteen $37,000 homes.

Uses R-13 in walls, R-22 in ceiling and storm windows. Recently improved insulation values in ceiling because of energy costs.

3. West Haven, CT builder of forty to fifty $50,000 homes.

Uses R-n in walls, R-n in ceiling and single pane windows, all low values for New England. Builder does shade southerly facing windows with roof overhang. He offers R-19 insulation in ceiling as an option because he “offers the buyer the choice, not simply dictate what I or anyone else thinks best!”

Builder believes fuel costs in a free economy will require maximum insulation levels without more regulations. “We have enough regulations al ready,” he said.

4. Warwick, RI builder of twelve $68,000 homes.

Uses R-13 in walls and R-19 in ceiling. Does not plan on changing levels of insulation in the next year. Provides storm windows. Energy costs may lead him to increase levels of insulation.

5. Montpelier, VT builder of $38,000 homes.

Uses R-19 in walls, R-38 in ceilings and insulated glass windows with storm windows. Plants deciduous trees to provide shade in summer for south facing windows. Plans on retaining these levels in the next year. If climate turns colder and energy costs get higher, he will consider increased insulation levels.

6. Boston, MA builder of 50 $37,000 homes.

Uses R-13 in walls and ceilings and single glazed windows. Plans on increasing to R-22 in ceilings next year because of energy savings.

7. Burlington, VT builder of thirty $28,000 homes.

Uses R-13 in walls, R-30 in ceilings and storm windows in his homes which are low cost. He plans to improve levels by insulating basement walls, using insulated doors, polystyrene behind electrical outlet boxes and more liberal use of caulking. He will do these things because of customer demand and awareness.

He may increase insulation levels because of economic factors and because of a sense of national and local responsibility. Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 341

8. Nashua, NH builder of sixty $43,000 homes.

Uses R-19 in walls , R-30 i n ceiling and storm windows. Does not plan on making any changes in future because, “We feel we have reached the cost/benefit ratio. ”

9. Pittsburgh, PA builder of eight $67,000 homes.

Uses R-19 in walls, R-30 in ceilings and insulating glass windows. Plans on changing to R-38 in ceilings next year. Believes conservation features to be a marketing point and has built to these high insulation standards for past ten years.

10. Southern New Jersey builder of thirty $40,000 homes.

Uses R-16 in walls, R-30 in ceilings and storm windows. Achieves R-16 with R-11 fiberglass batts and Dow R-5 Styrofoam sheathing. Does not plan on making any changes because, “We are currently building houses which exceed all insulation standards now in effect.” Rising fuel costs might cause him to increase insulation levels.

11. Pittsford, NY builder of twelve $74,000 homes.

Uses R-15 walls, R-30 ceilings and storm windows. Polystyrene sheathing is used to obtain R-15. Has been using this method for over a year. Plans on insulating basement walls next year because of Public Service Commission regulations. Public demand could cause him to increase insulation levels and public refusal to pay for increased levels might cause him to lower insulation levels.

12. Rochester, NY builder of twenty $45,000 homes.

Uses R-11 in walls and either R-30 or R-38 in ceilings. Also uses storm windows. Plans on increasing ceiling levels and insulating basement next year because of increased heating costs.

13. Fairport, NY builder of eight $58,000 homes.

Uses R-n walls, R-19 ceilings and storm windows. Plants trees to shade southern windows from summer sun. Plans on increasing ceiling to R-30 and insulating basement. Also plans to caulk around all doors and windows.

14. Reading, PA builder of fifteen $64,000 homes.

Uses R-n walls, R-19 ceilings and insulating glass windows. May increase levels in future if fuel costs increase or availability becomes a problem. Also may increase levels because of “sales appeal .“

15. Lancaster, PA builder of fifteen $75,000 homes.

R-19 in walls, R-30 in ceilings and insulating glass with storm 342 ● Residential Energy Conservation

wIndows . Does not pIan on making changes because ‘‘I feeI present levels are adequate. ”

16. Rochester, NY builder of thirty $55,000 homes .

Uses R-n in walls, R-30 in ceilings and insulating glass windows. Does not plan on changing levels in the future.

17. Syracuse, NY builder of twenty $50,000 homes.

Uses R-13 in walls, R-30 in ceilings and storm windows. Plans on reducing air infiltration and improving wall sheathing for better R values.

18. Philadelphia, PA builder of twenty $40,000 homes.

Uses R-12 in walls, R-22 in ceilings and single glazed windows. Doesn’t plan on making any changes next year.

19. Grand Rapids, Ml builder of 75-100 $49,000 homes.

Uses R-13 in walls, R-36 in ceilings and storm windows. May go to triple glazed windows and sliding glass door in near future. Michigan energy code (effective 7/1/77) may influence builder to make changes. Public awareness of insulation levels may cause some increase in R-values.

Builder said "We will continue to look for new and better ways to achieve best standards possible using the cost/benefit approach.”

20. Quincy, IL builder of eight $74,000 homes.

Uses R-19 in walls, R-40 in ceiling and storm windows. Does not plan on changing insulation levels but does plan on improving installation procedures. Builder says his customers are very satisfied at present. Higher utility bills might make him increase insulation levels.

21 . Canton, OH builder of twenty $51,000 homes.

Uses R-13 in walls, R-37 in ceilings and triple glazed windows. Does not plan on changing next year. Will retain present levels because of fuel savings and because home buyers are requesting these levels.

22. Deerfield, IL builder of thirty $105,000 homes.

Uses R-11 in walls and R-13 in ceiling. Some s ngle glazed, some insulating glass and some storms are insta led as options. Low level of ceiling insulation is “standard” w th higher levels offered as options to buyers. Believes in prov ding what customer requests and can afford to spend. Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 343

Energy crisis , government credits and customer, requests will influence builder to increase insulation levels .

23. Lindenhurst, ILL builder of twenty-five $58,000 homes.

Uses R-n in walls, R-19 in ceilings and storm windows or insulating glass windows. May increase insulation levels next year because of public awareness, conservation and utility costs.

24. Flint, Ml builder of $70,000 to $140,000 homes.

Uses R-13 in walls, R-24 in ceiling and insulating glass windows. Does not plan on making changes next year. Believes he is at optimum now.

25. Green Bay, WI builder of twenty $50,000 homes.

Uses R-19 in walls, R-30 in ceiling and insulating glass windows. Builder believes that people are quite conscious of the value of insulation in saving heating dollars and are willing to pay initially for increased insulation. He also believes buyers tend to associate better insulating practices with better all around building practices.

Would decrease levels only if competitive building tends to reduce price of homes to a point where minimum levels of insulation would be acceptable.

26. Milwaukee, WI builder of 125 single family detached dwellings and 75 single family attached dwellings with $53,000 average selling price.

Uses R-13 wall and R-22 ceiling insulation and storm windows. 24” overhang shades windows from summer sun. Plans on retaining present insulation levels because of fuel conservation. Lower cost insulation would prompt him to use more.

27. Fargo, ND builder of fifteen $70,000 homes.

Uses R-19 in walls and R-52 in ceilings. Windows are all insulating glass. Uses a 36” overhang to shade south facing windows from summer sun. Believes he has already attained maximum insulating levels.

28. Independence, MO builder of 100 $41,000 homes.

Uses R-n in walls, R-13 in ceiling and storm windows. Will increase levels only if codes or competition require it.

29. Hutchinson, KS builder of $55,000 homes.

Uses R-19 in walls, R-38 in ceilings and insulating glass windows. 2’-6” overhangs shade south facing windows from summer sun. Plans on using 5/8” foil-faced foam plastic sheathing in the future. 344 ● Residential Energy Conservation

30. St. Louis, MO builder of 120 $45,000 homes.

Uses R-11 in walls, R-19 in ceilings and insulating glass windows. Plans on increasing insulation levels next year because buyers are asking for it. Will definitely increase levels if required by governmental regulations.

31. Shakopee, MN builder of fifteen $55,000 homes.

Uses R-18 in walls, R-38 in ceiling and triple glazed windows. Does not plan to add to present levels. Added polystyrene sheathing last year.

32. Sioux Falls, SD builder of twenty-five $79,000 homes.

Uses R-19 in walls, R-38 in ceiIing and triple glazed windows in some homes. Next year will use more triple glazing.

33. Wichita, KS builder of twenty $44,000 homes.

Uses R-18 in walls and R-19 in ceiling. Also uses storm windows. Does not plan on making any changes unless ut lity costs force him to increase insulation.

34. Lincoln, NE builder of eighteen $47,000 homes

Uses R-n in walls, R-19 in ceiling and storm windows. Plans on increasing insulation amounts and improving installation methods next year because home buyers are requesting it and because of energy savings.

35. Topeka, KS builder of five $56,000 homes.

Uses R-17 in walls, R-30 in ceiling and double glazed windows.

He keeps glass area to a minimum and provides 24” overhang to shade windows from summer sun. Is considering 2x6 walls for electrically heated houses because of natural gas shortage. Builder believes added insulation is a selling feature and considers workmanship of insulation installation more important than high “R” values. Would prefer properly installed R-n to poorly installed R-19 with gaps, etc.

He believes we must encourage insulation of attached garage walls and ceilings, insulated basements or crawl spaces versus concrete slabs, open living areas for better air circulation, natural or artificial shade around A.C. compressor, attic power ventilators, etc.

He believes we must discourage high vaulted ceilings, ducted range hoods, excessive glass, fireplace chimneys on outside walls, etc.

36. Cedar Rapids, 1A builder of $51,000 homes.

Uses R-12 in walls and R-19 in ceiling. Plans on using more Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 345

insulation in ceiling to save fueI. Installs storm windows .

37. Winter Haven, FL builder of fifty $21,000 homes .

Uses no insulation in concrete block walls and R-9 in ceiling in these very low cost homes. Uses single glazed windows. Plans on making no changes in the future. 38. Myrtle Beach, SC builder of from three to six $112,000 homes.

Varies insulation from R-16 to R-19 in walls and from R-30 to R-38 in ceilings. Uses insulating glass windows. Some of his homes have large overhangs to shade windows from summer sun.

He offers good insulation package and sales pitch on what the low energy home should save in the long run. The final decision is the buyer’s and his ability to pay.

Builder believes his customers are interested in low energy homes and takes pride in his homes and in giving the buyers what they want.

He normally uses l-inch thick polystyrene sheathing to obtain an R-16 wall but is considering another sheathing product which is more expensive but will increase the wall to R-19.

Builder uses heat pumps and would like to use more water to air heat pumps. Attics are ventilated by fan. Concrete slabs are insulated with rigid foam plastic around the perimeter. In crawl space hems, 6" batt insulation is installed between joists. He talks customers into using light shades of roofing.

39. Wilkesboro, NC builder of 120 $39,000 homes.

Uses R-17 in walls, R-30 in ceiling, R-19 in wood floors and insulating glass windows. Builder believes he has done all that is possible but will conform to any code requirement in the future.

The change to higher levels of insulation were made to help the customer. Will decrease level only if power company rates are lowered.

40. Ft. Lauderdale, FL builder of sixty $35,000 townhouses.

Uses R-19 in walls and R-19 in ceilings. Will increase insulation levels if consumers require it. Builder believes a developing market shortage is causing material cost increases to the point where inexpensive alternatives for low to moderate housing are not available.

41 Seminole, FL builder of fifteen $46,000 homes.

Uses R-5 in walls and R-19 in ceilings. Single glazed windows are used. Does not plan on making any changes next year. 346 ● Residential Energy Conservation

42. Pinellas County, Fl builder of fifty $62,000 homes.

Uses R-8 in walls, R-22 in ceiling and single glazed windows. Uses overhangs and/or tinted glass to shade against summer sun on south facing windows. Does not plan on making changes because he believes his levels are adequate for Florida.

43. Warrenton, VA builder of twelve $77,000 homes.

Uses R-28 in walls, R-40 in ceilings and insulating glass windows. Builder believes he is at maximum insulation levels and therefore plans no changes. Uses 2x6 walls and 1" polystyrene sheathing.

44. Louisville, KY builder of twenty $40,000 homes.

Uses R-n in walls, R-19 in ceiling and storm windows. Plans on reducing air infiltration by using poly film vapor barrier in future. Plans on building 2x6 walls on a presold basis only. Believes pay back will be in from 5 to 7 years.

45. Lexington, KY builder of twenty $52,000 homes.

Uses R-13 in walls and R-25 in ceiling. Installs insulating glass windows.

46. Louisville, KY builder of twenty $60,000 homes.

Uses R-11 in walls, R-22 in ceiling and insulating glass windows. Does not plan on changing insulation level. “Consumer paranoia” would be the only reason he would increase levels.

47. Louisville, KY builder of thirty-five $77,000 homes.

Uses R-16 in walls and R-22 in ceiling. Installs insulating glass windows with storm windows. May change to polystyrene sheathing to conserve energy and satisfy buyers.

48. Louisville, KY builder of ten $54,000 homes.

Uses R-n in walls, R-30 in ceiling and storm w ndows. Does not plan on making changes in next year because “We feel that presently we have the best insulation for the area and do lar spent.” Might increase in future if the cost of fuel increases.

49. Louisville, KY builder of twenty-three $65,000 homes.

Uses R-13 in walls and R-30 in ceiling. Will not increase because he believes levels are adequate for the climate.

50. Fort Thomas, KY builder of twelve $48,000 homes.

Uses R-19 in wall, R-30 in ceiling and storm windows. Plans on increasing walls to R-24 next year because he believes it will be cost-effective. Other increases may be made due to sales appeal.

51. Lexington, KY builder of seventy single family detached and 206 Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 347

single family attached dwellings .

Uses R-8 in walls, R-14 in ceilings and storm windows. Will increase levels if sales are increased or if electric bills become excessive.

52. Birmingham, AL builder of twelve $66,000 homes.

Uses R-8 in walls, R-13 in ceiling and single glazed windows. Plans on increasing ceiling to R-19 because of increased fuel costs. Customer concern may also lead to increased insulation levels.

53. Lexington, KY builder of six $65,000 homes.

Uses R-19 in walls, R-38 in ceiling and storm windows. Plans on making no changes.

54. Lubbock, TX builder of 120 $28,000 homes.

Uses R-22 in walls, R-30 in ceiling and triple glazed windows. Uses roof overhang to shade south facing windows from summer sun. Builder upped insulation program this past year and will continue to update as new and better products come on the market. Is presently testing how various plans sold over 12 month period and is monitoring energy costs. Depending on results, insulation levels may be changed.

55. Tulsa, OK builder of forty $36,000 homes.

Uses R-23 in walls, R-39 in ceiling and insulating glass windows. Does not plan on making changes next year because he believes his homes are insulated well enough. He would increase levels of insulation if buyers showed enough interest.

56. Lewisville, TX builder of thirty $60,000 homes.

Uses R-16 walls, R-26 in ceiling and single glazed windows with storm windows as an option. Builder claims his homes meet utility company recommended levels so does not plan on making changes.

Builder will increase amounts when public demands it or when energy costs require it.

57. Arlington, TX builder of twelve $54,000 homes.

Uses R-19 in walls, R-30 in ceiling and insulating glass windows. Builder says he is dedicated to building energy efficient homes.

58. Tyler, TX builder of forty $28,000 homes,

Uses R-13 in walls, R-20 in ceiling and single glazed windows. Will increase insulation levels if market demands and if utility costs increase. 348 ● Residential Energy Conservation

59. Dallas, TX builder of one thousand $34,000 homes.

Uses R-11 in walIs R-22 in ceiling and insulating glass windows. Builder does not p an on increasing levels because he believes the present levels are optimum for the climate.

60. Marion, AK builder of twenty-five $36,000 homes.

Uses R-19 in walls, R-38 in ceiling and triple glazed windows. Uses overhang to shade windows from summer sun. Builder does not plan on changing levels in the near future. This is the buiIder who developed the “Arkansas Story” method of building energy efficient homes.

61. Fort Worth, TX builder of three hundred $34,000 homes.

Uses R-11 in walls, R-22 in ceiling and storm windows. plans on retaining present levels because of buyer interest and energy conservation.

62. Boulder, CO builder of thirty $44,000 homes.

Uses R-19 in walls, R-30 in ceiling and insulating glass windows. Roof overhang shades south windows against summer sun. Plans on increasing roof insulation to R-40 and changing to wood windows. Builder believes it is very important to build much smaller homes, say 1,000 square feet. He says "We are totally going to run out of fuel. We have to reduce the size of homes! !"

63. Salt Lake City, UT builder of seventy-two $41,000 homes.

Uses R-19 in walls, R-38 in ceiling and insulating glass windows. Plans on no changes because present levels are considered sufficient.

64. Salt Lake City, UT builder of sixty $40,000 homes.

Uses R-n in walls, R-19 in ceiling and insulating glass windows. Plans on increasing ceiling insulation in the next year to help relieve the energy crisis and help sales.

65. Boise, ID builder of twenty $72,000 homes.

Uses R-13 in walls, R-30 in ceiling and insulating glass windows. Builder is unsure if he will make changes next year. If so, he will increase levels for energy savings.

66. Denver, CO builder of seventy five $77.000 homes.

Uses R-13 in walls, R-30 in ceiling and insulating glass windows. Plans no changes in future. Comments, “We insulate from frost line up.”

67. Denver, CO builder of forty $57,000 homes.

Uses R-n in wall, R-19 in ceiling and insulating glass windows. Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 349

May possibly change insulation levels next year depending on market conditions and cost.

68. Colorado Springs, CO builder of seventy $58,000 homes.

Uses R-13 in walls, R-38 in ceilings and insulating glass windows. Plans overhangs to reduce summer sun effect on south windows. Plans no changes next year.

69. Mesa, AZ builder of twenty-five $35,000 homes.

Uses R-6 to R-13 in walls and R-30 in ceiling. Installs insulating glass windows. Overhang shades south facing windows from summer sun. Does not plan on any changes for next year. Will make changes based on customer demand.

70. Phoenix, AZ builder of fifteen $125,000 homes.

Uses R-6 or R-19 in walls, R-38 in ceilings and about one-half single glazed and one-half double glazed windows. An overhang of 2’ to 3’ helps shade south facing windows from the summer sun. Plans on using more insulating glass windows next year because it is a good sales feature. Increasing electric rates may someday result in increased insulation levels.

71. Mountain Home, ID builder of one hundred $35,000 homes.

Uses R-19 in walls, R-38 in ceiling and insulating glass windows. Uses trees to shade south facing windows. Builder does not presently plan on any changes, but says, “If a better product becomes available, we will make use of it. We have a very strong energy conservation program and will continue to use new energy saving concepts. It is our intent to give our customers the best deal possible for his housing dollar.”

72. Denver, CO builder of two hundred $73,000 homes.

Uses R-13 in walls, R-22 in ceilings and insulating glass windows. Shades south facing windows with overhangs, and porch and patio roofs. Does not plan on making any changes soon. “As long as natural gas is available at current rates, which are still low, there is no need to go further on insulation,” he said.

Will increase when there is a demand from buyers or an awareness of future energy problems.

73. Phoenix, AZ builder of two hundred $36,000 homes.

Uses R-22 in walls, R-33 in ceiling and single glazed windows. Uses overhang to shade south windows. Plans no changes because, “We have the highest in town.” 350 . Residential Energy Conservation

74. Denver, CO builder of one thousand, four hundred $45,000 homes.

Uses R-n in walls, R-30 in ceilings and insulating glass windows. Does not plan any changes because he believes it is not economical for homeowner or builder to increase R-values over above amounts. Might consider increase from R-n to R-13 wall insulation because of the minor cost increase. Builder believes it would be impossible for homeowner to recapture any additional costs passed on by the builder because of increased cost of insulation.

75. Fort Collins, CO builder of fourteen $69,000 homes.

Uses R-13 to R-21 in walls, R-35 in ceiling and insulating glass windows. Has 2’ overhang to shade south facing windows. Plans on 2x6 exterior walls or use of styrofoam sheathing on 2x4 walls because customers are becoming more aware. Energy costs and public awareness of the value of well insulated homes will cause builder to consider increase in insulation.

76. Maui , HI builder of twenty $95,000 homes.

Uses no insulation in walls, no insulation in ceilings and single glazed windows because, according to the builder, “They are not needed in Hawaii."

77. Walnut Creek, CA builder of $110,000 homes.

Uses R-n in walls, R-19 in ceilings and single glazed windows. Not planning on changes because considers present levels adequate for climate.

78. Fresno, CA builder of forty $55,000 homes.

Uses R-19 in walls and R-30 in ceilings. Attempts to get 48” overhang to shade south windows in summer. Is considering using l-inch styrofoam sheathing. Increased levels of insulation good sales point. Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 351

79. Seattle, WA builder of twenty-five $65,000 homes.

Uses R-19 in walls, R-30 in ceiling and insulating glass windows. Does not plan on changes in future. Says, “We have always insulated this way”.

80. Tampa, FLA builder of 150 $59,000 homes.

Uses R-3 masonry walls, R-13 in wood frame walls, R-26 in ceilings and single glazed windows. Plans on no changes next year because, “We feel that, with our present levels, we are giving our buyers the best insulating envelope for their dollar. Increasing R values would spend our customer’s dollar without adequate return”.

81. Minneapolis, MN builder of twenty-four $97,500 homes.

Uses R-20 in walls, R-30 in ceilings and insulating glass windows. Plans on increasing wall and ceiling insulation and triple glazing more windows to reduce energy costs and to upgrade homes.

82. Hutchinson, Kans. builder of thirty $47,000 homes.

Uses R-n in walls, R-19 in ceilings and storm windows. Shades south facing windows with wide overhangs and porches. Plans on increasing insulation amounts next year because of consumer demand and better sales. He also believes it to be in the public interest. He said, “We think the industry needs to establish (insulation) standards. All we are getting is slanted information from manufacturers”.

83. Indianapolis, Ind. builder of thirty $63,000 homes.

Uses R-19 in walls, R-30 in ceiling and double glazing in windows. Does not know whether he will change insulation levels but may “To satisfy the buyer and conserve energy”. Is concerned about increasing costs and buyer’s ability to afford new homes. 352 “ Residential Energy Conservation

The following three tables represent the homes built by the

eighty-three survey builders. The data have little, if any, statistical

validity because the sample was not chosen at random and the response

distribution does not resemble the total population distribution.

The tables are presented only to give an indication of how the

eighty-three respondents collectively insulate their homes and how much

those homes cost. Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 353

Weighted Average Insulation and Price By Region

Weighted Averages Region Houses Ceiling R Wall R Glazing Price

New England 222 21.2 14.9 1.6 $43,946 Middle Atlantic 184 27.8 13.9 2.0 53,223 East North Central 523 25.4 13.5 2.0 56,237 West North Central 372 21.6 13.2 2.1 51,393 South Atlantic 461 24.1 13.0 1.3 47,380 East South Central 434 17.7 13.1 2.0 53,115 West South Central 1567 23.4 12.5 2.0 34,121 Mountain 2321 30.0 13.1 1.9 44,655 Pacific (1) 85 22.9 14.5 1.3 66,882 Pacific (2) 65 30.0 19.0 1.4 58,231

Total U.S. (1) 6169 25.6 13.1 1.8 $44,532

(1) including Hawaii

(2) Excluding Hawaii 354 ● Residential Energy Conservation

Weighted Average Insulation By Price Range

Average Average Average P r ice Range Houses Ceiling R Wall R Glazing

$25-35,000 1675 23.6 12.7 2.0

36-45,000 1008 26.5 12.6 1.7 46,55,000 2373 26.8 12.2 2.0 56-65,000 497 26.7 13.0 1.5 66-75,000 316 25.4 14.0 2.0 76-125,000 230 28.5 16.1 2.3

Totals 6099 25.9 12.7 1.9

Note: Not included in above were (50) $21,000 Florida homes with R-9 in ceiling and O in walls with single glazed windows and (20) $95,000 Hawaii homes with O in ceiling and O in walls with single glazed windows. Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 355

Average Price of Lot and House, By Region Total Region Lot % House % Selling Price

New England $10,107 23.0 $33,838 77.0 $43,946 Middle Atlantic 9,846 18.5 43,377 81.5 53,223 East North Central 15,240 27.1 40,997 72.9 56,237 West North Central 7,555 14.7 43,838 85.3 51,393 South Atlantic 6,823 14.4 40,557 85.6 47,380 East South Central 10,410 19.6 42,705 80.4 53,115 West South Central 6,755 19.8 27,366 80.2 34,121 Mountain 7,993 17.9 36,662 82.1 44,655 Pacific (1) 19,195 28.7 47,687 71.3 66,882 Pacific (2) 16,712 28.7 41,519 71.3 58,231 National (1) 8,636 19.4 35,896 80.6 44,532

(1) Including Hawaii (2) Excluding Hawaii