residential energy conservation - princeton

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 OfficeWashington, D.C. 20402 Stock No. 052-003 -00691-0

Foreword

This report is the result of a request from the Technology Assessment Boardthat the Office of Technology Assessment (OTA) analyze the potential for conserv-ing energy in homes in terms of energy and costs. The report reviews existing andpromising technologies, and a broad set of issues affecting why these technologiesare or are not used, how their level of use and effectiveness can be improved, andrelated Federal programs and policies.

The choices Congress makes in framing energy conservation policy reflect soci-ety’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 diversenature of residential housing in this country, the many decisions involved in plan-ning, building, buying, and operating a home, and the basic desire of consumers tobe allowed the maximum freedom of choice– all of these factors make policy deci-sions in this area difficult.

This study focuses on the demand aspect of residential energy use, specificallythose functions that consume most of a home energy budget— fuel to heat and coolspace and to heat water. A number of related issues are relevant to this topic but gobeyond the scope of the study: land use patterns, transportation habits, protectionof residential customers as purchasers of certain types of energy, centralized versusdecentralized power sources, and cogeneration. While these issues are important,this study deals only with ways to improve energy efficiency within the 80 millionexisting 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’sApplication 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 energyefficient. This definition relies on making productive investments that provide thesame level of comfort and convenience with less energy. Homeowners and renterswho also choose to change their styles of living could achieve savings beyond thoseresulting from conservation technologies alone. This is a conservative definition ofconservation that does not treat ethical arguments or other areas of debate.Although based on the technology of energy conservation, the report also addresseshuman factors that play such a major role in shaping energy consumption. Choicesopen 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 eco-nomic, 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 alteredenergy supply situation are clear and dramatic. I n addition to broad policy ques-tions such as the contribution that conservation can make and the choice betweentypes of policy approaches, very specific questions—such as standards for newhousing–face the Nation. I believe this report can assist Congress in dealing withthese vital issues.

DANIEL DE SIMONEActing Director

iii

Residential Energy Conservation Staff

Lionel S. Johns, Assistant DirectorEnergy, Materials, and Global Security Division

Richard E. Rowberg, Energy Group ManagerNancy 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 BellConsumer Federation of America Richard BourbonDesign Alternatives Robert D. BrennerMalcolm Lewis Associates Robert DubinskyNAHB Research Foundation Dennis EisenOak Ridge National Laboratory Frederick GoldsteinTechnology & Economics C. Alexander Hewes, J r

OTA Publishing Staff

John Murray McCombsJoseph MohbatLee StephensonRobert Theobald

John C. Holmes, Publishing OfficerKathie S. Boss Joanne Heming

Residential Energy Conservation Advisory Panel

John H. Gibbons, ChairmanDirector, Environment Center, University of Tennessee

John Richards AndrewsArchitect

Robert E. AshburnManager, Economic Research DepartmentLong Island Lighting Company

Edward BerlinLeva, Hawes, Symington & Oppenheimer

Ellen BermanExecutive DirectorConsumer Energy Council of America

Joel DarmstadterSenior FellowResources for the Future

Sherman B. GivenPresidentMorley Construction Company

Donald HoltzmanPresidentHoltzman Petroleum Company

William KonyhaFirst General Vice PresidentUnited Brotherhood of Joiners &

Carpenters

W. B. MooreVice President Operations/MarketingGulf Reston, Inc.

Donald NavarreVice president, MarketingWashington Natural Gas Company

Harold OlinDirector of Construction ResearchU.S. League of Savings Association

David RickeltonConsulting Engineer

Andy SansomEnergy InstituteUniversity of Houston

Samuel StewartCar/son Companies, Inc.

Grant P. ThompsonSenior AssociateThe Conservation Foundation

Reviewers and Friends

OTA thanks these people who took time to provide information or review part or all of thestudy.

Robert Naismith Lee SchipperAtlantic Research Corporation Lawrence Berkeley Laboratory

Alan Ackerman, Energyworks, MassachusettsGeorge Amaroli, Public Utility Commission, State of CaliforniaCarl Bernstein, Lawrence Berkeley LaboratoryEd Bistany, Office of Energy Resources, State of GeorgiaKen Bossong, Center for Science in the Public InterestMary Love Cooper, Legislative Counsel Bureau, State of NevadaAlan S. Davis, National Consumer Law CenterGary DeLoss, Environmental Policy CenterBruce Hannon, University of IIIinoisCraig Hollowell, Lawrence Berkeley LaboratoryBetsy Krieg, Lawrence Berkeley LaboratorySally Cook Lopreato, University of TexasEd Meyer, Office of Energy Resources, State of GeorgiaHarvey Michaels, Energy Office, State of MassachusettsDavid Norris, Energy Task Force, New York CityEIliott Wardlaw, Energy Management Office, State of South CarolinaEdith Woodbury, Woodward East, Detroit

Contents

Chapter

1.

Il.

I l l .

Iv.

v.

VI.

VIl.

Vlll.

lx.

x.

xl.

Volume I

Executive Summary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Residential Energy Use and Efficiency Strategies . . . . . . . . . . . . . .

The Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Low-lncome Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Housing Decisionmakers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Utilities and Fuel Oil Distributors . . . . . . . . . . . . . . . . . . . . . . . . . .

States and Localities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Federal Government and Energy Conservation . . . . . . . . . . . . . . . . . .

Economic Impacts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Indoor Air Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Technical Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix A–lnsuIation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Appendix B–Thermal Characteristics of Single-Family Detached, Single-

FamilyAttached, Low-Rise Multifamily, and MobileHomes–1975-76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appendix C– Thermal Characteristics of Homes Built in 1974, 1973, and 1961 .

Page

3

17

29

65

77

91

119

153

167

211

219

227

277

292322

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 FederalGovernment’s Response: A Discussion Paper–prepared byConsumer Federation of America

Il. Description and Evaluation of New Residential EnergyEfficient Technologies—prepared by Technology &Economics

vii

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

n Residential Energy Consumption , . . . . . . . . . . . . .-Residential Energy Prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Consumer Attitudes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Low-lncome Consumers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Existing Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Building Industry Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Design Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .States and Localities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .lndoor Air Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Conservation Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Housing Standards. .. . . . . . . . . . . . . :... . . . . . . . . . . . . . . . . .Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tax Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Housing Programs . . . . . . . . . . . . . . . . . . . . . . . . . .

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10101111121213131314

FIGURES

Page

I. Comparative Energy Use Projections. .,.... . . . . . . . . . . . . . . . . . 6

Executive Summary

Americans are responding to a changedenergy situation by rapidly curtailing the directuse of energy in their homes. The patterns ofenergy use established by households in the1960’s have changed dramatically, Residentialenergy use, which grew at a rate of 4.6 percentper year during the 1960’s, has grown at anaverage annual rate of 2.6 percent since 1970.In 1977, Americans used 17 quadrillion Btu*(Quads) of energy in their homes, 22 percent ofthe total national energy use. Had the growthrate of the 1960’s continued, the Nation wouIdhave used an additional 2.5 Quads–equiva-Ient to 430 million barrels of oil – in 1977.

As impressive as these figures are, they canbe better. Savings of more than 50 percent inaverage use by households, compared to theearly 1970’s, are already being achieved insome new homes, and experiments with exist-ing homes indicate that similar reductions inheating requirements can be realized throughretrofit. These savings can be achieved with ex-isting technology, with no change in lifestyleor comfort— and with substantial dolIar sav-ings to homeowners. However, more sophisti-cated design, quality construction, and carefulhome operation and maintenance will be re-quired.

For the residential sector as a whole, thepotential energy savings can be seen inanother way. If the trend of the 197o’s were tocontinue for the balance of the century, theresidential sector would use about 31 Quads ofenergy in 2000. But if investments were madein home energy conservation technologies upto the point where each investor received thehighest possible dollar savings (in fuel costs)over the investment’s life, energy use in theyear 2000 would be reduced to between 15 and22 Quads, depending on the price of energy.The cumulative savings between now and 2000compared to the 1970’s trend would be equiv-alent to between 19 biIIion and 29 billion bar-rels of oil. Despite the sound economic reasonsfor achieving these savings, there are reasonswhy they may not be reached. This report ex-

*A Quad = 1 quadrillion Btu = 1.055 exajoule (E J).

amines the underlying problems and what todo about them.

Following this section, the study’s majorfindings are presented. They lead to these con-clusions, among others:

1.

2.

Analysis of data on price and consump-tion, combined with research on consum-er motivation, indicates that the desire tosave money is the principal motivation forchanges in energy habits (turning downthe thermostat at night) and investment inconservation (purchasing insulation orhaving the furnace improved). This reportoutlines the approximate level of energysavings that might result from investmentsup to the point where dolIar savings overthe life of the investment are greatest. If itis national policy to encourage energysavings beyond this point—for example,to the point where investments in energysavings provide smaller economic returnbut greater energy savings– additional in-centives would be required. The differ-ence between these two points is substan-tial in energy terms, because once a dwell-ing is efficient, costs of operation arerelatively insensitive to energy prices.Such a shift would be analogous to thestandards set in 1975 to improve energyperformance of new cars. In addition toprice or economic incentives, regulationcould also increase energy savings.

One of the principal ways to improve en-ergy use Iies in the area of informationand technology transfer. Those who actu-ally implement policy need more training.Policy may be made in Washington, but iscarried out by tradespersons, builders,local code inspectors, loan officers, ap-praisers, energy auditors, heating techni-cians, State and local officials, do-it-yourselfers — literally thousands of indi-viduals. The essentially human nature ofthe effort is both a strength and a weak-ness — many are willing to take some ac-tion, but there are many obstacles toperfect performance.

3

4 . Residential Energy conservation

3. The diversity of the housing stock, num-ber of persons involved, requirements fortechnology transfer, and product avail-ability all argue for careful pacing of Fed-eral policy, based on setting goals over atleast a decade. For example, short-termprograms, aimed at one particular solu-tion, appear to constrain the market andmay not encourage optimal solutions.This is particularly true of programsaimed at the existing housing stock. Antic-ipation of the tax credit for insulationcaused increased prices and spot short-ages and may not have produced substan-tial insulation beyond what would haveoccurred in any event. Another reason fordeliberate policymaking is that knowl-edge of the nature of a house as an energysystem is imperfect. Although a good dealis already known about saving energy,more remains to be learned. Becausechoices will vary with climate, local re-sources need to be developed; these re-sources will include both trained person-nel and improved data.

Policy choices will reflect the goals for sav-ings and costs. If the current trajectory is ap-propriate, present programs appear to be ade-quate in number and range. A lower growthrate can probably be accomplished by vigor-ous congressional oversight, some administra-tive adjustments, review and fine-tuning ofprogram operation, and improved informationefforts. If the sector is already moving fastenough, less emphasis could be placed on resi-dential energy use. In order to move muchmore rapidly, stronger measures wiII be re-quired. A great deal of energy could be savedin homes above present levels; these savingswould stilI be cost-effective to the consumer.A stronger program approach might reflect na-tional security goals and a high return on thehousing dollar.

The following sections consider the trends il-lustrated by this volume and the major factorsaffecting residential energy use and conserva-tion: price, consumer attitudes, the poor, ex-isting housing stock, building industry re-sponse, design opportunities, the role of States

and localities, the utilities, and Governmentprograms.

Trends in Residential EnergyConsumption

The decade of the 1970’s has brought signifi-cant changes in the historical patterns ofgrowth in energy consumption in the residen-tial sector. Earlier, Americans as a group wereincreasing their use of energy in the home at anaverage rate of 4.7 percent per year; in the1970’s, the annual growth rate has averaged 2.6percent. Moreover, the remaining growth is at-tributable primarily to a growth in the numberof households; the amount of energy used ineach household has remained almost constantbetween 1970 and 1977. In 1970, 63.5 millionhouseholds collectively used 14 quadrillionBtu of energy (Quads) or about 230 million Btuapiece. (A Quad is equivalent to 500,000 bar-rels of oil per day for 1 year—or the annualenergy required for the operation of eighteen1,000-MW powerplants–or 50 million tons ofcoal. )

In 1977, residential use of energy accountedfor 22 percent of total energy consumption,totaling 17 Quads. By comparison, the com-mercial sector in 1977 used 11 Quads (1 4.5 per-cent of total), transportation accounted for 20Quads (26 percent), and industry used 28Quads (37 percent). Total 1977 U.S. energy usewas 76 Quads.

Many factors have contributed to theslowed growth in residential energy use in thisdecade. Among them are energy price in-creases, economic fluctuations, demographictrends, the OPEC embargo, and consumers’ re-sponses to rising awareness of energy. Demon-strating a precise cause-and-effect relationshipbetween any one of these factors and thelower growth rate is statistically impossible.Fortunately, isolating and quantifying the con-tribution of each factor is probably of limitedutiIity to policymaking.

The rapidity of the slowdown suggests thatactions taken to reduce consumption so far areprimarily changes in the ways people use their

Executive Summary ● 5

existing energy equipment — e.g., turning downthermostats and insulating. A longer timeframe is normally required to bring aboutwidespread replacement or improvement ofcapital stock, including heating equipmentand housing units.

No one can say with certainty whether theresidential energy growth rate will stabilize attoday’s rate, drop still further, or creep backup toward earlier trends. Countervailing forcescould work in either direction. The currentdemographic trend toward slower populationgrowth is expected to continue for the nearterm, but household formation rates are likelyto exceed population growth rates. Energy usein the residential sector can be expected togrow faster than population as long as newhouseholds are forming at a higher rate,although construction of highly efficient newhousing would alter that presumption.

On the other hand, if energy prices continueto rise, greater investments in conservation(energy productivity) measures will becomecost-effective for consumers. Moreover, whilethere will be more households, each is likely tobe smaller; having fewer people at home gen-erally means smaller dwelling units and lowerlevels of energy consumption in each home.Very few experts believe that residential ener-gy growth rates will ever again approach thevery high pre-1970 rates.

If residential energy use were to continuegrowing by 2.6 percent annually until the year2000, total residential consumption in thatyear would approximate 31 Quads. This is con-siderably lower than the 48 Quads Americanhomes would consume in 2000 if growth pat-terns of the 1960’s had continued. Yet actualconsumption in 2000 might be even lower than31 Quads, driven down by rising prices and anumber of other factors, including improveddesign and technology as well as evolving con-sumer awareness of the economic benefits ofconservation.

If residential energy growth were to matchthe rate of household formation — that is, if theenergy consumption per household were to re-main constant between now and 2000—totalresidential sector consumption in that year

would be 24 Quads. This trend wouId representan annual growth rate of 1.6 percent, which isthe household formation rate projected by theOak Ridge National Laboratory housingmodel. This modest decline from 1970-77trends would appear to be relatively easy toachieve under current laws and programs (withimprovements in their implementation in somecases) and without sacrificing personal com-fort, freedom, or social goals that require in-creases in energy consumption for those at thelow end of the economic spectrum. Much ofthe decline could be accomplished through re-placement of capital stock and construction ofsmaller, more efficient housing units to ac-commodate new households.

An even lower consumption Ievel in 2000could be achieved through an optimal eco-nomic response — one in which all residentialconsumers made the maximum investment inconservation technologies that they couldjustify through paybacks in reduced energycosts over the remaining Iives of their dwellingunits. Such responses would depend on thelevels of energy prices over the next twodecades. Using a range of plausible energyprices, possible residential energy consump-tion levels were projected to be between 15and 22 Quads in 2000, based on optimal eco-nomic response. Few observers expect thelower end of the range to be achieved evenusing the highest price assumptions, becauseof imperfections in the marketplace. Circum-stances requiring especially vigorous publicpolicies could create additional incentives toconsumers to approach this level of savings.

The middle ground between the 1970’s trendand the optimal economic response trend isseen by many as a reasonable public policytarget. Measuring our progress toward this con-servative goal would be relatively easy; eachyear, the goal would be to maintain constantnational average energy consumption perhousehold by keeping the growth in residentialenergy use to a rate determined by the house-hold formation rate. This target appears to bemanageable within our current social, politi-cal, and economic situation. This option wouldnot involve sacrifice, because it would allowfor a constantly improved level of residential

6 ● Residential Energy Conservation

amenities that can be achieved by means ofimproved energy productivity (less energy perunit of amenity provided). Some critics willview this goal as too easy, too modest; con-sidering depletion of nonrenewable resources,maximum return on housing dollars, environ-mental quality, and the national security im-plications of our oil imports. (Comparativeenergy use projections showing these Quadlevels appear graphically in figure 1.)

Figure 1 .—Comparative Energy Use Projections(Residential sector)

Quads50

40

30

20

10

01 9 7 0 1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0

Year

A— Residential consumption based on simple ex-trapolation of 1970-77 trend.

B— Residential consumption based on simple ex-trapolation of 1960-70 trend.

C – Residential consumption based on constant level ofenergy use per household; growth results from in-crease in number of households.

D-E – Range of “optimal economic response” based onassumption that energy saving devices are installed asthey become cost-effective. Range is formed by price;upper boundary represents response to lowest pro-jected price, lower boundary represents response tohighest projected price.

NOTES: These curves are not given as predictions of the future, but as points ofcomparison for discussion See chapter I for detailed information.

For SI users. Quads can be substituted using exajoule (EJ) on thisfigure within the accuracy of the calculations. One Quad ~ 1 EJ.

Residential Energy Prices

Rising energy prices appear primarily re-sponsible for reduced residential consumptionin recent years. Rapid growth in the 1960’s ac-companied a decline in real energy prices,

while the growth slowdown of the 197o’s hasconcurred with a rise in real prices. The in-crease in energy prices has been especiallymarked since 1974, when the embargo reachedits peak and the Arab oil cartel began a quin-tupling of oil prices. The OPEC nations’ recentdecision to raise oil prices in 1979 and otherMiddle East developments can be expected toaffect U.S. energy consumption patterns fur-ther

For the residential consumer, the 1970’shave already brought a 65-percent rise in homeoil-heating bills, a 37-percent increase in thenatural gas bill, and a 25-percent rise in theelectricity biII (in constant 1976 dolIars). I n cur-rent dollars, the increases have been far moredramatic Even so, price controls on oil, aver-age costing of electricity, and Government reg-ulation of natural gas prices at the wellheadhave resulted in subsidized retail prices thatfail to reflect the full replacement cost of oil,gas, and electricity generated from either nu-clear or fossiI fuels.

It is important that energy prices representtrue replacement costs whether this is higheror lower than current energy prices. It is onlyunder this circumstance that consumers have acorrect signal to use in determining how muchto invest in conservation if they are to achievemaximum dollar savings. Furthermore, if soci-ety decides that information on items such asenvironmental damage, resource depletion,and reliance on foreign oil would not be accu-rately given by normal market forces, than it ispossible to adjust the replacement cost ac-cordingly or to provide equivalent financial in-centives. I n any case, since dollar savings arethe principal motivation for energy conserva-tion, it is important that conservation policy beconcerned with energy prices.

Price increases clearly mean less disposableincome for consumers. Stretching the avail-able resources through higher productivity ofenergy use is a less costly approach than devel-oping new supplies. Improving energy produc-tivity in household use helps to counter the in-flationary impact of rising costs. A number ofpolicy responses are possible between holdingprices steady or allowing them to rise directlyin response to costs; these include matching

price increases with income subsidies for all orsome portion of the population, using taxes toprotect against windfall profits, and otherstrategies. Price-based policy will be unaccept-able to those who believe that consumers can-not withstand higher costs, or who believe thatprice increases do not reflect true scarcity orrising marginal costs.

Consumer Attitudes

The level of energy use in a given home isgreatly influenced by the attitudes, choices,and behavior of its occupants, within a rangecircumscribed by the limitations of the struc-ture itself. Energy consumption in identicalhouses may vary by as much as a factor of twodepending solely on these variables.

Available research data indicate that con-sumer motivation to invest in conservationmeasures stems largely from a basic desire tosave money and resist rising prices. This is theprime concern of homeowners. Energy costsare now about 15 percent of the average an-nual cost of homeownership, and in the heat-ing and cooling season monthly payments mayapproach the level of the mortgage payment.The dramatic increase in fuel costs, over thevery low costs of the 1960’s and early 1970’s,has graphically demonstrated to residents thatreducing direct energy use is a wise invest-ment. Early experiments in helping consumersto change their energy use patterns suggestthat providing feedback, or quick response in-formation on how much energy a home isusing, helps people conserve. Experiments withspecial meters, report card billing by utilities(bills that compare use for a month comparedto the same month last year), and similar tech-niques are now underway.

Consumers are frequently unsure aboutwhat changes are most effective. Knowledgeabout effective communication argues for im-proving local resources. Consumers have moretrust in information from their locality or Statethan from remote institutions. The informationprovided by the Federal Government and bylarge oil companies is not well received.

It is unreasonable to expect that consumerswill make major housing or behavioral choicesbased on energy alone. Having adequate spacefor a growing family, being near schools andshops, feeling certain that a home is warmenough to ensure health and comfort—these,too, are important consumer values.

Data on attitudes and behavior indicate thatinformation programs that emphasize thepositive economic benefits of conservation aremore likely to show results than those basedon ethical urgency. Moreover, public state-ments or campaigns that link conservation andsacrifice, such as suggestions that conserva-tion means residents should be cold in theirhomes, may be ineffective, if not counter-productive.

More research on actual household energyuse patterns, as welI as attitudes and behavior,would improve the policy makers’ ability toselect successful motivational strategies.

Low-Income Consumers

Although rising energy prices provide astrong incentive for widespread conservation,they present special hardships for low-incomeconsumers who cannot absorb higher utilityand fuel bills, and have Iittle access to invest-ment capital. For the 37 million persons (17percent of the U.S. population) with householdincomes at 125 percent of the poverty level orbelow, utility costs typically consume between15 and 30 percent of the family budget.

Some low-income families spend as much ashalf their budgets on energy in the heating sea-son, yet a significant portion of this heat is lostbecause of substandard housing. Poor andnear-poor households in rented housing arehandicapped with regard to energy, as theyusually do not control their heating systems ortheir dwelling’s maintenance and improve-ment.

Efforts to relieve the energy-based economicproblems of the poor have taken two ap-


preaches: first, providing home improvementsintended to reduce energy needs, and second,providing financial assistance to meet energybills. Neither approach has been totally satis-factory or adequately deployed. Althoughdirect aid by “weatherization” appears highlycost-effective in the long run, it is impossibleunder current funding to reach more than 3percent of all eligible homes each year. Laborshortages and other programmatic problemshave also hampered the Federal weatheriza-tion efforts, although the basic concept is bothsound and popular. Because the poor frequent-ly cannot reduce consumption and have no ac-cess to capital to improve their housing, Feder-al funds can cause energy savings that wouldnot be achieved without such assistance, aswell as improved Iiving conditions.

Financial assistance for payment of utilitybills is more controversial. Questions aboutthis approach reflect a larger issue, which maybe described as the “right to energy” doctrine.As energy is as necessary as decent housing,adequate nutrition, and medical care— al I ofwhich the Government subsidizes to some ex-tent— consumer advocates have argued that abasic minimum quantity of energy should alsobe subsidized for low-income persons. So-called “lifeline” utility rates are one means ofsubsidizing energy; early experiences with suchrates suggest, however, that they may provideneither conservation incentives nor adequatefinancial relief for many of the poor.

Other proposals include energy stamps andlarge programs of emergency financial aid,legal aid for poor persons dealing with utilitiesand fuel providers, and procedures to preventshutoff of heat and power because of nonpay-ment during winter months. These programsmeet social needs but do not provide resiliencyto the problem. Because of a growing concernamong elected officials and the wider publicabout the inabiIity of financial aid programs toaddress basic causes of poverty, weatheriza-tion and broader housing programs designedto put all persons in decent homes may offer abetter approach. Such a policy subsidizesenergy efficiency rather than price.

Existing Housing

Improving energy efficiency in existing hous-ing wiII be a principal area of policy emphasisin the next decade, as most of the populationwilI continue to be housed in the 80 million ex-isting units. Both the largest savings of energyand the largest amount of protection againstthe impact of rising prices will come from “ret-rofitting” existing homes. owner-residents,rather than builders, are the principal audiencefor this effort.

Making homes use less energy withoutlowering the level of comfort is not technicallydifficult, but it requires careful attention tothe specific needs of the structure, qualityworkmanship in improvements, and continuingattention to the energy use patterns of theresidence. An audit by someone trained inhome energy use is necessary to identify theoptimal package of changes for a specifichome. Data on the energy characteristics ofthe existing stock are inadequate, and thiscomplicates policy formulation. While Federallevel efforts at data collection may be themost effective, States and localities are in abetter position to stimulate local conservationefforts and to provide accurate technical in-formation and guidance to occupants. Statesand localities, along with trade and profes-sional groups, wilI bear major responsibility fortraining and for improving the quality controlof retrofit projects. Dissemination of technicalinformation by the Federal Government andFederal work on appliance labeling and stand-ards wiII underpin local efforts.

I n addition to the savings available throughtightening the thermal shell of the building,substantial energy savings can be obtainedthrough retrofit of the heating and coolingequipment, and through replacing the heatingand cooling devices with more efficient sys-tems.

Present tax credits will encourage retrofit,although such credits may represent a substan-tial revenue loss while not adding a large incre-ment of investment. (The Congressional Budg-

Executive Summary ● 9

et Office estimates that many persons who in-stall insulation, for example, would have doneso without the credit. ) Grants and direct assist-ance, such as weatherization, are most respon-sive to the needs of low-income persons. Homeimprovement loans have not been attractive tothose making changes to their homes costingless than $1,000, but this could change if fuelprices continue to rise and pressure to retrofitis increased.

As in the case of new housing, lending in-stitutions that finance mortgage lending couldplay a critical role. If lending institutions re-viewed energy costs of a home when consider-ing a mortgage application, a total cost picturewould be made available to the prospectivepurchaser. Funds available to the buyer tofinance conservation investments through themortgage would be amortized over a long peri-od and would bring down monthly operatingcosts. A more vigorous policy initiative wouldrequire that existing housing be brought to aspecified standard of energy efficiency prior tosale, or prior to utiIity connection.

Building Industry Response

The homebuilding industry appears to be re-sponding to consumer demand, information,and price and taking advantage of opportuni-ties to improve energy efficiency. Typical newconstruction already matches the preliminaryenergy standards recently adopted by manyStates (ASH RAE 90-75 or Model Code levels).New building reflecting these standards is stillconsiderably below the level of energy effi-ciency indicated as cost-effective by OTAanalysis. Tighter code requirements, combinedwith information targeted at builders and buy-ers, will help sustain and intensify the trend tobetter homes.

Although the design and construction indus-try is fragmented and generally cautioustoward major change, it can respond quicklyand readily re-adapt its designs and methodsonce the economic and technical feasibility ofnew housing features or construction tech-niques are proven and accepted in the market-place. For example, many builders are nowaltering frame construction to utilize 6-inch

studs instead of the standard 4-inch studs. Thistechnique makes it easy to increase theamount of insulation in the walls, and thedistance between the studs allows the changewithout economic penalty. Encouragingchange in the industry requires making eco-nomic and technical determinations, judgingwhat will work and what will save money, andproviding that information to the key actors atthe right time. Principal actors for the residen-tial sector are:

1.

2.

3.

100,000 builders, who make the basicdecisions to build in response to whatthey perceive market demand to be,within the requirements of specific build-ing codes and available materials;

21,000 lending institutions, which approvefinancing for both builders and buyers;and

homebuyers, who by their purchasing de-cisions determine the demand for housingof varying types and prices, and thus influ-ence the perceptions and decisions ofbuilders and lenders.

Building standards and codes directly affectnew construction. The stringency of codes willreflect the policymaker’s views of the abilitiesof the industry and the urgency of the energysituation. Performance standards, now beingdrafted by the Federal Government, areneeded to allow for flexibility and experimen-tation in construction. Application of per-formance standards in housing may be partic-ularly delicate, because of problems of meth-odology and the resources of builders. Theaverage U.S. homebuilder constructs less than20 homes a year, does not use sophisticated ar-chitects or engineers, and works in a highlyleveraged market. These builders may prefer asimple code that can be easiIy followed by car-penters and laborers.

I n addition to standards and codes, changesin the economics of the market can encourageenergy conservation. Broad interpretation oftax credits and use of tax incentives, particu-larly tax incentives provided directly to thebuilder, will stimulate greater change in newhousing.


Affordability

Properly selected conservation choices willlower utility’ costs and thus reduce the totalcosts of homeownership and operation. Thepossible effect of eliminating marginal buyersfrom the housing market must be weighedagainst the consequences of encouraging thesebuyers to acquire homes that are likely to havesubstantial and rapidly increasing monthlyenergy bilIs. As fuel costs continue to rise, abroader view of “affordability” is necessary.Better dissemination of information on cost-effective opportunities and Iifecycle costs tobuilders, equipment suppliers, lenders, andbuyers may be a promising approach for in-creasing conservation investments.

Energy conservation features often add tothe initial cost of homes. Builders and lendersare cautious about decisions to increase pur-chase costs, especially in Iight of dramatic in-creases in the price of housing in recent years.Slightly increased first costs mean that mar-ginal buyers may have to scale down their ex-pectations. First-time homebuyers who havelimited savings for downpayments are more af-fected by increased downpayments than areprevious owners who have an equity to invest.

On the other hand, a substantial amount ofenergy can be saved without great expense—typically $1,500 to $2,000--and without com-plicated or untried devices. Some of the mosteffective actions involve reducing air infiltra-tion through caulking and weatherstripping, in-vestments in storm windows and insuIation,and improving the energy efficiency of heatingand cooling systems. The energy efficiency ofmany new homes can be substantially in-creased by adding enough thermal protectionto allow a reduction in the size of heating andventilating equipment; in some instances thischoice has actual [y meant lower first costs.

Lending institutions can improve the flow ofinformation on total costs of homeownershipand operation by including energy costs whencalculating monthly payments on mortgageapplications. The mortgage transaction is acritical intervention point, as buyers are fo-cused on the home and money is being bor-rowed to be repaid over a long time period. A

calculation that includes likely energy costswould give buyers, and lenders, a more com-plete estimate of total costs and could encour-age cost-cutting investments. Federal leveragecould be used to provide additional fundingfor conservation improvements at the time ofsale, subsidize downpayments or interest ratesfor energy-efficient homes, or deny mortgagefunding to homes not meeting an energy stand-ard. Federal and State energy agencies couldhelp lending institutions determine standardsappropriate to local conditions.

Design Opportunities

Energy-conscious design is a paradox: oncethe most ancient of the builders’ skills, it isbeing rediscovered as a modern trend. Properorientation of the home on the lot, thoughtfulplacing and sizing of the windows, andplanned-in natural ventilation combined withshading by eaves and trees produce housesthat use astonishingly little energy. Eventhough the ideas are as old as shelter itself,modern materials and design techniques canadapt and improve the concepts for urbanAmerica. Such homes are neither expensivenor outlandishly designed, and need to be en-couraged by Government action. However,policy actions are difficult to develop becauseenergy-conscious design is part of the fabric ofthe building itself. Unlike discrete, technologi-cal add-ens, energy-conscious design featurescannot easily be listed in a tax regulation orbuilding code. Special policy focus by Govern-ment on such designs may be particularly ap-propriate because there are few natural mar-ket forces to promote such building choice.

Even if the full advantages of energy-con-scious design are not explored, quite conven-tional, off-the-shelf technologies now exist toreduce heating and cooling loads at least 50percent below those of homes built in the early1970’s. Houses built using these technologieswill reduce energy use through greater effi-ciency with no change in living habits or levelof comfort. In fact, comfort may be increasedthrough reduction of drafts and cold spots.The real bonus results from the low purchased-energy costs of operating such homes. These

Executive Summary . 11

technological solutions to energy consump-tion — such as heat exchangers, “smart” ther-mostats, and draft-excluding devices — can beeasily encouraged by Government actionassisting the market.

Improved data collection is needed onhomes that use little purchased energy. Con-struction of such homes on a demonstrationbasis, perhaps one in every county, could pro-vide the type of direct learning experiencemost valuable and influential for builders andbuyers.

Technologies now in the development orcommercialization stage will offer opportuni-ties for energy savings well beyond the optionsnow available. More efficient furnaces, newapproaches for the design and construction ofwalls and windows, and electronic systems tomonitor and control the operation of homesare now being tested and used experimentalIy.As these devices become more reliable andlower in cost, the options for reducing homeenergy use will increase dramatically.

States and Localities

States and localities bear the major responsi-bility for implementation of federally author-ized residential conservation programs. Build-ing code revision and enforcement, informa-tion and education efforts, quality control,and regulation of utilities all come within thejurisdiction of States, counties, and towns. Thepriority assigned to conservation goals bythese levels of government will directly influ-ence the level of effort and thus the resourcesavailable to consumers and builders.

Current Federal policies both help andhinder State and local efforts. Central diffi-culties include rapid pacing of Federal initia-tives that may not match the capabilities ofthe locality; failing to involve States and local-ities in preparing guidelines and reguIations;placing responsibility for administering a largenumber of complicated programs on Stateenergy offices that are frequently small, under-staffed, and underfunded; and imposing Feder-al priorities that may not match local needs.Programs designed with the needs and capabil-

ities of the States in mind are most likely totake root and remain effective as Federal pri-orities change and Federal funding fluctuates.

Localities work most closely with new con-struction through the building permit process.Local code inspection offices may requirespecial help, both technical and financial, toimprove their level of activity. This will cer-tainly be the case if Federal actions to man-date energy changes in building codes con-tinue. WhiIe the needs of localities may press aState energy office beyond its capabilities,these off ices must recognize the importance ofproviding resources to localities.

Transfer of information and technologyfrom the Federal ‘Government can be im-proved. Trained personnel, either from Wash-ington offices or regional offices, could greatlyassist States in working out technical problemsand establishing ground rules for programoperation.

Utilities

The ways in which gas and electric utilitiescan most effectively stimulate energy conser-vation in the residential sector are just begin-ning to be understood and exercised. As experi-ence with utility-based conservation activitiesis gained, early concerns about utility involve-ment in nontraditional activities (such as in-sulation financing) and uncertainty about theimpacts of innovative pricing and service de-livery options (particularly time-of-use pricingand load management) are being replaced withencouraging empirical data.

Utilities can encourage residential energyconservation through information programsand home energy audits; financing and/or mar-keting insulation and other conservation de-vices; altering the rate structures to reflectcosts that vary with time of use; and institutingprograms of load management in the residen-tial sector. Relatively few utilities have carriedout aggressive conservation programs to date,although most electric and gas companieshave undergone some adjustments in theirmanagement and planning functions as a re-suIt of changing circumstances. WhiIe eco-


nomic and social criteria encouraged rapidenergy growth in the years before 1973, morerecent phenomena — including rising fuelcosts, massive increases in capital require-ments for new capacity, uncertainty aboutfuture demand, and changing regulatory re-quirements – have all caused utilities to expectand even encourage diminished growth.

Activities authorized by the National EnergyConservation Policy Act of 1978 should yieldusefuI data over the next few years. The effectsof audit programs, cost-based rates, load man-agement, and time-of-use pricing should becarefully analyzed and the information widelyshared. Following evaluation, Congress maywish to consider removal of the prohibitionagainst utility involvement in sale or installa-tion of residential conservation measures.

Indoor Air Quality

Potential health effects of changes in thequality of indoor air caused by energy conser-vation must be carefully monitored, and atten-tion should be given to preventing negative ef-fects as houses become tighter. As new stand-ards lower the amount of “fresh” air movingthrough homes to reduce heat (and cooling)losses, concentrations of undesirable sub-stances already present in indoor air will be in-tensified. Technological control measures areavailable to prevent the buildup of concentra-tions of pollutants indoors.

There is strong evidence that concentrationsof several air pollutants tend to be high in-doors. Existing houses with gas heating andcooking appliances have been shown to experi-ence levels of carbon monoxide (CO) and nitro-gen dioxide (NO2) that approach or exceed am-bient air quality standards. Other pollutantsthat may be significant in the indoor environ-ment include respirable particulate, partic-ulate sulfur and nitrogen compounds, nitric ox-ide (NO), sulfur dioxide (SO2), radon, andvarious organics. Aside from heating and cook-ing appliances, the sources of these pollutantsinclude building construction materials, ciga-rettes, aerosol sprays, cleaning products, andother sources. If air exchange rates of new andexisting houses are significantly decreased

from present rates, indoor concentrations ofthese polIutants will increase.

Control measures currently available to re-duce the concentrations include filters andelectrostatic precipitators to reduce particu-late levels; kitchen ventilation to reduce cook-ing-generated polIutants such as CO, NO, NO2,and SO2; spray washing, activated carbon fil-ters, and oxidizing chemicals to reduce air-borne chemicals and odors; and forced ventila-tion with heat recovery (to minimize heat loss)to reduce concentrations of all indoor-gener-ated pollutants. A comprehensive approachshould include reduction of emissions by im-proved maintenance and design of stoves andfurnaces, reduction in household use of pollut-ing chemicals, and similar measures.

Evaluation of these control measures re-quires an understanding of health effects ofambient levels of indoor pollutants and theconcentrations of such pollutants with andwithout controls in different housing situa-tions. Thus far, the Federal Government doesnot appear to have recognized the significanceof indoor air quality as a potential health prob-lem. The Department of Energy (DOE) and theEnvironmental Protection Agency (EPA) havesponsored some early work in this area, but thelevel of support has been very small. As mightbe expected from the scarcity of research con-ducted, the level of understanding of the ef-fects and causes of indoor air quality is insuffi-cient to allow the definition of an optimumstrategy for linking energy saving constructionrequirements and air treatment requirements.

Federal Conservation Programs

Federal programs support housing produc-tion and the maintenance of existing housingby providing subsidies to certain classes of oc-cupants, as well as mortgage loans, insurance,and guarantees to lenders and property own-ers. Federal programs affect housing throughstandards for construction and rehabilitationof housing, regulation of the lending industry,maintenance of a secondary market for mort-gage lending, research and development(R&D), financial assistance for communitydevelopment, tax credits and incentives, and

Executive Summary ● 1 3

programs specifically designed to provide in-formation or technical assistance to encourageconservation. Direct Federal construction,such as housing provided by the Departmentof Defense, affects the market for housingtechnology and appliances through the pro-curement process and the use of standards.

Because of the wide variety of programs in-fluencing both housing and conservation,many mechanisms exist to affect energy con-sumption in homes. Recent legislative and ad-ministrative changes will help to save energy.Energy conservation has not been a major pri-ority for most Federal programs, and there hasnot been strong coordination of the variousdepartmental efforts. A stronger commitmentto energy conservation, combined with im-proved technical work and more sophisticatedcost analysis, could mean a much strongerresponse to conservation goals from both thepublic and the private sector.

Some of the most important Federal actionsare Iisted here.

HOUSING STANDARDS

As a result of postembargo legislation, theFederal Government is now more deeply in-volved than ever in defining energy-basedhousing standards, which will eventually influ-ence local building codes. Codes are an effec-tive mechanism for altering construction prac-tices, but they are implemented at the locallevel, and great care is needed to ensure thatadequate time and resources for training ac-company this new Federal-State-local ap-proach.

States have been encouraged through Feder-al funding and training to adopt codes basedon an engineering approach. Existing legisla-tion calls for the adoption of performance-based standards by 1980. Performance stand-ards offer a unique and valuable way to en-courage energy efficiency while allowing in-novation and providing equal market access toall types of construction. This type of standardis also a totalIy new method, and there is noagreement on the correct methods for calcula-tion and review, particularly for residentialbuildings. Despite a sincere desire by DOE to

solicit comments on draft standards, timepressures generated by the current schedule donot allow for adequate review and thoughtfulanalysis. As a result, commitment to the cur-rent schedule will almost assuredly result inlitigation and dissatisfaction by both sup-porters and opponents of the standards.

A substantial period may be needed forreview and field testing of the new standards incertain areas and markets. Transition to per-formance standards closely tied to existingmethods of analysis and review wilI increasethe Iikelihood of compliance.

RESEARCH AND DEVELOPMENT

The short-term focus of current DOE conser-vation R&D ignores some longer term optionsthat also have high returns. The attention tocommercialization strategies that characterizethe program is questionable, as rising pricesshould enable the private market to absorbcommercialization costs. Research on atti-tudes, energy use patterns, institutional andlegal barriers to conservation, and similar im-portant areas have not received adequate em-phasis. Research and policy decisions on ener-gy technology do not adequately consider theconservation applications of new technol-ogies; the potential of conservation to reducedemand and provide time for shifting to newenergy systems is not fully appreciated. Thepolicy appears to reflect an attitude by DOEand the Office of Management and Budgetthat conservation should be viewed as a stopgap that merits little Federal research funding,in sharp contrast to new production ap-proaches.

TAX POLICY

Federal tax policy is probably the major ele-ment in decisions by owners of rental propertyon construction and rehabilitation. Historical-Iy, the tax code has encouraged low first-cost(and therefore energy inefficient) housing, andhas protected owners to the extent that mostprogram efforts to improve tenant energy usehave been futile. Broader use of tax incentivesshould increase the conservation response. Atleast, policies should be examined to ensure


that they do not continue to encourage energy-wasteful construction.

Similarly, the tax system can be used toreward homeowners for investing in conserva-tion. Critics of this policy believe that home-owners are sufficiently rewarded by the sav-ings in fuel bilIs, and that the number of peo-ple who invest because of the credit is small,while the number who claim the credit is large.This policy does not allow for the fact thatmany conservation investments can save muchenergy but are only a breakeven choice with-out additional incentives. Early Internal Reve-nue Service decisions on the eligibility of itemsunder the recently authorized conservation taxcredits show a reluctance to interpret the law

broadly, and raise special problems for energy-conscious design approaches.

FEDERAL HOUSING PROGRAMS

Federally owned and subsidized housingrepresents both a special responsibility and aspecial opportunity for saving energy andlowering total costs. Energy conservation hashad very low priority in most of this housing.Funds and authorizations recently approvedby Congress will help to improve the efficiencyof these dwelIings. Improved levels of conser-vation wouId demonstrate real Federal com-mitment, improve the comfort level of thehousing, and save money as utility costs, whichare frequently subsidized, continue to rise.

Chapter I

TRENDS

Chapter I.—TRENDS

Page

Trends in Residential Energy Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Energy, Demographics, and Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Analysis of Electricity and Natural Gas Use as Functions of Weather

and Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Projections of Future Residential Demand . . . . . . . . . . . . . . . . . . . . . . 22Discussion of Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Technical Note—Residential Energy Consumption Analysis. . . . . . . . . 26

I. Residential Energy Use by Fuel . . . .2. National Average Annual Heating Bills

Page

. . 17by Fuel :::: :: :::::.. 19

FIGURES

Page

2. Fuel Prices 1960-77. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193. Energy Use per Household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214. Comparative Energy Use Projections . . . . . . . . . . . . . . . . . . . . 225. Comparative Price Projections. . . . . . . . . . . . . . . . . . . . . . . . . 23

Chapter ITRENDS

TRENDS IN RESIDENTIAL ENERGY USE

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

ENERGY, DEMOGRAPHICS, AND PRICES

Table 1 shows aggregate energy use for theresidential sector, adjusted for annual weatherdifferences and broken down by fuel use andby function, for 1960, 1970, and 1977. From1960 to 1970, adjusted residential energy useincreased at an average rate of 4.7 percent,while from 1970 to 1977 it grew by only 2.6 per-cent. This substantial reduction has not beenspread evenly through the 1970’s, however. Be-tween 1970 and 1972, the average annualgrowth rate for weather-adjusted residentialenergy use was 3.4 percent; from 1972 to 1975consumption declined by 1.8 percent; andfrom 1975 to 1977 it leapt back up to a 3.7-per-cent average annual growth rate.

Electricity use is growing fastest. From 1960to 1970 electricity use grew at an average an-nual rate of 8.3 percent; from 1970 to 1977 theincrease was about 5.5 percent. In 1977, elec-tricity represented 45 percent of all the energyused in the residential sector. Unlike totalenergy use, however, the growth rate in elec-tricity use since the embargo has not departedfrom that over the entire 1970-77 period.

Even though growth rates have declined forboth electricity and total energy use for1970-77 compared with 1960-70, the ratio ofelectricity growth to total energy growth has

‘Data for total residential energy use are corrected forweather differences by assuming that 50 percent of thetotal is for heating, and is therefore weather-sensitive,and by adjusting that portion using a ratio of the averagenumber of annual degree days between 1960 and 1970(4,869) to the actual number in each year.

Table 1 .–Residential Energy Use by Fuel (Quads)

1960 1970 1977

Electricity. . . . . . . . . . 2.41 5.36 7.80Oil . . . . . . . . . . . . . . . . 2.37 2.81 2.98Natural gas. . . . . . . . . 3.34 5.31 5.83Other. . . . . . . . . . . . . . 1.00 0.90 0.60

Total . . . . . . . . . . . . 9.12 14.38 17.21

NOTE: The 1960 and 1970 figures are from “Residential Energy Use to the Year2000: Conservation and Economics,” ORNL/CON-13, September 1977.The 1977 figures are from the Energy Information Administration, De-partment of Energy.

1977 Components of Residential Energy Use (Quads)

Space Waterheating Cooling heating Other*

Electricity. . . . . . . . . . 1.55 1.13 1.16 3.96Oil . . . . . . . . . . . . . . . . 2.67 0.31Natural gas. . . . . . . . . 3.97 1.03 0.83Other. . . . . . . . . . . . . . 0.55 – 0.04 0.01

Total percentof nationalconsumption . . . . . 11.8 1.5 3.4 6.5

“Includes cooking, clothes drying, refrigeration and freezing, lighting, ap-pliances, TV, etc.NOTE: These are estimated from the 1977 figures using the relative breakdown

for 1975 given by ORNL/CON-13.1 Quad = 1.055 EJ.

increased. This is a result of rapid expansion inelectric heating over the period; about 50 per-cent of new homes have been constructed withelectric heat since 1974, compared with lessthan 30 percent in 1970. The proportion of newelectrically heated homes using heat pumps isrising rapidly. This trend toward electric heat-ing may be slowing, however, as there appearsto be a resurgence of gas space-heating in newhomes.

17

18 . Residential Energy Conservation

Many variables have contributed to thegradual reduction in residential energy growthin this decade, but it is difficuIt to demonstratea cause-and-effect relationship between demo-graphic trends, prices, and other economicfluctuations on the one hand, and energy con-sumption statistics on the other. The sharp dipto an absolute decline in weather-adjustedresidential energy use between 1972 and 1975can probably be attributed to the dominantevents of that period —the Arab oil embargoand the 1974-75 national bout with “stagfla-tion,” or combined recession and double-digitinflation. Beyond that, however, it becomesmore difficult to isolate causes of reducedconsumption.

Demographic contributions to reducedhome energy use can be glimpsed by reducingthe consumption statistics to the individualhousehold level. Between 1960 and 1970,energy consumption grew rapidly in eachhousehold–that is, total residential energyuse grew considerably faster than either thepopulation or household formation growthrates. While total weather-adjusted residentialenergy use grew by 4.7 percent annualIy, popu-lation increased at an annual rate of only 1.3percent and the number of households rose byonly 1.9 percent annually. The rapid increasein each household’s energy consumption canbe attributed to the trend toward saturation inmajor energy-consuming home appliancessuch as air-conditioners, dishwashers, andclothes dryers, and to increased energy-inten-siveness in such appliances as frost-free re-frigerators.

The trend toward higher per-household ener-gy consumption has been halted in the 1970’s.A recent study by the General Accounting Of-fice reports that total energy use per house-hold has remained essentially constant in thisdecade. 2 Demographic trends help to explainthis reversal: as population growth has slowedto an annual increase of 0.6 percent, the rateof household formation has picked up to 2.4

‘The Federal Government Should Establish and MeetEnergy Conservation Goals, Comptroller General of theUnited States, June 30,1978, Washington D.C.

percent. At the same time, the average numberof persons in each household has declined.One- and two-person households increasedtheir share of total households from 45.8 to51.2 percent between 1970 and 1976, whilehouseholds with four or more persons droppedfrom 21.1 to 15.9 percent. The high rate ofhousehold formation and smaller householdsize result from the “coming-of-age” of baby-boom children and, to a lesser extent, higherdivorce rates, greater longevity, and the in-creasing tendency of older persons to livealone.

Smaller households, typically occupyingsmaller homes, use less energy. But each addi-tional household adds more energy consump-tion to the total than the same number of per-sons would use in a combined larger house-hold, as each new household normally meansan additional furnace and water heater and ad-ditional appliances. Therefore, while energyuse per household does not grow, total house-hold energy use does increase faster thanpopuIation.

Projections of future population growth andhousehold formation suggest that the demo-graphic trends of the 1970’s are likely to con-tinue. The Bureau of the Census medium-growth projection (Series 11) for population in2000 is 260 million, or an average annualgrowth of 0.8 percent between 1976 and 2000.A housing model developed by the Oak RidgeNational Laboratory (ORNL)3 predicts a house-hold formation rate that continues to outstrippopulation growth; ORNL projects an averagegrowth of 1.6 percent in the housing stock be-tween 1975 and 2000. The highest growth (2.1percent annually) will occur in the 1975-85period, with a drop to 1.3 percent per year be-tween 1985 and 2000. Households in 2000 areexpected to total approximately 106.5 million.Combined with the Series I I population projec-tion, this would mean an average householdsize of 2.40 persons, compared to 2.95 personsin 1976.

3“An Improved Engineering– E c o n o m i c Model ofResidential Energy Use,’’ Oak Ridge National Laboratory,Oak Ridge, Tennessee.

Ch. I—Trends . 19

Most observers agree that the price of ener-gy, and particularly dramatic changes in price,affect residential (and other) energy use.Again, however, documenting the exact rela-tionship between price changes and reducedhousehold energy consumption is virtually im-possible, given the scanty data collected dur-ing the short period of time when price in-creases have occurred. Figure 2 shows pricesfor electricity, natural gas, and heating oilfrom 1960 to 1977 in constant 1976 dollars (toremove the effects of inflation). The figureshows that all energy prices, in real terms, haveincreased dramatically in the last few years.

Figure 2.— Fuel Prices 1960.77(in constant 1976 dollars)

1960 1965 1970 1975 1977Year

SOURCE: U.S. Energy Demand: Some Low Energy Futures, Science,vol. 200, Apr. 14, 1978, p. 144.

Since 1970, real oil prices have increased anaverage of 7.6 percent per year (with a 35-per-cent increase from 1973 to 1974); real naturalgas prices increased 4.9 percent annually; andelectricity prices rose 3.4 percent per year. Be-tween 1960 and 1970, by contrast, all theseprices decreased in real terms.

Viewing these price changes in another way,table 2 presents national average annual heat-ing bilIs (in 1976 dollars) for electricity, fuel oil,and natural gas, for the years 1960, 1970, 1975,and 1977. These figures show that the real costof heating dropped substantialIy from 1960 to1970 for all three fuels before beginning togrow. The greatest increase has occurred in theoil heating bill, which has increased 65since 1970. Natural gas and electricbills have increased 37 percent and 27respectively since 1970.

Table 2.—National Average AnnualHeating Bills by Fuel (1976 dollars)

percentheatingpercent

Year Electricity Oil Natural gas

1960 . . . . . . . . . . . . . . $690 $280 $2201970 . . . . . . . . . . . . . . 450 260 1751975 . . . . . . . . . . . . . . 510 400 2001977 . . . . . . . . . . . . . . 570 430 240

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

The relative costs of the three fuels are alsoinstructive. As expected, electricity is the mostexpensive, about 2.3 times that of gas in 1977and about 32 percent higher than oil. In 1970,however, electric heat was about 73 percentmore expensive than oil and 2.6 times higherthan gas. If electricity prices continue to growat a slower rate than oil and gas, and heatpumps capture a greater share of the electricheat market, these price differentials shouldcontinue to narrow substantially and couldcontribute to increased electrification of theresidential heating market.


ANALYSIS OF ELECTRICITY AND NATURAL GAS USEAS FUNCTIONS OF WEATHER AND PRICE

I n an effort to isolate the impact of price in-creases on residential use of electricity andnatural gas, OTA employed regression anal-yses that separated weather-related and non-weather-related use of each energy source on aper-household basis. The analysis covered1967-77 for natural gas and 1970-77 for elec-tricity. The results of these analyses are showngraphically in figure 3. Major conclusions fromthe analyses are:

1.

2.

3.

4.

The per-household use of natural gas forheating, measured in 1,000 ft3 per degreeday, declined by about 10 to 15 percentbetween 1967 and 1977. (Similar resultswere obtained in a study by the AmericanGas Association.)Similar changes have occurred in non-weather-related household use of naturalgas (such as cooking) over the decade ex-amined. Interesting shorter term trendsare also evident: consumption in thiscategory rose about 10 percent through1973, and dropped by about 25 percentbetween 1973 and 1977.Per-household weather-related use ofelectricity, measured as kilowatthoursconsumed per heating and/or cooling de-gree day, dropped sharply from 1971 to1974, but has been rising over the last 3years.Conversely, non-weather-related uses ofelectricity per household increased steadi-ly from 1970 to 1974 and then droppedsharply from 1974 to 1977.

The linear model used in OTA’s analysis wasnot able to indicate a quantitative relationshipbetween those consumption changes and pricechanges over the same periods. This does notmean that the price effect can be dismissed,however, as the above results do track with in-creasing prices in most cases. In the case ofnatural gas, real prices have increased by 35percent since 1973 (see figure 2). The drop ingas use per degree day that occurred in 1974was probably caused largely by the embargo,but the continued downward trend since then

has likely been a result of price. The non-heating use of gas shows an even greater cor-relation to price in that the decline has ac-celerated in the last 2 years, when price in-creases have been the greatest. The principalconclusion here is that some price response isevident but it is complex and extremely dif-ficult to demonstrate conclusively or quan-titatively.

Electricity use shows a much weaker correla-tion to price. It must be noted that real elec-tricity prices have increased the Ieast amongthe residential energy sources—only 14 per-cent since 1973. In fact, the real price of elec-tricity in 1977 was just equal to that in 1965.Therefore, one would not expect to see asmuch change in electricity use as in otherenergy sources. There has been a substantialincrease in weather-related electricity use perhousehold since 1974 while non-weather-re-lated uses have declined about 25 percent.While these trends are correct, it is possiblethat the size of the changes which have oc-curred is smaller than shown in figure 3. Ef-fects due to changed thermostat settings andweatherproofing could cause the linear modelused to overstate the actual changes. Perhapsthese changes indicate that the modest elec-tricity price increases that have occurred havemotivated users to conserve where conserva-tion involves the least discomfort— in lighting,cooking, and use of appliances — but not in thebasic amenities of heating and cooling.

The ability of any model to document a rela-tionship between price and consumption in adecade or less– and particularly in the post-embargo period of sharp changes in both vari-ables — is Iimited. Analysis over a longer periodshould shed further light on the price effects,especially since a longer period is required totest for, the most significant response to price,a replacement of energy-consuming durablegoods such as furnaces, refrigerators, waterheaters, and other appliances. While short-term behavioral changes such as setting back

Ch. l—Trends ● 2 1

Figure 3.—Energy Use per Household

Non-weather-related uses

1968 1970 1972 1974 1976

Weather-related uses

5

4

1970 1972 1974 1976

1968 69 70 71 72 73 74 75 76 77

Year

1970 71 72 73 74 75 76 77

Year

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


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 projectionsof residential energy demand — not to indicatewhat is likely to happen, but to establish thepotential for residential energy conservation.Demand is projected to 2000 along two curvesas if 1960-70 and 1970-77 trends were to con-tinue. Another projection shows potential de-mand if all consumers behave in an economi-cally optimum manner. The latter case is ap-plied to a range of possible future energyprices.

The results of these projections are shown infigure 4. The upper curve, showing residentialuse reaching 48.4 quadrillion Btu* (Quads) by2000 if the growth rate resumes its 1960-70value, is for illustrative purposes only and isnot considered likely to occur. Although thegrowth rate has picked up over the last 3 years,it still does not approach the 1960-70 levels,and it is unlikely to do so because energyprices are unlikely to fall and saturation isbeing reached in a number of energy-intensiveappliances in the residential sector.

The second trend curve, reaching 31.3Quads in 2000, is more realistic because it rep-resents continuation of the 1970-77 growth rateof 2.6 percent per year. This projection impliesthat future response to increased prices andsupply uncertainty would follow 1970-77 pat-terns, and energy prices would not increaserelative to income for the remainder of thecentury. Because the last 3 years have shown amarked increase in the growth rate, a continua-tion of the 1975-77 trend until 2000 wouldresult in substantially more actual energy use.It is important to remember, however, that thetrends of the last few years do not yieldenough information, especially in light of theenormous price changes that have occurred, tobe considered accurate forecasts of the future.Because energy prices are, in fact, expected to

*A Quad = 1 quadrillion Btu = 105 exajoule (EJ)

Figure 4.—Comparative Energy Use(Residential sector)

Quads50

40

30

20

10

0

Projections

1 9 7 0 1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 0 1 9 9 5 2 0 0 0

Year

A – Residential consumption based on simple extrapolationof 1960-70 trend.

B – Residential consumption based on simple extrapolationof 1970-77 trend.

c – Residential consumption based on constant level ofenergy use per household; growth results from in-crease in number of households.

D-E – Range of “optimal economic response” based onassumption that energy saving devices are installed asthey become cost-effective. Range is formed by price;upper boundary represents response to lowest pro-jected price, lower boundary represents response tohighest projected price. (See figure 5—Price)

1 Quad= 1.055 EJ.

increase, it is probable that actual residentialenergy demand will fall below 31.3 Quads.

How far below is the key question, To testthe conservation potential of hypotheticalconsumer behavior based on maximum eco-nomic self-interest, projections were calcu-lated from the residential energy demandmodel developed by ORNL. The projectionsassume that consumers make selected in-vestments designed to increase residentialenergy efficiency to a point where theirmarginal cost equals marginal savings — that is,

Ch. l—Trends 23

the point where an additional dollar investedwould return less than a dollar over the life ofthe investment— and then no more is invested.The resulting consumption levels range from15.4 to 21.8 Quads in 2000.

Certain assumptions about future energyprices, available equipment, and financial vari-ables are inherent in the projections; the rangeof future energy prices used is displayed infigure 5. The low price projections correspondto the 1977 Department of Energy price projec-tions. These curves from 1975 to 2000 show agrowth rate for prices in 1975 constant dollarsof 4.0 percent per year for natural gas, 1.0 per-cent per year for electricity, and 1.7 percentper year for fuel oil. The Department of Energyis currently revising its price projections up-ward. The high price projections are placedsomewhat above the high Government projec-tions prepared by the Brookhaven NationalLaboratory (BNL). The rationale for doing thisis explained in the OTA report Application ofSolar Technology to Today’s Energy Needs,Volume II, September 1978. According to thisprice range calculation, between 1975 and2000 the average annual rate of increase inconstant dollars is 5.0 percent for natural gas,4.7 percent for electricity, and 4.8 percent forfuel oil. The 1978 prices (in 1975 dollars) areshown for each of these three fuels for easiercomparison.

This analysis assumes that a residentialcustomer would decide to invest his money ina manner calculated to realize a maximumreturn while meeting his future energy needs.The customer would divide his available fundsbetween energy conservation technologies andfuel purchases to minimize the amount ofmoney spent over the useful life of his invest-ment. Therefore the amount spent on the con-servation technologies would be less than thecost of energy saved.

Another way of seeing this tradeoff is to con-sider the equivalent cost of a barrel of oilsaved by an investment in residential conserva-tion and compare it to the cost of the energypurchased in the absence of the investment.This computation may be made using theORNL model, which considers investments intechnologies that reduce the heating and cool-

Figure 5.—Comparative Price Projections(All prices in 1975 dollars)

1975 1980 1985 1990 1995 2000

■ 1978 price (1975 dollars).Low = 1977 DOE projections.High = Arbitrary upper limit (see OTA Solar Report, vol. II)

ing load by improving thermal integrity of newsingle-family homes (e. g., insulation, stormwindows). This calculation shows that an ini-tial investment of $550 in selected measureswould reduce the combined heating and cool-ing load for a new home by about 52 milIionBtu per year in an average climate. Over a 20-year period (the life of the technologies pur-chased with the investment) the total energysavings wouId amount to 1.04 million Btu orthe equivalent of 180 barrels of oil. Therefore


the investment is equivalent to paying a littleover $3.00 per barrel in 1977 dollars— a pricefar lower than retail consumers actually payfor oil. Thus, a clear advantage exists for in-vestments in conservation as long as fuelprices stay above this value.

Even though the dollar savings in the aboveexample would be substantial, investments inimprovements to the building shell alone maynot be the best way to maximize return fromresidential conservation investments. By put-ting some money into more efficient equip-ment (e. g., appliances, air-conditioners, spaceheaters) an even greater return may be real-ized. Other calculations using the ORNLmodel indicate this result.

The model also assumes that only technol-ogies now available will be purchased for in-creasing efficiency of buildings and equipmentfor the remainder of the century. In this sensethe model is quite conservative. The model

also assumes that investors will discountfuture investments and savings using a dis-count rate of 10 percent, after inflation. This,too, is a conservative choice and tends tounderstate the potential for conservation.Finally, the model accounts for the effect oflegislation enacted prior to 1978 in carryingout the computations. It has not, however, ac-counted for the tax credits granted in the Na-tional Energy Act of 1978. The effect of thesemeasures in this calculation would be tochange the ruIes governing computation of theoptimal investment level. With the credit, theinvestor wilI realize a greater return for a giveninvestment than without the credit. Thereforehe can go to a higher level of thermal protec-tion before the marginal costs and savingsbecome equal. In essence, Congress decidedby enacting the tax credit that our nationalenergy situation requires energy savingsgreater than those that could be achievedthrough market price considerations withoutGovernment intervention.

DISCUSSION OF PROJECTIONS

The range of projections based on the eco-nomic optimum case shows annual residentialenergy growth rates of – 0.5 to 1.0 percent,considerably below any value that could beverified as a present trend, and probably toolow to be realistic future projections. Residen-tial consumers often fail to make economi-cally optimum investments in energy conserva-tion for many reasons, which are discussedelsewhere in this report. Also, the model usesas a payback period for each investment theentire life of the technology being purchased,while most residential conservation “inves-tors” have a time horizon considerably shorter,typically no more than 5 years. Finally, theseprojections assume continued energy price in-creases at higher rates than inflation; if thisshould not occur, energy use in 2000 would fallbetween the economic optimum path and the1970-77 trend curve. (A thorough discussion ofthe plausibility of future energy price increasesis given in the OTA solar report previouslycited.)

The economically optimal projections doshow, however, what one could expect if con-sumers had access to all necessary informationand no other constraints existed. A residentialconsumer would then presumably make the in-vestment decisions assumed in the model, asdoing so would maximize economic return. Al-though these projections should not be consid-ered as predictions of what will happen, theyare a valid target, and a valid basis for policymeasures to reinforce private decisions.

It is worthwhile putting these projections inanother perspective. If one assumes that na-tional average household energy use in 1977does not change for the remainder of the cen-tury, then the residential sector would use 24.7Quads in 2000. This is based on the ORNL pro-jection of about 106 million residences in 2000.Therefore the 31.1 Quad projection from the1970-77 trend line implies an increase in theaverage amount of energy used per household.From another point of view, energy use can be

Ch. l—Trends Ž 25

estimated in 2000 if space-heating and coolingrequirements were cut in half from the valueprojected by the 1970-77 trends. A reduction ofthis size is reasonable as shown in the sectionon current technology, chapter II. In 1977about 57 percent of residential energy went forspace heating and cooling. Continuation ofthat percentage, coupled with the 1970-77trends projection, would mean that about 18Quads would be needed for heating and cool-ing in 2000. Reducing heating and cooling by50 percent to 9 Quads would give a total resi-dential consumption of 22.3 Quads. Therefore,the projections made under the optimal invest-ment assumption are not as far from reach asthey may at first seem.

Going back to these latter projections, onecan see a substantial potential for savings inresidential energy use. I n the highest price pro-jection, a 50-percent reduction in energy usefrom the 1970-77 trend is possible. For thelower price projection, the savings potential is

still more than 30 percent compared with theextrapolation of 1970-77 experience. This sav-ings represents 9.2 to 15.6 Quads in 2000, orthe equivalent of about 4.6 million to 7.8 mil-lion barrels of oil per day. The cumulative sav-ings that couId be achieved from now until theend of the century, compared to the 1970-77trends extrapolation, range from 96.7 to 167.8Quads for the equivalent of about 16.7 billionto 28.9 billion barrels of oil — roughly com-parable to two to three Alaskan oilfields of thesize discovered in 1967.

It is apparent that large savings are possiblein the residential sector, and that they can con-tribute substantially to reducing importedenergy needs. Although the potential savingsmay be too optimistic, because consumers arenot now likely to behave in a strict economi-cally optimum manner, they are not impossi-ble and are worth reaching for. This studydiscusses many reasons why a gap between ac-tual and optimum savings exists and whatmight be done to narrow the gap.


TECHNICAL NOTE–RESIDENTIAL ENERGYCONSUMPTION ANALYSIS

Regression analyses was applied to total res- Gas usage was treated similarlyidential consumption of gas and electricity to ing was not included in theobtain figure 3. used was obtained from the following

Residential electric usage was separatedinto weather-related and non-weather-relatedconsumption by regressing consumptionagainst heating and cooling degree days in theform:

S = C + Bh Ceh Dh/Ce + Bb Cec Dc/Ce

where S is total electric sales per residentialcustomer; C is the non-weather-related use perresidential customer; Dh and Dc are heating-and cooling-degree-days respectively; Ce, Ceh,and Cec are total residential electric, electricheating, and electric cooling customers, re-spectively; Bh is the electric heating use perresidential electric heating customer perheating degree day; and Bc is the electric cool-ing use per residential electric cooling custom-er per cooling degree day. Monthly data wasused to determine C, Bh, and Bc for each year.Annual customer data was interpolated toestimate customers on a monthly basis.

except cool-regression. Datas o u r c e s :

Monthly electric sales: Edison Electric Institute, “An-nual Report, ” 1970-77

EIectric customers: Edison EIectric Institute,Electric heating customers: Bureau of the Census,

“Characteristics of New One-Family Homes: 1973”and a “Characteristics of New Housing: 1977. ”

EIectrlc cooling customers: Bureau of the Census.Monthly gas sales: American Gas Association, “Month-

ly Bulletin of Utility Gas Sales," 1967-77.Gas Customers: American Gas Association, “Gas

Facts “Gas heating customers: American Gas Association,

“Gas Facts. ”Monthly heating degree-days: “Monthly State, Re-

gional, and National Heating Degree Days Weightedby Population, ” U.S. Department of Commerce,NOAA Environmental Data Service, NationalClimatic Center, Asheville, N.C.

Monthly cooling degree-days: Monthly State, Region-al, and National Cooling Degree Days Weighted byPopulation,” N a t i o n a l C l i m a t i c C e n t e r , A s h e v i l l e ,

N C

Chapter H

RESIDENTIAL ENERGY USE

AND EFFICIENCY STRATEGIES

Chapter II.-- RESIDENTIAL ENERGY USE ANDEFFICIENCY STRATEGIES

Page

Heat Losses and Gains . . . . . . . . . . , . . 30The Thermal Envelope . . . . . . . . . . . . . . 30

insulation Effectiveness . . . . . . . . 37Heating, Ventilation, and Air-Condition-

ing Systems . , . . . . . . 39Furnaces . . . . . . . . . . . . . . 39Furnace Retrofits . ., . . . . . . . . . . . . 39Heat Pumps. . . . . . . . . . . . . . . 41Air-Conditioners . . . . . . . . . . . . . . . . 41

Appliance Efficiency and IntegratedAppliances . . . . . . . . . . . . . . . . . . 42

Page

The ACES System . . . . . . . . . . . . . . . . 44Energy Savings in Existing Homes —

Experiments . . . . . . . . . . . . . . . . . . . 46Integrating Improved Thermal Envelope,

Appliances, and Heating and CoolingEquipment . . . . . . . . . . . . . . . . . . . . . . . 50

Lifecycle Costing . . . . . . . . . . . . . . . . . . . . 52Technical Note on Definitions of Performance

Efficiency ..,...... . . . . . . . . . . . . . . . 54

TABLES

Page

3. Disaggregate! Cooling Loads for aTypical 1,200 ft2 “1 973” House inThree Different Climates. . . . . . . . . . . . 34

4. Sources and Amounts of Internal HeatGain During the Cooling Season forChicago and Houston . . . . . . . . . . . . . . 34

5. R-Value of Typical Building Sectionsand Materials . . . . . . . . . . . . . . . . . . . . 35

6. Performance Comparison for ThreeThermal Envelopes in Three DifferentClimates . . . . . . . . . . . . . . . . . . . . . . . . 36

7. Effective R-Values for Different Wallsin a Range of New Mexico Climates . 38

8. The Impact of a 100 kWh/Year Reduc-tion in Appliance Energy Usage onTotal Energy Consumption . . . . . 44

9. Energy Consumption of ImprovedAppliances for the Prototypical Home 44

10. Full-Load Performance of theACES System. . . . . . . . . . . . . . . . . . . . . 44

11. Actual Space- and Water-HeatingEnergy Requirements of the ACESDemonstration House. . . . . . . . . . . . . . 46

12. Comparison of Reductions in Heat-Loss Rate to Reductions in Annualbleating Load. . . . . . . . . . . . . . . . . . . . . 49

13. Preretrofit Steady-State Winter Heat-Loss Calculations . . . . . . . . . . 49

14. Postretrofit Steady-State Winter Heat-Loss Calculations . . . . . . . . . . . 49

15. Primary Energy Consumption forDifferent House/EquipmentCombinations . . . . . . . . . . . . . . 50

16. Equipment Used in PrototypicalBaltimore Houses . . . . . . . . 51

17. Levelized Monthly Energy Cost inDollars for Energy Price RangesShown (All electric houses) . . . . . . . . . . 53

18. Levelized Monthly Energy Cost inDollars for Energy Price RangesShown (Gas heated houses). . . . . . . . . . . 53

19, Structural and Energy ConsumptionParameters for the Base 1973 Single-Family Detached Residence . . . . 56

20. Specifications and DisaggregateLoads for “1973” Single-FamilyDetached Residence . . . . . . . . . . . . 57

21. Specifications and DisaggregateLoads for “1976” Single-FamilyDetached Residence . . . . . . . . . . . . 58

22. Specifications and DisaggregateLoads for Low-Energy Single-FamilyDetached Residence . . . . . . . . . . . . . 59

23. Disaggregated Energy Consumptionfor Different Combinations ofThermal Envelope and HVAC Equipmentfor Houses in Houston, Tex. . . . . . . . . . 60

24. Disaggregated Energy Consumptionfor Different Combinations ofThermal Envelope and HVAC Equipmentfor Houses in Baltimore, Md. . . . . . . . . 61

25. Disaggregated Energy Consumptionfor Different Combinations ofThermal Envelope and HVAC Equipmentfor Houses in Chicago, Ill.. . . . . . . . . . . 62

FIGURES

Page

6. Residential Energy Use in the UnitedStates . . . . . . . . . , . . . . . . . . . . . . . . . 29

7. Disaggregate Energy Usage in the“Typical 1973” House Located inBaltimore, Md., for Three DifferentHeating and Hot Water Systems . . . . . 32

8. Heat Losses and Gains for the Typical1973 House in Chicago and Houston ––

Heating Season . . . , . . . . . . . . . . . 339. Heating Load/Cost Relationship––

Kansas City . . . ... , . . . . . . . . . . . . . . . 3610. Residential Heating Systems. . . . , . . . . 4011 Performance of Installed Heat Pumps . 4212, Handbook Estimates of Loss Rates

Before and After Retrofit . . . . . . . . . 4813. Disaggregated Point of Use Energy

Consumption for the Low-Energy HouseWith Heat Pump in Baltimore, Md. . . . . 51

14. LifecycIe Cost Savings vs. ConservationInvestment for a Gas-Heated andElectrically Air-Conditioned House inKansas City . . . . . . . . . . . . 54

Chapter IIRESIDENTIAL ENERGY USEAND EFFICIENCY STRATEGIES

Technologies available now can substantially reduce home energy use with no loss incomfort. This chapter demonstrates that total energy use in new and existing homes cantypicalIy be reduced by 30 to 60 percent and that these energy savings produce a large dollarsaving over the life of the home. The review focuses on the “thermal envelope” —the insula-tion, storm windows, and other aspects of the building shell —the equipment used to heatand 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 experimentson 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 costof owning and operating these homes.

There is little measured data on energy usein a “typical” home. Experiments are difficultto perform because of individual variations inconstruct ion, equipment, and appliances;moreover, the living and working patterns ofthe occupants can change energy use by a fac-tor of two.

Most of the data on residential energy use isbased on the interpretation of aggregate con-sumption data. Monthly gas sales are analyzedto determine the weather-dependent portionthat is used for heating; information on lightbulb sales is combined with the average bulblifetime to determine the average householduse of energy for Iighting; and simiIar deter-minations are made for other appliances anduses. The average residential use pattern asdetermined by Dole’ after reviewing previousstudies and performing additional analysis isshown in figure 6. This figure shows “primary”energy usage, which accounts for distributionlosses for all fuel types and for electric genera-tion losses.

Calculations based on aggregate consump-tion do not show the interactions that occurbetween appliance usage and heating andcooling needs, nor do they show the sources ofheat loss that greatly influence total energyusage. It is necessary to consider a particular

‘Stephen H. Dole, “Energy Use and Conservation inthe Residential Sector: A Regional Analysis, ” (RAND Cor-poration, June 1975),R-1641 -NSF

Residential primary energy consumption, 1970—13 quadrillion Btu

SOURCE: Stephen H. Dole, “Energy Use and Conservation in the ResidentialSector: a Regional Analysis,” RAND Corporation, R-1641-NSF, June1975, p. vi.

‘Hlttman Associates, Inc. , “Development of Residen-tial Buildings Energy Conservation Research, Develop-ment, and Demonstration Strategies, ” H IT-681, per-f o r m e d u n d e r E R D A C o n t r a c t N o E X - 7 6 - C - 0 1 - 2 1 1 3 ,August 1977

29


HEAT LOSSES AND GAINS

The first calculation is based on a single-story, three-bedroom, 1,200 ft2 home in Balti-more, Chicago, or Houston. Identified as the“1973 house,” it has a full, unheated basementand is constructed of wood frame with brickveneer. Insulation levels and other char-acteristics are shown in tables 19 through 25 atthe end of this chapter. It is sufficientlycharacteristic of the existing housing stock toiIlustrate typical energy use patterns.

The energy use patterns of the 1973 houseare shown in figure 7 for a variety of fuel sys-tems. Figures 7(a), (c), and (d) show the energyused at the home and do not include losses ingeneration or production and transmission ofenergy. If these are included so that primaryenergy is shown instead, the percentage distri-bution is changed dramatically. This is il-lustrated in figure 7(b) for the fuel case cor-responding to figure 7(a).

Heat loss or gain through the building shellresults primarily from heat conduction throughthe walls, windows, ceiling, and floors, and byinfiltration through cracks around windows,doors, and other places where constructionmaterial is joined. Figures 8 (a) and (b) show,for the typical house in two climates (Chicagoand Houston) that heat losses are well distrib-uted across the various parts of the thermalenvelope (as are infiltration losses). Thus, ma-jor reduction in heat loss will require that morethan one part of the shell be improved. Houseswill vary widely in this regard. For example, ifthe house used in figure 8 had been built with-out any attic insulation, roof losses wouldhave accounted for about 40 percent of totalheat loss rather than the 12 to 14 percentshown. Even though substantial reduction inheat loss would occur if the attic were insu-lated, there would still be room for substantialimprovement in other parts of the shell as well.

Mechanical or electrical heating systems aregenerally the principal source of heat to makeup for these losses to keep a home at a com-fortable temperature. Other sources of heat,however, are also significant. Figures 8 (c) and(d) show the distribution of heat gain for the

Chicago and Houston cases. Internal heat gaincomes from cooking, lighting, water heating,refrigerator and freezer operation, other ap-pliances, and the occupants themselves. Al-though none of these internal gains is large,they combine to provide nearly one-fifth of theheat in the colder climates. Heat availablefrom sunlight depends primarily on the win-dow area and orientation and can be consider-ably Increased if desired.

Everything (except the floor) that contrib-utes to the heating load also contributes to thecooling load. (The floor helps cool the house insummer. ) Internal gains and solar gain fromwindows that reduce the heating load require-ments add to the cooling load, but in very dif-ferent proportions. As shown in table 3 internalheat gains constitute about half the coolingload There is less infiltration in summer thanin winter, because of lower wind speed andsmalIer indoor-outdoor temperature differ-ences, but humidity removal requirements in-crease. Thus, infiltration contributes about asmuch fractionally to the cooling effort as itdoes to heating. Additions to cooling loadfrom windows are much larger than to heatingbecause their conductive heat gain adds to thesolar radiation gain when cooling is consid-ered Other parts of the building shelI con-tribute only 9 to 13 percent of the cooling loadin the three simulated locations. The floor,however, does reduce cooling requirementssignificantly.

Table 4 shows internal gains for the proto-typical house in Chicago and Houston. Majorsources are the occupants, hot water, cooking,lighting, and the refrigerator/freezer. All otherappliances together contribute about as muchas any one of the major sources.

The Thermal Envelope

Current practice in residential energy con-servation often begins with attempts to reducethe normal tendency of a house to lose heatthrough the structure. The rate at which a par-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 daytimephotography 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 wasestimated 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


Figure 7.— Disaggregated Energy Usage in the “Typical 1973” House Located inBaltimore, 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 Chicagoand Houston— Heating Season

Heat losses

(a) Chicago(b) Houston

Heat gains

c) Chicago

1 MMBtu = 1.05 gigajoule (GJ).SOURCE: Based on tables 19-25


Table 3.—Disaggregated Cooling Loads fora Typical 1,200 ft2 “1973” House in

Three Different Climates

Baltimore Chicago Houston

Structural heat gains percent percent percent

Roof . . . . . . . . . . . . . . . . . . . . . 4 4 5Doors. . . . . . . . . . . . . . . . . . . . 1 1 1Floor. . . . . . . . . . . . . . . . . . . . . — — 2Walls . . . . . . . . . . . . . . . . . . . . 4 4 5Window conduction and

radiation . . . . . . . . . . . . . . . 18 17 19Infiltration . . . . . . . . . . . . . . . . 22 19 24

Total structural gains . . . . . 49 45 56

Internal heat gains . . . . . . . . . 51 55 44

Total heat gains . . . . . . . . . 100 100 100

Heat lossesFloor . . . . . . . . . . . . . . . . . . . . . 33 40 —Cooling system . . . . . . . . . . . . 67 60 100

Heat removed by coolingsystem (MMBtu) . . . . . . . . . 18.0 14.0 56.9

1 MMBtu = 1.05 GJSOURCE: Based on table 20.

Table 4.—Sources and Amounts of Internal HeatGain During the Cooling Season for Chicago

and Houston (1973 House)

Chicago Houston

Percent Percentof total of total

MMBtu heat gain MMBtu heat gain

Hot watera . . . . . . . . . 2.5 10 4.6 8Occupants . . . . . . . . 2.8 12 5.2 9Cooking . . . . . . . . . . . 1.3 5 2.4 4Lighting . . . . . . . . . . . 2.3 10 4.3 7Refrigerator/freezer . 2.0 8 3.6 6Miscellaneous . . . . . . 2.3 10 4.2 7

1 MMBtu = 1.05 GJaHot water gains were assumed to be jacket losses PIUS 25 percent of the heatadded to the water.

boccupant heat gains were assumed to be 1,020 Btu Per hour for 3.75 monthsand 7 months respectively based on an average of 3 people in the house.

cThe remaining categories are based on usage levels shown in table 18 for 3.75and 7 months for Chicago and Houston, respectively.

‘%his category includes the TV, dishwasher, clothes washer, iron, coffee maker,and miscellaneous uses of table 17. The clothes dryer input is neglected sinceit is vented outdoors.

SOURCE: OTA.

through conduction (and conversely, gainsheat in hot weather) is governed by the re-sistance to heat flow (denoted by the R-value)and the indoor/outdoor temperature dif-ference. Engineers and designers commonlyexpress the R-value of various components inBtu per hour per ft2 per 0 F, which means thenumber of Btu of heat that wouId flow through1 ft2 of the component in an hour when a tem-perature difference of 10 F is maintained

across the component. Different parts of ahouse have R-values differing by a factor of 10or more, as shown in table 5(a). Tables 5(b) and5(c) show the R-values of a variety of commonbuilding materials and how they are added toobtain the R-value of a specific wall.

Infiltration is described in terms of airchanges per hour (ACPH)— and 1 ACPH corre-sponds to a volume of outside air, equal to thevolume of the house, entering in 1 hour. Therate of infiltration is affected by both the windand the difference between indoor and out-door temperatures; it increases when the windrises or the temperature difference increases.

Less is understood about how to measureand describe infiltration than about heat flow.It is clear that specific actions can help lowerinfiItration such as using good-quality win-dows and proper caulking and sealing. It is alsoclear that the general quality of craftsmanshipthroughout construction is important, and thatthere may be factors at work that are not yetwelI understood. Half an air change per hour isconsidered very tight in this country, althoughrates below 0.2 have been achieved in build-ings in the United States and Sweden. ManyU.S. houses have winter air change rates of twoor more. Tightening houses must be combinedwith attention to possible increases in the in-door moisture level and quality of the indoorair (see chapter X).

What can be done to reduce the heating andcooling energy use? As an example, the 1973home has been subjected to a number ofchanges in the building shell by computer sim-ulation.3 Two levels of change have beenmade, one improves the thermal envelope so itis typical of houses built in 1976 and anotheruses triple glazing and more insulation — it isdescribed as the “low-energy” house. Eachmodification was done in the three climatezones represented by Baltimore, Chicago, andHouston.

The 1973 house uses R-1 1 wall insulation andR-1 3 ceiling insulation and has no storm win-dows or insulating glass. The 1976 house in-creases ceiling insulation to R-19 and featuresweather-stripped double-glazing and insulated

~ Ibid


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 . . . . . . . . . . . . . . . . . 15.0Exterior wall with 3½" fiberglass batts. . . . . . . . . . 13.0 Attic with 12” fiberglass batts . . . . . . . . . . . . . . . . . 40.0Exterior wall with 5½” blown cellulose. . . . . . . . . . 22.0 Single-glazed window (excl. frame) . . . . . . . . . . . . . .9Uninsulated frame floor . . . . . . . . . . . . . . . . . . . . . . 4.6 Double-glazed window (excl. frame) . . . . . . . . . . . . 1.6Uninsulated 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 . . . . . . . . . . . . . . . . . . . . . . . . . 0.452. Brick veneer (4 in. face brick) . . . . . . . . . . . . . . . . 0.44 6. Inside surface (still air) . . . . . . . . . . . . . . . . . . . . . 0.683. I/2” insulation board sheathing . . . . . . . . . . . . . . 1 . 3 2A.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 . 6 2 5½" fiberglass batt . . . . . . . . . . . . . . . . . . . . . . . . . . 19.01x8 wood siding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.79 3½" blown cellulose. . . . . . . . . . . . . . . . . . . . . . . . . 13.04“ common brick . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.80 3½" expanded polystyrene foam . . . . . . . . . . . . . . 17.5Single-glazed window . . . . . . . . . . . . . . . . . . . . . . . . 0.94 3/4” still air space (nonreflecting surfaces) . . . . . . . 1.01Double-glazed window (¼” air space). . . . . . . . . . . 1.54 4" still air space (nonreflecting surfaces) . . . . . . . . . 1.01Single-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 ofHeating, Refrigerating, and Air-Conditioning Engineers, Inc., New York, N Y., 1972, chs. 20,22.

doors. The low-energy house is very heavily in-sulated, with R-38 ceilings, R-31 walls, and R-30floors. It is carefully caulked and weather-stripped to reduce infiltration and has triple-glazing and storm doors. Results of the com-puter simulation of these houses are shown intable 6. Detailed thermal properties andenergy flows are given in tables 19 through 25.(The computer program did not provide hourlysimulation; if it had, it is likely that the low-energy house in Houston would have requireda smalI amount of heating. )

Heat losses in winter are about 16 percentless for the 1976 house than the 1973 house inChicago and Baltimore, but the calculationsshow that the heat that must be supplied hereby the furnace is reduced by more than 20 per-cent. This is because the newer house receivesa higher proportion of its heat gain from sun-light, appliances, and other internal gains. (Ex-tra glazing slightly reduces heat gain fromsunlight, but other internal gains are un-

changed. ) Fractional savings for the 1976house are even larger in Houston, for the samereason. The “1976” summer heat gains are 8 to10 percent lower than the 1973 house, andcooling system loads are reduced by about 10to 12 percent. Reduction in the cooling loadbetween the two houses is less than the reduc-tion in heating load, because the thermal im-provements do not affect the internal heatgains.

Modifications in the low-energy house cutthe heating requirements dramatically. Ther-mal losses are cut by more than 50 percent.When this is done, the low-energy Houstonhouse no longer needs a heating system (oneburner of an electric range at high heat wouldkeep this house warm in the coldest Houstonweather), and the heating requirements forChicago and Baltimore are reduced by 75 and82 percent from the 1973 levels. Cooling re-quirements in Baltimore and Chicago increase,as the heavily insulated floor no longer loses asmuch heat to the relatively cool ground. In


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

Winter heat losses

City

Baltimore“1973” house . . . . . . . .“1976” house . . . . . . . .Low-energy house . . . .

Chicago

“1973” house . . . . . . . .“1976” house . . . . . . . .Low-energy house . . . .

MMBtu

794661287

1,057887405

I

Houston

“1973” house . . . . . . . . 211“1976” house . . . . . . . . 153Low-energy house . . . . —

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

Percent of1973 losses

—8336

—8438

—73—

Heat system load

MMBtu

554437

99

811647202

8452

0


—7918

—8025

—62

0

Summer heat gains

MMBtu

269247219

236218195

569513434


—9281

—9383

—9076

Cooling system load

MMBtu

180158204

140123179

569513434


—88

113

—88

128

—9076

Houston, however, the cooling load is still Figure 9.— Heating Load/Cost Relationship—lower for the low-energy home, as floor heatlosses do not aid cooling in this climate.

A similar analysis was performed by Hut-chins and Hirst of ORNL.4 This study used theNBS heating and cooling load program to cal-culate changes in these loads for “typical”new construction of a 1,200 ft2 home in 11cities of differing climates. The results of thatanalysis are in substantial agreement withthose discussed here. Figure 9 shows theheating load reduction for a home in KansasCity, Kans. as more and more improvementsare made to the building shell. The cost scalerefers to the additional investment needed toinstalI these improvements in a new home. It isa net investment in that it accounts for theadded cost of the additional materials (insula-tion, storm windows, etc. ) as well as the re-duced heating equipment cost that occurs be-cause the heating system size is reduced as theheating load decreases. It is important to re-member that these costs are for new homes;similar changes for existing homes wilI be moreexpensive in some cases (e. g., adding walI in-sulation).

‘Paul F. Hutchins, J r., and Eric Hirst, “Engineering-Eco-nomic Analysis of Single-Family DwelIing Thermal Per-formance” (Oak Ridge National Laboratory, November1978), ORNL/CON-35.

Kansas City.

0 $500 $1,000 $1,500 $2,000Additional initial costs (1 975– $)

SOURCE Paul F. Hutchins, Jr., and Eric Hirst, “Engineering-Economic Analysisof Single-Family Dwelling Thermal Performance, ” Oak Ridge NationalLaboratory, ORNL/CON-35, November 1978, p. 16.

The Kansas City results show a possible heatload reduction of up to 70 percent with an in-vestment of less than $2,000. (The baselinehouse for the case had no insulation.) Thesedollar levels compare well with those calcu-lated for the two houses discussed above. Inthis case it was estimated that the low-energyhouse would cost about $3,200 more than the1973 house while the 1976 house would beabout $600 more expensive. I n nearly all cases,

Ch. Il—Residential Energy Use and Efficiency Strategies ● 37

however, this added cost would be more thanrecovered in reduced fuel bills over the life ofthe home.

The results from these two models showthat, within the limits of computer simulation,a substantial reduction in heating load is possi-ble from homes built in the early 1970’s. Whencooling is considered, additional energy issaved in most cases.

Insulation Effectiveness

What is possible for new homes based oncomputer simulation and the stated character-istics of materials used to increase the efficien-cy of the building shell has been shown. A keyassumption is that the materials perform attheir specifications. For most of the items usedin improving the shell —weather-stripping,storm doors, and windows — the assumption isa safe one. With insulation, however, prob-lems, may arise.

Researchers have only recently begun to trydetermining the actual field effectiveness anddurability of insulating materials. (For informa-tion on health and safety questions about in-sulation, see appendix A). Van der Meer5 andMcGrew 6 contend that insulation is often lesseffective than commonly believed, owing todegradation over time, and to the effect ofsolar heat gain on the net heat loss through awall or attic over a heating season. It appearsfrom their work that uninsulated south walls orattics, in particular, tend to collect significantamounts of solar heat in the climates of Colo-rado and New Mexico. The absorbed sunshinecan offset a larger fraction of the heat lostthrough a wall if the entire winter season isconsidered.

Sunshine striking the roof or walls of a build-ing can significantly change the energy flows.This is the basis for the use of “Solair”temperatures to calculate summer heat gains.However, similar concepts have not received

5Wybe van der Meer, j r,, “Energy Conservation Hous-ing for New Mexico, ” Report No. 76-163, prepared for theNew Mexico Energy Resources Board, Nov. 14,1977.

‘George Yeagle, Jay McGrew, and John Volkman,“Field Survey of Energy Use in Homes, Denver, Colo. ”(Applied Science and Engineering, Inc., July 1977).

much attention when dealing with winter heatloss. When sunlight strikes a wall or roof, par-ticularly a dark-colored one, it will be heated.If the wind is blowing hard, the solar heat willbe removed so rapidly that it will have a verysmall effect on the surface temperature of thewalI and hence on the heat flowing from insideto outside. If the wind is relatively calm, thesurface can be heated considerably, and if theoutdoor temperatures are mild enough, theflow will be greatly reduced and can even bereversed so that heat is flowing into the housewhen the outdoor temperature is below thehouse temperature.

The heat loss through building componentsand the economic value of insulation are gen-erally calculated from the R-values discussedearlier and the winter temperatures as ex-pressed in degree-days. (A measurement of therelative coldness of a location. ) [f the effect ofthe Sun on a roof or wall as just described isaccounted for over the entire winter, the totalheat loss can be much smaller than a calcula-tion based only on temperature. This led vander Meer and Bickle7 to propose the use of aneffective R-value (reference discusses an effec-tive U-value, which is the inverse of R-value; R-value is used here for consistency with theearlier discussion). If a wall had an R-value of 5but lost only half as much heat as expectedover the course of the winter because of solareffects, it would have an effective R-value of10.

Van der Meer and Bickle calculated effec-tive R-values for a variety of different types ofwall construction for 11 different climaticregions of New Mexico, which ranged from2,800 to 9,300 degree-days and received dif-ferent amounts of sunshine. Their results aresummarized for three wall types in table 7.Results are shown for north- and south-facingwalIs and for Iight and dark colors. (Results forother colors and orientations will be inter-mediate among those shown.) Clearly color isvery important. The effective R-value of alight-colored south wall is very close to the lab-

7Wybe van der Meer, Jr., and Larry W. Bickle, “Effec-tive “U” Factors— A New Method for Determining Aver-age Energy Consumption for Heating BuiIdings, ” pre-pared for the New Mexico Energy Resources Board, Con-tract Nos. 76-161 and 76-164, Nov. 10, 1977.


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

Wall orientation

N o r t h I SouthI

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 -90.9Uninsulated frame wall (R = 3.7). . . . . . . . . . . . . . 3.7- 4.0 4.5- 5.3 3.9- 4.4 6.3- 41.7Brick 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-ever, the dark north walls all have an effectiveR-value slightly higher than the laboratoryvalue. The effective R-values of dark south-facing walls show dramatic increases abovethe theoretical values. The extremely high ef-fective values for uninsulated walls occur onlyin the warmer parts of New Mexico.

Several caveats must be applied to the inter-pretation of this work. Effective R-values inmost parts of the country will be closer to thesteady state values than for the sunny NewMexico climate. These results consider onlythe winter heating season, and unless over-hangs or other shading measures are em-ployed, increased heat gain in summer couldoffset much of the benefits of the winter gain.

This is another illustration of the need tomake standards responsive to the site. Al-though increased amounts of insulation almostalways reduce the total heat loss of a house, itwill not have as large an effect as anticipatedin some cases, and hence will be less cost ef-fective than calculated using standard values.

Insulation can also degrade in several waysas it ages. Loose-fiII insulation in attics can set-tle, foam insulation can shrink and crack, andmoisture buildup can reduce the effectivenessof different types of insulation. The MinnesotaEnergy Agency recently measured the proper-ties of retrofitted insulation in 70 homes wherethe insulation ranged in age from a few monthsto 18 years (with an average age of 2½ years).8

The R-values of the cellulose and urea-formal-dehyde insulation were 4 percent lower onaverage than expected based on the density of

‘Minnesota Energy Agency, “Minnesota Retrofit In-sulation In-Site Test Program, ” HCP/W 2843-01 for U.S.Department of Energy under Contract No. EY-76-C-0202843, June 1978.

the insulation. The R-values of the mineralfiber (fiberglass and rock wool) insulationvaried from 2.35 to 4.25 Btu-1 hr ft2 0 F; but thewide variation was due to differences in thematerial itself rather than to differences in ageor thickness. McGrew9 measured the R-valuesof insulation installed in several houses andfound that while thin layers of insulation hadR-values corresponding to their laboratoryvalues, thicker layers fell below their labora-tory values. Three inches of rock wool with alab value of R-11 had a measured value of 9.9,and 6 inches of fiberglass with a lab value ofR-1 9 had a measured value of 13.4. These areconsistent with the general trend of his otherfield measurements.

Neither of these studies can be regarded asdefinitive since both sample sizes were smalland limited to particular geographic areas. It isalso possible that the moisture content and R-value wilI vary throughout the year in a signifi-cant manner. More work is needed to establishthe long-term performance of different typesof insulation in various climates.

A related problem, which seems to have re-ceived very little attention, is provision ofvapor barriers for insulation retrofits, par-ticularly walls. With the exception of foamedplastics, the insulations used to retrofit wallcavities are degraded by the absorption ofwater vapor. Exterior walls that were builtwithout insulation seldom include a vapor bar-rier. This problem is now being investigated.One solution may be the development and useof paints and wallpapers that are impervious

‘Jay L. McGrew and George P. Yeagle, “Determinationof Heat Flow and the Cost Effectiveness of Insulation inWalls and Ceilings of Residential and Commercial Build-ings” (Applied Science and Engineering, Inc., October1977)

Ch. II--Residential Energy Use and Efficiency Strategies “ 39

to water vapor. While some paints are mar-keted with vapor barrier properties, most ofthe work on coatings impervious to watervapor appears to have been done by the paperindustry for use in food packaging. Applica-tion of this work to products for the housing in-dustry appears desirable.

Heating, Ventilation, andAir-Conditioning Systems

The efficiency of heating and air-condition-ing systems varies widely depending on thequality of the equipment and its installationand maintenance, but the average installationis less efficient than generally realized. This ispartially due to the fact that efficiencies listedby the manufacturer are those of the furnaceor air-conditioner operating under optimumconditions. These estimates do not include thelosses from the duct system that distributesconditioned air to the house. The confusionbetween potential and actual efficiency is in-creased by the fact that the performance ofdifferent equipment is defined in differentterms —the “efficiency” of a furnace, the“coefficient of performance” (COP) for heatpumps, and the “energy efficiency ratio” (EER)for air-conditioners. These different ap-proaches are explained in a note at the end ofthis chapter. For purposes of comparison, thisdiscussion will emphasize the seasonal systemperformance, which attempts to measure theactual performance of the system in a realhome situation.

Furnaces

The average seasonal efficiency of oil fur-nace installations is about 50 percent (in-cluding duct losses) as shown in figure 10.However, the Department of Energy (DOE) hasdetermined that the seasonal efficiency of aproperly sized and installed new oil furnace of1975 vintage is 74 percent, ’” which suggeststhat inadequate maintenance, duct losses, andoversizing may be increasing the amount of oil

‘“Department of Energy, “Final Energy Efficiency lm-provement Targets for Water Heaters, Home HeatingEquipment (Not Including Furnaces), Kitchen Ranges andOvens, Clothes Washers, and Furnaces,” Federal Register,vol. 43, no. 198 (Oct. 12, 1978), 47118-47127.

burned in home heating systems by 50 percent.DOE also determined that it would be possibleto achieve an industry-wide production-weighted average seasonal efficiency of 81.4percent by 1980. ” These improved furnaceswould incorporate stack dampers and im-proved heat exchangers. While the efficienciescited by DOE do not include duct losses, theselosses can be eliminated by placing the fur-nace and the distribution ducts within theheated space.

The average seasonal efficiency of gas fur-nace installations is 61.4 percent. This is muchcloser to the seasonal efficiencies that DOEfound for 1975 gas furnaces –61.5 percent–than would be expected. While gas furnacesdo not require as much maintenance as oil fur-naces and can be made more easily in smallsizes, duct losses would be expected to in-troduce a larger discrepancy than observed.DOE estimates that use of stack dampers,power burners, improved heat exchangers, andthe replacement of pilot lights with electric ig-nition systems can improve the average sea-sonal efficiency of new furnaces to 75.0 per-cent. 2

Steady-state and seasonal efficiencies above90 percent have been measured for furnacesand boilers employing the “pulse combustion”principle, A gas-fired pulse combustion boilerwill be marketed in limited quantities duringthe latter part of 1979 and an oil-fired unit hasbeen developed by a European manufacturerwho has expressed interest in marketing it inthe United States. Research on a number offossil fuel-fired heat pumps is underway and issufficiently advanced that gas-fired heatpumps with coefficients of performance of 1.2to 1.5 may be on the market in as little as 5years. These furnaces and heat pumps are dis-cussed in chapter Xl.

Furnace Retrofits

A number of different organizations are con-ducting tests of the improvements in furnaceefficiency that can be achieved by retrofits, in-cluding the American Gas Association (AGA),

1 I Ibid.“[bid.

40 ● Residential Energy Conservat ion

Figure 10.— Residential Heating Systems

(20 – new. laboratory test conditions)

(429 – well maintained)(72 – as found

(conversion)

(MIT)

(Univ. of Wise

(62 — as foun

I

I

Brook haven National Laboratory (BNL), NBS,and the National Oil Jobbers Council. Only afew results are available now, but these in-dicate that meaningful savings can beachieved by retrofits.

The AGA program, which is known as theSpace Heating System Efficiency improve-ment Program (SHEIP), involves tests in about5,000 homes in all parts of the country. Prelimi-nary findings based on the installations thatwere retrofitted prior to the 1976-77 winterfound that adding vent dampers, making thefurnace a more appropriate size, and othercombinations all saved energy. 13 The size of

‘American C-as Association, “The Gas Industry’sSpace Heating System Efficiency Improvement Pro-gram — 1976/77 Heating Season Status Report."

Average 61 .4%

the data sample is small and not adequate forgeneralizations. The savings provided by theadjusted system apparently depended on theinitial condition of the heating system, thedegree of oversizing, the location, and the ventsystem design.

Northern States Power Company (Minne-apolis, Minn. ) is participating in SHEIP and hasmonitored 51 homes that had been retrofitprior to the winter of 1977-78. 14 A variety ofdifferent retrofits were installed ranging fromsimply derating the furnace and putting in avent restrictor to replacement of the furnace.While the sample is too small to draw conclu-

14 Northern States Power Company, “1977-78 S e a s o nSHE I P Report “


sions about most of the individual retrofits, itis interesting to note that the retrofits resultedin an average reduction in fuel use (adjustedfor weather) of 14. I percent for a cost savingsof $42. The average installation cost of theretrofits was $163, but did not include themarkup on the materials, which would haveadded $20 to $25 per installation on average.These results were achieved on furnaces thatwere all in good enough condition that theywere expected to last for at least 5 years, so itis Iikely that their annual efficiencies weresIightly higher than average. Thus, it seemsprobable that seasonal efficiencies of 70 per-cent can be achieved in gas furnaces that arein condition adequate for retrofitting. Theseretrofits did not include duct system insula-tion, which is clearly effective if the exposedducts are in unconditioned space.

Heat Pumps

The seasonal performance factor for 39 dif-ferent heat pump installations was recentlymeasured in a study conducted by Westing-house. ” The heat pumps studied were made byseveral different manufacturers and were in-stalled in 8 different cities. Figure 11 shows theactual performance of the installations (O and6) measured over two winters and the solidline represents the average measured seasonalperformance factor as a function of the heat-ing degree-days. Manufacturers performancespecifications were used together with themeasured heating demands of each house tocalculate the theoretical seasonal perform-ance factor for each installation, and the re-sults were averaged to obtain the broken Iineshown in the figure. The horizontal dotted linerepresents the performance of an electric fur-nace. The figure shows that the average instal-lation achieves 88 percent of the expectedelectricity savings in a 2,000 degree-day cli-mate, but only 22 percent of the expected sav-ings in an 8,000 degree-day climate.

The study also found that of the 39 installa-tions, only three exceeded the theoretical

‘sPaul J. Blake and William C. Gernert, “Load and UseCharacteristics of Electric Heat Pumps in Single-FamilyResidences,” prepared by Westinghouse Electric Cor-poration for EPRI, EPRI EA-793, Project 432-1 FinalReport, vol. 1, June 1978, pp. 2,1-12,13,

seasonal performance factor16 and four othershad a seasonal performance factor at least 90percent of the theoretical value. Six of thesystems that performed near or above speci-fication were located in climates with less than3,000 heating degree-days, including all threethat exceeded the theoretical value. (Ductlosses were not included in either measure-merit. )

The deviation between the measured andthe theoretical performance did not correlatewith the age or size of heat pump model, butthere was some indication that the theoreticalperformance underestimated the defrost re-quirements. Measurements made by NBS17 ona single heat pump installation found a dif-ference between measured and calculatedseasonal performance factors virtually iden-tical to that given by the equations on figure11 for Washington, D.C. Much of this dif-ference was due to inadequate considerationof defrost requirements in the calculatedseasonal performance factor. While it was notpossible to place a quantitative measure on in-stallation quality, there seemed to be aqualitative correlation between the experienceof the installer and the performance of the in-stalIation. 18 Inadequate duct sizing and im-proper control settings appeared to degradethe performance. Thus, it seems plausible thata combination of improved installer trainingand experience and modest technical im-provements in heat pumps can result in moreinstalIations that achieve the theoretical per-formance levels.

Air-Conditioners

The average COP of air-conditioners on themarket in 1976 was 2.0 under standard test

“Insufficient data was available to calculate the theo-retical performance factor for one of these cases, but themeasured performance exceeded the theoretical per-formance of any other installation in that location.

‘ ‘George E. Kelley and John Bean, “Dynamic Per-formance of a Residential Air-to-Air Heat Pump,” Na-tional Bureau of Standards, NBS Building Science Series93, March 1977.

18Paul Blake, Westinghouse Electric Corporation, per-sonal communication, December 1978.


Figure 11 .—Performance of Installed Heating Systems

conditions. 9 However, some units were on the tional Energy Act, air-conditioners with largermarket that had COPS of 2.6. California will condensers and evaporators, more efficientnot allow the sale of central air-conditioners compressors, two-speed compressors, multiplewith 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 aCOP of at least 2.55 after that date. It isestimated that the cost of increasing the COP Appliance Efficiency and Integratedof air-conditioners from 2.0 to 26 is about $10 Appliancesper MBtu of hourly cooling capacity. 20 T omeet 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,

Carrier Corporation), testimony before the Californiaachieved in other parts of residential use. I n

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,because of the accessibility of appliancescompared to some components of the buiIdingshell, such as the walls.

The effect of appliances includes the energyused to operate them and changes in thehouse’s internal heat gains that change theheating and cooling load. As most appliancesare used in conditioned space, they exhaustsome heat into that space. As with any otherchange in the house, a careful examination ofthe system interaction must be made to deter-mine the overalI effect of an apparently simplechange.

The overall effect of an improved appliancethat consumes 100 kWh per year less than theunimproved version is illustrated in table 8.This figure shows the effect of such a changeon two electric homes, one with resistanceheating and one with a heat pump, in twoclimates. I n Chicago, where heating is thelargest need, the improved appliance reducestotal consumption only by half of the appli-ance savings when resistance heat is in use, butby 79 percent when a heat pump is used. Thisresults from a drop in the appliance contribu-tion to heat gain, due to greater appliance effi-ciency. I n Houston, where cooling is more im-portant, total savings are greater than the sav-ings of the appliances alone, since internalheat gain is reduced.

The Department of Energy has publishedwhat it has determined to be the maximumfeasible improvements, technically and eco-nomically, for major appliances by 1980.2’ 22 Ifappliances in the prototypical home were im-proved according to these estimates, the con-sumption of the improved appliance would bethat shown in table 9. These target figures donot represent final technological limits, butonly limits the Department believes can soonbe achieved industry-wide. Some appliancesnow on the market equal or exceed these per-

2’Department of Energy, “Energy Efficiency Improve-ment Targets for Nine Types of Appliances, ” FederalRegister, vol. 43, p. 15138 (Apr. 11, 1978).

“Department of Energy, “Energy Efficiency Improve-ment Targets for Five Types of Appliances,” FederalRegister, vol. 43, p, 47118 (Oct. 12, 1978),

formance levels. A British study has estimatedthat the average energy use of the appliancesshown in table 9 (other than water heaters)could be reduced to 41 percent of present con-sumption. 23

As water heating is the second largest use ofhome energy (after heating) in most locations,a number of methods are under study to re-duce this demand below the incremental im-provements reflected in table 9. Heat pumpsdesigned to provide hot water are in the works,and proponents expect they may be able tooperate with an annual water heating COP of 2to 3.24 Because a heat pump removes heatfrom the air around it, a typical heat pumpwater heater will also provide space coolingabout equal to that of a typical small windowair-conditioner (one-half ton) in summer. Sucha heater is expected to cost about $250 morethan a conventional water heater.

Other approaches to the problem of heatingwater include use of heat rejected from thecondenser of an air-conditioner, refrigerator,or freezer, or the recovery of heat from drainwater. Air-conditioner heat pump recoveryunits now on the market cost $300 to $500 in-stalled. Estimated hot water production rangesfrom 1,000 to 4,600 Btu per hour per ton of air-conditioning capacity.25 The air-conditionerheat recovery unit is identical in concept tothe heat pump water heater, but is fitted toexisting air-conditioners or heat pumps. A unitinstalled on a 3-ton air-conditioner in the Balti-more area would reduce the electricity usedfor heating hot water in a typical home byabout 26 percent. 26

“Gerald Leach, et al., A Low Energy Strategy for theUnited Kingdom (London: Science Reviews, Ltd., 1979),pp. 104,105.

“R. L. Dunning, “The Time for a Heat Pump WaterHeater,” proceedings of the conference on Major HomeAppliance Technology for Energy Conservation, PurdueUniversity, Feb. 27- Mar. 1,1978 (available from NTIS).

*’David W. Lee, W. Thompson Lawrence, and Robert P.Wilson, “Design, Development, and Demonstration of aPromising Integrated Appliance,” Arthur D. Little, Inc.,prepared for ERDA under Contract No. EY-76-C-03-1209,September 1977.

“Estimate by the Carrier Corporation for a familyusing 80 gal Ions of hot water per day.


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

Chicago Houston

Resistance Efficient Resistance Efficientheat heat pump heat heat pump

Appliance savings. . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100 100Cooling savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 12 39 22Additional 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 heatpump 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 7months 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 ImprovedAppliances for the Prototypical Home

Appliance Energy consumption

Hot water heater -Gas. . . . . . . . . . . . . . . . 216 therms-Electric. . . . . . . . . . . . . 3,703 kWh

Cooking range/oven . . . . . . . . . . . . . . . . . 1,164 kWhClothes dryer. . . . . . . . . . . . . . . . . . . . . . . 950 kWhRefrigerator/freezer. . . . . . . . . . . . . . . . . . 1,318 kWhDishwasher . . . . . . . . . . . . . . . . . . . . . . . . 290 kWhNOTE: One therm = 29.3 kWhSOURCE: OTA.

As knowledge of home energy use increasesand prices of purchased energy rise, the use ofappliance heat now wasted should becomemore common. Some building code provisionsmay have to be adjusted to encourage theseuses.

The ACES System

The Annual Cycle Energy System (ACES) isan innovative heat pump system that usessubstantially less energy than conventionalheat pump systems. ” A demonstration houseincorporating the ACES system has been builtnear KnoxvilIe, Term., and uses only 30 percentas much energy for heating, cooling, and hotwater as an identical control house with anelectric furnace, air-conditioner, and hot waterheater.

The ACES concept, which was originated byHarry Fischer of ORNL, uses an “ice-maker”

27A, s, Holman and V. R. Brantley, “ACES DemonWa-tion: Construction, Startup, and Performance Report, ”Oak Ridge National Laboratory report ORNL/CON-26,October 1978.

heat pump in conjunction with a large ice binthat provides thermal storage. During thewinter, the heat pump provides heating andhot water for the house by cooling and freez-ing other water. The ice is stored in a large in-sulated bin in the basement and used to coolthe house during the next summer. After theheating season, the heat pump is normallyoperated only to provide domestic hot water.However, if the ice supply is exhausted beforethe end of the summer, additional ice is madeby operating the heat pump at night when off-peak electricity can be used.

The efficiency of the system is higher in allmodes of operation than the average efficien-cy of conventional systems. The “heat source”for the heat pump is always near 320 F so it isnever necessary to provide supplemental re-sistance heating and the ACES operates with ameasured COP of 2.77 as shown in table 10.When providing hot water, the system has aCOP slightly greater than 3, which is com-

Table 10.— Full-Load Performance of theACES System

——Function Full-load COP

Space heating with water heating . . . . . . . . . . 2.77Water heating only . . . . . . . . . . . . . . . . . . . . . . 3.09Space cooling with stored ice . . . . . . . . . . . . . 12.70Space cooling with the storage

> 32° F and < 45° F. . . . . . . . . . . . . . . . . . . 10.60Night heat rejection with water heatinga. . . . . 0.50

(2.50)aln the strict accounting used here, only the water heating is calculated as a

useful output at the time of night heat rejection because credit is taken forthe chilling when it is later used for space cooling. This procedure results ina COP of 0.5. If the chilling credit and the water-heating credit are taken atthe 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 insulatedtank 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


parable to the heat pump water heaters underdevelopment and much better than the con-ventional electric hot water heater COP of 1.The system provides cooling from storage witha COP of more than 10.

The ACES demonstration house is a 2,000-ft2, single-family house. It is built next to thecontrol house that has a simiIar thermal enve-lope so both houses have nearly identicalheating and cooling loads. Both houses arewell insulated although not as highly insulatedas the “low energy house” of this chapter. Thethermal shell improvements reduce the annualheating requirements (20.3 MMBtu) to lessthan half those of a house insulated accordingto the Department of Housing and Urban De-velopment (HUD) minimum property stand-ards (43.8 MMBtu) but increase the seasonalcooling requirement from 22.7 to 24.1 MMBtu.The use of natural ventilation for cooling whenpractical lowers the cooling requirements ofthe ACES house to 17.1 MMBtu.

The actual space- and water-heating energyrequirements for the ACES house are shown intable 11 for a 5-month period during the1977-78 winter. The ACES system used 62 per-cent less energy than wouId have been re-quired if the house had used an electric fur-

nace with no duct losses and an electric hotwater heater. It used 35 percent less energythan the theoretical requirements of a conven-tional heat pump/electric hot water heatersystem. These measurements combined withestimates of the summer cooling requirementsshow that the ACES system will use only 30percent of the energy for heating, cooling, andhot water that would be used by the controlhouse with a conventional all-electric system.This is only 21 percent of the energy thatwould be used for these purposes by this houseif constructed to HUD minimum propertystandards (This is nearly identical to the reduc-tion shown for the low-energy house. )

Table 11.—Actual Space- and Water-Heating EnergyRequirements of the ACES Demonstration Housea

——. —Elec. furnace, Heat pump,

elec. water elec. waterACES heater heater

Load consumption consumption consumption(kWh) (kWh) (kWh) (kWh)

Heating . - 1 0 , 5 4 64,960

10,546 5,021Hot water 2,657 2,657 2,657

Total. . 13,203 4,960 13,203 7,678acovers period from Oct. 31, 1977 through Mar. 26, 1978.

SOURCE: A. S. Holman and V. R. Brantley, “ACES Demonstration: Construc-tion, Startup, and Performance Report,” Oak Ridge National Labora-tory, Report ORNUCON-26, October 1978, pp. 43,47.

ENERGY SAVINGS IN EXISTING HOMES–EXPERIMENTS

Although the calculations of heating andcooling loads discussed above were given fornew homes, they hold as welI for retrofit of ex-isting homes to the extent retrofit is feasible.As the majority of the housing stock betweennow and the year 2000 is already built, how-ever, it is important to examine the potentialfor savings by retrofit in more detail. To im-prove the thermal qualities of the shell, con-sumers are urged to weatherstrip, caulk, in-sulate the attic, and add storm windows, oftenin that order. This is correct for most homes,but resulting savings will vary. Princeton Uni-versity and NBS have conducted extensive andthoroughly monitored “retrofits” of houses,and Princeton has undertaken an extensiveproject involving retrofit and monitoring of 30

townhouses in an area known as Twin Rivers,N.J. The results of this work suggest that largesavings are possible on real houses throughcareful work but that much field work isneeded before the full impact of changes isunderstood.

Thirty townhouses near Princeton, N. J., wereimproved with different combinations of fouroptions thought to be cost-effective. Thehouses were constructed with R-11 insulationin the walls and attic, and some units had dou-ble glazing. Thus, they were more energy effi-cient than the average existing house built upto that time. Improvements used by the Prince-ton researchers were: 1 ) increasing the attic in-sulation from R-11 to R-30; 2) sealing a shaft


around the furnace flue, which ran from thebasement to the attic and released warm airpast the attic insulation; 3) weatherstrippingwindows and doors, caulking where needed,and sealing some openings between the base-ment and fire walls that separate the houses;and 4) insulating the furnace and its warm airdistribution system and adding insulation tothe hot water heater.28

These retrofits showed winter heating sav-ings averaging about 20 percent for the two at-tic retrofits and up to 30 percent for the totalpackage. 29 30 Savings varied considerably; thiswas due to changes in temperature and sun-light combined with changing living patternsof the occupants (al I houses were occupied).

The savings measured are consistent withthe reduction in heating required in 600 housesthat received attic insulation retrofit throughthe Washington Natural Gas Company (Seat-tle) in autumn 1973. These houses indicated anaverage reduction of gas consumption of 23percent.31

While the Twin Rivers retrofits were conven-tional, there were some choices the averagehomeowner would have missed. These choiceswere important. Plugging the space around theflue and the spaces along the firewall stoppedheated air from bypassing the insulation. (Clos-ing openings in the basement also contrib-uted. ) Engineering analysis indicated that up to35 percent of the heat escaping from the town-houses as built occurred via the insulationbypass–heated air was flowing up and out ofthe house by direct escape routes! 32

28Davld T, Harrje, “Details of the First Round Retrofitsat Twin Rivers,” Energy and Buildings 1 (1977/78), p. 271.

*’Robert H. Socolow, “The Twin Rivers Program onEnergy Conservation in Housing: Highlights and Conclu-sions,” Energy and Buildings 1 (1977/78), p. 207.

JoThomas H. Woteki, “The Princeton omnibus Experi-ment: Some Effects of Retrofits on Space Heating Re-quirements” (Princeton University Center for Environ-mental Studies, 1976), Report No. 43, 1976.

3’Donald C. Navarre, “Profitable Marketing of Energy-Saving Services, ” Utility Ad Views, July/August 1976, p.26.

“Jan Beyea, Bautam Dutt, and Thomas Woteki, “Criti-cal Significance of Attics and Basements in the EnergyBalance of Twin Rivers Townhouses, ” Energy and Bui/d-ings 1 (1 977/78), p, 261.

This experience suggests that retrofit will bemost effective when based on an energy auditby someone who can identify specific charac-teristics of the structure, and it further suggeststhe need for more carefully monitored experi-ments to identify other common designdefects.

Princeton researchers also conducted an in-tensive retrofit on a single townhouse withcareful before-and-after measurements. Atticinsulation was increased to R-30 as in thegroup retrofit, and the hole around the flueand gaps along the firewall were plugged asbefore. For this experiment, however, the oldinsulation was lifted and additional holesaround pipes and wires entering the attic wereplugged. More holes along the partition wallsat the attic were filled; the joint between themasonry and the wood at the top of the foun-dation was sealed, and basement walls were in-sulated. Careful caulking and weather-strip-ping was used, and a tracer test to locate smallair leaks identified tiny holes. Total labor in-volved in reducing infiltration was 6 worker-days, and the final infiltration rate was lessthan 0.4 air changes per hour, even with windshigher than 20 mph.

Different treatments were used for windows.Sliding glass doors were improved throughadding a storm door. Windows not used forvisibility were covered with plastic bubblematerial placed between two sheets of glass.This type of window covering created an R-value of 3.8, compared with 1.8 for single glassplus a storm window. The living room windowswere equipped with insulating shutters, to beclosed at night.

Figure 12 shows engineering estimates of thelosses through various parts of the house,before and after retrofit. Largest reductionscame from lowered infiltration, but it is clearthat total reduction in thermal losses was pro-duced by many small adjustments. Thermallosses were reduced to 45.5 percent of theirpreretrofit value, and annual heating re-quirements (calculated considering internalheat gain and sunlight) showed the heatingsystem would have only one-third the load ofthe original system. These impressive numbersare especially significant because the house


Figure 12.— Handbook Estimates of Loss RatesBefore and After Retrofit

Loss rate: W/” Co 20 40 60

Through atticOutside walls Front

BackFront door

South windows:Living roomBedroom

North windows:Family roomBedrooms

Basement:Walls above gradeWalls below gradeFloor

Air infiltration:Basement1st & 2nd floors

L 1 1 I i 1 1 1 1 I 1 1 10 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 thermallosses as built than most existing stock.

The materials cost $425 and required some20 worker days for installation. Some itemswere hand built, so labor requirements werehigh. Since this work, additional loss mecha-nisms have been discovered in the party wallsof adjoining townhouses,33 and correction ofthese flaws should reduce the heating require-ment to 25 percent of the original value.

The National Bureau of Standards moni-tored the heating requirements of a 2,054 ft2

house (commonly called the Bowman house) inthe winter of 1973-74, and continued tomonitor during a three-stage retrofit thefollowing winter.34 A single-story wood-framehouse with unheated half basement and crawlspace, the house was buiIt with R-11 attic in-

“ R o b e r t H Socolow, “1 ntroduction, ” Energy a n d~ui/dif?gS 1 (1977/78), p. 203.

“D. M Burch and C M Hunt, “Retrofitting an ExistingWood-Frame Residence for Energy Conservation – An Ex-perimental Study,” NBS Building Science Series 105, July1978.

sulation, and uninsulated walls and floors.Windows were single-glazed except for a Iivingroom picture window. The house is surroundedby trees on all sides and has dense shrubberyalong the north wall. It showed evidence ofabove-average craftsmanship in construction.All these factors combined to produce air in-filtration rates ranging from one-quarter totwo-thirds air change per hour in extreme con-ditions; this is unusually low.

First retrofits were planned to reduce infil-tration — careful caulking, weather-stripping,replacement, or reglazing of window panes.The fireplace damper was repaired, a spring-Ioaded damper was installed on the kitchenvent-fan, and the house was painted inside andout. There was no measurable difference in in-filtration after the retrofits.

The next step was to install wooden-sashstorm windows, which cut the heat loss of thehouse by 20.3 percent.

Finally, blown cellulose insulation wasadded 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,blown cellulose, and urea-formaldehyde foamin different walls), R-11 insulation was placedunder the floor over the basement, and R-1 9over the crawl space. The addition of this in-sulation cut the heat loss from the house byanother 23 percent, but actually resulted in aslight increase in the infiltration rate, a resultnot fulIy understood.

Table 12 shows the resulting reduction inthermal losses of the house, based on anassumed occupancy pattern. Thermal losseswent down 43.3 percent, and the annual heat-ing system load was reduced by 58.5 percent.Tables 13 and 14 show calculated steady-stateheat losses before and after retrofit.

Table 12.—Comparison of Reductions in Heat-LossRate to Reductions in Annual Heating Load

Reduction in Reductions inheat-loss rate annual heating

Retrofit stage % load, %.

Preretrofit (and Stage 1) . . 0 0Stage 2 . . . . . . . . . . . . . . . . 20.3 25.2Stage 3 . . . . . . . . . . . . . . . . 23.3 33.3Combination . . . . . . . .’. . . 43.3 58.5SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-Frame

Residence for Energy Conservation-an Experimental Study,” NBSBuilding Science Series 105, July 1978.

Table 13.—Preretrofit Steady-State WinterHeat-Loss Calculations

Heat-loss Heat-loss-ratepath Btu/h

Percent oftotal

Walls. . . . . . . . . . . . . . 9,617Ceiling . . . . . . . . . . . . 4,020Floor

Over crawl space. . 3,201Over basement . . . 292 }

3,493

WindowsSingle pane . . . . . . 8,395 ,02 7 2

}Insulating glass. . . 1,877 ‘Doors . . . . . . . . . . . . . 924Air Infiltration . . . . . . 6,010

(1 = 0.51 h-l)a

Total . .........34,336

; 28.011.7

9.30.9

24.45.5 }

29.9

2.7”17.5

100

Table 14.—Postretrofit Steady. State WinterHeat-Loss Calculations

Heat-loss Heat-loss-rate Percent ofpath Btu/h total

The summer cooling load was slightly in-creased. Insulation added to the walls andattic reduced heat gain and a polyethylenesheet placed in the crawl space reduced themoisture entering the house, but these reduc-tions were offset by the reduction in coolingresulting from the passage of air through thefloor to the basement space.

The experiments at NBS and Princeton sug-gest possible heating savings of at least 50 per-cent through straightforward improvements,even in well-constructed houses. They alsoshow that these levels will be reached onlythrough careful examination of the structure,and that our general knowledge of the dynam-ics of retrofit is not very sophisticated. Addi-tional careful monitoring of actual houses isneeded. Such data will help us to obtain bettervalues for public and private investments.

aBased on Preretrofit air-infiltration correlation, indoor temperature of 68° Fand outdoor temperature of 32” F.

SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-FrameResidence for Energy Conservation-an Experimental Study,” NBSBuilding Science Series 105, July 1978.


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

The overall reduction in household energyuse is not determined solely by the thermalenvelope improvements; it is also influencedby the type and efficiency of heating, cooling,and water heating equipment used as well asthe other appliances. This can be seen in table15, which shows the total primary energy con-sumption for five different sets of equipmentin the three different simuIation houses dis-cussed earlier.

The equipment packages assumed range inperformance from that typical of many ex-isting installations to systems with aboveaverage but still below many existing commer-cial facilities. Gas and electric heating equip-ment is used to illustrate around the country.Price, availability or other considerations leadto the choice of oil, wood, or solar in manynew homes.

The effect of the thermal envelope or equip-ment improvements is rather similar in Chi-cago and Baltimore. The extra attic insulation,storm windows, and insulated doors of the1976 house reduce consumption by 12 to 14percent. Replacing the electric furnace with aheat pump cuts consumption to 72 percent of

the baseline 1973 performance. The low-energy, all-electric house starts with a well-in-sulated and tight thermal shell, uses a heatpump installed to meet predicted perform-ance, and improved appliances. The onlyequipment not now commercialIy available inresidential sizes is the heat pump providing thehot water. This house uses 36 to 39 percent ofthe energy of the 1973 house. The low-energygas-heated house is comparably equipped, ex-cept that it uses an improved furnace, air-con-ditioner, and hot water heater as shown intable 16. It uses about 55 percent of the energyof the baseline gas-heated house. The reduc-tion is smaller than for the all-electric house,as heating represented a much larger fractionof the primary energy consumption in thebaseline all-electric house than in the gas-heated house.

In Houston, the qualitative changes ob-served are similar, but the absolute and frac-tional reductions observed are generally con-siderably smalIer since heating and cooling areinitialIy a smaller fraction of the total con-sumption. For the 1976 house, the heating loadis already small enough that the heat pumpcuts 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 ofConsumption 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 89Low-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 95Low-energy house . . . . . . . . . 168 54 150 55 160 63NOTES: 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 0.891 MMBtu = 1.05 GJ.SOURCE: OTA


Table 16.—Equipment Used in Prototypical Baltimore Houses— — . .

House Heating system Cooling system Hot water Appliances-. — ——

All electric

“1973” house with electricfurnace. Electric resistance furnace

with 90°/0 system efficiency

“1976” house with electricincl. 10°/0 duct losses.

furnace. . . . . . . . . Same as above.

“1976” house withheat pump . . . . . . . . . . Electric heat pump with

seasonal performance factorof 1.26 (Chicago), 1.48(Baltimore), or 1.88 (Houston)incl. 1OO/. duct losses.

Low-energy house withheat pump. . . . . . . . . . . . . Electric heat pump with sea-

sonal performance factor of1.90 (Chicago), 2.06 (Balti-more), and no duct losses.Houston has no heatingsystem.—

Gas heated

“1973” house . . . . . . . . . . . . . . . Gas furnace with 60%seasonal system efficiency.

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

Low-energy house . . . . . . . . . Gas furnace with 75%seasonal system efficiency,

Central electric air-condition-ing system with COP = 1.8incl. 10% duct losses.

Same as above

Electric heat pump withCOP = 18 incl. 10% ductlosses,

Electric heat pump withCOP = 2.6 and no duct losses.

— ——

Central electric air-condi-tioning system withCOP = 18.

Same as above

is also interesting to note that in all threecities, the primary energy requirement for thegas-heated low-energy house is almost thesame as that of the one with the heat pump.

The changes that have been incorporated inthe low-energy house vastly alter the fractionof total consumption that goes to each enduse. Figure 13 shows that appliances andlighting now use 61 percent of the total (inBaltimore) while they used only 25 percent ofthe total for the 1973 house. Appliance use hasbeen reduced slightly, but the total for otheruses has been reduced by 80 percent. The dis-aggregate use for each house is shown intables 23, 24, and 25.

Part of the reductions shown in table 15 aredue to the use of improved heating and cool-ing equipment. The low-energy gas-heatedhouse uses a furnace with a seasonal efficien-cy of 75 percent while the 1976 house has anefficiency of only 60 percent. The improvedfurnace is equivalent to thermal envelope im-

Central electric air-condi-tioning system with COP = 2.6and no duct losses.

Electric hot water Appliances and usageheater with 800/0 effi- as shown in table 19.ciency.

Same as above. Same as above.

Same as above. Same as above.

Electric heat pump with Same as above exceptCOP =2. Hot water sup-plied by heat recoveryfrom air-conditionerduring cooling season.

Gas hot water heaterwith 44% efficiency.

Same as above.

Gas hot water heaterwith 55% efficiency.

usage given bytable 9 forappliances listedthere.

Appliances and usageas shown in table 19.

Same as above

Same as above exceptusage given bytable 9 for appli-ances Iisted there.

Figure 13.—Disaggregated Point, of Use EnergyConsumption for the Low-Energy House With Heat

Pump in Baltimore, Md.

1 MMBtu = 105 gigajoule (GJ)Source Based on tables 19-25


provements that reduce the heating load by 20percent, which points out that the retrofit ofequipment needs to be considered for existinghousing. It may pay to consider an improvedfurnace before retrofitting wall insulation.Each case must be decided separately, butwhere insulation already exists in accessibleplaces (attic, storm windows) the heating sys-tem offers considerable potential.

A number of additional steps— not con-sidered in the computer simulation — could betaken to reduce consumption even further.

Cooling requirements could be reduced byusing outside air whenever temperatures andhumidity are low enough. South-facing win-dows could easily be increased to reduce theheating requirements and it might be possibleto reduce the hot water requirements by lower-ing the water temperature or using water-con-serving fixtures. Appliance usage could clearlybe cut because no fluorescent lighting is used,and the “efficient” appliances used representonly the industry-weighted average perform-ance, which can be achieved by 1980.

LIFECYCLE COSTING

Dramatic savings in energy consumptionhave been shown to be readily achievablethrough existing technology. However, mostconsumers are more interested in savingmoney than saving energy. Comparison oftwo alternative purchases— buying additionalequipment now and making smaller operatingpayments versus paying less now but assuminglarger operating cost– is always difficult. Fewhomeowners resort to sophisticated financialanalysis, but they may consider the “payback”time required for operating savings to returnthe initial capital investment. This figure is fre-quently calculated without considering futureinflation in the operating costs— and hence inoperating savings —or interest on the moneyinvested.

A more sophisticated approach involves“lifecycle costing,” which can be useful forpolicy purposes even if individual homeownersdo not use it. Lifecycle costing, as used in thissection, combines the initial capital invest-ment with future fuel and operating expend-itures by computing the present value of allfuture expenditures. The Ievelized monthlyenergy cost is then computed as the constantmonthly payment that would amortize over 30years a loan equal to the sum of the initial in-vestment and the present value of al I future ex-penditures. The methodology and assumptionsused are described in detail in volume 11,chapter I of the OTA solar study .35 The “inter-

35 Application of Solar Technology to Today’s EnergyNeeds (Washington, D. C.: U.S. Congress, Office ofTechnology Assessment, September 1978), vol. 11.

est rate” assumes that three-quarters of the in-vestment is financed with a 9-percent mort-gage and that the homeowner will receive a 10-percent after tax return on the downpayment.It also considers payments for property taxesand insurance and the deductions from Stateand Federal taxes for interest payments. Futureoperating expenses include fuel costs, equip-ment replacement, and routine equipment op-erating and maintenance costs, all of whichassume that inflation occurs at a rate of 5.5percent. The present value of these expenses iscalculated using a discount rate of 10 percent.It is generally agreed that future energy costswill not be lower than now (in constant dol-lars), but beyond that projections differ as aresult of the different actions possible by theGovernment, foreign producers, and consum-ers. This study calculates Ievelized monthlycosts for three different energy cost assump-tions: 1) no increase in constant dollar prices;2) oil and electricity prices increase by about40 percent, while gas prices double (in cons-tant dollars) by the year 2000 as projected by aBrook haven National Laboratory (BNL) study;and 3) a high projection where prices approx-imately triple by the year 2000 (see figure 4,chapter l). The detailed assumptions about theenergy costs are given in volume 11, chapter I Iof the OTA solar study above.

The Ievelized monthly costs for each of thehouses described in table 15 are presented intables 17 and 18 for each of the energy priceincrease trajectories described above. Two dif-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(A l l e l ec t r i c houses ) ‘-

—Primary energy Price range 1976-2000 in 1976 dollarsb

—3.22-7.03 3.22-10.604.4-6.4 4.4-14.44.4All-electric houses

Chicago

“1973” house withelectric furnace. . . . . .


“1976 house withheat pump. . . . .

Low-energy housewith heat pump. . .

491

424

353

176

183

170

175

138

158

150

156

136

129

128

150123

492

442

408

273

293

268

260

192

398 828

362 743

341 668

240 435

341 703

315 641

297 573

229 407

273 556

264 530

282 541219 403

Baltimore



“1976” house withheat pump . . . . . . . . . .

Low-energy housewith heat pump. . . . . .

400

351

286

154

416

381

351

257

252

235

230

185

Houston



“1976” house withheat pump . . . . . . . . . .

Low-energy house . . . . .

294

271

261161

328

315

331248

204

199

218173

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 0.89bGas 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)

Primary energy Price range 1976-2000 in 1976 dollarsb

consumption Gas: 1.08 - 1.08-2.40 1.08-3.52 3.22 3.22-7.03 3.22-10.60(MMBtu) Electricity: 2.5 2.5-3.6 2.5-8.2 4.4 4.4-6.4 4.4-14.4Gas-heated houses

Chicago

“1973” house . . . . . . . . .“1976” house . . . . . . . . .Low-energy house . . . . .

311 111 160 272 204 323 553277 111 155 261 193 298 511168 117 144 232 168 225 387

Baltimore

“1973” house . . . . . . . . .“1976” house . . . . . . . . .Low-energy house . . . . .

271 106 148 257 188 288 507244 107 145 249 181 270 475150 110 135 221 157 206 364

Houston

“1973” house . . . . . . . . .“1976’ ’house. . . . . . . . . .Low-energy house . . . . .

252 114 151 280 186 261 501240 115 150 274 184 254 484160 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.The price ranges shown at the top are those in1976 and in 2000, both expressed in 1976 dol-lars. Only in the case of gas-heated homes andconstant energy prices for low-priced gas($1.08/MMBtu) does it appear not to pay to goto the low-energy home. Thus, not only can in-vestment in conservation provide substantialenergy savings but also significant dolIar sav-ings as well. It is interesting that heating re-quirements for the 1976 house in Houston areso small that the added capital investment fora heat pump is not justified.

It is important that although the low-energyhome reduces Iifecycle costs it does notnecessarily represent the combination of im-provements that would have the lowest possi-ble Ievelized monthly costs for a given set ofeconomic assumptions. Although such a calcu-lation has not been performed for this set ofhouses, one has been done for the houses mod-eled by ORNL discussed above. The ORNL cal-culations show only improvements to thebuilding shell, rely on an uninsulated baselinehouse, and require a higher return on invest-ment than the OTA calculations. Figure 14shows the combined heating and cooling ener-gy savings relative to the base case, and totalcosts (investment and fuel) over the life of thehouse plotted against the initial investment.While energy savings continue to increase asinvestments grow, the total dollar savingsreach a maximum (corresponding to minimumlifecycle cost) at an investment of about $550.After that the increase in investment to getmore energy savings grows faster than the in-crease in fuel cost savings. This calculation

was done for the BNL fuel cost projection, andif one used the higher price range, the invest-ment for minimum Iifecycle cost would bemuch greater than $500 — meaning greaterenergy savings.

Figure 14.— Lifecycle Cost Savings vs.Conservation Investment for a Gas-Heated and

Electrically Air-Conditioned House in Kansas City=

u o $500 $1,000 $1,500$2,000

Investment dollars

IMMBtu = 105 glgajoule (GJ)

SOURCE Paul F Hutchins, Jr., and Eric Hlrst, “Engineering-Economic Analysisof SI ngle-Family DwelIing Thermal Performance, ” Oak Ridge NationalLaboratory Report ORNL/CON-35, November 1978, tables 7 and 8.

Although one could not reasonably expect aperson to go beyond the point that gives aminimum Iifecycle cost (indeed, this is thepoint assumed in the projections discussed inchapter l), additional energy savings are possi-ble. If these savings are desirable from soci-ety’s point of view, then other economic incen-tives, such as tax credits, are called for tomake the additional investments attractive.

TECHNICAL NOTE ON DEFINITIONS OF PERFORMANCEEFFICIENCY

At least eight different terms are used todescribe the energy efficiency of furnaces,heat pumps, and air-conditioners, and the listcould grow. Manufacturers have traditionallyused efficiencies based on operation underspecified steady-state conditions, but there hasbeen growing interest in seasonal measuresthat would more nearly reflect performance of

a home installation. The Energy Policy andConservation Act (EPCA– Public Law 94-163)as amended by the National Energy Conserva-tion Act (NEPCA — Public Law 95-619) requiredDOE to establish testing standards for thedetermination of estimated annual operatingcosts and “at least one other measure whichthe Secretary determines is likely to assist con-


sumers in making purchasing decisions” forheating and cooling equipment and a numberof appliances. Manufacturers are required touse these test procedures as the basis for anyrepresentations they make to consumers aboutthe energy consumption of their equipment.The test procedures developed by DOE em-phasize the use of seasonal efficiency meas-ures. These should eventually be more usefulto consumers but are likely to lead to in-creased confusion at first.

The performance of furnaces is customarilydescribed in terms of efficiency. The “steadystate efficiency” of a furnace refers to the frac-tion of the chemical energy available from thefuel (if burned under ideal conditions), which isactually delivered by the furnace when it isproperly adjusted and all parts of the systemhave reached operating temperature. An ac-tual home installation is seldom in perfect ad-justment, heat is lost up the chimney while thefurnace is not operating, and the duct systemsthat distribute heat always have some lossesunless they are completely contained withinthe heated space. Thus, the “seasonal systemefficiency” is typically much lower than thesteady state efficiency. DOE has developedprocedures for determining a seasonal effi-ciency, which is called the “annual fuel utiliza-tion efficiency. ”

Air-conditioners “pump” heat out of thehouse and are able to remove more than a Btuof heat for each Btu of electrical input. Theusual measure of air-conditioner performancehas been a somewhat arbitrary measure calledthe “energy efficiency ratio” or EER, which isdefined to be the number of Btu of coolingprovided for each watt-hour of electric input.The standard conditions for determining theEER have been 800 F dry bulb and 670 F wetbulb indoors and 950 F dry bulb and 750 F wetbulb outdoors.36 DOE has retained the use ofthe EER for room air-conditioners in its test

JGAir-Conditioning and Refrigeration Institute, “Direc-tory of Certified Unitary Air-Conditioners, Unitary HeatPumps, Sound-Rated Outdoor Unitary Equipment, andCentral System Humid ifiers,” 1976 (Arlington, Va.), p. 85.

procedures37 but has also adopted the use of aseasonal energy efficiency ratio (SE E R) for cen-tral air-conditioners.38 The seasonal energyconsumption of an air-conditioner is increasedby cycling the machine on and off since it doesnot operate at full efficiency for the firstminute or so after it is turned on. An offsettingfactor is provided by the increase in EER thatoccurs as the outdoor temperature drops. Theseasonal energy efficiency ratio incorporatesboth of these effects and is defined on thebasis of a typical summer use pattern involving1,000 hours of operation, Use of the SEERbecame effective January 1,1979.

A final word should be added about heatpumps and their air-conditioning mode. Theproposed DOE standards for heat pumps de-fine tests for the heating seasonal performancefactors (HSPF) in each of six different broadlydefined climatic regions of the country. Cool-ing seasonal performance may be specified bya cooling seasonal performance factor (CSPF)or an SEER. In addition, an annual perform-ance factor (APF) is defined as a weightedaverage of the HSPF and the CSPF based onthe number of heating and cooling hours in dif-ferent parts of the country.39

Since heat pumps, as their name implies,pump heat into the house from outdoors, theycan provide more heat to the house thanwould be provided if the electricity were“burned” in an electric heater or furnace. TheCoefficient of Performance (COP) is the ratioof the heat provided by the heat pump to thatwhich would be provided by using the sameamount of electricity i n an electric heating ele-ment. The COP of a heat pump decreases asthe outdoor temperature drops, and the AirConditioning and Refrigeration Institute hasspecified two standard rating conditions for

“’’Test Procedures for Room Air Conditioners, ”Federal Register, vol. 42, 227, Nov 25, 1977, pp. 60150-7and 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.

“’’Proposed Rulemaking and Public Hearing Regard-ing Test Procedures for Central Air Conditioners In-cluding Heat Pumps, ” Federal Register, vol. 44, 77, Apr.19, 1979, pp. 23468-23506.


heat pump heating performance. ’” Both spe-cify indoor temperature of 700 F dry bulb and600 F wet bulb with outdoor temperature forthe “high temperature heating” conditionbeing 470 F dry bulb and 430 F wet bulb, andspecifications for “low temperature” being170 F dry bulb and 150 F wet bulb. Heat pumps

40 Air-Conditioning and Refrigeration Institute, op. cit.,pp. 8,85.

are usually sized so that part of the heatingload must be met by supplementary resistanceheat at lower temperatures, lowering the over-all COP still further. A useful measure of thetotal heating performance is the “seasonal per-formance factor,” which is the average COPover the course of the winter for a typicallysized unit in a particular climate. The seasonalperformance factor includes the effects of sup-plementary resistance heating and cycling butdoes not include any duct losses.

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

———

Structural parameters:

Basic house design

FoundationConstruction

Exterior walls:Composition

Wall framing area, ft2

Total wall area, ft2

Roof:TypeComposition

Roof framing area, ft2

Total roof area, ft2

Floor:Total floor area, ft2

Windows:TypeGlazingArea, ft2

Exterior doors:TypeNumberArea, ft2

3-bedroom rancher, one story, 8-ftstories.

Full basement, poured concrete.Wood frame, 2x4 studs 16“ on ctr.

Brick vener, 4"½" insulation board3½” fiberglass batts½" gypsum board

203 sq. ft.

935 Sq. ft.

GableAsphalt shingles, 3/8” plywood

sheating, air space, 6“ fibreglassloose-fill insulation, ½” gypsumboard

78 sq. ft.

1,200 Sq. ft.

1,200 Sq. ft.

Double hung, woodSingle105 Sq. ft.

Wood frameTwo40 Sq. ft.

Patio door(s):Type Aluminum, slidingGlazing DoubleArea, ft2 40 Sq. ft.

Energy consumption parameters:a

Energy consuming equipment:Heating system Gas, forced airCooling system Electric, forced airHot water heater Gas (270 therms/year)Cooking range/oven Electric (1 200 kWh/year)Clothes dryer Electric (990 kWh/year)Refrigerator/freezer Electric (1 830 kWh/year)Lights Electric-incandescent

(21 40 kWh/year)Color TV Electric (500 kWh/year)Furnace fan Electric (394 kWh/year)Dishwasher Electric (363 kWh/year)Clothes washer Electric (103 kWh/year)Iron Electric (144 kWh/year)Coffee maker Electric (106 kWh/year)Miscellaneous Electric (900 kWh/year)

Heating/cooling load parameters:

People per unit Two adults, two children

Typical weather year 5 yr. average (1 970-75)Monthly heating degree

daysb

Monthly cooling degreedaysb

Monthly discomfortcooling 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


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-681performed 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 andHVAC 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 thehouse

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 andHVAC Equipment for Houses in Baltimore, Md. (in MM Btu*)

efficiency for IS and that p r o c e s s i n g ,

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 th e hot heater hot water j heat recovery from the air-conditioner

= 105 (GJ)

6 2 ● R e s i d e n t i a l E n e r g y C o n s e r v a t i o n— —.—— . —

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

aprlmary energy ~on~umpt Ion Is computed as<u m I nq I hat overal I Conversion t ransmls< 10’ arl[’ I I I lbutlon efflc Iency for electricity Is O 29 and that processl ng,transmlsslon, and dlstrlbut Ion of natural gas h~s a F>f f If ncy of O 89

bThls flgure ,nclud~~ only the e l e c t r i c i t y 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 thehouse

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

Lack of Reinforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Disparity of Effects and Opportunities by Income Groups . . . . . . , .Conflicts Between Conservation and Other Coals. . . . . . ., . . . . . . .Distrust of Information Providers and Disbelief in Reality of ShortagesLack of Specific Knowledge About How to Conserve . . . . . . . . . . . .Faith in “American Technological Know-How” to Solve the

Energy Problem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Consumers and the Building Industry . . . . . . . . . . . . . .Consumer Behavior and Energy Conservation in Home Operation .Conclusions . . .

26.

27.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

6868697070

71717374

TABLES

Homebuyers Willing to Spend $600 orMore at Outset to Save $100 or More Annually on Energy,by Family Income and House Price Range . . . . . . . . . . .Percent of Homebuyers Desiring Energy-Saving Features inFive Major Housing Markets, 1978 . . . . . . . . . . . . . . . . . .

. .

. .

72

73

Chapter IllTHE CONSUMER

Americans want to own their homes. Few social phenomena have been more influentialin 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 War11. The result has been a profound impact on land use, transportation, community develop-ment, family life, and many other areas. Our present concern, however, is with the rapidgrowth in residential energy consumption that has accompanied the growth in household for-mation, 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 usegrew about twice as fast as the number of households between 1950 and 1970, reflecting theincrease in use within each household. Household consumption of fossil fuels and electricitygrew from 7 quadrillion Btu* in 1950 to 16 quadrillion Btu in 1974; with the number ofhouseholds increasing from 43 million to 70 million, this represents an increase of 65 MMBtuper household between 1950 and 1974.

The relationships between homeowners andother housing decisionmakers such as lenders,builders, architects, manufacturers of buildingsupplies, and contractors for heating and cool-ing equipment installation, are very complex.No single group determines the ultimate ener-gy consumption in a home. It is clear, however,that consumers are in control of a significantportion of the decisions that affect consump-tion directly or indirectly. Homeowners paythe utility and fuel bills and adjust their con-suming behavior when prices rise. They main-tain the heating and cooling equipment in theirhomes. They control thermostat settings andwindow and door openings, and they chooseappliances. They make— or fail to make— in-vestments to improve the energy efficiency oftheir homes, through structural or equipmentchanges. In short, within the very real limits offinances, technical capabilities, and comfort,they control the operational aspects of homeenergy consumption.

In a less well-recognized area, home con-sumers affect residential energy use levelsthrough their influence on the homebuildingindustry. There is evidence that builders ignoreconsumer preferences at their peril, for at-tempted innovations that have run counter to

*One Btu is equivalent to 1 kW-per-second or 1 kilo-joule.

consumer tastes have generally failed to catchon and left builders with financial losses. Con-sumers appear to be conservative in their hous-ing tastes, resisting radical changes in thedesign, comfort, or space of a home. The ma-jor trade associations and publications of thebuilding industry spend considerable time andmoney surveying the attitudes and preferencesof buyers, with the result that builders, too, areoften conservative about major innovationsthat affect buyer perceptions. Efforts to lead,rather than follow, consumer tastes have notalways succeeded. For example, the recentmovement to buiId “no frilIs” housing in an at-tempt to bring families of modest means intothe new home market is now considered a fail-ure by the building industry. It appears thatbuyers would rather wait a year or two longer,if necessary, to buy the kind of house they real-ly want–one with amenities such as a fire-place, a family room, a garage, and an extrabathroom.

In light of the rapid turnover of houses in thecurrent-day real estate market, some of thisbuyer conservatism can be attributed to pur-chasers’ concern with resale value. Homeown-ership represents the single largest financial in-vestment made by most families, and its at-tendant risks can be minimized by investing in“safe” properties— those with the largest ap-peal. If the buyer decides to invest in extras, he

65


wants to be sure that value will be easily ack-nowledged by potential future buyers.

This concern about resale values has impli-cations for decisions about energy-conservingfeatures. Until recently, homeowners wouldundoubtedly have been correct in decidingthat extra insulation was not a feature likely to“turn on” later buyers. Now, however, with ris-ing energy prices and occasional spot short-ages of some fuels, prospective buyers havebegun to demand information about utilitycosts, and to insist on more efficient houses.

It is important to bear in mind, however,that energy is only one of several items aboutwhich consumers are concerned. Efforts toconserve energy through design or construc-tion methods often conflict with other val-ues–for example, the desire to take advan-tage of a fine view by installing large amountsof north-facing glass. In determining whichenergy-conserving technologies will be attrac-tive to consumers, builders and policy makersneed to keep these conflicting values in mind.

Just as important as consumer attitudestoward housing are their attitudes toward theenergy problem generally, and toward itscauses, effects, and remedies as these relate totheir own lives. Social scientists have carriedout considerable research on consumer atti-tudes and behavior.

Many studies have been collected and ana-lyzed by Sally Cook Lopreato and her col-leagues at the University of Texas Center forEnergy Studies. ’ Several of these studies indi-cate that many consumers have serious doubtsabout the severity of our energy problem, andare more concerned about issues like inflation,crime, and unemployment. Most people do notshare the official views of either Governmentor business regarding the causes of the prob-lem. In fact, it appears that most consumers

‘Compilations and analyses by Lopreato et al. arefound in Sally Cook Lopreato and Marian Wossum Meri-wether, “Energy Attitudinal Surveys: Summary, Annota-tions, Research Recommendations” (unpublished: 1976),and in William H. Cunningham and Sally Cook Lopreato,Snergy Use and Conservation Incentives: A Stucfy of theSouthwestern Unitecf States (New York: Praeger Publish-ers, 1977).

mistrust both Government and industry—es-pecially the oil industry–as sources of in-formation about energy issues.

One major study by Jeffrey S. Milstein, ofthe Department of Energy’s (DOE) Office ofConservation and Solar Applications, indicatesthat although a majority of Americans in 1977did not believe that fuel shortages were real,an even larger majority did believe it was im-portant to conserve energy.2 More than one-half of the respondents in Milstein’s nationalsurvey believed that fuel shortages were ar-tificial, but 50 percent said the need to con-serve energy was “very serious” and another 33percent believed it was “somewhat serious. ”Perhaps consumers find it important to con-serve because of high energy costs rather thanbecause energy shortages require it.

Unfortunately, most consumer studies re-veal that even when the energy crisis is per-ceived and accepted as real, this attitude doesnot necessarily lead to conservation behavior.Marvin E. Olsen of the Battelle Human AffairsResearch Center concluded from his surveysthat “with only a few minor exceptions, all theresearch conducted thus far has found little orno relationship between belief in the reality orseriousness of the energy problem and any ac-tual conserving behavior.”3 However, Olsenpoints out that consumers’ belief in the seri-ousness of energy problems may make themmore accepting of Government policies requir-ing conservation.

A number of factors appear to contribute toconsumer inaction: a lack of practical knowl-edge about what to do; a lack of sense of per-sonal involvement in the problem, a “themfirst” approach to potential sacrifices, and aconfIict with other personal goals such as com-fort and convenience. Not surprisingly, whenqueried about their willingness to undertakespecific conservation measures, consumers in-dicate their highest levels of support for the

2Jeff rey Milstein, “How Consumers Feel About Energy:Attitudes and Behavior During the Winter and Spring of1976-1977” (unpublished: 1977).

3Marvin E. Olsen, “Public Acceptance of Energy Con-servation, ” in Seymour Warkov, Energy Policy in theUnited States: Social and Behavioral Dimensions, p p .91-109.

Ch. Ill—The Consumer ● 6 7

easiest measures (like turning out lights), andlowest support for measures that call for majorchanges in lifestyles. Governmental andmedia-oriented public relations efforts, usingcatchy slogans such as “Don’t Be Fuelish,” ap-pear to result in passive responses (“Somethingshould be done . . .“ ) rather than active ones(“1 will do the following . . ").4

Studies also show that consumers often de-ceive themselves (and policy makers) aboutconservation steps they claim to be taking orbe willing to take. For example, the Gallup Or-ganization sampled households nationwide inFebruary 1977 and found that the average tem-perature at which consumers said they set theirhome thermostats was 66° F during the dayand 640 F at night. But pollsters for Gallup andfor Louis Harris who actually measured tem-peratures of homes 1 month later found aver-age temperatures were 700 F (plus or minus 20,during the day and 690 F (plus or minus 20, atnight. Reflecting on this finding, Milstein con-cludes that the discrepancy “indicates a feel-ing on the part of people that they ought tohave lower temperatures.” He also notes thatmany thermostats may be miscalibrated.5

Many consumer studies indicate that theprospect of real cost savings is the most effec-tive factor in moving people to conserve ener-gy in their personal lives. Other motives, suchas altruistic concerns about the Nation’s futureenergy supply, independence from OPEC car-tel manipulation, or the quality of the environ-ment are less successful in generating conser-vation action. b

W. B. Doner, Inc., determined in a studydone for the Michigan Department of Com-merce that among Michigan consumers thesingle most powerfuI motivator for conserva-tion is represented by the statement that

‘Kenneth Novic and Peter Sandman, “How Use ofMass Media Affects Views on Solutions to Environmen-tal Problems,” journalism Quarterly, vol. 51, no. 3, pp.448-452, cited in Cunningham and Lopreato, op. cit., p. 22and p. 29.

sMi Istein, op. cit., p. 5“

‘Cunningham and Lopreato, op. cit., p. 20.

“conserving energy saves money.”7 The Gal I upOrganization, in conducting a series of groupdiscussions on energy during 1976 for theFederal Energy Administration (FEA) (now partof DOE), found widespread agreement thatmonetary incentives are the critical conserva-tion motivator.8 A Texas study reached thesame conclusion after surveying about 800households before and after the oil embargo.9

Adding insulation is the most widely docu-mented conservation action taken by cost-con-scious consumers. About 80 percent of U.S.households were found to be insulated tosome extent in Milstein’s 1977 survey— upfrom 70 percent in 1976 and 62 percent in 1975.A Gallup survey conducted in January 1978found that 17 percent of those surveyed hadadded some attic or crawl-space insulationand 11 percent had added wall insulation inthe previous 12 months; less than one-third ofthe Gallup respondents had failed to take ac-tion to improve the energy efficiency of theirhouses in 1977. ’0

Studies suggest a wide variety of reasons forsome consumers’ failure to take conservationactions, including: 1 ) lack of social pressure orreinforcement for conserving behavior; 2) dis-parity in effects of the energy problem, as wellas in opportunities to conserve, among differ-ent income groups; 3) conflicts between con-servation objectives and other goals such ascomfort, convenience, and “fairness;” 4) dis-trust of information providers and disbeliefthat shortages are “real;” 5) lack of practicalknowledge about how to conserve; 6) compla-cency caused by faith in a technical solutionto future energy supply problems.

‘W. B. Doner, Inc. and Market Opinion Research,“Consumer Study– Energy Crisis Attitudes and Aware-ness” (Lansing, Mich.: Michigan Department of Com-merce, 1975), cited in Cunningham and Lopreato, op. cit.,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.

‘David Gottlieb, Socia/ Dimensions of the Energy Crisis(Austin, Tex.: State of Texas Governor’s Energy AdvisoryCouncil, 1974), cited in Cunningham and Lopreato, pp.134-135.

‘°Ca[lup Organization, Inc., “A Survey of Homeown-ers Concerning Home Insulation” (Washington, D. C.: U.S.Department of Energy, 1978).


LACK OF REINFORCEMENT

Robert Leik and Anita Kolman of the Minne-sota Family Study Center maintain in a 1975paper that social pressure could serve to rein-force conservation behavior. Without a strongnational ethic to conserve energy, little or nosocial pressure for conservation exists. Conse-quently, consumers rely almost exclusively oneconomic reinforcement. However, Leik andKolman maintain that much of the potentialfor economic reinforcement is lost becauseconsumers pay for energy not as they use it butmonthly or even less often. Also, because billsare usually paid by one member of a house-hold, other members are not aware of econom-ic savings or penalties unless informed by theperson who pays the bill. ’

Field studies conducted at Twin Rivers, N. J.,revealed that feedback about consumption

“Robert Leik and Anita Kolman, “Isn’t It More Ra-tional to be Wasteful ?,” in Warkov, op. cit., pp. 148-163.

and conservation can enhance people’s effortsto conserve. Summertime electricity consump-tion among households studied was reducedby 10.5 percent when people were providedwith almost daily feedback on their consump-tion performance and were exhorted to con-serve. In a separate study, residents given agoal of a 20-percent reduction in electricityuse actually cut back by 13 percent when pro-vided with frequent feedback. In still a thirdexperiment, use of a light that flashed when-ever cooling could be achieved through openwindows rather than air-conditioners led peo-ple to conserve 15.7 percent of their electrici-ty. While these were relatively short-term ex-periments (3 to 4 weeks), they do suggest thatfrequent feedback to the consumer could pro-vide substantial savings of energy. 2

‘2 Clive Seligman, John M. Darley, and Lawrence J.Becker, “Behavioral Approaches to Residential EnergyConservation,” Energy and Bui/dings, April 1978, pp.325-337.

DISPARITY OF EFFECTS AND OPPORTUNITIES BY INCOME GROUPS

A 1975 Ford Foundation study, since con-firmed by several other consumer surveys,found that household energy use (includingtransportation) rises with income and that thelargest gaps in consumption between incomegroups are accounted for by elective or luxuryuses. At the same time, the percentage ofhousehold income that is used for energydrops sharply as income rises. While the poorspent 15.2 percent of their household incomeon direct energy use in 1972-73, the more af-fluent spent only 4.1 percent. This means thatwhile lower income households have the great-est need to conserve, they also suffer from alack of opportunities to do so. There is very lit-tle fat in the poor family’s energy budget. ’3

An Austin, Tex., study found that short-termresponse to electricity price increases among

‘3 Dorothy K. Newman and Dawn Day, The AmericanEnergy Consumer: A Report to the Energy Po/icy Projectof the Ford Foundation (Cambridge, Mass.: Ballinger Pub-lishing Company, 1975), cited in Cunningham and Lopre-ato, pp. 145-146.

household energy users varied sharply by in-come group. Upper income households in-creased consumption despite rising prices; thesmall impact on total household budgets wasnot sufficient motivation for most to conserve.Lower income households showed very littlechange in consumption because, the research-ers concluded, they are already at the mini-mum consumption level they can manage forreasonable comfort in homes that lack ade-quate insulation and efficient appliances.Only among middle-income families were con-sumption declines widespread in response toprice increases. The authors conclude that themiddle-income group offers the greatest po-tential for conservation, since this group hasboth a margin for conserving and economic in-centive to do so. 4

“Nolan E. Walker and E. Linn Draper, “The Effects ofElectricity Price Increases on Residential Usage by ThreeEconomic Groups: A Case Study,” Texas Nuc/ear PowerPo/icies 5 (Austin, Tex.: University of Texas Center forEnergy Studies, 1975), cited in Cunningham and Lo-preato, pp. 155-156.

Ch. Ill—The Consumer b 69

CONFLICTS BETWEEN CONSERVATION AND OTHER GOALS

A number of studies suggest that the energycrisis—at least at recent levels of severity— isnot a sufficient incentive to deter consumersfrom their pursuit of comfortable lifestyles.Participants in the Gallup Organization’s 1976group discussions on energy represented across-section of consumers, varying by income,education, place and type of residence, age,and sex. Summarizing the attitudes Gallup dis-cerned regarding Iifestyles, values, and conser-vation, Cunningham and Lopreato wrote:

Participants hear ‘Deny yourself’ as the im-plicit theme in most conservation communica-tions and are answering with ‘1 have earned theright to indulge’ . . Convenience and imme-diate gratification are primary goals, limitedonly by financial pressure. Saving energy whenit is ‘convenient’ provides a sense of contrib-uting and helps relieve guiIt.15

This factor of “convenience” does appear tolimit personal support for conservation meas-ures and actual conservation behavior. An Illi-nois survey found that consumers, both beforeand after the embargo and accompanyingprice increases, placed “high value emphasison privacy, autonomy, and mobility.” Theresearchers conclude that conservation cam-paigns affecting “deeper lifestyles” cannotsucceed at present. ’b The fact that consumersvalue convenience and comfort, plus the factthat energy costs are still a small portion of thecost of operating a home, indicates that pricesmay need to rise much more dramaticallybefore they will outweigh these competingvalues.

Family welfare was also mentioned often byconsumers as a reason for not conserving.When Milstein asked certain consumers whythey had not turned down their thermostats,many mentioned that their families would beuncomfortable or that there were babies or

‘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 inCunningham and Lopreato, p. 141.

sick or elderly people in the house. In the TwinRivers study, concern with health and comfortcorrelated closely with levels of summer ener-gy consumption; the stronger the respondent’sperception that energy conservation led todiscomfort and illness, the greater was hisenergy consumption. The Twin Rivers research-ers also found that participants who believedthat the effort involved in saving energy wastoo great for the cost savings achieved —forexample, that it was too much trouble to turnoff the air-conditioner and open the windowswhenever it got cool enough outside— alsohad higher consumption levels. The third sig-nificant predictor of energy consumptionfound in the Twin Rivers research was the per-ception that the actions of individual home-owners could have only a negligible effect onnational energy consumption. 7

Milstein’s respondents believed strongly thatconservation policies must be “fair” to be ac-ceptable. Sometimes, this concern with equityappeared to lead to support for contradictorypolicies. For example, only 30 percent believedthat “consumers have the right to use as muchenergy as they want to and can afford to, ” andonly 10 percent believed that “people shouldbe allowed to drive their cars and heat theirhomes as much as they want to even if we allbecome dependent on foreign countries.”While these attitudes might suggest supportfor a strong regulatory approach, the samerespondents overwhelmingly believed that thebest way to get people to save energy is by “en-couraging voluntary conservation” (70 per-cent) rather than “passing and enforcing laws”(20 percent). Nor did Milstein’s participantsfavor a free-market approach: 70 percentagreed with the statement that “raising [the]price of fuel is not fair, because rich peoplewiII use all they want anyway.’” 8

‘7 Milstein, op. cit., p. 5‘81 bid., pp. 12-13.


DISTRUST OF INFORMATION PROVIDERS AND DISBELIEFIN REALITY OF SHORTAGES

In February 1977, a month with widespreadnatural gas shortages, three-fifths of the con-sumers in Milstein’s national sample believedthat fuel shortages were “real. ” By March,however, fewer than half the sampled popula-tion thought so; this percentage has been con-sistent most of the time since the end of theArab oil embargo. One-third of Milstein’s re-spondents said they believed shortages arecontrived by vested interests for economic orpolitical gain. ’9

The National Opinion Research Center atthe University of Chicago found in a year-longseries of weekly surveys that consumers held awidespread belief that the Federal Govern-ment and the oil industry—two major sourcesof advertising campaigns urging conserva-tion —were actually responsible for the energycrisis through mismanagement and/or design. 20

‘gIbid., p. 5.‘“James Murray, et al., “Evolution of Public Response

to the Energy Crisis,” Science 184:257-63, cited in Cun-ningham and Lopreato, pp. 144-145.

A number of other studies also found thatconsumers blame the energy problem on oilcompanies, utilities, “big business,” and Gov-ernment. In one public opinion survey, re-spondents blamed “oil company actions” and“Government favoritism to the companies”most for fuel shortages, but also placed someblame on “wasteful energy consumption. ”Very few believed the world was running outof fossil fuel. z’ Nine out of ten in Milstein’s1977 survey agreed with the statement that theGovernment should investigate oil and naturalgas companies to make sure they do not holdback production.22

“Gordon L. Bultena, Pub/ic Response to the EnergyCrisis: A Study of Citizens’ Attitudes and Adaptive /3ef-tav-iors (Ames, Iowa: lowa State University, 1976), cited inCunningham and Lopreato, pp. 124-125.

22 Milstein, op. cit., p. 12.

LACK OF SPECIFIC KNOWLEDGE ABOUT HOW TO CONSERVE

Adding to this general mistrust of govern-mental and business advocates of conserva-tion is the disincentive created by lack of con-sumer understanding about how to save ener-gy. Milstein found that 36 percent of the re-spondents to a 1976 survey did not know thatlower wattage light bulbs use less electricity,and 59 percent thought that leaving a lightburning used less energy than switching it onand off as needed. Although water-heating isthe second largest energy-consuming activityin the home (after heating and cooling), only 42percent knew where to find their water heatercontrols or how to set them. Only 13 percent ofrespondents to the 1976 survey believed theirhouses needed additional insulation,23 al-

23jeffrey S. Milstein, Attitudes, Knowledge andBehavior of American Consumers Regarding Energy con-servation With Some Implications for Governmental Ac-tion (Washington, D. C.: Federal Energy Administration,October 1976), p. 6.

though Milstein’s 1977 survey found that 20percent of all homes had no insulation at alland many more were inadequately insulated.Consumers do know that lowering thermostatssaves energy and money, but MiIstein found in1977 that half the public believed that thermo-stats must be turned down 50 or more to saveenergy. 24

Government efforts to help consumers de-termine savings potential and to provide prac-tical “how to” information have either beentoo complex or not been made widely avail-able, owing to funding problems. The informa-tion problem is particularly challenging be-cause of regional variations in prices, heatingrequirements, and fuel mixes, as well as infi-nite variations in the thermal characteristics ofthe current housing stock.

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-logical achievements, especially in producing“modern conveniences” and in glamorous ac-complishments such as putting men on themoon. A 1975 study by Angell and Associatesfound respondents optimistic about prospectsfor solving the energy problem through Ameri-can technological “know-how.”25 Similarly,

ZsAngell and Associates, Inc., A Qualitative StuCfY ofConsumer Att;tu~es Towarcf Energy Conservation (Chica-go, Ill.: Bee Angell and Associates, 1975), cited in Cun-ningham and Lopreato, pp. 121-122.

Bultena found consumers favoring “techno-logical solutions” much more strongly thanpolicies to reduce demand or promote effi-ciency. 26 This optimistic view may dampenconsumers’ motivation to conserve, as itplaces the burden of a remedy on others, spe-cifically the U.S. scientific community.

2’Bultena, op. cit.

CONSUMERS AND THE BUILDING INDUSTRY

The preceding discussion focused on con-sumer attitudes and behavior relative to theoveralI energy problem and to conservation inparticular. It is appropriate now to turn to thearea of the consumer’s role in the energy con-servation aspects of decision making on hous-ing.

As noted earlier in this chapter, families pur-chasing new homes typically make a series ofjudgments and comparisons, weighing suchfactors as attractiveness, size, location, con-venience, comfort, and — not insignificantly—affordability. Since very few homes are likelyto be regarded as one’s dream house, buyersmust weigh the pluses and minuses of eachpotential choice.

What role does energy conservation play inthese choices? Until recently, it would havebeen safe to say little or none. The presence ofa fireplace, a family room, wall-to-wall carpet-ing, a picture window, a powder room —fac-tors like these, along with external attractionssuch as convenience to schools, shopping, andtransportation dominated the choice of a newhome. Indeed, these factors remain very im-portant in buyers’ perceptions. But a 4-yearseries of surveys conducted by ProfessionalBuilder magazine suggests that families enter-ing the market for new homes are increasingly

aware of energy considerations as part of thechoice process, and are expressing willingnessto alter their buying habits somewhat torealize cost savings in energy .27

It has become commonplace to argue thatbuilders and buyers alike tend to look only atfirst costs and ignore lifecycle costs when de-termining what features to include in a house.The Professional Builder survey suggests thatthis may no longer be the case when it comesto energy conservation.

In querying families currently in the marketfor newly constructed homes, ProfessionalBuilder asked this question in 1975,1976,1977,and 1978:

Suppose you were interested in a new homeand a builder told you that by spending $600more at the time of construction, he could cutyour heating and cooling bills by $100 peryear. What would be your reaction?

In answering the question, respondents weregiven four choices:

1. I would spend the additional $600.

“Data from the Profession/ Builder Annual Consum-er/Builder Surveys of Housing can be found in the follow-ing issues of the magazine: 1975 data, January 1976; 1976data, January 1977; 1977 data, December 1977; and 1978data, December 1978.


2. I’d be willing to spend even more to savemore.

3. I would not spend the $600 because thesavings take too long to recover.

4. I would not spend the $600 because thesavings are not believable.

Results were tabulated according to type ofhome sought (detached single-family, attachedsingle-family, or multifamily), economic status(measured by family income and by pricerange of home to be purchased), and geograph-ic region. The results, described below, suggestthat buyer attitudes are not an impediment toenergy conservation, even when long-rangeconservation requires an increased initial in-vestment.

Among 248 potential buyers of single-familyhomes in 1975, 80.5 percent expressed theirwillingness to spend $600 to realize an annualsaving of $100 in energy costs, and another 8.8percent said they would spend even more ifthe saving would be increased as well. In 1976,the percentage willing to spend $600 or moreremained nearly constant (89.1 percent), but ofthat fraction, a larger group than before (1 5.1percent of the total sample of 596) expressed awillingness to pay even more than $600 for agreater annual saving. In 1977, 93.2 percent ofrespondents were willing to spend $600 ormore to save $100 or more in annual energycosts. In 1978, the fraction of willing energysavers returned to its 1975-76 level of 89 per-cent.

It is particularly interesting to note that thiswillingness on the part of new-home consum-ers to increase their first costs to save moneyon energy over the long run can be found insimilar percentage of every income group andevery house price-range group. This is shown intable 26.

In its 1977 survey, Professional Builder askedpotential buyers whether they would purchase,or consider purchasing either now or in thefuture, solar heating and water heating sys-tems in order to reduce their fuel bills. The re-sults indicate that solar is an idea whose timehas not yet come, in terms of public accept-ability, but that homebuyers are keeping anopen mind and might well consider solar more

Table 26.—Percent of Potential Homebuyers Willingto Spend $600 or More at Outset to Save $100 orMore Annually on Energy, by Family Income and

House Price Range

1975 data 1976 data

By family incomeLess than $15,000 . . . . . . . . . . . . . . 89.2 87.9$15,000-$ 19,000. .., . . . . . . . . . . . . 89.7 89.2$20,000 or more. . . . . . . . . . . . . . . . 89.1 92.3

By house price rangeUnder $25,000 . . . . . . . . . . . . . . . . . 90.2 88.8$25,000-$34,999 . . . . . . . . . . . . . . . . 90.8 90.1$35,000-$44,999! . . . . . . . . . . . . . . . 88.9 85.5$45,000-$54,999 . . . . . . . . . . . . . . . . 84.6 84.1$55,000-$64,000 . . . . . . . . . . . . . . . . 90.6” 94.7$65,000 or more. . . . . . . . . . . . . . . . — 95.5

‘1975 data available only as “$55,000 or more.”SOURCE: Statistical data on Professional Builder survey provided to OTA by

Cahners Publishing Company. 1977 and 1978 data not available by in-come group and house price range.

seriously in the future. Told that solar spaceheating might cost them $7,000 in additionalfirst costs but could reduce fuel bills by 30 to70 percent, only 8.4 percent of respondentssaid they would purchase the solar option;another 35.6 percent indicated they wouldconsider purchasing it; 35.1 percent would notdo so now but might in the future; and 20.4percent said a flat no to solar heat. Consumerswere also asked to consider a solar water heat-ing system that would cost $1,200 and save be-tween 50 and 80 percent of water heatingcosts. Among those responding, 7.1 percent in-dicated they would purchase the system; 37.7percent would consider the option; 39.5 per-cent might do so later; and 14.0 percent wouldnot be interested, period.

Looking at six major housing markets inmid-1 978, l-lousing magazine surveyed buyersto learn what energy-saving options (amongother housing choices) they wanted in thehomes they would purchase. Costs for the op-tions varied from city to city; in showing theresults in table 27, cost ranges are provided.

Given the complex interplay between build-ers and buyers in determining what featuresand designs will be included in new homes, it isuseful to look not only at buyers’ opinions, butalso at builders’ perceptions of buyers’ opi-nions. Builders remain the primary decision-makers in new construction, but their decisionsrefIect what they find to be the dominant char-

Ch. Ill—The Consumer ● 7 3

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 83Double-glazed windows. . . . . $750-2,000 91 70 86 68 34Solar water heater. . . . . . . . . . $1,800-2,000 34 58 25 41 36Solar 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 newyour customer?” Ninety-seven percent said it housing are indeed energy-conscious, and thatwas either “somewhat important” (53 percent) builders are sensitive to this concern.

CONSUMER BEHAVIOR AND ENERGY CONSERVATIONIN HOME OPERATION

Does consumer behavior really make a sig-nificant difference in energy consumption? Ifnot, consumers will have Iittle incentive to cutback. But if so—and if the answer is measur-able in dollars and cents — a residential energyconservation campaign will find a receptiveaudience.

Data on the direct impact of behavior onenergy consumption have only recently be-come available—and the early returns, basedon utility bills and other records, along withthe experience of fuel suppliers— indicate thatthe way a home is used makes a substantialdifference in how much energy is used. Thereare savings to be had — and while they will not,in the long run, compare with the vast savingsderived from a house designed to saveenergy—the savings are real and can play alarge role in reducing energy use in existinghousing.

Thermostat and air-conditioner settings arean obvious example. The use of hot water canbe a major energy drain. Opening or closingshades and curtains, using natural or mechani-cal ventilation, opening and closing doors,leaving windows open at night–all these andother choices combine to affect the total ener-gy consumption for any given family.

Even more dramatic are certain observations about variable energy use levels in

houses of similar or identical design. Wybeobserved two houses, built by the same con-tractor, which were expected to have identicalthermal characteristics. One used 2.2 times asmuch heat and 75 percent more total energythan the other.28 Jay McGrew observed in a re-lated analysis that the occupants’ knowledgeof proper energy management was generallymore important in achieving low energy con-sumption than the quality of the construc-tion. 29

Princeton University researchers found simi-lar evidence in the Twin Rivers Project. In asample of nine identically constructed town-houses, each with similar orientation, con-sumption of gas for heating varied by as muchas a factor of 2 to 1. When occupants changed,gas consumption also changed. In the ninetownhouses where gas consumption was moni-tored from 1972-76, one house moved from thehighest consumer (1975) to the lowest consum-

2’Wybe J. van der Meer, “Energy Conservative Housingfor New Mexico,” report 76-163, prepared for the NewMexico Energy Resources Board, 1977, p. 19.

*’Jay McGrew, President, Applied Science and Engi-neering, Inc., private communication.


er (1976) when occupancy changed, droppingalmost 50 percent. When these nine houseswere retrofitted, the gas consumption of eachfell by an average of approximately 30 per-cent, but the ranking of the houses remainedessentialIy the same. 30

30R. H. ‘jocolOW, “The Twin Rivers program on EnergyConservation in Housing: Highlights and Conclusions,”Energy and Buildings, vol. 1, no. 3, April 1978, p. 225.

Although it is clear that the way people liveis important in residential energy consump-tion, it is more difficult to determine howmuch energy could be saved by behavioralchange, because the major determinants ofuse are the number and age of occupants,combined with living and working patterns,Also, large savings reflecting purely behavioraleffects should drop as houses are better con-structed and more energy sensitive from thebeginning.

CONCLUSIONS

Using data from the large number of studiesthat have been completed in the area of con-sumer attitudes and behavior with respect toenergy conservation, it is possible to state thefollowing general conclusions with policy im-plications:

1.

2

Consumer decisions on housing are com-plex, and it would be unrealistic to pro-pose energy conservation options that failto recognize this. Homebuyers look formany things besides energy efficiency in ahome. They are conservative about dras-tic changes in house design or in homelifestyles. There is, however, great latitudefor efficiency improvement in the struc-ture and operation of the home within theconfines of consumer tastes and needs.

Consumers are becoming more aware ofthe need for conservation, but thisawareness does not necessarily lead toconservation behavior. Many consumerslack practical knowledge about how toaccomplish conservation and harbor adegree of mistrust about Government andindustry as information sources. Much ofthe available technical information ap-pears to be too complicated or inaccessi-ble for consumer use.

3.

4.

5.

6.

Consumers are most easily motivated bythe prospect of monetary savings. Exhor-tations about the need to reduce importsor prevent energy-related environmentalproblems do not move most people totake conservation steps,

Consumers are undertaking minor adjust-ments (lights out, thermostats down) totheir energy-consuming practices, but aredisplaying reluctance about major invest-ments or lifestyle changes.

There are significant discrepancies in ac-tual conservation opportunities (as well asincentives) among different incomegroups. Low-income consumers have littlelatitude to conserve, and upper incomefamilies lack the financial incentive, leav-ing conservation mostly in the hands ofthe middle-income householders.

Impediments to consumer conservationinclude inadequate information, conflictswith other goals, lack of perceived finan-cial reward, doubts about others’ motiva-tions and commitments, and complacen-cy about forthcoming technological solu-tions

Chapter IV

LOW-INCOME CONSUMERS

Chapter IV.– LOW-INCOME CONSUMERS

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77Weatherization . . . . . . . . . . . . . . . . . . . . . . . . 81Low-Income Tenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83Emergency Financial Assistance for Utility Payments.. . . . . . . . . . . 83Utility Policies for the Poor and Near-Poor . . . . . . . . . . . . . . . . . . . 85l-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 pov-erty line, ’ and this group feels the most severe effects of inflation, unemployment, and highenergy bills.2

Utility costs erode the meager budget of a low-income family. Utility costs account for15 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-lion people whose incomes are below, and approximate-ly 10 million people with incomes no more than 25 per-cent above, the poverty level, as based on a poverty in-dex developed by the Social Security Administration in1964, modified by a Federal Interagency Committee in1969, and revised in 1974. For a nonfarm family of four in1978, the poverty line was set at an income level of$6,200 per year.

Zusing Consumer price Index (C PI) data as a measureof inflation, gas, electricity, fuel oil, and coal costs roseat rates 1.6 to 3.0 times the rate at which the CPI rose be-tween 1972 and 1977. No other major CPI item had ratesof increase as high.

Table A.—Consumer Prlce Index Increases, 1972-77

Ratio of increaseIncrease in CPI of all items:

1972-77 to each item

All items. . . . . . . . . . . . . . . . . . . . . . . . . . . 55.3 —Food . . . . . . . . . . . . . . . . . . . . . 68.2 1.2Rent . . . . . . . . . . . . . . . . . . . . ., 33.0 .6Home ownership. . . . . . . . . . . . . . . . . . . . . 62.2 1.1Fuel oil and coal . . . . . . . . . . . . . . . . . . . . 164.1 3.0Gas and electricity . . . . . . . . . . . . . . . . . . . 90.4 1.6Apparel and upkeep . . . . . . . . . . . . . . . 31.1 .6Transportation, public . . . . . . . . . . . . ., 38.1 .7Transportation, private. . . . . . . . . . . . . 60.3 1.1Medical. . . . . . . . . . . . . . . . . . . . . . . . 68.0 1.2

The costs of food and medical care, for example, in-creased at rates only 1.2 times greater than did the over-all CPI, while the costs of rent, apparel, and public trans-portation increased at rates less great than did the over-all CPI. (Ratios of increases in gas, electricity, fuel oil,and coal costs from 1972-77 derived from table 770, p.478. Statistical Abstract of the United States 1977.)

It is interesting to note the course of progress in thereduction of poverty since 1959. I n that year there wereapproximately 55 million persons below 125 percent ofthe poverty level, constituting about 31 percent of thetotal population. The greatest reduction occurred in the1959-68 period, at the end of which 35.9 million personsor 18 percent of the population, were below 125 percentof the poverty level. There has been no significant reduc-

tion in poverty since then. See Statistical Abstract of theUnited States 1977, U.S. Bureau of the Census, 98th edi-tion, Washington, D. C., 1977, table 733, p. 453.

3These figures on average household expenditures forhome fuels as a percentage of disposable income weresubmitted by the Federal Energy Administration (FEA) tothe U.S. Senate’s Special Committee on Aging. Thefigures were taken from FEA’s Household Energy Expend-iture Model (HE EM). The H E E M data shows:

Table B.—Average Annual Household Expenditures on Home Fuels as aPercent of Disposable Income by Age of Household Head, United States

Household headunder 65 65 and over

Disposable income 1973 1976 1973 1976

Less than $2,000 ..., . . . . . . . . . 34.1 50.1 34.5 50.7$2,000-$5,000 . . . . . . . . . . . . . . . . . . . . . . . . 10.1 15.9 10.3 15.1

According to U.S. Census figures, 17.9 percent of allhouseholds have total incomes of $5,000 or under (1976).In other words, the first two brackets up to $5,000 in-come correspond reasonably well to the 20 percent ofthe population at poverty line or below. Thus, a range of15 to 50 percent would seem to be justified. However,the percentages in the above tables were calculatedassuming the mean household incomes within each in-come bracket was equal to the midpoint of the bracket,i.e., that the mean household income within the less than$2,000 bracket is $1,000. Given that welfare payments fora single person are $177 per month or $2,124 per year, thenumber of households subsisting on $1,000 per year isprobably very small.

Thus, only a small percentage of households withinthat bracket are paying 50 percent of their incomes forenergy. Twenty-five percent would be a more statistical-ly meaningful figure, giving a range of 15 to 25 percent.

Middle-income families typically pay less for utilitycost partly because most utility companies use somevariation of the declining-block rate structure; the firstblock of energy consumed is charged the highest price,per unit price additional increments of energy con-sumed, the lower the average price that is paid.

(Continued)

77


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 availableincome on utility bills. Further, increases in welfare payments and other assistance tied to theConsumer Price Index have not kept up with escalating energy costs. In 1972-79, fuel oilprices 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 propor-tion of a low-income family’s budget that goes for utilities affects the family’s ability to payfor other essentials such as food, rent, and clothing. Data from crisis intervention and weath-erization programs sponsored by the Community Services Administration (CSA) have shown alarge number of poor families spending 40 to 50 percent of their household budgets on fueland utility costs during the heating season.5 Some of these families face a choice betweenpaying for food and having their utilities shut off. Low-income families lack discretionary in-come that they couId divert from other expenses to meet escalations in energy costs.

(Continued)(See The Impact of Rising Energy Costs on Older Ameri-

cans, Hearings before the Special Committee on Aging,U.S. Senate, 95th Cong., Apr. 7, 1977 (Washington, D. C.:U.S. Government Printing Office), stock #052-070-04230-3), 1977, pt. 5, p. 259.

For corroborating information placing current U.S.low-income energy costs in the 15 to 25 percent of dis-posable income range, also see Hollenbeck, Platt &Boulding, An Analysis of the Effects of Energy Cost onLow-lncorne Households, table 2 submitted to theBureau of Applied Analysis, Regional Impact Division,Department of Energy, on Apr. 6, 1978, in response to arequest by OTA; and Dorothy K. Hewman and DawnDay, The American Energy Consumer, ch. 5 and 7 (Cam-bridge, Mass.: Ballinger, 1975).

‘See note 1. In 1973 (the last year for which data wasavailable) before taxes, the poorest half of the U.S. low-income population (those making less than $3,400 yearly)spent an average of 52.1 percent for food: an estimated20.0 percent for rent; 21.4 percent for gas, electricity, andother fuels; and had 6.5 percent left for apparel, medicalcare, and other expenditures.

Energy costs (see note 2) have risen at rates three timesthat of other costs. Projections of energy costs for peoplewith disposable income below the poverty line indicatethat energy costs, which represented 20.5 percent of apoor household’s disposable income in 1974, may repre-sent 31.8 percent by 1985 (Hollenbeck, Platt, Boulding,op. cit., tables 2 and 8). Any little discretionary incomelow-income people have will be eliminated and substitu-tions must be made from other cost categories, like food.

(Derived from table 9.26, p. 472, Social Indicators: 1976(Washington, D. C.: U.S. Department of Commerce, 1977),and communication with Eva Jacobs, Bureau of LaborStatistics.)

5From testimony given by Mr. Tony Majori, AssociateDirector, Community Relations-Social DevelopmentCommission of Milwaukee County, Milwaukee, Wis.,before the U.S. House Select Committee on Aging, Sub-committee on Housing and Consumer Interest, Sept. 26,1978.

Nearly half (49 percent) of all low-incomehouseholds live in the Northeast and North-Central regions, where winters are cold andprices for electricity and natural gas are high.6

More than half (54 percent) of all low-incomefamilies occupy single-family detached dwell-ings, which require more energy to heat thanapartments or rowhouses. Fifty-five percent ofthe poor and near-poor rent their housingunits; this tends to diminish their opportunitiesto control residential energy requirements orto make conservation-related home improve-ments. I n the colder Northeast, 59 percent oflow-income families live in apartments, reduc-ing their energy needs (relative to occupants offree-standing homes) but also reducing theircontrol over energy consumption.

Forty-two percent of all low-income house-holds live in rural areas or in small towns. Forthese 5.9 million families, home is often asmall, old, substandard, uninsuIated, and poor-ly heated single-family house. Only 51 percenthave central heating, and 28 percent use sup-plementary room heaters. The large number ofpoor and near-poor families living outside met-ropolitan areas accounts for the fact that per-sons in this income group are five times as Iike-Iy as those in the middle and upper groups touse wood, kerosene, coal, or coke to heat theirhomes instead of the more common oil, gas, orelectricity.

‘All statistics in this section describing energy-relatedcharacteristics of low-income households are fromEunice S. Crier, Colder. . . Darker: The Energy Crisis andLow-Income Americans (Washington, D. C.: CommunityServices Administration), #B6B5522, June 1977.


About 37 percent of all low-income house-holds are headed by elderly persons; converse-ly, about 37 percent of all elderly householdsare classified as poor or near-poor. Just overhalf of these elderly low-income householdslive in the Northeast and North-Central re-gions. They tend to use more natural gas thanother low-income households — and to pay ahigher portion of their incomes for it–whileconsuming much less electricity. This meansthat a bigger share of the low-income elderlyhousehold’s energy use can be attributed tospace heating, the most essential use.

The poor and the elderly are usually not in aposition to lower fuel bills by reducing con-sumption. Available data show that the aver-age low-income household in 1975 used 55.4percent less electricity and 24.1 percent lessnatural gas than the average middle-incomeU.S. household. In the aggregate, low-incomehouseholds used only 11 percent of total U.S.residential energy, although they accountedfor 17 percent of population. These figures areespecially significant because at least 43 per-cent of low-income households have no insula-tion, and 58 percent have no storm doors orstorm windows — factors that drive up theamount of home fuel use required to maintainminimum conditions of health and comfort.Moreover, 39 percent of low-income house-holds have no thermostat or valve with whichto control their heat, and among low-incomerenters 49 percent lack such control. Giventhese circumstances, recent increases in utilityand fuel bills severely penalize poor peoplewho cannot significantly cut consumptionwithout enduring health hazards in theirdrafty, uninsulated homes. Similarly, lack offunds to pay for air-conditioning in hot cli-mates has resulted in death from heat prostra-tion for some low-income citizens. Accordingto a newspaper account, the 20 persons whodied from heat in Dallas, Tex., in July 1978were elderly, poor, and without air-condition-ing.7 The elderly, who comprise a substantial

‘See Crier, ibid., p. 3; The Washington Post, “Life andDeath in the Heat,” July 22,1978, p. A8; and A. Henschel,et al., Heat Tolerance of Elderly Persons Living in a Sub-Tropical Climate (Washington, D. C.: DHEW, Bureau ofDisease Prevention and Environmental Control, NationalCenter for Urban and Industrial Health, OccupationalHealth Program, February 1967).

proportion of the poor and near-poor popula-tion, are more susceptible than the generalpopulation to health problems that are aggra-vated by cold (e. g., respiratory ailments, arthri-tis, or hypothermia) and by heat, because theirbodies are less able to adapt to extreme tem-peratures. 8

Three types of policy questions emerge:

●

●

●

How can it be ensured that the energyproblems of the poor and the elderly arenot overwhelming in either a financial or ahealth sense? Because low-income citi-zens are normally the last to move intonewer and more energy-efficient housing,their proportion of residential energy con-sumption could actualIy increase overtime.How can the financial hardships faced bythe poor and elderly in purchasing ade-quate energy supplies be addressed with-out creating a dependency on long-termFederal financial subsidies or relief pro-grams? How can a self-reliant approach beencouraged?How can low-income persons participatebest in solving their energy problems,perhaps acquiring skills and preparingthemselves for future jobs at the sametime?

The questions are especially challengingbecause policy makers face difficult choices.Given limited Government financial resources,what criteria should be used to ensure that theneediest are reached first? How many Federaldollars should be directed toward helping poorhouseholds reduce energy consumption, andhow many to help to pay utility and fuel bills?How should energy-related needs be coordi-nated with other social needs such as day carecenters, job training, or medical care? How

8See K H Collins, et al., “Accidental Hypothermia andImpaired Temperature Homostasis in the Elderly,”British Medical Journal, 1977, 1, 353-356; G. L. Mills, “Ac-cidental Hypothermia in the EIderly,” British Journal ofHospital Medicine, December 1973; Robert D. Rochelle,“Hypothermia in the Aged,” Institute of EnvironmentalStudies, University of California, Santa Barbara; FredThumin and Earl Wires, “The Perception of the CommonCold, and Other Ailments and Discomforts, as Related toAge, ’ International Journal of Aging and Human Devel-opment, vol. 6(1), 1975.

Ch. IV—Low-income Consumers ● 81

does a national goal of raising energy prices tolevels that reflect true costs affect the poor?How could the Federal Government mitigatethese adverse side-effects of an otherwisedesirable policy?

Price mechanisms that encourage conserva-tion through the marketplace do indeed exac-erbate the financial problems of low-income

persons. Tax incentives and penalties also dis-criminate against the poor. Direct subsidies,such as energy stamps patterned after foodstamps, could address some of the problemsthe poor face in paying utility bills—at leasttemporarily. However, critics argue that suchsubsidies fail to get at the sources of the prob-lem and tend to become self-perpetuating.

WEATHERIZATION

The most effective way to cope with higherprices is to reduce energy requirements by“weather i zing” homes. Federally sponsoredweatherization grant programs have demon-strated the benefits of this approach. TheFederal Government operates three separatebut similar weatherization grant programs– inthe Department of Energy (DOE), the Commu-nity Services Administration (CSA), and theFarmers’ Home Administration (FmHA). Beforepassage of the National Energy ConservationPolicy Act of 1978 (NECPA), these three pro-grams operated under varying eligibility re-quirements and other administrative rules. Thenew law unifies the programs, all of which aredesigned to provide direct assistance to low-in-come homeowners and occupants by sendingworkers into the field to install insulation,storm windows, and other conservation de-vices. Recipients pay nothing for this service.Labor is provided primarily through the De-partment of Labor’s Comprehensive Employ-ment and Training Act (CETA) program.

The weatherization program of FmHA waslimited, until passage of NECPA during thefinal days of the 95th Congress, to loans of upto $1,500 at 8-percent interest to rural home-owners; no outright grants were available tothose unable to afford to go into debt in orderto save energy. The new energy law adds grantsto FmHA programs on the same terms as thosein the DOE and CSA programs, except thatFmHA provides extra funds for labor whenCETA workers are unavailable.

Unfortunately, low funding levels during theearly years of the weatherization grant pro-grams in DOE and CSA permitted only 3.5 per-

cent of all low-income housing in need ofweatherization to be retrofitted with conserva-tion materials through October 1978.9

Several other problems also emerged in thefirst 2 years of Federal weatherization efforts,particularly in the DOE program. Among themwere overly restrictive Iimits on expendituresfor weatherization materials and transporta-tion of workers and equipment to the worksite, a firm Iimit of $400 in expenditures oneach housing unit, and exclusion of all me-chanical devices costing more than $50 fromthe list of conservation materials to be in-stalled. A labor shortage plagued the pro-grams; without special funding for labor, bothDOE and CSA relied almost exclusively onCETA workers, who were often unavailable.Finally, because families had to be at thepoverty level or below to be eligible for DOEweatherization services, many near-poorhouseholds with substantial need for energy-saving improvements were excluded from theprogram.

The recent National Energy ConservationPolicy Act of 1978 and Comprehensive Em-ployment and Training Act Amendments of1978 have remedied some of these difficulties.

‘This determination of the “total need,” or the totalnumber of poor and near-poor housing units that couldbe weatherized, is based on the fact that there are ap-proximately 14 million households below 125 percent ofthe poverty level. Sixty percent are single-family dwell-ings and 22 percent are apartments of eight units or less,thus yielding approximately 11,480,000 potentiallyweatherization units. According to the Community Serv-ices Administration, approximately 400,000 units hadbeen weatherized by October 1978,


The eligibility ceiling for DOE weatherizationhas been raised to 125 percent of the povertyline to include all those households generallyconsidered to be low-income. The legal defi-nition of weatherization materials has been ex-panded to include replacement burners for fur-naces, flue dampers, ignition systems to re-place pilot lights, clock thermostats, and otheritems that may be added by regulation. Thenew law also calls for development of proce-dures to determine the most cost-effectivecombination of conservation measures foreach home, taking into account the cost ofmaterials, the climate, and the value of theenergy to be saved by the materials. The limiton allowed expenditures for each dwelling hasbeen raised to $800, an amount that includesmaterials, tools, and equipment; transporta-tion; onsite supervision; and up to $100 inrepairs to the house that are needed to makethe energy improvements worthwhile. Most im-portant, the DOE program funding authoriza-tions have been increased to $200 million an-nually for FY 1979 and 1980. The new FmHAgrant program is authorized at $25 million forFY 1979.

Weatherization programs are especially ap-pealing because they can help low-income per-sons not only to save energy, but in some casesalso to obtain job training and improve theirpermanent employment prospects. Title VI ofCETA authorizes county and local govern-ments or private nonprofit “prime sponsors” tohire unskilled, underemployed, or hardcore un-employed labor for public service work, in-cluding weatherization. The primary objectiveof the program is to facilitate private employ-ment for CETA workers after a 6-month or 1-year training experience. Marriage between theweatherization and CETA programs, born ofconvenience and fraught with difficulties,nonetheless has the potential to make someheadway against two of the Nation’s mostpressing problems –the energy crisis (includ-ing inflation in energy prices) and unemploy-ment. More than 30,000 low-income unem-ployed persons had received training in weath-erization skills— installation of home insula-tion, storm windows, and other conservationdevices– by the end of 1978.

‘“Public Law 95-524, sec. 123 (c).

The chief difficulty in using CETA workersfor weatherization has centered on communityaction agencies’ inability to marshall theneeded manpower when and where it wasneeded. Because CETA jobs have been statu-torily limited to short periods of time, and be-cause the CETA program as a whole has had tofunction with only 1-year lifespans (until ex-tended by the new legislation), it has been vir-tually impossible to plan ahead for adequatelabor supplies.

Along with the difficulty of training andscheduling CETAs, lack of authorization to usefunds to hire supervisors as well as inadequatefunds for training have resulted in limitedskills. Program analyses at the local level haveshown that little effective training has oc-curred, and that the more extensive skills thatthe trainee might have been able to Iearn anduse in construction industry jobs (e. g., basiccarpentry) have not been taught. Such factorshave limited the trainee’s effectiveness on thejob and eventual desirability as an employee.

The 1978 CETA Amendments direct the Sec-retary of Labor to facilitate and extend proj-ects for work on the weatherization of low-in-come housing, providing adequate technicalassistance, encouragement, and supervision tomeet the needs of the weatherization programand the CETA trainees. According to GaylordNelson, chairman of the Senate Subcommitteeon Employment, Poverty, and Migratory Labor,the weatherization provisions of the CETA billwere needed to prevent three-quarters of the1,000 active weatherization projects in the Na-tion from shutting down for lack of workers.

In spite of the difficulties confronting CETAweatherization, some programs have been ef-fective if not outstanding. For many others,however, continued effort by the Departmentof Labor, DOE, and CSA will be necessary ifthe program is to effectively meet its severalgoals.

Weatherization is not a panacea; this ap-proach offers little help to those beyond theprogram’s reach who face immediate hardshiptrying to pay high utility bills. Those least like-ly to receive weatherization assistance are the55 percent of all low-income families who live


in rental housing and those living in severelydeteriorated housing for which bandaid im-provements cannot be justified. For these per-sons, a number of additional policies may berequired.

What additional policy options might beconsidered? The development of weatherizedand rehabilitated public and private housing isone possibility. Or, if the rehabilitation ofsome housing is too costly, considering itsuseful life, the construction of new energy-efficient housing for the poor might be a more

cost-effective use of Federal funds. But giventhe emphasis that Federal assistance programsusually place on ownership as a preconditionto any housing development activity, perhapsprograms in individual or cooperative owner-ship might be developed. In any event,whether these, or other options for renterssuch as continuing emergency financialassistance are chosen, some action should betaken to address the problems of low-incomerenters in housing whose energy inefficiency iscontinually increasing.

LOW-INCOME TENANTS

The problems of low-income families livingin rental housing are especially difficult to ad-dress. Those whose units are metered andbilled individually have reason to seek ways toreduce energy consumption, but their opportu-nities to do so are limited. Even if they can af-ford to invest in conservation measures–which most cannot—their investments bringthem no personal benefits unless they con-tinue living in the unit for a long time. Mosttenants are understandably reluctant to im-prove properties they do not own. Many ten-ants cannot even control the thermostats orwater heaters that serve their units. Individualtenants’ relatively low levels of energy con-sumption mean that they pay the highest ratesin the standard declining-block rate design.(See chapter VI.) Landlords who pay utilitybills for their properties and pass the costalong to tenants through rent have little incen-tive to invest in weatherization improvements.When they do make such investments, theypass those costs along, too--so that tenantswho move before the payback period is com-plete fail to receive the financial benefit of thelower utility bills.

Energy costs, along with property taxes andescalating maintenance costs, contribute in amajor way to the tendency of slum landlordsto abandon substandard buildings. Tenants areseldom well-enough organized to pressure mu-nicipal governments into enforcing buildingcodes or retrofitting and renovating buildingsthat cities acquire through tax liens.

Federal weatherization programs have of-fered little help to low-income renters, particu-larly those living in apartments. CSA regula-tions prohibited use of the agency’s funds forretrofitting multifamily housing until recently.The laws governing DOE and FmHA weather-ization require that multifamily weatheriza-tion projects be designed to benefit tenantsrather than landlords and direct the programmanagers to ensure that rents are not raised asa result of weatherization improvements andthat no “undue or excessive enhancement” ofthe property results from weatherization ac-tivities. While these provisions are laudatory,implementing them is difficult.

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 findinglow-income families have faced the unpleas- their gas, oil, or electricity cut off. To avoid


these difficulties, three Federal programs havebeen used to help low-income consumers payutility bills. They are the Department ofHealth, Education, and Welfare’s (HEW) Emer-gency Assistance and Title XX programs, andthe much larger CSA Special Crisis Interven-tion Program (SCIP).

HEW’s Emergency Assistance (EA) Programis available to poor families with one or morechildren through the welfare system in 22States. Emergency assistance payments aremade to prevent imminent hardship, such asloss of fuel services. Close to 90 percent of theEA caseload is carried by only seven States,however. The Federal Government provides amatching share of 50 percent to States that of-fer the program. Some States find the required50-percent non-Federal share too expensive.

Welfare officials often find it difficult todocument the legitimacy of emergency needsclaimed by applicants. ’ Litigation in someStates has resulted in court rulings that someState restrictions on the use of EA funds are il-legal; State response has sometimes been tostop offering emergency assistance. 2

Other factors have also limited this pro-gram’s effectiveness. The program is availableonly to families with children, and only topublic-assistance recipients. Further, a familymay not receive EA payments for more than 1month during any 12-month period.

Funds available through title XX of theSocial Security Act of 1975 may also be usedto permit low-income consumers to pay fuelbills. Title XX funds have traditionally beenused for such social-service purposes as pro-viding clothing and groceries for needy fam-ilies, or for meeting the needs of handicapped,mentally ill, retarded, or other poor personswith special problems. HEW regulations wereamended in January 1978 to permit the use oftitle XX funds for reimbursement of low-in-

‘ ‘Consumer Federation of America, Low-Income Con-sumer Energy Problems and the Federal Government’s Re-sponse, report to the Office of Technology Assessment,1978, p. 135.

‘zSee, for example, Kozinski v. Schmidt, D.C. Wis.,1975, 409 F. Supp. 215; Williams v. Woh/gemuth, D.C. Pa.,1975,400 F. Supp. 1309.

come persons for payment of utility and fuelbills in emergencies. This provision has beencontroversial because HEW officials have ex-pressed a concern that utility payments couldconsume such a great portion of title XX fundsthat too little would remain for more tradi-tional social services. 3 Furthermore, at Ieastone State– North Dakota–found title XX animpractical tool for utility payments becauseof the requirement that bills be paid in fullbefore reimbursement funds are released. ”These problems, particularly the issue of com-peting needs for limited funds, may jeopardizethe availability of title XX funds for energy-re-lated financial assistance.

The Community Services Administration’sSCIP was initially funded by a supplementalappropriation of $200 million in March 1977.The program was intended to make available avariety of financial assistance mechanismsthat included grants, loans, fuel vouchers, orstamps; payment guarantees, mediation withutility companies or fuel suppliers, and finan-cial counseling; and maintenance of emergen-cy fuel supplies, warm clothing, and blankets.In practice, assistance was limited to emergen-cy grants in most cases.

Although funded for $200 million, SCIP didnot come close to helping all those in need.The maximum payment to individuals or fam-ilies, limited to $250 by Federal regulations,was often too low to cover the total bill, andsome States set lower ceilings because thenumber of applications was too high for theavailable money. When consumers could notmeet their entire bills with SCIP payments,utilities sometimes failed to establish deferred-payment plans and proceeded instead to shutoff gas or power. Some utilities reportedlyfailed to reduce their customers’ bills to reflectSC I P payments.

SCIP’s major problems in the first year re-sulted from poor timing. Congress’ action inappropriating funds in March was aimed atassisting with bills accumulated during thewinter just ending, yet funds did not becomeavailable to community action agencies for

‘3Consumer Federation of America, op. cit., p. 139“ibid., p 138.


distribution until late summer. By then, manypoor families had already had their utilitiesshut off or had sacrificed other essential needsto pay their bills. When funds finally becameavailable, they had to be distributed in theshort time remaining in the fiscal year or elserevert to the CSA weatherization program, aworthy program but one that could not meetthe immediate and critical financial needs ofmany poor families. Of the amount appropri-ated in FY 1977, 82 percent was actually dis-tributed to the needy population.

Community action agencies functioned witha frenzy of activity in order to handle SCIPfunds in August and September 1977. With nofunds provided for administration of the pro-gram, the agencies operated with staff hastilyborrowed from other community action proj-ects. They undertook efforts to communicatewith eligible persons through newspaper,media, and poster advertising, but some failedto reach enough people to use all availablefunds, despite evidence of a large target popu-lation. Others succeeded in their public rela-tions efforts but found potential recipientsdiscouraged by long waiting lines for applica-tion processing and lack of transportationassistance, particularly in rural areas.

To be eligible for SCIP payments, utility andfuel customers were required to show writtennotice from their suppliers of intent to termi-nate service. Many small dealers in propane,butane, and wood were accustomed to oper-

ating informally—for example, farmers whosold wood to their neighbors to earn extra win-tertime income— and failed to provide suchnotice. Their customers were therefore ineligi-ble for SC I P assistance.

Many local SCIP coordinators objected tothe program because they felt it forced theiragencies into an uncomfortable role: handingout money (like a social service agency) to tryto alleviate the effects, rather than the causes,of a problem. They saw this as restraining themfrom focusing their efforts to do somethingabout the causes of the local energy problem,and as providing local people with an errone-ous perception of the agencies’ role in theircommunities: that is, as surrogate welfare de-partments rather than as organizations whichhelp people become more self-sufficient.

Some local antipoverty workers also took of-fense at the practice of making payments fromFederal CSA funds to private utility companiesand fuel oil distributors. They saw SCIP as acontinuing subsidy to utilities, and not as ahelp to the poor. ”

CSA’s second-year financial assistance pro-gram, also funded at $200 million, was knownas the Emergency Energy ‘Assistance Program(EEAP). In FY 1978, funds were made availablesooner and program administrators were ableto benefit from many of the first year’s experi-ences.

UTILITY POLICIES FOR THE POOR AND NEAR-POOR

Emergency payments to low-income per-sons, discussed in the previous section, are in-tended to forestall utility shutoffs and ensureenough energy to meet basic needs. A numberof governmental jurisdictions have imposedadditional policies, however, to protect low-income consumers in their dealings with util-ities.

In California, all utilities have been requiredby law since 1975 to design their electric andgas rate structures so that the first blocks ofenergy consumed — the amount needed to pro-

vide necessary amounts of heat, light, refrig-eration, cooking, and water heating— are sold

1‘Data derived from telephone interviews with 44 CAPweatherization, energy, and overall program directors,and interviews with community leaders at OTA. Tele-phone interviews discussed the structure and problemsencountered with CSA energy education programs,which included extensive discussion of weatherizationactivities and problems with CSA/DOE and other pro-grams, and SC I P, while additional interviews at OTA withlocal energy personnel visiting in Washington centeredon the effect of and improvements that could be made inSCIP and other community energy conservation pro-grams,


at reduced rates. Utility revenues lost throughthe so-called “lifeline” subsidy are recoveredby charging higher rates for energy consumedabove the minimum allowance. This policyrepresents a reversal of the traditional utility“declining block” rate structure.

The California law is premised on a findingthat “light and heat are basic human rights andmust be made available to all people at lowcost for minimum quantities. ” Lifeline ratesare discussed in the context of utility policy forenergy conservation in chapter VI of this re-port. Here, they are discussed in terms of theirpurpose in meeting social welfare goals—thatis, in preventing severe hardship caused byhigh energy prices or by termination of essen-tial utility services as a result of inability topay.

For lifeline rates to function as effective in-come-transfer devices, low-income householdsmust hold their electricity and gas consump-tion at or near the low levels needed to meetonly essential needs. Available data indicatethat on the average, low-income householdsdo indeed consume less energy than house-holds in higher income brackets. A study bythe Washington Center for MetropolitanStudies found that in 1975, the average low-in-come household consumed 60.6 million Btu*of electricity and 110.1 million Btu of naturalgas, compared with an average of 94.2 millionBtu of electricity and 136.3 million Btu ofnatural gas for all households. Table 28 indi-cates how gas and electricity consumption inlow-income households compared with use ofthese energy sources in middle- and upper-in-come households.16

Table 28.—Consumption of Electricity and NaturalGas in U.S. Households by Income Group, 1975*

(millions of Btu)

Income

$25,000Low- $14,000- a n d

income 20.500 above

Electricity. . . . . . . . . . . . . . . . . . 60.6 111.3 137.5Natural gas. . . . . . . . . . . . . . . . . 110.1 137.4 190.5

● Average annual Btu per household.SOURCE: Washington Center for Metropolitan Studies, National Survey of

Household Energy Use, 1975.

*One Btu is equivalent to 1 kilojoule.“Crier, op. cit., p. 11

Other studies of electricity and gas con-sumption among low-income users indicate,however, that looking at average householdconsumption patterns may not be the best wayto evaluate the effectiveness of lifeline rates inmeeting social welfare goals. Looking insteadat the number of households in various incomegroups that exceeded lifeline allowance levels,the Pacific Gas & Electric Company (PG&E)found that significant numbers of low-incomehouseholds exceed not only the lifeline con-sumption levels, but also the utility system’saverage consumption per household. For ex-ample, PG&E determined that nearly 50 per-cent of its low-income customers in the SanFrancisco Bay area outside San Francisco con-sume more than the area’s average monthlyhousehold level of 300 kWh.17 High consump-tion levels among low-income customers werefound to be very weather-sensitive and espe-cially prevalent during winter peak-heatingperiods, probably because of the poor thermalintegrity of many homes occupied by low-in-come consumers. PG&E concluded that largenumbers of low-income consumers were beingpenalized, rather than helped, by lifelinerates.18

In a recent critique of the California lifelinepolicy, Albin J. Dahl expressed a doubt thatlandlords receiving lifeline allowances forunits in master-metered buildings would in allcases pass on utility cost-savings to their ten-ants through lowered rents. He also pointedout that California residential gas consumerswere paying for much of the gas they con-sumed at rates far below the costs borne byutilities in purchasing and delivering that gas.Dahl argued that the tax and welfare systemswere more appropriate vehicles for solving theenergy-based financial problems of low-in-come persons. 19

Other utility-related policies that mightassist low-income persons include prohibitionson wintertime utility shutoffs, legal aid to indi-gent utility customers, and requirements ofthird-party notification prior to shutoff.

“j, Dahl Albin, “California’s Lifeline Policy,” PublicUtilities Fortnight/y, Aug. 31,1978, p. 20.

‘81 bid., p 18.“I bid., pp. 13-22.

Ch. IV—Low-income Consumers . 87

HOUSING, ENERGY, AND THE POOR

For low-income persons, problems of energyuse in the home are a subset of the larger prob-lems of poor housing quality in general. Op-portunities to lower residential energy con-sumption — and reduce utility bills — are sharp-ly limited for people who live in substandardhousing, unless a way can be found to rehabil-itate or replace such housing. Weatherizationprograms, financial assistance, and preferen-tial utility rates cannot provide full remediesfor either owners or renters of low-quality,energy-guzzling homes. A number of Federalprograms address the housing needs of low-income persons. Efforts are directed at bothtenants and homeowners.

Programs affecting rental housing include:

Federal assistance to local housing au-thorities for construction, maintenance,and subsidization of rents in public hous-ing projects;Rent subsidies under section 8 of the Na-tional Housing Act which make up the dif-ference between 25 percent of recipientfamilies’ incomes and the fair market rentfor the private housing units they occupy;Mortgage insurance, interest and rent sub-sidies, and energy-related home improve-ment financing for rental housing undersection 236 of the National Housing Act,as amended; andFmHA’s Section 515 Rental and Cooper-ative Housing Loan Program, whichfinances housing for low- and moderate-income families developed by public,private, or nonprofit organizations.

Programs aimed at owner-occupied housinginclude:

● The Department of Housing and UrbanDevelopment’s (HUD) section 312 pro-gram, providing loans at 3-percent interestto low-income homeowners in certain des-ignated areas, for the purpose of rehabili-tating their homes and bringing them intocompliance with current local buildingcodes;

●

●

●

Mortgage insurance and interest subsidiesmade available under section 235 of theNational Housing Act to permit low- andmoderate-income persons to purchasenew and existing housing under afford-able financing terms;FmHA’s Section 502 HomeownershipLoan Program, offering either loanguarantees or direct loans for the pur-chase or rehabilitation of homes underfinancing terms that vary depending onthe recipient’s income; andFmHA’s Section 504 Home Repair Pro-gram, which offers loans and grants toelderly rural low-income homeowners toremove certain dangers to health andsafety.

Programs that can affect both rental andowner-occupied housing are:

●

●

Community development block grantsmade available annually to local govern-ments to meet broadly specified Federalobjectives (which include the provision ofadequate housing, a suitable living envi-ronment, and expanded economic oppor-tunities for low-income groups) throughprojects designed at the local level; andHUD’s urban development action grantsdesigned to stimulate new constructionand economic development in low-in-come areas.

All these programs have helped low-incomepersons to acquire “decent, safe, and sanitaryhousing” without the expenditure of an unrea-sonable portion of their incomes for housing. Itis not clear, however, that the programs havehelped in a noticeable way to make poor fam-ilies’ homes more energy-efficient. For mostprograms, energy conservation is a concern farfrom the minds of program administrators inWashington, D. C., and in the field; similarly,lenders, builders, owners, developers, non-profit groups, and others on the receiving endof Federal housing funds have only rarely in-cluded energy efficiency in their planning orcost calcuIations.


Public housing projects, for example, wereconstructed without effective thermal stand-ards until 1963, and from 1963 to 1973, Federalguidelines for thermal standards were volun-tary. In recent years, the emphasis within thepublic housing program has shifted from newconstruction to rehabilitation of existing proj-ects, and energy efficiency has been desig-nated as a “priority expenditure category” aspart of rehabilitation. Since utility costs havebeen estimated by HUD to account for be-tween 20 and 30 percent of project operatingexpenses, in many cases upgrading insulation,windows, and energy-consuming equipment inpublic housing units is a cost-effective use ofpublic funds. Unfortunately, however, HUDcannot supply accurate estimates of the levelof energy-related improvements being made inthe public housing sector, or of the energy sav-ings that are resuIting.

The rental assistance program under section8 of the National Housing Act assists over350,000 low-income families by making up the

difference between 25 percent of their familyincomes and the fair market rent for the hous-ing units they occupy. Tenants in both publicand private housing are eligible for section 8subsidies if their incomes do not exceed 80 per-cent of the median income in their geographicareas; nearly a third of all recipients earn lessthan half of the median income. As with thepublic housing program, section 8 guidelinespay little attention to energy efficiency. Onlyin the case of newly constructed apartmentsare section 8 subsidies tied even indirectly torequirements for thermal integrity in the build-ings; newly built homes must meet HUD mini-mum property standards to be eligible for par-ticipation in the section 8 program. Older unitsare not subject to any energy standards foreligibility

Chapter Vlll describes each of the Federalhousing programs listed above, and evaluatestheir effectiveness (or lack thereof) in encour-aging energy efficiency to keep utility costsdown for low-income owners and tenants.

Chapter V

HOUSING DECISIONMAKERS

Chapter V.— HOUSING DECISIONMAKERS

Page

Introduction . . . . . . . . . . . . . . . . . 91Characteristics of the Existing Housing

Inventory . . . . . . . . . . . 91Characteristics of New Housing . . . . . . 93Housing Processes and Participants . . . . 94

New Construction. . . . . . . . . 95Retrofit . . . . . . . . . . . . . . . . 97Manufactured Housing. .,,. . . . 98

The Existing Housing Stock. . . . 99Trends in Housing and Conservation ~ ~ ...101

T r e n d s i n H o u s i n g C o s t s . . . . . 1 0 1Trends in Utility Costs .. ...104

Findings and Opportunities for EnergyConservation. . . . . . . . . . . . .112

Builders’ Attitudes . . . . ..113Property Owners’ Attitudes. . .......113ls the Cost of Adding Energy Conservation

Features to New or Existing Housingan impediment to Conservation? 114

Are Problems of Financing Impeding thePace of Residential Conservation? 114

What Are the Current and Potential Rolesof the Federal Government inEncouraging ResidentialC o n s e r v a t i o n ? 115

Directions for the Future .116

TABLES

29

30

31

32.33.34.35.

36.

37.

38.

Structure Type: Year-Round HousingUnits, 1976 . . . . . . . . . . . . . . . . . .Tenure and Number of Units by Typeof Structure, 1976 . . .Year-Round Housing Units by Location,1976. . . . . . . . . . . . . . . ., . . . .Tenure by Location, 1976 . . . .Income by Type of Occupancy, 1976 .Age of Housing Units, 1976. .Sales of Existing Single-Family Homesfor the United States and Each Regionby Price Class, 1977 . . . . . .Private Housing Starts by Type ofStructure, 1977 . . . . . . . . . . . .Private Housing Completions byLocation, 1977. . . . . . . . .Sales Price of New One-Family HomesSold, 1977 . . . . . . . . . . .

91

91

92929292

93

93

94

94

39

40

41

42

43

44

45

464748

49

50

51

52

53

54

15

16

Chapter V

HOUSING DECISIONMAKERS

INTRODUCTION

This chapter assesses the efforts to improve the energy efficiency of new and existinghousing. It identifies the opportunities for and impediments to more residential conserva-tion. The characteristics of residential buildings, the factors that influence property owners’attitudes and behavior toward energy conservation, the participants and processes involvedin new housing development and improvement of existing housing, and trends and institu-tional factors that encourage or discourage conservation are examined. Based on those judg-ments, some policy options and considerations that might further energy conservation arenoted.

CHARACTERISTICS OF THE EXISTING HOUSING INVENTORY

To understand the context within which resi-dential conservation actions occur, it is usefulto review the general characteristics of existinghousing. The types of units, tenure arrange-ments, the age of the housing stocks, and theincome of property owners all influence theneed, potential, and feasibility of energy con-servation. In 1976 the inventory totaled nearly81 million units, of which more than 79 millionwere all-year housing units and 74 milIion wereoccupied. The housing stock is diverse, varyingby age, construction quality, size, design, andamenities. Most structures are single-unitbuildings and most housing is occupied byowners. As shown by table 29, 53.6 millionunits or 67.6 percent are one-unit structures.Only 11.9 million units or 15.0 percent are inbuildings with five or more units.

Table 29.—Structure Type:Year-Round Housing Units, 1976

——.Units in

Type thousands Percent

1 unit. . . . . . . . . . . . . . . . . . . . . 53,611 67.62-4 units . . . . . . . . . . . . . . . . . . . 10,189 12.85 or more units. . . . . . . . . . . . . . 11,888 15.0Mobile homes or trailers. . . . . . 3,627 4.6———

Total . . . . . . . . . . . . . . . . . . . . 79,315 100—————.—.

SOURCE: U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Arrnua/ Hous/rrg Survey, 7976 U S and Regions,Part A‘ Genera/ Housing Characteristics, p 1

Table 30 gives information on tenure andstructure size. Nearly two-thirds of all Ameri-

Table 30.—Tenure and Number of Unitsby Type of Structure, 1976

(units in thousands)

Owner Renteroccupied occupied Total

Occupied units . . . . . . . . . 47,904 26,101 74,005l-unit structure . . . . . . . . . 42,136 8,477 50,6132- 4-unit structure . . . . . . . 2,143 7,116 9,2595 or more unit structures . 638 9,867 10,505Mobile homes . . . . . . . . . . 2,987 640 3,627

SOURCE’ U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Annual Housing Survey, 1976 U S. and Regions,Part A Genera/ Housing Characteristics, p 1

can families are owner-occupants; 47.9 millionunits or 64.7 percent are owner-occupied; andonly 26.1 mill ion units or 35.3 percent are oc-cupied by renters. The percentage of owner-occupied housing is increasing, with the big-gest changes having occurred in the 1940’s and1950’s. In 1940, owner-occupied units repre-sented only 43.6 percent of all units; by 1960,they accounted for 61.9 percent of all units.

Most one-unit structures and mobile homesare owner-occupied, but a significant numberare rented. Only 14 percent of all units are inbuildings with five or more dwellings.

Most housing is located in urban areas.More than two-thirds of all housing is in stand-ard metropolitan statistical areas (SMSAs). Butas shown in table 31, only 31.0 percent of thehousing stock is found in central cities, and

91


most housing in SMSAs is not in central citiesbut in suburban areas.

Table 31 .—Year-Round Housing Unitsby Location, 1976

Units inLocation thousands Percent

Inside SMSAs ., . . . . . . . . . . . . 53,606 67.6Within central cities . . . . . . . (24,547) (31.0)Not in central cities. . . . . . . . (29,059) (36.6)

Outside SMSAs. . . . . . . . . . . . . 25,710 32.4Total . . . . . . . . . . . . . . . . . . . . 79,315 100.0

SOURCE: U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Annual Housing Survey, 1976 U.S. and Regions,Part A: General Housing Characteristics, p 3

Housing tenure varies by location. As shownby table 32, the incidence of rental housing isgreater in SMSAs than outside SMSAs andmore prevalent in central cities than in subur-ban areas. Nearly half the housing in centralcities is rented, but in suburban areas ofSMSAs rental housing makes up only 29 per-cent of all units. The Northeastern section ofthe country has the largest percentage of ren-tal housing and the North-Central section thesmallest.

Table 32.—Tenure by Location, 1976(units in thousands)

Percent Owner- PercentRental within occupied within

Location units location units locationInside SMSAs . . . . . . 19,557 38.8 30,895 61.2Within central cities (11,581) (1 1,349)Not in central cities. ( 7,976) (19,546)

Outside SMSAs. . . . . 6,544 27.8 17,009 72.2

Total . . . . . . . . . . . . 26,101 47,904

SOURCE: U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Annual Housing Survey, 1976 U S. and Regions,Part A: General Housing Characteristics, p 3

Owner-occupants earn more than renters,but a significant number of homeowners havelow or moderate incomes. (See table 33.) Near-ly 35 percent of homeowners had an income ofless than $10,000 in 1976; this group could beexpected to be particularly affected by the in-creasing costs of homeownership.

More than one-third (34.3 percent) of thestock predates 1940, even with the high levelof construction over the past three decades. Asnoted in table 34, a large fraction of the stockis new: 27.9 percent of the inventory has beenbuilt since 1965.

Table 33.—income by Type of Occupancy, 1976(numbers in thousands)

Number Numberof owner of renter

Family income occupants occupants

Total . . . . . . . . . . . . . . . . . . . . 47,904 26,099

Less than $3,000 . . . . . . . . . . . . 3,001 3,938$3,000-4,999 . . . . . . . . . . . . . . . . 3,625 4,074$5,000-6,999 . . . . . . . . . . . . . . . . 3,644 3,301$7,000-9,999 . . . . . . . . . . . . . . . . 5,061 4,252$10,000-14,999 . . . . . . . . . . . . . . 9,574 5,318$15,000-24,999 . . . . . . . . . . . . . . 14,046 3,948$25,000 or more. . . . . . . . . . . . . 8,953 1,268Median income in dollars ... ..$14,400 $8,100

——SOURCE: U.S. Department of Commerce and U.S. Department of Housing and

Urban Development, Annual Housing Survey, 1976 U.S. and Regions,Part A General Housing Characteristics, p. 10.

Table 34.—Age of Housing Units, 1976(units in thousands)

Units inYear structure built structure Percent

April 1970 or later. . . . . . . . . . . . 12,493 15.81965-70 (March) . . . . . . . . . . . . . 9,581 12.11960-64 . . . . . . . . . . . . . . . . . . . . 8,093 10.21950-59 . . . . . . . . . . . . . . . . . . . . 13,840 17.41940-49 . . . . . . . . . . . . . . . . . . . . 8,103 10.21939 or earlier . . . . . . . . . . . . . . 27,206 34.3

SOURCE: U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Annual Housing Survey, 1976 U.S. and Regions,Part A General Housing Characteristics, p. 1.

A significant amount of the housing stockchanges hands each year. In 1977, more than3.5 million existing homes were bought andsold. The cost of existing housing has been ris-ing rapidly. The median price in 1972 was$27,100; in 1977, it was $42,900. The mediansales price disguises a significant variety ofhome prices, generally and by region. Nearly15 percent of all existing houses sold for lessthan $25,000, but nearly 16 percent of all salesexceeded $70,000. Table 35 provides a break-down of sales by price class and region for1977. Housing in the West is substantially moreexpensive than in other parts of the country.The incidence of lower cost housing is greatestin the North-Central and Southern sections ofthe country.

Based on this data it would appear that thefocus of a residential conservation programshould be on owner-occupants, most of whomoccupy single-unit properties. Even thoughthey own their own homes, many owner-occu-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 WestUnder $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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0Median 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 innificant inflation in the cost of existing hous- Location, tenure, price, and age of housing anding. 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 energytral cities in suburbs. In central cities nearly conservation in residential buildings.

CHARACTERISTICS OF NEW HOUSING

The construction industry is a cyclical in-dustry whose production varies widely year byyear. In recent years, production has rangedfrom a low of 1.2 million units in 1975 to 2.4million units in 1972. In 1977 nearly 2 millionunits were started, and 277,000 mobile homeswere shipped to dealers. As might be expected,singl e-f am i I y construction predominated.Table 36 provides a breakdown of housingstarts by type of structure. More than 73 per-cent were single-unit structures, only 21 per-cent were in structures of five or more units.

Table 36.—Private Housing Startsby Type of Structure, 1977

(units in thousands)

NumberType of units Percent

1 unit. . . . . . . . . . . . . . . . . . . . . . . 1,451 73.12 units. . . . . . . . . . . . . . . . . . . . . 61 3.13-4 units . . . . . . . . . . . . . . . . . . . 61 3.15 or more units. . . . . . . . . . . . . . 413 20.8

Total . . . . . . . . . . . . . . . . . . . . 1,986 100Mobile homes or trailers. . . . . . 277

NOTE: Totals may not add to 100 due to rounding.SOURCE: Department of Housing and Urban Development’s Office of Housing

Statistics.

Nearly 70 percent (1 .377 million of the total1.986 million housing starts) were locatedwithin SMSAs. Housing construction activity isgreatest in the South and West, where thepopulation is growing fastest. New construc-tion is heavily concentrated in fast-growingmetropolitan areas. Ten market areas are ex-pected to account for 372,289 units or nearly19 percent of all construction starts in 1978,with Houston and Dallas-Fort Worth alone ac-counting for nearly 109,000 units.

Table 37 shows the regional distribution ofcompleted housing construction for single-family and multifamily housing. Over 38 per-cent of the completions occurred in the South.More than one-third of all multifamily comple-tions were located in the West, an area withonly 27 percent of total completions. The

‘ National Association of Home Builders’ estimate. Thetop 10 markets are Houston, 62,706; Dallas-Fort Worth,46,000; Chicago, 44,000; Phoenix, 40,000; Los Angeles-Long Beach, 38,500; Riverside-San Bernardino, 35,000;Seattle-Everett, 31 ,320; San Diego, 28,000; Denver-Boulder, 23,400; and Detroit, 23,360.


Total. . . . . . . . . . . 1,656 1,258 398

SOURCE: Department of Housing and Urban Development Office of HousingStatistics.

Northeast had a small fraction of activityrelative to its popuIation.

The cost of new housing has been risingrapidly and is significantly higher than theaverage cost of existing housing. In 1977, theaverage sales price of a new home was$54,200, but the price of housing varied byregion of the country. As is the case with ex-isting housing, the highest average costs are inthe West and East. In the Northeast, the aver-age sales price was $54,800; in the South$48,100; and in the West $60,700.2

In 1978 prices have continued to escalateand to reflect a diversity in housing costs.Housing magazine reported that in the firsthalf of 1978 new single-family detachedhouses sold and conventionally financed aver-aged $60,100. San Francisco had the highestprices at $88,200 per unit, followed by LosAngeles ($83,800), San Diego ($80,600), andNew York City ($78,000).

Table 38 presents a breakdown by priceclass of housing sold in 1977. A majority of thehousing sold was in the $30,000 to $60,000

‘Characteristics of New Housing (Bureau of the Censusand Department of Housing and Urban Development,1977).

Table 38.—Sales Price of New One-FamilyHomes 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—.—

Development, Characteristics of New Housing, 1977

range, but 18 percent sold for more than$79,000.

New homes sold in 1977 totaled 819,000, ofwhich 782,000 were financed. More than three-fourths of these homes were financed bybanks, savings and loans, and other mortgagelenders without the involvement of the FederalGovernment. The Federal Government’s role inhousing finance is relatively modest except inthe case of lower income home purchasers, butFederal insurance programs and secondary fi-nancing mechanisms provide important lever-age on the financing actions. Table 39 providesdata on the role of Federal financing activitiesand shows that the average federally assistedloan is much smaller than the average conven-tional mortgage.

Table 39.—New Homes Sold, Sales Priceby Type of Mortgage Financing, 1977—

Number ofType of mortgage units in Median

financing thousands Percent sales priceFHA insured. . . . . . . . 73 9 $37,700VA guaranteed. . . . . . 93 12 41,600Conventional . . . . . . . 592 76 53,400Farmers Home. . . . . . 24 3 25,800

Total . . . . . . . . . . . 782 100

SOURCE Bureau of the Census and the Department of Housing and Urban— .

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 theit is important to understand the attributes and attitudes and interrelationships of the keyinstitutional structure of the three general decisionmakers in each market. The design,

Ch. V—Housing Decisionmakers . 95

construction, financing, and operation ofhousing involve a multitude of participants.Each of these participants operates under dif-ferent circumstances and conditions and eachattempts to maximize profits and Iimit risks.

New Construction

The development of new housing is a com-plex entrepreneurial activity, involving manyparticipants whose interactions and coopera-tion are necessary for its successful comple-tion. The manner and extent of participationand interaction differ between single-familyand multifamily construction and betweenhousing constructed on behalf of an ownerand that constructed on a speculative basis,which is more common. Participants in theprocess include the builder or developer’ whoplans, initiates, and carries out the develop-ment; lenders who provide construction andmortgage financing; specialized subcontrac-tors who undertake construction activities;construction workers; architects and engineerswho design the housing; local government of-ficials who establish and administer local landuse regulations, including zoning and buildingcodes; realtors who assist in the sale or rentalof the housing; and the homeowner, owner-occupant, or investor.

A new residential construction project,regardless of type, involves five basic steps: 1 )determining whether the project is financiallyfeasible and marketable; 2) detailed planningand securing the site and financial commit-ments; 3) detailed design and engineering andthe organization and securing of labor andmaterials; 4) construction; and 5) sale or rentalof the completed project or home. At eachstep the builder works closely with one ormore of the participants.

The building industry is fragmented intomany small producing units, none of whichcontrols a significant percentage of the hous-

ing market. There are more than 100,000builders. The largest single-family builder in1977 produced only 8,830 units and the largestmultifamily builder 3,974 units.3 In 1976 thetop 419 builders built 21 percent of all newhousing. The average builder operates a smallbusiness and builds fewer than 20 houses ayear. 4 A 1970 survey of the building industryfound that three-fourths of all builders whobuilt only single-family housing built less than25 houses, and 46 percent built less than 10houses a year. Only 2.5 percent of these build-ers constructed more than 100 houses annual-ly. Firms that built both multifamily and single-family housing tended to be larger. As a resultonly 57 percent of them built less than 25 unitseach year and 11.7 percent built more than 100units. Firm’s that handled only multifamilyhousing were the largest. Only 17.6 percentconstructed less than 25 units a year and 52.6percent buiIt more than 100 units.

No builder dominates or controls a par-ticular housing market, and the competitionamong builders is intense. Except in the largesthousing development firms, the planning, de-sign, construction management, and financingfunctions are carried out by different parties.

Most builders have few full-time employees.(An average builder employs 2.8 full-time ex-ecutives, 3.4 office personnel, and 24.8 super-visors and tradesmen).5 The size of the firmand the precise role of the builder vary withthe type of housing being constructed, as doesthe role of the builder and his relationship toother participants. Some builders only coor-dinate the developmental process; they relyfully on specialized subcontractors to con-struct the various building elements. Otherscarry out all or some part of the constructionprocess. Some builders only build for clientson a custom basis. Most, however, build spec-ulatively. A speculative project may involve asingle lot or a large subdivision. Sixty-one per-

*The term builder is typically used in single-familyconstruction. In multifamily construction the buildermay be the developer or may only build the project forthe developer. In this study the terms are used inter-changeably.

3“California Builders Still Going Strong,” Housing, No-vember 1978, p. 18.

“’Housing Giants on the Grow Again,” ProfessionalBuilder, July 1977.

‘Michael Sumichrast and Sara A. Frankel, Profile of theBuilder and His Industry.


cent of the single-family housing started in1976 was built for sale or rent; the remainderwas built by the owner or by a contractor forthe use of the owner.

The builder is involved in a high-risk, highlyleveraged situation, with his success or failuredependent on his ability to judge market de-mand and conditions accurately. Builders tryto avoid situations that increase risk or thatmay hurt the marketability of the housing theyproduce. To be successful the builder must re-spond to local tastes and produce housing thatis competitively priced. During the construc-tion process decisions must be made quicklyto deal with a constant stream of unforeseenevents.

An analysis of the building industry commis-sioned by OTA noted:

Despite apparent outward similarities, theresulting product is quite heterogeneous innature. It must be produced for al I types ofunique building sites and in an incrediblerange of community types and climatic re-gions. Viewed in this light, the production ofhousing would seem to demand a significantcombination of market sensitivity and man-agerial/organizational talent. This suggeststhat entrepreneurship is almost more ‘impor-tant’ than the other inputs because it is the en-trepreneur who must organize, become atleast practically responsible for, and eventual-ly commit those resources. b

As the entrepreneur, the bui lder or devel -

oper determines the character of the housing.I f he is bui ld ing on a speculat ive basis , the

builder must decide what type of house is indemand and will sell at a profit within the localmarket and price class. The builder must notonly weigh and evaluate the multitude offeatures that might be used but must gauge hismarket correctly in terms of price, style, andamenities, and compete with other buildersserving the same market. Typically a builderkeeps track of local market conditions andcompetitive projects. The National Associa-tion of Home Builders (NAHB)–to which most

homebuilders belong–and material suppliersalert builders to new trends and products.

Homebuilders tend to use stock plans, drafttheir own plans, or modify designs they orcompetitors have used previously; most homesare not directly designed by architects or engi-neers. Only 27 percent of homebuilders re-ported they used staff or consultant archi-tects. 7 Architects and engineers are more fre-quently used in multifamily projects becauseof their greater complexity.

Builders are adaptable and willing to changethe characteristics of the housing they build,but only as a result of proven market demand.Most builders are reluctant to pioneer un-proven changes that may adversely affect themarketability of housing and may meet con-sumer resistance. Builders must be concernedabout the cost of their product and the cost ofadding standard features will be carefullyweighed against the advantages of thosefeatures in helping to sell the housing. Firstcost is given more consideration than Iifecyclecost. Large builders are in a better financialposition to take risks–but even they mustcarefully assess the risks and opportunities in-volved in deviating from established marketpractices.

The builder of custom homes is in a differentposition and need not make all the marketjudgments of the speculative builder. Manydecisions will be made by the owner, perhapson the builder’s advice. The builder does haveto manage the construction process so thatcosts fall within the budget of his client whilethe builder earns a profit.

The role of the builder and the financialmanagement is different in the multifamilymarket. In the case of multifamily housing thebuilder may or may not be the owner/devel-oper of the project. The owner/developerassumes the key decision making role and de-termines the character of the project. Projectdesign is based on an estimate of the rents that

61 bid.71 gT6 HUD s~~tjstjcal Yearbook (Washington, D. C.:

Department of Housing and Urban Development), p. 284.

Ch. V—Housing Decisionmakers ● 97

can be charged for that location and type ofunit. Rent projections determine an accept-able level of construction cost, which in turnserves to determine the features to be includedin the project. The terms and conditions ofavailable financing determine the ultimatefeasibility of multifamily construction. Mostdevelopers build multifamily projects withonly a token equity so that project characteris-tics and features are determined by the extentto which lenders believe they add to the valueof the project and are willing to finance theirinclusion. Multifamily property is an invest-ment, and decisions are based on their impacton profit. The profit to be realized can be inthe form of cash flow, depreciation, future ap-preciation, or amortization of debt. Additionalcash investment to add a special feature maybe avoided, in some cases, even if such an in-vestment would be profitable over the longrun. Developers seek to achieve maximum lev-erage; thus f rent-end costs may be more impor-tant to them than Iifecycle costs.

These concerns, combined with the require-ments of local codes and regulations, providethe context within which the builder selects asite, determines what he can pay for the site,and makes decisions about the housing designand the specifications and quality of the dif-ferent construction components.

Lenders are key participants in the housingconstruction process. Housing normalIy in-volves long-term debt financing. Lenders pro-vide interim financial assistance to builders,developers, and subcontractors during thedevelopment process, and long-term mortgageloans to house purchasers or multifamily in-vestors. Lenders seek to make profitable loansand protect themselves against default. Be-cause they lend money, by nature and circum-stance they tend to be conservative. Typically,lenders do not examine homebuilders’ plans indetail. They rely instead on the experience andreputation of the builder in deciding whetherto provide short-term financing. In terms of alevel of mortgage debt, lenders base their will-ingness to finance particular homes on ap-praisers’ estimates of value, on the perceivedrisk of the investment over the term of theloan, and on the credit-worthiness and ability

of the borrower to afford the expense of home-ownership. Appraisers play a key role in deter-mining the availability of financing by estimat-ing the value of the property to be financed.Appraisals are intended to reflect marketvalues, so appraisers discount any housingfeatures they believe are not accepted in themarketplace. Because multifamily loans arelarger, plans and specifications for multifamilyprojects are scrutinized more carefully thanfor single-family homes, but typically lenderswould not review indepth the specificationsfor the project. Lenders make financial judg-ments based on appraisers’ estimates of valueand, perhaps to some degree, on the demon-strated skills and experience of the devel-oper/owner.

Funds for housing construction are madeavailable by banks, savings and loan associa-tions, life insurance companies, and federallyrelated credit agencies such as the Federal Na-tional Mortgage Association (FNMA) and theFederal Home Loan Mortgage Corporation(FHLMC). For multifamily lending, savings andloan associations and Federal credit agenciesare the most active lenders; for single-familyhousing, savings and loan associations are thedominant lenders. There are more than 23,000lending institutions throughout the country.

Other participants play less central roles indevelopment. Subcontractors and workersworking under the direction of the buildercarry out specified construction tasks. Ar-chitects and engineers may be involved in thedesign of housing. Government agencies maybe involved in a number of ways: the FederalGovernment for example, may provide subsi-dies, loans, or mortgage insurance to lenders toassist in the development or financing of hous-ing. Such housing must be designed to Federalconstruction standards. These programs arediscussed in detail in chapter IX. Local govern-ments establish and administer local buildingcodes to which most new housing must con-form. Realtors may be employed to sell or rentcompleted housing.

Retrofit

The home-improvement or retrofit market,which involves upgrading or improving existing


housing, functions differently from the newconstruction market. Typically, the propertyowner determines what improvements shouldbe made to the property and how the workshould be done.

Improvements can range from minor paint-up/fix-up activities to substantial modifica-tions to a building’s structure or condition.Work can be accomplished by hiring a home-improvement contractor or installer, or by thedo-it-yourself approach. Home-improvementcontractors are not normally involved in newconstruction projects. Property owners oftenlook to hardware stores, lumber yards, or homesupply centers for information on particularproducts or names of contractors. An esti-mated one-half of all property improvementsare done on a do-it-yourself basis. The propertyowner usually specifies the work to be done,although some contractors promote and solicitbusiness for particular types of work. Thismeans that the homeowner must be knowl-edgeable about what improvements he or shewants or have access to reliable information orcontractor advice. The most common types ofretrofit energy-saving improvements are in-stallation of insulation, storm windows, caulk-ing and weatherstripping around doors andwindows, and furnace replacement or im-provements in furnace efficiency.

Qualified Remodeler magazine estimatesthat professional remodelers will be responsi-ble for $21.5 billion of remodeling in 1979,8 in-cluding both residential and commercial activ-ity. Nearly 31,000 firms do remodeling work.Firms vary from large and sophisticated enter-prises capable of undertaking any type ofrenovation work, to one-person outfits special-izing in a particular trade such as electricalwork or storm window instalIation. Most firmsare small; the average remodeler employs onlynine full-time and two part-time employees.Most projects are also small, and contractorprofits as a percentage of overall cost arehigher than in new construction. More thanhalf do less than $250,000 worth of business ayear, while only 11.6 percent have an annualvolume in excess of $1 million.

8“Market Report: Five Year Forecast for Remodeling isRosy,” Qualified Remodeler, September 1978.

In terms of conservation improvements, theaverage firm instalIs $58,000 worth of insula-tion annually, and on an average each firm in-stalIs 663 storm windows and 152 storm doors.As might be expected, contractors are pre-dominantly involved in installing blown-in in-sulation. In 1978, contractors were expected tocarry out 647,000 jobs involving blown insula-tion, 375,000 jobs using foam insulation, and91,000 using batt insulation. Approximatelythree-fourths of all remodelers install stormwindows and doors, and about 13,000, or 43percent, install insulation. ’

Financing is less important in retrofit workthan in new construction because most proj-ects are small. The most common energy im-provements represent relatively small sums ofmoney, ranging from $100 to $1,000 for mosthomes. Improvements may be made all atonce or over an extended time. In 1976, theaverage maintenance and improvement ex-penditure for owner-occupants of single unitswas $450 per property. Expenditures variedwidely by income group; those with incomes ofless than $5,000 averaged $203; those whose in-come exceeded $25,000 averaged $822. As aresult of the smalI sums involved, most im-provements are paid for by cash on hand,short-term credit, or savings. It is estimatedthat only 17 percent of home improvementsare financed by lending institution home-im-provement loans. Small loans are not profit-able to these institutions because of the highoverhead costs in relation to the interestearned. Many lenders do not make home-im-provement loans for less than $1,000 or even$1,500. As a result they are not involved inmost home-improvement projects.

Manufactured Housing

Manufactured housing, including mobilehomes and modular housing, is built in a fac-tory Construction and sales processes formanufactured housing bear little resemblanceto onsite construction. The housing is con-structed by factory workers, rather than by

9Booz, Allen, and Hamilton, l?ui/cfing l-lousing Out/ine:Energy Conservation Assessment Study for the Office ofTechnology Assessment, p. I I I-10.

IOM. Sumichrast, op. cit.


subcontractors. As a result, the manufacturermaintains total control over the constructionprocess.

About 276,000 mobile homes were shippedin 1977. Single-width homes range in pricefrom $7,000 to $25,000; double-widths cost$13,000 and up. All mobile homes built sinceJune 1976 conform to the Federal MobileHome Construction Standards, which preemptearlier and inconsistent State requirements.Homes are typically designed by companystaff or consultants who might be draftsmen orengineers who have specialized in mobilehome design.

Besides the manufacturer, the other key par-ticipants are the distributors or dealers whosell mobile homes and arrange financing, com-mercial banks who finance the manufacturingfirms, and commercial banks, finance compa-nies, and other lenders who finance the pur-chase of mobile homes. Manufacturers some-times help distributors with financing. Mobilehomes are considered personal property, al-though there is a growing trend to considerthem real property. Mobile home loans, whichare considered chattel mortgages, commonlyrun for 7 to 10 years at 12- to 1 3-percent in-terest.

THE EXISTING HOUSING STOCK

How existing houses are built must beknown before realistically assessing how muchtheir thermal envelopes can be improved in acost-effective manner. Very Iittle informationexists about the thermal characteristics of ex-isting housing. A good deal of informationabout the generaI characteristics of the hous-ing stock is contained in census data and in in-formation collected by the Federal HousingAdministration (FHA) for houses with FHAmortgages. But the only study of the thermalcharacteristics of existing houses seems to bethat of Rowse and Harrje,11 which combines in-formation from census data, FHA data, andhistorical trends in insulation use in the con-struction industry to estimate the potential forupgrading the thermal shells of existing hous-ing. The situation is further complicated by thelack of information about the massive retrofitsthat have been underway for the last 3 or 4years.

Nearly two-thirds of the houses existing in1975 were built after 1940; almost a quarterwere built in the 1960’s. (See table 40.) Thus amajority of the housing stock has been con-structed since insulation materials were gener-

1‘R. E. Rowse and D. T. Harrje, “Energy Conservation:An Analysis of Retrofit Potential in United States Hous-ing” (unpublished) (Center for Environmental Studies,Princeton University).

ally available. Tabulated information on thethermal characteristics of houses is shown intable 41. Nearly three-fourths of the homeshave at least some attic insulation, with morethan two-thirds of the houses in all parts of thecountry reporting attic insulation. Over halfthe homes have at least some storm windowsor other double glazing, but these are largelyconcentrated in the Northeast and North-Cen-tral regions. Similar results hold for stormdoors.

Rowse and Harrje12 point out that insulationwas rare in homes built before 1940, and evenfor the 27 percent of the homes built between1940 and 1960, the standard attic insulationwas 2 inches of mineral wool. Thus all of thesehomes are potential candidates for retrofit.Additional savings are possible even for hous-ing constructed in the 1970’s, as illustrated bythe experiments at Twin Rivers, N.J. Rowse andHarrje conclude that more than two-thirds ofthe existing housing stock is ripe for additionalattic insulation.

From a practical viewpoint, it is likely thatconsiderably less than the 90 percent of housesnoted by Rowse and Harrje will actually beretrofitted, as the payback for the homes con-taining some insulation is not likely to appear

‘21bid.


Table 40.—The Original 1975 Annual Housing Survey Data Plus Tabulated Data for Years Prior to 1940Expressed 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 3.41960-70 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 3.8 5.5 8.7 5.01950-59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 3.2 4.2 6.1 4.01940-49 ......., . . . . . . . . . . . . . . . . . . . . . . . . 10.3 2.0 2.3 3.9 2.11930-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 1.5 1.7 2.1 1.21920-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 2.6 2.5 2.0 1.31910-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 1.7 2.0 1.3 .81900-09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 2.0 2.1 1.1 .51890-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 1.4 1.5 .4 .21880-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 .8 .9 .21879-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 67.4No . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 13.8 9.0 22.5 18.8Don’t know . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 5.7 5.4 8.5 12.0Not reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.8 1.6 1.7 1.8

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

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

debasementAll year round units . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0With basement. . . . . . . . . . . . . . . . . . . . . . . . . . 47.9 85.2 70.5 18.3 21.7No 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

Owens-Corning Fiberglas Corporation has the remainder had either no attic (15.1 percent)

developed estimates of the potential for 13Owens-Corning data are taken from presentation toenergy conservation through reinsulating ex- the Federal Energy Administration, Feb. 25,1977.


or an inaccessible attic. In this part of the hous-ing market only 10.9 percent of respondentsreported their dwelling had no insulation, butthe majority of homes appear underinsulated,with less than 4 inches of insulation in the at-tic. Only 15.3 percent of respondents had morethan 6 inches of attic insulation.

A Gallup survey for the Department ofEnergy (DOE) in early 1978 is generally consist-ent with the Owens-Corning findings. Nearlythree-fourths of all homeowners reported thatthey have attic insulation or some storm win-dows or storm doors.

In 1977, Construction Reports conducted astudy of insulation requirements and esti-mated that the market for additional insula-tion totaled 25.5 million single-family and two-to four-family units. The report notes, how-ever, that there is no agreement on the actualnumber of homes or properties that need in-sulation or on how many owners could cost-ef-fectively reinsulate their homes.

Table 42 characterizes the types of heatingequipment and fuel used in occupied units.The majority of housing units are heated bywarm air furnaces. Gas is the dominant heatingfuel, followed by fuel oil or kerosene. Gas and

electricity are the predominant fuels used forcooking.

Table 42.—Heating Equipment and Fuelsfor Occupied Units, 1976

(in thousands)

Number PercentTotal occupied units . . . . . . . . . . . . . . . 79,315 100

Warm air furnace. . . . . . . . . . . . . . . . . . . . 40,720 51.3Steam or hot water . . . . . . . . . . . . . . . . . . 14,554 18.3Built-in electric units. ., . . . . . . . . . . . . . . 5,217 6.6Floor, wall, or pipeless furnace . . . . . . . . 6,849 8.6Room heaters with/without flu. . . . . . . . . 8,861 11.2Fireplaces, stoves, portable heaters. . . . 2,398 3.0None. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 .9

Total occupied housing units. . . . . . . . 74,005 100House heating fuel:

Utility gas. . . . . . . . . . . . . . . . . . . . . . . . 41,219 55.7Fuel oil, kerosene . . . . . . . . . . . . . . . . . 16,451 22.2Electricity. . . . . . . . . . . . . . . . . . . . . . . . 10,151 13.7Bottled gas or LP gas . . . . . . . . . . . . . . 4,239Coke or coal/wood/other. . . . . . . . . . . . 1,482 ;::None. . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 .6

Cooking fuel:Utility gas. . . . . . . . . . . . . . . . . . . . . . . . 32,299 43.6Electricity. . . . . . . . . . . . . . . . . . . . . . . . 35,669 48.2Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,748 7.8None. . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 .4

SOURCE. U.S. Department of Commerce and U.S. Department of Housing andUrban Development, Annual Housing Survey, 1976 U.S. and Regions,Part A: General Housing Characteristics, pp. 7,8.

TRENDS IN HOUSING AND CONSERVATION

Trends in Housing Costs

It is clear that property owners and thebuilding industry have become more aware ofthe importance of energy conservation and, asknowledge has improved and the cost of ener-gy has risen, have taken steps to improve theenergy efficiency of housing. This trend is ap-parent in both new construction and in theretrofit market.

“Gallup Organization, Inc., A Survey of HomeownersConcerning Home Insulation, conducted for the Depart-ment of Energy, April 1978.

‘5 Bureau of Census, “Estimates of Insulation Require-ments and Discussion of Regional Variation in HousingInventory and Requirements,” Construction Reports,August-September 1977.

Interest in conservation coincides withrapidly rising costs both for new and existinghousing. Builders have been particularly con-cerned about the negative impact that risingcosts may have on the ability of purchasers toafford housing. Table 43 provides a breakdownof changes in the Consumer Price Index duringthe period 1968-76, when the costs of home-ownership nearly doubled. Fuel and utilitiesrepresent a rapidly rising element in housingcosts over the past few years, although theirtotal contribution to owning a home is stillwell below other factors.

Figure 15 portrays the relationships amongthe increases in median housing costs, owner-ship costs, income, and the Consumer Price In-dex between 1970-76. For the median-price


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

Home ownershipHome

First mortgage Property maintenance Fuel andYear Sheltera Rent Total b interest rates insurance rates and repairs utilities1968. . . . . . . . 104.8 102.4 105.7 106.7 104.7 106.1 101.31969 . . . . . . . . 113.3 105.7 116.0 120.0 109.3 115.0 103.61970. . . . . . . . 123.6 110.1 128.5 132.1 113.4 124.0 107.61971 . . . . . . . . 128.8 115.2 133.7 120.4 119.9 133.7 115.11972 . . . . . . . . 134.5 119.2 140.1 117.5 123.2 140.7 120.11973 . . . . . . . . 140.7 124.3 146.7 123.2 124.4 151.0 126.91974 . . . . . . . . 154.4 130.6 163.2 140.2 124.2 171.6 150.21975 . . . . . . . . 169.7 137.3 181.7 142.1 131.4 187.6 167.81976. . . . . . . . 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 Jn I I I Iu

4 6 . 0 4 7 . 0 6 5 . 4 7 3 . 4 8 8 . 9 1 0 2 . 3 ’1 0

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 ofdoubled (102.3 percent), and for the existing all families could afford the median-price newhomebuyer they have increased 73.4 percent. home and 36 percent the median-price existingDuring the same period median income inhome. By 1976 only 26 percent of all families


could afford the median-price new home and36 percent the median-price existing home. ’G

A recent Department of Housing and UrbanDevelopment (HUD) study of housing costsalso determined that housing costs outpacedfamily income in the period 1972-76. ’7 Duringthat period median family income increased atan average annual rate of 7.05 percent. Duringthe same period the average annual rate of in-crease in the median sales price of new one-family homes was 12.49 percent, and the me-dian sales price of existing one-family homesincreased 9.30 percent.

Even with the rapid escalation of housingcosts demand for both new and existing homeshas been strong. Several reasons explain whydemand continues in the face of rapidly risingprices. Homeownership provides attractive taxadvantages over rental housing. Buyers an-ticipate that owning a home is a sound andprofitable investment and will cost more in thefuture. Many home purchasers buy existinghousing rather than newly constructed hous-ing. Americans are willing to devote more oftheir income to housing than would be ex-pected based on traditional income/housingcost guidelines. As a result, the majority ofAmericans has been able to afford a house. In1977, nearly 60 percent of all homebuyers hadincomes of less than $25,000 and nearly 40 per-cent less than $20,000.18

Several factors have enabled families tocontinue to afford housing. A traditional in-dustry rule of thumb has been that housingcost should not exceed 25 percent of gross in-come. In fact only 52 percent of all home-owners spend less than 25 percent, 24 percentspend 25 to 30 percent, and 14 percent spendmore than 30 percent. Table 44 breaks downthe percentage of buyers who exceed the 25-percent income rule.

“The Nation’s Housing: 1975-1985 (Joint Center for Ur-ban Studies of the Massachusetts Institute of Technol-ogy and Harvard University, 1977), p. 103.

‘7Fina/ Report of the Task Force on Housing Costs(Washington, D. C.: Department of Housing and UrbanDevelopment, May 1978), p. 3.

“Homeownership: Affording the Single Family Home(U.S. League of Savings Association, 1978), p. 27.

Table 44.—Percentage Distribution by Incomeof Homebuyers Exceeding the 25. Percent Rule

Percentage ofAnnual income all homebuyersLess than $15,000 . . . . . . . . . . . . . . . 30$15,000-19,999 . . . . . . . . . . . . . . . . . 30$20,000-24,999 . . . . . . . . . . . . . . . . . 19$25,000 or more. . . . . . . . . . . . . . . . 21

Total. . . . . . . . . . . . . . . . . . . . . . . 100

SOURCE: U.S. League of Savings Associations, Homeownership: Affording theSingle Family Home, p. 32.

There are two general types of homebuy-ers–first-time homebuyers and repeat home-buyers. Repeat homebuyers tend to be older,have higher incomes, and have an equity fromtheir old house to invest in the purchase oftheir new home. As a result they can afford tobuy more expensive housing. The median pricefor first-time homebuyers is $37,500 but for re-peat buyers it is $48,500. First-time homeown-ers are often able to afford a home becausethey are willing to buy existing housing.

About 43 percent of first-time homebuyerspurchase housing constructed before 1955,compared with 25 percent of repeat buyers. Bycontrast, 29 percent of repeat buyers purchasenew housing, versus 18 percent of the first-timebuyers. Table 45 describes the difference be-tween the two types of buyers.

Table 45.—Percentage Distribution of Age of HomesPurchased by First-Time and Repeat Homebuyers

Year of construction of First-time Repeat Allhome purchased buyers buyers buyers

Before 1945. . . . . . . . . . . . . . 26.5 16.2 19.91945-54 . . . . . . . . . . . . . . . . . 16.0 8.8 11.51955-64 . . . . . . . . . . . . . . . . . 17.8 16.0 16.71965-69 . . . . . . . . . . . . . . . . . 8.1 9.7 9.01970-75 . . . . . . . . . . . . . . . . . “ 13.3 19.9 17.5New homes. . . . . . . . . . . . . . 18.3 29.4 25.4

SOURCE: U.S. League of Savings Associations, Homeownership: Affording theSingle Family Homes, p. 46.

First - t ime homebuyers are able to purchase

housing part ly because of the avai labi l i ty ofl i b e r a l f i n a n c i n g . F o r t y - f i v e p e r c e n t m a k edownpayments of less than $5,000, and 73 per-cent put down less than $10,000. Forty-sevenpercent of first-time buyers make downpay-ments of less than 20 percent of the purchaseprice. By contrast, only 11 percent of repeatbuyers make downpayments of less than 20percent of the purchase price.


It is also important to recognize that hous-ing costs and markets vary significantly byregion of the country and community size.Table 46 shows the substantial cost variationin new housing by metropolitan localities ofdifferent sizes.

Table 46.—Median Home Purchase Price, 1977

Median homeMetropolitan area purchase priceAll U.S. metropolitan areas with

population of 1.5 million or more . . . $49,500All U.S. metropolitan areas with

populations between 250,000-1.5million . . . . . . . . . . . . . . . . . . . . . . . . . $42,900

All U.S. metropolitan areas withpopulations of less than 250,000 . . . $37,000

All of the United States . . . . . . . . . . . . $44,000

SOURCE: U.S. League of Savings Associations, Homeownership: Affording theSingle Family Home, p. 13.

The increase in housing costs is pricing mostlower middle-income families out of the newhousing market; they must purchase existinghousing or improve the dwellings they are cur-rently living in. Only 3.7 percent of all housepurchasers in 1975-76 earned less than $10,000,although this income bracket represents 32percent of the population. Families earning$10,000 to $14,999 represent more than 22 per-cent of the population but bought only 13.4percent of the new housing. ’9 While the paceof construction has remained high, much ofthe housing is being built for upper incomegroups. Families earning more than $25,000comprise 14.1 percent of the population, butthey bought 32.4 percent of the new housing.20

Trends indicate that the new constructionmarket is increasingly oriented to the upper in-come buyer. In 1965-66 the top quarter of thepopulation, in terms of income, bought 58 per-cent of the new homes. By contrast the lowerthird of the population bought only 4 percentof the new housing in 1975-76, but bought 17percent of the new housing in 1965-66.2’

Trends in Utility Costs

Historically, utility costs have been a smallcomponent of housing costs. As a result, build-

‘gIbid.201 bid.2’ Ibid.

ers and consumers were not concerned, untilrecently, about the energy efficiency of hous-ing. While utility costs have been rising sub-stantially, so have other elements of home-ownership, particularly in larger communities.As shown in table 47, utility costs are notuniform and also vary by region. They arehighest in the South and lowest in the West,particularly California.

Table 47.—Median Utility Costs by Region

Median utility costs

Region Monthly Annual

Northeast. . . . . . . . . . . . . . . . . . $ 6 0 $720North Central. . . . . . . . . . . . . . . 60 720South . . . . . . . . . . . . . . . . . . . . . 70 840West . . . . . . . . . . . . . . . . . . . . . . 50 600

SOURCE: U.S. League of Savings Associations, Homeownerahip Affording theSingle Family Home, p. 22.

Table 48 documents that utility costs stillrepresent a relatively small fraction of month-ly housing expenses. In metropolitan areas themortgage payment is the largest element ofmonthly costs, followed by utilities and taxes.But in small communities, where taxes are low,utilities represent a much larger cost elementthan real estate taxes.

Buyers seem to be demanding reasonablelevels of insulation and double-glazing orstorm windows in most housing markets.Because of this demand, builders are includingthese features in their homes and appraisersand lenders are recognizing the added costs intheir lending judgments. Although the largerdownpayments and increased carrying costsmay affect the ability of the marginal pur-chaser to buy a home, the overall marketabili-ty for housing has not been significantly af-fected by including such features, whichbuilders view as adding to the appeal andsalability of their homes.

Trade publications report strong buyer in-terest in energy-saving features. As noted inchapter 11, surveys by Professional Builder in1974-77 indicate that the proportion of home-buyers willing to spend $600 or more initiallyto save $100 per year in energy costs increasedfrom 78 to 93 percent.22 As figure 16 shows,

*z’’ Consumers Tell What They Want in Housing,” Pro-fessional Builder, December 1977.


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

TotalMortgage Real estate Hazard monthly

Metropolitan area payment taxes insurance Utility costs expenses

All U.S. metropolitan areas with populationsof 1.5 million or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.6 15.8 2.9 13.6 100

All U.S. metropolitan areas with populationsbetween 250,000 and 1.5 million . . . . . . . . . . . . . . . . . . . . . . . 69.1 11.8 3.4 15.7 100

All U.S. metropolitan areas with populationsless 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 allparts of the country.

A survey of builders reported by ProfessionalBuilder confirms this trend. It documentsstrong consumer interest in and builder re-sponse to energy conservation features in newhomes. 23 Builders report that buyers believeenergy conservation is an important consider-ation in buying a home— and that for a majori-ty of buyers in some regions it is a very impor-tant consideration. Such interest does not varysignificantly by housing price.

The Professional Builder study reports thatdouble-glazed windows are now a standardfeature employed by almost 7 out of 10 builderrespondents. Almost three of every four build-ers use some type of attic ventilation, andnearly two out of three use a zoned heat-ing/cooling system with separate thermostatsin different rooms.24 As a result, about half ofthe builders indicated they have been able toreduce the size of the heating and cooling sys-tems used, thus mitigating the added costs ofother energy-conserving features.

Simple conventional equipment and materi-als are most typically used by builders to up-grade the energy efficiency of their homes. Themost common features used in the past 2 yearsare: increased attic (ceiling) insulation (83 per-cent), double/triple glazing (67 percent), im-proved weatherstripping/caulking (50 percent),roof overhangs (50 percent), heat pumps (39percent), and attic fans (29 percent) .25

23’’ Energy and the Builder,” op. cit.241 bid.251 bid.

Buyers are clearly concerned about energycosts and will invest in energy-saving improve-ments. Housing magazine recently conducteda survey of approximately 400 prospective newhomebuyers in five market areas around thecountry to determine their attitude toward dif-ferent features including energy-saving im-provements.

26 While the estimated costs ofthese improvements varied by region, thesurvey revealed some attitudinal similaritiesand some clear-cut differences among themarket areas. The willingness to pay $500 to$1,500 for upgrading insulation was stronglyevident in all five markets. Outside California,a large majority of respondents were willing topay for double-glazed windows. Both types ofimprovements seem well accepted by consum-ers and would appear to be viewed as a worth-while investment. Table 49 presents the dataon the five markets.——

The National Association of Home BuildersResearch Foundation conducted detailedsurveys of members of NAHB in 1974, 1975,and 1976 to gain a comprehensive summary ofthe thermal characteristics of homes built inrecent years. Table 50 compares the averagelevels of insulation and the glazing character-istics of more than 120,000 homes built in 1974and more than 112,000 homes built in the lasthalf of 1975 and the first half of 1976.

The data show a rather remarkable jump inthe levels of insulation and in the use ofdouble- and triple-glazing. The levels of bothceiling and wall insulation increased in all ninecensus regions and now show surprisingly little

*b’’What Home Shoppers Seek in Six Major Market,”Housing, October 1978.


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 andhouse 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-valueof the wall ranging from 10.9 in the SouthAtlantic region to 12.2 in New England and theEast North Central (States bordering on theGreat Lakes) regions. Somewhat more varia-tion is shown for attic insulation, with a low of16.9 in the South Atlantic region and a high of22.5 in the Mountain States. These data reflectthe greater variety of materials used in atticsand the ease of installing different amounts.The use of insulation between the floor joistsactually showed a decrease, but this may re-flect the fact that the 1976 survey separatelytabulated basement wall insulation and insula-tion of the crawl space walls, rather than an ac-tual decrease in the amount of floor insula-tion. A significant decline in the use of single-glazed windows is also evident, with only theEast South-Central States (Kentucky, Tennes-see, Mississippi, and Alabama) showing an ap-preciable increase in the use of single glazing.Triple glazing was not tabulated separately inthe 1974 survey, but it is now being used in asmall number of homes in the Midwest andEast.

It should not be inferred that similar in-creases have occurred every year since the oilembargo of 1973, because the NAHB survey of

houses built in 1973 showed insulation levelsvery similar to 1974, with weighted average R-values for the walls of 10.0 (vs. 9.2 in 1974),14.4 for the ceilings (vs. 15.8), and 4.0 for floors

(vs. 4.3).27 The F. W. Dodge Co. surveyed 1,000randomly selected homes built in 1961 andfound that 65 percent contained exterior wallinsulation, 92 percent had ceiling insulation,and 7 percent had perimeter insulation.26 B ycontrast, 99 percent of the houses built in1975-76 had both ceiling and wall insulationand 11 percent had perimeter insulation .29

The percentage of homes built in 1975-76with various levels of insulation is shown intable 51. Almost 100 percent have ceiling in-sulation of some kind, with 83 percent havingR-1 3, R-19, or R-22. Nearly 100 percent of thehouses have wall insulation, with 93 percenthaving either R-11 or R-13 because of thealmost universal use of 2x4 studs. It may seemsurprising that only 20 percent of the houseshave insulation between the floor joists, butthis may be due to the fact that in many areassubstantial cooling is provided through thefloor in summer, offsetting the winter heatingsavings of floor insulation to a considerabledegree. However, it is clear that a largenumber of houses with ventiIated crawl spaceswould benefit from insulation; increased in-

27 Therma/ Characteristics of Sing/e Family Detached,Single Family Attached, Low Rise Multi-Family, andMobile Homes for the Office of Technology Assessment(National Association of Home Builders, October 1977).(See appendix C.)

“Ibid.“Ibid.

Table 50.—Comparison Between Average Insulation and Glazing Characteristics of New Single-Family Detached HousesBuilt in 1974 and in 1975-76

East West East WestNew 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average ceiling or roof insulation

1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average insulation R-value betweenfloor joists

1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

W i n d o w s1974

Single glazing. . . . . . . . . . . . . . . . . . . . . . .

Double glazing (insulation glass orsingle w/storm) . . . . . . . . . . . . . . . . . . .

1975

Single glazing . . . . . . . . . . . . . . . . . . . . . . .

Double glazing (insulation glass orsingle w/storm) . . . . . . . . . . . . . . . . . . .

Triple glazing (insulation w/storm. .,...

10.312.2

9.311.8

10.612.2

11.312.0

7.210.9

10.312.0

10.311.9

6.711.0

8.8 9.211.4 11.7

17.918.2

17.918.7

15.718.5

16.619.3

14.816.9

15.118.0

15.118.4

18.122.5

14.6 15.818.0 18.4

4.85.0

4.86.7

2.85.0

5.24.8

5.43.7

5.22.9

6.60.1

1.81.8

1.8 4.31.4 2.6

37.1

62.9

40.7

59.3

28.3

71.7

34.3

65.7

69.4

30.6

42.4

57.6

92.7

7.3

74.1

25.9

85.1 52.0

14.9 48.0

37.6

62.2

0.2

26.6

71.6

1.7

5.8

89.5

4.8

14.3

82.8

2.9

58.8

41.1

0.1

49.6

49.4

0

80.2

19.8

0

22.6

76.6

0.8

76.0 44.0

23.5 55.0

0.5 1.0SOURCE: 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


England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S.Ceiling (% of all houses)

None. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-7 & R-11 . . . . . . . . . . . . . . . . . . . . . . . . . .R-13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-25, R-26, R-30, R-31, & more than R-31 .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exterior wall (% of all houses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Less than R-7 . . . . . . . . . . . . . . . . . . . . . . .R-7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-Ii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .R-19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Between floor joists (% of all houses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1/4’’ batts R-7.. . . . . . . . . . . . . . . . . . . . .3-1/2’’ batts R-n. . . . . . . . . . . . . . . . . . . . .R-13, R-19&Other . . . . . . . . . . . . . . . . . . .

Crawl space walls(% of all houses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .lnsulated (R-7 through R-19). . . . . . . . . . .

Basement walls (% of all houses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .insulated (mostly R-7, 11, 13, & 19). . . . . .

Slab-on-grade perimeter (% of allhouses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1" rigid . . . . . . . . . . . . . . . . . . . . . . . . . . . .2" rigid . . . . . . . . . . . . . . . . . . . . . . . . . . . .Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.77.0

24.152.7

8.17.20.2

000.4

58.235.6

4.51.3

63.00.9

16.519.6

99.60.4

87.013.0

99.30.40.20.5

012.37.8

46.714.212.46.6

000.5

73.021.7

4.00.8

51.01.7

32.914.4

98.71.3

93.56.5

96.72.60.70

0.64.5

30.628.425.3

9.21.4

000

61.133.7

3.41.8

63.11.9

18.516.7

98.71.3

93.04.6

92.65.12.20.5

0.63.0

25.725.522.818.73.7

000

63.832.5

3.40.3

65.71.1

14.318.9

99.70.3

81.818.2

99.30.60.10

1.49.8

23.651.1

5.36.91.9

0.68.00.9

69.318.6

2.10.5

75.01.8

16.86.4

97.12.9

97.42.6

86.311.02.30.4

1.54.2

25.642.617.08.11.1

000.3

64.530.0

4.60.6

75.74.4

11.58.4

97.52.5

95.14.9

88.89.31.30.6

03.0

20.759.5

6.87.81.2

000.2

77.815.55.90.6

99.10.10.40.4

99.80.2

99.80.2

89.09.10.91.0

5.60.7

13.442.822.924.5

0.1

0.22.08.7

62.822.1

2.60

88.30.44.17.4

98.21.2

93.96.1

93.36.10.10.5

0.72.8

12.880.9

0.91.50.4

0.20

8!;8.93.00

88.91.17.32.7

93.66.4

97.72.3

91.92.60.80

1.05.4

20.450.012.39.31.8

0.21.41.1

71.021.8

3.51.0

80.11.4

11.27.3

98.21.8

96.04.0

89.38.32.10.3

SOURCE: NAHB Research Foundation, inc.


sulation of basement walls and increased useof insulation between the floor joists are themost obvious areas where added insulationwould be useful in new construction.

The window and door characteristics of thehouses built in 1975-76 are shown in table 52. Itshows that 42 percent of the entrance doorswere insulated.

Table 53 shows the percentage of homes byprice that have R-11 or greater levels of insula-tion in the exterior walls and R-13 or greaterlevels of insulation in the ceiling. More than 94percent of all houses had exterior insulationlevels of R-11 to R-19, and the incidence of lessthan R-11 levels does not seem to correlatewith housing price. The data related to ceilinginsulation are similar. Nearly 90 percent of allhouses had ceiling insulation levels of R-13 orgreater, and housing price does not seem to af-fect the levels of insulation.

There appears to be some buyer resistanceto expensive conservation packages; manyhomeowners would prefer to invest in addi-tional amenities rather than more conservationimprovements. A Los Angeles Times30 articleabout Chicago builders indicated that whilemost builders provide R-11 exterior wall insula-tion and R-19 ceiling insulation, customerspass up beefed-up conservation packages forsuch luxury options as extra rooms or garages.One builder offered a $3,800 optional energypackage, but only 18 of 77 homebuyers boughtit. Another reported a lack of interest in an op-tional feature to double the amount of insula-tion in the homes in one subdivision.

While builders have responded to consumerdemand for energy-saving improvements, lend-ers have begun to promote saving in lending.Some lenders have promoted energy conserva-tion through advertising the advantages ofconservation - and providing special arrange-ments and rates for conservation loans. Manylenders have offered conservation home-im-provement loans at interest rates below nor-mal market rates. One California bank offers

30 Don Debat, “Lending Institutions Say That EnergyExpenses May Exceed Monthly Mortgage Payments,” LosAngeles Times, Oct. 8,1978.

to rewrite homeowner loans and lend 100 per-cent of the cost of adding a solar systemwithout raising the interest rate on the homemortgage and normally without increasing thetotal monthly payments. A bank in Washing-ton State offers preferential terms for loans onhomes that meet certain energy conservationrequirements. 31 A Minnesota bank promotesits conservation program as “the way lenderscan help, ” while an IIlinois bank group offers ahome inspection at a $50 cut-rate fee to detectheat-loss problems.32 A survey by the SavingsInstitutions Marketing Society of America in-dicated that 20 percent of the 656 institutionssurveyed featured energy-related homes intheir 1977 advertising. 33 But while lenders havelaunched many types of programs, many havedropped them or lowered their expectations inthe face of weak consumer response. Below-market interest rates appear to offer only alimited incentive to take conservation actions.Presumably, this reflects the general low-levelof demand for small home-improvement loans(see Retrofit, page 97).

Data on retrofit are less precise, but manyhomeowners have been improving the energyefficiency of their homes. As noted in table 54,Building Supply News estimated that in 19774.2 million jobs involved insulation and 1.3 mil-lion jobs involved storm windows and doors.

Extensive retrofit is confirmed by Owens-Corning data. To monitor the extent of ceilingreinsulation activity by homeowners, Owens-Corning conducted surveys in 1975 and 1976.During this period the average insulation in-stalled increased from 4¼ to 5½ inches. Theextent to which reinsulation occurred did notvary widely across income groups: in fact,households with incomes under $10,000 had aslightly higher rate of activity than their per-centage of the population. Based on otherstudies Owens-Corning estimated that between1974 and 1976, 8 million homeowners ap-peared to have reinsulated their ceilings, anadditional 7 million did so in 1977. In 1978, 5

31 Urban and Communi ty Economic Development(American Bankers Association, May 1977).

32 I bid.33 Energy Savings Is Good (Savings Institutions Market-

ing Society of America).

Table 52.—Window and Door Characteristics of 1975-76 Single-Family Detached Housing Units


England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S.

Window glazing (% by region)

Single glaze . . . . . . . . . . . . . . . . . . . . . . . . 37.6Single w/ storm . . . . . . . . . . . . . . . . . . . . . 25.3Insulating glass. . . . . . . . . . . . . . . . . . . . . 36.9Insulating w/ storm . . . . . . . . . . . . . . . . . . 0.2

Window (ft2 per unit by region)

Single glaze . . . . . . . . . . . . . . . . . . . . . . . . 81.7Single w/ storm . . . . . . . . . . . . . . . . . . . . . 55.0Insulating glass. . . . . . . . . . . . . . . . . . . . . 80.3insulating w/storm . . . . . . . . . . . . . . . . . . 0.5

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.5

Sliding glass doors

Number per unit. . . . . . . . . . . . . . . . . . . . . 0.88Square feet per unit. . . . . . . . . . . . . . . . . . 35.2

Exterior doors (% by region)(Entrance)

Not insulated . . . . . . . . . . . . . . . . . . . . . . . 41.0Insulated. . . . . . . . . . . . . . . . . . . . . . . . . . . 59.0

SOURCE. NAHB Research Foundation, Inc.

26.621.650.0

1.7

47.838.789.8

3.1

179.4

1.0240.8

16.183.9

5.827.262.3

4.8

7.542.0

104.98.2

162.6

0.8835.2

23.176.9

14.340.642.2

2.9

23.466.971.0

4.9

166.2

0.9337.2

46.153.9

58.815.525.6

0.1

105.425.844.8

0

176.0

0.8935.6

69.630.4

49.622.726.7

0

84.135.141.7

0

160.9

0.6827.2

69.230.8

80.212.1

7.70

123.416.411.1

0

150.9

0.8433.6

78.821.2

22.622.753.9

0.8

49.755.192.7

1.2

198.7

1.0040.0

56.543.5

76.04.9

18.60.5

152.89.2

35.80.9

198.7

1.2650.4

89.410.6

44.020.035.0

1.0

82.032.658.9

2.1

175.6

0.9538.0

57.942.1

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

Exterior wall insulation Ceiling insulationPrice range Less than R-1 1 R11-19 Other Less than R-13 R-13 or Greater OtherLess 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$40,000 -44,999 . . . . . . . . . . .

1.92.6 96.5 .9 6.4 93.4

$45,000 -49,999 . . . . . . . . . . ..2

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$65,000 and over. . . . . . . . . .

.11.3 98.2 .5 4.8 93.6 1.6

SOURCE: NAHB Research Foundation, Inc.


Table 54.—Estimates of Insulation and Storm Door/Storm Window Activity in the Retrofit Market, 1977

Dollar Averagevolume Number cost

Type of activity ($000) of jobs per jobAdditional insulation $1,035,292 4,243,000 $244Storm windows &

doors . . . . . . . . . . . $ 212,901 1,339,000 $159SOURCE: Building Supply News, Homeowners Remodeling/Modernization

Study, 1978.

million to 5.5 million more homeowners wereexpected to invest in ceiling reinsuIation.

The Gallup survey conducted for DOE inearly 1978 found that 1 out of 6 respondentssaid that they had added insulation and 1 outof 10 installed storm doors or windows in theprevious 12 months. Thirty-six percent of thosewith insulation believe more is needed.34

Ninety-three percent believe their bills will belower-–(but only 44 percent know how largethe savings will be). More than 80 percent ofthe homeowners said they know the type of in-sulation they want, where to buy it and how toinstall it. On the other hand, only 50 percentknow what a fair price would be.

Energy conservation is a concern for themobile home industry. The Federal standardsunder which all mobile homes are built includethermal performance standards. Three differ-ent thermal performance standards are useddepending on the zone of the country. TheNAHB study of 175,000 mobile homes built in1976-77 shows that most homes had R-13 toR-18 levels of insulation in the ceilings, thoughsizable portions had R-19 to R-21. Walls andfloors were typically insulated to an R-11standard. Most units had single-glazed win-dows with storm windows, but in units to besold in southern areas single-glazed storm win-dows were common. The Federal standardshave had a positive effect in raising insulationstandards in mobile homes. Most existingmobile homes have some insulation but its ef-fectiveness is not known. Few mobile homeshave storm windows or storm doors. Due to thenature of the industry, Federal regulation hasbeen welcomed, and improved standardsshouId not represent a major barrier.

FINDINGS AND OPPORTUNITIES FOR ENERGY CONSERVATION

Operating practices and market conditionslargely determine the incentives for and obsta-cles to energy conservation. Opportunities forenergy conservation differ among the threehousing submarkets– new construction, man-ufactured housing, and existing housing. Thesedifferences must be considered in settingenergy conservation goals and programs. Dif-ferences in practices, levels of knowledge, andattitudes toward conservation vary dependingon whether the housing is investor-owned andrented or owner-occupied, and whether thehousing is single-family or multifamily. Thesedifferences affect the economic circum-stances, attitudes, and characteristics of theparticipants in the housing sector and the in-centives needed to motivate property ownersto take energy-saving actions.

34 Gallup Organization, Inc., op. cit.

There is no single national housing market;each locality has its own characteristics andfeatures. Practices, attitudes, and require-ments vary by such factors as geography, sup-ply and demand for housing, climate, tradi-tion, cost and availability of fuel, patterns oftenure, community size, and type of construc-tion. As a result, housing costs and characteris-tics differ widely depending on locality orregion. These variations, true of both the ex-isting housing stock and the new constructionmarket, affect the attractiveness of investingin energy conservation improvements and de-termine in part the building industry responseto conservation. The attitudes of propertyowners toward energy costs and energy conser-vation have changed significantly over thepast 5 years. In response, many builders haveraised their standards for energy efficiency inhomes and are now actively promoting energyfeatures in sales. Persons owning homes have


begun to alter their homes to save energy; thiseffort is being augmented and supported bycontractors, utilities, and some lenders.

Despite the growing response of the buildingindustry and individuals, a great deal more canbe accomplished. New construction offersmore energy-saving potential per dwelling thanexisting housing, as many improvements possi-ble during construction cannot be added, orcan be added only at high cost, after thebuilding is finished. Because most new con-struction must conform with local buildingcodes, a system is in place to inspect plans andconstruction practices.

Because of the size of the existing housingstock — some 80 million units — retrofit wilI bemost productive in saving energy in the shortrun. The level of thermal performance of thetotal housing stock will change only slowly asa result of new construction, with annual startsof 2 million units on the average.

Builders’ Attitudes

The construction industry responds to wide-ranging changes in taste and demand. Sincethe new construction market is highly com-petitive, and most firms are relatively small,builders must compete in terms of price, de-sign, and amenities as demanded by the publicat a given time. Builders therefore add energyconservation improvements to their houses tothe extent they expand or improve the market-ability of the house.

In addition to watching buyer demand close-Iy, builders also stay in close touch with build-ing material suppliers, and some follow theresearch and publications of NAHB and similargroups. From such marketer’s associations andother builders, they learn of new industrytrends, practices, and products. Features likeair-conditioning, once considered a luxury,became standard in a short time in response tobuyer demand and technology transfer. Thus,education through building trade groups, com-bined with growing public concern over energycost, should work to accelerate the use of con-servation options by builders.

Although most builders now seem generallyaware of opportunities for conserving fuel,their expertise is limited. Most building com-panies do not have design or engineering skills,but rely on architectural and engineeringfirms, utilities, design reviewers, and lendinginstitutions to make decisions on energy-basedchanges. Designing energy-efficient housing re-quires consideration of climate, site, style, ma-terial costs, and specifications, financingcosts, and taxes. Builders often cannot affordto hire experts in all these areas. Without prop-er engineering and design, housing can containmany “energy saving” features and yet fail tooperate efficiently.

Builders appear willing to experiment withnew materials, particularly if others in theirarea are also experimenting. I n 1978, a Profes-sional Builder survey found that 25 percent ofthe builders had tried 2x6 framing with 6inches of insulation to obtain an R-19 wall; thisnumber was up from 20 percent of the builderssurveyed in 1977.35

The other factor that determines how build-ers build is the local building code, Inspectionsnormally include both design review and on-site inspection. As code requirements relatingto energy use become more stringent, builderswill presumably comply. Most homes are con-structed by builders who use prescriptivecodes; i.e., acceptable materials and practicesare clearly specified. These builders will easilycope with most new codes that can be trans-lated into simple, easy to follow formats. (Seethe section in chapter VI 1 I on standards.)

Property Owners’ Attitudes

The price of energy seems to be the mostpowerful incentive to conserve, and futureconservation will depend on property ownersrealizing increased economic benefits. Wherefuel costs are high and climatic conditions ex-treme, it appears that consumers are especiallywilIing to invest in energy efficiency.

35’’ Energy and the Builder,” op. cit.


A Iifecycle costing analysis, while common-ly used to make investment decisions of cer-tain types, is not typically used by the home-owner. The commercial real estate investormay conduct a lifecycle cost analysis in an in-formal manner, balancing the analysis withjudgments about the future of the property,the investment required, and other investmentplans. Short ownership periods and investmenthorizons mitigate against adoption of Iifecyclecosting approaches.

The marketplace makes distinctions be-tween conservation improvements that areclearly cost-effective and those which returnthe investment over a longer pried. This par-tially explains the greater interest in insulationand double-glazed windows than in, for exam-ple, solar energy systems. The difference in at-titude may also reflect consumers’ and build-ing professionals’ different levels of awarenessand information about various conservationtechnologies.

Homeowners and investors assess energyconservation opportunities differently. Home-owners view conservation improvements interms of their potential for reducing energycosts, effect on the downpayment and themonthly carrying costs, and the possibility offuture maintenance difficulties. Investors inrental housing consider conservation improve-ments in terms of improved profitability, re-duced risk, or additional income or profit. If in-creased energy costs can be directly passed onto tenants by increasing rents, conservationmay not be an attractive investment. (See thesection in chapter VI I I on tax policy.)

The principal opportunity for additionalconservation activity in the retrofit marketcenters on ways to motivate the homeowner toimprove the efficiency of his home. The home-owner can be made more aware of conserva-tion opportunities through the media, utilityadvertising and energy audit programs, andpublicity by manufacturers and suppliers ofbuilding materials. Realtors and lenders canalso encourage homeowners and homebuyersto take conservation action.

Is the Cost of Adding EnergyConservation Features to New orExisting Housing an Impediment

to Conservation?

The inclusion of conservation improvementsin new housing is tempered by market condi-tions and considerations. The dramatic rise inthe price of housing in recent years has madebuilders sensitive to increases in first costs orin carrying charges.

Including energy conservation features in anew home often increases downpayment re-quirements and fixed monthly charges. Whileit does not follow that if builders choose toupgrade the energy-saving characteristics oftheir housing and increase the price according-ly, households are priced out of the marketaltogether, marginal buyers might have toscale down their expectation. For example,assuming a 10-percent interest rate and 30-yearterm, a house cost of $50,000 and $45,000 loan,and a $5,000 downpayment, a monthly mort-gage payment of $394.91 would be required.Extra improvements of $2,000 financed on thesame terms would increase the downpayment$200 and the monthly payment would rise to$410.18. The $15.27 monthly increase wouldadd $183.24 a year to housing costs. Using therule of thumb (which is no longer universallyused) that a purchaser shouId spend 25 percentof his income for housing, a purchaser wouldhave to earn an additional $733 of annual in-come to afford the house. This additional costmight affect the marketability of the home;NAHB estimates that 39.8 percent of the pub-lic–22,771,000 households–could afford a$50,000 home with the financing describedabove. Increasing the price to $52,000 reducesthe number of households who can afford thehouse to 21,283,000 households or 37.2 percentof all households, according to NAHB. Thebuilder therefore makes a decision to increasecost with great care.

Are Problems of Financing Impedingthe Pace of Residential Conservation?

Lenders generally have been willing tofinance the added cost of energy-efficient


housing. Financing has not been a problem forthe credit-worthy borrower. Lenders rely on ap-praisers to make judgments about the extent towhich conservation improvements add to thevalue of a property; standard conservation im-provements are not seen as valuation prob-lems. Houses based on “solar passive” prin-ciples or other design approaches may not beacceptable to lenders if the houses have anunusual appearance or require no purchasedenergy; they are considered experimental.Lenders appear increasingly willing to makeconservation-related home improvementloans, although most conservation improve-ments are inexpensive and not profitable forbanks to finance. Most homeowners, however,pay for home improvements through cash onhand, savings, or short-term credit arrange-ments such as credit cards. Those who do needfinancing may not meet requirements for in-come and established credit. Low-incomehomeowners have more difficulty financingconservation improvements and may needsome form of subsidy to make those improve-ments. The Community Services Administra-tion (CSA) and DOE weatherization programpartially meets the needs of low-income home-owners, but many may fail to qualify for or bereached by weatherization assistance. Newlyauthorized utility audit programs may alsoassist those who need financial help.

Lenders have limited interest in promotingenergy conservation and do not consider it asignificant factor in lending decisions. On theother hand, some financing institutions esti-mate utility costs in calculating the monthlyhousing expenses of a potential borrower.Some lenders may view energy-conserving im-provements as potential means of reducinglending risks by reducing fuel costs, or as waysto improve resale value, but most do notevaluate the energy efficiency of housing theyfinance. Many lending institutions have initi-ated special, below-market interest-rate loanprograms to promote conservation activity.These programs have not generated strongconsumer response. Lenders therefore givethese programs a low priority, treating themprimarily as public relations endeavors.

Few lenders are concerned with the energyefficiency of the homes they finance. Sincefinancing is essential to homeownership formost Americans, a change in the attitude oflenders could quickly facilitate a shift to muchhigher levels of conservation. If review ofmortgage applications included a review ofenergy costs, much greater investments in sav-ing energy couId be expected.

What Are the Current and PotentialRoles of the Federal Government in

Encouraging Residential Conservation?

The Federal Government currently affectsthe housing sector through programs that regu-late lenders, through tax policy, programs thatprovide housing subsidies, insurance, and guar-antees, and standards setting. The impact ofFederal actions is much greater than the levelof Federal insurance, guarantees, or subsidieswould suggest. The role and impact of Federalprograms are reviewed in chapter VllI.

The implementation of HUD’s Building Effi-ciency Performance Standards (BEPS) and theadoption of federally sponsored “model code”standards should raise the energy efficiency ofnew housing. By using nationally developedenergy standards and enforcement guidelinesfor all new construction, builders and localbuilding code officials will be in a better posi-tion to understand and implement conserva-tion actions. The process of reviewing and im-plementing standards should improve consum-er awareness of energy conservation. (Seechapter VII l.)

Other Federal initiatives that will affectenergy efficiency in the residential sector havebeen mandated by the National Energy Policyand Conservation Act of 1975 and the Housingand Community Development Amendments of1978, which established programs to financeenergy-conserving improvements and promotesolar energy and energy conservation in HUD-assisted housing. Tax credits for conservationimprovements have been enacted.


DIRECTIONS FOR THE FUTURE

Much remains to be done to upgrade resi-dential structures and to encourage propertyowners to adopt energy-conserving practices.Tens of millions of homes require reinsulationand other energy-saving improvements. Thedesign and features provided in new housingcould be significantly upgraded even beyondcurrent levels to improve their energy efficien-cy.

The key issue is whether the current pace ofchange is satisfactory, or whether additionalFederal actions directed to property owners orthe building industry are required to increaseeither the pace or the direction of currenttrends. Available information provides no con-clusive answer, but signs indicate that increas-ing energy prices, greater awareness amongproperty owners and industry participants, andpreviously enacted Federal legislation are en-couraging property owners to invest in conser-vation. Legislation enacted in 1978, recentchanges in Federal policies and practices, andthe promised issuance and implementation ofBEPS promise to bring about further improve-ment in the energy efficiency of residentialbuildings. Other new incentives for energyconservation in both the public and privatehousing sectors are described in detail inchapter VII I.

These new initiatives, plus those related toother aspects of residential energy conserva-tion discussed elsewhere, should help to ex-pand the awareness and knowledge of prop-erty owners and building industry participantsabout energy conservation, and stimulate fur-ther investments in conservation improve-ments. In the context of rising energy prices,further conservation can be expected.

Given the breadth of these recent Federalinitiatives and the market dynamics of thehousing industry, it seems appropriate to movecautiously in terms of proposing additional ac-

tions. A cautious approach is warranted toavoid Federal actions that may be unnecessar-ily costly, provide windfalls, or have a negativeimpact on housing costs. Actions that increasehousing costs must be weighed carefully interms of costs and benefits.

Assuming that the availability and price ofenergy remain about as expected, it may bemost efficient to focus on improving the qual-ity or expanding the coverage of existing con-servation programs, and to monitor the impactof the new initiatives, before mounting anymajor new efforts. Priority should also begiven to modifying policies or practices thatact as barriers to conservation.

Efforts to inform the building industry andproperty owners about the opportunities andtechniques for saving energy need to be im-proved. Industry needs better technical in-formation, and the average homeowner needssimpler, more useful information. The qualityof information now available varies widely andis disseminated unevenly. The expandedenergy audit program appears to be a promis-ing educational approach. The Governmentshould continue to work closely with tradegroups to assure that building professionalsare not only aware of the importance of con-sidering energy costs in making housing deci-sions, but know how to design and constructmore energy-efficient houses. Demonstrationefforts promote the market for energy-savingimprovements and should be continued.

More research should be directed to conser-vation. Promising technological approachesmust be encouraged. More information isneeded about the thermal efficiency of thehousing stock and the extent and character ofretrofit actions. A better understanding of realestate investors’ attitudes and motivations,and the extent to which they are making con-servation improvements, is needed.

Chapter VI

UTILITIES AND FUEL OIL

DISTRIBUTORS

Chapter Vl.– UTILITIES AND FUEL OIL DISTRIBUTORS

Page

Electric and Gas Utilities . . . . . . . . , 119introduction . . . . . . . . . . . . . . . . . . . .119Electric Utility Industry Structure and

Historical Development . . . .. ...119The Regulatory Environment . . . .. ....120The Problems of Recent Changes for the

Electric Utility Industry. . .. ..121Gas Utility Structure and Regulatory

Environment . . . . . . . . . . .123Recent Changes in the Gas Utility

Industry. . . . . . . . . . . . . . . . . .124Utilities and Residential Consumers .. ..125Utility Activities in Residential Energy

Conservation. . . . . . . . . . . . .. .126Information Programs. . . . . .126Conservation Investment Assistance

Programs. . . . . . . . . . . . . . . . . .127Rate Reform for Electric Utilities . . .. ..130

Lifeline Rates . . . . . . . . . . . .131Load Management . . . . . . . . .132

Federal Programs and Opportunities inUtility-Based Issues. . . . . . . .133

New Legislation on ConservationInvestment Assistance. . . . .134

New Legislation on Utility Ratemakingand Load Management . . .134

DOE Electric Utility RateDemonstration Program . . . . . .135

DOE Load Management Activities . . .138Conservation Programs of the Federally

Owned Power Authorities . .. ...138Conclusions for Utility Policy .. ..139

The Fuel Oil Distributors . . . . . . .139Industry Size. . . . . . . . . . . . . . . .139Fuel Oil Marketers . . . . . . . . . . . . . .140Sales of Distillate Fuel Oils. . .........140Service Activities . . . . . . . . . . . . . . .140New Construction . . . . . . . . . . . . .143The Role of Oil Heat Distributors in

Energy Conservation Practices . . . .143Introduction . . . . . . . . . . . . . . . , 143Marketing of Energy Conservation

Products . . . . . . . . . . . . . .......143Reduction in Annual Fuel

Consumption. . . . . . . .143

Page

Factors That InfIuence and LimitMarket Entry . . . . . . . . . . . . . . .144

Fuel Oil Customer Accounts . . . . . . .144Technical Notes–Computer Simulation: The

Effect of Conservation Measures onUtility Load Factors and Costs . . .. ..145

The Question . . . . . . . . . . . . . . . . . . . .145Background . . . . . . . . . . . . . . . . . . . . .. 145OTA Analysis of Conservation Impact on

Utility Loads and Costs . . . . . . . .147Results . . . . . . . . . . . . . . . . . . .. ...148Discussion. . . . . . . . . . . . . . . .149

TABLES

Page

55. Residential Natural Gas and ElectricPrices . . . . . . . . . . . . . . . . . . . ......125

56. Percentage Changes in Real UtilityPrices, Selected Periods, 1960-77......125

57. DOE EIectric Rate DemonstrationProgram kWh Consumption Effects . . .136

58. DOE EIectric Rate DemonstrationProgram kW Demand Effects . . . . . . .137

59. Average Yearly Demand for DistillateFuel 011 . . . . . . . . . . . . . . . . . . .......141

60. 1985 Projection of Heating Unit Mix andBasic Loads . . . . . . . . . . . . . . . . . . .. ..148

61. 50-Percent Electric Resistance Heatingby 1985 . . . . . . . . . . . . . . . . . ........148

62 Simulated Utilities’ Load Factors, Peaks,Summer-Winter Ratio by 1985 . ......148

FIGURES

Page

17. Sales of Distillate Fuel Oil Use asPercent of Total . . . . . . . . . . . .. ...142

18. Dispatching Generation to Meet aC y c l i c a l L o a d , . . . . . . . . . . . . . . . . . . . 1 4 6

19. Daily Load Curve . . . . . . . . . . . .14620. Electrlc Energy Output and Annual Load

Factors . . . . . . . . . . . . . . . . . . .147

Chapter VI

UTILITIES AND FUEL OIL DISTRIBUTORS

ELECTRIC AND GAS UTILITIES

Introduction

The electric and natural gas utility industriesserve as the conduit through which Americanhouseholds receive most–and sometimesall —of the energy used in their residences.Sharp increases in utility bills in recent years,along with such emergencies as blackouts andbrownouts, have made American homeownersand renters increasingly aware of the criticalrole that utility companies play.

Probably no industry — not even the petrole-um industry— has experienced the profoundimpact on its operations and policy decisionsfelt by the utility industry in the wake of theenergy crisis of the 1970’s. Other industrieshave experienced increased prices and or cur-tailed supplies; so have the utilities. But utilitycompanies have also come up against societaldemands for change in their fundamental pur-poses, plans, financial management, and de-livery of service.

Thus, the entire relationship between utili-ties and their residential customers has shifted.After years of enjoying declining or stable realprices, promoting greater energy use, and re-sponding to rapid growth in residential energyconsumption, utilities are suddenly beingasked to help their residential consumers useless gas and electricity.

To understand the role of electric utilities inthe consumption and conservation of energyin the home, it is useful to review briefly thestructure and historical development of the in-dustry and the regulatory environment inwhich it operates. Following a discussion ofthese items, this chapter examines utility ac-tivities as they relate to residential energy con-servation. Information programs, energyaudits, conservation investment assistance,rate reform, and load management are exam-ined.

Electric Utility Industry Structure andHistorical Development

The electric utility industry is a diversegroup of more than 3,500 companies, bothpublicly and privately owned, collectivelycomprising one of the Nation’s largest in-dustries. Some companies engage in all threeof the industry’s major functions —the genera-tion, transmission, and distribution of electricpower. Most, however, serve only as local dis-tributors of power. Publicly owned municipaland cooperative companies, in particular, tendto purchase electricity from generating com-panies that may be investor-owned or federallyoperated entities such as the Tennessee ValleyAuthority (TVA). The term “electric utility,” asused here, refers to a distributor of electricity,regardless of whether the company generatesits own power. EIectric utilities may also serveas distributors of natural gas.

Although publicly and cooperatively ownedelectric companies outnumber private inves-tor-owned firms by almost 10 to 1, the privatecompanies dominate the industry in terms ofgenerating capacity and quantity of electricitydelivered. Furthermore, the largest 200 (out ofa total of 400) investor-owned companies ac-count for three-quarters of the Nation’s totalelectric-generating capacity and serve 80 per-cent of all electric customers.

The electric utility industry is the Nation’smost capital-intensive industry. In 1977, inves-tor-owned electric power companies had ag-gregate plant investments of $190.4 billion andannual revenues of $58.8 billion, or a total in-vestment of $3.24 for each dollar of annualsales 2 Attracting the capital needed for plant

‘ Booz, Al Ien & Hamilton, Inc., Utility Role in Residen-tial Conservation, report to OTA, May 1978

2Energy Data Reports, Department of Energy, CRN78032 )9919, Mar. 22,1978

119


expansion was not difficult for the utility sec-

t o r u n t i l r e c e n t l y , a s t h e i n d u s t r y ’ s h i g h ,steady, and seemingly predictable growth, andi ts regulated return, were at t ract ive to inves-

tors seeking secure earnings.

Before the oil embargo of 1973-74, personalincomes and retai l pr ices paid for consumer

goods in the United States grew much fasterthan retail electricity prices, so that “real”power prices — adjusted for inflation —fell.While the Consumer Price Index rose 31 per-cent and real family income rose 34 percentbetween 1960 and 1970, the price of electricitygrew by only 12 percent. By contrast, medicalcare cost 52 percent more in 1970 than in 1960,while the increase for food was 31 percent andfor homeownership 49 percent.3 The growth ofelectricity use in the United States, closelyrelated to these economic trends, was also en-couraged by the promotional activities of theelectric utilities.

Low fuel costs for power generation havebeen one reason for traditionally low electric-ity prices. Another reason is that utilities have,until recently, enjoyed increases in productivi-ty through economies of scale in generatingequipment and improvements in thermal effi-ciency of boilers. The prospect of scale econ-omies made the utilities’ promotion of electric-ity beneficial to both shareholders and con-sumers during the pre-embargo period. As fall-ing real prices and promotional activities en-couraged growth, steady increases in con-sumption led to lower unit costs and, inciden-tally, made future planning a straightforwardprocess of extrapolating from past trends.

As long as the electric utilities enjoyed risingproductivity, they remained a declining mar-ginal cost industry —that is, the incrementalcost of electricity generated to meet new de-mand was lower than the average costs in-curred by the power companies to meet ex-isting demand. This situation facilitated thefinancing of new powerplants, the construc-

3Statistica/ Abstract of the United States (Washington,D. C.: 1977).

tion of which could be planned, financed, andcarried out in a few years.

The result of all these advantages, in theperiod before the mid-1970’s, was long-termsecurity in the electric power sector. Today, bycontrast, utility companies find themselvesfacing high costs for new capacity and for fuel;new regulatory requirements for environmen-tal protection, nuclear safety, and energy con-servation; and uncertain future growth projec-tions and capital availability prospects.

The Regulatory Environment

For investor-owned utilities, most regulationoccurs at the State level. The Federal EnergyRegulatory Commission (FERC), formerly theFederal Power Commission, regulates only theinterstate transmission of power and the saleof power for resale (wholesale sales). Stateregulation is carried out by public utility com-missions whose members are either elected or,more commonly, appointed by Governors(sometime with legislative consent) to servefixed terms. The commissions function asquasi-judicial bodies and hand down decisionson rates and powerplant sitings after publichearings. Municipally owned utilities are usu-ally regulated by local government officials,while cooperatively owned power systems areregulated by elected boards representing theconsumer-owners. Regardless of ownership, allutilities are constrained from the arbitrary useof their monopoly power by the regulators,who require them to perform certain duties(such as providing a reliable power supply toall those who pay for it) in exchange for au-thorizing a “fair and reasonable” rate ofreturn.

Electric utility rate regulation involves twomajor steps. The first step is to approve a levelof revenues adequate to cover costs for opera-tion and maintenance, debt service, deprecia-tion, and taxes, plus a “fair and reasonable”rate of return on invested capital. The utilitycommission attempts to establish a rate of re-turn that is high enough to attract capital forfuture expansion, yet not so high as to over-charge consumers or violate the “fair and rea-sonable” standard.

Ch. V/—Utilities and Fuel Oil Distributors ● 121

The second step in utility regulation is toestablish the rates at which electricity is to besold in order to produce the allowed revenues.The ratemaking process is normally based on a“cost-of-service study,” a tool used by utilitiesto break down their total costs over a specifiedtime period among the different functions(generation, transmission, and distribution),customer classes (residential, commercial, andindustrial), and cost classifications (customer,demand, and energy).

Cost classifications require some explana-tion. Customer costs include such expenses asmeters, distribution lines connected to thecustomer’s service address, billing, and mar-keting. As a general rule, customer costs varyhardly at all with consumption levels. Demandcosts are fixed costs reflecting the company’sinvestment in plant capacity and a portion ofthe transmission and distribution expenses;they represent the cost of providing the max-imum (or peak) amount of power required bythe system at any time. Energy costs are vari-able; they depend directly on the amount ofpower used by the system’s customers. Thiscost category includes fuel costs, costs in-volved in running and maintaining the boilers,or in producing hydroelectric power (includingpumped storage), and certain costs incurred inpurchasing power from other generating com-panies.

Assigning customer costs and energy coststo different classes of customers is a fairlystraightforward exercise, but allocating de-mand costs is more difficult. Here, a degree ofjudgment is required. Once the total contribu-tion of each consuming class to the functionaland classified costs is estimated, the totals aredivided by the number of billing demand unitsin each class and translated into rates. In mostcases — and in almost all situations involvingresidential customers — the customer, energy,and demand charges are not identified sep-arately for the customer. Rather, they arelumped together in a single kilowatthour rate.For residential consumers, the customercharges are usually included in the ratecharged for the first increments (or blocks) ofpower consumed each month (measured in kil-owatthours), in order to ensure that they are

recovered. Power companies usually charge aminimal fee even when no power at all is used,to cover these fixed customer costs. Conse-quently, the first blocks of power are more ex-pensive than additional blocks consumed inthe same month and the most common rate de-sign is called a “declining block” rate. Untilrecently, most utility commissions have leftthe details of this second regulatory step, thedesign of rates, largely to the discretion of theutilities, with pro forma commission approval.

The Problems of Recent Changes forthe Electric Utility Industry

In recent years, utilities have experiencedchanges — many of them traumatic — in everyaspect of their operations. Like all fossil fuelconsumers, utilities have faced drastic in-creases in the price of fuel, particularly oil.While utility fuel cost rose 24 percent between1965 and 1970, they jumped a startling 248 per-cent between 1971 and 1976.4 In the face ofsuch rapid cost increases, regulators have per-mitted the electric companies to pass onhigher fuel costs to their electric customersthrough automatic “fuel adjustment clauses,”without waiting for normally lengthy ratemak-ing proceedings before increasing rates. Theseclauses have reduced hardships that utilitieswould otherwise have experienced by shorten-ing the regulatory lag and eliminating the needfor constant repetition of hearings and findingsin response to requests for rate increases.Whether fuel adjustment clauses have alsoserved as disincentives to energetic utilitysearches for inexpensive fuels or alternativeenergy sources is a question currently underreview in many State utility commissions. Theyhave been major contributors to continuous in-creases in residential electric customers’ bills,making the utilities the target of resentmentand suspicion. Low-income customers and per-sons on fixed incomes have suffered particu-larly from large increases in their bills. De-l i n q u e n t a c c o u n t s h a v e i n c r e a s e d , a s h a v e

‘Electric Utility Rate Design Study, Rate Design andLoad Control; Issues and Directions, A Report to the Na-tional Association of Regulatory Utility Commissioners,November 1977, p. 10.


meter tampering and theft. In the two suc-cessive cold winters of 1976-77 and 1977-78,there were occasional news accounts of poorpeople freezing to death after utility shutoffsfor nonpayment of bills. Some States enactedemergency relief programs that prohibitedsuch shutoffs, and the Federal Government of-fered grants and loans to help pay the bills.

Utility managers have expressed surprise attheir apparent fall into disfavor with manycustomers as rates have risen; typically, theelectric (and gas) companies see themselves asanalogous to the Greek messenger who was ex-ecuted for bearing bad tidings. Public opinionsurveys document a widespread public beliefthat the utilities are profiting from the energycrisis and are highly suspect as sources of in-formation about the crisis and its remedies. ’Many consumers appear not to understand thereasons behind their higher bills, and they at-tribute all rate increases to attempts to in-crease profits.6

Fuel prices accounted for approximately 60percent of all rate increases in 1974, but theyare not the only reason for rising utility bills.Plant costs have also risen sharply, Accordingto figures compiled by the Department of En-ergy (DOE), a single 1,000-MW nuclear plantbegun in 1967 and brought online in 1972 costan average of approximately $150 million tobuild, while a similar plant begun in 1976 andexpected to be ready in 1986 will have totalprojected costs of $1.15 billion–10 times ashigh. A coal-fired plant begun in 1966 andplaced in service in 1972 cost $100 million,whiIe a comparable plant constructed between1976 and 1986 will cost $950 million—againalmost a tenfold increase. ’ A greatly length-ened period of planning and construction ac-counts for a significant portion of these higherplant costs. Caused in part by what John H.Crowley calls an “exponential increase in regu-latory requirements,” these delays contributein turn to massive increases in interest paid onborrowed capital during construction. Pro-

5Electric Utility Rate Design Study, op. cit., p. 83.‘Ibid.‘John H. Crowley, “Power Plant Cost Estimates Put to

the Test,” Nuclear Engineering International, July 1978, p.41.

tracted licensing procedures, inflation in laborcosts, added hardware for safety and environ-mental protection, and higher interest rates alladd to plant costs. I n 1950, the average interestrate paid by utilities on newly issued bondswas 2.8 percent; in 1970, the rate was 8.8 per-cent, and by 1975 it had reached 10.0 percent.8

Utilities must now look to external sources formost of their capital needs. As a result of allthese factors, the electric utility sector is nowan industry of increasing marginal costs—thatis, the incremental cost of producing one moredemand unit is higher than the average unitcost for meeting existing demand.

Regulatory changes have also caused somediscomfort for the utilities. While the electriclight and power industry could hardly be con-sidered a textbook illustration of the freeenterprise system at work — marked, as it is, bygovernmental regulation of profits and prices,as well as by its own monopoly control of mar-kets and the power of eminent domain – utilitymanagers have nonetheless tended to identifywith business interests and to resent the expan-sion of Government power. They have, conse-quently, found themselves in an increasinglyadversary relationship with regulators at boththe State and Federal levels, as utility commis-sions and Federal agencies have reached everdeeper into their operations.

Utility regulators have responded to newlyfelt public needs to conserve energy, protectthe environment, and deal with new consumeractivism. Some State commissions began inthe earl y 1970’s to disallow the costs of promo-tional advertising as operational expenses.Some attempted to prohibit advertising alto-gether. A few have required experiments innew rate designs, such as peakload (time-of-day and seasonal) pricing and “lifeline” ratesto subsidize poor and elderly consumers. Manycommissions, most notably the California Pub-lic Utilities Commission, have begun to take acloser look at requests for new generatingcapacity, to see if energy conservation pro-grams could delay or eliminate the need forproposed additional powerplants. Some haverequired utilities to initiate conservation pro-

8Electric Utility Rate Design Study, op. cit., p. 11.

Ch. VI—Utilities and Fuel Oil Distributors ● 123

grams involving the sale, installation, or fi-nancing of insulation and other energy-con-serving features for consumers. These new ini-tiatives have come both from aggressive inter-pretations of existing mandates and from newState legislation.

Utilities are also being asked to meet new re-quirements imposed at the Federal level. Airand water quality standards mandated by Con-gress and enforced by the Environmental Pro-tection Agency have accelerated the retire-ment of some older plants and required the in-stallation of sophisticated control equipmenton both existing and new pIants. Many com-panies have altered their boiler fuels morethan once to respond to Federal directives;after shifting from coal to oil or gas to meet airquality requirements, they have been asked bythe Federal Energy Administration (and themore recent DOE) to convert back to coal toavert oil and gas shortages and cut imports. Asnuclear power has begun to produce an impor-tant share of the Nation’s total generatingcapacity, power companies have found it nec-essary to deal at great length and expense withthe Nuclear Regulatory Commission (formerlythe Atomic Energy Commission).

Gas Utility Structure andRegulatory Environment

Most gas utilities serve only as retail dis-tributors, purchasing natural gas at wholesalerates from a relatively small number of 13pipeline companies, which purchase in turnfrom producers. Among the 1,600 retail naturalgas distributors, private companies predomi-nate in terms of both their share of the industry(two-thirds of all gas companies) and the quan-tity of gas they sell, as a percentage of totalsales (90 percent). Many of these companiesare combination gas-and-electric companies;these account for 40 percent of all natural gassaIes. 9

Almost two-thirds of the natural gas sold byutilities comes from the interstate market,where its price is regulated by FERC. Intrastategas prices have been regulated by the public

9Booz, Allen & Hamilton, op. cit.

utility commissions of States in which the gasis produced and consumed. With passage ofthe Natural Gas Policy Act of 1978, intrastateprices have been slated to come under FederalreguIation.

The separate regulatory systems for intra-state and interstate gas have contributed, overthe years, to imbalances in both price and sup-ply. Intrastate gas, which is not regulated atthe wellhead, has generally been priced closerto competitive or substitute fuels such as dis-tillate fuel oil. Interstate wellhead prices, onthe other hand, which are subject to cost-based Federal regulation, have been lowerpriced than substitute fuels. As a consequence,producers have kept as much gas as possiblewithin the producing States which has helpedbring about an imbalance in supply betweenthe two systems. Even though wellhead pricesare generally higher in producing States, theprices residential consumers pay is lower withsome exceptions. This discrepancy in part isdue to higher transmission costs for those liv-ing far from the producing regions and theneed to supplement the flowing gas supply inthe nonproducing regions in times of shortage.

The intrastate/interstate price discrepancieshave increased during the last few years, asgas-short utilities in the nonproducing Stateshave had to turn to high-priced supplementalgas sources such as imported liquefied naturalgas (LNG) or synthetic natural gas (SNG) andpropane just to meet their existing customers’needs. Expansion of their markets has beenprecluded in many areas by the supply short-ages. Industrial customers in some consumingStates have wearied of constant interruptionsin their gas service and have permanentlyturned in large numbers to other fuels, par-ticularly distillate fuel oil. Ironically, industrialfuel shifts have freed up enough gas in someplaces to cause pocket surpluses. But whereutiIities were prohibited from providing serviceto new customers, they had no market for thissurplus gas and had to relinquish it to otherdistributors.

Historically, the gas utility industry hasrelied primarily on long-term debt to financeits capital needs. Its capital intensity hasdeclined over the last 25 years, going from


$3.00 in total investment per $1.00 of salesrevenues in 1950 to $1.75 in total investmentper $1.00 of sales in 1975. ’0

Recent Changes in the GasUtility Industry

Like the electric utilities, gas companieshave experienced a number of traumaticchanges in recent years. In many regions,utilities have been totally unable to take onnew customers and have had to curtail notonly their large industrial customers whosecontracts anticipated interruptions in serviceat times of peak demand, but also some cus-tomers whose contracts and rates were basedon more expensive “firm” service. Allocationsof scarce gas supplies by Federal and Stateagencies have caused some utilities to lose gasto other companies. While the need to con-serve gas has been obvious from a nationalpolicy standpoint, the most immediate anddirect benefits of such conservation have notalways been available to the companies thatwere able to save supplies, only to see themallocated to others.

Recent passage of the National Gas PolicyAct has brought a prospect of major changesfor gas utilities and their customers. The newlaw paved the way for gradual deregulation ofmost gas prices and brought intrastate gasunder Federal regulation for the first time,reducing the price gap between interstate andintrastate gas. High-cost gas is to be deregu-lated first, and the regulated price of other gaswill be allowed to rise gradually from legis-latively mandated ceiling prices, using annualinflation rates as guides for increases. Deregu-lation will be virtually complete by 1985.

Utilities will pay much higher prices for gasunder the new legislation. Interstate pipelinecompanies will pass on to utilities the higherprices paid by pipelines for gas supplies, andthe utilities will pass on the increases in turn totheir own customers. Residential gas utilitycustomers will be sheltered initially, however,from the increase in natural gas prices becauseof a provision for “incremental pricing” under

‘“I bid.

which large industrial customers using gas as aboiler fuel will bear the full additional priceburden –to a point. When incremental pricingcauses industrial gas rates to exceed the costof alternative fuels, the burden of higher gasprices in excess of alternative fuel costs will beshared by al I gas consumers.

Just how soon residential gas users feel theimpact of the new legislation on their monthlyutility bills is a matter of considerable debate.The number of industrial customers subject tothe incremental pricing provisions is limitedsomewhat by the new law; only interstate cus-tomers, and only those who use gas as a boilerfuel (as opposed to a process feedstock), areaffected. If rising industrial gas prices or re-quirements of the coal conversion legislationcause many industries to shift to alternativefuels (including, perhaps, imported fuel oil),then the fixed costs associated with gas pipe-line transmission and storage must be sharedby the remaining customers. The smaller thegroup of industrial customers subject to in-cremental pricing, the sooner the peak price—on a par with alternative fuels — is reached andthe high-cost burden becomes dispersedamong residential and commercial customersas welI as industries.

As residential natural gas prices continue torise steeply —and the Energy Information Ad-ministration estimates that they could reach$3.31 per mcf in 1976 dollars by 1985–home-owners will have an even stronger incentive toconserve and overall consumption growth inthe residential sector will continue to decline.On the other hand, the higher prices couldcause special hardships for the poor and theelderly. Even without direct increases in gasprices, families will bear indirect costs throughhigher prices for products of industrial gasusers subject to incremental pricing.

Also uncertain is the effect the new legisla-tion will have on gas supplies for utilities andresidential users. Experts in the producing in-dustry believe that the new higher prices willstimulate exploration and production in fieldspreviously inaccessible for economic reasons,and that ample supplies will tend to hold downprices to some extent. Consumer advocates, on

Ch. V/—Utilities and Fuel Oil Distributors ● 125

the other hand, dispute the claim that dereg-ulation will stimulate growth in productionbefore 1985 and that a competitive market isat work which will restrain price increases.

Utilities and Residential Consumers

The 74 million U.S. households accountedfor one-third of the electric utility industry’ssales of 1.85 trillion kWh of electricity in 1976,and for just under 40 percent of the utilityrevenues of $53.5 billion. The average Ameri-can family consumed 8,400 kWh of electricityin 1976, spending $288, or 3.45 cents per kWh(as compared with 2.89 cents per kWh forcustomers who heat electrically). Virtually allhomes in the United States are served by elec-tricity, with 12.6 percent of all occupied hous-ing units heated electricalIy in 1976.2

Forty-one million households with naturalgas service accounted for one-third of the gas

utility industry’s sales of 14.8 quadrillion Btu(Quads) in 1976, bringing in revenues of $9.9billion, or 41.9 percent of the industry’s totalrevenues of $23.6 billion. Gas was the heatingfuel for 56.4 percent of all occupied housingunits in 1976.3

Utility bills, like taxes, are a continuingsource of particular unhappiness to consum-ers. I n fact, however, utility price statisticsreveal just how great a bargain electric and gasconsumers have enjoyed, at least until recent-ly. Using constant 1976 dollars, which take ac-count of inflation, table 55 indicates that realutility prices fell steadily during the 1960’s.Although that trend has since been reversed,real gas prices in 1977 were still only 12.2 per-cent higher than their 1960 levels, while realelectricity prices were still 17.7 percent lowerin 1977 than in 1960. Table 56 shows the per-centage change over certain indicated periods.

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 $.0241965 . . . . . . . . . . . . . . . . . 1.76 1.05 .035 .0221970 . . . . . . . . . . . . . . . . . 1.58 1.90 .028 .0211971 . . . . . . . . . . . . . . . . . 1.58 1.15 .028 .0211972 . . . . . . . . . . . . . . . . . 1.64 1.21 .031 .0221973 . . . . . . . . . . . . . . . . . 1.64 1.29 .031 .0231974 . . . . . . . . . . . . . . . . . 1.69 1.43 .031 .0281975 . . . . . . . . . . . . . . . . . 1.77 1.70 .032 .0321976 . . . . . . . . . . . . . . . . . 1.98 1.98 .034 .0341977 . . . . . . . . . . . . . . . . . 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 EnergyFutures,” Science, Apr. 14, 1978, pp. 142-153.

Table 56.—Percentage Changes in Real UtilityPrices, Selected Periods, 1960-77

Period Natural gas Electricity

1960-65 . . . . . . . . . . . . – 10.7 -17.61965-70 . . . . . . . . . . . . – 10.2 – 21.11970-75 . . . . . . . . . . . . + 12.0 + 14.31975-77 . . . . . . . . . . . . + 24.8 + 10.6

SOURCE: Adapted from Science, Apr. 14,1978, pp. 142-152.

‘l factbook on the Proposed Natura/ Gas Bill, preparedby the Citizen Labor Energy Coalition, Energy Action,and the Energy Policy Task Force, Sept. 25, 1978, p. 21,supra.

12 Statistical Abstract of the United States, 1977.

Consumer ire can best be accounted for bythe suddenness of the increases and the degreeto which they have contradicted long-term his-torical experience. For consumer activists whofollow utility rate increase proceedings, the ag-gregate amounts requested in recent years alsoboggle the mind. Total annual rate increasesgranted to electric utilities across the countrybetween 1961 and 1968 came to $16 million.From 1969 to 1976 the annual total was $1.4billion, almost a tenfold increase. ”

1‘Ibid.“Electric Utility Rate Design Study, op. cit., p, 13.


The high prices consumers are paying (andto a lesser extent, the perceived threat of short-ages) have created a new interest in the possi-bilities of conservation. Investment in insula-tion, weatherstripping and caulking, thermo-stats with automatic nighttime setbacks, andfurnace efficiency improvements have allbegun to look attractive to homeowners.

Many utility companies have tried to helptheir residential customers to conserve by initi-ating a variety of conservation programs, rang-ing from simple “bill-stuffers” providing in-formation on how to conserve to extensive pro-grams of insulation financing and installation,rate reform, and load management. The bal-ance of this section describes these programsand analyzes the policy issues they raise forutiIities and their consumers.

Utility Activities in Residential EnergyConservation

Information Programs

The simplest (and often the first) conserva-tion activity undertaken by utility companiesis to promote conservation by providing, inflyers sent to customers with their monthlybills, “how-to” information and reasons forcutting down on waste. These efforts, nowcommon among gas and electric companiesthroughout the Nation, are natural substitutesfor the “bill-stuffers” of earlier years. Only theproducts have changed: while the brochures ofthe 1950’s and 1960’s urged homeowners to in-vest in electric heating and air-conditioning,frost-free refrigerators, and other energy-con-suming commodities, the current promotionalliterature extolls the merits of insulation andweatherstripping, along with practices such aslowering thermostats and cooking one-dishmeals. This kind of information disseminationcosts the utility little and can be useful to con-sumers. Attitudinal surveys provide evidence,however, that consumers generally regard util-ities as suspect sources of information, ’ 5 Un-fortunately, there are no easy ways to measurethe cause-and-effect relationship between

‘‘I bid., p. 83.

these information programs and consumers’actions in undertaking conservation measures.

More concrete information is provided toresidential consumers by utilities that provide“energy audits” of individual homes. Makinguse of specially trained staff members andcomputer programs, utility audits include asurvey of the home to determine the currentlevel of insulation, the presence or absence ofstorm windows, and other structural details.The audits also include information about thehistorical energy consumption and costs asso-ciated with energy use in the home. They gen-erally conclude with information about thecost of upgrading the thermal integrity of thestructure through investments in insulationand other features, estimates of the energy andmoney that could be saved, and the amount oftime needed to amortize the conservation in-vestment through savings on utility bills.

Many utility companies conduct audits forall requesting homeowners in their serviceareas regardless of the fuel used for heatingthe home. Gas and electric companies, for ex-ample, audit homes that are heated by oil. Insuch cases they must rely on estimates or oncustomers’ records (often incomplete) for his-torical heating cost data, and, inaccuracies inprojected savings may be a problem. Evenwhen relying on complete past billing records,auditors may either overestimate or under-estimate both the potential savings and thelifecycle costs of insulation investments. Utili-ty managers are concerned about the credibili-ty and liability problems they may incur ifcustomers are dissatisfied after relying onutility-conducted audits for promises of sav-ings of energy or dollars that do not mate-rialize. Despite the imperfections inherent inhome energy audits, they are valuable tools forhomeowners seeking practical guidance in im-proving the energy efficiency of their dwell-ings

Other conservation information programscarried out by utilities may include guidancefor builders about energy-efficient construc-tion and efficient appliances and heating sys-tems. The Tennessee Valley Authority, for ex-ample, offers free seminars on heat pump de-sign and installation for builders and contrac-


tors. Some companies offer special awards tobuilders who construct energy-conservinghouses. Seattle’s Washington Natural GasCompany contacts all builders who obtainlocal building permits, urging them to use ener-gy-efficient structural materials and heating,ventilating, and air-conditioning (HVAC)systems, A few utilities have constructeddemonstration homes to display the latest inenergy-conserving construction and systemsand to improve their own conservation in-formation through research and monitoring.

Conservation Investment Assistance Programs

A more direct involvement in conservationcan be seen with utilities that offer customersinstallation and financing services for in-sulating their homes. Typically, loans offeredby the utilities may be repaid through regularmonthly bills. Michigan Consolidated GasCompany, an early entrant into the insulationbusiness, offers its customers up to $700 inloans to purchase ceiling insulation, with nodownpayment requirement, at 12-percent an-nual interest, with 3 years to pay. Actual in-stallation is done either by utility-approvedcontractors or by the homeowners themselves.The company estimates that approximately140,000 homes within its service area havebeen insulated since its program began, butonly 800 customers have taken advantage ofthe financing opportunity. Michigan Consoli-dated considers its insulation program a publicservice and the State’s public service commis-sion concurs; as such, its administrative costsare included among the company’s allowableoperating expenses. This means that all cus-tomers, whether or not they participate in theinsulation program, share these costs in theirutility bills. Some experts believe this situationconstitutes unjust discrimination in rateset-ting, while others find it justifiable since allcustomers presumably benefit from the util-ity’s increased supply of gas acquired throughconservation. One proponent of the MichiganConsolidated approach, the former chairmanof the Michigan Public Service Commission,points to the similarity between the practice ofincluding conservation program costs in theutility’s revenue requirement and the now-defunct policy– upheld in the courts—of sub-

sidizing hookups for new customers in order tobenefit all customers through economies ofscale.16

Washington Natural Gas Company hastaken a different approach in its ambitiousenergy conservation program. It offers notonly ceiling insulation, but also sidewall in-sulation, night setback thermostats, storm win-dows, furnace ignition devices (to eliminatepilot lights), and new furnaces and waterheaters that meet certain efficiency standards.Because of the large total expense incurred bycustomers who buy several of these items, 45percent of Washington Natural Gas’s conser-vation customers take advantage of the com-pany’s financing arrangements. Even this num-ber is lower than the company expected at theoutset; it suggests a greater-than-anticipatedconsumer ability to pay for energy improve-ments. The utility’s conservation business iscarried out as a merchandising operation,which recoups its own costs and earns amodest profit. Hence, the gas company’s nor-mal operations and rates are not affected byits conservation activities. The company usesindependent contractors to install the conser-vation devices, and the utility’s managementbelieves its program has benefited these smallbusinessmen by stimulating a substantialvolume of business. 7

A number of policy issues emerge from thisnew area of utility activity. The companiesthemselves have expressed concern about pos-sibly adverse legal, financial, and managementeffects of conservation investment assistanceprograms, particularly if company participa-tion were to be made mandatory by State orFederal legislation. Insulation manufacturershave worried about potential supply problemsand consequent “demand pull” inflation stem-ming from utility-produced demand for theirproducts. (See appendix A for a discussion ofthe insulation supply problem.) And some con-sumer advocates fear that utilities will use

“William G. Rosenberg, “Conservation Investments byGas Utilities as a Gas Supply Option,” Public UtilitiesFortnight/y, Jan. 20,1977, p.19.

‘ ‘Information provided to OTA by Don Navarre, VicePresident for Marketing, Washington Natural Gas Com-pany


their conservation programs to realize windfallprofits, extend their monopoly powers into acurrently competitive market, justify unfair orunnecessary rate increases, or otherwise workin ways contrary to the public interest.

Little empirical information is available tosubstantiate or refute these concerns. Thedebate about utilities’ roles in residentialenergy conservation is primarily theoretical. Itis useful, however, to review the major pointsof concern and outline the Iimited avaiIable in-formation about the corporate, societal, andconsumer impacts of utility conservationassistance programs.

In recommending the installation of sup-plemental insulation and other conservationdevices, utilities are often asked to estimatethe amount of energy and money that could besaved by the proposed conservation invest-ments. Utility spokesmen fear they will be heldlegally liable if customers later fail to achievethe promised savings. A discrepancy betweenprojected and actual savings is not unlikely insome cases, given the difficulty of accountingfor individual families’ energy-consuminghabits and keeping pace with the moving tar-get of rising electric and gas rates. In fact,however, there is no record of any liabilitysuits being filed or of judgments being madeagainst utilities for failing to deliver promisedsavings, and the likelihood of such suits seemslow. Utilities should be able to protect them-selves through careful explanation of theirmethods of estimating savings and of theresidual uncertainty that invariably remains.

A more serious liability threat may lie in the“implied warranty” offered by utilities whosell, finance, or even simply recommendspecific insulation products or contractors.Managers have expressed concern about thequality control that customers may expectthem to exercise over the efficacy and safetyof insulation materials and the integrity ofmanufacturers and installation contractors.This matter has arisen with at least one utility’sactive conservation program. Some insulation

“Ken Bossong, “The Case Against Private Utility In-volvement in Solar/lnsuIation Program s,” Solar Age,January 1978, pp. 23-27.

dealers used by the utility as installation con-tractors were found to be engaging in fraud-ulent activities, “puffing up” blown-in insula-tion to make it appear more substantial involume (and, hence, in insulating value), andinstalling insulation that was a dangerous firehazard. The problem appears especially acutein the cellulose insulation industry, which ischaracterized by large numbers of small man-ufacturers and installers who are outside anyrecognized regulatory authority. Cellulose in-sulation is normally mixed on the job site, mak-ing quality control virtually impossible. Recentrecognition of the need for standards of quali-ty and performance has produced voluntarycertification programs developed by the in-sulation industry (and in a few cases by utiIitiesor State government agencies) in some areas.Yet the impossibility of guaranteeing absolutequality control is likely to necessitate utilityactions such as disclaimers and liability in-surance to protect themselves from responsi-bility for contractors’ fraud or safety failures.

Logically, if many of an electric utility’scustomers decide to take advantage of thecompany’s conservation investment assistanceprogram (hereafter referred to simply as an “in-sulation program”), they will use less electrici-ty individually and reduce the utility rate ofload growth collectively. A vigorous insulationprogram may reduce the utility’s peakloadtemporarily, but the long-term effect will mostlikely be a reduction in the growth rate, not anabsolute demand drop.

An important question remains: Will theutility’s total costs be reduced by this changein demand patterns, allowing the savings to bepassed on to consumers in the form of lowerbills–or at least slower growing bills? Theanswer appears to depend on a number of fac-tors, which vary from utility to utility. A con-sulting group commissioned by OTA to surveyutilities’ experiences with and attitudes towardinsulation programs found this area of uncer-tainty to be a matter of major concern amongthe companies surveyed. ’9

In planning for future capacity and capitalneeds, as well as for revenue and rate re-

‘9Booz, Allen & Hamilton, op. cit.


quirements, utilities must consider the varia-tions they typically experience between aver-age and peakloads. If insulation programs tem-porarily reduce their average (or base) loads,revenues will be reduced accordingly. How-ever, if peakloads are not reduced as well,capacity requirements will remain as great asthey would be without the insulation program.In such a case, the utility must still operate ex-pensive peaking plants during peak periods–and with lower revenues, they must raise ratesto meet the fixed costs. Such an occurrencecould wipe out consumer savings.

A technical note at the end of this chaptercontains a detailed discussion of this per-ceived problem and of an OTA computer simu-lation that tests the likelihood of insulationprograms having an adverse effect on utilityload factors and costs. Using a model devel-oped for the recent OTA study, Application ofSolar Energy to Today’s Energy Needs, OTA hadsimulated the total loads of hypothetical util-ities in four cities that represent a cross-sectionof climatic variations throughout the UnitedStates. The utilities were designed to be typicalin their heating and cooling loads, with a mixof single-family homes, townhouses, low- andhigh-rise apartments, shopping centers, indus-try, and streetlighting. The model tested the ef-fect of altering the insulation levels andheating and cooling equipment for certainfractions of each utility’s 1985 residential load.The results suggest that insulation programshave only a small effect on a system’s loadfactor–that is, on the ratio of its baseload toits peakload—and by extension, on total sys-tem costs. The effect is, in most cases, positive(a higher load factor). The impact of insulationin each case depends on such things as theutility’s air-conditioning load, service areaclimate, and electric-heating load. Table 62 inthe technical note illustrates the findings,which still need to be verified through actualexperience. If they prove to be correct, theyshould reduce the fear that insulation pro-grams will lead to higher costs and higherrates.

The long-term picture is clearer. By slowingdemand growth, insulation programs shoulddelay new capacity needs. As new powerplants

are far more expensive than old ones, this,delay should also retard rate increases.

Another corporate concern about utility in-sulation programs is peculiar to the gas com-panies. This problem centers on whether thegas utilities will be permitted to add newcustomers to provide a market for any gas thecompany saves through existing customers’conservation efforts. As residential customerssave natural gas through improved insulationand other conservation measures, they free upgas supplies for possible use by an expandednumber of customers. Until recently, however,many gas companies were prohibited fromadding new customers, and during periods ofespecially short supply companies often lost aportion of their available supplies to othercompanies through mandatory allocation pro-grams. Without a promise of being able tokeep and sell “conservation gas” at attractiveprices — a so-called “finder-keepers” policy—gas companies correctly perceive their cus-tomers’ gas-saving efforts as not necessarilybeneficial to their operations. Indeed, conser-vation in the absence of a “finders-keepers”policy means the companies will have tospread fixed-distribution costs over reducedsales.

Although a large number of utilities have ini-tiated insulation programs either voluntarily orin response to State requirements, the majortrade associations representing both publiclyand privately owned utilities have gone onrecord to oppose detailed uniform nationaldirectives for such programs. They fear thatsuch requirements, which were included in dif-ferent forms in the House and Senate versionsof the National Energy Act before being modi-fied substantially by the Conference Commit-tee, fail to recognize each company’s uniqueneeds arid circumstances.

Some utilities are also reluctant to under-take the new roles of moneylenders and sellersof hardware, although in fact neither activity istotally new to the industry. (In former days,many utilities sold appliances to theircustomers and permitted them to make install-ment payments on their utility bills.) The elec-tric and gas companies’ strange bedfellows, inthis viewpoint, are the consumer activists.


Consumer groups are particularly fearfulthat small businessmen in the conservation-device and insulation businesses would sufferfrom unfair competition at the hands of theutilities.20 The Washington Natural Gas ex-perience suggests, however, that the oppositeeffect could also result. WNG made extensiveuse of small businessmen to install conserva-tion materials.

Rate Reform for Electric Utilities

The area of electric utility rate design mayeventually represent the most significantdeparture from past practices brought aboutby the changed circumstances of recent years.Declining-block rates, the rate structure usual-ly applied to residential users, came intowidespread use during the early days of elec-trification when lighting comprised most of theutilities’ loads. Since the utilities had to main-tain adequate capacity to meet a sharp peak indemand during evening hours, it made sense topromote other uses of power to fill the “val-leys” of demand. Customers and utilities alikebenefited from the economies of scale, andthe load leveling that came with growth thatwas encouraged through declining-block rates.Now, however— as new capacity costs and fuelcosts exceed average system costs, and asgrowth exacerbates peaking problems—pro-motional rates cease to be beneficial.

A number of State utility commissions havebegun requiring utilities to experiment withdepartures from their traditional declining-block rate structures, using “peakload pric-ing,“ or “time-of-use rates” that rise at times ofpeak seasonal and/or daily demand, to encour-age users to change their habits and reducepeak loads.

The area of innovative rate design — and par-ticularly time-differentiated rate structure— iscomplex and controversial. This report canonly touch briefly on the subject, yet its signif-icance for residential electricity use is greatenough to warrant a limited discussion of theissues surrounding peakload pricing.

2oBossong, OP. Cit

The basic argument for peakload pricing isclear: A utility’s costs vary with the season andthe time of day, due to the equipment and fuelmix that must be used to meet different levelsof demand. These cost variations have in-creased in recent years, with the result that thehighest operating costs are now incurred whenreserve plants are pressed temporarily intoservice to provide peak power levels. Althoughthese peaking plants require lower capital costthan baseload plants, they employ expensivefuels such as petroleum distillates, and theyoperate less efficiently than baseload plants.As a result, peak power costs run as much asfour times higher than base power costs, there-fore, the premise that rates should be relatedto costs in order to achieve objectives of equi-ty and efficiency leads to the conclusion thatrates shouId vary with time.

Each utility’s peakload pricing system mustbe “custom made” to reflect the company’sload characteristics, peak patterns, weatherconditions, and generational equipment. Thetime-differentiated rate design recently of-fered by the Virginia Electric Power Company(VEPCO) to its residential customers is fairlytypical: 2,000 VEPCO customers, chosen fromamong 17,000 who volunteered for the pro-gram, have had special meters (which cost thecompany $250 apiece) instaIled at their homesto record their total kilowatthour usage andtheir consumption during peak hours (9:00 a.m.to 9:00 p.m. e.s.t., or 10:00 a.m. to 10:00 p.m.e.d.t., Monday through Friday). The metersalso measure each customer’s peak demandduring any 30-minute onpeak period of the bill-ing period; the demand figure, in kilowatts, isnot calculated during off peak hours. Thecustomer’s monthly bill is broken down intothree separate parts:

1, A basic customer charge of $11.50 per bill-ing month;

2. A kilowatt demand charge for onpeak de-mand, calcuIated at the following rates:

–$.031 per kW of onpeak demand duringbilling months of June through Septem-ber;

–$.022 per kW of onpeak demand duringbilling months of October through May;

Ch. VI—Utilities and Fuel Oil Distributors . 131

3. An energy charge calculated on the basisof the following rates:

–$.023 per kWh of on peak use.–$.01 5 per kWh of off peak use.

The kilowatthour charges may be adjustedfor changes in fuel costs (i.e., fuel adjustmentclause).

Because VEPCO’s time-of-use experimenthas only recently begun, the company does notyet have data on the effects of the experimen-tal rates on participants’ electricity consump-tion or bills, or on the VEPCO system’s peaks,costs, or revenues. The Virginia utility is alsoexperimenting with time-of-use rates that areapplicable to water heaters only, and withvoIuntary time-differentiated rates forchurches and other charitable organizationswhose electricity demand tends to be greatestduring evenings and weekends. VEPCO hasalso identified 9,000 residential customers withhistories of substantial summer electricity con-sumption (at least 3,500 kWh during at leastone summer month of 1976 or 1977); thesecustomers have been required to participate ina metering experiment in which they are notactually charged according to time-of-dayrates, but are given monthly statements com-paring their electricity bills under traditionalpricing (which they actually pay) with costsunder peak load pricing.

Because peakload pricing of electricityreflects the higher costs associated withgenerating and distributing power during theperiods of highest demand on a utility system,such rate structures provide customers with“fair” and “appropriate” price signals. The ac-tual level of demand elasticity—that is, cus-tomer response (through behavior changes) toprice differences — is not well-understood atthis time, but federally funded rate experi-ments are beginning to produce empiricaldata. (These experiments are discussed below.)The reasons for shifting to such innovativerates go beyond a desire of economists toperfect the workings of the marketplace. Fromthe standpoint of national policy, such ratesare desirable if they resuIt in an energy savings,particularly of scarce and expensive fuels suchas oil and gas.

Electricity savings at the point of end-usemay or may not occur as a result of time-differ-entiated rates; however, energy savings at the“input” end of the utility could be substantial.This is because most utilities use their newest,most efficient and economical powerplants togenerate their baseloads. Although theserecently built plants typically represent largecapital investments (and hence, high fixedcosts) for the companies, their efficient ther-mal performance makes them the least expen-sive to run because they require fewer Btu ofenergy input per kilowatthour of output thando the usually older, smaller, less efficientpeaking plants. Furthermore, baseload plantsare more likely to use nuclear energy or coal,while peaking plants generalIy rely on im-ported oil or scarce natural gas.

To the extent that shifts in demand causedby peakload pricing can minimize use of thepeaking plants and increase the proportionaluse of the efficient baseload plants, a net sav-ings of energy and of operational costs shouldresult. Over the long run, leveling peak de-mand could also save on fixed costs by reduc-ing the need for construction of new plants. AlIthese savings —of scarce fuel input, of fixedand operating costs, and perhaps of end-useelectricity — represent conservation in thebroad sense of the word.

Lifeline Rates

If the trend toward time-differentiated ratesreflects a growing belief in the appropriatenessof cost-based rates, a countervailing belief hasaffected some utility rates differently. “Lightand heat are basic human rights and must bemade available to all people at low cost forbasic minimum quantities,” says section 1 ofthe California Energy Lifeline Act of 1975.Based on this premise, the Act required Cali-fornia utilities to set rates below cost for cer-tain minimum quantities of gas and elec-tricity—the estimated amount needed by anaverage family of four living in a well-insulated1,000 ft2 single-family house to provide enoughIighting, cooking, refrigeration, water, andspace heating to maintain health and areasonable level of comfort.


So-called lifeline rates, which have alsobeen implemented in Ohio, Georgia, and Col-orado but were rejected on a national scaleduring the congressional debate over the Pub-lic Utilities Regulatory Policy Act of 1978,have two essential goals. First, they are in-tended to provide financial relief and avoidhardship for low-income families who con-sume only the minimum essential amount ofenergy in their homes. Second, they are in-tended to promote conservation by reversingthe traditional declining-block rate structureand charging progressively higher rates forgreater quantities of gas and electricity con-sumed. The California experience to date instriving to achieve the first purpose is dis-cussed in chapter IV, “Low-Income Con-sumers.” With regard to the second objective,that of promoting conservation, the Californiaexperience is not encouraging. The Pacific Gasand Electric Company found virtually nochange in the average residential use of elec-tricity during the first 2 years of the lifelinerate policy and determined that there was “lit-tle conclusive evidence as to the link betweenlifeline and conservation . . . customers re-spond more to their total bill than to anymarginal price for the block in excess oflifeline (allowances).”21

Load Management

Load management is the deliberate manipu-lation of electricity demand at the point of enduse, in order to maximize cost savings for theconsumer, the utility system, or both. When acustomer alters his energy-consuming habits totake advantage of time-differentiated rates,that customer is practicing a simple form ofload management. His actions might includedeferring dishwashing, clothes washing, anddrying to off peak hours. On a slightly moresophisticated level, the homeowner might in-stall a timer on the water heater to limit itsoperation to off peak hours. Forms of load

2“’Lifeline Electric Rates in California: One Utility’sExperience,” presented by William M. Gallavan, vicepresident, rates and valuation, Pacific Gas and ElectricCompany, to the ninth annual Conference of the In-stitute of Public Utilities, Graduate School of BusinessAdministration, Michigan State University, Dec. 14,1977,p. 9.

management that are under the consumer’s(rather than the utility’s) control are called in-direct load management.

The term “direct load management” refersto actions under the direct control of the utili-ty company. With the consumer’s prior con-sent, the utility installs electromechanicalmeans by which it can manipulate a certainportion of the customer’s load. When the sys-tem approaches peak levels, preceded signalstransmitted over high-voltage wires or radiowaves can be used to disconnect certain ap-pliances such as hot water heaters, air-condi-tioner compressors, and heat pumps. Custom-ers are sometimes given compensation for anyinconvenience caused by load management, inthe form of credits against their utility bills. Bycarefully designing the patterns in which theseappliances are cycled on and off throughoutthe utility system, the electric company canshave the sharp spikes in demand that requirethe expensive operation of peaking plants. Incertain cases, it may also be possible to useload management as a means of deferring oreliminating the addition of new capacity; thisprospect however, is considerably less certainthan the probability of saving fuel costsassociated with short-term operations.

Load management has been practiced wide-ly in Europe for many years. There, mechanicalcycling or timing devices have been combinedwith time-differentiated rates and energy stor-age systems to expand the use of load manage-ment practices to heating. At least one U.S.utility, the Central Vermont Public Service(CVPS) Company, has also experimented with aheat storage/load management combination.Twenty-five of CVPS’s customers have in-stalled electric heating systems that heat waterduring off peak hours (11 p.m. to 7 a.m.), ceaseheating during onpeak hours, and keep thecustomers’ houses warm during the daytime bycirculating the preheated water throughout thehouse. The company calculates that in 1974-75each customer paid approximately the sameamount for this system as he would have ex-pended for oil heat, but that a customer whowould have spent $724 per year for electric re-sistance heat paid only $348 under the heatstorage option. For the utility, the important

Ch. VI—Utilities and Fuel Oil Distributors “ 133

result of the experiment was the finding thateach customer reduced his onpeak demand anaverage of 22 kW, or a total of 565 kW for thesystem as a whole.22

One danger associated with the combina-tion of load management and time-of-dayrates is the possibility that their appeal to con-sumers will be so successful that they willsimply “chase the peaks around the clock,” asa Wisconsin utility regulator put it. I n Ger-many, preferential rates induced such a large-scale shift to storage heating systems thathigher nighttime peaks occurred and the rateshad to be altered, thereby reducing the eco-nomic benefits enjoyed by consumers.23

Direct load management, keyed to mecha-nisms such as temperature readings, is beingtried by a number of utilities. Compared withpeakload pricing, direct load management hasthe advantage of assured response; the utilityknows for certain that it can reduce a peak-Ioad by a specific amount through mechanicalmeans, rather than hoping for an estimatedprice elasticity.

Residential consumers account for an esti-mated average of 30 percent of U.S. utilitypeakloads.24 Detroit Edison estimated thatresidential cooling accounts for 50 percent ofsummer temperature-sensitive load, the frac-tion of total system load that is most volatile.25

Only a fraction of this load can be eliminatedthrough management. A typical arrangementshuts off air-conditioner compressors and out-side fans for 10 to 15 minutes for each hour, intwo periods, while leaving inside fans runningto circulate air throughout the participatinghouses. The cycling signal is activated, typical-ly, when outside temperatures are high enoughto generate a substantial systemwide demandfor air-conditioning. By shutting down air-con-ditioners in 50 homes for 15 minutes per hourbetween 2 and 5 p.m. on days when temper-

‘z’’Storage Heat Shifts Load on Time at Central Ver-mont,” Electric Light and Power, Mar. 15,1976, p. 3.

23 Gordon C. Hurlbert, improved Load lvlanagement–New Emphasis, Sept. 24,1975.

“’’Survey Scrutinizes Load Management,” ElectricalWorld, July 15,1976.

*s’’ Cooling-Demand Controls Look Good,” ElectricalWor/d, July 15,1976.

atures exceeded 750 F, Detroit Edison was ableto achieve a 25-percent reduction in thesecustomers’ air-conditioning demand. The utili-ty’s systemwide savings achieved through man-agement of both air-conditioning and waterheating were limited, however, by the fact thatits summer peaks tend to be broad —that is, ahigh demand level is sustained for many hoursduring the day. While savings through waterheater control amounted to 200 MW in thewinter, they were only 50 to 60 MW in the sum-mer.

A 1977 study by the Federal Energy Admin-istration (FEA) indicated that a simulated coal-burning utility’s load management programcould achieve a substantial shift from peakingplants to baseload plants, and could result insignificant fuel cost savings. Furthermore,when adequacy of reserve margin is the cri-terion for planning new capacity additions, thehypothetical utility could justify the delay ofsome construction plans. FEA cautioned, how-ever, that such delays probably could not beachieved in real-life situations because of theever-growing problems of rising costs, financ-ing problems, and delays in Iicensing and con-struction. 26

Load management represents a significantdeparture from utilities’ historical obligationsto provide electrical service in any quantitycustomers desire and are willing to pay for. Itrepresents a form of rationing, a practice thateconomists argue is unnecessary when a freemarketplace employing cost-based prices allo-cates resources. Increasingly, however, utilitiesand their regulators are coming to view loadmanagement as one more tool in the diversecollection of policies that can aid in encour-aging utility-based residential energy conserva-tion.

Federal Programs and Opportunities inUtility-Based Issues

Because responsibility for utility regulationrests, for the most part, with States, Federal op-

ZGFederal Energy Administration, The /mPaCt of LoadManagement Strategies UporI E/ectric Utility Costs andFuel Consumption, June 1977.


portunities to encourage utility actions tostimulate residential energy conservation arelimited. However, recent Federal legislationand programs do provide a framework of sortsfor such utility activities.

New Legislation on Conservation InvestmentAssistance

The National Energy Policy Act of 1978,although not as ambitious as President Carter’soriginal proposal to Congress, does requireutilities to establish conservation programs forresidential buildings of four units or less.Under the new law, utilities must inform theircustomers of suggested conservation measuresand of available means of purchasing and fi-nancing investments in such measures. Util-ities must offer onsite audits and services toassist homeowners in finding instalIation con-tractors and lenders. If the customer chooses,a utility must permit repayment for conserva-tion investments on the regular monthly utilitybill. Gas and electric companies may them-selves lend customers up to $300 each for con-servation investments, but they are prohibitedfrom direct involvement in the installation ofconservation measures other than furnace effi-ciency modifications, clock thermostats, andload management devices. Utilities alreadyengaged in installation of other conservationmeasures as of the date of enactment are ex-empt from this prohibition.

Utilities are also prohibited, under the newlaw, from incorporating the administrativecosts of their residential conservation programsin their rates. Instead, they must charge thosecustomers who use their conservation services.

New Legislation on Utility Ratemaking andLoad Management

The Public Utilities Regulatory Policies Act,(P. L. 95-617), passed in October 1978 as part ofthe overall energy legislative package, in-creases the level of Federal involvement inelectric utility ratemaking activities. The newlaw does not preempt State authority, but it re-quires State utility regulators to consider theadoption of certain federally proposed stand-ards in their rate determinations, and either toadopt such standards or to state in writing the

reasons for not doing so. The Federal standardsapplicable to residential buildings are:

1. rates that reflect the cost of service to

2

3

4

5

A

various classes of electric consumers, tothe maximum extent practicable;prohibition of declining-block rates forthe energy component of electric rates,except where such rates can be demon-strated to refIect costs that decline as con-sumption increases for a given customerclass;time-of-day rates reflecting costs of serv-ing each customer class at different timesof the day, except where such rates arenot cost-effective with respect to acustomer class;seasonally variable rates, to the extentthat costs vary seasonally for eachcustomer class; andload management techniques offered toconsumers when they are determined by autility to be practicable, cost-effective,reliable, and advantageous to the utiIity interms of energy or capacity management.

second set of standards under the Actdeals with master metering of multifamilybuildings, automatic adjustment clauses, in-formation to be provided to consumers aboutrates applicable to them, procedures for ter-mination of electric service, and limitations onthe inclusion in rates of costs attributable toutility promotional and political advertising.

The new law’s most significant opportunityfor Federal participation in utility ratemakingmay well be its provision for intervention in ad-ministrative proceedings. The Secretary ofEnergy (along with affected utilities and con-sumers) is allowed to “intervene and partic-ipate as a matter of right in any ratemakingproceeding or other appropriate regulatoryproceeding relating to rates or rate designwhich is conducted by a State regulatory au-thority.” (16 U.S.C. §2601) According to thereport of the conference committee on the leg-islation, such intervention is for the purpose ofparticipating in the consideration of theFederal standards “or other concepts whichcontribute to the achievement of the purposesof the title. ” The report also states a congres-sional intent that the phrase dealing with


“other concepts” be construed broadly “sothat no one will have to prove his case in ad-vance before being allowed to intervene. ” I neffect, this provision for Federal interventionaffords DOE a means of monitoring and en-couraging effective state implementation ofthe Act through direct involvement in Stateregulatory proceedings.

DOE Electric Utility Rate DemonstrationProgram

Because empirical data on consumer re-sponse to alternative rate structures arescarce, the Federal Government’s most helpfulrole may be in providing such data.

The electric utility rate demonstration pro-gram, initiated by FEA in 1975 and continuedto the present by DOE seeks to analyze theresults of 16 experiments with innovative ratesundertaken by utiIities across the country.

The rate demonstration program, on which$9.2 million in Federal funds (supplemented byat least 10-percent State and local funding)were expended through FY 1978, has focusedprimarily on time-of-use rates applied toresidential customers. Approximately 18,000households have been studied, either as testingunits or as control points. DOE, along withcooperating State utility commissions, util-ities, and consulting analysts, has been watch-ing customers’ total electricity consumption,kilowatt demand peaks, and temporal use pat-terns to determine the degree of price elas-ticity among residential users over a period of2 to 3 years. Although the analytical phase ofthe rate demonstration program is still under-way, some results have become available andpreliminary conclusions have been drafted byDOE.

Tables 57 and 58 list the projects in DOE’srate analyses and describe the innovationstried in each test. On the basis of complete testdata from two States and partial data fromfour more, DOE has arrived at the followingtentative general findings:27

“’’Electric Utility Rate Demonstration Program FactSheet,” Economic Regulatory Administration, November1977.

●

●

●

●

customers have uniformly been found torespond significantly to changes in elec-tricity prices at all hours of the day, in-cluding peak periods;peak period kilowatthour price elasticity(i.e., “responsiveness”) appears to exceedoff peak elasticity;t i me-of-use rates reduce residentialcustomer peak demands even on the hottest days of the year; andcustomer attitudes toward time-of-userates are decidedly positive.

More specifically, DOE has observed sur-prisingly uniform—and encouraging—resultsamong the various time-of-use demonstrationprograms, even though the study designsvaried considerably from test to test. Somestudies metered consumption and demandduring two different periods–onpeak and off-peak –while others employed at least one ad-ditional rating period, a “shoulder” or“intermediate” time of the day. The durationand the time used for each period varied ac-cording to different utilities’ peakloads. Whilesome time-of-day customers were comparedwith their own utility records from a yearearlier, others were examined in comparison togroups of control customers with similardemographic, economic, and historical elec-tricity consumption characteristics. Thenumber of participating customers in eachstudy ranged from fewer than 100 to severalthousand. Some experiments lasted only ayear, while others are continuing for up to 5years. Finally, the ratios of onpeak to off peakrates differed substantially among the studies.Specific results of time-of-use tests in sixStates, dealing with kilowatthour consump-tion, kilowatt demand, and shifts among ratingperiods, are summarized in tables 57 and 58.

In a few cases, utilities attempted to esti-mate actual or potential effects of time-of-usepricing on their system loads and fuel costs.Connecticut Light & Power Company, for ex-ample, perceived an actual reduction insystem peak of 8 to 13 MW in its peak wintermonth, and 70 to 83 MW in its peak summermonth. Arkansas Power & Light projected afuel cost saving of $20 million “over the shortrun” if the experimental rate design were to beimplemented on a systemwide basis.

Table 57.—DOE Electric Rate Demonstration ProgramkWh Consumption Effects—

Onpeak “Shoulder” period Off peak Net change inState consumption consumption consumption consumptionArizona T-O-D customers reduced, Increased slightly, compared Inconclusive evidence

compared with same with year earlier, suggests slight declinecustomers a year earlier according to inconclusive

evidenceArkansas T-O-D customers reduced Slight decline on

to level 18-26% below average summer days, largercontrol customers on average larger decline on peak daysummer days, and 15-59%below control customerson system annualpeak day

California T-O-D customer reduced Increased, compared withcompared with same year earliercustomers 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 incontrol 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

winterOhio - – 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 controlcontrol 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 earlierearlier (amount not quantified) (not quantified)

Six-State summary T-O-D customers reduced T-O-D customers increased in T-O-D consumed15-30% compared with comparison with control 5-8% less overall than controlcontrol customers or year customers or year earlier customers. Exception: Vermont,earlier Most reductions occur in

summer. Some increases occurin winter


Lu


Much analysis of the rate demonstrationprogram data remains to be done, but the ini-tial findings appear to confirm the usefulnessof time-differentiated rates as means of en-couraging more efficient, cost-effective elec-tricity delivery. Evidence of consumer accept-ance of such rates may well be among themore important observations to date. It shouldbe emphasized, too, that long-term implemen-tation of time-differentiated rates can be ex-pected to produce greater consumer responsethan the present experiments. This is becauseshort-term response relies almost entirely onbehavioral changes in the usage rate and timeof use of presently owned appliances, whilelong-term response could include widespreadchanges in capital stock, such as purchases ofwater heaters with timing devices to limit theiroperation to off peak hours.

DOE Load Management Activities

The Department of Energy encourages loadmanagement through a small program in theDepartment’s Economic Regulatory Admin-istration (ERA). DOE provides States withfunds and technical assistance to advance cur-rent knowledge and experimentation with loadmanagement programs, and will monitor theStates’ compliance with the new requirementsfor consideration of Federal standards (includ-ing load management) in future ratemakingproceedings. The Department’s Electric EnergySystems Division and Energy Storage Divisionalso carry out research and development ac-tivities to assist the development of new loadmanagement technologies.

Conservation Programs of the FederallyOwned Power Authorities

The federally owned segment of the electricpower industry, which accounts for about 10percent of the Nation’s installed generating ca-pacity and 5 percent of total kilowatthoursales, has always served as a “yardstick” forcertain national policies. For most of the his-tory of the two largest Federal power authori-ties–the Tennessee Valley Authority (TVA)and the Bonneville Power Administration —they have served as models for effective ex-pansion of electricity service to rural areas atlow cost. More recently, they have begun to

function as models for programs in energy con-servation.

The Tennessee Valley Authority encouragesconservation among its customers in a numberof ways. TVA offers consumers interest-freeloans, payable over 3 years, for purchasing andinstalling insulation in their attics. The insula-tion program will soon expand to allow 7-yearinterest-free loans of up to $2,000 for a numberof conservation measures, including stormwindows, floor insulation, caulking andweather-stripping, and insulation of duct work.TVA will determine which measures are cost-effective for each customer and will inspectthe installation before releasing funds. Addi-tionally, TVA offers customers now using elec-tric resistance heating systems a means of con-verting to heat pumps by providing 81/2-per-cent loans repayable over 10 years.

[n the area of rates, TVA asserts that its ratestructure is based on cost of service and en-courages conservation by applying automaticadjustment clauses only to that portion of acustomer’s electricity consumption that ex-ceeds 500 kWh in any billing period. TVA isalso experimenting with four different ratestructures designed to encourage conserva-tion. In one study, time-of-use rates are beingapplied, with kilowatthour consumption billedat 9 cents per kWh during onpeak periods and1.5 cents per kWh during off peak periods.Analysis of the results of the study is justbeginning.

The Bonneville Power Administration hasconcentrated its conservation efforts on itsown Internal operations and on informationdissemination among its employees, its utilitycustomers, and end-users. The Bonneville out-reach effort has included workshops on insula-tion, energy audits, and training sessions forCETA workers employed in weatherizationprograms. Bonneville has also undertaken cer-tain research programs aimed at conservation;these include experimental use of aerial andground-based infrared sensors to detect heatloss from buildings, and the installation ofwind data recording stations to determinewhere wind-driven electric generator systemscouId be installed to supplement hydroelectricenergy in the Bonneville service area. Bonne-


vine has not developed an insulation financingprogram or experimented with conservation-oriented rates.

Conclusions for Utility Policy

In response to the dramatically different cir-cumstances in which utilities have had tooperate in recent years, electric and gas com-panies are undertaking a number of new ac-tivities to encourage residential users toreduce their consumption and aid in levelingsystem peakloads. Because many of theseactivities — including energy audits, insulationprograms, rate reforms, and load manage-ment — are recent in origin and used by only arelatively small number of companies, impor-tant areas of uncertainty about their efficacy

THE FUEL OIL

The distribution of home heating oil, as anindustry, was developed by oil appliancemanufacturers and their retail installers.Today, nearly 80 percent of heating oil de-mand in the United States is served by in-dependent fuel oil marketers.

Although the heating oil industry operatesnationwide, about 90 percent of the heatingoils are sold in only 28 States, principally alongthe northern tier of the United States from thePacific Northwest to New England and downthe east coast to Florida.28 Over 16 million resi-dential buildings depend on fuel oil for spaceheating. 29

Historically, the fuel oil industry has notbeen regulated. In recent years, however, theindustry has been subject to Federal regula-tions on pricing and allocation during periodsof short supply. No such regulations arepresently in effect.

‘aSales of Fuel Oil and Kerosene in 1977 (Departmentof Energy, Energy Information Administration, 1978), p.6.

zgAnnua Housing Survey, 7976 (Department of com-merce, Bureau of the Census, 1978), p. 6.

remain to be clarified. The opportunities for en-couraging conservation through utility actionsappear promising, but the adjustments to newmethods of operation are proving difficult insome cases for both the utilities and theircustomers.

The great diversity among the Nation’s 3,500electric utility companies and 1,600 retailnatural gas distributors precludes the develop-ment of a single national policy for conserva-tion. Rather, there must be a flexible approachenabling each utility to design a residentialconservation program around its unique sys-tem load, supply and cost situation, climate,and other variables. An examination of Federalprograms and opportunities suggests thatrecently enacted legislation and programs of-fer a good start.

DISTRIBUTORS

Unlike the utilities with whom the industrycompetes for space-heating markets, most fueloil marketers do not have captive customers,nor do they have a monopoly on product orservice territory. The marketers are forced tocompete within the oil industry for productsupply, advantageous pricing, and customers.As marketers are in direct contact with theconsumers, the success of their businessdepends entirely on customer satisfaction.One of the major concerns of fuel oil mar-keters is the need to maintain customer good-will in light of national energy and conserva-tion policies that could conceivably discrim-inate against fuel oil consumers and jeopard-ize the competitive position of the marketers.

Industry Size

In 1972, the Bureau of the Census of theDepartment of Commerce estimated that therewere 7,276 fuel oil dealers with payrolls. Thisestimate, however; includes only those fuel oildealers who list the sale of fuel as their prin-cipal business. However, in many markets, par-ticularly nonurban markets, petroleum market-ers may distribute both gasoline and heating


oil, with gasoline predominant. According toindustry estimates, the total number of fuel oilsuppliers, including those who distribute moregasoline than fuel oil, falls between 10,000 and12,000 marketers.

The predominant distillate oil consumed inresidential space heating is No. 2 fuel oil.Heavier heating oils (No. 5 and No. 6 oil) areused primarily by industrial accounts, and areusually purchased directly from refineries orterminal facilities. Consumption of No. 2 fuelin 1977 amounted to 1.2 billion barrels.30 No. 1fuel oil (kerosene) and No. 4 oil are also usedfor space heating. The demand for these distil-late oils in 1973-77 appears in table 59.

Fuel Oil Marketers

About 85 percent of independent heating-oilmarketers sell directly to consumers. There-fore, they are regarded as retailers rather thanjobbers. However, a dual petroleum marketerwill often have different suppliers or brandsfor its heating oil and its gasoline. It is notunusual for a distributor to be a jobber for oneproduct and a retailer of the other.

A marketer may service from several hun-dred to 50,000 or more customer accounts. Ac-cording to a 1978 survey, 16 percent of themarketers had more than 3,000 customers;their share represented 55 percent of thecustomers recorded .3’ Forty-seven percent ofthe companies had between 1,000 and 3,000accounts, representing 41 percent of thecustomers. Forty-two percent of the marketershad fewer than 1,000 customer accounts, ac-counting for approximately 14 percent of thecustomers. The survey also indicated that allfuel oil marketers sold No. 2 fuel oil, abouthalf sold No. 1 fuel oil (kerosene), and less than10 percent sold other fuel oils. The survey in-dicated that about 80 percent of marketerssold and serviced oil heat equipment, account-ing for 62 percent of that end of the business.Seventy-eight percent of the heating oil mar-keters surveyed operate a bulk plant (largestorage) facility.

30Sa/es of Fue/ Oil, op cit., p. 1.‘I Margaret Mantho, “Margins Improve to Offset Rising

Costs,” Fuel Oil and Oil Heat, September 1978, p. 35.

Sales of Distillate Fuel Oils

Figure 17 represents sales of distillate fueloil by end use sector for the period 1973-77. Asindicated by the table, nearly 50 percent of allsales of distillate fuel oil goes to heating. Thedata presented does not indicate what percent-age of total sales is earmarked for the residen-tial sector. However, according to one DOE of-ficial, approximately 85 to 90 percent of No. 2heating oil is sold in the residential sector.

In general terms, fuel oil marketers delivermore than 2 million barrels of distillate oildaily from November through March to meetresidential space-heating needs. The deliveryschedules are temperature-sensitive and estab-lished according to the calculated “degreedays.” The average consumption per heatingseason for residential home heating variesfrom about 900 gallons in the South-Atlanticregion to about 1,600 gallons per heating sea-son in the New England region.

Service Activities

For the 1977-78 heating season, about 67 per-cent of all fuel oil consumers had their oil heatequipment checked and serviced as part of an-nual efficiency checkups. About 40 percent offuel oil consumers have service contracts pro-viding for annual efficiency checkups. Theseannual service calls are generally consideredessential to maintain furnace efficiencies andpromote fuel conservation.

In the same heating season, the averageserviceman was responsible for 440 customersand managed to make six calls per day, exclu-sive of efficiency checkups.32 About 53 per-cent of the servicemen serviced burners exclu-sively. The remainder either installed burnersonly or serviced and installed them.

The lifetime of oil heat equipment is approx-imately 20 years while other equipment— suchas gas furnaces — may be in place much longer.Improvements in oil burner efficiencies overthe years have acted as an incentive for morerapid replacement of oil furnaces.

32 Margaret Mantho, “Annual Service ManagementAnalysis, ” 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)

Domesticdemand Production Imports Stocks

1975

1976

1972 Average. . . . . . . . . . . . . . . . .

1973 Average. . . . . . . . . . . . . . . . .

1974 January. . . . . . . . . . . . . . . . .February . . . . . . . . . . . . . . . .March . . . . . . . . . . . . . . . . . .April. . . . . . . . . . . . . . . . . . . .May . . . . . . . . . . . . . . . . . . . .June. . . . . . . . . . . . . . . . . . . .July . . . . . . . . . . . . . . . . . . . .August . . . . . . . . . . . . . . . . . .September . . . . . . . . . . . . . .October . . . . . . . . . . . . . . . . .November . . . . . . . . . . . . . . .December . . . . . . . . . . . . . . .

Average . . . . . . . . . . . . . . . . .

January . . . . . . . . . . . . . . . . .February . . . . . . . . . . . . . . . .March . . . . . . . . . . . . . . . . . .April . . . . . . . . . . . . . . . . . . . .May . . . . . . . . . . . . . . . . . . . .June. . . . . . . . . . . . . . . . . . . .July . . . . . . . . . . . . . . . . . . . .August . . . . . . . . . . . . . . . . . .September . . . . . . . . . . . . . .October . . . . . . . . . . . . . . . . .November . . . . . . . . . . . . . . .December . . . . . . . . . . . . . . .

Average . . . . . . . . . . . . . . . . .

January . . . . . . . . . . . . . . . . .February . . . . . . . . . . . . . . . .March . . . . . . . . . . . . . . . . . .April . . . . . . . . . . . . . . . . . . . .May . . . . . . . . . . . . . . . . . . . .June. . . . . . . . . . . . . . . . . . . .July . . . . . . . . . . . . . . . . . . . .August . . . . . . . . . . . . . . . . . .September . . . . . . . . . . . . . .October . . . . . . . . . . . . . . . . .November . . . . . . . . . . . . . . .November FEA/APl . . . . . . .December FEA/APl . . . . . . .

Average FEA/APIC . . . . . . . .

1977 January FEA/APIC. . . . . . . . .

2,913

3,092

3,8353,8493,1642,8522,4502,3772,3092,3092,3852,8873,1573,853

2,948

3,9533,9673,2933,0942,3822,2662,1122,1732,1632,6752,5443,778

2,849

4,2983,6873,3362,7882,5192,4362,2552,2372,618

c3,0283,7143,7244,654

3,130

5.237

2,629

2,820

2,8802,3992,2262,5222,7042,7832,7922,7052,5522,7002,8012,924

2,668

2,8522,6792,5312,4862,4312,5742,5892,5922,8122,7442,7672,783

2,653

2,7342,9612,7932,6552,7382,8852,9592,9822,9472,9953,1803,1993,273

2,925

3.374

181

392

464306287220268220221125152237454515

289

32430225611013668

10692

12910396

124

153

1642071519697

151126131147141135136166

142

471

alsd,zad

alg6,@l

181,179149,125128,822160,645141,806160,645182,458198,673208,269209,908212,875223,717

199,715176,696161,111146,214152,027163,306181,472197,323220,732226,113235,749208,787

165,428150,439138,306137,249147,057165,064190,861217,930232,230235,599223,648221,178183,500

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 DecemberJanuary 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-efficiencyand 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 andrailroads

❑ Electricutilities Heating

$1,150.9

1973 “ 974

$ 1 , 2 3 1 0

5.1%

1976

2

3

4

5

6


for high-efficiency equipment; research effortsare therefore centered in the furnace manufac-turing industry.

New Construction

In 1971-77, from 8 to 11 percent of newhomes were heated by oil. The following chartcompares the relative position of oil, gas, andelectricity in the new home market:

Percent of New Homes by Type of Heating Fuel33

Oil Gas EIectricity1971 . . . . . . . . . . . . . 8 60 311972. . . . . . . . . . . . . 8 54 361973. . . . . . . . . . . . . 10 47 421974. . . . . . . . . . . . . 9 41 491975. . . . . . . . . . . . . 9 40 491976. . . . . . . . . . . . . 11 39 481977. . . . . . . . . . . . . 9 38 50

In the Northeast, however, the figures indi-cate an increase in the oil share of the newhome market in 1971-76. The following chartshows the comparisons for the Northeast:

Percent of New Homes by Type ofHeating Fuel34

Oil Gas Electricity971. . . . . . . . . . . . . 31 42 26972. . . . . . . . . . . . . 33 36 29973. . . . . . . . . . . . . 35 34 28974. . . . . . . . . . . . . 32 29 38975. . . . . . . . . . . . . 41 24 33976. . . . . . . . . . . . . 51 15 319 7 7 . .........,.. 4 9 17 31

Thus, while oil heat has grown slowly in thenational new home market, stilI accounting foronly slightly over a tenth of the units, oil heatin new homes in the Northeast has grown fromjust under a third of the market in 1971 to overhalf in 1976. The decline of the gas share in theearly- to mid-1 970’s, both nationwide and inthe Northeast, can be attributed to prohibi-tions on new gas hookups by several State pub-lic utility commissions in response to supplyshortages. Recent increases in gas supply andtermination of moratoria on new hook-upsmay reverse this trend.

qJC~aracterjStjcS of New Housing 7977 (Department of

Commerce, Bureau of the Census, 1978), p. 28.341 bid.

The Role of Oil Heat Distributors inEnergy Conservation Practices

Introduction

Given the relatively small and highly con-centrated nature of the residential oil-heatingmarket, a number of factors affect— and lim-it — the role of fuel oil distributors in residen-tial energy conservation. This section outlinesthe industry’s assessment of its current role inthe energy conservation practices of its cus-tomers. The assessment is the product of aquestionnaire that was mailed to 48 fuel oildistributors and 19 State, regional, and localtrade associations in late November 1977.Twenty-one distributors and five trade associa-tions responded from all regions of the countrywhere fuel oil is consumed for space heating.

Marketing of Energy Conservation Products

Very few fuel oil distributors are activelyselling residential insulation, storm windowsand doors, and other conservation hardware.However, most fuel oil distributors are in-volved in helping their customers reduce theamount of fuel oil consumed. As mentionedearlier, about 69 percent of the residential con-sumers of fuel oil have their heating equip-ment checked and/or tuned at least once ayear through a direct service offered by thedistributors and many of the refiner markets.

More fuel oil distributors use independentcontractors to provide insulation and otherenergy conservation products to their custom-ers than sell these materials directly.

Besides the basic energy hardware (e.g., re-placement burners, boilers, furnaces, insula-tion, etc.) that is being marketed by fuel oildistributors, some have attempted to marketother energy conserving equipment such asautomatic stack dampers, stack heat reclaim-ers, outdoor temperature controls, humidifiers,attic vents, fireplace heaters, and other relateditems.

Reduction in Annual Fuel Consumption

More than half of the respondents reportedthat 50 percent or more of their customershave reduced their annual consumption by

144 . Residential/ Energy Conservation

more than 15 percent since the 1973 price rise.States in the colder climates reported thehighest percentage of customers conservingfuel oil.

In the 1972-73 heating season (adjusted foractual rather than average degree days), resi-dential oil consumption reflected predictableregional patterns, influenced by climate—forexample, a low of 800 gallons in South Caro-lina to a high of 1,750 gallons in northern NewEngland. It should be noted that homeownerconsumption can vary widely even within acommunity. This divergence is largely attrib-uted to variables such as living-space size,thermal characteristics of the housing unit,and consumer behavior patterns.

Factors That Influence and Limit Market Entry

Why have a few fuel oil distributors enteredthe business of marketing insulation and stormwindows and doors, while most have not? Thereasons most often cited include the expecta-tions of increased profits, increased service ofexisting customers, and the prevention of cus-tomer switches to other fuels.

What prevents fuel oil distributors from mar-keting insulation and other related items? Rea-sons most frequently cited include the lack ofavailable qualified independent contractors toservice the distributor’s customers, and thelack of capital to get into the conservationbusiness. Furthermore, most competing distrib-utors are simply not marketing this hardware.Other disincentives include the apparent short-age of insulation and other energy materials,the inability of homeowners to pay for orfinance energy conservation measures, and thelimited public interest in energy conservation.

Advertising is one of the major vehicles bywhich fuel oil distributors penetrate the mar-ket. Bill-stuffers are the most popular form, ac-counting for 5 to 30 percent of total advertis-ing budgets. Direct mail to potential customers

runs from a low of 10 percent to a high of 90percent of advertising budgets. Radio is alsoused, but it accounts for a relatively lowpercentage of the total advertising budget.

A number of marketing choices that are ex-ercised by fuel oil distributors are based ontechnical information about energy conserva-tion. Some of the most frequently citedsources include State trade associations,magazines and other publications of generalcirculation, and local industry trade associa-tions Suppliers and manufacturers of energyconservation materials, however, are consid-ered the most reliable sources of technical in-formation

Fuel Oil Customer Accounts

Since 1973, when costs of fuel oil began torise, oil distributors’ delinquent customer ac-counts (past due by more than 30 days) have in-creased significantly. Many distributors re-ported increases of about 15 percent orgreater, and some distributors have reportedan increase in delinquent accounts by 50 per-cent or more. Obviously, customers with delin-quent accounts cannot normally finance addi-tional expenditures, such as conservation im-provements. A large number of delinquent ac-counts affects the ability of distributors to setaside capital or to acquire financing for thepurpose of developing energy conservationguidelines.

One of the most significant problems facingfuel oil distributors in terms of their ability tocarry delinquent accounts or to offer creditterms for financing conservation efforts is theelimination by wholesale suppliers of discountterms for payments. Another problem fre-quently cited is the increased interest chargesassociated with financing more expensive in-ventory. Furthermore, increases in insurancecosts have also contributed to oil distributors’cash flow problem.


TECHNICAL NOTES–COMPUTER SIMULATION:THE EFFECT OF CONSERVATION MEASURES ON UTILITY

LOAD FACTORS AND COSTS

The Question

Will widespread adoption by residentialelectric customers of conservation measures,particularly insulation, result in utility loadchanges that are economically counterproduc-tive to the utilities and/or their customers?

Background

Many residential consumers of electricityare investing in energy-saving materials anddevices for their homes in hopes of reducingtheir utility bills, or at least stemming the rapidincreases they have experienced recently. Add-ing insulation to existing homes is the actionmost commonly taken, but some homeown-ers — and builders of new homes— are alsochoosing HVAC systems with energy efficiencyand cost savings in mind. Electric heat pumpsare becoming widely used for this reason. Con-sumer attitudinal surveys indicate that electriccustomers investing in conservation measuresare motivated primarily by the hope of savingmoney.

Whether or not consumers experience loweror even slower growing utility bills in thefuture depends ultimately on whether or nottheir utility companies can achieve cost sav-ings that can be passed on, in turn, to rate-payers. Many factors affect utility costs, andconsumer conservation actions will not be theonly determinant of the direction in whichrates will go in the next few years. But utilitymanagers have raised questions about the pos-sibility that conservation practices could havesome adverse effect on load factors and sys-temwide costs, thereby contributing to a needfor higher rates. From the consumer’s stand-point, this would surely be the ultimate exam-ple of “Catch-22.”

The fear of cost increases caused by conser-vation actions is based on the fact that utilitycosts are positively correlated to seasonal and

daily variations in the demand for electricity,and on the possibility that insulation and otherconservation measures could magnify thesevariations in uneconomic ways. EIectric com-panies must have available to them at anygiven time enough generating capacity to meetthe highest level of demand expected at thattime, plus a reserve margin of capacity to usein the event that some powerplants are shut-down by emergencies or for routine mainte-nance. But since the peak demand level maybe reached on only a few days each year, andfor only a few hours even on those days, util-ities are Iikely to have a considerable fractionof their total generating capacity idle much ofthe time.

Idle generating capacity is expensive, andcertain kinds of powerplants are more expen-sive to keep idle than others. Although a com-pany pays for fuel and other operating costsonly when the plant is operating, many fixedcosts — such as interest on the capital bor-rowed to build the plant— must be paid regard-less of how much the plant is used. It follows,then, that newer, bigger, more capital-inten-sive plants (particularly nuclear plants) are themost expensive to shutdown, while older,smaller plants (like oil-fired turbines) are theleast expensive to hold in reserve. Conversely,new plants are often the least expensive tooperate, while the older ones (which usuallyuse the most expensive fuels) are the mostcostly to run.

A utility’s daily or yearly “load’ ’-the totalamount of electricity it must generate duringthat time— is usually thought of as havingthree components. The baseload–-that whichis demanded nearly all the time— is the largestcomponent and is usually generated with thecompany’s newest, largest, and most techno-logically advanced plants. The intermediateload–an increment that is demanded less ofthe time— is typically derived from slightlyolder and smaller plants, fired with fossil fuels.


The peakload — a sharply greater demand com-ponent that may be demanded only occasion-

alIy — is usually met with small oil- or gas- fired

turbines, or with pumped-storage hydroelectricp l a n t s , o r b y p u r c h a s i n g p o w e r f r o m o t h e r

companies shar ing the same d is t r ibut ion gr id .F igures 18 and 19 i l lus t ra te a typ ica l sys teml o a d a n d t h e t h r e e m a j o r g e n e r a t i n g c o m -

ponents.

Figure 18.—Dispatching Generation to Meet a

6,000Cycling generation

4,000

3,000

2,000

1,000

012M 4 8 12N 4 8 12M

Time of Day

SOURCE: Electric Utility Rate Design Study, Rate Design and Load Control:Issues and Directions, a Report to the National Association ofRegulatory Utility Commissioners, November 1977

The costs of keeping and operating these dif-ferent kinds of plants vary, typically, as fol-lows:

●

●

Baseload plants–high fixed costs, lowoperating costs, resulting in the lowestoverall costs when in operation.

Intermediate-load plants— medium fixedcosts, medium-to-high operating costs, re-sulting in medium overalI costs when inoperation.

● Peakload plants — low fixed costs, veryhigh operating costs, resulting in the high-est overalI costs when in operation.

Figure 19.— Daily Load Curve

o12M 4 - 8 12N 4 8 12M

Time of day

= 0.73 = 73 %

SOURCE. Electrlc Utility Rate Design Study, Rate Design and Load Control:Issues and Direct/ens, a Report to the National Association ofRegulatory Utility Commissioners, November 1977.

A major determinant of total utility costsand generating capacity needs is a company’s“annual load factor, ” which is the ratio of theaverage utility load over the year to the peak-Ioad during any time period (usually 15minutes] during the year. The higher the loadfactor, the less total downtime the companyexperiences in its generating capacity. Up to acertain point, the utility benefits from keepingits plants running, generating sales revenueswith which to cover both fixed costs and oper-ating costs. Some idle capacity is needed, how-ever, to allow normal maintenance operationsto take place, to substitute for other plants inemergency outages, and to meet the peaks.When all plants are operating and additional


OTA Analysis of Conservation Impacton Utility Loads and Costs

A model developed for OTA’s recent study,Application of Solar Energy to Today’s EnergyNeeds, analyzed the impact of conservationmeasures on utiIity operations.

OTA’s model simulates utilities in four U.S.cities. The utility loads, shown in table 60, con-sist of a mix of single-famiIy homes, town-houses, low- and high-rise apartments, shop-ping centers, industry, and streetlighting. Eachof the four cities has the same number of unitsalthough the heating and cooling loads aredetermined by the weather conditions, takenfrom 1962 data, of each city. The residentialheating and cooling equipment mix is initiallyset to match conditions in 1975 and then fore-cast. to 1985 using a residential energy usemodel developed by ORNL. All the single-

family homes are initially set to the same levelof Insulation, which the model can increase toa higher value. The insulation levels in theother buildings do not vary. The change forsingle-family homes corresponds to a heat loadreduction of 31 to 49 percent, depending onthe location. In addition to the insulationlevel, the type of heating equipment can bechanged to allow the possibility of varying thepercentage of homes that are electricallyheated. Diversity is built into the model so thatthe peakloads of the individual homes do notalI occur simultaneously. 35

To determine the effects on utility loads ofincreased insuIation among resident i al

details about the model and the hypotheticalut I I loads can be found in Application of Energy

Energy Needs, vol. 1, chapter V, and vol. 11,chapter V 1.


Table 60.—1985 Projection of Heating Unit Mixand Basic Loads (number of buildings)

Albu- Fortquerque Boston Worth Omaha

Single family unitsElectric heat. . . . . . 10,470 8,080 11,790 7,720Fossil heat. . . . . . . 45,450 47,840 44,130 48,200Electric cooling. . . 43,613 34,863 55,920 55,920

Total . . . . . . . . . . 55,920 55,920 55,920 55,920

Townhouses . . . . . . . 6,960 6,960 6,960 6,960Low rise units . . . . . . 2,160 2,160 2,160 2,160High rise units. . . . . . 600 600 600 600Shopping centers . . . 30 30 30 30

Annual industrial loads (all cities) —2.54 billion kWh.Annual streetlight load (all cities) —98.78 million kWh.

customers, the model was run first with allsingle-family homes at the baseline insulationlevel and again at the high insulation level,using the forecast 1985 mix of home heatingsystems initially, and then using an assumptionthat 50 percent of the homes were electricallyheated. (The latter case was included to simu-late utilities with winter peaks.) All other loadcharacteristics remained constant throughoutthe analysis. The heating and cooling mix forsingle-family homes for the 1985 forecast is

shown in table 60. Table 61 shows the number-ing of buildings assumed to have electric heatin the case when it was assumed that 50 per-cent of residences use electric heat.

Results

The load factor and seasonal peak demandsare given in table 62 for the reference and thehigh insulation cases for both mixes of residen-tial heating —1 985 projection and high electricresistance. The results show that an increase ininsulation does not change the load factor sig-nificantly. In all but two situations, the loadfactor Increases as insulation is added, but theincrease does not exceed 4 percent. The twoexceptions are the utilities with 50-percentelectric resistance heat that still experiencetheir peak loads in the summer.

Table 61 .—50-Percent Electric Resistance Heatingby 1985 (number of buildings)

Electric FossilCity heat heat Total

Albuquerque, Boston,Fort Worth, and Omaha . . . . 27,960 27,960 55,920

— — —

Table 62.–Simulated Utilities’ Load Factors, Peaks, Summer-Winter Ratio by 1985

— . . .Albuquerque Boston Fort Worth Omaha——

Reference High Reference High Reference High Reference Highcase insulation case insulation case insulation case insulation—— . .

Base caseLoad factor. . . . . . . . . .Winter peak (MW,

month). . . . . . . . . . . .Summer peak (MW,

month). . . . . . . . . . . .Summer-winter ratio . .

Load factor. . . . . . . . . .Winter peak (MW,



Load factor. . . . . . . . . .Winter peak (MW,



0.5341,359Jan.

1,386Aug.1.02

0.4721,677Jan.

1,368Aug.0.79

0.4651,632Jan.

1,373Aug.0.85

0.537 0.498 0.505 0.4701,315 1,316 1,263 1,562Jan. Feb. Feb. Jan.1,352 1,354 1,320 1,942Aug. Jul. Jul. Aug.1.03 1.03 1.05 1.24

50-percent electric resistance heating case0.485 0.466 0.492 0.4831,569 1,600 1,433 1,842Jan. Feb. Feb. Jan.1,348 1,392 1,362 1,958Aug. Jul. Jul. Aug.0.86 0.87 0.95 1.06

50-percent heat pump case0.484 0.446 0.483 0.4701,528 1,587 1,426 1,778Jan. Feb. Feb. Jan.1,351 1,400 1,368 1,976Aug. Jul. Jul. Aug.0.88 0.88 0.96 1.11

0.4751,472Feb.1,873Aug.1.27

0.4811,594Jan.1893Aug.1.19

0.4761,569Jan.1,906Aug.1.21

0.4481,453Feb.

1,823Jul.1.25

0.4831,787Feb.

1,847

1.03

0.4631,787Feb.

1,861Jul.1.04

0.4531,397Feb.1,768Jul.1.26

0.4671,603Feb

1,805

1.13

0.4571,599Feb.1,815Jul.1.14


The effect on the summer-winter peak dif-ference, shown in table 62, is more pro-nounced. For all summer peaking utilities, foreither mix of heating systems, the ratio of thesummer to winter peak increases as a result ofincreased insulation. These increases rangefrom 1 to 12 percent and are greatest for theutilities with the highest percentage of electricheat. For the winter peaking utilities, the ratiodecreases by about 8 percent when the resi-dential insulation level is increased.

Discussion

These simulations indicate that the effect ofextensive additions of insulation by residentialcustomers depends greatly on the amount ofresidential electric heat in the utility’s load,since adding insulation affects heating loadsmore than cooling loads. Utilities that havewinter peaks or small electric heat loads (rela-tive to their cooling loads) experienced in-creases in their load factors; this means thattheir peakloads were reduced more than their

average loads by the addition of insulation. Onthe other hand, two of the simulated utilities —those with summer peaks accompanied bylarge electric heating loads–experiencedmoderate drops in their load factors after in-sulation was added. Summer-winter peakratios change very Iittle — under 2 percent— inthe cases for which the electric heating load issmall, but as that load increases, the change inthe ratio also grows until the winter peakbegins to exceed the summer peak.

In sum, OTA’s simulation indicates thatmost utilities will not be measurably affectedby the widespread addition of insulation byresidential customers, unless at Ieast a third orso of their residential customers use electricheat If more than half use electric heat, theutility will still experience an improved loadfactor as long as its peak comes in the winter.In such cases, the increase in load factor andthe leveling of differences between summerand winter peaks can assist in bringing aboutmore efficient use of generating capacity.

Chapter Vll

STATES AND LOCALITIES

Chapter Vll.— STATES AND LOCALITIES

Page

EPCA/ECPA: Legislative Foundation . . . . . . . . . . . 154Federal Energy Policy Leadership and Federal Funds for State Energy

Conservation Programs Will Continue to be Necessary to StimulateMany State Activities. . . . . . . . . . . . . . 160

WeII-Defined State Energy Policy Has Not Emerged . . . .161Energy Production Is the Predominant Concern of Energy-Rich States .161New State Organizations Are Emerging to Grapple With Current

Energy Problems . . . . . . . . . . . . . . . . . . . . 162Information Flow From Federal to State and From State to State

Government Requires Attention . . . . . . . . . . . . . 162State Legislatures Have Focused on Seven Major Issues in Energy

Conservation . . . . . . . . . . . . . . 163Four Residential Energy Conservation Programs Serve as the

Foundation of State Efforts . . . . . . . . . . . . . 164

TABLES

Page

63. Residential Energy Conservation Legislation, 1974-77 .. ....15564. Residential Energy Conservation Programs . . . . . . . .15765. 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 atreducing residential energy consumption, and States are the mechanism through whichlocalities receive Federal dollars for many efforts. But the wide differences among States inattitudes, resources, climate, geography, population, size, governmental organization, andhistory 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 informationcan be gleaned from viewing the States in the aggregate and a few States more carefulIy. Thischapter reflects a close look at 10 States, with some information about all 50. Although con-servation programs have been in place only a short time, it is possible to make some clearstatements about areas of difficuIty and areas of promise.

All States, plus the trust territories, have submitted plans for Federal approval under theEnergy 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 suc-cess. In these States, such as Minnesota, Iowa, and California, State agencies, localities, in-terest groups, and others have joined to produce innovative and fruitful responses to theproblem. On the other hand, many States have done very Iittle.

Most States have simply responded to theFederal initiative and available Federal fund-ing for the mandatory programs. Thus, theFederal Government tends to define State andlocal solutions. As the energy problems havebeen defined as a national problem and Con-gress has indicated that national policies willbe forthcoming (and indeed are in effect), mostStates have been hesitant to initiate policy in-dependently. Many States feel that the pro-grams initiated and the organizations set inplace, while responsive to the Federal view, areinappropriate to the particular State. MostStates have substantial problems in programintegration, technical assistance, and funding.Too few persons are trained to deal with thevaried and overlapping aspects of energy con-servation, and State agencies need more tech-nical help than they are receiving. The usualproblems—the pacing of Federal programs,uncertainties about guidelines and reguIations,communications problems, late release of Fed-eral funds, and changing players in nationaland regional Department of Energy (DOE)off ices — add to the confusion.

Beyond these complaints, which character-ize the early stages of many Federal efforts,are problems relating to the States’ energyviewpoint. States with substantial energy re-sources are less concerned with conservationthan with obtaining a “fair shake” in the solu-tion of the problems. States with large re-sources of fossil fuels place conservation in asecondary role compared to production issues.Legislative attention in these States tends to bedirected toward resource extraction and devel-opment.

Of particular difficulty to the States hasbeen the need to measure the energy savingsthe ‘approved State plan” will produce. Thisproblem is well stated by one of the leadingState energy agency directors, John Millhoneof Minnesota:

The requirement that the State plan save atleast 5 percent of the 1980 energy consump-tion presumed a statistical sophistication thatdoesn’t exist. Most rudimentary State energydata systems have an error of plus or minus 5percent or more. The Act provided that part of

153


a State’s grant would be based upon its pur-ported energy saving, stimulating exaggerationwhen accuracy about the real energy savings issorely needed. The emphasis was placed onBtu savings alone, penalizing States thatsought conversion from precious to moreabundant fuels — natural gas to coal, for exam-ple—when conversions meant more BtuwouId be used. 1

Another problem with the 5-percent goalrelates to the funding level. The State energy

conservation program required energy savingsequivalent to about 800 million barrels of oilby 1980, and provided only $150 million infunding authority. This meant that the FederalGovernment was trying to buy a barrel of oilthrough the program for 10 cents. 2

A review of the findings from the 10-Statestudy sample reveals a number of useful find-ings. More specific information appears intables 63, 64, and 65.

EPCA/ECPA: LEGISLATIVE FOUNDATION

The Energy Policy and Conservation Act(Public Law 94-163) and the Energy Conserva-tion and Production Act (Public Law 94-385)provide the foundation for Federal energy con-servation policy. (The former Federal EnergyAdministration (FEA) weatherization programhas been brought under these Acts.) These actsauthorize funding to States that develop ap-proved State energy conservation plans (SECP).The plans must address eight mandatory areas:

●

●

●

●

●

●

●

●

mandatory Iighting efficiency standards;programs promoting vanpools and publictransportation;mandatory standards on energy efficiencythat govern State and local procurementpractices;mandatory thermal efficiency standardsand insulation requirements;laws permitting a right-turn-on-red;public education;intergovernmental coordination in energymatters; andenergy audits for buildings and industrialplants.

A State may propose other activities toreceive Federal funding. The proposed pro-grams must cumulatively achieve a 5-percentreduction in energy demand by 1980.

Every State, plus the trust territories, hassubmitted plans for Federal approval. EachState plan outlines many programs, but rela-tively few program elements have beenstarted Some programs rely on State legisla-tive action. In most cases the legislatures havenot passed legislation specified in the plans.Most of the Federal funds for programs, more-over, were not dispersed until January 1, 1978.Planning activity predominated prior to thatdate

Seven major conclusions emerge from ex-amination of these States. They include orga-nizational or administrative difficulties as aresult of funding characteristics, the emer-gence of new agencies in fields previouslydominated by existing organizations, and prob-lems in providing qualified technical expertise.None of these is trivial in the development ofsuccessfuI 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 TechnologyFebruary 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

1 I ..— —. . . -.—

Appliance efficiencystandards

None

None

Requires listing ofenergy consumptioninformation andaverage operatingcost of appliancesbefore sale (1975)

Requires disclosureof energy consump-tion & efficiencyinfo. of appliances{1975)

None —

None

None

None .———. -..

Ch. VIl—States and Localities ● 157. . . . . . . . — — — — . — . . . . ..— . . - . . .=. . ..—— —. . . . . —-—.———

Table 64.— Residential Energy Conservation Programs’

1-P4

-----

I

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

Table 65 –State Issues in Residential Energy Conservation

State

California

Georgia

Illinois

Iowa

Conservation as anissue (Residential

Conservation is ofprimary concern toCalif. as an energyissue- CPUC & ERCDC

have stated apolicy that con-servation is theequiv. of analternativesource of supplyof energy

- Very concernedabout finders-keepers issue& natural gas

Energy conserva-tion does not seemto be a major issue.Has been givenrelatively Iittleattention

Coal conversion &exploration, nuclearwaste management& disposal are mostimportant: conser-vation a secondaryissue

Conservation con-sidered an impor-ant issue bygovernment

Other major issuesare:

nuclear facilitysiting

Natural gas avail-ability & curtailment

Energy producervs. importer

Energy importer— Heavily depend-

ent on naturalgas

— Dependent onsupplemental gasboth foreign &

domestic

Georgia is a verystrong energy import-er; it imports 97% ofits energy. HoweverHistorically low ener-gy prices & a mildcIimate make it diffi-cult to convince thepublic that conserva-tion is necessary

None

Imports 80-90% ofs energy

Intergovernmentalinteraction

(& local interaction

There appears to beextensive cooperationamong the actors inCalifornia althoughCPUC & ERCDCappear critical of oneother’s actions

All agencies appearcommitted to the samegoal of achieving max.conservation & worktogether toward thisgoal

There is relatively littleinteraction among theSEO, PSC, and LEG.PSC focuses on ratestructure and theIegislature considersenergy to be of minorImportance. Energy isleft, for the most part,[o the SEO

The GMA (Ga. Munici-pal Association is anextremely powerfulbody in Ga. & GPC isworking w/govt. at thelocal level to imple-ment conservationprograms

None

All agree thatintergovernmentalrelationships arecooperative

—— . . . . . .Policymakfngresponsibilityin State gov’t

Lack of comprehensiveenergy policy hasslowed conservationefforts

Seems that the energycommission & legisla-ture play the key role!in formation of energypolicy— very strong energy

commission

The Ga. SEO (Office cEnergy Resources) wecreated by executiveorder & maintains aclose relationship w/the governor Policyis formulated in theGovernor s office w/strong dependenceon the OER

Division of Energy

ICC in lead (accordingto the ICC and Gov-ernor’s Office ofManpower & HumanDevelopment)

All agencies see theEnergy Policy Council& the Iowa CommerceCommisslon as majoractors

SecondariIy. Stategeological survey &council onenvironmentalquality

Attitudetoward

Federal program<

Strong beliefamong all actorsthat the FederalGovernment hasnot been the im-petus for Calif. ’saggressive con-servation efforts

The State wantsthe Fed’s not topreempt

Lack of under-standing by Fedsof State problems—lack of cooper-ation with Stateson Important Is-sues In pursuingconservation

Feds. can play arole in settingmaterials

There exists apositive attitudew/in Ga. govt. to-ward Fed, inter-vention in Stateprograms. TheOER expressedthe view that theFed’s are flexi-ble w/respect totheir program re-quirements,even the’ theymay not addressthe most crucialenergy issues

Infrared ffyovers

Rate structures

Bottle biii

Coal usage study

Life aye@ costing

Schc@ retrofit

$ona

, ——.....-L. . . .

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

FEDERAL ENERGY POLICY LEADERSHIP AND FEDERAL FUNDSFOR STATE ENERGY CONSERVATION PROGRAMS WILL

TO STIMULATETIES

Ch. VII—States and Localities ● 161

missions, which may have many employees,have generally not devoted themselves toquestions beyond ratemaking. States appear tohave trouble stimulating public support for in-creased State energy research funding. Most ofthe individuals interviewed suggested it wouldbe imprudent for the State either to duplicateFederal analytical efforts or the ability of Fed-eral laboratories to perform technical re-search. This viewpoint has its notable excep-tions: California, for example, has establisheda large agency in addition to the existingPublic Utilities Commission. The agency hasbeen charged with conducting research anddeveloping material, building, and appliancestandards, as well as performing independentenergy forecasting. One of the largest energy-producing States, Texas, has garnered suffi-cient revenue from energy expiration activ-ities to be able to invest State money in seek-ing solutions to State energy problems.

Federal funding is a mainstay of State con-servation programs. Without this supportmany States would be limited in their pro-grams. Most States provide some contributionto conservation programs; some— like Colo-rado — rely on Federal funds. Federal legisia-

WELL-DEFINED STATE ENERGY

Many States can reach political consensuson nonenergy matters, such as education, andpresent that consensus to Federal decision-makers. In such cases, it is quite clear what aState wants from Washington. But with energy,no State has developed well-defined, compre-hensive programs and policies. In some in-

tion has been the prime motivation for thedevelopment of conservation programs inmost States.

Two other aspects of Federal action are ofconcern to States: program flexibility and tech-nical assistance. States want Federal programsto provide sufficient flexibility to accommo-date individual State needs. States viewguidelines more favorably than strict stand-ards, for example. States are also receptive totechnical assistance from the Federal Govern-ment. Georgia officials suggested that the lackof technical staff to develop lighting standardscould be accommodated by Federal technicalsupport. Only in Minnesota was it determinedthat DOE had provided someone to assist withconservation program design. Although Feder-al assistance in both manpower and fundingare desirable from the State viewpoint, mostState officials interviewed were critical of theaccountability requirements, which involve asignificant amount of paperwork. These of-ficials felt that Federal reporting procedureswere an unreasonable burden given the num-ber of persons and amount of time required tocomply with Federal procedures.

POLICY HAS NOT EMERGED

stances, States have been able to coalescetheir concerns on some (but not all) issues,such as California’s position on the importanceof liquefied natural gas, Texas’ views on natu-ral gas deregulation, or Pennsylvania’s standon coal extraction. But these are the excep-tions.

ENERGY PRODUCTION IS THE PREDOMINANT CONCERNOF 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 productsdisagrees with policies requiring it to distribute are equitably distributed.gas out of the State and convert some users to


NEW STATE ORGANIZATIONS ARE EMERGING TO GRAPPLEWITH CURRENT ENERGY PROBLEMS

Many organizations play a role in Stateenergy policymaking. These bodies may createnew laws or rules to suit existing authority. TheGovernors, legislatures, and public servicecommissions are traditional participants inenergy policy formulation. However, theseorganizations have accumulated new duties ornew considerations for the conduct of their ac-tivities. Others have begun to consider issuespreviously left to administrative agencies,private enterprise, or the Federal Government.The functional relationships between these ex-panding and new organizations are not fullyestablished. Uncertainty may disappear asFederal policy becomes established, State en-tities gather more experience, and as issuesbecome more clearly defined for State, local,and Federal decisionmakers. Meanwhile, Statedecisionmakers may tend to defer difficultissues for study, or to shift highly sensitiveissues to other decision makers (e. g., the Feder-al Government). Moreover, State energy policywill continue to be developed on a case-by-case basis.

INFORMATION FLOW FROM

State Energy Off ices (SEOs) and Public Serv-ice Commissions (PSCs) share responsibility forthe conduct and implementation of conserva-tion programs. The PSC utility regulatoryresponsibility and the SEO role in residentialenergy conservation programs provide a basisfor interaction between these two State agen-cies. It is not uncommon, however, to findthese agencies communicating very little withone another. PSCs are addressing the subjectof rate reform and encouraging voluntary par-ticipation by utilities in energy conservation.SEOs, on the other hand, are primarily respon-sible for developing and implementing energyconservation programs. Many proposed SEOprograms promote utility involvement in in-forming customers of conservation options,providing audits and, in some cases, financing.The lack of coordination between PSCs andSEOs can be a problem for utilities as well asconsumers.

FEDERAL TO STATE ANDFROM STATE TO STATE GOVERNMENT REQUIRES ATTENTION

Though Federal agencies gather a lot of in-formation, States have limited access to andbenefit from this information. State officialsreported their inability to secure informationthat they believed would be useful. No Federaleffort was identified to discern State needsand uses for federally derived information.

The same informational problems existamong States. Thus, each State must address aproblem from scratch, without significantbenefit from previous similar efforts at theFederal level or in other States. Information

must be disseminated. The Energy ExtensionService and the Solar Heating and Cooling In-formation Center are examples of ways to dothis. The Extension Service is designed to workwith individuals and organizations to defineproblem areas and to provide informationaland technical assistance. The InformationCenter is a federally funded repository for in-formation on specific issues available toanyone who desires it. More trained individ-uals who can work directly with groups areneeded.

Ch. VII—States and Localities “ 163

●

●

STATE LEGISLATURES HAVE FOCUSED ON SEVENMAJOR ISSUES IN ENERGY CONSERVATION

Thermal efficiency standards. States arerequired to develop thermal efficiencystandards in order to receive funds forSECP. In some cases, this may be done ad- ●

ministratively (as in Massachusetts); inothers new legislation is required. Most ofthe State effort here has been to adoptdirectly or to model one of three modelcodes, American Society of Heating, Re-frigeration, and Air Conditioning Engi-neers 90-75, National Conference ofStates on Building Codes and Standards,

●

or the Department of Housing and UrbanDevelopment (HUD) minimum propertystandards. Twenty-six States have the leg-islative authority to establish energy con-servation standards for new buildings.Twenty-one States have authority to es-tablish standards for all new buildings,and one State, Washington, has authorityto establish residential standards only.

●

One more State, New York, has adminis-trative authority to set standards forhomes. Only six States have explicit legis-lative authority to enforce the standardswhen local jurisdictions do not. Enforce- ●

ment has traditionally been a local, volun-tary choice. State legislation has been in-troduced to adopt one of the approvedcodes, usually in a modified form as partof a State building code. I n many cases, ●

proposed thermal efficiency code legisla-tion refines existing law, such as in Ten-nessee and California.California has adopted insulation materialstandards; several other States have con-

sidered similar legislation. States have notmoved ahead strongly and appear to bewaiting for Federal action.Minnesota and California have enactedappliance efficiency standards. Pennsyl-vania and Tennessee require disclosure in-formation to assist consumers in selectingenergy-efficient appliances. Here, too,most States are deferring to Federal ac-tion.Insulation programs have been enacted in4 of the 10 States studied. Many otherStates have passed similar legislation.Most of the legislation authorizes Stateexpenditures for weatherization for low-income and elderly homeowners. In Cali-fornia, the legislature directed the PublicUtilities Commission to authorize utilityinsulation and financing programs.Tax incentives to encourage homeownerconservation are being considered bylowa, Missouri, and Nevada. Alaska hasmade a $200 tax credit available since1977.Utility rate reform has been a major issuein most States. Maine, Tennessee, andCalifornia have enacted legislation requir-ing consideration of conservation rates bythe State PSCs.

Solar energy has been a popular legisla-tive topic. Many States have passed orconsidered legislation on sun rights, taxcredits, and solar system testing. MostStates view the use of solar energy as anelement of conservation policy.


FOUR RESIDENTIAL ENERGY CONSERVATION PROGRAMSSERVE AS THE FOUNDATION OF STATE EFFORTS

States have emphasized four programs in ●

residential energy conservation.

Consumer education –The complex i ty o fenergy issues may be the most significantobstacle to motivating consumer action in ●

conservation. States have placed muchemphasis on the development of con-sumer education materials and programs.

Weatherization p r o g r a m s – T h e s e p r o -grams were initially sponsored by FEA.

Energy audits –Utility-sponsored auditshave been one of the most successful andwidely used programs. Audits have beeninstrumental in the encouragement of ret-rofit insulation activities by homeowners.Insulation retrofit– State energy officemedia presentations and utility bill-stuff-ers have provided strong motivation forconsumer participation in retrofit pro-grams. Many consumers are financingtheir retrofits through the utilities.

State conservation plans have, in many in- Besides these four programs, a few Statesstances, provided for the continuation of have studied the need for State-determinedthese programs. In some cases, State heating, ventilating, and air-conditioningfunds 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 byStates and utilities

Chapter Vlll

FEDERAL GOVERNMENT AND

ENERGY CONSERVATION

Chapter VllI.— FEDERAL GOVERNMENT ANDENERGY CONSERVATION

Page

Introduction . . . . . . . . . . . . . . . . .. ....167Department of Housing and Urban

D e v e l o p m e n t . . . . . . . . . . . . . . . . . . . 1 6 9Housing Programs Directed to Low-

and Moderate-Income Families . . . . . 169Low-Rent Public Housing . . . . . . . .169Section 8 Low-Income Rental

Assistance . . . . . . . . . . . . . . . ., 170Section 236 Rental and Cooperative

Housing Assistance for LowerIncome Families . . . . . . . . . . . .171

Section 202 Direct Loans for Elderlyand Handicapped Housing . . . . . 171

Section 312 Rehabilitation Loans .. 171Section 235 Homeownership Assistance

for Low- and Moderate-incomeF a m i l i e s . . . . . . . . . . . . . . . . . . . . 1 7 1

Conservation Policies andopportunities . . . . . . .........172

Public Housing . . , . . . . . . . . . . , .. 172Section 8, Section 202, and Section

236 Projects. . . . . . . . . . . .. ....173Section 312 Rehabilitation Loans .. 174Section 235 Homes . . . . . . . . . . . .174

Page

Mortgage and Home ImprovementInsurance Programs . . . . . . . . . . .. ..175

Section 203(b) and (i) One- to Four-Family Home MortgageInsurance. . . , . . . . . . . . . . . . . .175

Section 221(d(2) HomeownershipAssistance for Low- and Moderate-Income Families . . . . . . . . . . .. .175

Section 233 Experimental HousingP r o g r a m . . . . . . . . . . . . . . . . . . . . 1 7 5

Section 207 Multifamily RentalH o u s i n g . . . . . . . . . . . . . . . . . . . . 1 7 5

Section 221(d)(3) and (4) MultifamilyRental Housing for Low- andModerate-Income Families . ., .. 176

Section 223(e) Housing in DecliningNeighborhoods . . . . . . . . . . . . . .176

Title I Home Improvement andMobile Home Loan Program .. ..176

Conservation Policies andopportunities . . . . . . . . . . .......176

other HUD Programs . . . . . . . . . . . . . . .177Community Development Block

Grant Program. . . . . . . . . . . . . . .177

Page Page

Acquired Property Management andDisposition . . . . . . . . ........178

GNMA Guaranteed Mortgage-BackedSecurities and Special AssistanceMortgage Purchases . . . .. ....178

Research and DemonstrationProjects . . . . . . . . . . . . .. ....178

Minimum Property HousingS t a n d a r d s . . . . . . . . . . . . . . . . . . 1 7 9

Conservation Policies andOpportunities . . . . . . . . .. .179

Community Development BlockGrant Program. . . . . . .........179

Acquired Property Management andD i s p o s i t i o n . . . . . . . . . . . . . . . . . 1 8 0

Government National MortgageC o r p o r a t i o n . . . . . . . . . . . . . . . . . 1 8 1

Minimum Property Standards .. ...181Farmers Home Administration . . . . . . .. .181

Section 502 Homeownership LoanProgram. . . . . . . . . . . . . . . . . . . . .182

Section 504 Home Repair Loan andGrant Programs. . . . . . . . . . . . . . . .182

Section 515 Rural Rent and CooperativeHousing Loans. . . . . . . . . . . . . . .. 182

Conservation Policies and Opportunities 182Veterans Administration. . . . . . . . . . .. 184

VA Loan Guarantee and Direct LoanPrograms. . . . . . . . . . . . . . . . . . . . . .. 184

Conservation Policies and Opportunities 184Other Federal Departments and Programs .185

CSA Emergency Energy ConservationProgram. . . . . . . . . . . . . . . . .185

DOE Weatherization AssistanceProgram. . . . . . . . . . . . . . . . . . . . . .185

DOE Division of Buildings andCommunity Systems . . . . . ......186

DOE Obligations Guarantee Program. 186Department of Defense. . . . . . . .. ...186Treasury Department: Tax Policy . .. .187

Conservation Policies andOpportunities . . . . . . . . ...........187

Housing Secondary Mortgage Market andRegulatory Agencies . . . . . . . . . . . . .187

Regulatory Agencies. . . . . . . . . . . .. .188Federal Home Loan Bank Board .. .188Federal Deposit Insurance

Corporation. . . . . . . . . .......188Conservation Policy and

O p p o r t u n i t i e s . . . . . . . . . . . . . . . . . 1 8 8Secondary Mortgage Market . ........188

Federal National MortgageAssociation . . . . . . . . . . . . .. 189

Federal Home Loan MortgageCorporation . . . . . . . . . . . . . . . 89

Conservation Policies andOpportunities . . . . . . . . . . . . . . . 189

Energy Conservation and Federal TaxPolicy . . . . . . . . . . . . . . . . . . . . . .190

Present Law (Prior to the Energy Tax Actof 1978) . . . . . . . . . . . . . . . . . . . . . . .. 190

1 he Effect of Present Law on EnergyC o n s e r v a t i o n . . . . . . . . . . . . . . . . . . . . 1 9 1

1 he Energy Tax Act of 1978...........191Further Changes to Encourage Energy

Conservation Expenditures . . . . . . . . .192Investment Tax Credit. . . ., . .........193Rapid Amortization . . . . . . . . . . . . . . . .193

Conservation R&D Activities, Office ofConservation and Solar Applications,Department of Energy. . . . . . . . . . . .. 194

Program Objective and Strategy. . . . . 194Budget Allocation. . . . . . . . . . . . . . . . . .194Activities of the BuiIdings and

Community Systems Program . ......196Program Evaluation . . . . . . . . . . . . . . .. 197Conclusion . . . . . . . . . . . . . . . . . . . . . . .199

Standards and Codes . . . . . . . . . . . . . . . . .200Minimum Property Standards. . .......200

Farmers Home Administration ThermalPerformance Standards. . ........202

Model Code for Energy Conservation inN e w B u i l d i n g s . . . . . . . . . . . . . . . . . . . 2 0 3

Building Energy Performance Standards. 204

TABLES

Page

66. Federal Housing Programs DeliverySystems. . . . . . . . . . . . . . . . . . . . . .. ..168

67. New Privately Owned and PubliclyOwned Housing Units Started, IncludingFarm Housing, 1977. . . . . . . . . . . . . . . . 169

68. New Privately Owned Housing UnitsStarted by Type of Financing 1977 .. ..169

69. Originations of Long-Term MortgageLoans 1977 . . . . . . . . . . . . . . . . . . . . .. 187

70 Net Acquisitions of Long-Term MortgageLoans on Residential Properties byLender Groups. . . . . . . . . . . . . . . . . . . .188

71. FY 1979 Budget Estimates for Residentialand Commercial Components of DOE’sConservation Mission . . . . . . . . . . . . . .196

72. FY 1979 Budget Estimates for DOEEnergy R&D. . . . . . . . . . . . . . . . . . . . . .196

Chapter Vlll

FEDERAL GOVERNMENT ANDENERGY CONSERVATION

INTRODUCTION

The Federal Government exerts substantial influence on the character of the Nation’sexisting housing and on the location, type, and level of new construction activity. It would belogical to conclude that Washington is thus a leader in the drive for energy conservation inresidential housing. But the Federal record is a mixed one. The Federal Government has notdeveloped a coordinated or standardized policy to encourage residential energy conserva-tion. The level of interest in promoting conservation varies by agency and program. Althoughthere is evidence of greater concern and sensitivity about conservation by Federal agenciesand important additional legislative authority was enacted in 1978, there are opportunitiesfor accelerating conservation and for developing more systematic agencywide approaches.

This section of the report examines the major Federal agencies involved in housing andenergy 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, au-thorization, and program activity. How these programs and activities affect lending institu-tions, the building industry, State and local governments, and property owners—and howthey influence the knowledge and awareness of all of these sectors about energy conserva-tion — is explained.

The Federal Government has been activelyinvolved in promoting the objective of “a de-cent home and a suitable living environment”for all Americans through a variety of housingprograms and regulatory activities. The De-partment of Housing and Urban Development(HUD), the Farmers Home Administration(FmHA) of the Department of Agriculture(USDA), the Veterans Administration (VA), andthe agencies that regulate lending institutionsare the major Federal agencies bearing on thehousing industry. Federal activities aredirected to lenders, property owners, develop-ers, and lower income tenants and homeown-ers<

●

●

●

●

●

Types of activity and assistance include:

loan insurance for private lenders;subsidies to lower income families andowners of lower income housing projects;direct Government loans to property own-ers;establishment of construction standards;grants to local Government for housing in-frastructure;

●

●

●

●

demonstration projects to pioneer new ap-proaches;research related to residential buildings;regulation of housing, financing, and mar-ket support activities; anddirect construction and ownership ofhousing (by the Department of Defense(DOD)).

Federal assistance involves a number of Fed-eral agencies and programs, private lenders,and State and local governments. Table 66 il-lustrates the fragmented nature of the deliverysystem. The types of lenders and agencies dif-fer depending on the type of construction andthe housing occupants.

For all of its regulations and standards–which do affect general housing activities —the direct Federal role in housing developmentis relatively small in relation to nonfederallyassisted housing. (The exceptions are low-income housing development and providingmortgage insurance or guarantees for the

167


Table 66.—Federal Housing ProgramsDelivery Systems

Number of field offices/Type of institution participating institution:

1. Federal agencies

HUDArea/insuring offices . . . . . . . . . . . . . . . . .Regional offices . . . . . . . . . . . . . . . . . . . . .

FmHACounty offices. . . . . . . . . . . . . . . . . . . . . . .FNMA regional offices. . . . . . . . . . . . . . . .

VARegional offices . . . . . . . . . . . . . . . . . . . . .

Federal Home Loan Bank BoardRegional banks . . . . . . . . . . . . . . . . . . . . . .

2. State and local government agencies

StatesState housing agencies . . . . . . . . . . . . . . .

Local government agenciesCDBG recipients. . . . . . . . . . . . . . . . . . . . .CDBG recipients proposing housing/

rehab type programs. . . . . . . . . . . . . . . .Section 312 agencies . . . . . . . . . . . . . . . . .

3. Private institutions (categories overlap)

LendersCommercial banks . . . . . . . . . . . . . . . . . . .Savings and loan associations . . . . . . . . .Mutual savings banks. . . . . . . . . . . . . . . . .Credit unions. . . . . . . . . . . . . . . . . . . . . . . .

Title I lendersApproved . . . . . . . . . . . . . . . . . . . . . . . . . . .Active. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FHA mortgagesApproved . . . . . . . . . . . . . . . . . . . . . . . . . . .Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FNMA originatorsApproved . . . . . . . . . . . . . . . . . . . . . . . . . . .Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Very active. . . . . . . . . . . . . . . . . . . . . . . . . .

FHLMC originatorsFederally supervised savings & loans....Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GNMA originatorsApproved (all are FNMA approved

originators) . . . . . . . . . . . . . . . . . . . . . . .

VA mortgages

7610

1,7605

49

12

39

3,200

1,470200-250

14,6974,858

47322,421

10,0004,600

11,7007,500

3,0001,500

400-500

2,0481,400

1,000

No approval system . . . . . . . . . . . . . . . . . . NA

SOURCE: RUPL Federal incentives for Solar Homes, 1977, table lV.7. NationalAssociation of Mutual Savings Banks, 1977 National Facfbook ofMutualSavings Banks, 197LP. 12.

Iower end of the market.) Publicly owned hous-ing is a small fraction of new constructionstarts as table 67 shows.

Most housing is built and financed withoutFederal assistance. [n 1977 only one in sixprivately owned housing starts were insured byHUD’s Federal Housing Administration (FHA)or guaranteed by VA (table 68). FmHa financedan additional 126,000 units. Federally assistedhousing totaled 435,000 units or 22 percent ofall starts in 1977.

Even though most housing is conventionallyfinanced and developed without direct Federalassistance, the Federal Government’s influ-ence on housing is significant and its role inpromoting energy conservation can be impor-tant. Whether or not energy conservation ismade a priority concern, Federal housing pro-grams and policies affect residential energyconservation. In assisting in the development,maintenance, and financing of housing, theFederal Government is in a position to in-fluence directly and indirectly the thermalcharacteristics of a significant portion of theexisting housing inventory and plans for newconstruct ion.

In terms of reducing energy consumption,the Federal Government has an opportunitynot only to promote energy conservationthrough requiring high thermal standards fornewly constructed federally assisted housingor by retrofitting existing structures in whichHUD has an interest, but it can also promotethe adoption of energy conservation standardsin State building codes and encourage mort-gage lenders and secondary market mortgagepurchasers to consider energy costs and theenergy conservation characteristics of residen-tial properties they finance. These latter ac-tivities could have a larger impact on the hous-ing sector than many more direct Federal hous-ing support activities. But as the following ex-amination of agencies and programs indicates,conservation may be given inadequate priorityin 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 2NOTE: 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Homes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 VA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Total FHA & VA. . . . . . . . . . . . . . . . . . . . . . . . . 16

VA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Total 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 ofSeptember 9, 1965, established HUD. It is theprincipal Federal agency responsible for pro-grams concerned with housing needs and im-proving and developing the Nation’s commu-nities. It operates programs in all parts of thecountry except that for rural and small-townareas served by FmHA. HUD administers avariety of housing programs, including mort-gage insurance programs for private lenders,rental and homeowners hip subsidy programsfor lower income families, and programs to im-prove the availability of mortgage credit andpolicy research support programs. Local devel-opment activities are assisted by the communi-ty development block grant program. Throughits promulgation of minimum property stand-ards, HUD sets construction standards for allHUD-assisted, VA-guaranteed, and FmHA-assisted housing.

HUD operates through a field structure of 10regional offices and 82 field offices including39 area offices.

The Assistant Secretary for Neighborhoods,Voluntary Associations, and Consumer Protec-tion is the Department’s principal energy con-servation officer. An Office of Energy Conser-vation has been established. Energy conserva-

tion does not appear to be a priority depart-mental concern and the role of the EnergyConservation Office is limited. Individual pro-grams have established policies toward energyconservation but the Department has no over-all policy or consistent priority for meetingconservation goals.

The Senate, Banking, Housing, and UrbanAffairs Committee and the House Banking,Currency, and Housing Committee handleHUD’s legislation.

The most important HUD programs are re-viewed below. Housing programs designed tobenefit low- and moderate-income families arediscussed first. Subsequent sections discussthe principal mortgage insurance programsand other types of HUD programs with energyconservation potential. Each program’s conser-vation policy is described, and its level of ac-tivity noted.

Housing Programs Directed to Low-and Moderate-Income Families

LOW-RENT PUBLIC HOUSING

This program provides financial and techni-cal assistance to local public housing agencies


(PHAs) to develop, own, and operate low-income housing projects. Projects are financedthrough the sale of tax-exempt local obliga-tions that are guaranteed by the Federal Gov-ernment. HUD provides annual contributionsto pay the debt service of PHA obligations soas to assure low rents and maintain adequateservices and reserve funds. Rents, based on theresidents’ ability to pay (25 percent of adjustedgross income), contribute to the cost of manag-ing and operating the housing.

Additional public housing can be developedby PHAs acting as the developer, by private de-velopers under the “turn key” program, orthrough acquisition and rehabilitation of ex-isting housing.

Two related programs–modernization andoperating subsidies – provide financial sup-port to the existing public housing inventory.

Under the modernization program, HUDfinances capital improvements in public hous-ing projects to upgrade living conditions, cor-rect physical deficiencies, and achieve oper-ating efficiencies and economies. The develop-ment cost is amortized through annual Federalcontributions toward the debt service. I n addi-tion, the National Energy Act authorized aspecial program to finance the cost of energy-conserving improvements for public housing.

HUD also provides operating subsidies tohelp PHAs maintain and operate their projects,retain minimum operating reserves, and offsetcertain operating deficits. The operating sub-sidies are based on the Performance FundingSystem, a formula designed to calculate oper-ating subsidies based on what it costs a well-managed PHA to operate its units.

Program Activity. –As of December 1977,more than 4,000 localities had public housingprograms; 1,187,693 units were available foroccupancy, of which about 25 percent weredesignated for the elderly. In 1977, an addi-tional 6,229 units were made available for oc-cupancy, and 6,321 were placed under con-struction or rehabiIitation.

In FY 1978, some 800 PHAs were expected toparticipate in the modernization program,$42.6 million in contract authority was allo-cated to finance capital costs of $475 million.

In FY 1978, $685 million was appropriatedfor operating subsidies.

Authorization.– U.S. Housing Act of 1937(Public Law 75-412) as amended.

SECTION 8 LOW-INCOME RENTAL ASSISTANCE

This program, which is HUD’s main assisted-housing program, makes rental subsidies avail-able to help lower income families rent stand-ard privately owned housing. Eligible familiesmust earn less than 80 percent of the medianincome for the area. Thirty percent of thefamilies assisted must earn less than so per-cent of the median income for the area.

The program makes up the difference be-tween what a lower income household can af-ford (no more than 25 percent of adjustedgross income) and the fair market rent for anadequate housing unit. Housing thus subsi-dized must meet certain standards of safetyand sanitation, and rents for these units mustfall within the range of fair market rents asdetermined by HUD. This form of rental assist-ance may be used in existing housing or newlyconstructed or substantially rehabilitatedunits Project sponsors may be private owners,profit-motivated, nonprofit or cooperativeorganizations, public housing agencies, andState housing finance agencies.

Local PHAs administer the existing housingprogram. They certify eligible tenants, inspectthe units proposed for subsidy, and contractfor payment with landlords whose units havebeen approved. Proposals for new construc-tion or substantial rehabilitation are submittedfor approval to HUD or State housing financeagencies.

Program Activity. -Through December 1977,reservations had been established for 982,439units. As of that time, 25,636 new units, 4,341rehabilitated units, and 327,797 existing unitswere occupied. A significant portion of pro-gram funds were being used to assist familiesliving in HUD-financed projects that have beenreacquired or assigned to HUD or are in finan-cial difficuIty.

Authorization.– Section 8 of the U.S. Hous-ing Act of 1937 (Public Law 73-379) as amended

Ch. Vlll—Federal Government and Energy Conservation ● 171

by the Housing and Community DevelopmentAct of 1974 (Public Law 93-383).

SECTION 236 RENTAL AND COOPERATIVEHOUSING ASSISTANCE FOR LOWER

INCOME FAMILIES

The section 236 program provides mortgageinsurance and interest subsidies to lenders toreduce the rent that lower income householdspay for housing. No additional commitmentsare now being made under the program. Undersection 236, HUD insures mortgages andmakes monthly payments to lenders on behalfof project owners to reduce mortgage interestcosts to as low as 1 percent. The amount ofsubsidy provided is based on the income of theoccupants. Projects are developed by nonprof-it, limited-dividend, or cooperative organiza-tions. In 1974 HUD began to pay additionalsubsidies to cover the differences between thetenants’ contribution and the actual costs ofoperating the projects.

Program Activity. – In 1977, 561 units were in-sured. The program has financed more than393,000 units since its inception.

Authorization. — Section 236 of the NationalHousing Act (1934) (Public Law 73-479) asamended by section 201 of the Housing andUrban Development Act of 1968 (Public Law90-448).

SECTION 202 DIRECT LOANS FOR ELDERLYAND HANDICAPPED HOUSING

The section 202 program for the elderly andhandicapped provides long-term direct loansto eligible, private, nonprofit sponsors tofinance rental or cooperative housing facilitiesfor elderly and handicapped persons. The in-terest rate is based on the average rate paid onFederal obligations during the preceding fiscalyear. A minimum of 20 percent of the section202 units must also be assisted by the section 8program.

A household of one or more persons, thehead of which is at least 62 years old or handi-capped, is eligible to live in section 202 proj-ects.

Program Activities.– In 1977, reservations for32,801 units were made and projects involving10,322 were started.

Authorization. – Section 202 of the HousingAct of 1959 (Public Law 86-372).

SECTION 312 REHABILITATION LOANS

The section 312 program provides rehabilita-tion loans in federally aided community devel-opment block grant, urban homesteading, andneighborhood strategy areas. The programmakes available direct Federal loans tofinance the rehabilitation of residential,mixed-use, and nonresidential properties. Aloan may be used to insulate or weatherizeproperties. Loans may not exceed $27,000 perdwelling unit or $50,000 for nonresidentialproperties. The interest rate is 3 percent exceptfor families whose income is above 80 percentof the median family income when the rate istied to the Treasury borrowing rate. The loanterm is for a period up to 20 years or three-fourths of the property’s remaining useful life.The applicant must evidence the capacity torepay the loan and be unable to secure neces-sary financing from other sources on compar-able terms and conditions. Preference is givento low- and moderate-income applicants.

Program Activity.– Through December 1977,$430 million of rehabilitation loans involving80,327 units had been approved. In 1977 alone,5,787 loans were made, involving 7,942 unitswith a total loan amount of $65.3 million.

Authorization. – Section 312 of the Housingand Urban Development Act of 1964 (PublicLaw 88-560).

SECTION 235 HOMEOWNERSHIP ASSISTANCEFOR LOW- AND MODERATE-INCOME FAMILIES

The section 235 program provides mortgageinsurance and interest subsidies to lenders.HUD insures mortgages and makes monthlypayments to lenders on behalf of low- andmoderate-income homebuyers to reduce theirmortgage interest costs to as low as 4 percent.The program originally enacted in 1968 wassignificantly revised in 1975.

The homeowner must contribute 20 percentof his adjusted gross income to the monthlymortgage payments and must make a down-payment of 3 percent of the cost of acquisi-tion. The income limit for initial occupancy is95 percent of the area median income. Mort-


gage limits are $32,000 ($38,000 for homes forfive or more persons) and in high-cost areas$38,000 ($44,000 for homes for five or morepersons).

Program Activity. — In 1977, 6,485 loans wereinsured for a total value of $174 million. Theprogram has financed nearly 485,000 units.

Authorization. — Section 235 of the NationalHousing Act (1934) (Public Law 73-479) asamended by section 101 of the Housing andUrban Development Act of 1968 (Public Law90-448).

Conservation Policies and Opportunities

Legislation enacted in 1978 and changes inprogram policies have made energy conserva-tion a more important policy concern inassisted housing programs than it had beenpreviously. Recent legislative changes and theconservation policies of the different programsare discussed below.

The 1978 National Energy Conservation Pol-icy Act and the Housing and CommunityDevelopment Amendments of 1978 enactedimportant new energy conservation authoritiesand funding. I n the Housing and CommunityDevelopment Amendments the Secretary ofHUD is encouraged to promote cost-effectiveand economically feasible solar energy sys-tems in housing assisted through sections 8,312, and 202. The Secretary is also directed topromote cost-effective and economically fea-sible solar energy instalIations in residentialhousing in general, taking into account the in-terests of the low-income homeowners andrenters. The Act requires that section 312 fi-nanced improvements and section 8 substan-tial rehabilitation projects meet cost-effectiveenergy conservation standards. The NationalEnergy Conservation Policy Act included sev-eral provisions that affect assisted housing. A$10 million authorization of contract authorityspecifically for the purchase and installationof energy conservation improvements was au-thorized. A $25 million grant program was au-thorized to finance conservation improve-ments for sections 236, 221(d)(3), and 202 proj-ects that are in financial difficulty as a resultof energy costs. The law requires that the sav-

ings resulting from the grants must either bene-fit tenants in the form of reduced rent orreduced Federal operating subsidies.

HUD has an opportunity to influence energyconservation in assisted housing in two generalways: as a part of the approval of the plans andspecifications of new construction or substan-tial rehabilitation projects and, once the hous-ing is built, in conjunction with the provisionof annual subsidies that maintain the low- andmoderate-income character of the housing.Because of the manner in which the programfunctions, the opportunities to promote con-servation in the section 312 program are morelimited and are explained below.

All assisted housing programs have similarpolicies governing the inclusion of energy-savings improvements in new construction orsubstantialIy rehabiIitated projects with the ex-ception of the section 312 loan programs. Allnewly developed assisted housing must con-form to HUD’s minimum property standards(MPS) Improvements financed by section 312loans must conform to local building code re-quirements. The conservation requirements ofthe MPS have been raised periodically and willbe made more stringent as a result of thefuture adoption of the building energy per-formance standards. The upgrading of the MPSmay increase the capital costs of new projects,

w h i c h w i l I o v e r t h e s h o r t - r u n i n c r e a s e t h e

amount of Federal subsidies required. Over thelong run, however, the energy savings that willresult from improved thermal performancewiII decrease Federal subsidy requirements.

The opportunities for improving conserva-tion activities and saving energy in existinghousing are significant. HUD policies relatedto conservation are in the process of beingupgraded. Some of the specific policies andissues are reviewed on a program by programbasis.

PUBLIC HOUSING

Concern for energy conservation in the man-agement of public housing projects has been adistinct and often stated HUD policy. Conser-vation improvements for existing projects canbe financed through the modernization pro-gram, and conservation has been identified as


one of five areas for priority funding. Theextent to which modernization funds are usedfor conservation is not known but it appearsthat significant numbers of projects involvesome conservation activities. Some PHAs havefunded conservation projects out of their ownsurplus funds without looking to HUD for spe-cial funding but few PHAs have significantsurplus reserves and most must rely on HUDfor funds to make conservation improvements.The energy efficiency of the public housing in-ventory is not known but because of historicconstruction cost limitations and the age ofthe housing stock it can be assumed that alarge portion of public housing is not energyefficient. Recently HUD has encouraged PHAsto install individual utility meters in projects ifit was judged cost effective.

HUD has proposed new regulations thatwould expand and extend energy conservationefforts in public housing and involve PHAs insystematic conservation programs. All PHAswould be required to conduct energy audits oftheir projects within 3 years. Based on theaudits, PHAs would have to establish a list ofconservation improvements ranked by theirdegree of cost effectiveness and to make im-provement decisions based on the priorityranking. The scope of the audits would have tocover an assessment of certain specializedtypes of improvements. The regulations wouldrequire PHAs to buy appliances with thehighest energy efficiency, thermostats wouldhave to be set at no more than 750 F, waterheaters would have to be set at 1200 F, and in-dividual utility check meters would have to beinstalled unless other actions were consideredmore cost effective.

Adoption of these requirements could resultin significant energy savings. PHAs currentlyspend $400 milIion for utilities and the in-crease in the cost of utilities has been a majorfactor in the large operating losses sustained inpublic housing.

Prior to the development of these regula-tions, HUD and PHAs had not established ener-gy conservation standards and goals. PHAshad been encouraged to include conservationprojects in their modernization activities butthere was no HUD review of conservation

practices. Increased utility expenses weresimply funded by the operating subsidies pro-gram. Operating subsidy funding decisionswere not reviewed in order to determine howoutlays could be reduced by making cost ef-fective conservation improvements to proj-ects.

The conservation potential in public housingis large for a number of reasons. Many projectsare not now energy efficient. The informationchain between HUD and PHAs is relativelyshort. Information can be easily distributedthrough established communication channels.Financing is a relatively modest problem. Themodernization program could become primar-ily an energy conservation program throughadministrative action.

The operating subsidies program could bereoriented to give greater consideration toenergy conservation. The performance fundingsystem, the formula used to allocate operatingsubsidies, could be revised to provide incen-tives for conservation. Operating data couldbe reviewed to provide a clearer picture of theenergy conservation potential of particularprojects. Incentives could be created for PHAsto encourage them to give energy conservationmore attention and priority.

SECTION 8, SECTION 202, ANDSECTION 236 PROJECTS

These projects are largely owned by privatenonprofit or limited dividend-for-profit cor-porations. Because of debt service paymentsand operating cost requirements owners havevery limited cash flow or reserve funds avail-able to finance energy conservation improve-ments. Most sponsors are unwilling to increasetheir equity in projects even if the investmentwill result in reducing operating costs.Although the relationship between HUD andthese private housing owners is not as direct aswith public housing agencies, owners shouldbe sensitized and encouraged to make conser-vation improvements.

Motivating owners to retrofit their projectsmay be difficult. Project owners may not havean incentive to make conservation improve-ments because many have little investment orpersonal interest in the projects. Because util-


ities in many projects are paid by the tenants,owners have no financial incentive to invest inconservation improvements.

HUD might use its authority to approve rentincreases to get owners to make conservationimprovements. The extent to which proposedincreases in rent represent utility cost in-creases could be ascertained and, in situationswhere improvements would be cost effective,such improvements couId be required as a con-dition of the rent increase. A similar require-ment might be made as a condition of receiv-ing section 236 operating subsidies. In grantingoperating subsidies HUD does not evaluate theenergy efficiency of projects nor determine theimpact of energy costs on operating costs.Prior to 1978 there was no funding available tofinance such improvements but the NationalEnergy Conservation Policy Act authorized agrant program to assist section 236 and section202 projects, and loans for conservation im-provements, solar energy systems, and installa-tion of individual utility meters can be insuredunder section 241 of the National Housing Act.

Although HUD requires reserves for capitalimprovements in properties with HUD incomemortgages, and those reserve funds might, insome cases, represent a source to cover con-servation capital expenditures, that resourcehas limited potential. Many projects are infinancial difficulty and many do not have ade-quate reserves. Applying stringent policiesabout making conservation improvementscould increase the cash flow problems of proj-ects and couId bring about increased mortgagedefaults and foreclosures.

In the section 8 existing housing program,HUD does not evaluate the energy efficiencyof the units occupied by program benefici-aries, Assistance is calculated based on pro-totype utility costs and fair market rent deter-minations. As a result, actual energy costs arenot considered in approving units and deter-mining subsidy payments in the program.Although it would pose many administrativeproblems, the section 8 housing standardcould be modified to require consideration ofthe energy characteristics of units eligible forassistance or consideration of the actual costsof utiIities.

Recently proposed regulations would en-courage PHAs to provide technical assistance,work writeups, and cost estimates to landlordsparticipating in the section 8 existing programto help them determine what energy savingsimprovements wouId be cost effective.

Proposed regulations for the section 8moderate rehabilitation program would allowowners to make conservation improvementssuch as installing storm windows and stormdoors as long as the improvements are judgedcost effective over the 15-year term of the sub-sidy contract.

Because virtually all section 202 elderlyprojects are on a sound financial footing andowned by experienced church and union spon-sors, retrofitting existing projects offers an ex-cel lent opportunity for saving energy. The areaof prime potential for unrealized conservationmeasures in this program relates to projectsbuilt before 1973 when thermal standards werelower. Separate financing might be required toenable sponsors to make conservation im-provements, but given the nature of the tenantgroup and the financial sources of these proj-ects, such financing, especially if backed by aGovernment guarantee, should be readilyavaiIable.

SECTION 312 REHABILITATION LOANS

Borrowers can make conservation improve-ments with proceeds from section 312 rehabili-tation loans. The program has not specificallypromoted conservation but consideration isbeing given to establishing energy conserva-tion guidelines. Since properties assistedthrough section 312 must be brought up tolocal code standards, the effectiveness of theprogram in terms of saving energy could be im-proved by the upgrading of local energy con-servation codes. Since most loans go to low-and moderate-income property owners thereare tradeoffs that have to be made in establish-ing standards between additional energy sav-ing and the ability of property owners to affordthe extra costs.

SECTION 235 HOMES

No special conservation policies or opportu-nities have been identified for the section 235


homeownership program beyond those relat-ing to acquired property disposition and thosewhich would result from changes to the MPS.

Mortgage and Home ImprovementInsurance Programs

SECTION 203(b) AND (i) ONE- TO FOUR-FAMILYHOME MORTGAGE INSURANCE

The section 203(b) and (i) program providesmortgage insurance to lenders for loans tofinance the purchase, construction, or rehabili-tation of one- to four-family properties — up to97 percent of the property value up to $25,000and 95 percent for the value in excess of$25,000–for terms up to 30 years. The loansmay finance homes in both urban and ruralareas (except farms). The maximum mortgageloan on a single-family home is $60,000.

Program Activity.– In 1977, 42,760 new con-struction and 241,504 existing home loans wereinsured for a total value of $7.7 biIIion.

Authorization.– Section 203(b) and (i) of theNational Housing Act (1934) (Publ ic Law73-479).

SECTION 221(d)(2) HOMEOWNERSHIPASSISTANCE FOR LOW- AND MODERATE-

INCOME FAMILIES

The section 221 (d)(2) program provides mort-gage insurance to lenders for loans to financethe purchase, construction, or rehabilitation oflow-cost, one- to four-family housing. The max-imum insurable loan for an owner occupant is$31,000 for a single-family home (up to $36,000in a high-cost area). For a large-family home$36,000 (or up to $42,000 in a high-cost area) isthe maximum insurable loan. Higher mortgagelimits apply to two- to four-family housing. Adownpayment of 3 percent is required, andmortgage terms are for up to 30 years.

Program Activity. — In 1977, 1,039 new con-struction and 33,594 existing units were in-sured for a total value of $736.2 million.

Authorization. – National Housing Act (1934)(Public Law 73-479) as amended by section 123and section 221(d)(2) of the Housing Act of1954 (Public Law 83-560).

SECTION 233 EXPERIMENTAL HOUSINGPROGRAM

The section 233 program provides insurancefor experimental single-family and multifamilyprojects involving unconventional housing sys-tems or subsystems without the requirementsthat they adhere to normal HUD-FHA process-ing and MPS requirements. The program is in-tended to assist in lowering housing costs andimproving housing standards, quality, livabil-ity, or durability of neighborhood designthrough the use of experimental technology orexperimental property standards. The ra-tionale for the program is to develop ex-perience with a concept before the concept iswritten into the MPS. OccasionalIy, cases be-ing considered by FmHA or VA that cannot beapproved under their procedures are referredto the section 233 program for final action. Noexample of this procedure being used to facil-itate processing of energy-conservation-ori-ented loans has been identified.

Program Activity. -Through September 1977,$8 million in insurance on single-family hous-ing had been issued, and $97 million in in-surance on multifamily projects had beenissued. I n 1977, 14 single-famiIy loans were in-sured at a total value of $399,300. No multi-family projects were insured in 1977.

SECTION 207 MULTIFAMILY RENTAL HOUSING

The section 207 program provides mortgageinsurance to lenders for loans to finance theconstruction or rehabilitation of multifamilyrental housing (eight or more units) by privateor public developers. The housing project mustbe located in an area approved by HUD forrental housing and in which market conditionsshow a need for such housing. The mortgagecannot exceed the lesser of 90 percent of valueor unit-size cost limitations. The mortgageterm is Iimited to 40 years.

Program Activity.– In 1977, 2,884 units wereinsured at a value of $49 miIIion.

Authorization. — Section 207 of the NationalHousing Act (1934) (Public Law 73-479).


SECTION 221(d)(3) AND (4) MULTIFAMILYRENTAL HOUSING FOR LOW- AND

MODERATE-INCOME FAMILIES

This program provides mortgage insuranceto lenders for loans to finance the constructionor rehabilitation of multifamily (5 or moreunits) rental or cooperative housing for low-and moderate-income or displaced families.The insured mortgage amounts are controlledby statutory dollar limits per unit, which are in-tended to insure moderate construction costs.Section 221(d)(3) mortgages may be obtainedby public agencies, nonprofit, limited-divi-dend, or cooperative organizations. Section221(d)(4) mortgages are limited to profit-moti-vated sponsors. Under section 221(d)(3), HUDmay insure 100 percent of total project cost forcooperative and nonprofit mortgages, but itmay insure only 90 percent under section 22 I(d)(4) irrespective of the type of mortgage.

The National Energy Conservation PolicyAct authorizes a grant program to finance thecost of energy-conserving improvements insection 22 I (d)(3) projects.

Program Activity. — In 1977, 70,809 units wereinsured for a total value of $1.57 biIIion.

Authorization. — Section 221(d)(3) and (4) ofthe National Housing Act (1934) (Public Law73-479) as amended by the Housing Act of 1954(Public Law 83-560).

SECTION 223(e) HOUSING IN DECLININGNEIGHBORHOODS

The section 223(e) program provides mort-gage insurance to lenders for loans to financethe purchase, construction, or rehabilitation ofhousing in older, declining, but still viable ur-ban areas where conditions are such that nor-mal requirements for mortgage insurance can-not be met. The terms of the loans vary accord-ing to the HUD/FHA program under which themortgage is insured, but the loan must be anacceptable risk.

Program Activity.– In 1977, 8,511 loans wereinsured under this authority.

Authorization. –Sect ion 223(e) of the Na-tional Housing Act (1934) (Public Law 73-479)as amended by section 103(a) of the Housing

and Urban Development Act of 1968 (PublicLaw 90-448).

TITLE I HOME IMPROVEMENT AND MOBILEHOME LOAN PROGRAM

The title I home improvement and mobilehome loan program provides co-insurance tolenders for loans to finance major and minorimprovements, alterations, and repairs of in-dividual homes, nonresidential structures, andmobiIe homes.

Title I loans may be made in amounts up to$15,000 for a term of up to15 years at an inter-est rate not to exceed 12 percent. Loans of lessthan $7,500 are generally unsecured personalloans, Under the program HUD reimburseslenders for 90 percent of any loss under theprogram.

Under title 1, mobile home loans may bemade in amounts up to $16,000 and 12 yearson single-module units and up to $24,000 and15 years for double-module units at any inter-est rate up to 12 percent.

Program Activity.– More than 32 millionloans, of which more than 60,000 are mobilehome loans, for a value of over $26 billion,have been insured under the program since itsinception. Program activity in 1977 was345,579 loans with a value of $1,341 million.

Authorization. — Section 2, title I of the Na-tional Housing Act (1934) (Public Law 73-479)as amended by the Housing Act of 1956 (PublicLaw 84-1020).


Conservation efforts in HUD mortgage in-surance programs occur primarily through therequirements imposed by HUD’s MPS (in thecase of new construction) and standards of ac-cepted practice (in the case of existingbuildings). These standards are implementedthrough the relationships among area officestaff, lenders, and applicants for mortgage in-surance. Field staff are sensitized to conserva-tion measures through formalized training oftechnical personnel (architects and engineers)who interact with the field representatives andapplicants. An applicant who wants to incor-porate a novel or first-cost intensive system in


new construction can generally secure a fullhearing for his case before local office person-nel. If his costs are higher than those generallyaccepted for the kind of structure in that par-ticular area, he will be persuaded to modify hisapproach to conform to accepted costs. [f hisapproach involves a system or a technique notprovided for in the MPS, he may elect prefer-ential processing under the experimental pro-gram (section 233 described above).

It is difficult to evaluate the impact the titleI home improvement loan program has on en-ergy conservation since this activity is admin-istered primarily by lending institutions withHUD-FHA carrying out postaudits of insuranceclaims. Although the written instructions to thelending institutions are broad enough to allowpractically any kind of conservation loan, nospecific attempt is made to generate loans forconservation purposes. Further, there appearsto be no effort to determine whether suchloans are being made, and if so, what problemsmight exist. The 1974 Housing and Urban De-velopment Act specificalIy authorized title I toinsure loans for energy conservation improve-ments. The MPS do not apply to title I loansbut HUD has specified standards for solarenergy installations. The National Energy Con-servation Policy Act authorizes Federal sec-ondary market institutions to buy and selI title1 loans that financed energy conservation im-provements.

The National Energy Conservation PolicyAct has increased the opportunity for insuringhomes and multifamily projects with solarenergy systems. Section 248 of the act author-izes HUD to increase the size of insured loansunder sections 203 and 207 by up to 20 percentdue to increased costs for the installation ofsolar energy systems.

The dissemination of conservation informa-tion by HUD to the portion of the housing mar-ket that relies on HUD mortgage insurance ap-pears potentially effective, despite the numberof participants involved, because of the largenumber of HUD area offices, the regular con-tacts that owners and the housing industryhave with HUD staff and the variety of HUDpublications going to the different parts of thehousing industry. These channels, however, do

not seem to be used as aggressively as theymight be for transmitting information on con-servation techniques and opportunities.

Other HUD Programs

COMMUNITY DEVELOPMENT BLOCK GRANTPROGRAM

The community development block grantprogram (CDBG) makes available block grantsto local governments to fund a wide range ofcommunity development activities. Metropoli-tan areas–generally cities over 50,000 popula-tion — and qualified urban counties—thosewith populations in excess of 200,000— areguaranteed an annual grant or “entitlement”based on needs. Smaller communities competefor the remaining “discretionary” funds.Spending priorities are determined at the locallevel, but the law enumerates general objec-tives that the block grants are designed to ful-fill, including the provision of adequate hous-ing, a suitable Iiving environment, and ex-panded economic opportunities for lower in-come groups. Grant recipients are required toestimate their lower income housing needs andaddress them in the overall community devel-opment plan they submit.

Funds may be used to finance or subsidizehousing improvement and rehabilitation.CDBG rehabilitation assistance is provided in avariety of forms, including direct loans, loanguarantees to private lenders, interest sub-sidies, and loan writedowns to reduce the sizeof privately made loans.

Program Activity.– Under the program$10.95 billion was authorized for FY 1978-80.The FY 1978 appropriation was $3.6 billion,and some 3,200 local governments receivedgrants, of which 1,300 received entitlementgrants. The amount of funds earmarked for re-habilitation was estimated at $418 million inFY 1977, and about 1,500 communities ex-pected to have rehabilitation programs.

Authorization. –Title 1 of the Housing andUrban Development Act of 1974 (Public Law93-383) as amended by the Housing and UrbanDevelopment Act of 1977 (Public Law 95-128).


ACQUIRED PROPERTY MANAGEMENT ANDDISPOSITION

In the course of its activities, HUD acquirestitle to many properties it insured or assistedbecause of mortgage defaults by propertyowners. HUD’s policy is to Iiquidate propertiesin such a manner as to assure the maximumreturn to the mortgage insurance funds exist-ent with the need to preserve and maintainresidential areas and communities.

Program Activities.– At the end of FY 1978 itis estimated that HUD will own 63,119 proper-ties of which 25,701 would be houses and37,418 multifamily units. Total acquisitions for1978 are estimated at 50,575.

Authorization. — Not applicable.

GNMA GUARANTEED MORTGAGE-BACKEDSECURITIES AND SPECIAL ASSISTANCE

MORTGAGE PURCHASES

The Government National Mortgage Associ-ation (GNMA), a corporate entity within HUD,was originalIy established to provide a second-ary market for federally insured residentialmortgages not readily salable in the privatemarket. These mortgages generally financedhousing for special groups or in areas ofspecial needs. Prior to September 1, 1968,GNMA’s functions were carried out by the Fed-eral National Mortgage Association (FNMA).

More recently GNMA was authorized to pur-chase both federalIy insured and conventionalmortgages at below-market interest rates tostimulate lagging housing production. Thesemortgages are then resold at current marketprices, with the Government absorbing the lossas a subsidy under the “tandem” plan. HUD-,FNMA-, or Federal Home Loan Mortgage Cor-poration (FHLMC)-approved lenders may applyto sell mortgages to GNMA.

Twenty-five special assistance programshave been implemented since 1954. BetweenJanuary 1974 and September 1977 GNMAissued $20.5 billion in commitments to pur-chase below-market interest rate mortgages.

GNMA also guarantees the timely paymentof principal and interest to holders of securi-ties issued by private lenders and backed bypools of HUD-insured and VA-guaranteed

mortgages. The guarantee is backed by the fullfaith and credit of the U.S. Government. Appli-cants must be FHA-approved mortgagees ingood standing and generally have a net worthin excess of $100,000.

Program Activity. –GNMA guaranteed morethan $152 billion in mortgage-backed, pass-through securities in FY 1978. In FY 1978 itmade tandem commitments of $2.1 billion.

Authorization.— Tandem plan activities wereauthorized by the Housing and Urban Devel-opment Act of 1968 and 1969 (Public Law90-488 and 91-1 52), the Housing and Communi-ty Development Act of 1974 (Public Law93-838), the Emergency Home Purchase Act of1974 (Public Law 93-449), the Emergency Hous-ing Act of 1975 (Public Law 94-50), and theHousing Authorization Act of 1977 (Public Law95-1 28). GNMA’s guarantee authority is author-ized by the Housing and Urban DevelopmentAct of 1968 (Public Law 90-44).

RESEARCH AND DEMONSTRATION PROJECTS

Solar Heating and Cooling Demonstration.–As part of the national solar energy programadministered by the Department of Energy(DOE), HUD is responsible for a demonstrationof the practical application of solar energy inresidential heating and cooling. The programincludes 1) residential demonstrations inwhich solar equipment is installed in both newand existing dwelIings, 2) development of per-formance criteria and certification proceduresfor solar heating and cooling demonstrations,3) market development to encourage accept-ance of solar technologies by the housing in-dustry, and 4) data gathering and dissemina-tion of demonstrations and market develop-ment efforts.

Program Activity. –As of December 1977 thefirst four of five funding cycles have beencompleted. A total of 325 grants valued at$13.5 million, involving 6,924 dwelling units,had been made.

Authorization. – Solar Heating and CoolingAct of 1974 (Public Law 93-409).

Energy Performance Standards for New Build-ings. –The purpose of this research, managed


by HUD, is to develop energy performancestandards for new buildings. It is divided intothree phases: an assessment of how much ener-gy buildings are designed to use; an assessmentof how much less energy buiIdings could be de-signed to use; and the testing and evaluationof standards. For analysis purposes buildingswere divided into two major groups — nonresi-dential buildings, including multifamilyhomes, and low-rise multifamily housing, andmobile homes.

The work is being carried out by the AIAResearch Corporation and its subcontractors.

Data is being collected on 6,254 buildings,which were constructed in 1975 and 1976 indifferent metropolitan areas.

Program Activity. –The Phase I report hasbeen completed. In November 1978, a draft setof standards and regulations and targetnumbers for different climatic regions wereissued by DOE, and HUD issued draft imple-mentation regulations for comment. After pub-lic review and comment, standards will bepromulgated. Approximately $10 million hasbeen devoted to standards development.

Authorization. –Title I I I of the Energy Con-servation Production Act of 1976 (EC PA) (Pub-lic Law 94-385).

MINIMUM PROPERTY HOUSING STANDARDS

HUD has established MPS for its programs,which prescribe minimum levels of design andconstruction. The preamble of the NationalHousing Act (1934), which established FHA, au-thorized the agency to promote the upgradingof housing standards. There are MPS for one-to two-family new construction, multifamilynew construction, nursing homes, and rehabil-itation. The rehabilitation standards are morein the form of guidelines than standards. TheMPS are used not only by HUD but by VA andFmHA, except that the latter’s standards forinsulation differ somewhat from HUD’s MPS.(See later section on Housing Standards.) Theconstruction of all mobile homes is governedby HUD’s Mobile Home Construction andSafety Standards.

Anyone may suggest modifications to theMPS; important changes are issued for com-ment through the Federal Register.

Program Activity. – Not applicable.

Authorization. — National Housing Act (1934)(Public Law 73-279).


COMMUNITY DEVELOPMENT BLOCK GRANTPROGRAM

Energy conservation activities are not spe-cifically promoted nor precluded as one of theeligible activities under CDBG. Localities maychoose to assist virtually any list of projects,provided there are community improvementactivities and are primarily oriented towardhelping low- and moderate-income families.Many approaches to energy conservationcould be justified under these conditions; themost obvious would be an energy conservationCDBG-funded component tied into a housingrehabilitation or a public housing moderniza-tion program. Because individual communitiesselect and design the projects they will under-take, HUD has no easy way of knowing to whatextent energy conservation improvements arecurrent] y encouraged.

The use of CDBG funds for conservation im-provements in rehabilitation financing pro-grams has been made explicit in draft regula-tions issued by HUD. The regulations wouldallow CDBG rehabilitation financing to beused for measures to increase the efficient useof energy in structures through such means asinstallation of storm windows and doors,siding, wall and attic insulation and conver-sion, modification or replacement of heatingand cooling equipment, including the use ofsolar energy equipment. The regulations alsopropose that in considering discretionarygrants for new communities, HUD will givesome weight to proposals that demonstrate thepotential of energy conservation.

The CDBG program could give greater atten-tion to how its funds could be used to saveenergy. Better coordination of efforts betweenCDBG and the Community Services Admin-istration’s weatherization program could be aneffective approach to promoting residential


conservation. The weatherization programcould be administered to dovetail with HUD-financed rehabilitation projects, thus meetingparticular needs.

Many jurisdictions, especially suburban andsmall communities, have had little involve-ment in HUD programs but may be eligible fordiscretionary CDBG grants. The situation sur-rounding the planning of an application or ex-penditure of CDBG funds in such communitiesmay be fluid, and—with encouragement—they might find the promotion of energy con-servation in housing worthwhile. I n this con-text, energy conservation would appear to bean ideal activity for the CDBG program tofoster.

In larger cities CDBG funds can and fre-quently do go to agencies or organizations thatmay be particularly interested in energy con-servation. These agencies are frequently neigh-borhood-oriented, close to citizens, and maybe willing to launch energy conservation activ-ities. Such groups could be encouraged to pro-mote conservation. Urban planning activities,now supported by the block grant program,could be directed toward articulating the needfor and scope of energy conservation pro-grams.

There appear to be few procedural road-blocks to encouraging conservation in CDBGrehabilitation programs. HUD and local gov-ernment personnel do not seem to be opposedto an energy efficiency emphasis but need en-couragement and greater awareness of themagnitude of the opportunity and potential touse the CDBG program to achieve energy con-servation objectives.

ACQUIRED PROPERTY MANAGEMENT ANDDISPOSITION

Although three Federal agencies (HUD,FmHA, and VA) administer housing acquireddue to default on Government-financed mort-gages, HUD has the largest inventory con-sisting of both single- and multi-famiIy units.

HUD and VA closely coordinate their activ-ities in administering and disposing of reac-quired properties. Field offices determinewhether properties are sold “as is” or rehabili-

tated and then marketed. For those propertiesthat are fully repaired before resale, there areno statutory maximums placed on the dollaramount of improvements aIlowed per struc-ture. A major goal of HUD, FmHA, and VA, in-sofar as their reacquired housing inventory isconcerned, is to dispose of the units as quicklyas possible with the highest dolIar return.

In 1978, HUD modified its property disposi-tion policies so that all single-family homeshave to include certain energy conservationfeatures, or the purchaser has to agree to addthe features to the home as a condition of sale.The only exceptions to the policy are homesscheduled to be demolished, properties sold inconjunction with section 312 financing forrehabiIitation by the purchaser, and propertiestransferred to local governments. Localgovernments, however, are required to agreethat conservation measures will be includedin their repair requirements for the homes.HUD required energy-savings features includeweatherstripping and caulking as needed, re-placement of warped or ill-fitting doors andwindows, Insulation of the attic, air ducts, andhot water heating pipes, and installation ofstorm doors and windows in certain climaticzones. If heating or air-conditioning equip-ment is replaced, proper sized equipment mustbe selected.

Multifamily properties are not required toconform to a specific conservation standard.Field offices have discretion in determiningwhat should be done or in the case of “as is”sales whether the making of conservation im-provements should be a condition of sale.

An energy conservation emphasis by HUDmay, in fact, have greater utility in helping pre-vent mortgage default and housing reacquisi-tion by the Government than in rescuing prop-erties once defaulted. The major area of con-cern for HUD (and FmHA) revolves aroundmultifamily projects that are heading for buthave not yet defaulted and been acquired. Apossible first step might be for the agency toreview its lists of publicly financed low- andmoderate-income housing, using annual re-ports submitted for the projects as well asaudit reports to identify those projects ap-proaching default. Those projects where


energy cost factors are the major financialproblem could be identified and targeted forimmediate action to improve the energy man-agement situation. While it might or might notbe possible to influence tenant attitudestoward saving energy, pinpointing such prob-lem projects could encourage project man-agers to display a greater conservation con-sciousness. If escalating energy costs are theprime cause of the financial difficulty and ma-jor conservation expenditures are indicated,secondary financing could be made availableand the financial problems that led to mort-gage default might be lessened or eliminated.This approach may be particularly appropriatefor projects using electric heat.

GOVERNMENT NATIONAL MORTGAGECORPORATION

Because all its purchases are federally in-sured or guaranteed, HUD’s MPS determinethe energy efficiency of housing financedthrough GNMA. GNMA would presumably ac-cept whatever increased standards and energy-savings priorities were established by HUD.

The National Energy Conservation PolicyAct provides authority to GNMA to purchasetitle I insured loans made to low- and moder-ate-income families to finance the instalIationof solar energy systems. Such loans cannot ex-

ceed $8,000 and total purchases and commit-ments cannot exceed $100 million at any onetime. The interest rate can range from a ratethat is not less than the average yield on out-standing interest-bearing obligations of theU.S. Government of comparable maturitiesthen forming a part of the public debt to themaximum rate authorized by title 1. The Actalso provides standby authority to buy and selltitle I or section 241 loans made for the pur-pose of installing energy-conserving improve-ments.

MINIMUM PROPERTY STANDARDS

Section 526 of the Housing and CommunityDevelopment Act of 1974 required that–tothe maximum extent feasible— HUD promoteenergy conservation through the MPS. The Na-tional Energy Conservation Policy Act requiredunder the Energy Conservation Standards forNew Buildings Act of 1976 becomes effective. ”The MPS have been upgraded recently. (Seesection on standards.) HUD believes any up-grading of conservation standards requires abalancing of the need to keep down construc-tion costs and the potential fuel savings thatwill result from energy conservation improve-ments, and tends to look with disfavor on addi-tional requirements that might increase the netmonthly housing costs of borrowers.

FARMERS HOME ADMINISTRATION

The Farmers Home Administration of USDAprovides housing assistance in open countryand rural communities with populations up to10,000. Its programs are also available in citiesof 10,000 to 20,000 population that are outside

standard metropolitan statistical area(SMSA) and have a serious lack of mortgagecredit as determined by the Secretaries ofHUD and USDA. The Federal Housing Act of1949 gave FmHA authority to make housingloans to farmers; that authority has beenbroadened to serve other groups over theyears.

The programs are administered by countyagents through a system of 1,760 county of-

fices in rural areas (usually county seats) na-tionwide. Unlike HUD, most of FmHA’s pro-grams are not dependent on banks or other ap-proved lending institutions. FmHA makesloans directly to families or sponsors usingfunds secured by issuing Certificates ofBeneficial Ownership placed with the FederalFinancing Bank. FmHA also has the authorityto insure loans made by commercial lenders.

Housing developed under FmHA programsmust be modest in size, design, and cost andmust meet HUD’s MPS.

The Senate Banking, Housing, and Urban Af-fairs Committee and the House Banking, Cur-


rency, and Housing Committee handle FmHAhousing legislation.

Section 502 Homeownership Loan Program

The section 502 homeownership loan pro-gram provides loan guarantees to private lend-ers or direct loans to individuals to buy, build,or rehabilitate homes. FmHA guarantees 90percent of the principal and interest onprivately financed housing loans. The max-imum repayment period is 33 years. Newhomes and homes older than 1 year may befinanced with 100-percent loans. The interestrate depends on adjusted family income andcan vary from 1 to 8 percent. Although there isno maximum amount that an applicant canborrow, the loan is limited by FmHA’s require-ment that the housing be modest in size, de-sign, and cost and what an eligible family canafford for mortgage payments, taxes, and in-surance within 20 percent of its adjusted in-come.

In addition to the use of “regular” section502 loans for housing repair, families earningless than $7,000 annually are eligible foranother type of home improvement loan undersection 502. Under the 1:2:4 program a familycan borrow up to $7,000 over a period of 25years at an interest rate of 1 to 4 percentdepending on family income for improvementsthat would bring its home up to standard con-ditions.

Program Activity. — In 1977, 121,614 loanswere made with a total value of $2,678 m i I I ion.

Authorization. –Title V of the Housing Actof 1949 (Public Law 81-171) as amended.

Section 504 Home Repair Loan andGrant Programs

The section 504 home repair program pro-vides loans and grants to low-income home-owners with grants restricted to the elderly toremove certain dangers to their health andsafety. An applicant must lack the incomenecessary to repay a FmHA section 502 loanand must own and occupy a home that hasconditions hazardous to health and safety. Allloans are made at an interest rate of 1 percent.Loan terms vary from 10 to 20 years depending

on the amount. Loans cannot exceed $5,000.Loans of less than $2,500 need only be evi-denced by a promisory note. A combinationloan grant is made to applicants if they canrepay only part of the cost; if the applicantcannot repay any of the cost a 100-percentgrant is made.

Program Activity. –During 1977, 3,843 loanswere made at a value of $9. I million.

Authorization. –Title V of the Housing Actof 1949 (Public Law 81-171) as amended.

Section 515 Rural Rent and CooperativeHousing Loans

The section 515 program provides loans toprivate, public, or nonprofit groups or in-dividuals to provide rental or cooperativehousing of economic design for low- andmoderate-income families and the elderly.Funds may be used to construct new housing,purchase new or existing housing, or repair ex-isting housing for rental purposes. The interestrate on loans varies from 1 percent to theFmHA market rate, depending on the housingsponsor and the incomes of the occupants.Loans up to 50 years are made to elderly proj-ects; for all other projects the term is up to 40years. Section 8 assistance provided by HUDcan be used in conjunction with section 515projects.

Program Activity.– In 1977, 1,509 loans weremade with a value of $647 m i I I ion.

Authorization. --Title V of the Housing Actof 1949 (Public Law 81-171) as amended.

Conservation Policies andOpportunities

The FmHA loan programs have no specificenergy conservation goals. They rely on con-servation measures that may be integrated intoHUD’s MPS. Innovative approaches are dis-couraged in the new construction programs. Aswith solar applications, any measure requiringcapital costs out of the ordinary must be sepa-rately financed and requires special reviewand approval from Washington.

Ch. Vlll—Federal Government and Energy Conservation . 183

The National Energy Conservation PolicyAct requires the Secretary of Agriculture topromote the use of energy saving techniquesto the maximum extent feasible. Such stand-ards should be consistent as far as practicalwith the HUD standards and be implementedas soon as possible.

The FmHA section 504 program (grants andlow-interest loans for modifications to existinghousing) has made an effort to promote theweatherizing of single-family homes generalIywherever local community action agencieshave been aware of FmHA’s program.

Housing assistance of FmHA is very person-alized. FmHA, unlike HUD, is decentralizeddown to the county level. Applicants alwaysmeet directly with the FmHA county agent andcontinue that relationship throughout the lifeof the loan. The county agent inspects con-struction in progress and manages the loanpayment process. County agents have relative-ly complete authority, provided they deal withconventional building systems and techniques.On the other hand, the agents are not techni-calIy expert in housing, and agency resourcesare limited. FmHA usually has only one archi-tect per State office. Several State offices, infact, cover more than one State, further re-ducing the technical attention that can begiven to individual projects.

Because of the rural nature of the program,there is heavy reliance on electric heat so thatenergy costs are an important concern. How-ever, FmHA does not actively promote certainkinds of buildings or utility systems. FmHAreacts to what is proposed by builders, manyof whom previously built single-family homesonly.

Most FmHA financing is direct Governmentlending, sometimes at a subsidized interestrate. Conservation measures that exceed nor-mal construction costs will therefore representan additional cost to the Government in thelatter case. FmHA rental projects typicallyhave only one-third the number of units of atypical urban project, so larger apartmentbuilders and architects are not attracted to theprogram and technical resources may belimited.

Several steps could be taken to make hous-ing built through FmHA more energy-efficient.A much closer utility cost analysis could be re-quired of every rental project applicant toassure that alI feasible energy options are con-sidered. Although FmHA has issued new insula-tion thermal efficiency standards, the Wash-ington-level system for handling novel energyconservation questions and for simplified andsympathetic processing of such applicationsdoes not appear to have generally penetratedto the field level within the agency. Field staffcouId be encouraged to combine single-familyloans and grants (section 504) with the weath-erization grants administered by local povertyprograms. The importance of energy conserva-tion could be more actively promoted byFmHA. The county agents could be providedwith more extensive information on conserva-tion opportunities and given more extensivetechnical support.

The FmHA State and county personnel ap-pear to be diligent and service-oriented andwill respond to Government policy that en-courages conservation if authority and direc-tion are given. The message on energy conser-vation has so far been muted and very unclear,with the exception of the recently publishedthermal efficiency standards for insulation.


VETERANS ADMINISTRATION

The Veterans Administration provides a vari-ety of benefits to veterans and their depend-ents, including housing financing assistance onmore liberal terms than is available to the non-veteran. The assistance is in the form of loanguarantees to private lenders. Where privatecapital is not available direct loans are made.The VA uses HUD’s MPS in evaluating proper-ties.

The VA operates through 49 regional offices.

In the Senate and House, the Veterans Af-fairs Committees handle VA housing legisla-tion.

VA Loan Guarantee and DirectLoan Programs

The Veterans Administration provides loanguarantees to private lenders and direct loansto veterans to finance the purchase, construc-tion, or rehabilitation of homes, mobile homes,or condominiums. One- to four-unit owner-occupied properties are eligible for assistance.The maximum guarantee is $17,500 or 60 per-cent of appraised value, whichever is less.There are no limits on the value of propertiesthat can be guaranteed. No downpayment isrequired and loans up to 30 years are eligibleunder the guarantee.

Program Activity. — In 1977, 392,557 guaran-tee commitments were issued with a totalvalue of $13.9 billion. In addition 2,566 directloans were made for a total amount of $63.2million. Of the total program activity 369,024involved home purchases, 12,206 refinancing,2,638 condominiums, 3,459 mobile homes, and5,230 direct loans sold and guaranteed.

Authorization. – Servicemen’s ReadjustmentAct of 1944 as amended, title 30 U.S.C. 1,chapter 37.


The Veterans Administration has no formalsystem for promoting energy conservation inits home loan guarantee program. VA followsHUD’s MPS in approving loans for new con-

struction. Existing properties are approved onthe basis of “value.” There is no statutory limiton the value of structures the agency willguarantee, but energy-conserving improve-ments wilI not be recognized if those costs ex-ceed the appraiser’s notion of the “value” ofthe structure. As the VA operates its programthrough “approved lenders, ” (commercialbanks and mortgage Iending institutions), thefirst consideration is the “approved lender’s”policies. If the lender is liberally inclinedtoward financing a house that includes extracosts due to energy conservation equipment ormaterials not fully recognized in the appraisal,the lender must then be willing to seek VA ap-proval of the particular case. The VA may thenreview the appraiser’s statement of “value,”and the questionable costs may be includedwith in the mortgage. However, this is relativelydifficult because the VA housing program istoo thinly staffed for the case-by-case per-sonalized attention this approach requires.

As far as new construction is concerned, VAfollows HUD’s MPS; therefore, any initiative orthe raising of energy efficiency requirementsin this area is up to HUD.

I n the existing home market, the determina-tions of value are largely made by feeappraisers — local real estate personnel whoare not Government employees. Reachingsuch a large group concerning energy conser-vation and influencing their thinking may bebest accomplished through the appraisal orprofessional organizations and through HUDchannels, as these appraisers usually do FHAappraisal work, as well.

The Veterans Administration could also playan important role in educating VA lenders andoriginators about the importance of consider-ing energy conservation in lending decisions.As VA does not guarantee the entire loan, butjust a portion, many lenders may have a differ-ent and more conservative attitude toward VAloans than toward FHA loans. Moreover, VA isproud of its relatively low default rate andbelieves this is due to its conservative policiesin analyzing risk and judging “value.”


OTHER FEDERAL DEPARTMENTS AND PROGRAMS

A number of other Federal departments playimportant roles in supporting residentialenergy conservation or housing productionand can have a significant impact in promotingenergy conservation. HEW’s Community Serv-ices Administration (CSA) administers theemergency energy conservation program,which includes research and development ac-tivities and a program to weatherize the homesof low-income families. The DOE’s Division ofBuildings and Community Systems funds awide variety of residential conservationresearch and demonstration activities. The De-partment also administers a weatherizationassistance program for low-income familiesand is authorized to operate a loan guaranteeprogram for energy conservation improve-ments. The Department of Defense is an im-portant developer of residential housing forthe military and is involved in energy conserva-tion demonstrations. The Department of theTreasury affects energy conservation practicesand housing production and maintenancethrough its formulation and administration oftax and fiscal policies.

CSA Emergency Energy Conservation Program

The emergency energy conservation pro-gram of CSA includes a weatherization compo-nent, which provides grants to low-incomefamilies (up to 125 percent of the Office ofManagement and Budget’s (OMB) poverty in-come guidelines) for housing repair andenergy-savings i m prove merits that wi l lminimize heat loss and improve thermal effi-ciency. Renters as well as homeowners areeligible. Funds are allocated to States, which inturn allocate funds to community action agen-cies (CAAs) or CSA can fund CAAs directly.Funds may be used for insulation, storm doorsand windows, repairs of sources of heat loss,and repair of heating systems. Of the fundsgranted, 80 percent must be used for materials.Expenditure limits per unit vary from region toregion and, since November 1977, can rangeup to $800. CAAs are encouraged to attempt tosecure labor, supervision, and transportationcosts from other sources; most frequently man-

power training funds provided under the Com-prehensive Employment and Training Act(CETA) are used.

The emergency energy conservation pro-gram also funds a variety of research and dem-onstration activities related to energy conser-vation in various sectors of the economy.

Program Activity. –Approximately 800 CAAsparticipate in the weatherization program.About $39 million was appropriated for weath-erization grants in fiscal year 1978. As ofDecember 31, 1977, 268,252 households hadbeen assisted. The average grant was approx-imately $233. The research and demonstrationactivities were funded at a level of $24 millionin FY 1978.

Authorization. –Section 222(a)(12) of theEconomic Opportunity Act of 1964 (PublicLaw 88-452) as amended.

DOE Weatherization Assistance Program

The DOE weatherization assistance programis intended to supplement other Federalweatherization efforts. Grants are provided tothe States, based on climate and the extent ofpoverty. The States contract with community-based organizations, which in turn weatherizethe homes of low-income families, particularlythe homes of the elderly and handicapped. Pri-ority is given to contracts with community ac-tion agencies. The income of recipients cannotexceed 125 percent of the OMB poverty in-come guideline. Normally, grants cannot ex-ceed $400 per household. Of the funds granted90 percent must be used for program costs.Labor, supervision, and transportation are ex-pected to come from other sources, particular-ly CAAs and manpower training funds pro-vided under CETA.

Program Activity. -The program was initi-ated in the fall of 1977 and 501 homes wereweatherized in 1977. About 1,000 organiza-tions are participating. The FY 1978 appropria-tion was $65 million; the FY 1979 appropriation$199 million.


Authorization. – Title IV, part A, of theEnergy Conservation and Production Act of1976 (Public Law 94-385). (See chapter III forcurrent information.)

DOE Division of Buildings andCommunity Systems

The Division of Buildings and CommunitySystems supports a variety of research projectsand demonstrations designed to: 1 ) encourageand support the installation of energy-efficienttechnologies, 2) develop and commercializesystems to reduce the dependence on petro-leum and natural gas, 3) develop and dissemi-nate information about energy-efficient tech-nologies, 4) promote the use of energy-conserv-ing technologies and practices, 5) develop andimplement energy-efficient standards for newbuildings and appliances, and 6) implementthe weatherization assistance program. Activ-ities include such projects as the testing ofheat pumps, energy feedback meters, and insu-lation; a nine-city demonstration to improvethe availability of energy conservation im-provement financing; distribution of an energyretrofit manual to homeowners and home im-provement contractors; and the encourage-ment of State adoption of the NationaI Con-ference of States on Building Codes and Stand-ards (NCSBCS) Model Code (Model Code forEnergy Conservation in New Building Con-struction).

Program Activity. —The 1979 appropriationwas $79.55 million. In 1978 it was $52.3 million.

Authorization. –The Department was estab-lished by the Department of Energy Organiza-tion Act of 1977 (Public Law 95-91) pursuant toExecutive Order 12009 of September 13, 1977.(See p. 194 for discussion of program.)

DOE Obligations Guarantee Program

This program would provide loan guaranteesfor a wide range of conservation or renewableresource activities for existing commercial, in-dustrial, and multifamily buildings. Whilemultifamily housing is specifically included as

one of the allowable uses of loan guarantees,the program appears to be only incidentally ahousing program. To implement the housingportion a system to service the housing marketwould have to be established. GuaranteescouId be made if credit would not otherwisebe available.

The program has never become operational.DOE has had second thoughts about whetherit would be useful. Potential demand for theassistance is under study.

Program Activity. – None.

Authorization. – Section 451 of the EnergyConservation and Production Act of 1976 (Pub-lic Law 94-385).

Department of Defense

The Department of Defense owns and oper-ates 385,000 units of family housing within thecontinental United States. DOD also leasessome units off base, but these leases typicallyare short term to handle emergency situations.

Since 1976 DOD has operated a comprehen-sive energy conservation investment program(EClP) designed to save energy in all types ofDOD-owned buildings. Approximately $13 mil-lion a year has been used for residential retro-fit The ECIP requirements for FY 1976-84 areestimated to be $1.5 bilIion.

Initially retrofit projects had to show a 5-year payback period to be selected for imple-mentation, but a Btu-saved formula is now be-ing used. In FY 1979 al I projects must average58 million Btu saved per $1,000 of investment,but a project designed to save as low as 23million Btu will be considered. Translated intoa payback formula, this approach results inconsideration of projects with payback periodsas long as 15 years.

The DOD program is goal-oriented and im-plemented through the chain of command,and apparently the goals are being achieved.Information access is regular and there are nopeculiar financing problems because all con-servation is funded from Iine item appropria-t ions.


Under a DOD solar demonstration project,DOD has retrofitted four houses.

Also, DOD appears to have a well-conceivedand relatively thorough training program forupgrading housing managers and sensitizingtenants in day-to-day conservation measures.

Program Activity. — Retrofit activity has aver-aged approximately $13 million a year duringthe FY 1977-79 period.

Authorization. – Not applicable.

Treasury Department: Tax Policy

The Treasury Department has a significantimpact on the development and maintenanceof the Nation’s housing inventory and invest-ment in conservation improvements throughits administration and enforcement of internalrevenue laws. These laws and their present andpotential impact on energy conservation arediscussed in detail at the end of this section.


Both the CSA and DOE programs directlysupport energy conservation. Tax policies arediscussed in another part of the report.

To expand its conservation activities, DODmight consider using the annual appropri-ations for debt service dollars instead of directexpenditure dollars. In that way, it could accel-erate the conservation program and realize theper unit savings of volume contracting at to-day’s costs rather than future costs, thus ac-celerating all the energy cost savings into 1year rather than realizing them incrementally.These earlier realized energy cost savings, plusavoidance of contracting cost increases due toinflation in future years, might be cost effec-tive. Such an approach, which commits Con-gress to appropriations in advance, would re-quire specific legislative approval but wouldnot require additional appropriations.

HOUSING SECONDARY MORTGAGE MARKET ANDREGULATORY

Nearly all of the capital for the housing in-dustry is provided by a Variety of private lend-ing institutions. Savings and loan associations,banks, and mortgage companies are the pri-mary loan originators as shown by table 69.

AGENCIES

Lending practices are affected by the policiesof lending regulatory agencies and the activ-ities of secondary mortgage market institu-tions.

Table 69.—Originations of Long-Term Mortgage Loans 1977(dollars in billions)


Regulatory Agencies

Most lenders are subject to Federal and/orState regulations. The two most important interms of their impacts on the housing industryare the Federal Home Loan Bank Board(FHLBB) and the Federal Deposit InsuranceCorporation (FDIC).

FEDERAL HOME LOAN BANK BOARD

The Federal Home Loan Bank Board is an in-dependent executive agency that supervisesand regulates savings and loan associations,which are the country’s major private sourceof funds for financing housing. The Board gov-erns the Federal Savings and Loan InsuranceCorporation, which provides deposit insuranceto savings and loan institutions. The Boarddirects the Federal Home Loan Bank System,which provides reserve credit and ancillaryservices to member saving and loans. There are12 regional Federal Home Loan Banks in thesystem.

FEDERAL DEPOSIT INSURANCE CORPORATION

The Federal Deposit Insurance Corporationis an independent executive agency that super-vises and regulates certain activities of Na-tional and State banks that are members of theFederal Reserve System and State banks thatapply for deposit insurance. FDIC provides de-posit insurance to banks. The management ofthe corporation is invested in a three-personBoard of Directors, one of whom is the Comp-troller of the Currency. There are 14 regionalFDIC offices in the system.

Conservation Policy and Opportunities

The Federal Home Loan Bank Board has nospecific conservation policy. It is cooperatingwith DOE’s attempt to sensitize all financialinstitutions to energy efficiency in their resi-dential lending practices. These activities in-clude structured group interviews, discussionsabout revision of loan appraisal procedures,and investigations of different financing incen-tives.

The Federal Deposit Insurance Corporationhas no apparent energy conservation policy. Itdoes not believe that it has the authority or

leverage to encourage its members to adopt anenergy conservation policy as it regulates butdoes not provide liquidity to banks as doesFHLBB.

Secondary Mortgage Market

A number of Government-sponsored agen-cies have been established to provide liquidityto the mortgage market by purchasing loansoriginated by private lenders. As noted earlier,the Government National Mortgage Associa-tion (GNMA) purchases selected types of FHAand VA mortgages. The Federal Home LoanMortgage Corporation provides a secondarymarket for conventional mortgages made bysavings and loans and other lenders, and theFederal National Mortgage Association(FNMA) purchases mortgages originated by ap-proved lenders. The important role of federallysupported loan pools can be noted in table 70,which breaks down net acquisitions of long-term mortgage loans on residential propertiesfor 1977. The pools acquired 15 percent of theone- to four-family loans made and 5.7 percentof the multifamily loans made. (Comparingthis table to table 68 documents that mortgagecompanies particularly make use of the sec-ondary market to selI off loans they originate. )

Table 70.—Net Acquisitions of Long-Term MortgageLoans on Residential Properties by Lender Groups

(dollars in billions)

1-to 4-family MultifamilyType homes projectsSavings and loan

associations. . . . . . . . . . . 84.2 6.5Mutual savings banks . . . . . 10.3 1.7Commercial banks. . . . . . . . 31.6 1.4Life insurance companies. . .6 .9Non insured pension funds. .1 .1State & local retirement

funds. . . . . . . . . . . . . . . . . .3 .2State & local government

credit agencies. . . . . . . . . 2.6 1.0Credit unions . . . . . . . . . . . . .7 —Mortgage investment

trusts. . . . . . . . . . . . . . . . . (a) .1Federal credit agencies. . . . 4.5 1.1Mortgage pools . . . . . . . . . . 22.5 1.2State chartered credit

unions. . . . . . . . . . . . . . — .3Total . . . . . . . . . . . . . . . . . 158.4 14.6

aunder $50 milllon.NOTE Figures may not total due to rounding.SOURCE: HUD Office of Housing Statistics.


These secondary market institutions are im-portant to energy conservation not only in thatthey provide liquidity to lenders, but becausethey employ appraisal and mortgage creditstandards, forms, and policies that are com-monly used in the lending industry and haveenergy conservation implications. Generally,appraisal forms have not explicitly (with theexception of the HUD/FHA forms) required anestimate of energy costs. No forms require anappraisal of the energy efficiency of the prop-erty. Neither FNMA nor FHLMC requires ener-gy costs to be considered to evaluating a bor-rower’s credit.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

The Federal National Mortgage Associationis a Government-sponsored private corpora-tion regulated by the Secretary of HUD. It pro-vides supplementary assistance to the second-ary market for home mortgages by supplying adegree of liquidity for mortgage investments,thereby improving the distribution of invest-ment capital available for home mortgagefinancing. FNMA buys FHA-insured, VA-guar-anteed, and conventional mortgages. FNMAmakes mortgage funds available through peri-odic auctions of mortgage purchase com-mitments on home mortgages in which lendinginstitutions, such as mortgage companies,banks, savings and loan associations, and in-surance companies, make offers to FNMA,generally on a competitive basis. It also offersto issue standby commitments for both homeand multifamily mortgages on proposed con-struction at approved prices based on its auc-tion prices. The Secretary of HUD may requirethat a reasonable portion of the corporation’smortgage purchases support the national goalof providing adequate housing for low- andmoderate-income famiIies.

Program Activity.– In 1977, FNMA madecommitments of $10.92 billion and as of De-cember 31, 1977, had a net mortgage and loanportfolio of $33.2 billion.

Authorization. – Housing and Urban Devel-opment Act of 1954 (Public Law 83-560) asamended by the Housing and Urban Develop-ment Act of 1968 (Public Law 90-448).

FEDERAL HOME LOAN MORTGAGECORPORATION

The Federal Home Loan Mortgage Corpora-tion (the Mortgage Corporation) promotes theflow of capital into the housing market byestablishing an active secondary market inmortgages for savings and loans and otherlending institutions. It operates under thedirection of FHLBB. The corporation’s pur-chase programs cover conventional mortgageloans, participations in conventional mortgageloans, and FHA-insured and VA-guaranteedloans. Its sources of funds are borrowings fromFederal Home Loan Banks, the issuance ofGNMA mortgage-backed securities, the is-suance of participation sale certificates, anddirect sales from its mortgage portfolio.

Program Activity. –At the end of 1977, theMortgage Corporation held $4.1 billion inmortgages. Outstanding commitments totaled$5.5 billion.

Authorization. — Emergency Home FinanceAct of 1970.


The National Energy Conservation PolicyAct authorized the Mortgage Corporation topurchase title I loans whose proceeds wereused to finance energy conservation improve-ments and authorized FNMA to buy and sellconservation and solar energy-related homeimprovement loans.

FNMA and FHLMC have taken some actionsto promote conservation. They have issued anew home mortgage appraisal form requiringappraisers after March 1, 1979, to determinewhether insulation exists and is adequate,whether the home has storm windows, and tonote any special energy features, their costsand contribution to the property’s value. TheFHLMC has announced that it will purchaserefinance loans with loan-to-value ratio’s of upto 90 percent rather than 80 percent if its pro-ceeds will be used for rehabilitation, renova-tion, or energy conservation improvements.

FNMA and FHLMC are in a position to pro-vide leadership to sensitize lenders to energyconservation considerations in lending. Theirinfluence on lending practices is substantial


because lenders commonly follow secondarymarket practices and requirements so thatmortgages will be readily salable if the lenderwants to dispose of them. Their forms arewidely used in the industry. DOE has tried toencourage these institutions to induce lendersto require energy-efficiency information onmortgage applications, to consider energycosts in approving properties and judging thecredit of borrowers, and to revise theirguideforms and lending guidelines according-ly. A number of actions could be taken to pro-mote conservation. Forms and procedurescould require more explicit considerations ofthe energy efficiency of properties. Appraisalscould take into account the actual energycosts of specific homes. Appraisers could iden-tify and give greater consideration to the ex-istence or absence of conservation improve-ments. Lenders could be required to use energy

costs as a factor in determining the ability ofthe purchaser to afford a home. These actionswould make homebuyers more aware ofenergy conservation issues and would providefinancial incentives to purchasers of energy-efficient properties.

The Mortgage Corporation is in a particular-ly strong position to change lender practicesbecause it can require sellers to repurchasemortgages if it is determined that prescribedprocedures and practices were not followed inoriginating the loan. On the other hand, ap-praisers and lenders are reluctant to to use in-formation on the past energy consumption of ahome because of the importance of lifestyleand family size in determining energy costsand because of potential issues of liability thatmight arise.

ENERGY CONSERVATION AND FEDERAL TAX POLICY

Federal tax policy can do much more than ithas to stimulate energy conservation. Taxeshave substantial impact on individual deci-sions about the construction, rehabilitation,improvement, and ownership of all kinds ofresidential property in the United States. Untilvery recently, existing law has not encouragedexpenditures for energy conservation.

The tax laws may be used –as they havebeen in a number of similar situations–to af-fect certain investment decisions and to re-quire certain behavior as a prerequisite to theavailability of a financial benefit. If energyconservation is accepted as a valid nationalobjective, long-term conservation goals maybe assisted substantially by changes in the taxlaws that affect the building and improvementof residential housing.

Some tax law changes have already beenmade to encourage energy conservation ex-penditures, and others could be made tostrengthen the incentives. These changes fallinto two categories: 1 ) Iimiting tax benefits tocases where energy conservation needs havebeen considered, and 2) providing new, spe-

cific tax incentives for energy conservation ex-penditures.

Present Law (Prior to theEnergy Tax Act of 1978)

Under present law, four types of tax law pro-visions principally affect the construction,rehabilitation, improvement, and ownership ofresidential property. They relate to the deduc-tions available for the payment or incurrenceof: 1 ) interest on indebtedness, 2) real propertytaxes, 3) depreciation, and 4) the costs ofoperating residential property. Section 163 ofthe Internal Revenue Code (the “Code”) pro-vides a specific deduction for all interest paidor incurred on indebtedness. Section 164 of theCode provides a specific deduction for realestate taxes paid or incurred. Section 167 ofthe Code is the basic depreciation provision —providing various methods of depreciation forthe owners of rented residential property, in-cluding a special 5-year amortization provisionfor the rehabilitation of low- and moderate-income residential property. For certain prop-erties having historic significance, Congress

Ch. Vlll—Federal Government and Energy Conservation Ž 191

added in 1976 a special 5-year amortizationprovision for rehabilitation expenditures (sec-tion 191 of the Code). With respect to the costof operating rental residential property, sec-tions 162 and 212 of the Code provide deduc-tions for all of the ordinary and necessary ex-penses related to the operation of such proper-ty.

Single-family homeowners (whether thedwelling is a freestanding house, a condomini-um unit, or a unit in a cooperative) who oc-cupy their own homes may take only the in-terest and real estate tax deductions. Ownersof multifamily residential property (without re-gard to the number of rental units) are entitled,additionally, to the benefits available underthe depreciation provisions and to deductionsfor the costs of operating the property.

The Effect of Present Law on EnergyConservation

The interest and real property tax deduc-tions are both important factors in decisionsmade by individuals to build, rehabilitate, im-prove, or purchase a single-family home. Theinterest deduction reduces the real cost of themortgage loan. The real estate tax deductionreduces the cost of providing shelter. The in-terest deduction indirectly encourages expend-itures for capital equipment or structuralchanges that conserve energy. For example, tothe extent that the cost of original construc-tion or later rehabilitation or improvement isfinanced by a mortgage loan, the interest de-duction reduces the real cost of the energyconservation expenditures. To the extent thatsuch expenditures increase the appraisedvalue of single-family homes — and thus, theapplicable real property taxes —the real estatetax deduction reduces shelter costs.

While neither of these deductions is nowavailable to renters, an effort is underway tomake the real property tax deduction avail-able. Under a recently enacted New Yorkstatute, a renter would become directly re-sponsible for the real property tax allocable tohis dwelling unit. The Internal Revenue Serviceis considering whether this new State law re-

sults in the availability of the Federal taxdeduction to renters.

The interest and real property tax deduc-tions are available to the owners of multi-family residential property, with similareconomic effects. I n addition, such ownershave the opportunity to recover the cost ofenergy conservation expenditures throughdepreciation —ordinarily, over the useful lifeof the capital equipment or structural featureinvolved. While the depreciation deductiondoes afford cost recovery, it does not provideany greater incentive to make an energy con-servation expenditure than to make any othercapital equipment or structural expenditure.While the knowledge that energy operatingcosts will be reduced by such expendituresmay affect certain decisions concerning newlyconstructed buildings, those costs have amuch lower priority in rehabiIitation and im-provement decisions, particularly when utilitycosts are simply passed on to tenants.

Overall, therefore, it may be concluded thattax laws enacted before 1978 have providedvery Iittle encouragement to the owners ofresidential property considering decisions tomake energy conservation expenditures.

The Energy Tax Act of 1978

To stimulate energy conservation expendi-tures by those homeowners who are not en-titled to depreciation, the Energy Tax Act of1978 provides certain new Federal income taxcredits. The credits may be applied onlyagainst investments relating to a taxpayer’sprincipal place of residence (whether owned orrented), which must be located in the UnitedStates and –to be eligible for the first categoryof credits— have been “substantially com-pleted” before April 20,1977.

The new law permits tax credits amountingto 15 percent of the cost of energy conserva-tion investments of up to $2,000 (i. e., a max-imum credit of $300) made during a taxableyear between 1977 and 1985. Eligible invest-ments include insulation, furnace efficiencyimprovements, clock thermostats, storm win-dows and doors, caulking and weatherstrip-

192 Ž Residential Energy Conservation

ping, utility meters that show the cost of serv-ice, and any other items “of the kind which theSecretary specifies by regulations as increasingthe energy efficiency of the dwellings.” Draftregulations specifically exclude heat pumps,according to Internal Revenue Service sources.

A second provision of the Energy Tax Actprovides tax credits amounting to 30 percentof the cost of investments of up to $2,000 inrenewable energy sources, and 20 percent ofup to $8,000 in additional costs of such renew-able energy sources (i. e., a maximum credit of$2,200). The renewable-energy tax credit,which may be used for newly constructed aswell as pre-1 977 dwellings, may be appliedagainst an investment in active or passive solarsystems, geothermal energy, wind energy, or“any other form of renewable energy whichthe Secretary specifies by regulation, for thepurpose of heating or cooling such dwelling orproviding hot water for use within such dwelI-ing.” At this writing, the draft regulations areexpected to prohibit application of the creditto wood-burning stoves. They are also ex-pected to be restrictive with respect to passivesolar features; they will exclude such things asgreenhouses, draperies, special materials usedin roofing, siding, or glazing, and any construc-tion components that serve structural func-tions as welI as passive solar functions.

The new credits may be used only to reducetax liability, not to gain a refund. However, ifthe eligible expenditures exceeds a taxpayer’stax liability for the year in which the invest-ment is made, the amount of the tax liabilitymay be carried over to the next taxable year.This provision seeks to avoid discriminationagainst low-income persons with Iittle or no taxliability.

Further Changes to Encourage EnergyConservation Expenditures

Further changes in tax policy would encour-age additional energy conservation expend-itures. Two broad categories of change deserveconsiderate ion:

1. Requiring that certain existing tax benefitsbe available only if energy conservationneeds have been taken into account.

2. Providing new, specific tax incentives forenergy conservation expenditures.

Two special provisions of present law allowowners of multifamily residential property torecover their costs of rehabilitation and im-provement over a 5-year period (rather thanthe much longer useful life of the rehabilitatedor improved property).

Under section 167(k) of the Code, owners ofrehabiIitated low- and moderate-income resi-dential property may recover their rehabilita-tion expenditures — to the extent of $20,000 perresidential unit—over a 5-year period. Theavailability of this special provision should beconditioned upon making energy conservationexpenditures that meet HUD standards. AS thepresent $20,000 limitation on rehabilitation ex-penditures to which this special provision nowapplies often does not cover the full cost ofthe actual rehabilitation, the present provisionmight be amended to provide simiIar treat-ment for up to an additional $2,000 per unit of“certified energy conservation expenditures”made in connection with such a project. Sucha requirement would produce a long-termbudgetary benefit through its reduction of thelong-range increase in section 8 housingassistance payment costs in section 167(k)housing projects. It would, thereby, offset therevenue losses in early years from such achange in tax policy.

Under sections 191 and 167(o) of the Code,the owners of substantially rehabilitated his-toric properties have been afforded the abilityto deduct rehabilitation expenditures, withoutlimit, over a 5-year period (under section 191)or to claim depreciation with respect to suchcosts in the same manner as would the ownerof newly constructed residential property (sec-tion 167(o)). The availability of these specialprovisions should also be conditioned uponmaking energy conservation expenditures thatmeet H U D standards. I n the case of ownerswho make an election under section 191, nonew tax incentive is required, as all rehabilita-tion expenditures are deductible over a 5-yearperiod. I n the case of section 167(1) elections,a substantial tax incentive already exists and itseems improper to increase it at this time

Ch. Vlll— Federal Government and Energy Conservation ● 193

before any experience has been accumulatedconcerning its use.

Somewhat different considerations apply toowners of residential property who use it in atrade or business, or hold it for the productionof income and are, therefore, entitled to claimdepreciation deductions. In such cases, the taxlaws have been utilized in two ways to encour-age particular types of investments — either theprovision of an investment tax credit or theprovision of a form of rapid amortization ofthe costs of the investment. Either techniquecould be selected to encourage investments inenergy conservation.

Investment Tax Credit

The existing investment tax credit provisionsdo not encourage energy conservation expend-itures in that they do not now provide a creditfor the cost of buildings (or the structural com-ponents of buildings) or for any tangible per-sonal property used in connection with resi-dential property (see section 43 of the Code). ItwouId be necessary to amend the provisions ofpresent law to provide for an exception for“certified energy conservation expenditures”to encourage such investments.

Indirectly, Congress has given such a provi-sion active consideration for expenditures inconnection with the rehabilitation of certaincommercial and industrial buildings. Undersection 314 of H.R. 13511 (which passed theHouse and reached the Senate Finance Com-mittee in the 95th Congress), the investmenttax credit would be available for qualifyingenergy conservation and al I other expendituresmade in connection with a qualified rehabili-tated building. These expenditures include in-vestments in structural components of thebuilding as well as capital equipment expend-itures that constitute personal property.

Having recognized the importance of mak-ing avaiIable the investment credit in such cir-cumstances to encourage the recycling of ex-

isting commercial and industrial structures, itwould seem equally important to extend suchpolicy to “certified energy conservation ex-penses” — including structural componentsand capital equipment— in both newly con-structed and rehabilitated residential struc-tures. While the definition of “certified energyconservat ion expenditures” would requirecareful drafting to avoid abuse, the principle isthe same ascredit.

in the expansion of the investment

Rapid Amortization

An alternative tax incentive to the expansionof the scope of the investment credit provi-sions is the enactment of a special rapid amor-tization provision for “certified energy conser-vation expenditures. ” The technique of a 5-year amortization provision has been used inthe past to encourage investments in suchareas as soil and water conservation (section175), fertilizer (section 180), the clearing ofland (section 182), the rehabilitation of low-and moderate-income housing (section 167(k))and, most recently, the rehabilitation of his-toric structures (section 191 ). Such a techniqueseems particularly adaptable to encouraginginvestments in energy conservation.

Congress has, in more recent years, ex-pressed the belief that incentive tax provisionsshould not become permanent parts of the In-ternal Revenue Code, but should be readilysusceptible to review, change, and eliminationas necessities and priorities change. Thus, forexample, the 5-year amortization of expend-i t u r e s f o r t h e r e h a b i l i t a t i o n o f h i s t o r i cbuildings applies only to expenditures madebetween June 15,1976, and June 15,1981. Suchprovision may be thereafter extended by Con-gress, as has the section 167(k) rehabilitationexpense deduction for further periods (general-ly, of 2 years each in duration). A separate 5-year amortization provision for energy conser-vation expenditures should be easiIy suscepti-ble to such treatment.


CONSERVATION R&D ACTIVITIES, OFFICE OF CONSERVATIONAND SOLAR APPLICATIONS,

The buildings and community systems pro-gram of the Office of Conservation and SolarApplications is the major division within DOEthat conducts R&D activities related to energyconservation in the residential sector. Underthis program, there are a var iety of sub-programs which address specific areas of con-servation R&D. The purpose of this discussionis to provide a general description of thevarious subprograms and to address some ofthe problem areas in the R&D component ofresidential energy conservation.

Program Objective and Strategy

Specifically, the near-term objective of thebuildings and community systems program, “isto produce total energy savings through thedevelopment and implementation of new tech-nology equal to 2.4 mi l l ion barrels of oi lequivalent per day by 1985 by lowering unitenergy consumption 20 percent in existingbuildings and community systems; and 30 per-cent in new buiIdings, community systems, andconsumer products."1

The program is aimed at increasing energyut i l i zat ion eff ic iency, providing opt ions tosubst i tute energy forms such as coal fornatural gas, and providing technologies thatdecrease the need for energy to satisfy humanneeds. AlI activities are directed toward pro-viding these new technologies within an eco-nomicalIy and environmentalIy sound frame-work. Also, activities focus on preparing fortransfer of energy-efficient technologies fol-lowing demonstration to the residential andcommercial sectors.

The strategy for attaining program objec-tives is to:

1. encourage and support the installation ofenergy-efficient technologies as soon aspossible;

‘Management Review and Control Document, Officeof Conservation and Solar Applications, p. 1, Mar. 23,1978

DEPARTMENT OF ENERGY

2

3

4

5

6

develop and commercialize systems thatwill reduce dependence on petroleum andnatural gas;develop and disseminate informationabout new and existing technologies con-cerning energy-efficiency utiIization im-provements;promote the use of energy-conservingtechnologies and energy-conserving prac-tices in the facilities and operations of theFederal Government;develop and implement energy efficiencystandards for new buildings and appli-ances; andimplement the weatherization program tomeet certain energy needs of low-incomecitizens. 2

Another important objective of the build-ings and community systems program is to in-volve nongovernmental groups in research,development, demonstration, and implemen-tation activities to facilitate the transfer oftechnology and information to potential usersas soon as the technology has been demon-strated to be economically and technicallyfeasible. A majority of the funds that supportthese activities are spent with industry on alarge number of cost-sharing projects. The pro-gram also works closely with various trade andnon-Federal organizations to obtain commentsfrom a variety of sources, including the Na-tional Governors Conference, the NationalConference of States on Building Codes andStandards, the League of Cities, Public Tech-nology, Inc., the National Association of HomeBuilders, the American Institute of Architects,the American Society of Heating, Refrigeratingand Air Conditioning Engineers, Inc., and theNational Savings and Loan League.

Budget Allocation

Table 71 presents a summary of budget esti-mates (in thousands of dollars) by program ac-

2U S Department of Energy, FY 1979 Congressional/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 MissionViejo, Calif., designed to use less than half the energy ofsurrounding conventional houses in a research project

supported by DOE, Southern California Gas company, andthe Mission Viego Company, a real estate firm

Disseminating information on residential energy efficiencyinvolves cooperation within the executive branch. This

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, usespassive 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


Table 71.— FY1979 Budget Estimates for Residentialand Commercial Components of DOE’S

Conservation Mission(in thousands of dollars)

Activity FY 1978 FY 1979—Residential & commercial

Buildings & community systemsBuilding systems . . . . . . . . . . . . . . $ 19,500 $ 17,600Community energy utilization. . . . 12,800 19,400Urban waste. . . . . . . . . . . . . . . . . . . 11,000 8,500Technology & consumer products 9,200 20,350Analysis & technology transfer. . . 2,590 2,800

Subtotal. . . . . . . . . . . . . . . . . . 55,090 68,650

Mandatory appliance standards . . . . 4,267 3,750Other commercial. . . . . . . . . . . . . . . . 200 500Weatherization . . . . . . . . . . . . . . . . . . 64,166 198,950Capital equipment . . . . . . . . . . . . . . . 170 1,200

Total, residential & commercial. ... .$123,893 $273,050Estimate, residential & commercial, FY 1979. . . . $27,050Estimate, residential & commercial, FY 1978. . . . 123,893

INCREASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . $149,157—

tivity for the residential and commercial com-ponent of DOE’s conservation mission.

As the table indicates, the FY 1979 budgetauthority for $273,050,000 represents an in-crease of $149,157,000 from FY 1978. Part ofthis increase occurs in the community energyutilization program where projects are movingfrom the feas ib i l i ty and des ign stages todemonstration. However, most of the increaseoccurs in the weatherization program to pro-vide for weather izat ion of approximately857,000 homes. The program essentially repre-sents a balance between efforts which start toaccumulate savings in the near-term (i. e., ar-chitectural and engineering systems, consumerproducts, weatherization, and utility retrofitprograms) and the mid-term (i. e., communitysystems, urban waste, and technology develop-ment).

Table 72 represents a comparison of FY 1979budget estimates for a variety of energy R&Dactivities within DOE.

Table 72.—FY 1979 Budget Estimates forDOE Energy R&D

Activity FY 1979Energy conservation R&D . . . . . . . . . . . . . . . $707,101,000 Fossil energy R&D . . . . . . . . . . . . . . . . . . . . . 576,888,000Solar energy R&D . . . . . . . . . . . . . . . . . . . . . . 441,900,000Geothermal R&D. . . . . . . . . . . . . . . . . . . . . . . 156,200,000Fuels from biomass . . . . . . . . . . . . . . . . . . . . 42,400,000Fusion R&D. . . . . . . . . . . . . . . . . . . . . . . . . . . 348,900,000

As the figures suggest, conservation R&D re-mains a high priority in the Federal energyagenda.

Activities of the Buildings andCommunity Systems Program

Building Systems. –The building systems ob-jective is geared toward development andcommercialization of energy-efficient design,methods of construction and operation, andthe development of standards for new and ex-isting residential and commercial buildings.For the residential sector, R&D attempts toprovide cost-effective and acceptable technol-ogies for retrofit of existing buildings (e. g., ap-plications of revised mechanical ventilationand redesign of existing equipment to improveoverall seasonal performance). Another majorpr ior i ty i s the improvement of instal lat ionpractices for mechanical equipment and thebuilding envelope.

Community Systems.– There are three majorthrusts to the community systems program: 1 )integrated systems, 2) planning design andmanagement, and 3) implementation mecha-nisms. All of these programs are moving fromfeasibi l i ty studies and in i t ia l des ign in todemonstration activity, and the work is beingperformed cooperatively with other programswithin other Federal agencies.

Some of the technological options of the in-tegrated systems focus on energy sources(coal, solar), scaling (small to large), kinds ofapplications (new and retrofit), and targets ofimplementation (municipalities, uti l ity com-panies, etc.).

The planning, design, and management ac-tivities focus on the development and testingof concepts, tools, and methodologies thatidentify and define relationships between ur-ban forms and functions and energy utiliza-tion. For example, many case studies are beingconducted on the tradeoffs between energyconservation measures and other communityservices, Iifestyles, and economic activities.

The implementation activity is intended toprovide data and develop strategies for imple-mentation of the community energy systems


and energy-conserving community design ac-tivities. Projects include market analysis forthe integrated community energy systems, aswell as development of financial strategies andmanagement techniques for minimizing capi-tal and operating costs and maintenance ofcommunity systems.

Technology and Consumer Products. -Thisactivity strives to develop and encourage thecommercialization of more energy-efficientnew technologies in heating, cooling, and ven-tilating equipment and systems; lighting andwindows; appliances; building controls; anddiagnostic equipment for determining energyefficiency in buildings. Major activities aredirected at the development and commercial-ization of advanced heat pumps and the devel-opment and testing of improved oil- and gas-fired furnace components and systems. Otherprojects include the development and com-mercialization of high-efficiency gas- and oil-fired space-conditioning systems and the de-velopment and testing of an integrated high-efficiency space heating/domestic hot waterheating system. Laboratory investigation andtesting will continue to measure various prop-erties of insulation materials.

Analysis and Technology Transfer.– The goalof this activity is to encourage early accept-ance of new means for improving energy effi-ciency through the development of informa-tion and technology transfer methods, to con-duct research that will encourage consumerpurchase of more energy-efficient products,and to encourage more energy-efficient prac-tices in the home. Major effects are the provi-sion of information on savings for energy-effi-cient products, information on Iifecycle cost-ing and the cost effectiveness of energy-effi-cient products, and the provision of informa-tion on new technologies to the builder, home-owner, and manufacturer.

Appliances. –The major object ives of th i sprogram include the development of test pro-cedures, minimum efficiency standards, andcertification methods for a variety of appli-ances that include furnaces, central and roomair-conditioning, water heaters, etc. I n addi-tion, a consumer education program is under-way to introduce the use of Iifecycle costing

concepts in comparative shopping for more ef-ficient appliances.

Weatherization Assistance Programs,— Thisact iv i ty provides grants to the States forweatherizing the homes of low-income per-sons, particularly the elderly and handicapped.At least 90 percent of the grant funds are ex-pended on weatherization materials and re-lated costs. In 1979, approximately 857,000homes will be weatherized.

Ut i l i ty Insulat ion Serv ice.– Th is effort i sdesigned to guide the programs of insulationservice that will be offered to the customers oflarge electric and gas utilities, and home heat-ing suppliers, as directed by the NationalEnergy Act of 1978. Implementation funding toState regulatory agencies, intervention in somehearings, and technical assistance to Stateagencies and utilities is involved.

Other Programs.– Other activities includethe Energy Extension Service, designed to pro-vide information and technical assistance tobuilding owners and renters on reducing ener-gy use; the State Energy Programs mandatedunder EPCA and EC PA; and the schools andhospitals program that assists these institu-tions in retrofitting buildings.

Program Evaluation

Activities in DOE represent a broad ap-proach covering a number of technologies, in-stitutional factors, and surveys of consumer at-titudes. The R&D program employs extensiveanalytical techniques to choose priorities, in-cluding cost/benefit calculations and projec-tions of energy savings from proposed newtechnologies based on a sophisticated engi-neering-economic model. Despite this broadapproach and strong analytical base, there aresignificant problems that are a result of boththe general R&D philosophy in the executivebranch and program operation.

Problem Areas in Conservation R&D.--This re-port has ident i f ied four areas with short-comings in the current DOE conservation pro-gram. First, there is too much concentration onprojects for the short term (5 to 15 years). Sec-ond, there is an insufficient connection be-


tween supply R&D programs, part icular lysolar, and the goals of the conservation pro-gram. Third, there is an inadequate amount ofbasic R&D relevant to increasing energy pro-ductivity. Fourth, there is no clear relationshipbetween the R&D activities and the policy andother program (weatherization, energy exten-sion service, etc. ) portions of conservation.

1. Time Horizon. As stated earlier, the cur-rent buildings and community systems R&Dprogram relies very heavily on sophisticatedcost/benefit analyses and energy use projec-tions to determine its direction. While this hasmerit in choosing between projects of near-term (5 to 15 years) application, it tends to biasagainst choice of anything that may have long-term (25 to 50 years) potential. The reason isthat the only way to calculate the payoff of aproject under this procedure is to estimate itslikelihood of success, its use, and the amountof energy it wilI save. Such estimates becameharder and harder the more speculative a proj-ect and therefore tend to be more readily dis-missed when making funding decisions.

A certain portion of the research budgetdevoted strictly to more speculative proposalswould help solve this problem, if it was basedon a review process that did not have the short-term bias built into the one just described. Forexample, the appropriate technology programnot within the buildings and community sys-tems d iv i s ion i s des igned to take somechances; the principal technical requirement isthat the proposal not v io late the laws ofphysics. Beyond that, the review process spe-cificalIy goes after innovative and novel pro-posals. The procedure involves considerablymore risk than the standard approach, and thefrequency of failure wil l naturally be high.Change is needed because near-term technol-ogies, such as the direct-fired heat pump, willbe undertaken by private interests as energyprices continue to rise. The acceleration oftechnology development, which is supposedlythe main reason for Government involvementwith such R&D, may be of marginal value inthe residential sector, particularly when the in-herent difficulties of commercialization areconsidered.

There is currently very little incentive to ex-plore more efficient ways to use energy thatwill not be economical for decades. This couldinvolve technologies requir ing substant ialmodification of existing construction prac-tices, extensive use of solar or other onsitegeneration, or new lighting, water heating, orspace-conditioning methods. Work in theseareas is not Iikely to gain support in the privatesector, because the risk is so great and thepotential payoff too far in the future.

2 Relation to Supply R&D. One of the prin-cipal guidelines of an R&D program on de-mand technologies is that it should address thelikely energy supply options. Currently, na-tional research efforts are focused on syn-thetic fuel production from coal and biomass,solar thermal and electricity, geothermal, andelectricity from nuclear and thermonuclearresources. All of these options will be expen-sive, and therefore it is important that newways be found to use these sources efficiently.This coordination of goals is not apparent inthe conservation R&D program. In particular,there is little work going on to explore ap-pliance technologies, building constructiontechniques, and lighting schemes that wouldmake use of solar energy in novel ways. Mostof the work is directed toward conventionalheating and cooling methods with solar replac-ing fossil combustion or electricity. Are therephotochemical processes or passive solar de-s igns that would dramatical ly reduce theamount of solar energy that needs to be col-lected, and therefore collector and storagecosts? The OTA solar report indicated commu-nity solar energy systems couId be economi-cally attractive even using today’s technol-ogies if conventional energy prices continue torise. Might not there be novel communitydesigns and/or construction techniques thatcould reduce material costs for such systems?Although somewhat speculative, these pro-posals offer the potential for large economicbenefits several decades from now. Similararguments can be made about exploring waysto use expensive synthetic fuels, direct heatfrom geothermal steam, and electricity energy.To reiterate, the important points are thatlong-term, more speculative research shouldreceive greater emphasis, and that it should be

Ch. VIII-- Federal Government and Energy Conservation ● 199

directed at the “inexhaustible” energy sourcesthat will eventually be used.

3. Basic R&D. Basic R&D in the conservationsector should be increased. Areas of im-portance include materials research for ther-mal insulation, optical coatings for windows,energy storage, air handling, and distributionto increase the overall efficiency of heatingand cooling systems, and electro- and photo-chemical processes for more efficient use ofelectric and solar energy. Some work is under-way in optical coatings and energy storagematerials, but is only loosely connected to theresidential conservation program, thus reduc-ing the chances for application of results.

Other basic research areas concern nonhard-ware issues. For example, what constitutescomfort? A better understanding of the psy-chological mechanisms could suggest more ef-ficient ways of delivering or removing heat. Assuggested in the environmental section, indoorair quality may become very hazardous asbuildings become tighter. Research on chemi-cal pollutants that may be released in thehome and ways to control them could be veryuseful in removing a potentialIy severe con-straint to energy conservation.

More work needs to be done to learn howpeople actually use energy in their homes. Abetter understanding of use patterns is impor-tant for identifying areas for governmental ac-tion in education and information. Technologi-cal decisions must be initiated not solely onthe basis of technical feas ibi l i ty , but onwhether or not consumers will accept and usethe technology.

The basic R&D efforts described here do notnecessarily have to fall within one division ofconservation for an effective program to exist.What is important is that basic conservationresearch be part of a comprehensive plan thatis guided in part by the principals discussedabove. Basic R&D is an essential part of any re-search effort that attempts to develop long-term, innovative technologies.

4. Relation to Conservation Policy and Pro-grams. Under the Assistant Secretary for Con-servation and Solar Applications in DOE thereare several programs directed at increasing

energy conservation in buildings. These in-clude the weatherization and State energymanagement programs, and the energy exten-sion service. I n addition, the Assistant Secre-tary for Policy of DOE is charged with Federalenergy conservation policy. The issue here isthe manner in which conservation R&D is usedin carrying out the programs and developingpolicy. Currently there is no indication thatthis is done in a systematic fashion. The pro-grams offer a unique opportunity to test newresults coming from the near-term aspect ofthe R&D programs. If the latter had a specificgoal for assisting Federal conservation pro-grams, rapid commercialization of new tech-nologies and more cost-effective conservationassistance could be possible.

The policy area is where the link betweensupply and demand R&D can be best made. Byseeing to it that R&D on demand technologiesassociated with long-term supply options isgiven top priority, greater emphasis could beplaced on long-term research in conservation.The policy could then be directed at encourag-ing the most economically efficient energysystems rather than just supply options. If R&Dresults identify technologies that use “inex-haustible” resources in novel and efficientways, a national energy policy that better ac-counts for the contribution of conservationR&D can be outlined. The philosophy here isthat there might be cases where developmentof new end use technologies could lower oper-ating costs below that by improvement in ener-

gy production. For example, consider a homeusing solar energy to supply its needs. Newconstruction techniques and materials mightlower its energy requirements and improve theeconomics well below that resulting from anyimprovement in the energy production andconversion technologies. If policy is designedto encourage only the latter, however, themost economic solution would be missed.Therefore energy conservation R&D should bea major part of policy design with particularemphasis on looking for means to use the long-term energy source most effectively.

ConclusionThese problem areas appear to be more re-

lated to the general philosophy of conserva-


tion apparently held by administration of-ficials rather than to the management of theresidential R&D programs. An excessive con-cern for quick results has contributed to thisposture. Part of the responsibil ity l ies withOMB. It is in OMB that the decision to pursuenear-term R&D is most prevalent. This rests inpart on the need for OMB to maintain controlover the Federal budget. As we have argued,however, if energy prices continue to rise,many of the DOE projects wouId become at-

tractive enough to be undertaken by private in-terests.

As a result, there is probably a considerableamount of shifting that could take placewithin the program’s current budget Iimits andstill meet the objectives discussed above. Thiswould seem to satisfy the OMB goals of budg-et restraint while simultaneously emphasizingthe important long-term and basic researchneeds of residential energy conservation.

STANDARDS AND CODES

Building codes represent an obvious mecha-nism for improving the energy-use characteris-tics of new housing. In light of the growingawareness of concern over energy cost andavailabil ity, the Federal Government, bothCongress and the executive branch, has takenan increased interest in codes. This sectionreviews the current level and extent of Federalactivities that influence building codes withregard to energy. Because of congressional ac-tion, this is an area of much activity and con-troversy. The effort of the Federal Governmentto directly influence local building codes rep-resents a new role in Federal-State-local rela-tionships and raises many questions of equity,compliance, measurement, regulatory philos-ophy, and enforcement.

The energy -consc iousnes s o f the pos t -embargo era triggered a number of congres-s ional in i t iat ives for encouraging greaterenergy efficiency in housing. Agencies withhousing responsibility also turned to standardsand codes. Building codes are adopted byStates and/or localities, normally in concertwith codes endorsed by one of the three na-tional code groups. Without exception, theprincipal responsibil ity for enforcement l ieswith localities. (1 n some States, the State mayact if localities do not.) Thus, the FederalGovernment does not write building codes.The Federal Government does, however, deter-mine standards for participation in a numberof federally funded housing programs. Thesestandards have often influenced codes andpractice.

Building codes have been used for nearly4,000 years, to protect the safety and health ofoccupants. The earliest known example is theCode of Hammurabi, which dates from about1750 B.C. Codes apply to new structures (or tovery substantial alteration of a structure) anddefine acceptable materials and methods ofconstruction. In this country, the emphasis ofmost codes has been to ensure a structurallysound building, reasonably resistant to deteri-oration over time, and reasonably protectedagainst sanitation and fire hazards.

Two principal Federal programs have influ-enced building codes for a number of years: a)Minimum Property Standards and b) BuildingEnergy Performance Standards.

Minimum Property Standards

The Department of Housing and Urban De-velopment’s MPS define and describe theminimum levels of acceptability of design andconstruction of housing built under HUD mort-gage insurance and low-rent public housingprograms. Although some of the requirementspermit flexibil ity of design, the bulk of thestandards are specified. In other words, theytell a builder what materials and methods areacceptable. This type of standard is known as a“prescriptive” standard, and is the type ofstandard of code in widest use today in thehomebuilding industry. Designers, builders,and local code enforcement officials can referto MPS and be certain that a given design orbuilding is in compliance.

Ch. VIII—Federal Government and Energy Conservation ● 201

Minimum Property Standards are mandatorynational standards that cover one- and two-family dwellings, multifamily housing, and cer-tain care facilities insured or financed underHUD or FHA programs. MPS are also used todetermine loan eligibil ity by VA and, untilrecently, FmHA.

Minimum Property Standards grew out ofthe National Housing Act of 1934. The purposeof that Act was to encourage improvement inhousing construction and provide a base levelof acceptability for mortgage insurance as thecountry began the great, federally supportedhousing expansion. Since that time, standardshave been developed for a variety of housingtypes and a variety of factors. However, it isonly recently that the use of MPS as a directmethod to encourage energy efficiency hasbeen perceived as a policy tool.

A decentralized network of HUD field of-fices (approximately 82) administers MPS inwhich architectural analysis and constructioninspections are performed by architectural andengineering personnel. Working drawings andplans are reviewed and checked for compli-ance, and inspections are made during con-struction. If the construction does not meetthe standard, Federal funding can be refusedor withdrawn. This system of inspections hasserved to ensure a high level of compliancewith MPS. It requires a substantial amount oftime.

In 1977, about one in six private housingstarts were insured by HUD’s FHA or guaran-teed by VA.

Over the past 2 years, HUD has been in-volved in upgrading MPS in response to newemphasis on energy conservation. The altera-tions to the standards have been controversial,and as of February 1979 final action was notcomplete.

The revised MPS reflect a decision to deter-mine the acceptable level of certain measuresin houses—those measures that reduce heat-ing or cooling requirements —on the basis ofcosts over a 30-year period; the normal life ofthe mortgage. In addition to this time period,the DOE projected fuel costs are used. The useof these price projections means that MPS as

altered will be a much more energy-efficientstandard than those currently in use.

HUD employed a National Bureau of Stand-ards computer model that uses a prototypicalhouse with 15 different possible shell modi-fications to reduce heat transfer. The modi-fications include various levels of attic, wall,and floor insulation, double- and triple-glaz-ing, and storm doors. The prototypical househas an unfinished attic and an unheated crawlspace below the slab. The National Bureau ofStandards load dete rm inat ion p rogram(NBSLD) was used to calculate heating andcooling requirements of the house with variousmodif icat ions for 14 cit ies with di f ferentclimates. Cost data was determined by presentmarket levels and fuel prices were determinedby DOE price data for 10 regions. (These pricesassume increases until 1990 and a constantreal price level thereafter. ) A 6-percent infla-tion rate is assumed throughout, and a IO-per-cent discount rate. The computer programcombines all the variables, and calculates acost-benefit figure for each modification, ineach location, based on a 30-year Iifecyclecost. Separate calculations are made for elec-tric resistance heat, gas heat, oil heat, and heatpumps. Results indicate whether each modi-fication is cost-effective (savings over time ex-ceed costs) or not.

The resulting new MPS thus attempts to bal-ance costs, benefits, climates, and availabletechnology to reach an optimum level of rea-sonable energy conservation for new housing.There are three pathways for compliance withthe standard.

The first method is the “component per-formance” approach, which defines the ther-mal transmission (U-value) through each of thecomponents in the buiIding. This approach setsa target for heat transmission through anycomponent and allows flexibility in selectingmaterials. For example, a certain level of heattransfer for wall insulation, etc. Most home-builders are expected to select this approach.

The second method is called an “overallenvelope approach;” the overall thermal trans-mission of the dwelling must meet a statedvalue but components can be combined and


manipulated within the structure. For instance,increased levels of insulat ion in the wal lsmight be used to compensate for high heatlosses through large window areas. This ap-proach is the same conceptual method used inthe ASH RAE 90-75 standard (see Model Code,below) but the standards as drafted appear tobe more stringent. Some builders are expectedto use this approach, particularly those build-ing innovative housing and multifamily units.Masonry industry builders generally favor thisapproach, as it provides greater leeway forcompliance and suits the particular needs ofmasonry structures.

The third avenue of compliance is “overallstructural performance.” Builders using thisapproach must demonstrate that they canmeet or improve on the energy uses deter-mined by either of the other two methods.Builders of manufactured housing and somemasonry buiIders are expected to favor this ap-proach.

The revised MPS are expressed in two forms;one for homes heated by electric resistanceunits and one for homes using heat pumps orfossil fuels. Approximately 49 percent of HUD-financed buildings are estimated to use elec-tric resistance heat, close to 50 percent arethought to use natural gas and only 0.5 percentuse oi1.

The new MPS will clearly mean an increasein first-costs as a result of increased amountsof insulation, more use of double- and triple-glazing, and possible increases in labor costs.They are designed, however, to effect a netsavings in total costs through reduced energybills, and to lower the consumption of fossilfuel.

A number of conservation groups, repre-sented principally by the Natural ResourcesDefense Council, have objected to variousaspects of the standards as not sufficiently ef-fective in light of the necessity for loweringconsumption of fossil fuel. The homebuildingindustry has objected on the basis that the newMPS will be overly stringent, require levels ofthermal protection that are not cost-effective,and wi l l present technical di f f icul t ies forbuilders. (The National Association of Home-

builders has argued that conservation invest-ments should payback over a 7-year period,the time in which most homes are resold.)

Farmers Home Administration ThermalPerformance Standards

The Farmers Home Administration adoptedMPS in 1971 as the minimum design and con-struction criteria for all residential structuresconstructed or purchased with FmHA loans orgrant funds. At that time, FmHA found MPSprovided adequate protection for its low- andmoderate-income borrowers. However, esca-lating fuel costs and other economic pressurescaused many FmHA borrowers to experienceser ious f inancial di f f icult ies in the 1970’s .There was an increase in the rate of fore-closures, abandonments, and voluntary trans-fers of FmHA housing units. Given what wasthen perceived to be HUD’s lag in revisingMPS, FmHA decided to act independently.

I n March 1978, FmHA issued its thermal per-formance standards. The goal of the standardsis to conserve energy and to control theheating and cooling costs for its borrowers.The economic rationale behind the thermalperformance standards closely parallels thatused by HUD for the revised MPS. However,FmHA elected to standardize its basic energycosts at 80 cents per 100,000 Btu delivered,and did not adopt a dual fuel standard, asmost of their units (85 percent) are serviced byelectric resistance heating.

The standards are more stringent than theproposed new MPS for fossil fuels, but are ap-proximately the same for electric resistance.Higher levels of insulation are required in theceilings, walls, and floors of dwellings. Thechoice of compliance paths is the same as forMPS – component performance, envelope per-formance, or overall structural performance.

Criticisms of the 1978 standards have beensimilar to the criticisms of MPS; conservationand some consumer groups have argued forstrong standards to protect residents againstrising costs; bui lders and some consumergroups have argued for keeping first costs low.

One of the major differences between theFmHA and the MPS programs is the approval

Ch. VIII—Federal Government and Energy Conservation ● 203

process. FmHA activity occurs primarily at thecounty level; some 1,800 county offices servethe national constituency of the agency. Appli-cant interviews, review of plans, appraisals,and inspections are provided from the countyoff ice.

The Farmers Home Administration accountsfor approximately 6 percent of the annual na-tional housing starts. With the adoption of thenew standards, FmHA estimates that the num-ber of new housing starts for FY 1978 will de-crease by up to 12 percent.

Model Code for Energy Conservationin New Buildings

In 1975, Congress enacted the Energy Policyand Conservation Act (Public Law 94-1 63). Oneof the numerous provisions of the measure isan authorization for funds to assist States inreducing the growth rate of energy consump-tion. States must initiate certain programs toreceive the funding. (See chapter VI I fordiscussion.) One of the requirements is theadoption of mandatory thermal efficiencystandards and insulation requirements.

In implementing this legislative mandate,DOE had to determine a measurement of ac-ceptability for the standards chosen by theStates. This process led to creation of theModel Code, and launched a major Federal ini-tiative affecting local building codes. TheDepartment entered into a contractual agree-ment with NCSBCS. NCSBCS acts as a coor-dinator and an agent for uniformity and/orcompatability between the major code groups.The major code groups are the Building Offi-cials and Code Administration International,Inc. (BOCA), the International Conference ofBuilding Officials, (ICBO), and the SouthernBuilding Codes Congress International (South-ern). The Model Code reflects the technicalprovisions of ASH RAE 90-75, “Energy Conser-vation in New Building Design, ” a documentprepared by the American Society of Heating,Refrigeration and Air Conditioning Engineers.ASH RAE 90-75 as a consensus standard.

The provisions of the Model Code reflect itsbasis in standard engineering analysis. It is

compatible with the language and approach ofexisting codes. Selection of this approachrepresented a major success for the engineer-ing profession.

The provisions of the Code “regulate thedesign of building envelopes for adequatethermal resistance and low air leakage, and thedesign and selection of mechanical, electrical,and illumination systems and equipment thatwilI enable the effective use of energy in newbuilding construction. ” Three compliancepaths are offered:

1. Specified Acceptable Practice Provisions.A basic component approach, allowing thebuilder to check all materials and practicesagainst guidelines.

2. Subsystem Approach. Various buildingelements can be combined to make a whole,i.e., the thermal performance and energy useof the envelope must be acceptable but therecan be variation within the several parts of thestructure [chapters IV through IX).

3. Systems Approach. Entire building and itsenergy using systems. This approach allowscredit for the use of nondepletable resources(chapters X and XI).

Once the Model Code was endorsed byDOE, it began to enter the State and localbuilding code system through the variousadoption processes. It is now estimated that bythe end of 1979, 42 States will have adoptedthe Model Code or a similar methodology,either through direct adoption by the State orby reference.

The Department of Energy has providedfunding for training programs for State andlocal officials on the Model Code. The codegroups and NCSBCS have been the principalinstruments for training and test efforts, alongwith engineering groups and other interestedtrade groups. Basic training documents havebeen prepared and tested in a few States.Much of the training material developed thusfar is quite technical in nature. Early evalu-ation of training efforts conducted by someStates on an informal basis has indicated that,due to the complexity of the provisions and the


difference from existing practice, training willbe needed for a long time.

I t i s not poss ible to conclude f rom thenumber of States that are in some stage of ap-proving the Model Code the actual level ofcode enforcement. There is very little informa-tion available on code enforcement in general,in some jurisdictions a code is defined as en-forced when it is adopted. This relieves thejur i sdict ion of the necess i ty for grant ingwaivers. WhiIe local code inspectors have ex-perience with traditional health and safetyaspects of codes, the energy provisions arenew and require learning new calculations andpractices. Building inspection as an activity istraditionally underfunded, and inspectors fre-quently have very large work burdens andslight technical preparation. I n the past fewyears, budget trimming measures have oftenkept the number of officials at low levelsdespite increasing construction activity. (Thereare about 50,000 local code officials in thecountry. ) Building inspectors work for localgovernments and must be responsive to thedesire of the locality and local builders tomove quickly through the inspection process.

In addition to the normal range of objec-tions to the Model Code (as being either too le-nient or too demanding), the following prin-cipal technical objections are often raised:

1. The Code is not based on a clear measure

2.

3.

4.

5.

of cost-effectiveness and therefore doesnot truly serve the interests of the con-sumer.

The Code is deficient in that the buildingenvelope requirements are based entirelyon heating degree days, with no con-sideration given to cooling loads.

The Code does not provide incentives forreducing the size of heating and coolingsystems.

The Code allows the same building enve-lope requirements whether the fuel sourceis gas, oil, electric resistance, or heatpump.

6. The structural performance path, charac-terized as the most flexible complianceapproach, is felt by some to be not suffi-ciently flexible to allow for real innova-tion in building design.

Building Energy PerformanceStandards

In 1976, Congress once again turned tobuilding standards in enacting the Energy Con-servat ion and Product ion Act (Publ ic Law94-385). Th is law requires that States andlocalities adopt building energy performancestandards (BEPS). Such a standard is to con-s ider the total energy performance of abuilding design and set energy use parameterswithout regard to specification of materials ortype of construction. As normally defined, aperformance-based standard specifies a goalwithout specifying the methods, processes, ormaterials used to reach the goal. The statedpurpose of the Act is to:

(1) redirect Federal policies and practices toassure that reasonable energy conservationfeatures will be incorporated into new com-mercial and residential buildings receivingFederal financial assistance;

(2) provide for the development and imple-mentation, as soon as practicable, of perform-ance standards for new residential and com-mercial buildings which are designed toachieve the maximum practicable improve-ments in energy efficiency and increases in theuse of nondepletable sources of energy; and

(3) encourage States and local governmentsto adopt and enforce such standards throughtheir existing building codes and other con-struction control mechanisms, or to applythem through a special approval process.

(Public Law 94-385, sec. 302(b))

The adoption of such a standard as a na-tional target was understood to represent themost modern and far-sighted approach toenergy conservation in buildings. Proponentsof such standards, principally representativesof the architectural profession and certain en-vironmental groups, expressed the conviction

The Code does not deal adequately with that performance standards would allow freethe important issues of siting, orientation,or dynamic effects.

reign to new, innovative design approaches,promote the use of nonrenewable resources,

Ch. Vlll—Federal Government and Energy Conservation c 205

focus on energy consumption rather thanmaterials or techniques, and in general raisethe level of utility of standards. The adoptionof performance standards was a victory for thearchitects, just as adoption of ASH RAE 90-75as the basis for the Model Code had been atriumph for the engineering profession. It alsomarked a very new approach to measuring theenergy use of building design. (No steps to re-quire the building to actually meet the designenergy level have been authorized.)

In November 1978, the “Advanced Notice ofProposed Rulemaking” (ANPR) containing theinitial DOE statement on BEPS appeared in theFederal Register. Because of the legislativeorigin of BEPS, the new approach to standardsetting BEPS represents, and the involvementof numerous interest groups in this issue, agreat many important issues have emerged inthe debate. Numerous studies and analyseshave been prepared by the Government andprivate groups. This report does not attempt torestate the many complicated and thoughtfulreports and analyses that are available on thistopic. Six principal issues have been selectedfor specific discussion. These issues are likelyto figure prominently in congressional de-bates.

1. The Unique and Complex Nature of theStandard. A performance standard approach tobuilding design does offer the widest range ofoptions to a designer. It appears to provide im-portant freedom for innovation, particularly inthe area of energy-conscious design (“passivesolar”), where the structure itself acts as theheating and cooling mechanism. It also assuresa focus on the energy consumption as a prin-cipal characteristic of the structure. It doesnot, automatically, ensure that a structure willuse less energy than a comparable structuredesigned by standard code techniques. Thepractical side of the question, however, is thatit has proven quite difficult to draw a per-formance standard that satisfies all the objec-tives and yet is correct for the majority ofbuildings and agreed on by all players. Thereare still many unanswered questions about thedynamic performance of buildings. An accu-rate figure is difficult to determine for likelyactual infiltration rates. There is disagreement

over the accuracy of various computer pro-grams and calculations used to derive energybudgets. While initial calculations have beenexpressed in Btu/ft2/degree day, some criticssuggest that the function of various areas ofthe st ructure must be included (di f ferentbudgets for homes with lots of bedrooms andlittle communal space, for example). Thus, aquestion exists as to whether the state-of-the-art is adequate to determine a valid energybudget equation, (not whether housing can beimproved).

I n addition to this issue, the draft statementreleased by the Department in the ANPR con-tains provision for RUFs – Resource UtilizationFactors—and RIFs — Resource Impact Factors.The Resource Util ization Factor weighs therelative efficiency of total energy used in thevar ious typical home fuels , and ass igns ahigher thermal integrity requirement to homesusing electric heating. Traditional codes havemeasured energy from the input of the homerather than from the point of origin. Whilethere are clearly different supply situationsand different thermodynamic characteristicsof various fuels, this issue has not been fullyaddressed by Congress. RI F, which has notbeen used as a meaningful factor as yet, repre-sents an attempt to quantify the social, envi-ronmental, and similar “external” costs ofusing certain fuels. Reaching agreement on aquantitative value for RIF wil l be extremelydifficult. Both RUFs and RIFs reflect an at-tempt to design a standard that measures im-pacts well beyond the simple heat use of build-ings. Both RUFs and RIFs represent areas ofgreat controversy and fuel the debate overBEPS.

2. Regulatory Philosophy. I n any standard-set-ting process, there will be varying opinions onthe regulatory philosophy to be employed. Re-garding BEPS, proponents of rapid energy con-servation, including many environmentalgroups, wish to have the initial standard set ata level attainable by the construction industrybut well above the current level of practice.Building industry representatives contend thatthe existing codes are adequate, that the in-dustry is responding to consumer demand forenergy conservation as quickly as possible,


and that to require a higher level of per-formance would be injurious to the industryand cross the “reasonable” boundary.

Resolution of this controversy is related tomany other problems in home energy conser-vation. No established and consistent strategyexists to reduce residential energy consump-tion over time. No schedule has been estab-lished for upgrading MPS, the Model Code, orBEPS regularly, and no second- or third-leveltargets have been created. An example of tar-get setting exists in the automobile industry.Manufacturers were put on notice as to the ac-ceptable levels of fleet average fuel consump-tion that would be expected over a number ofyears. Some similar set of goals might beuseful for the housing industry. (The State ofWisconsin has adopted such an approach.)Goal setting is particularly necessary if someform of sanctions is to be invoked for non-compliance, either now or in the future. Simi-larly, incentives that could be added to theprogram could be tied to reaching certainenergy use levels prior to the required date.

In any event, the first BEPS levels werebased on 1974 construction data. Since 1974,there has been a considerable improvement inthe level of insulation, use of double- andtriple-glazing, and other factors influencingenergy use. (See “Housing Decisionmakers,”chapter V and appendix B.) To establish astandard based on 1974 data may well bedrawing a standard below current industrylevel of practice.

3. BEPS Timetable. Many of the problems thatnow characterize the debate over BEPS appearto result from DOE’s attempt to respond to anunrealisticalIy accelerated t imetab le fo rpreparation and publication of a standard. Thefirst BEPS draft regulations were to appear atleast 1 full year prior to rulemaking, to allowfor full comment and review. This schedulewas not met. ANPR appeared on November 21,1978, and hearings began on December 1,1978. This timing has resulted in understand-able cynicism from critics of ANPR regardingthe openness of the process. Principal con-sultation during the drafting period for BEPSwas with the construction industry, despite alegislative requirement for full public par-

ticipation. A proprietary computer programwas used for commercial building calcula-tions. Since not only the specific formulasu s e d i n B E P S b u t t h e a s s u m p t i o n s a n dpremi ses o f the suppor t ing ana ly s i s a represumably open to review, the time allowedappears totally inadequate. Interestingly, theFederal experience seems to be paralleling theexperience of the State of California. Califor-nia prepared an energy conservation code, in-cluding some energy budget standards. Thestandards were drawn quickly, and there wasnot enough time to fulIy consider comments orobjections. The standard has met with resist-ance and litigation. While an agency cannotprotect against litigation by taking a long timeto act, the consequences of releasing a stand-ard of such potential impact as BEPS withoutvery thorough and sincere public review andinvolvement seem dire.

4. Implementation. Once agreement has beenreached on the determination of the standard,very substantial problems will remain regard-ing Implementation. Implementation issuesneed to be faced from the beginning, in orderthat the standard as eventually promulgatedcan be as productive as possible. Federalstandards that must be enforced by State andlocal officials face many problems of compli-ance There is no indication that the problemsof implementation have been given the appro-priate level of consideration. Implementationproblems are critical because DOE, through theModel Code, has already launched States on avery different code course. Several factorsstand out:

A) Preparation for the New Standard. Due tothe existing DOE State grant program,States have put considerable effort andresources into adopting the Model Codeor simiIar, engineering-based standards.The training that has been done by codeand professional groups has concentratedon that approach. No training has beendone to prepare States for BEPS. Whilesome HUD and DOE research studies andcontracts have been initiated to preparefor the new standards, OTA interviewswith State officials and people working incode enforcement indicates that there is


essentially no understanding of the per-formance standard, and almost no aware-ness that the standard is about to beadopted. The response of States con-tacted during the OTA study has been oneof surprise that such a standard was in thepipeline, and skepticism about the seri-ousness of the Government in implement-ing it.

B) Equivalency. The enabling legislationstates that States must adopt BEPS or astandard that will “meet or exceed the re-quirements” of the Federal standard. Nodetermination has been made as to howthe equivalency requirement will be de-fined. It could mean that all States and lo-calities would have to adopt a perform-ance standard using the same or similarmethodology as BEPS. It could also meanthat the localities must have in place, astandard that results in l imiting energyconsumption in buildings to approximate-ly the same level. If this is the case, for ex-ample, changes in the Model Code to in-crease the level of effectiveness couldmeet the equivalency test. Without an in-dication of how the equivalency require-ment will be interpreted, States have littleguidance as to how to prepare. Will therebe two separate, overlapping standards?If only a pure performance standard is ac-ceptable, by whom will the design draw-ings be certified? Will computer analysisbe made available by DOE, or will build-ers be required to obtain the imprimaturof an architectural and engineering firmfor certification? Will local code officialsbe expected to in te rp re t the BEPScriteria? Will special assistance or reviewbe provided by DOE or HUD area offices?Who will monitor the progress of the in-dus t r y? What so r t o f f i nanc ia l andtechnical assistance will be provided toloca l i t ie s fo r add i t iona l inspections?These problems are resolvable, but deci-sions must be made with the involvementof State and local officials if complianceis expected.

C) Transition. This issue relates once again totarget setting, as well as to preparation. If

a performance-based standard is desig-nated as the only acceptable path of com-pliance, will the new approach be phasedin over time? States and towns cannotmodify bui ld ing codes quickly. T radi-tional processes of review and approvalmust be followed. Many States are stillmoving through this process on the ModelCode effort. Who will train the buildinginspectors, State energy office techni-cians, and others who will bear the bruntof the effort?

5. Sanctions and Incentives. The enabling leg-islation requires that the Secretary of DOE rec-ommend to Congress whether or not to adoptthe authorized sanction of the program. Thissanction is the withdrawal of Federal fundingmechanisms for housing, including FHA fund-ing and Federal lending programs. If adopted,the sanction would be extremely strong. If thesanctions are not adopted, it is unclear whatmechanism or leverage would be available toencourage compliance. The use of incentivesfor the early periods has been suggested;homes meeting low energy standards couldreceive favorable loan terms from Federal pro-grams or other forms of assistance. The newstandard cou ld s imp ly be adopted andlocalities encouraged to incorporate it into ex-isting codes, so that those wishing to use thisapproach could take advantage of it. Datacould be collected on houses designed by thisapproach and this data could be used to deter-mine if broader application is desirable. Feder-al property, or property directly assisted byFederal programs, could be required to meetBEPS criteria. The Minimum Property Stand-ards could be revised to incorporate BEPS.Special grants could be made available tolocalities to test BEPS and experiment withalternative methods for measuring compli-ance. Awards for design competitions mightencourage BEPS usage. Congress couId consid-er adding any one of a number of options tothe existing legislation either in addition to orin Iieu of the authorized sanctions.

6. Special Problems of Housing. The energyconsumption in commercial-sized buildings isbetter understood than the consumption ofmost houses. The principal involvement of ar-


chitects and engineers is with larger buildingsrather than housing. Most hous ing in theUnited States is constructed by small builderswho have little technical training or access totechnical assistance and few resources (seechapter V). Most small builders use the sim-plest approach to meeting code approval; theyfollow accepted practice for their area and theprescriptive aspects of codes. Given the dif-ficulties of determining an energy budget for ahouse, and the problems of training smallbuilders to comply, it may be necessary to pro-vide a simple methodology for the housing sec-tor, such as previously approved designs thathave been translated into specifications. In the

Advanced Notice of Proposed Rulemaking onBEPS , the res ident ia l secto r was s imp lydirected to follow the National Association ofHome Builders Thermal Performance Guide-lines. No rationale was given for this decision.A number of technical problems exist withinthe Thermal Performance Guidelines, althoughthey do appear to be more responsive toclimate and local conditions than the draftBEPS, which rely on seven climate zones.

If housing is to be included under BEPS,more thoughtful attention must be given to thespecial needs of the sector.

Chapter IX

ECONOMIC IMPACTS

Chapter IX.– ECONOMIC IMPACTS

Page

Unemployment, Inflation, and Real Economic Growth. . ...........211The Total Number of Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . .211Labor Productivity and the Distribution of Jobs and Income

Among Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ..............214Rea l Economic Deve lopment . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

T A B L E S

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 thisreport, this chapter assumes that real energy costs are rising and will continue to rise in thefuture, and that eventually energy consumers or society as a whole will pay prices that reflectthese higher real costs. Given these assumptions, it is important to realize that this changingsupply situation has a variety of economic impacts that cannot rightly be attributed toenergy conservation in the home.

Higher real costs and prices have several ef-fects. They mean that individual energy con-sumers and the United States as a Nation canbuy fewer goods and services than otherwise.Money previous ly avai lable for other pur-chases must now go to pay for energy. Higherenergy prices also redistribute income fromenergy consumers to owners and producers ofenergy resources. Some of this redistributed in-come now goes abroad to pay for fuel importsand this further reduces domestic income.Higher energy prices also change the mix ofjob opportunities to reflect the buying patternsof those who benefit from energy sales, includ-ing fuel-exporting foreign countries. Finally,real domestic income may fall if energy pricesjump too abruptly, causing short-term unem-ployment and other economic dislocations.

Home energy conservation, by the substitu-tion of more energy-efficient devices andstructures or by behavioral changes, is theeconomic response by the residential sector to

higher energy prices and uncertain supplies.This chapter examines the broader economiceffects of this response. Besides saving dollars,residential conservation has other economicimplications because it redirects expendituresaway from fuel to other goods and services.

Production of nonenergy goods and servicesgenerates income and it is important to seehow this income is distributed compared to thedistribution generated by energy production.This comparison will be made in terms of theproportion of nat iona l i ncome go ing toworkers, which is determined by the totalnumber of jobs and by labor productivity.After the issue of who benefits, there are im-portant questions about whether these bene-fits are proper economic incentives. Do theyhelp or hinder the national economy in adjust-ing to the depletion of oil and gas supplies?Does this redistribution of income improve theutil ization of labor and capital or does itaggravate infIation?

THE TOTAL NUMBER OF JOBS

Home energy conservation can increase the sumption expenditures beyond what theynumber 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 discussed2. by the subst i tut ion of labor- intens ive below and the order of discussion reflects the

3

goods and services for capital-intensive, sequence in which they arise. When energy-domestically produced energy; conserving investments are made, employmentby yielding a net return or savings out of caused by th is investment subst i tutes forwhich families can increase personal con- employment in energy production (1 or 2).

211


After energy-conserving improvements havebeen installed, consumers begin to accumulatenetand

1.

2.

income from their profitable investmentsthis can be spent elsewhere (3).

Home energy conservation may reducethe demand for imported fuels directly asin New England where most home heatingoil is imported. It may also reduce importsindirectly by freeing up domestically pro-duced fuels that can substitute for im-ports elsewhere in the economy. In eithercase, jobs created by conservation are notoffset by jobs lost anywhere else in thedomestic economy, and total employ-ment clearly increases, assuming there areunemployed people avail able.’ Further-more, keeping income within the countryindirectly increases employment by an ad-ditional amount due to resending. Onedollar of additional (real) domestic in-come generated by import substitutionyields at least another in secondary ex-penditures, if unemployment is at a highlevel, and on the average 75 percent ofthis is spent on wages and salaries.2

Home energy conservation also reducesthe need for more domestically producedenergy. This would apply mainly to high-cost supply alternatives since any lowercost supplies saved from residential usewould reduce the need for new highercost alternatives elsewhere in the econ-omy. High-cost energy supplies includeelectricity and new sources of oil, gas, andcoal.

Labor intensities in terms of jobs areeither indicated or can be inferred fromthe data presented in table 73. These areaverage data for existing enterprise, but it

‘Of course payments abroad may be recycled in termsof U.S. exports but on the margin this is probably not im-portant since there is a general dollar surplus among fuelexporting countries.

2For a recent discussion of muItiplier effects, seeAlbert A. Hirsch, “Policy Multipliers in the BEA Quarter-ly Econometric Model,” Survey of Current Business, June1977, pp. 60-71. The estimate that 75 percent of second-ary expenditures goes to labor is based on the fact thatthe average labor share in national income is 75 percent.See Statktica/ Abstract of the United States, 1978, table718, p. 444.

Table 73.—Full-Time Employment Equivalents per$100,000 Expenditure”

(1967 input/output data)

Sector

Manufacturing household appliances. . . . . . . . . . . 8.6General maintenance and repair . . . . . . . . . . . . . . . 8.8All investment in fixed capital . . . . . . . . . . . . . . . . . 9.2Residential construction . . . . . . . . . . . . . . . . . . . . . 9.2Personal consumption expenditure (average) .. ..10.2Natural gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7Coal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2Fuel oil #2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5

● See Donna Amado, “Creation of Labor Data for 1963, 1967, and 1972,” Centerfor Advanced Computation, technical memo No. 77, University of Illinois atUrbana-Champaign, September 1976, pp. 66-72. Data includes both direct andindirect labor Inputs.

3

can be safely infer red that new fuelsources would not greatly increase laborut i l i zat ion over convent ional suppl iessince the former involve technically com-plex, capital-intensive stages of produc-tion added on to present fuel-producingactivities.

Compared to fuel production, homeenergy-conserving activities are relativelylabor intensive. A comparison to home ap-pliance manufacturing is pertinent whenconservation is accomplished by morerapid turnover of the stock of heating,ventiIating, and air-conditioning equip-ment as well as other home appliances. Acomparison to residential construction ispertinent when conservation is accom-pl i shed by more rapid turnover or in-creased investment in hous ing stock.Finally, a comparison to general repairand maintenance is pertinent when con-servation is accomplished by more rapidturnover or increased investment in hous-ing stock. Finally, a comparison to generalrepair and maintenance is pertinent whenconservation is accomplished by retrofit-ting homes. In all of these comparisons,based on the actual or inferred informa-tion contained in table 73, home energyconservation is relatively labor intensive.A f te r ene rgy -conse rv ing inves tment sbegin generating savings for families,private consumption expenditures for allgoods and services can increase, offset-ting to some extent the loss in real incomecaused by rising energy prices. These ex-

Ch. IX—Economic lmpacts ● 213

penditures create more jobs per dollarthan any other type shown in table 73. Thesize of this third effect depends on theprofitabil ity of home energy-conservinginvestments, and OTA analys is aboveclearly suggests that these profits may besubstantial. (See chapter I I.)

Despite these three positive conclusionsabout job creation, it should not be implied

that home energy conservation will solve thenational employment problem. Direct energyexpenditures account for only about 5 percentof gross national product and residential con-sumption only for a fraction of that. However,we can say that some jobs will be created andthis should make it easier to reduce the rate ofunemployment.

LABOR PRODUCTIVITY AND THE DISTRIBUTION OF JOBSAND INCOME AMONG WORKERS

In analyzing labor productivity, it is impor-tant to reemphasize the distinction betweenrising real energy costs and prices and subse-quent conservation efforts. The former clearlyreduces average product per worker as it re-duces real national production. Energy conser-vation on the other hand should increase bothby moving to a more productive mix of energy,capital, and labor. This overall positive impactof home energy conservation is clear, basedentirely on the fact that it is profitable. Ifprices of capital, labor, and energy all reflectreal costs, then profitabil ity is synonymouswith getting more total product and largeraverage product per worker out of the samepackage of resources.

Not all workers, however, will benefit fromreduced energy consumption in the home. Inparticular, workers in displaced energy supplyactivities may lose their jobs or be asked to ac-cept lower incomes, and this prospect raisesissues that must be resolved politically. How-ever, in these political discussions, two pointsshould be kept in mind.

First, a major advantage of home energyconservation, when compared to increasingenergy consumption, is that jobs are less likelyto be concentrated at centralized points ofproduction such as at the wellhead, the mine

mouth, or at the electric power station. Homeenergy conservation involves more extensivedownstream operations (distribution, sales,construction, installation, and maintenance),which means that employment opportunitiesare spread out geographically in a pattern de-termined more by the location of the final con-sumer. This decentral izat ion is benef icialbecause it spreads income from employmentmore evenly across the country and, in particu-lar, it reduces the outflow of wealth from ener-

gy poor regions and districts that have sufferedthe most due to rising energy prices.

Second, the threat of job or income loss forpresently employed people may not be signifi-cant if the national economy can reduce itsenergy consumption per dollar of product andstilI continue to grow apace with the size ofthe labor force. If it can, and energy conserva-tion is one of the engines for such growth, thenhigh-cost energy supply activities may not ac-tually contract, but merely not grow as fast,and present workers can stay on the job. Inother words, home energy conservation hasmore impact on the locus and kind of new jobsthan on jobs that already exist. This situationobtains in part also because most of the ener-

gy-conserving options considered here will re-quire a decade or more to accomplish.


INFLATION

Home energy conservation, as defined here,is anti-inflationary because it costs less (forroughly the same convenience and comfort) toconserve or save a Btu of energy in the homethan to produce it. This saving is partly due tothe substitution of less expensive domesticgoods and services for imported fuels. Sincethe United States has a serious balance ofpayments problem, this reduces downwardpressure on the dollar and domestic inflationcaused by currency devaluation.

Anti-inflationary savings also derive fromthe relatively broad geographical distributionof energy-conserving jobs, compared to jobs inenergy supply, which makes them accessibleto a larger number of potential workers. Alarge fraction of energy-conserving jobs canalso be accomplished by people with skills inmaintenance and repair. Such skills are fairlywidespread and can be acquired without ex-tensive training. Consequently, it is unneces-sary to bid up wages very far before large num-bers volunteer for work, including many fromthe large pool of chronically unemployed.

F ina l l y , labor i s subs t i tu ted fo r energywithout bidding up wages and salaries whenfamilies do a better job of housekeeping. Thefactor of two difference in energy use amongpeople with the same basic energy services(see chapter III) suggests that this form of in-creased self-employment may be quite impor-tant in increasing real incomes while decreas-ing infIation and energy consumption.

In capital markets, home energy conserva-tion has two distinct advantages when com-pared to alternative investments that wouldotherwise have to be made in energy supply.First, home energy-conserving investments are

relatively profitable. There are exceptions ofcourse, and new supply technologies mightcome along which are very profitable, but thecurrent situation is illustrated by comparing in-vestment payoff periods. New electric power-generating stations are commonly amortizedover 20 to 30 years because it takes that longto accumulate sufficient revenues above oper-ating costs. Investments in home energy con-servation typicalIy pay off within 10 years andmay yield revenues above debt service costsright from the very beginning. In other words, agiven stock of real resources and finance capi-tal can support a greater total amount of in-vestment activity if home energy conservationreduces Investment in energy supply, and thismeans less pressure on interest rates to rise.

Second, for the approximately 65 percent ofdwelling units that are owner occupied, homeenergy-conserving investments have many at-tractive aspects. A dollar of payoff in terms ofreduced expenditures for energy is worth morethan a dollar of income to buy energy becauseonly the latter is subject to income tax. Thehome owner/investor, in other words, has a taxincentive to save rather than to buy energy.Also, energy-conserving investments, unlikesavings accounts and other securities availableto small investors, do not have fixed rates ofreturn that can be wiped out by inflation. Fur-thermore, rates of return in terms of reducedenergy expenditures are very likely to increasefaster than inflation because price incrementsfor energy are likely to be above average. Bothof these factors are inducements to increasesavings beyond what homeowners might other-wise and, again, this takes pressure off of in-terest rates.

REAL ECONOMIC DEVELOPMENT

As defined in this report, home energy con-servation saves money and so it can occurla rge ly as the resu l t o f p r i vate marketbehavior. In addition, this profitabil ity also

serves as an economic incentive toward reduc-ing unemployment and inflation because itredirects spending toward relatively plentifulsupplies of labor and capital, and results in a

situation overall in which goods and serv icesare del ivered at a lower total cost. Homeenergy conservation, in other words, can berecommended both on the basis of its payoffsto the Nation as a whole as well as its profitsfor residential consumers.

Qualifications might be made based onshort-run adjustment rates for labor and capi-

Ch. IX—Economic Impacts “ 215

tal markets (e. g., labor must be trained and in-terest rates may be temporarily very high), butin the long run the progressive economics ofhome energy conservation cannot be denied.The fundamental point is that energy suppliescannot be expanded without rapidly increasingreal costs, while cost increments for the expan-sion of labor and capital, as substitutes forenergy, are much smaller.

Chapter X

INDOOR AIR QUALITY

Chapter X.— INDOOR AIR QUALITY

Page

Indoor Air Quality . . . . . . . . . . . . . . . . . . . . . . . ................219Energy Conservation Effects on Indoor Air Quality. . . . . ...........220Expanding Our Understanding of indoor Air Quality . . . . ..........221Protecting the lndoor Environment. . . . . . . . . . .......,........222

Air Change . . . . . . . . . . . . . . . . . . . . . . . . . . . ................222Air Purification . . . . . . . . . . . . . . . . . . . . . ................223Pol lut ion Source Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . .223

T A B L E

Page

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

F I G U R EPage

21. Nitrogen Dioxide Concentrations in a 27m3 ExperimentalRoom at Various Air Exchange Rates . . . . . . . . . . . . . . . . . . . . ....221

Chapter X

INDOOR AIR QUALITY.

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

INDOOR AIR QUALITY

The air pollution control effort in the UnitedStates has generally considered the pollutantconcentrations of outdoor air as the appro-priate measure for population exposure. Ex-ceptions to this emphasis have been the atten-tion given the industrial workplace environ-ment and building codes for office and publicbuildings, which require minimum ventilationrates. The indoor residential environment, tothe extent that it has been considered, has gen-erally been assumed to shelter the occupantsfrom exposure to higher pollutant concentra-tions found outdoors.

It is now clear that indoor levels of severalimportant air pollutants can be as high as orhigher than outdoor levels. (See table 74.) Con-sider the results of a few recent research proj-ects:

● Several studies have shown that house-hold gas stoves can cause high indoor con-centrations of carbon monoxide, nitrogenoxides, and fine particuIates. LawrenceBerkeley Laboratory’ and other sourceshave shown that nitrogen oxide emissionsfrom such stoves are sufficiently high tocause kitchen concentrations to exceedthe range of recommended 1-hour nation-al ambient air quality standards (NAAQS).Some studies have also indicated that car-bon monoxide levels may be raised to lev-els above the short-term ambient stand-ards, but results have been extremely vari-able from study to study.

‘Craig D. Hollowell and C. W Traynor, Combustion-Cer?eratecf Indoor Air Pollution (Lawrence Berkeley Lab-oratory, April 1978) Report LBL-7832

●

●

Danish scientists have found high levels(up to nearly twice the legal occupationalexposure limit) of formaldehyde in homesthat have substantial quantities of parti-cle board in their structure.2 Similarly highlevels of formaldehyde concentrationshave been found in mobile homes in theUnited States.Several studies have shown that smokingseriously affects the indoor environment.The particulate from cigarette smokingare in the respirable size range; nicotine isthe second largest component of thesmoke. 3 Moderate smoking (a pack a day)can cause particulate concentrations toexceed the 24-hour ambient air qualitystandard. 4

Internal sources of pollution include gasstoves, a var iety of bui lding construct ionmaterials including wallboard, paint, and insu-lation, cigarette smoking, aerosol spray, clean-ing and cooking products, and products usedfor hobbies and crafts. Even the concrete andstone in the floors and walls of homes addquantities of radon “daughters” (a fission

‘1 Andersen, “Formaldehyde in the Indoor Environ-mental-Health Implications and the Setting of Stand-ards, ” /nternationa/ /ndoor C/imate Symposium (Copen-hagen, Aug. 30- Sept. 1, 1978).

‘W C. Hinde and M. S. First, 1975, “Concentrations ofNicotine and Tobacco Smoke in Public places, ” NewEngland )ourna/ of Medicine, 292:844-5.

‘For example, see S. J. Peakale and G. De Oliverira,1975, “The Simultaneous Analysis of Carbon Monoxideand Suspended Particulate Matter Produced by Ciga-rette Smoki rig,” Environment/ Research, 9:99-114.

219


product of radon)-–potential causes of lung fects, and exposure levels of the important aircancer–to the indoor environment. Table 74 pollutants found in significant quantities inprovides a brief summary of the sources, ef- indoor air.

Table 74.—Characteristics of Some Indoor Air Pollutants

Pollutant—

Sulfur dioxide (SO2) . . . . Outside air -. . , . ,, Usually somewhat lower than

Major sources Impacts Exposure indoors

Carbon monoxide (CO). . Outside air (autos), gas stoves,smoking, infiltration fromgarage

Nitrogen dioxide (NO2). . Outside air, gas stoves, oilor gas furnaces (whenimperfectly vented)

Photochemical oxidants Outside air

Total suspended Outside air and resuspensionparticulate (including from physical activity;trace elements). . . . . . . smoking, asbestos insulation,

gas stoves, etc.

Hydrocarbons. . . . . . . . . Outside air, smoking, pesti-cides, spray can propellants(fluorocarbons), cleaning sol-vents, building materials,etc.

Radon & radon Cement, stone, bricks, etc.daughters . . . . . . . . . . .

Bacteria & spores. . . . . . Coughing, sneezing

Risk of acute and long-termrespiratory problems inconjunction with particulate

Headache, dizziness at lowerconcentrations; nausea,vomiting, asphyxiation,death at higher concen-trations

Risk of acute respiratoryproblems, possible long-termrespiratory problems, possi-ble increased mortalityfrom cardiovascular diseaseand cancer

Eye irritation, respiratorydiscomfort; long-term prob-lems not well-understood

Risk of short-term pulmonaryeffects; some toxic com-ponents can have severe andvaried effects

Risk of a variety of severeacute and long-term effects

Enhanced risk of lung cancer,other cancers

Spread of respiratory illness— —

outdoors

Can be high from indoorsources; much outdoorconcentration is passedindoors

Can be very high, especiallywhen gas stove is operating

Lower than outdoor concen-tration

Can be very high, especiallyfrom smoking; particlesin respirable size rangedominate

Can be high, also can havecontinuous low-level concen-t rations

May be sign if i cant

Higher than outdoors

ENERGY CONSERVATION EFFECTS ON INDOOR AIR QUALITY

A principal strategy for conserving energy inhomes is to lower the rates of air exchangefrom infiltration and exfiltration, as this air ex-change is a major heat loss mechanism (and amajor source of cooling loss in hot weather) inbuildings. Lowering air exchange rates is ac-complished by sealing the structure, e.g., byweatherstripping, caulking, sealing cracks, andtight construction.

Lowering the air exchange rates in a struc-ture also slows the diffusion of indoor-gener-ated air pollutants to the outside. In otherwords, the pollutants tend to be trapped insidethe structure. Many of the studies of indoor air

quality show a clear and strong inverse rela-tionship between pollutant levels and air ex-change rates. For instance, figure 21 demon-strates a very strong inverse relationship be-tween air exchange rates and nitrogen dioxideconcentrations in the presence of an operatinggas oven. 5

Many of the indoor air quality problemswere discovered only when air exchange rateswere drastically reduced and the pollution ef-fects became obvious to the building’s inhabi-tants. These effects tend to be odor and mois-

5Hollowell and Traynor, op cit.

Ch. X—Indoor Air Quality ● 221

2

1

o Hours 2

NOTE: Gas oven operated for 1 -hour at 350° F.

*Range of recommended 1 hr. air quality standard.

ACPH = air change per hour.

ture buildup rather than health problems, asthe former are more commonly associatedwith the housing environment. Problems of thisnature are not uncommon in Scandinavia,where recently built housing is far tighter thanaverage new homes in the United States. Suchdifficulties could seriously impair the credibili-ty of energy conservation programs in thesame way that problems of flammable cellu-lose insulation have recently discouragedbuyers,

Promotion of energy conservation measuresfor buildings may exacerbate an existing in-door air quality problem whose present dimen-sions are largely unknown. Thus, it is crucialthat the conservation effort be closely coupledwith a program to expand our understandingof indoor air quality as welI as with measuresto protect the indoor environment.

EXPANDING OUR UNDERSTANDING OF INDOOR AIR QUALITY

The Federal research effort on indoor airquality has been limited to a few small, piece-meal contracts. The total Federal effort ap-pears to have been on the order of $1 millionyearly for the past several years. The Depart-ment of Energy (DOE) has funded most of itssmall effort through Lawrence Berkeley Lab-oratory in California; the Environmental Pro-tection Agency’s (EPA) major effort was withGeomet, Inc., in Gaithersburg, Md. Neither ofthese series of studies can be characterized asa comprehensive, systematic effort to increaseour knowledge about the sources, character-istics, and effects of indoor air polIution.

This low level of effort is particularly diffi-cult to understand because both DOE and EPAhave ample evidence to demonstrate that thecurrent system of ai r pol Iut ion monitor ingbased on central measurement stations isoften not measuring true exposure. Besides theobvious problem of indoor air pollution, theexposure measurement problems that arisefrom nonuniform pollution distribution, com-muting activities, and other factors severely

limit the credibility of central-station-based ex-posure estimates.

As a result of these errors in measurement:

●

●

c

The current enforcement of air qualitystandards based on central station pollu-tion monitors may not be adequately pro-tecting the public.The emission control strategies designedto support these standards may be eithertoo lenient, too strict, or else simply badlyskewed.Ep idemio log ica l s tud ies o f po l lu tanthealth effects suffer from severe errors inmeasurement of popuIation exposure.

Thus the lack of understanding of indoor airquality is part of a larger problem of determin-ing total environmental exposure to air pollu-tion. Any Government program designed to im-prove our understanding of the indoor environ-ment should take care to integrate this re-search with research into the total exposureproblem.


In the past few years, a number of excellentpersonal air pollution monitoring instrumentshave been developed for selected air pollut-ants. If monitors were available for a widerrange of indoor and outdoor air pollutants,field studies could use them to measure realexposures of a representative sample of the

urban population. The relationship betweenexisting air pollution monitors and actual ex-posures might be better understood, with thefollowing benefits:

●

●

●

A more accurate, uniform, and mean-ingful measure of air quality than is possi-ble with today’s data. This would providea more realistic measure of the success ofpresent control strategies.

Identification of critical portions of thepopulation –by occupation, location, orother factors — that require special atten-tion, especially during episodes of ex-tremely high polIution concentrations.

Development and validation of modelscapable of predicting pollution exposureto other than ambient pollutant concen-trations.

● Exposure data that is necessary to con-duct credible statistical studies of thehealth effects of low levels of pollution.

Various experts estimate the cost of devel-oping a personal monitor for a particular pol-lutant at $250,000. ’ A 1975 workshop’ atBrookhaven Nat ional Laboratory recom-mended a national development program atthe level of $1.5 million per year for 5 years.Such a program probably would suffice to pro-duce the prototype personal monitors neededfor the most important pollutants.

Given the existence of personal monitors forindustrial applications, the first step of anysuch development program should be a rigor-ous quality assurance testing and evaluationof the existing technology to determine its ap-plicability to exposure assessment studies. Asmonitors for critical pollutants become avail-able, they can be deployed to provide the as-sessments descr ibed above. These assess-ments, if conducted with careful attention todiscovering the socioeconomic and physicalcharacteristics that govern the variation of pol-lution exposure within an area, should providethe understanding of indoor air quality that iscurrently lacking.

PROTECTING THE INDOOR ENVIRONMENT

There are three basic approaches to protect-ing the indoor air environment:

1. maintenance of an adequate level of airchange,

2. air purification, and3. reduction of indoor sources of air pollu-

tion.

Air Change

Because energy conservation involves delib-erately reducing air infi ltration and exfi ltra-tion — natural air exchange—the maintenanceof a satisfactory level of indoor air quality in-volves artif icially inducing an air exchangewith some mechanism to recapture the heat inthe exhaust air. In Europe, and particularly inSweden, it is not uncommon to provide a heat-

recovering system as part of the home ven-tilating system. An advantage of such con-trolled air change is that air removal pointscan be located near the major sources of mois-ture, odor, and pollutants. For example, thekitchen can be ventilated at a higher rate thanthe remainder of the home. Also, developmentof inexpensive monitor ing equipment wi l lallow the rate of air change to be varied ac-cording to the (air quality) need. However, the

‘Lance Wallace, “Personal Monitors,” in vol. IVa (Envi-ronmental Monitoring Supplement) of Analytical Studiesfor the U S Environmental Protection Agency, NationalAcademy of Sciences, Washington, D. C., November1977

‘M. G. Morgan and S. Morris, “Individual Air PollutionMonitors An Assessment of National Research Needs,”report of a workshop held at Brookhaven National Laboratory, July 8-10, 1975, Energy Research and Develop-ment Administration, January 1976.

Ch. X—Indoor Air Quality ● 223

critical factor in avoiding the loss of the con-servation benefits of reducing natural infiltra-tion is still the exhaust air heat recovery. Anumber of devices in varying stages of devel-opment are capable of extracting this heat andtransferring it to the incoming air. These in-clude heat pumps, heat pipes, interpenetratingducting, heat wheels, and runaround systems(see volume 11, p. 548, for a description of howthese systems work) . The interpenetrat ingducting systems, which are heat exchangerswith the incoming and exhaust air streams inparallel but opposite directions, are presentlyavailable, can be extremely efficient, and arethe simplest of the systems; they appear to bethe most feasible systems for residential use.

Air Purification

Air purification is an alternative or a com-plement to air change as a method of assuringgood indoor air quality. Ventilation with heatrecovery may be inadequate to maintain ade-quate air quality if the outside air is polluted.Without air purification devices to screen theincoming air, the ventilation system can com-promise the building’s “sheltering” effect inprotecting its occupants from outside pollu-tion.

Indoor air pollutants vary sufficiently to re-quire a variety of devices to ensure thoroughcontrol. The pollutant categories that requiredifferent methods of control are moisture, par-ticulates, and airborne chemicals and odors.Moisture can be controlled by dehumidifica-tion equipment in the heating season and air-conditioning in the cooling season. Particulatecontrol is accomplished in most homes withforced-air heating and cooling by inserting afilter in the ducts. These filters are not efficientcollectors of finer respirable particulate. Elec-trostatic precipitators can be added to allowcontrol of a greater range of particle sizes; thisequipment is available today.

Reduced infiltration rates will most affectthe need for control of airborne chemicals andodors. Aside from ventilation, the control tech-nology categories are:

1.

2

3

Absorption by dissolving the pollutants inliquids. Spray washing, which can alsocapture particulate and provide a dehu-midifying function, is often used in largebuildings.Adsorption of the odors and chemicals ona solid, usually activated carbon. Thismethod should have the greatest residen-tial application.Chemical reaction by oxidation to an inert,odorless state. The oxidizing chemical canbe added to the water in a spray washer orto the activated charcoal in an adsorptionfilter for a combined effect.

Much work remains to be done on all thesetechnologies.

Pollution Source Reduction

Much indoor air pollution occurs because of(or is increased by) poor maintenance or im-proper manufacturing techniques. For exam-ple, levels of formaldehyde emissions fromwalIboard depend on proper curing of the ma-terial. Carbon monoxide emissions from gasstoves can be increased by several orders ofmagnitude by improper burner adjustment ormaintenance. Defects in the venting of gas andoiI furnaces can and often do contribute to in-door air pollution. Many of the chemicals usedin cleaning and in hobby work are extrava-gantly and/or improperly used, and their con-tribution to degrading of indoor air qualitycould be substantially reduced through in-creased awareness of their adverse effects. Itseems Iikely that many chemicals in use in thehome environment are inappropriate exceptunder careful ly control led condit ions andshould be controlled; however, no analysis ofthe appropriateness of such controls was con-ducted during this study.

A strategy for pollution source reductionshould clearly include an added emphasis oncombustion equipment maintenance and de-sign, as well as far greater Government atten-tion to the composition of common householdchemicals and their packaging and labeling,p lus the po l lu t ion-caus ing p roper t ie s o fmaterials used inside the home.

Chapter Xl

TECHNICAL OPTIONS

Chapter XI.--TECHNICAL OPTIONS

Page

Improved Building Envelopes. . . . . . . . . .. 227Insulation . . . . . . . . . . . . . . . . . . . . . . . .227Interior and Exterior Cladding for

W a l l R e t r o f i t . . . . . . . . . . . . . . . . . . 2 2 8Installation Quality . . . . . . . . .. 229Wall Sandwich Configuration. . . . . .. 229Infiltration Control . . . . . . . .. .229

W i n d o w T e c h n o l o g y . . . . . . . . . . . . . . . . . . 2 3 1Improved Windows. . . . . . . . . . . . . . .233

Heating and Cooling Equipment. . .......240Direct Fossil-Fired Heating Equipment .. 240Oil arid Gas Furnace Efficiency

Improvements. . , . . . . . . , . . . . . .241Advanced Fuel-Fired Equipment. .. ....242

Pulse Combustion Furnaces andBoilers. . . . . . . . . . . . . . . . . . . . . .. 242

Fue l - F i red Heat Pumps . . . . . . . . . . . . 244Electric Air-Conditioners and Heat

Pumps . . . . . . . . . . . . . . . .Gas-Fired Heat Pumps and Air-

Conditioners . . . . . . . . . . .Absorption Air-Conditioners .Absorption Heat Pumps . . . .Other Gas-Fired Heat Pumps.

Integrated Appliances . . . . . . . . .Air-Conditioner/Water Heater. .Furnace/Water Heater Systems.Refrigerator/Water Heater . . . .Drain Water Heat Recovery . . .

. . . . . . . 244

. . . . . . . 250

. . . . . . . 250

. . . . . . . 250

. . . . . . . 250

. . . . . . . 252

. . . . . . . 252

. . . . . . . 253

. . . . . . . 253

. . . . . . . 253

Page

Summary. , . . . . . . . . . . . . . . . . . . . . . . .254Controls and Distribution Systems . . . . . . .254Passive Solar Design . . . . . . . . . . . . .. .256

D i r e c t G a i n S y s t e m s . . . . . . . . . . . . . . . . 2 5 7Indirect-Gain Passive Buildings . . . . .. 259Hybrid Passive Systems. . . . . . . . . . . . . .263Cost of Heat From Passive Solar Heating

Systems. . . . . . . . . . . . . . . . . . . . . .264Cost of Heat From Fossil Fuels and

Electricity . . . . . . . . . . . . . . . . . . . . 268Summary. . . . . . . . . . . . . . . . . . . . . .. ..270

Technical Notes–– Fossil Fuel Prices. . . . . .272

T A B L E S

75

76

77

78

79

Page

Summary of New FenestrationTechnologies. . . . . . . . . . . . . . . . . . . . . .239Heating Equipment and Fuels forO c c u p i e d U n i t s i n 1 9 7 6 . . . . . . . . . . . . . 2 4 0Refit Modifications for EfficiencyImprovement of Oil-Fired Boilers . . . .. 241California Standards for CoolingEquipment . . . . . . . . . . . . . . . . . . . . .. 249DOE Room Air-Conditioner Energy-Efficiency Improvement Target . . . . . .249

DOE Central Air-Conditioner Energy-Efficiency Improvement Target .. ....249

81. Estimated Performance of Carrier HotShot@ Heat Recovery Unit With a3-Ton Air-Conditioner and a Family ofFour. . . . . . . . . . . . . . . . . . ..........253

82. Cost of Heat From Passive Solar HeatingInstallations . . . . . . . . . . . .268

83. Cost of Heat Supplied to Houses FromFoss i l Fuels and Electr ic i ty . . . . . . . . . .269

F I G U R E S

Page

22. Air Leakage Test Results for AverageHome of 1 ,780 sq . f t . . . . . . . . . . . . . . . . 230

23 . The Doub le-S ided B l ind . . . . . . . . . . . . 23424. Triple Blind, Winter Day Mode. .. ....23425. Shades Between Glazing With Heat

Recovery. . . . . . . . . . . . . . . . . .23526. Between Glazing Convection and

R a d i a t i o n C o n t r o l . . . . . . . . . . . . . . . . . 2 3 527. Multilayer, RoIl-Up Insulating

W i n d o w S h a d e . . . . . . . . . . . . . . . . . . . 2 3 528. Insulat ing Window Shade . . . . . . . . . . .23629. Window Quilt Insulating Window

Shade . . . . . . . . . . . . . . . . . . . . .. ....23630. Skylid . . . . . . . . . . . . . . . . . . . . .. ....23631. Beadwall. . . . . . . . . . . . . . . . . . . . . .. .2373 2 . B e a m D a y l i g h t i n g . . . . . . . . . . . . . . . . . 2 3 733 , Se lect ive So la r Cont ro l . . . . . . . . . . . . . 23734. Heat Mirror. . . . . . . . . . . . . . . . . .. 23835. Optical Shutter . . . . . . . . . . . . . . .. ..2383 6 . W e a t h e r Panel@ . . . . . . . . . . . . . . . . . . 2 3 837. Typical Energy Flow for a Gas

Furnace System. . . . . . . . . . ........24138. Principles and Operation of the Hydro-

Pulse Boiler Which Uses the Pulse-Combustion Process . . . . . . . . . . .. ..243

39. A Typical “Split System” Heat PumpInstallation . . . . . . . . . . . . . . . . . . . . . .245

40. Air-Conditioning COP of Heat Pumpsand Central Air-Conditioning UnitsShipped in 1977 . . . . . . . . . . . . . . . . .. .246

41. Performance of the Carrier Split-SystemHeat Pump . . . . . . . . . . . . . . . . . . . . .. 247

Page

42. The Seasonal Performance of Heat-PumpUnits as a Function of Local Climate. .. 248

43. Estimated Cost of Increasing thePerformance of Air-Conditioners Fromthe Industry Average COP of 2.0 tothe Performance Levels Indicated. . .249

44. Modified Saltbox Passive Solar DesignHome . . . . . . . . . . . . . . . . . . . .257

45. The Fitzgerald House Near Santa Fe,N. Mex., is 95-Percent Solar Heatedby a Direct-Gain System at a 5,900Degree Day Site . . . . . . . . . . . .. ...258

46. The Kelbaugh House in Princeton, N.J.,Receives 75 to 80 Percent of Its HeatFrom the Trombe Wall and the SmallAttached Greenhouse. . . . . . . . . . .260

47. The Crosley House in Royal Oak, Md.,

48.

49

50

51

Comblnes a Trombe Wall System WithDirect Gain and a Massive Floor, to Provide50 to 60 Percent of Its Heating Needs . . 261The Benedictine Monastery Off ice/Warehouse Near Pecos, N. Mex., UsesDirect Gain From the Office Windows andWarehouse Clerestories Combined Withthe Drumwall Below the Office Windowsto Provide About 95 Percent of ItsHeating Needs. . . . . . . . . . . . . . . . . . .262The PG&E Solarium Passive Solar Home in(California Uses the Large Skylight to HeatWater-Filled Tubes on Three Walls of theSolarium . . . . . . . . . . , . . . . . . . . . . . .263This Retrofit Sunspace is Manufactured bythe Solar Room Co. of Taos, N. Mex.. . .264This Retrofit Greenhouse is an Example ofThose Built by the Solar SustenanceProject. . . . . . . . . . . . . . . . . .265

52. The Balcomb Home Near Santa Fe,N. Mex., Combines the Use of aGreenhouse With a Rock Storage Bedto Provide 95 Percent of Its HeatingNeeds . . . . . . . . . . . . . . . ..........266

53. This Home in Los Alamos, N. Mex. ,Combines a Large Trombe Wall WithSmall Direct Gain Windows and a RockStorage Bed. . . . . . . . . . . . . . .. ...267

54. Solar Feasibility for Trombe Wall WithNight Insulation Alternative Fuel –Natural Gas. . . . . . . . . . . . . . . . .. ....271

Chapter Xl

TECHNICAL OPTIONS

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

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

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

IMPROVED BUILDING ENVELOPES

Insulation

Minimizing the amount of heat lost from theinterior is usually the first step toward con-structing an energy-conserving house. This ap-proach is almost always taken when the retro-fit of a building is considered as well. It is fre-quently assumed that this merely means add-ing more insulation in the walls and over theceilings, using storm windows and doors, andcaulking and weatherstripping all of the cracksin the building. However, new ways of usingthese techniques are being implemented, andsignificant new products are being developed.

Thermal transmission through walls, ceil-ings, and floors is the single largest source ofheat transfer in a typical house. While manyolder homes were buiIt without insulation, vir-

tually all new houses contain at least some in-sulation to reduce heat loss. Many different in-sulating materials are used including rockwool, fiberglass, cellulose, cellular plastics(such as polystyrene, urethane, and ureafor-maldehyde), perlite, vermiculite, glass foam,and aluminum multifoil. The characteristics ofthese materials and insulation standards arediscussed in appendix A. That discussion in-cludes insulation properties, health and firesafety issues, and production capacity.

The choice of insulation depends on cost,application, availability, and personal prefer-ence. New wall cavities are generally filledwith rock wool or fiberglass batts while plasticfoam sheathing may be added to the exterior.Retrofit of walls built without insulation isgenerally accomplished by drilling holes be-

227


tween each pair of studs and blowing in fiber-glass, cellulose, or ureaformaldehyde. Insula-tion is occasionally added to the exterior ifnew siding is installed. Attics are insulatedwith batts or loose-fi l l insulation. Fiberglass,rock wool, and cellulose are widely used, butperlite and vermiculite are also used in attics.Floors are seldom insulated, but fiberglassbatts are the most frequent choice for this ap-plication. Foams such as polystyrene or ure-thane are generally used when foundations orbasements are insulated.

Cost-effective levels of insulation can sub-stantially reduce heat losses as illustrated inchapter II.

Thus it might seem that new insulation mate-rial and techniques wouId represent a newtechnology area of substantial importance.

It appears, however, that this is not the case.Contacts with industry and with national lab-oratories indicate that new technology devel-opments will not make a large contribution toinsulation materials and practices. What ad-vances do occur by 1985-90 wilI primarily aug-ment existing techniques; not represent majornew directions. A basic difficulty in assessingthis area is that major companies carefullykeep their new product developments to them-selves. Nevertheless, the fo l lowing pointsemerge:

1

2.

3

4.

Major breakthroughs in the cost per unitof insulating value of major insulating ma-terials are not expected, and no funda-mentalIy new materials of high cost-effec-tiveness are anticipated.

In frame wall cavity retrofit, incrementalimprovements may be expected in thehandling and performance characteristicsof the major materials, but no fundamen-tal breakthroughs are anticipated.

New systems for reinsulating the exteriorsurfaces of walls are being developed,but, again, no fundamental change is ex-pected.

Changes in wall sandwich configurationsfor new buildings are being developedthat will result in more efficient wall per-formance.

5. The quality of installation is a major prob-lem and may be the area in which insula-tion effectiveness can be most improvedover the next decade.

Each of these areas provides a range of newopportunities, but inst i tut ional const raintsmay limit implementation. The technical ad-vances that are likely may be only incremen-tal, but this could result in houses with sub-stantially less energy consumption and lowerIifecycle cost.

The price of insulation has increased sharplyin the last 4 years, but this is largely due to atemporary lack of capacity in the industry, andfuture increases should be more directly re-lated to cost increases. However, it does notappear that ways will be found to make signifi-cantly cheaper insulation, as the materialsalready used are quite inexpensive. It is ex-pected that the price of insulating materialswill generally keep pace with inflation.

Improved mater ia ls for retrof i t t ing wal lcavities would be useful since all of the materi-als now in use have at least one drawback. Thelabor cost is typically one to two times as greatas the material cost for these retrofits. Thus,any dramatic drop in the installed price wouldrequire a less expensive material that also of-fered simplified installation.

Interior and Exterior Cladding forWall Retrofit

In retrofitting exterior walls for improvedthermal performance, an alternative to fillingthe wall cavity is the application of a layer ofinsuIation over the exterior or interior wall sur-face, followed by re-covering of the wall. Theadvantage of this approach is that the insula-tion layer is monolithic (rather than broken byframing members) and that a wide range ofdurable and highly effective insulating materi-als is available for this application. This ap-proach also has its disadvantages. If an interiorinsulating layer is used, the available interiorspace is reduced, the Iiving space must be dis-rupted, and there are refinishing problems. Ifan exterior cladding is used, a sound weather-proof finish must be applied over it. Generally,

Ch. X/—Technical Options ● 229

exterior systems are more practical and havereceived more attention in the marketplace.

A number of complete insulation and sidingsystems are already on the market. None ofthese, however, is cost-effective purely as anenergy-conserving measure; they are cost-ef-fective only on the assumption that it is neces-sary to re-side the buiIding anyway. There is nopromising technical breakthrough on the hori-zon. Thus, it appears that wall cladding as amethod of retrofit will not become a majorenergy strategy.

Installation QualityIt is well known that installation quality in

both new and retrofit insulation application isa major and continuing problem.

In new construction, common defects in-clude the failure to fill smalI or narrow cavitieswith insulation, the failure to pack insulationproperly around and behind electrical andplumbing fixtures, and the incomplete cover-age of cavities with insulation. The last prob-lem is particularly serious if the defect extendsvertically for a significant distance becauseconvection currents are thereby set up thatresult in rapid heat transfer. I n general, the per-centage increase of heat loss is dispropor-tionate to the area of the defect, because ofthe action of air infiltration and internal aircurrents.

In the retrofit of existing construction, seri-ous problems exist in reinsulation of wall cavi-ties. As the framing pattern is not easily ap-parent from the outside of the building, it iscommon to miss small cavities entirely. Evenwhen a cavity is located, the filling may be in-complete or the insulation may be hung up oninternal obstructions. The fact that the extentof coverage of the completed installation can-not be seen results in a basic quality-controlproblem.

It is likely that increased understanding ofthese problems will result in corrective effortsby conscientious builders and inspectors. ln-frared thermography can be used to detect in-stallation defects by taking a “heat-loss pic-ture” of a house, but the cost of the equipmentand other factors have limited its use to date.

Wall Sandwich Configuration

The typical exterior residential frame wall isinsulated by glass or mineral fiber insulationwith a thermal resistance value of R-11 or R-13,fastened between 2x4 framing members. Theinterior and exterior wall surfaces and framingare composed of materials of low to moderateinsulating value. Exclusive of openings, 15 to20 percent of the area in such a wall is givenover to framing. This portion of the wall area,insulated only by standard building materials,accounts for a disproportionate amount of thetotal wall heat loss; a framing area of 15 per-cent accounts for approximately 30 percent ofthe total heat loss through the wall.

A number of improved wall configurationsand details have been developed and are find-ing increasing use. These, in general, involveincreasing the total amount of insulation, usu-ally from about R-1 3 to about R-20, and chang-ing the wall sandwich to either reduce the sizeof framing areas or to insulate them. Several ofthese configurations are described on pp. 500-505 of volume I 1.

Infiltration Control

Infiltration has traditionally been a majorsource of thermal inefficiency in homes. Ac-cording to various estimates, it accounts forbetween 20 and 40 percent of all heat transferthrough the building envelope, in both old andnew construction. While the absolute magni-tude of infiltration losses has declined with theadvent of tighter building components andtechniques, the decline has been comparableto the reduction in conductive losses. There isclear potential for large energy savings fromfurther infiltration control.

Infiltration depends on how a house is builtand used. It increases whenever the windspeed or indoor-outdoor temperature differ-ence increases and may vary from near zero ona calm spring day to several air changes perhour (ACPH) on a windy winter day. Thesebasic facts are well known, but overall infiltra-tion behavior is rather poorly understood anddocumented. A review of the literature severalyears ago determined that the average infiltra-tion rate for most houses in the United States

230 ● Residential/ Energy Conservation

Fireplace - 5% Dryer vent - 3°/0

SOURCE: “Reprinted with permission from the American Society of Heating,Refrigerating, and Air-Conditioning Engineers “

It is possible to build a house very tightly ifthe builder uses the right materials with suffi-cient care. The “Saskatchewan ConservationHouse” in Regina, Canada, has uncontrolledinfiltration of only 0.05 ACPH.2 However, it isnot known whether the average builder couldbuild houses this tightly. The present Swedishbuilding standard3 requires that a house have a

‘T. H. Handley and C. J. Barton, “Home VentilationRates: A Literature Survey” (Oak Ridge National Labora-tory, September 1973), ORNL-TM-4318.

2Robert W. Besant, Robert W. Dumont, and GregSchoenau, “Saskatchewan House: 100 Percent Solar in aSevere Climate,” So/ar Age, May 1979, p. 18.

3Svensk Bygnorm 1975, Statens Planverks Forfattnings-samling, Liber Tryck Publications (Stockholm, Sweden,1978), PFS 1978:1, 3rd edition.

maximum leakage rate that corresponds toabout 0.3 AC PH. It is enforced by measuringthe leakage in a sample of the homes by eachbuilder.

Insulation standards can be very specificand s imple v isual checks can determinewhether the standard has been met. By con-trast, infiltration reduction requires the use ofmaterials and techniques in places that are in-herently inaccessible and invisible. It appearsthat the only way to ensure compliance withan infiltration standard is to measure it as partof the inspection process.

There are two basic approaches to infiltra-tion measurement. In the first, a small amountof sul fur hexaf luor ide (SF 6) or some othertracer gas is circulated through the house withthe furnace blower and its concentration ismeasured several times during the next hour ortwo. Analysis of these measurements deter-mines the infiltration rate for the specific windand temperature conditions at the time of themeasurement. The air samples can be taken inplastic bags and analyzed in a laboratory, sono elaborate equipment is required at thehouse. The other technique uses a large fan tosuck air out of the house and measures thevolume exhausted at different indoor-outdoorpressure differences (fan speeds). This providesa “leakage” measurement of the house that isrelatively independent of the weather condi-tions and individual leaks can be located withthe use of a smoke source such as incense. Sev-eral investigators4 have attempted to correlatethese measurements with actual infi ltrationrates. The results have been highly variable so,in a strict sense, these measurements shouldonly be considered leakage measurements.The leakage test is used for standards enforce-ment in Sweden where it requires about 2hours to test a house. ’ The equipment used inthe test can be purchased for about $500.

‘Investigators who have worked with air infiltrationand leakage measurements include Richard Grot, Na-tional Bureau of Standards; Robert Socolow, PrincetonUniversity; Robert Sonderegger, Lawrence Berkeley Lab-oratory; Maurice Gamze of Gamze, Korobkin, andCaloger, Chicago, Ill.; and Gary Caffey, Texas Power andLight Company

5Stig Hammarsten, National Swedish Institute forBuilding Research, private communication, May 1979.

Ch. X/—Technical Options ● 231

A house would use less energy if there wereno infiltration, but the occupants would ne-gate this strategy whenever they opened thewindows. Alternatively, fresh air could be pro-vided with very little loss of heat by a simpleheat exchanger. The Saskatchewan Conserva-tion House heats incoming air with outgoingair by running both through interpenetratingducts made of plastic sheets separated bywooden spacers. This recovers over 80 percentof the heat. Many Swedish houses that meetthe present building standard have experi-enced air quality problems (such as those dis-cussed in chapter X) and excessive humiditylevels. The standard is presently being re-viewed and, according to one observer, it willlikely be modified to require the installation ofa heat exchanger. G Minimum acceptable airchange rates for homes are not well defined,but a number of people active in the fieldbelieve that heat exchangers or some othermethod of purification are needed if infiltra-tion is below about 0.5 AC PH.

The “technology” for infiltration control isand will remain primarily the plugging of holes

and cracks, weatherstripping, and attention tothe tightness and quality of construction. Exist-ing products are being used more extensivelyand others are being used in different ways;plastic sheeting is increasingly used to providea vapor barrier instead of paper or foil insula-tion backing. Following the identification ofelectrical outlets as a major infiltration source,simple foam plastic gaskets that are placedunder the outlet covers have come on the mar-ket.7 Improved sealants and caulking materialsthat are easier to use have become available inrecent years. A foam plastic sealant that canbe squirted into a crack much like shavingcream is now available; it expands slightly as itcures to ensure a tight seal.8 Other devices andconfigurations used to reduce infiltration in-clude outside combustion air intakes for fur-naces, water heaters, and fireplaces, and tight-ly sealable exhaust vents . Each of thesechanges makes it easier to build a tight houseor retrofit an existing house. Further improve-ments of this nature are likely.

‘Three manufacturers of such gaskets are the VisionCo In Texas, KGS Associates in Greenville, Ohio, and theArmstrong Cork Co.

‘One manufacturer of such a foam is the CoplanarCorp , Oakland, Cal if.

WINDOW TECHNOLOGY

Windows serve mult ip le funct ions. Theyallow daylight to enter, provide a view of theoutside with its changing weather patterns, canbe opened to provide ventilation, and admitheat in the form of sunlight. They also allowheat to escape, both by infiltration around theframe and by the normal radiative/conduc-tive/convective heat transfer processes.

From the standpoint of energy-eff ic ientbuilding operation, the ideal window wouldallow all the sunlight to enter the buildingwhenever heating is needed, and would havevery low thermal losses. During the summerwhen no heating is needed, it would admit onlyvisible light, and only in the quantities neededfor lighting and providing a view of the out-

side. All of the invisible infrared rays (over halfof normal sunlight) would be excluded.

The windows in most houses are quite effi-cient at admitting sunlight—80 to 90 percentof the light striking them passes through. In thesummer, shade trees and shades and awningson the windows limit the heat admitted. Butwindows have the poorest thermal loss behav-ior of any part of the building shell. Typically,windows have an R-value of 0.9 to 2, while in-sulated walls have an R-value of 10 to 15 andinsulated attics have an R-value of 15 to 20.There is clearly room for vast improvement.

Early windows were a simple hole in the wallto admit sunlight and allow the occupants tosee out, or a translucent material that wouldadmit some light and exclude cold air was


used. Glass was a great advance, since it simul-taneously let in sunlight and prevented drafts.Double-glazing and shutters have now beenused for many years to reduce the heat lossfrom windows, and shades can prevent over-heating in the summer. During the last fewdecades, most of the development of glass forarchitectural uses has concentrated on makingwindows that would admit less sunlight andheat while still providing an adequate view.The early solar control glasses simply absorbedpart of the sunlight in the glass with the resultthat part of the heat entered the building, butmuch of it stayed outside. Then manufacturersbegan to put very thin reflective coatings onglass. These reflect most of the sunlight, and insome cases actually cut down on the winterheat loss through the glass because they alsoreflect the infrared heat waves back into aroom. The vastly decreased amounts of sun-light admitted to the building are consideredsatisfactory because they still permit a goodview and greatly reduce glare. These reflectiveglasses are marketed on the basis of theirreduction of air-conditioning loads in the sum-mer and their reduced heat loss in the winter,ignoring the fact that the additional sunlightkept out in the winter would in some cases behelpful. They are generally used on large build-ings that have large air-conditioning loads inboth summer and winter.

In the last 3 or 4 years, increasing attentionhas been devoted to new window productsthat will add to the flexibility of window useand substantially improve their overall effecton the energy requirements of houses. The suc-cessful commercialization of these productsshould make it possible for windows to gener-ally lower the overall energy requirements of ahouse for space-conditioning.

Windows lose heat by all of the basic heatloss mechanisms discussed earlier: radiation,convection, and conduction. As the contribu-tion of radiation and of convection/conduc-tion is comparable in most windows, reductionof the losses attributable to either of thesemechanisms can be important. One factor thathas very little effect on heat loss is the thick-ness of the glass. Doubling the glass thicknesshas a barely perceptible effect, but the same

amount of glass added as a storm window willcut the heat loss in half. The combination of anadditional dead air space and layer of glasscuts both radiative and convective losses. It isgenerally true that the heat loss through a win-dow will be divided by the number of panes(e. g., the heat loss through triple-glazing is one-third that through single-glazing).

In addition to multiple-glazing, the basicmethods of conduction and convection con-trol have been various forms of blinds, shut-ters, and curtains. Some sunscreen deviceshave the effect of baffling the outer air layerand reducing surface convection. Relativelylittle attention has been paid, in existing win-dows, to the control of convection betweenglazing layers. One technique that has beenstudied is that of filling the interglazing spacewith heavier molecular weight gases. Use ofgases such as argon, sulfur hexafluoride, orcarbon dioxide can result in a significantreduction of conduction. It is also possible tomake “heat mirror” coatings that allow mostof the sunlight to pass through but whichreflect heat back into the room.

Room temperature radiation is a major con-tributor to heat loss, but sunlight has an evenlarger effect on the energy impact of manywindows. Solar radiation at the Earth’s surfaceis approximately 3 percent ultraviolet, 44 per-cent visible, and 53 percent infrared. The pri-mary intent of glazing is to admit daylight andpermit a view. Daylight is “free” lighting froma renewable source and has a more desirable“color” than most artificial light. As with ar-tificial light sources, sunlight, both visible andinvisible, is converted to heat energy when ab-sorbed by materials. One property of sunlight,however, is that its l ighting “efficiency” ishigher than that of artif icial l ight. In otherwords, for a given level of lighting, sunlightproduces one-sixth the heat of incandescentlight and slightly more than one-half the heatof fIuorescent light.

The use of daylighting is particularly desir-able in the summer because it can cut the useof electricity for both lighting and cooling. Inwinter, the heat from the lights is often useful,but dayl ight ing is st i l l benef icial s ince i treduces the use of nonrenewable sources.

Ch. Xl—Technical Options ● 233

In the typical design approach to small resi-dential buildings, little attention is paid to theuse and rejection of solar radiation. Windowsare treated simply as sources of conductiveheat loss in winter and of cooling load in sum-mer. I n reality, summer heat gain can be great-ly reduced and winter heat gain can be signifi-cantly increased by appropriately specifiedand properly oriented windows. It is likely thatthe sizing and orientation of windows will bemore carefully specified in the future.

Shading to keep out heat from the Sun is ac-complished most effectively by an exteriorshade or reflector. An outer reflective surfaceis almost as effective, an interior refIector (e. g.,a shade) is still quite effective, and absorbingglass is generally less effective.

At night, when sunlight and view are not fac-tors, movable insulation that cuts the heat lossto that of an ordinary wall section can be ex-tremely useful. A single-glass window com-bined with nighttime insulation can exceed theoverall performance of even a triple-glazedwindow. 9

Many variations on these ideas are being de-veloped and some products are already on themarket.

Improved WindowsEnormous improvements in the energy effi-

ciency of windows could be achieved throughthe proper use of conventional materials andcomponents. (Some of these approaches arepresented in the discussion of Passive SolarDesign at the end of this chapter.) In manycases “new” technologies are simply a revivalof old ideas and practices. Several technol-ogies and devices of recent origin that appearto provide significantly improved window effi-ciency are illustrated and described in figures23 through 36. These are:

● the double-sided blind,● the triple blind,● shades between glazing with heat recov-

ery,● between-glazing convection and radiation

control,

. insulating shades and shutters,● the Skylid® ,. the Beadwall® ,. beam daylighting,● selective solar control reflective film, and. the heat mirror (Iow-emissivity film),● the optical shutter, and● the Weather Panel® .

Some of these technologies have been de-veloped by industry while others have beensupported by the Department of the Energy(DOE) through its energy-efficient windowsprogram managed by the Lawrence BerkeleyLaboratory. This program has provided sup-port for work on shades between glazing withheat recovery, between-glazing convectionand radiation control, multi layer insulatingshades, beam daylighting, selective solar con-trol films, heat mirrors, and optical shutters.Testing and evaluation of other concepts andproducts has been performed.

Traditional blinds provide protection fromglare and overheating near the window. Theblinds illustrated in figures 23 through 26 allprovide this protection but also allow the heatto be used elsewhere if desired, reduce the win-dow heat losses, or both.

The devices shown in figures 27 through 37all serve to reduce the heat losses from win-dows when the Sun is not shining, and general-ly do it quite effectively. They can also be usedas shades to exclude sunlight when it isn’twanted. The shades shown in f igures 27through 29 incorporate design features that at-tempt to eliminate air leakage around theedges. The same convective processes thatenable the double-sided and triple blinds todistribute heat into the room will effectivelycancel the insulating value of a shade if theedges are not tightly sealed. Figure 32 illus-trates one approach to increased utilization ofdaylighting, while figures 33 through 36 illus-trate the use of some highly innovative materi-als. The materials in figures 33 and 34 share theproperty of transmitting some radiation andreflecting others, but their uses are very dif-ferent. The heat mirror primarily reduces cool-

‘D. Claridge, “Window Management and Energy !5av-ings,” Energy and Bui/dings 1, p. 57 (1977).

~ Registered trademark of Suntek Research A=OCi-ates, Inc., Coite, Madera, Cal if.


Figure 23.— The Double-Sided Blind

-:

.

Absorbingside

Reflectingside

Exterior

k

Interior

The double-sided blind is used on bright winter days whenshading is needed to prevent overheating or glare fromlarge windows. It absorbs and distributes to the roomheat that would be reflected outside by an ordinary shade. Itfunctions as an ordinary shade in the summer with the reflectiveside out.

ing loads while maintaining daylight availabil-ity for lighting. The heat mirror wiII be mar-keted by a subsidiary of Suntek Research Asso-ciates next year. The optical shutter is a pas-sive shading material also under developmentby Suntek. It works well, but the economicsare not considered promising if the shutter ma-terial is enclosed in glass. Some work has beendone on developing a suitable method forencapsulating it in less expensive plastics. TheWeather Panel® (figure 36) is a logical com-bination of heat mirror and optical shuttertechnology that could be a major advance inpassive heating technology if it can be pro-duced at low cost. A discussion of this systemwas presented at the Second National PassiveSolar conference. ’” Weather Panel® combinesthe advantages of high thermal resistance andshading in a completely passive system. The

@ Registered trademark of Suntek Research Associ-ates, Inc., Coite, Madera, Calif.

‘“Day Charoudi, “Buildings as Organisms,” Proceed-ings of the Second National Passive Solar Conference,Mar. 16-18, 1978, p. 276 (Philadelphia, Pa.: Mid-AtlanticSolar Energy Association).

Figure 24.—Triple Blind, Winter Day Mode

The triple blind is functionally similar to the double-sided blind,but the clear shade keeps more of the absorbed heat in thehouse. At night, thermal resistance of R5 is achieved by pullingall three shades, according to the manufacturer,Ark-tic-seal Systems, Inc., Butler, Wis.

Cloud Gel® material can be made to turn re-flective at any temperature in the range from00 to 1000 C. (An essential requirement for sys-tems like this is for all parts to last 15 years ormore or be readily replaceable.)

None of these new technologies is the single“best” approach for all conditions. They differradically from each other in cost, effective-ness, and range of applicability. Table 75 sum-marizes the salient features of these new tech-nologies. This table presents the performanceparameters, operating requirements, estimatedcost-effectiveness, appl icabi l i ty to retrof i t ,and current status of each new technology.The estimates of the level of cost-effectiveness

Ch. Xl—Technical Options . 235

Figure 27.—Multilayer, Roll-Up InsulatingWindow Shade

r. \

Figure 25.—Shades Between Glazing WithHeat Recovery

TO north sideor storage

l \ \ Cover with double head seals

Black side

7

7

7

7

7

(.~

& expand ~o formdead air spaces

Reflective surfaces:0 develop highresistance toheat transfer

Reflecting side

Spacers collapsewhen rolled upyet expand whenpulled down

r Cover with doublejamb seals

11- /

Thermally effective summer thru winterat windows and sliding doors

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

Figure 26.—Between Glazing Convection and Radiation Control

Privacy Acceptance

ss ss(Exterior) (Exterior)

The horizontal slats between the glass suppress convective heat loss. In the “privacy mode,” light is excluded and heat loss isreduced further. R3.5 has been achieved and R5 is believed possible with better design and construction.


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 aregenerally installed primarily for esthetic rea-sons. While there are a host of window acces-sories and modifications, probably only stormwindows and double-glazing have historicallybeen marketed primarily on the basis of energysavings. Many of these accessories and im-provement solve one “problem” and introduce

Figure 28.— Insulating Window Shade

I I

2nd air space

Flexible /4

barrier

Hollow)still air b A

core

● The desire for privacy. Shades, drapes,and blinds are sold primarily for the pri-vacy they afford. Exterior shutters such asthe Rolladen, which are widely used in Eu-rope, offer both privacy and increasedsecurity.

Figure 29.—Window Quilt Insulating Window Shade

attach

This roll-up shade is made of hollow, lens-shaped, rigid white PVC This roll-up shade is a fabric covered quilt whose edges slide in a

slats with minimal air leakage through connecting joints. It can be track to reduce infiltration. It offers a thermal resistance of R5.5

operated manually or automatically and is manufactured by when used with a double-glazed window according to the

Solar Energy Construction Co., Valley Forge, Pa. manufacturer, Appropriate Technology Corporation, Brattleboro, Vt.

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 tothe inner cannister, and closes by the reverse process. It provides a thermal resistance of R3 when used with single-glazing according to themanufacturer, Zomeworks, Inc., Albuquerque, N. Mex.

Ch. XI— Technical Options c 237

●

●

The need for improved comfort is a majorfactor in the sale of “solar control”glasses. While they also reduce the needfor air-conditioning, it is virtually impossi-ble to provide comfort in the full glare ofthe summer Sun. This is another importantconsideration in the purchase of shades,drapes, and blinds. The “solar control”glasses also exclude useful winter sun-light.The ultraviolet rays in sunlight shorten thelife of fabrics and home furnishings. Theopaque window covers and some coatingsreduce this problem.

Figure 31.—Beadwall

The beadwall uses automatic controls to pump small expandedpolyurethane beads between the two layers of glass to provide anighttime thermal resistance of R8. Beadwall is a registeredtrademark of Zomeworks, Inc.

● Drapes, shades, blinds, and shutters areopaque. By contrast, heat mirrors, selec-tive solar control films, and between-glaz-ing convection/radiation control devicesprovide both daylighting and outlookeven when in operation.

Since reduced energy consumption is onlyone factor in the choice of window improve-ments, it is entirely possible, and perhaps Iike-Iy, that some of the “less cost-effective” im-provements that offer other advantages willuItimately become most widely used.

Figure 32.—Beam Daylighting

This beam daylighting approach uses adjustablereflective blinds to reflect light off the ceiling farinto a room to extend the area where daylightlevels are acceptably high.

Figure 33.—Selective Solar

. -

Control

Selective controlfilm

\Visible sunlight

P

Infrared sunlight

u

The selective solar control film transmits most of the visiblesunlight while reflecting most of the infrared sunlight. This canreduce cooling loads while utilizing available daylight.


Figure 34.-Heat Mirror Figure 35.—Optical Shutter

Heat mirror on

Wallinner surface

Room temperatureinfrared

1

a

The heat mirror transmits almost all of the visible and invisibleinfrared sunlight but reflects almost all of the thermal infraredradiation back into the room. The overall effect can be similar toadding another pane of glass.

Glazing containsoptical shutter Clear

\ /glass

The optical shutter is a heat-activated sunshade made from atemperature sensitive polymer material which is transparent belowa critical temperature (76°F in this example) and becomes amilky-looking diffuse reflector of 80% of the sunlight above thattemperature.

Figure 36.—Weather Panel®

I I I ~ Light reflectedif interior too hot


Table 75.—Summary of New Fenestration Technologies

Winter Summer

Name of Radiative Heat loss Radiative Othertechnology gain (all types) gain gains

= 9 0 % O f U n -

1. D o u b l e - s i d e d shaded; U.V. moderate moderate moderateblind is controlled reduction reduction reduction

———.= 9 0 % O f u n - moderate-

2. Triple blind shaded; U.V. high moderate moderateis controlled reduction reduction reduction

3. Shades some lossbetween but distribu- moderate-

glazing with tion/storage moderate high moderateheat recovery capability; U .V. reduction reduction reduction

is controlled

4. Between = 90% of un-glazing con- shaded; slats moderate-vection and can direct high high high

radiation Sun away from reduction reduction reductioncontrol furn ishings——————

5. Insulating very highshades and N/A very high high reduction

shutters reduction reduction if closed

6. Skylid® N/A high high h i g hreduction reduction reduction

if closed

high7. Beadwal l®

very highN/A very high reduction reduction

reduction if filled if filled

8. Beam beneficial reduceddaylighting dis t r ibut ion N/A no effect lighting

effects and loadu.v. control — — .

9. Selectivesolar control significantly moderate-

reflective reduced N/A high N/Afi lm reduction

low-10. Heat mirror low moderate low some

reduction reduction reduction reduction

11. Opticalshut ter low N/A high N/A

reduction reduction

low reduction12. Weather unless very high high very high

panel® overheating reduction reduction reductionoccurs

13. Optimization significant highof fenestra- optimization reductiontion design over N/A through reduction

(size, ori- current proper shad-entation) practice ing, etc.

Effect onlighting/ Opera- Estimated Applica-

outlook when bility cost- bility to Currentoperating effectiveness retrofit status —

m a n u a l ; —

no outlook, seasonal very very ready forvery low reversal of high high commercial i-

Iight blind required zation

no outlook: manual,very low somewhat high high on market

light complex

some outlook;lighting pos- readysible when manual high low commerciali-

I n operation zation

no outlook orIight: some

degradation none moderate- Iow earlyof outlook at high R & D

all times—manual;

no outlook, or low- low- productsno light automat ic moderate moderate marketed——

no outlook, automat ic low- Iow on marketno light moderate

no outlook, automat ic low- Iow on marketno light moderate

Increased manual;daylighting; onlyaffects up- seasonal low- Iow advancedper part of adjustment moderate R & D

W indow only is essential

high in pre-none none dom, cooling

cl imates

none none moderate-high

— —no outlook

when automat ic probablytranslucent low—

veryhigh

veryhigh

probablylow

R & D

on market;retrofit

package nearmarketing

R & D

passive/no outlook automat ic R&D

N/A N/A very high very earlylow R & D


HEATING AND COOLING EQUIPMENT

Direct Fossil-Fired Heating Equipment*

Most residential and commercial buildingsin the United States are heated with direct-fired gas and oil furnaces and boilers, as shownin table 76. Considerable controversy arisesover the typical operating efficiencies of these

Table 76.—Heating Equipment and Fuels forOccupied Units in 1976

(in thousands)

Number Percent

Total occupied units. . . . . . . . . . 79,316 100.0Warm air furnace. . . . . . . . . . . . . . . 40,720 51.3Steam or hot water. . . . . . . . . . . . . 14,554 18.3Built-in electric units . . . . . . . . . . . 5,217 6.6Floor, wall, or pipeless furnace. . . 6,849 8.6Room heaters with/without flu . . . 8,861 11.2Fireplaces, stoves, portable

heaters. . . . . . . . . . . . . . . . . . . . . 2,398 3.0None. . . . . . . . . . . . . . . . . . . . . . . . . 716 .9

Total occupied housing unit . . . 74,005 100.0House heating fuel:

Utility gas. . . . . . . . . . . . . . . . . . . 41,219 55.7Fuel oil, kerosene. . . . . . . . . . . . 16,451 22.2Electricity . . . . . . . . . . . . . . . . . . 10,151 13.7Bottled gas or LP gas. . . . . . . . . 4,239 5.7Coke or coal/wood/other . . . . . . 1,482 2.0None. . . . . . . . . . . . . . . . . . . . . . . 463 .6

Cooking fuel:Utility gas. . . . . . . . . . . . . . . . . . . 32,299 43.6Electricity . . . . . . . . . . . . . . . . . . 35,669 48.2Other . . . . . . . . . . . . . . . . . . . . . . 5,748 7.8None. . . . . . . . . . . . . . . . . . . . . . . 287 .4

SOURCE: Bureau of Census, Construction Reports, “Estimates of InsulationRequirements and Discussion of Regional Variation in Housing In-ventory and Requirements,” August, September 1977.

systems. One reason is that remarkably little isknown about their performance in actual oper-ating environments, and the literature in thearea is replete with inconsistent information.(Figure 10 in chapter II illustrates the problem.)Performance undoubtedly varies with the typeof unit, its age, size, installation, position inthe building, and a number of other variables.Another reason for the controversy is the in-consistency in the definition of efficiency. Un-til recently, the most common value quotedwas the steady-state or full-load combustionefficiency, which is defined as the ratio ofuseful heat delivered to the furnace bonnet

*Some parts of this section are taken from “Applica-tions of Solar Technology to Today’s Energy Needs,” Of-fice of Technology, June 1978.

divided by the heating value of the fuel. ” Typi-cal values for direct-combustion furnaces are70 to 80 percent; heat loss principally resultsfrom heated stack-gases lost during combus-tion. This definition does not give a completemeasure of the fuel required to heat a livingspace over the heating season. A definitionthat does, and one that is increasingly beingused, is the seasonal performance factor orseasonal efficiency. This measure is defined asthe ratio of (a) the useful heat delivered to thehome to (b) the heating content of the fuelused by the furnace over the entire heatingseason. Typical gas furnaces have seasonal ef-ficiencies in the range of 45 to 65 percent (seefigure 37) Seasonal efficiency accounts for allfactors affecting the heating system’s perform-ance in its actual operating environment. Inaddition to stack-gas losses these factors in-clude loss of heated room air through thechimney while the furnace is off (infiltration),cycling losses, pilot light (gas furnaces only),and heat losses through the air distributionducts when in unheated spaces. ” Cyclinglosses are a result of operation at part loads,which causes heat to be lost in raising the tem-perature of the furnace before useful heat canbe delivered to the living space. Most existinghomes have furnaces oversized by at least 50percent, so they are always operating at rela-tively inefficient part-load conditions. ’ 3 T h eoversizing is greater still in homes that havehad insulation, storm windows, or other ther-mal envelope improvements added since thefurnace was installed.

In addition to the fossil fuel required for theburner, gas and oil furnaces and boilers requireelectric energy to operate fans and pumps.

1‘E. C. Hise and A. S. Holmn, “Heat Balance and Effi-ciency Measurements of Central Forced Air ResidentialGas Furnaces” (Oak Ridge National Laboratory).

1*C. Samuels, et al., “MIUS Systems Analysis— InitialComparisons of Modular-Sized Integrated Utility Sys-tems and Conventional Systems, ” ORNL/HUD/MIUS-5,June 1976, p. 24.

‘‘H ise and Holman, op. cit.


Figure 37.—Typical Energy Flow for a Gas FurnaceSystem

Infiltration loss(o-lo%)

loss

Oil and Gas Furnace EfficiencyImprovements

Furnaces with improved efficiency levels arenow available and new devices are being de-veloped. Table 77 summarizes the approxi-mate energy savings and costs of a number ofoil boiler improvements, most of which arenow available. Corresponding tables of meas-ured improvements for oil furnaces and gasfurnaces and boilers are not available, but sim-ilar levels of improvement can be expected.

Several of these improvements reduce theheat lost when the furnace cycles on and offfrequently. As most furnaces are now sized tosupply at least one and one-half times the max-imum anticipated heating load, reducing thefurnace capacity, either by installing a smallernozzle or a smaller furnace, will also substan-tialIy cut off-cycle losses.

Periodic adjustment of oil burners will im-prove their combustion efficiency and lowerfIue-gas temperatures. This service is availablefrom heating oil distributors and furnace re-pair services.

Variable firing rate furnaces represent an at-tempt to provide reduced output for near con-t inuous operat ion and thus cut off-cyclelosses; development of a reliable and afford-able technology for accomplishing this goal

Table 77.—Refit Modifications for Efficiency Improvement of Oil-Fired Boilers


has proven difficult. Such furnaces are not ex-pected to be commercially available until thelate-l 980’s.

Automatic fIue dampers close the flue afterthe furnace shuts off to drastically reduce theamount of heat that escapes up the chimneywhile the furnace is not operating. Flue damp-ers have been used in Europe for many years,but concern over safety questions delayedtheir acceptance in this country. They are nowcoming into use.

Flame-retention head burners improve com-bustion efficiency by causing turbulence in thecombustion air, enhancing air-fuel mixing.These burners are on most oil furnaces soldnow, but improved versions are being devel-oped.

Sealed combustion units reduce flue-gaslosses during both on and off cycles by usingoutside air for combustion. This means thatthe warm interior air is not exhausted up theflue. These improvements can result in fur-naces with seasonal efficiencies of 75 to 81percent. 14 15

Advanced Fuel-Fired EquipmentSeveral types of equipment that should pro-

vide substantially higher seasonal efficienciesare under development. These include con-densing flue-gas furnaces, pulse combustionburners, and several different fuel-fired heatpumps.

Conventional furnaces maintain flue-gastemperatures of 4000 to 7000 F to avoid con-densation and attendant corrosion and tomaintain the nature draft.

The near-condensing flue-gas mechanismwould reduce this temperature to nearly 3000F, and thus capture a great deal of the flue-gasheat; the condensing version would place theflue temperatures below 300° F and thus re-capture the latent heat in the water vapor aswell. Problems with this approach relate to

“j. E. Batey, et al., “Direct Measurement of the Over-all Efficiency and Annual Fuel Consumption of Residen-tial Oil-Fired Boilers” (Brookhaven National Laboratory,January 1978), BNL 50853.

“Department of Energy, “Final Energy Efficiency lm-provement Targets for Water Heaters, Home HeatingEquipment (Not Including Furnaces). Kitchen Ranges andOvens, Clothes Washers and Furnaces, ” Federal Register.

corrosive fIue-gas condensate and scaling onthe heat exchanger. Neither version is ex-pected to appear on the market for severalyears.

Pulse Combustion Furnaces and Boilers

The pulse combustion burner is a unique ap-proach that uses mechanical energy from anexplosive combustion process to “power” theburner and permit condensation of the fluegases without the need for a fan-driven burner.

The operat ion of the pulse combust ionburner is i l lustrated in figure 38. Initially, asmalI fan drives air into the combustion cham-ber through flapper valves along with a smallquantity of gas and the mixture is ignited by aspark plug. The explosive force of ignitioncloses the valves and drives the exhaust gasesout the tailpipe. The combustion chamber andtailpipe are acoustically “tuned” so the ex-haust process creates a partial vacuum thatopens the intake valves and sucks air and gasinto the combustion chamber without use ofthe fan. Residual heat from the previous com-bustion ignites this mixture without need forthe spark plug. The exhaust gases are cooled toabout 120° F, recovering nearly all of theirheat including the latent heat in the watervapor.

The pulse combustion principle has beenknown for many years and some developmentoccurred in the 1950’s and 1960’s. The prin-cipal problems were related to muffling the in-trinsically noisy combustion process and mate-rials problems related to the extremely highheat releases in small volumes. ” While theseproblems were not insolvable, the promise ofhigher efficiency was insufficient to offsethigher production costs. Further developmentwork has occurred and Hydrotherm, Inc., hasstarted an initial production run of 300 residen-tial boilers with full production to begin aftermid-1979 . 17 Hydrotherm has measured eff i -ciencies of 91 to 94 percent for this boiler andseasonal efficiencies are expected to be simi-

“J C. Griffiths, C. W. Thompson, and E. J. Weber,“New or Unusual Burners and Combustion Processes,”American Gas Association Laboratories Research Bulle-tin 96, August 1963.

“Richard A. Prusha, Hydrotherm, Inc., Northvale, N. J.,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 blowerforces outside air into a sealedchamber where it is mixed with gas.

n

2. A spark plug is used on the firstcycle only to ignite the mixture.

3. The pressure resulting from 4. As the hot gases are cooled belowthe combustion process forces the hotgases through tubes in the heat ex-changer where surrounding waterabsorbs the heat.

6. Residual heat from the initial com-bustion ignites the second andsubsequent air/gas mixtures withoutthe need for the spark plug orblower...at a rate in excess of 25cycles per second.

the dew point, condensation of thewater vapor in the flue gases takesplace, releasing the latent heat ofvaporization ...amounting to about9010 of the fuel input.

a

7. Air is drawn into the combustionchamber from outdoors by the vac-uum caused by the velocity of theexiting exhaust gases...both throughsmall diameter plastic pipe. No flue orchimney is needed

5. Condensation collects in the base ofthe boiler and is removed by a con-densate drain.

8. Water is circulated through Hydro-PulseTM in much the same manner as ina conventional boiler.

SOURCE: Hydro Therm, Inc., Northvale, N.J. brochure for hydro-pulse boiler


Iar since outdoor combustion air is used andoff-cycle flue losses are virtually eliminated. 18

Due to the low flue temperatures, the fluegases are exhausted through a 1½-inch PVCplastic pipe and no chimney is needed to pro-vide natural draft. The cost of this boiler willbe about twice that of conventional gas boil-ers. An oil-fired pulse combustion boiler is nowmanufactured in Europe (“TurboPuls”) and themanufacturer is apparently interested in mar-keting in the United States if certification canbe obtained.

Both the noise problem and the materialsproblems are more severe for hot air furnaces,but Lennox Industries is developing a pulsecombustion furnace in a joint project with theGas Research Institute. Laboratory efficienciesabove 95 percent have been achieved and apreproduction prototype has been installed ina home but additional work on noise reductionand controls development is needed. ’9 Majorfield testing will be conducted before the fur-nace is marketed, perhaps in the mid-1 980’s.

Fuel-Fired Heat Pumps

Heat pumps, as their name implies, pumpheat from a cooler space to a warmer space.All refrigerators and air-conditioners are ac-tually heat pumps, but the term “heat pump”is generally reserved for a device that is de-signed to provide heating by pumping heatfrom the outdoor air or a water supply. Mostheat pumps can also be reversed and used asair-conditioners. The heat pumps now on themarket are electricalIy driven but develop-ment of gas-fired heat pumps is underway.Most gas-fired designs could be modified andproduced as oil-fired units as well. The designsbeing developed should provide seasonal per-formance factors of 1.1 to 1.5 for heating, oruse about half the fuel consumed by presentfurnace installations. Three of these designsare discussed in the Heat Pump section.

‘8Hydro-Pulse Boiler product literature, Hydro Therm,I nc:.

197978 Annual Report (Chicago, I Il.: Gas Research Insti-tute).

Electric Air-Conditioners andHeat Pumps*

A typical residential air-conditioner/heat-pump installation is i l lustrated in figure 39.These systems usually cool and dehumidifyroom air directly while the systems used inlarge apartments and commercial buildingstypically produce chilled water, which is pipedto fan-coil units in various parts of the build-ing. Cooling systems have three basic compo-nents: 1 ) a unit that permits a refrigerant to ex-pand, vaporize, and absorb heat from theroom air (or water system); 2) a compressorthat compresses the heated vapor (increasingits temperature); and 3) a condenser, locatedoutside the building that rejects the heat ab-sorbed from the room air into the atmosphere(condensing the compressed vapor to a liquid).In “single-package” units, all three functionsare provided in the same unit and can be con-nected directly to the ductwork (or chilledwater system) of the buiIding. In “split-system”devices, refrigerant is sent to an air-handlingunit inside the building. Another distinction in-volves the technique used to compress the re-frigerant vapor. Smaller units typically use asimple piston system for compression and arecalled “reciprocating” units. Larger units mayuse centrifugal pumps or screw compressorsfor this purpose.

Heat pumps use the same three basic com-ponents as the air-conditioners describedabove, but the cycle is reversed. In the heatingcycle, the indoor air absorbs heat from the re-frigerant and heat is acquired by the refriger-ant from the outdoor fan unit (the “condenser”in the cooling model).

Heat pumps that can extract useful energyfrom outdoor air temperatures as low as 00 Fare now on the market, although system per-formance is little better than electric furnacesat low temperatures. The electricity used bythe system can be considerably reduced if asource of heat with a temperature higher thanthat of the outside air can be found. Lakes or

*Some parts of this section are taken from “Applica-tion of Solar Technology to Today’s Energy Needs,” Of-fice of Technology Assessment, June 1978.

Fig

ure

39.—

A T

ypic

al “

Spl

it. S

yste

m”

Hea

t Pum

p In

stal

latio

n

I

SO

UR

CE

: C

arrie

r C

orpo

ratio

n.


ground water, for example, are usually aboveambient air temperatures during the winterand can be used to provide a source of inputheat if they are available. Solar energy canalso be used to provide a source of heatedwater. Systems that extract heat from waterare called “water-to-air” heat-pump systems;units extracting energy from the air are called“air-to-air” systems. 20

In 1976, 51 percent of the housing in theUnited States was equipped with room air-con-ditioners or central air-conditioning, up from47 percent in 1973.2’ Housing units with centralair-conditioning increased from 16.8 to 21.5percent from 1973 to 1976 while the fractionwith room air-conditioners showed very littlechange, going from 30.1 to 29.6 percent. From1973-77, the fraction of new homes with cen-tral air-conditioning has ranged from 46 per-cent in 1975 to 54 percent in 1977.22 Thus, it isdifficult to say whether growth in demand forcentral air-conditioning in new housing wasmerely slowed by the Arab embargo, or wheth-er it is approaching saturation.

Less than 5 percent of U.S. homes currentlyhave heat pumps, but 20 to 25 percent of newhousing starts in 1978 used the system, Thegrowth of the market has been slowed by thesensitivity of buyers and builders to the initialcost of the equipment (which is higher thanconventional electric-resistance heat), and bythe fact that regulated gas prices and promo-tional electric prices have made the cost ofoperating competitive heating systems artifi-cially low. Concerns about reliability have alsobeen a problem. Some of the heat pumps mar-keted in the early 1960’s were extremely unreli-able, and sales of the units fell steadily be-tween 1965 and 1970. While most of the reli-ability problems have been resolved, a recentstudy 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-pared for the Federal Energy Administration, Apr. 23,1976, p. 114.

Bureau o f t h e C e n s u s , “1976 Annual Housing Sur-vey. ”

‘z Bureau of the Census, “Characteristics of New Hous-ing: 1977, ” Construction Reports, C25-77-13, 1978, p. 12.

The performance of heat pumps and air-con-ditioners now on the market varies greatly.Figure 40 indicates the performance of centralair-conditioners smalIer than 5 I/z tons now onthe market. The difference in performancerefIects both the quality of design and the costof the unit. High-performance units may alsoresult from a fortuitous combination of com-ponents. Manufacturers cannot afford to de-sign condensers optimally suited for all com-pressors to which they may be attached, andsome combinations of these units may there-fore result in a high-efficiency system. As aresult, while there are a few units on the mar-ket with very high efficiencies (figure 40, forexample, indicates that 5 percent of the unitson the market have a coefficient of perform-ance (COP) greater than 2.5), this performanceis not available in all size ranges. (The defini-tion of COP, energy efficiency ratio, and other

Figure 40.— Air-Conditioning COP of Heat Pumpsand Central Air-Conditioning Units Shipped in 1977

Less than 1.6-1.9 1.9-2.2 2.2-2.5 2.5-2.8 2.8-3.1 3.1-3.31.6

COP

SOURCE and Institute Includes only units ofu rider 135,000 Btuh Data has been converted from to COP andvalues rounded to nearest tenth ranges were ‘‘5 4 and under

6574 75.84 85.94, 95104, and 105.11 4


efficiency measures are discussed in a techni-cal note to chapter 1 I.) The 1976 industry aver-age COP was 2.00.23

Heat pumps in the cooling mode were about5-percent less efficient than the average air-conditioner, for a variety of reasons. Heatpumps cannot be optimized for maximumcooling performance as somewhat more com-plexity is required in the coolant piping, andthe valve that switches the direction of the re-frigerant when the system is changed fromheating to cooling introduces some inefficien-cies.

The performance of electric-cooling andheat-pump systems also varies as a function ofthe temperature and humidity of both the in-side and outside air. This is because the theo-retical capacity of a unit varies as a functionof these parameters, and because most smallunits must be either fully on or fully off. Theload control achieved by “cycling” the systemfrom full capacity to zero output requiresheating or cooling large parts of the systembefore useful space conditioning can be per-formed. Using energy to heat or cool the unitsdecreases the system’s efficiency, The depend-ence of a typical residential heat-pump unitCOP on the outdoor temperature is shown infigure 41. The fact that the heat pumps capaci-ty to produce heat decreases as the outsidetemperature decreases results in a highlytemperature-dependent heating mode. A sys-tem large enough to provide 100 percent of theheating load at the lowest anticipated tem-perature would be prohibitively expensive inmost locations, and a common compromise isto assist the heat pump with electric-resistanceheat whenever its capacity falls below theheating demand. The average COP of a heat-pump system during the winter season is calledthe seasonal performance factor (SPF). Thisparameter is shown in figure 42 as a functionof local climate. As expected, the average COPof heat pumps is lower in northern parts of the

23 George D. Hudelson (Vice President-Engineering,Carrier Corporation), testimony before the CaliforniaState Energy Resources Conservation and DevelopmentCommission, Aug. 10,1976 (Docket No. 75; CON-3).

Figure 41.— Performance of the Carrier Split-System Heat Pump

Ambient Temperature

Model 38CQ020 ARI ratings:

Assumptions used in computingsystem performance

Heating mode nominal capacity21,000 Btu/hour. COP at high tem-perature is 2.9, COP at low temper-ature IS 1.7Cooling mode nominal capacity is19,000 Btu/hour. COP is 2.1,

Heating mode entering indoor airIS 70° F (db) heating demand in-c ludes energy used for def ros tbalance point at 30° F.

Cooling mode entering indoor airis 80° F (db) and 67° F (wb). Fanpower iS 0.2 kW.

Energy use includes: compressor motor demands; resistance heat;the demands of indoor and outdoor fans, and the energy used indefrost cycles. The air-flow was assumed to be 700 cfm. Assumptionsmade about decrease in efficiency due to part load conditions werenot explained in the literature.SOURCE Career Heat Pump Outdoor Carrier Corporation 1976 Form

country. As discussed in chapter 11, the per-formance of heat pump installations has gener-alIy been lower than predicted.

The performance of water-to-air heat-pumpsystems can be significantly higher than air-to-air systems if heated water is available. When600 F water is available, most commercialunits have COPS in the range of 2.5 to 3.5, butunits with COPS as low as 2.0 and as high as 3.7are on the market.

There are a number of s t ra ightforwardchanges that can improve the performance ofair-conditioners without changing the basicdesign. Legislative actions and rising fuel costshave produced a number of higher perform-


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 toimprove performance include:

●

●

●

●

●

●

use of more efficient compressors,use of two compressors or multiple-speedcompressors to improve part-load effi-ciency,improved heat exchangers for both thecondensor and evaporator,more efficient motors to drive the com-pressor and fan,automatic cycling of the fan with thecompressor, andimproved airflow.

One estimate for the cost of these incremen-tal improvements is shown in figure 43. Califor-nia has legislated performance standards in atwo-step process; standards were first effectiveduring 1977 and become more stringent inlate-1979. These standards, which specify theminimum performance of any unit that can besold in California, are shown in table 78.

The Energy Policy and Conservation Act(EPCA–- Public Law 94-163) as amended by theNational Energy Conservat ion Pol icy Act(NECPA–- Public Law 95-619) required DOE to

establish energy-efficiency improvement tar-gets for appliances. These targets for air-condi-tioners, shown in tables 79 and 80, representtargets for the production-weighted averageperformance of all air-conditioners sold ratherthan a minimum standard. The National Ener-gy Act has mandated the setting of efficiencystandards that will be proposed in October1979.

Looking further into the future, a number ofsystems have been proposed that could in-crease the COP of air-conditioning systemsand heat pumps by as much as 50 percent. Re-searchers at General Electric believe that itwould be possible to achieve an approximate50-percent increase in the average COP of bothheating and cooling for an increase in the ini-tial cost of the unit of about 20 to 30 percent.It should be noted that performance can beimproved by increasing low-temperature per-formance, high-temperature performance, orboth. The speed with which these new units ap-pear on the market will depend strongly on thecompany’s perception of whether the public iswilling to invest in equipment that can reducetheir annual operating expenses over the long


Figure 43.— Estimated Cost of Increasing the Performance of Air-ConditionersFrom 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 2.6System 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 forCooling Equipment

Standard Standardas of after

System type 11/3/77* 11/3/79*

Central Air-Conditioners

Heat pumps (cooling mode) 1.96 2.2Air-conditioners 2.05 2.34

Room Air-Conditioners

All systems with capacity greaterthan 20,000 Btu’s 2.05 —

Other heat pumps 2.08 —Other air-conditioners 2.20 —All systems using voltages

greater than 200 v. — 2.40Other heat-pump systems — 2.43Other air-conditioners — 2.55

1972 energy- 1980 energy-efficiency ratio 1972 efficiency ratio 1980Btu/watt-hour COP Btu/watt-hour COP

6.2 1.82 7.94 2.33

SOURCE: Department of Energy, “Energy Efficiency Improvement Targets forNine Types of Appliances,” F.R. 43, No. 70, Apr. 11, 1978, p. 15143.

Table 80.—DOE Central Air-Conditioner Energy.Efficiency Improvement Target

1975 1975 1980 1980SEERa COPb SEERa COPb

Central air-conditioners(aggregate). . . . . . . . 6.5 1.90 8.0 2.34

Single package . . . . . 6.2 1.82 7.2 2.11Split system. . . . . . . . 6.6 1.93 8.1 2.37

‘No system may be sold in the State after this date with a COP below the standard.

efficiency ratio in as defined in chapter coefficient of performance = SEER/3.413.

SOURCE: Department of Energy, “Energy Efficiency Improvement Targets forNine Types of Appliances,” F.R. 43, No, 70, Apr. 11, 1978, p. 15145.


term. These attitudes may be influenced bylegislative initiatives, such as the NationalEnergy Act.

Gas-Fired Heat Pumps andAir-Conditioners

Absorption Air-Conditioners

The only systems now available that usedirect thermal input to operate a heat pump orair-conditioner are the “absorption-cycle” air-conditioners that have been used for decades.The refrigeration cycle is very similar to cyclesused in other types of air-conditioning systems(vapor-compression). A chilled liquid (usuallywater instead of a refrigerant) is permitted toexpand and cool air. This water is then recom-pressed and the absorbed heat is rejected intothe atmosphere. The absorption cycle accom-plishes this recompression by absorbing thelow-pressure water vapor in a concentratedsalt solution. This concentrated solution iscont inuously produced in a dist i l l ing unitdriven by the heat from the fuel.

Absorption air-conditioners are inherentlymore expensive than electric systems because1 ) of the larger number of heat exchangers re-quired, and 2) the unit’s cooling surface mustbe large enough to reflect both heat from thecombustion process and heat removed fromthe space that was cooled. (In electric systems,the heat from generation is rejected at theelectric generator site.) Absorption units had alower operating cost than electric chillers inthe era of cheap gas, and are still competitivein some areas, but their use was limited by firstcost.

A typical single-effect absorption chiller hasa COP of 0.52; double-effect units can haveCOPS of 0.88. These COPS must, however, becarefully qualified, as they do not include theelectricity used for fans and pumps. They can-not be directly compared with the COPS ofelectric chillers since fuel costs are differentand the COP of electric units does not includepowerplant losses. It is reasonable to expectthat improvements in current designs couldlead to significant improvements in perform-ance.

The I ron -F i remen double-effect chiller,which was manufactured for a time, was ableto achieve a COP of 1.2 (not including boilerlosses and electric energy requirements). Someengineers believe it would be possible to in-crease this COP for double-effect absorptiondevices to the range of 1.35.

Absorption Heat Pumps

An absorption heat pump is being developedfor residential use by Allied Chemical Corpora-tion and Phillips Engineering under sponsor-ship of the Gas Research Institute. The currentgoals for operating COP of this unit are 1.2 forheating and 0.5 for cooling.24 Further improve-ment in heating COP could be obtained by re-covering the waste heat from the generatorsection of the unit. It is believed that signifi-cant advances in fluids, fluid pumps, and heatexchangers have overcome problems that hin-dered earlier efforts to develop an absorptionheat pump.

This unit has reached the preproduction pro-totype stage and negotiations are underway toaccelerate commercialization by involvingDOE and a major manufacturer in further de-velopment. After further development and ex-tensive field testing, this system could be onthe market in about 5 years.25 Similar units arebeing developed in Europe by the British GasCorporat ion and others .26 This system is ex-pected to cost about 15 percent more than agas furnace/electric air-conditioner combina-tion and will probably be most competitive inareas where heating is the major requirement.

Other Gas-Fired Heat Pumps

A different approach to the use of fossilfuels to operate a heat pump has been underinvestigation for some time. These designsburn fuel to operate a small onsite heat engine,which in turn drives the heat-pump compres-sor. A number of advanced, gas-fired, heat-

24 James Drewry, “Gas-Fired Heat Pumps,” G/?/ Digest,September 1978, pp. 1-5.

*’James Drewry, Gas Research Institute, private com-munication, May 1979.

*’Gerald Leach, et al., A Low Energy Strategy for theUnited Kingdom (London: Science Reviews, Ltd., 1979), p.25

Ch. XI—Technical Options ● 251

pump systems are being examined by the in-dustry with the support of DOE and the GasResearch Institute. These include:

● A concept that uses a subatmospheric gasturbine is being developed by the GarrettA i Research Corp.

● A free-piston Stirling engine is being de-veloped by General EIectric.

● Systems based on diesel engines andRankine-cycle devices are also beingexamined.

An interesting feature of the heat-fired, heat-pump systems is that their performance doesnot decrease with temperature as fast as theperformance of conventional heat pumps.

The gas turbine heat pump development em-phasizes commercial or multifamily applica-tions. A “breadboard” system has been oper-ated and development of a commercial proto-type is underway. Commercial production isexpected by the mid-1 980’s, with units ex-pected to range from 7.5 to 25 tons in capacity.The expected COP is 1.4 to 1.5 in the heatingmode and about 1.0 in the cooling mode.27 28

The installed cost is expected to be 15 to 20percent higher than existing systems with pay-back in fuel savings in about 2 years.

The free-piston Stirling engine heat pumpseems to be at a similar stage of development,but is thought to be more applicable to theresidential market. One prototype has beenbuilt and another will be completed during1979. The design goal for the prototype is aheating COP of 1.4 to 1.5 and a cooling COP of0.9. This requires an engine efficiency of 30percent and the present prototype operates at22 to 25 percent. This design is potentially veryreliable since there are only two moving partsin the engine and one in the compressor. It isexpected to be on the market in the mid-1 980’s

z71 rwin Stambler, “Working on New Gas Turbine Cyclefor Heat Pump Drive,” Gas Turbine World, March 1979,pp. 50-57.

28 James Drewry, “Gas-Fired Heat Pumps,” CR/ Digest,September 1978, pp. 1-5.

at a price that will allow payback from energysavings in less than 3 years.29 30

Stirling and Ericsson cycle, free-piston de-vices may be able to achieve efficiencies onthe order of 60 to 90 percent of ideal Carnot ef-ficiency. An engine operating between 1,400°and 1000 F could therefore achieve a cycle ef-ficiency of 40 to 63 percent.

ERG, Inc., has reported a measured indi-cated efficiency that represents 90 percent ofCarnot in a free-piston device operating inroughly this temperature region. The GarrettCorp. has reportedly achieved a cycle efficien-cy of 38 percent, using a small regenerated gasturbine. 31

If it is assumed that seasonal performancefactors for heat pumps can be in the range of2.5 to 3.0, the overall system COP (or ratio ofheat energy delivered to the living space to theheating value of the fuel consumed) of a heatpump combined with a heat engine that is 38-to 60-percent efficient can be in the range of0.95 to 1.8. If waste heat from the engine isused, the effective COP can be as high as 2.2.

A 38- to 60-percent efficient engine com-bined with an air-conditioning cycle with COPof 2.5 could achieve system COPS of 0.95 to1.5. These coefficients cannot be compareddirectly with COPS of electric heat pumps. Inorder to obtain comparable “system efficien-cy” for an electric system, the electric COPSmust be reduced by the efficiency of convert-ing primary fuels to electricity and transmit-ting this energy to a heat-pump system. Theaverage generating efficiency of U.S. utilitiesis approximately 29 percent; the average trans-mission losses, approximately 9 percent. Underthese assumptions, an electric heat pump witha heating COP of 3.0 and a cooling COP of 2.5would have an effective “system” COP of 0.79for heating and 0.66 for cooling. A number of

“L, L. Dutram, J r., and L. A. Sarkes, “Natural Gas HeatPump Implementation and Development,” presented atConference on Drives for Heat Pumps and Their Control,Haus der Technik, Essen, West Germany, Sept. 6-7,1978.

30J ames E. DreWry, oP. cit.

31 Patrick C, Stone (Garrett Corporation), private com -

munication, December 1976.


questions remain about system performanceas an integrated unit: reliability, safety, noise,ease of maintenance, etc.; these can be re-solved only after more experience. The devicesdo offer the prospect of a much more efficientapproach to converting fossil fuels to usefulspace-conditioning.

INTEGRATED

Heating and water heating are the majorenergy users in homes today. As discussed inchapter 11, the use of “waste” heat from otherappliances already makes a significant con-tribution to heating and the relative contribu-tion increases as the house is made tighter.Several sources of “waste” are not presentlybeing used and others could be used more ef-fectively by “integrated appliances.” Most ofthese appliances would recover heat (that isnow completely wasted) for either heating orwater heating (e. g., air-conditioner/hot waterheaters), while others would heat water withheat that now heats the house whether heat-ing, cooling, or neither is needed (e. g., refrig-erator/water heaters). WhiIe other applicationsof waste heat in the home can be imagined,cost of recovery and coincidence betweenavailability and demand are expected to resultin selected heating and hot water combina-tions.

Of the many possible combinations, this sec-t ion discusses four systems ident i f ied in as tudy32 by Arthur D. Little, Inc., as particularlypromising, with brief mention of some otherpossibilities. The four promising systems iden-tified are:

● air-conditioner/water heater,● furnace/water heater,. refrigerator/water heater, and● drain water heat recovery.

3ZVV, David Lee, W. Thompson Lawrence, and Robert

P. Wilson, “Design, Development, and Demonstration ofa Promising Integrated Appliance, ” Arthur D. Little, Inc.,performed by the Energy Research and Development A d -ministration under contract no. EY-76-C-03-1209, Septem-ber 1977.

A major question concerning any onsite sys-tem requiring oil or gas is whether they willcontinue to be less costly than electricity. Theheat-engine devices just discussed could, atleast in principle, be used in connection with acoal-burning, fluidized-bed boiler or a solarheat source, and thus might present a promis-ing long-term alternative.

APPLIANCES

Costs and potential savings given in the follow-ing discussion are from the Arthur D. Littlestudy unless another source is given.

Air-Conditioner/Water Heater

This system heats water with the super-heated refrigerant vapor whenever the air-con-ditioner operates. It consists of a vapor-to-water heat exchanger inserted in the refrig-erant loop just ahead of the condensor (the fin-ned radiator-like part of the air-conditionerlocated outside), The heat recovered is ordi-narily rejected outdoors. This system can beretrofit rather easily by qualified personnel,and if added to an air-conditioner whose per-formance is limited by a small condensor, itcan actually improve the COP by a few per-cent.

This system can also be used with a heatpump and when operated in the heating mode,the heat used is not waste heat, but is providedat the operating COP of the heat pump. Thisstill offers substantial savings compared to aresistance heater.

This is the only integrated appliance that iscommercially available. It is made by at leastsix manufacturers. The installed cost of theseunits ranges from $200 to $500, and several air-conditioner manufacturers allow installationof one or more of these systems without void-ing their warranty.

The estimated savings expected from use ofthe Carrier Hot Shot® unit (about $400) with a

@ Registered trademark of the Carrier Air Condition-

ing Corporation.


3-ton air-conditioner in each of several cities isshown in table 81. Dollar savings would begreater for a larger family that used more hotwater. Most sales of these units have been inareas with high air-conditioning loads such asFlorida and the deep South. Use of these unitson heat pumps would probably double the sav-ings shown for more temperate climates.

Furnace/Water Heater Systems

Combining the furnace and hot water heateroffers several potential advantages. The mostcompelling is that it should be possible tobuild a high-efficiency unit that incorporatesfeatu res I i ke in te rm i t ten t ignition, ventdamper, and forced draft for less money thanwould be possible for two separate units in-corporating comparable features. Some oil fur-naces have been equipped with hot water heat-ers, but they have a reputation for high fueluse so many homes with oil heat use electrichot water. A high-efficiency combined systemcould provide significant savings over such sys-tems. There is also the potential for reducedstandby losses from use of a smaller storagetank (perhaps 10 to 20 gallons) since presentfurnaces often have 100,000 Btu per hourcapacity or greater. This is more than twice thecapacity of typical water heaters. This advan-tage could disappear as tighter houses reducethe necessary furnace sizes.

Refrigerator/Water Heater

The refrigerator generates heat that couldbe recovered and used to heat water. During

the heating season, this helps heat the housebut only part of it reduces consumption forspace heating since it typically keeps the kitch-en at a slightly higher temperature than therest of the house. The Arthur D. Little studyconsidered this fact and estimated that a hotwater recovery unit on the refrigerator couldsave about 14 MMBtu of primary energy peryear if an electric hot water heater is used withelectric heat. The estimated cost of the heat re-covery unit was $142 with a payback of 3 to 4years (8 years with gas). These savings could bereduced very substantially, perhaps by a factorof two or more, by more efficient refrigeratordesigns.

Drain Water Heat Recovery

Most of the heat added to hot water simplyruns down the drain. Existing homes mix drainsfrom showers, sinks, and washing machines(gray water) with toilet drains (black water). Itappears that heat recovery will be more prac-tical if the “gray” water is kept separate fromthe “black” water since there is less difficultywith sedimentation and the black water isalways cold water. One proposed system thathas been tried in a demonstration house inEurope would run the gray water into a draintank (about 50 gallons) and use a water sourceheat pump to extract heat. Such a systemcould result in primary energy savings of 46MMBtu per year for a first cost of $440. Thiscost does not appear to include any additionalcost for separate drain systems.

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

Water heatingElectric 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 26Atlanta, Ga.. . . . . . 3.0 172 115 57 33Houston, Tex.. . . . 3.0 161 78 82 51Chicago, Ill.. . . . . . 4.0 243 199 44 15Sacramento, Cal if. 4.0 214 173 41 19Boise, 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


Summary

Many other systems are possible. One of thes implest would be a s imple f i l ter ( for l intremoval) and damper that would permit use ofthe clothes dryer output for heating during thewinter months. Frequent filter changing wouldbe required and considerable humidity wouldbe added to the house. Freezer/hot water heat-

ers should be similar to refrigerator systemsand ingenuity may make other systems practi-cal. All of these systems must compete withother improvements in hot water and heatingas they reach the market, and it is unlikely thatmore than one system to augment hot waterproduction would be practical in a singlehouse.

CONTROLS AND DISTRIBUTION SYSTEMS

Controls and distribution systems can play acritical role in the efficiency and effectivenesswith which furnaces, air-conditioners, active orpassive solar systems, refrigerators, ranges,etc., function individually and as a completesystem to maintain comfortable conditionsand provide other amenities in a house. Forpurposes of this discussion, controls wil l beconsidered in two categories: 1 ) those that con-trol individual equipment, and 2) those thatcontrol comfort conditions in the house.

Houses contain a surprising array of con-trols, some manual and some automatic. Themost frequently used manual control is prob-ably the light switch, but all of the major ap-pliances in the home contain automatic con-trols and/or manual controls. Refrigerators,freezers, toasters, ovens, and water heaters allcontain thermostats. Furnaces contain a ther-mostat (in addition to the room thermostat)that controls the blower shutoff. Furnaces andgas water heaters have flame sensors andvalves to control the flow of fuel.

A number of the new or improved technol-ogies being developed require additional con-trol circuitry. Solar hot water heaters and ac-tive heating systems use controls of varied so-phistication and several companies now manu-facture these controls. Automatic flue damp-ers (considered under furnace improvements)are themselves a control and require addi-tional controls and sensors for operation. Thepulse combustion furnace is likely to requiremore sophisticated controls for safe operationsince the combustion process is not continu-ous. Fuel-fired heat pumps can also be ex-pected to have their own control requirements.

The discuss ion of indoor ai r qual i ty inchapter X indicated the need for several dif-ferent sensors and controls. Powered ventila-tion that responds to odors and other indoorpollutants is needed. Other equipment thatmay be adapted for residential use providesparticulate control, and removes airbornechemicals and odors by means of filters, pre-cipitators, adsorption, absorption, and chemi-cal reaction systems.

Instruments to provide rapid feedback onthe cost of consumption and to show the ef-fect of changes initiated by the occupants arenot avaiIable now. They couId significantly im-prove occupant behavior as discussed in chap-ter IIl.

A number of the losses associated with fur-naces are related to nonoptimal controls. Thefans (or pumps in hydronic systems) are shutoff while the furnace is well above room tem-perature. It is necessary to shut off fans beforethe air reaches room temperature to avoid un-comfortable drafts, but this contribution tooff-cycle losses could be reduced. The savingsthat could be realized without compromisingcomfort by lowering these set points are ap-parently not known.

The only systems control found in mosthomes is the thermostat, which controls theheating (and possibly the cooling) system. Theregisters in each room usually have a damperso that the air flow in individual rooms can beshut off manually if desired, but these dampersare generally designed for infrequent use.There are at least three potential changes inthermostats. Instruments that allow one or


more temperature setbacks are increasinglyavailable; at least one of these can be set for adifferent temperature each hour of the week.Most thermostats contain an “anticipator”that shuts the furnace off slightly before theset temperature is reached. The heat remainingin the furnace jacket then brings the house upto the set temperature. Houses often over-shoot the set temperature when the thermostatsetting is increased, resulting in added Iossesfrom the house. The extent of these losses isnot really known, but improved “anticipators”could reduce them. One of the sources of fur-nace inefficiency is the loss associated withfrequent cycling of the system on and off. Thefrequency of this cycling is related to the tem-perature band within which the thermostatkeeps the house. The narrower this band, themore frequent the cycling and the greater thecycling losses. This is another problem that isvery prevalent, but the extent of the losses andthe practical potential for reduction by chang-ing the thermostat band-width is not known.

Heating unoccupied rooms obviously wastesenergy. It may be possible to reduce this losseither through the use of timed controls orthrough active occupancy sensing. However,the widely varying use patterns of differentrooms seem likely to limit the utility of this ap-proach. As thermal envelopes are made tight-er, the savings from such controls will also bereduced.

The rapid development of integrated circuittechnology has led to sophisticated small com-puters that control energy use in some com-mercial buildings. Such systems could also beadapted for use in homes. Excess heat could becirculated from the kitchen when the rangewas in use, outs ide vent i lat ion could bebrought in through a heat exchanger asneeded, an economizer unit could cool withoutside air when practical, space conditioningcould be provided only in occupied rooms, etc.However, the computer itself is only the “tip of

JJMarvin L, Menka, “control Iers and process APp I ica-tions,” Proceedings of the Conference on Technica/ Op-portunities for Energy Conservation in f3ui/dings Through

the iceberg” in the cost of such systems.33 T h epurchase and installation of the sensors, addi-tional valves, and dampers that such a systemwould require greatly exceeds the cost of thelogical unit. It seems l ike ly that other im-provements in houses will obviate the need forsome of these functions while making othersmore acute, so it is difficult to predict the sav-ings that couId be achieved or the potential forthe use of such systems.

Distribution systems transfer hot or cold airfrom a central furnace or air-conditioner to therooms where heating or cooling is needed. Thepr incipal losses f rom these systems occurwhen they are run through unconditionedspace in the basement, attic, or exterior walls.These losses can best be eliminated in newconstruction by running ducts entirely withinthe conditioned space. The design of such sys-tems is facilitated if smaller ducting, designedfor use with high velocity air, is substituted forstandard ducting. Such ducting has been usedin large buiIdings for many years. SmalIer duct-ing can be readily used in tight, highly insu-lated houses since heating requirements aregreatly reduced.

Conflicting needs suggest larger distributionsystems in some cases. The heating mode effi-ciency of heat pumps could be improved bylower distribution temperature. Similarly, theefficiency of simple solar collectors is muchhigher at low temperatures than at high tem-peratures. The same is true of passive solar sys-tems, where very low-temperature heat mustbe circulated from the rooms receiving sun-light to other rooms. Some homes are beingbuilt with most of the rooms opening onto acommon area so that heating can be accom-plished much as it was in homes heated onlywith a central wood stove in the past. It is like-ly that several approaches to efficient distribu-tion will evolve to satisfy the requirements ofdifferent housing designs.

/rnprovecf Contro/s, Boston, Mass., May 10, 1976, DOEpublication CONF 7605138, p. 218.


PASSIVE SOLAR DESIGN

The concept of using sunlight and winds tohelp heat and cool houses is rapidly being “re-discovered” in the wake of today’s new con-sciousness about the use of energy. Featuresthat were standard construction practicesbefore the introduction of central heating andcooling systems are making a comeback. Newrefinements are being added so that somehouses now being built without collectors onthe roof get as much as 90 percent of their heatfrom the Sun. As these houses generally do notuse the pumps, blowers, storage tanks, andassociated controls typical of solar houses,they are generally referred to as “passive”solar houses, or houses with “energy-consciousdesign.”

These houses use natural phenomena tominimize their use of conventional fuels forheating and cooling. Overhangs are used to ad-mit sunlight in the winter and provide shade inthe summer. Deciduous trees are another reli-able method of ensuring summer shade andwinter sunshine. Windbreaks can be used totemper the effect of winter winds. While thesetechniques reduce the need for heating andcooling, the key to the success of passive solardesign lies in the fact that over the course of awinter, a good south-facing double-glazed win-dow will admit more heat from the Sun than itwill lose both day and night. Thus south-facing(or nearly south-facing) windows can be usedto supplement the heating requirements ofhomes in virtually any climate in the continen-tal United States. The most effective use ofthis solar heat requires that massive compo-nents such as concrete or masonry floors orwalls be incorporated into the house. Thesecomponents absorb heat and thus reduce tem-perature swings inside the dwelling.

The benefits of proper orientation towardthe Sun have been recognized for centuries;the forum Baths in Ostia (near Rome) werebuilt with large openings to capture wintersunlight nearly 2,000 years ago.

The classic examples of ancient passivesolar design in North America are the cliffdwell ings of the Indians of the Southwest.

They are typically situated on the south faceof a rock cliff with an overhang to shade thesummer sun. The dwellings, built into the wallof the cliff, use heavy adobe materials in con-junct ion with space hewn di rect ly out ofrock — thus providing tremendous capacity formoderating the huge swings in outdoor tem-perature occurring in this area.

In more recent times traditional southern ar-chitecture incorporated a variety of methodsto enhance the summer cooling of homes,most prominently the use of huge porticoedporches.

With the advent of inexpensive gas and oilheating and electric cooling, these traditionalregional practices were quickly discarded, asthey limited design and were often less “effec-tive” than the mechanical systems that re-placed them. A few architects and engineersexperimented with passive solar design in the1940’s and 1950’s, but encountered problemswith overheating on mild winter days. By thetime OPEC tripled the price of oil in 1974, mostengineers were not only unaware of passive de-sign principles, but they believed that everywindow was an energy loser and that any ener-gy-efficient building should limit the windowarea to the minimum level allowed by the es-thetic demands of the occupants.

Following the OPEC embargo, new advo-cates of passive solar design appeared, manyafter independently rediscovering that win-dows really could reduce the fuel consumptionof a house. These new advocates were largelypeople from outside the mainstream of engi-neers and architects—typically solar energy“nuts” with little formal training or scientistswith no design experience. As in any change oftechnology, the early supporters received littleattention or Government funding. Anothercomplication was the “site specific” nature ofthese designs; as each dwelling must be de-f ined by i t s s i te, the technology was notperceived as broadly applicable. Only veryrecently has passive solar design begun to re-ceive significant research and demonstrationmoney.


There are just about as many approaches todesign of a passive solar house as there are de-signers; it may be as simple as planting a shadetree or so complex that it stretches the conceptof “passive” design. This description makes noattempt to provide exhaustive coverage of theideas that have been proposed or even built;rather it attempts to provide some feel for thebreadth of ideas which lend excitement to thefield.

Direct Gain Systems

The simplest passive solar design simplyadds larger south-facing windows to a house.The slightly modified saltbox design (figure 44)is a good example of the “direct gain” ap-proach to passive solar heating. This housecontains substantially larger windows on thesouth wall than is typical for this style of housein the New England area (Wiscasset, Maine,

near Brunswick) and does not contain any fans,blowers, or heavy concrete walls to help storeand distribute the heat. It does incorporatesliding insulating shutters that cover the win-dows at night to reduce the heat loss. The shut-ters also make the house more comfortable byreducing the window chill. The upstairs bed-rooms have skylights angled with the roof tocolIect more winter sunlight than a simiIar areaof vertical windows.

If most of the south wall were covered withwindows, the typical frame house would oftenbe too hot, even in cold weather, because ofthe limited capacity to absorb and store heat.As more windows are added it becomes neces-sary to add massive features to the construc-tion of the house so more heat can be storedwith small increases in the interior tempera-ture The house shown in figure 45 has win-dows covering the entire south wall, but it also

Figure 44.—Modified Saltbox Passive Solar Design Home

Photo credit Christopher Ayres, Pownal, Maine

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Ch. XI—Technical Options ● 259

has lo-inch thick adobe walls with urethan in-sulation outside the adobe and a brick floorresting on 16 inches of sand. The sand has a 1-inch layer of styrofoam insulation beneath itand the house has an overhang that limits theamount of summer Sun which enters. Thishouse, in Santa Fe, N. Mex., receives about 95percent of its heat from the Sun. This is not anarea of mild winters—the location is at anelevation of 6,900 feet and the heating require-ments are comparable to those of upstate NewYork. Supplementary heat is provided by twofireplaces and a small electric heater in thebathroom.

Such direct-gain systems are the ultimate insimplicity as they use no fans or dampers andthe heat “stays on” when the electricity goesoff. However, the large windows can produceuncomfortable glare, and if the floor is to beeffectively used to store heat, it must not becarpeted. If the house does not effectively in-corporate massive components, the tempera-ture swings resulting can be uncomfortablylarge– as much as200 to 250 F in a day.

Indirect-Gain Passive Buildings

The problems with glare and the wide tem-perature fluctuations experienced in many“direct-gain” buildings have led to the use of avariety of simple approaches where the Sundoes not directly heat the living space.

One is i l lust rated in f igure 46 where amassive concrete or masonry wall is placeddirectly behind a large glass surface. (This con-cept is called a thermal storage wall or aTrombe wall after its French inventor.) Thesunlight is absorbed by the wall. Heat is trans-ferred to air against the inside surface, this airbecomes buoyant and sets up circulation loopsthat move hot air into the house through thevents. Part of the heat is stored in the wall; theinterior surface of concrete walls will actuallyreach its highest temperature well after theSun has set. The house in figure 47 illustratesthe use of this approach in combination withdirect gain. Behind the left awning is a brickwall 8 inches thick; the windows on the right-hand portion of the house have a concrete/brick floor 4 inches thick behind them. The

house is 50- to 60-percent solar heated and onsunny winter days, the occupants open win-dows when the interior temperature reaches86° F.3 4

Barrels of water may be substituted for thebrick wall; computer calculations have shownthat they wil l actually increase sl ightly theamount of heat that can be gained by a storagewall. The building shown in figure 48 is a com-bination off ice/warehouse used for editing andstoring books by the Benedictine monasterynear Pecos, N. Mex. This building combinesdirect gain with the use of a “water wall.” Thewindows on the first floor and the clerestorieson the second level provide direct gain. Belowthe windows on the first level is a window-wallwith 55-gallon drums of water behind the win-dows. Reflective panels lying on the groundbelow the water wall serve to increase theamount of sunlight striking the wall. They canbe closed at night to reduce the heat lossesfrom the water barrels. This system has pro-vided more than 90 percent of the heatingneeds of this large buiIding.

A variation on the mass wall approach is the“greenhouse” or “attached sunspace” design.Sunlight provides all of the heat for the sun-space and part of the heat for the rest of thehouse. The sunspace is a large, live-in collec-tor, and the storage wall is placed between thesunspace and the living quarters. The storagewalI mass evens out the temperature variationsfor the living quarters, while the temperaturein the sunspace undergoes wide swings. Such asunspace can be used as a greenhouse, a sunnyplay area for children, an enclosed patio, orany use compatible with substantial tempera-ture shifts.

Figure 49 illustrates the use of a solarium ina rather conventional appearing house specifi-calIy designed to be mass-produced in a stand-ard California tract development. The houseincorporates direct gain through the windowson the south wall and water tubes near thesewindows to add storage. The skylight in theroof lights a square solarium in the center of

~qAndrew M. Shapiro, “The Crosley’s House–WithCalculations and Results,” Solar Age, November 1977, p.31

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

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

footings of building and manyother details

Straight segment

Roundedgreenhouse

N

Ch. Xl— Technical Options ● 261—

Figure 47. —The Crosley House in Royal Oak, Md., Combines a Trombe Wall System With Direct Gain anda 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 Fromthe Office Windows and Warehouse Clerestories Combined With the Drumwall Below the Office Windows to

Provide About 95 Percent of Its Heating Needs

55 gallond r u m s

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-FilledTubes on Three Walls of the Solarium. The Tubes Then Radiate the Solar Heat to the Surrounding Areas

the house. Three walls of the solarium havewater-filled tubes. As this house was built inStockton, Calif., where summer day tempera-tures are frequently in the 90’s but night tem-peratures regularly drop to the 50’s or low 60’s,it also incorporated a gravel bed 14 i n c h e sdeep under the entire house The rock bed iscooled by the earth and by circulating coolnight air through it. (The use of fans to cir-culate the air would cause some to regard thisas a hybrid passive home ) Another feature ofthe skylight is the use of insulating panels,which are moved over the top of the solariumat night to reduce the heat loss.

An attached sunspace or greenhouse can beadded to many existing homes. While most ofthe commercial lean-to greenhouses now avail-able are single glazed, an increasing number ofmanufacturers offer double glazing. The SolarRoom Co. emphasizes the heating benefits andmuItipurpose nature of their inexpensive dou-ble-glazed rooms (see figure 50) in their mar-keting. These units, which are designed for sim-p le in s ta l la t ion , u se u l t rav io le t inh ib i tedplastic coverings for extended life and can beeasily taken down during the summer if de-

Photo credit: Pacific Gas arid Company

sired. The Solar Sustenance Project has con-ducted workshops at numerous locations inthe Southwest teaching simple greenhouseconstruction and promoting the benefits ofboth food and heat that can be derived fromretrofit greenhouses such as the one shown infigure 51. The materials for the greenhousesbuilt in these workshops cost from $395 to$652. Simple retrofits l ike those shown aregenerally built over an existing door or win-dow, which can be opened to circulate heat in-to the house. They use the mass of the housefor any s torage and can supply 10 to 20MMBtu of useful heat annually in most U.S .locations.

Hybrid Passive Systems

The definition of passive systems is the ob-ject of some controversy; the term passive im-plies lack of machinery and controls, but somesuch houses also incorporate a storage bed to

William F Yanda, “Solar Sustenance Project Phase I I Report, ” proceedings of the Conference on Energy

Conserving Solar Heated Greenhouses (Mar lboro, Vt . : College, Nov. 19-20, 1977), p. 16.


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

improve the system’s performance. Fans andcontrols circulate heat to and from the storagebed. Strictly speaking, the Pacific Gas andElectric house in Stockton could be consid-ered hybrid, as it utilizes, some controls andmotors.

The house shown in figure 52 successfullycombines a greenhouse with a rock storagebed to provide additional heat storage. Thewall between the greenhouse and the livingquarters is a heavy adobe wall; blowers forceair through the rock storage bed whenever thetemperature in the greenhouse goes above acertain point. This heat is used to warm thehouse after the adobe has exhausted its heat.This house is near Santa Fe, N. Mex., wheresubzero winter temperatures occur; it required

Photo credit: Room

less than 1,000 kWh of electricity for sup-plementary heating (the equivalent of 30 to 40gallons of heating oil) during a 6,400 degree-day winter). 36

The house shown in figure 53 is an exampleof a dwelling with a storage wall and a rockstorage bed.

Cost of Heat From Passive SolarHeating Systems

It is clear that a variety of passive heatingsystems are capable of providing substantialheat to buildings, that these systems are simple

Douglas Balcomb, “State of the Art in PassiveSolar Heating and Cooling,” proceeding of the SecondNational 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

and that they can be built from rather ordinaryconstruct ion mater ials . The exper ience ofmany people who have lived in passivelyheated homes suggests that consumer accept-ance can be enthusiastic, although presentowners are largely a self-selected group ofinnovators. As with any other new energy sys-tem, the installation cost and the value of theenergy savings will be a major factor in generalconsumer acceptance.

The cost of heat from passive solar heatingsystems depends on the system and the costingmethodology used. As an example, considerthe role of windows in a residential building.Most free-standing houses have windows ontheir south wall that were installed purely forthe light and view they provide. If they are un-shaded they will also reduce the heating billslightly, and it can be argued that this heat isfree since the windows were installed for otherreasons. Similarly, some of the windows thatwould ordinarily be placed on the north wall ofa new house can be put in the south wall, re-ducing the heat needed, again at no additional

Photo credit: Sandia Laboratories

cost. Alternatively, the cost of this heat couldbe computed based on the difference betweenthe cost of a blank wall and the cost of the wallcontaining windows. Attached sunspaces canbe treated in the same manner in that the costof heat they provide depends on how the in-trinsic value of the sunspace is treated.

Passive systems may change the appearanceof a house, and this further complicates thecosting. The addition of sl ightly larger win-dows to increase heat gain may be welcomed,but if they are too large then glare becomes aproblem. Inclusion of a greenhouse in a homecan be a distinct plus if the owners enjoyplants and indoor gardening, but would not bea strong selling point for others. The use ofmassive construction to provide heat storagein the winter and retention of coolness in thesummer can be done in tasteful ways thatshould add to the value of the home, but floorsthat are used for thermal storage lose efficien-cy if carpeted. Thus, a passive solar heatingsystem may increase the value of a home as aheating 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 Witha 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.


esthetically pleasing, but a poorly designedsystem could decrease a home’s market valuewhile reducing heating costs.

These subjective reasons make it difficult toestimate the total costs of the heat frompassive solar heating systems.

The most comprehensive survey of the costand performance of passive solar heating in-stallations now available is that performed byBuchanon of the Solar Energy Research lnsti-tute) .37 It presents information on the installa-tion cost and useful heat delivered by 32 ac-tual systems and 18 simulated installations.The heat delivered by 20 of the systems wasdetermined from monitoring of the buildingperformance while engineering estimates havebeen made of the heat delivered to the otherbuildings. These estimates exclude heat thatmust be vented outdoors during the heatingseason because of insufficient thermal storagein the building.

Table 82 presents the cost of delivered heatfor the systems surveyed. The cost of deliveredheat was calculated using an annual capitalcharge rate of 0.094 and an annual mainte-nance estimate of 0.005 of the initial systemcost, based on the average maintenance cost

Table 82.—Cost of Heat From Passive SolarHeating Installations

Cost of heatInstallation type ($/million Btu)

Direct gain:Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $3.00-13.80Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $3.30-12.60

Thermal storage wall:Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $3.60-24.20Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $8.80-15.40

Thermal storage roof:Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $8.20

Greenhouse/attached sun space:Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $1.20-11.90

Hybrid:Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $2.60-16.60Unmonitored ... , . . . . . . . . . . . . . . . . . . . . $11.90

SOURCE: Based on Deborah L. Buchanon, “A Review of the Economics ofSelected Passive and Hybrid Systems,” Solar Energy Research In-stitute publication SERI/TP-61-144, January 1979. The information oncombined cost and performance has been converted to a cost ofdelivered heat using an annual capital charge rate of 0.094 and an an-nual maintenance cost of 0.005 of the initial cost.

jTDeborah L. Buchanon, “A Review of the Economicsof Selected Passive and Hybrid System s,” Solar EnergyResearch Institute, SERl/TP161-144, January 1979.

in the survey. It is assumed that the systemshave no intrinsic value other than as heatingsystems. (This probably overcharges for theheat from attached sunspaces.) If a single en-try is given instead of a range, only one systemof that type was included in the survey. Resultsof monitored and unmonitored systems areshown separately and there do not appear tobe major discrepancies. The ranges shownrefIect variation in both quality of construc-tion and climate. The systems pictured earlierin this section span most of the range of costsshown in the table.

Cost of Heat From Fossil Fuelsand Electricity

The s imp les t compar i son fo r the cos t sshown in table 82 is against the cost of gas, oil,and electricity to residential customers. How-ever, it is also necessary to include the effectsof equipment efficiencies such as furnaces anddistribution systems to provide a meaningfulcomparison. The policy maker may also wish tocompare the costs shown in table 79 with themarginal cost of new supply such as liquefiednatural gas or electricity from new generatingand transmission faciIities.

Table 83 shows the cost of fuels and heatsupplied to houses from a variety of presentand future sources of fossil fuel and from elec-tricity. The fuel prices shown were assembledfrom a variety of sources as described belowand reflect ranges of present or expected costsfor fuel delivered to a residential customer.The cost of heat delivered to the house is thecost of a million Btu of heat delivered to theinterior of the house after considering the fur-nace losses and ownership costs. It is thus com-parable to the cost shown in table 82. It is ex-pected that for modest increases in initial cost,the efficiency of conventional furnaces andheat pumps will be improved in the future. Thethird column of this table shows cost estimatesfor this case. The fourth column shows costwith improved equipment Ievelized over 30years; fuel costs are assumed to increase at ageneral inflation rate of 5.5 percent. The basisfor the energy prices shown and the equipmentefficiencies and costs used in preparing table


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

cost of Levelized cost of heatheat to houses to houses using

1977 residential cost of using improved improved equipmentfuel 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 $6.60-11.30Intrastate gas. . . . . . . . . . . . . . . 2.50-4.00 5.60-8.10 5.00-6.90 7.80-11.30Synthetic gas. . . . . . . . . . . . . . . 4.00-8.00 8.10-14.80 6.90-12.00 11.30-21.00LNG. . . . . . . . . . . . . . . . . . . . . . . 3.00-6.10 6.50-11.60 5.70-9.50 9.00-16.00Gas from “exotic” sources*. . . 3.25-7.50 6.90-14.00 6.00-11.00 9.30-20.00Oil at 500/gallon. . . . . . . . . . . . . 3.60 9.50 8.00 12.50Electrical resistance heat

electricity at 3-5¢/kWh . . . 8.80-14.60 10.10-16.00 10.00-16.00 18.00-29.00electricity at marginal

cost of 7¢/kWh . . . . . . . . . . 20.50 21.80 21.80 40.00Heat pumps

electricity at 3-5¢/kWh . . . . . 8.80-14.60 8.30-12.00 7.00-9.90 11.00-16.00electricity 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 endof this chapter.

Comparison of tables 82 and 83 show similarcost ranges that suggest that passive solarheating is now competitive with conventionalheating fuels in at least some cases. It is in-teresting to note that the low end of the costranges shown for passive solar heating arelower than present cost of heat from gas. Thissimple comparison of costs indicates that pas-sive systems wil l often be competitive, butgives no indication of the geographic range ofcompetitive behavior. Furthermore, the cost ofheat from the passive solar systems will not in-crease with inflation, leading to a substantialcost advantage for the passive systems afterthe first few years of operation. Lifecyclecosting can be used to provide a better meas-ure of the competitive advantage or disadvan-tage of passive solar heating systems. Most ofthe work in this area has been performed at theLos Alamos Scientific Laboratory and the Uni-versity of New Mexico. 38 Among the more in-

38 References on solar passive —

(a)

(b)

Scott A. Nell, “A Macroeconomic Approach toPassive Solar Design: Performance, Cost, Com-fort, and Optimal Sizing,” Systems Simulationand Economic Analysis Workshop/Symposium,San Diego, Cal if., June 1978.Scott A. Nell, “Testimony Prepared for the U.S.House of Representatives Subcommittee onOversight and Investigations, Committee on In-terstate and Foreign Commerce, ” Aug. 11, 1978.

teresting of their results are those showing howa Trombe wall system will compete with gasand electricity in different parts of the coun-try.

The group considered a double-glazed ther-mal storage wall with storage provided by 18inches. of concrete. An engineering firm esti-mated that such a system would have an incre-mental installed cost of $12 per square foot.For comparison, the thermal storage wall sys-tems used in table 82 ranged from $5 to $21 persquare foot with a single exception. A variation

(Continued)

(c)

(d)

(e)

(f)

(g)

Fred Roach, Scott Nell, and Shaul Ben-David,“The Economic Performance of Passive SolarHeating: A Preliminary Analysis,” AIAA/ASERCConference, Phoenix, Ariz., November 1978.Fred Roach, Scott Nell, and Shaul Ben-David,“Passive and Active Residential Solar Heating: AComparative Economic Analysis of Select De-signs, ” submit ted to Energy , the In ternat iona l)ourna/, January 1979.Scott A. Nell and Mark A. Thayer, “Trombe Wallvs. Direct Gain: A Macroeconomic Analysis for Al-buquerque and Madison,” The Third NationalPassive Solar Energy Conference, San Jose, Cal if.,January 1979.Scott A. Nell, J. Fred Roach, and ShaulBen-David, “Trombe Walls and Direct Gain: Pat-terns of Nationwide Applicability,” The Third Na-tional Passive Solar Energy Conference, San Jose,Cal if., January 1979.Scott A. Nell, “Thermal Mass Storage andGlazings Show Effectiveness in New Modeling,”Solar Engineering, January 1979, pp. 29-31.


on this system was considered that assumedthat the Trombe wall was equipped with mov-able insulation, which increases the R-value ofthe collector surface to R-10, between 4 p.m.and 9 a.m., at an added cost of $4 per squarefoot. This insulation allows a smaller system tomeet the same fraction of the heating load andis often found to be cost-effective.

Results of the State-by-State analysis areshown in figure 54, maps 1 through 5 for fivedifferent combinations of system, backup fuel,and incentives. The first two maps show thatTrombe wall systems with night insulation arenow feasible in three States when natural gas isthe backup and would be expected to be eco-nomic in one more within the next 10 years ifno incentives are provided. The inclusion ofTrombe wall systems in the solar energy taxcredit contained in the National Energy Act of1978 would make such systems economical in29 of the 48 States shown by 1985, when natu-ral gas is used for backup. It is interesting tonote that the system is not economic in severalSun Belt States due to the relatively smallheating requirements.

The feasibility of Trombe wall systems usingelectric-resistance heating as backup is ex-amined in maps 3 through 5. Map 3 shows thatTrombe wall systems are now feasible in everyState except Washington, where electric ratesare extremely low and there is relatively littlesunshine. Systems that provide about half ofthe heating are feasible in California, Arizona,and South Carolina. The addition of night in-sulation to the system makes it feasible to in-crease the fraction of the heat provided by thesolar system as shown in map 4. (The night in-sulation is generally most effective in the cold-er States. ) The addition of the recent tax creditincentives would increase the fraction of solarheating that is feasible by 0.05 to 0.20 in abouttwo-thirds of the States as shown in map 5.

The importance of this analysis lies not inthe specific States and solar fractions shown tobe feasible, but rather in the trends. Passivesolar heating is shown to be marginally com-petitive on a Iifecycle cost basis with gasheating in parts of the country. The largenumber of States where the addition of the taxcredit incentives makes small systems com-

petitive illustrates this. Systems that supply asignificant fraction of the total heating needsare competitive with electric resistance heat-ing in much of the count ry . Other pass ive de-signs such as attached sunspaces that offerother benefits in addition to heating may bemore broadIy applicable.

Summary

“Passive solar” buildings, which obtain 20 to95 percent of required heat from the Sun with-out active solar collectors, have been built andare operating in many parts of the country.While data are sketchy, it appears that suchhousing is clearly competitive with electric-re-sistance heating in terms of cost, and is com-petitive with oil and gas in some parts of thecountry. In addition to the heat provided,many passive solar homes provide additionalspace, good natural Iight, and a pleasing view;these characteristics may be as important tohomeowners as the savings in fuel costs. An ad-ditional benefit is that the systems are simplyconstructed and have few moving parts, so Iit-tle maintenance is required. In some suchhomes, the daily swings in temperature aregreater than commonly acceptable in housesusing conventional heating/cooling systems.

Additional research and development isneeded in this area, including the collection offield data on operation of homes now in place.It is likely, however, that the principal barriersto widespread use of these techniques (carefulsiting, construction, and landscaping) are in-stitutional rather than technical. (This is gener-ally true for home energy conservation issues. )First costs of such a system will be higher thanconventional systems. Code barriers may be aproblem in some areas; for instance, somecode changes implemented over the past 5years in the name of energy conservation re-quire extensive engineering justif ications ofsuch homes on a case-by-case basis.

Passive heating systems are largely conven-tional building materials in an unconventionalcombination rather than new products. Ac-cordingly, industr ial promotion of pass ivesolar has been slow to materialize. Glass andplastics industries are potential proponents,


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

Map INo incentives

Map 2NEP tax credit incentive

I/o Night Insulation(Resistance)

Map 3No incentives

(30-year life cycle cost basis)

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

Map 4No incentives


Map 5NEP tax credit incentive


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


but large industries such as these typically donot become active in a new market area until ithas been established by small entrepreneurs.

Manufacturers of movable insulation arenatural marketers for passive solar construc-tion. This area is characterized by a number ofsmall companies that have experienced diffi-culty in developing durable, reliable productsand have not had extensive marketing experi-ence.

The Internal Revenue Service interpretationof the solar energy tax credits (and conserva-tion credits) recently authorized effectively ex-cludes many passive systems. This places thepassive approach, which can drastically re-duce heating requirements, at a strong disad-vantage to conventional supply technologies.

Accelerating the use of passive solar tech-niques calls for a vigorous information anddemonstration effort, as the technology is notwidely understood and does not have strongprivate sector support. Rapid and credibledemonstration of a variety of systems in allregions of the country would help. These dem-onstrations could parallel the developmentand distribution of a design catalog, showing

systems that have received adequate engineer-ing analysis to meet local building code re-quirements. Such approaches could lead to theacceptance of “rules of thumb” for use bydesigners and builders in each part of thecountry. The recently concluded Passive SolarDesign competition should provide a usefulstart on this task.

A number of homes could be built in varyingclimates and subjected to detailed and preciseperformance monitoring. This work could becoordinated with continued development andverification of computer programs designed topredict energy usage. Simple computer pro-grams that are cheap and accessible areneeded for field use by designers and builders;programs of greater precision and accuracyare needed for research.

Some applied research areas, such as im-proved glazing methods and infiltration moni-toring, will be useful to passive solar. Passivecooling has received very Iimited attention andneeds work. Possibilities for combining passivesystems with active solar to further reduce de-pendence on conventional fuels have not beenwidely explored.

TECHNICAL NOTES–FOSSIL FUEL PRICES

These assumptions were used for comparingconventional fuel and solar passive heatingcosts in this chapter.

In 1977, natural gas prices for residentialcustomers ranged from $2.00 per MMBtu in theSouthwest to $4.00 per MMBtu in New Eng-land, 39 where gas is piped over long distancesor derived from supplemental sources, such asliquefied natural gas (LNG) or synthetic naturalgas (SNG) from naphtha. In comparison, theaverage 1977 price for wellhead interstate gaswas $0.93 per MMBtu and $1.54 per MMBtu togas distributors. 40 Although comparable aver-age prices for wellhead intrastate gas are notknown, typical new contracts ranged from

“American Gas Association, “Quarterly Report of GasIndustry Operations– Fourth Quarter 1977 “

‘“Department of Energy, April 1978.

$1.50 to $2.00 per MMBtu. Synthetic gas priceswere compiled from a variety of sources usedin the OTA solar study,41 while LNG prices arebased on current and pending LNG projects.42

Prices for “exotic sources” are based on theOTA Devonian shale study43 and a recent pres-entat ion by Henry L inden 44 of the Gas Re-search Institute.

A substantial quantity of fuel oil is importedand apparently is not affected by crude oil en-

“office of Technology Assessment, “Application ofSolar Technology to Today’s Energy Needs,” June 1978.

42 American Gas Association, “Gas Supply Review, ”June 1978.

“(lffice of Technology Assessment, “Status Report onthe Gas Potential From Devonian Shales of the Appa-lachian Basin, ” November 1977.

“Henry Linden, presentation at the Second Aspen En-ergy Conference, July 1978.


titlements. Consequently, increasing the priceof U.S. crude oil to world levels would notresult in a large increase in fuel oil prices. Also,the delivered price of $0.50 per gallon equals$21.00 per barrel delivered.

Typically, the price of electricity for residen-tial customers ranged from 3 to 5 cents/kWh.Exceptions to this are the Northwest whereelectricity costs are less than 3 cents/kWh andthe Northeast where it costs more than 5 cents/kWh. The delivered price of electricity fromnew capacity was calcuIated within a few millsof 7 cents/kWh for each of the four citiestreated in the OTA solar report.

Different efficiency values were used for gasand oil furnaces, baseboard heaters, and heatpumps. Seasonal efficiency for gas furnaces is60 percent; for oil furnaces, 50 percent; and100 percent for baseboard electric heaters.Gas furnace efficiency can be increased to 80percent at a cost of about $400 per furnace,while oil furnace efficiency can be increased

to 70 percent at a cost of about $500 per fur-nace. Typical heat pumps have a seasonal per-formance factor of 1.55–an efficiency of 155percent — in a 5,000 degree-day climate.45 Aheat pump with “improved” installation wasassumed to have a seasonal performance of2.0 at no additional cost. The performance ofthe heat pump with “improved” installationcorresponds to the performance of some heatpumps manufactured today and suggests thattypical heat pump performance can be in-creased to the 2.0 level.

Convent ional systems ownership costs ,which include capital costs, annual mainte-nance costs, and a pro-rated replacement cost(for heat pumps that have a typical lifetime ofonly 10 years), are based on the OTA solarstudy.

4~Westinghouse Electric Corporation, “Load and UseCharacteristics of Electric Heat Pumps in Single-FamilyResidences,” EPRI EA-793, Project 432-1, Final Report,June 1978.

Appendixes

Appendix A

INSULATION

INTRODUCTION

In his National Energy Plan presented to Congress on April 20, 1977, President Carter setas 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 theirhomes in record numbers. According to the Department of Energy (DOE), 25 million to 47million homes will be reinsulated by the end of 1985.

Nationwide increases in thermal insulation have, however, resulted in a number of ac-tual and potential problems. For example, the absence of uniform safety standards and test-ing methods among various levels of government and the absence of Federal and State lawson 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 insula-tion materials, their effectiveness remains questionable.

This appendix outlines and discusses some of the major problems associated with the in-creased use of insulation.

TYPES OF INSULATION

The p r inc ipa l app l icat ions and marketsegments for insulation materials in the resi-

MATERIALS

Rock Wool and Slag Wool

dential sector are shown in tables A-1 and A-2.A number of properties influence the thermalperformance of insulating materials. Thermalperformance is expressed in terms of thermalresistance (R-value), which describes the abiIityof a particular material to restrict heat flow. I naddition to thermal performance, this sectionincludes a brief overview of other importantproperties, such as corrosiveness and degrada-tion. Tables A-3 through A-1 O provide a moreextensive Iist of properties.

Rock wool and slag wool are terms used todenote glassy fibers that are produced by melt-ing and fiberizing slags obtained from smeltingmetal ores (“slag wool”) or by melting andf iber iz ing natural ly occurr ing rock (“rockwool”). Rock and slag wool products appear inthe form of batts and loose-fill for blown orpoured application. The reported R-values forrock wool batts are 3.2 to 3.7, and 2.9 per 1-inch thickness for blowing wool. The thermalperformance of this product is reportedly

Table A-1. —Principal Residential Applications——-

Rock Cellular ReflectiveLocations Fiberglass wool Cellulose plastics Perlite Vermiculite surfaces

New construction—

Roof/ceiling. . . . . . . . . x x x xWalls . . . . . . . . . . . . . . x x x xFloors/foundation. . . . x x x x

RetrofitRoof/ceiling. . . . . . . . . x x x x xWalls . . . . . . . . . . . . . . x x x xFloors/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 NationalLaboratory, Publication No. BNL-50862, June 1978, p. 9

277


Table A-2.—Market Segments and Product Usage

Location or Products used

building section New buildingsResidential buildings (wood. framed)

Ceilings . . . . . . . . . Fiberglass batt

Sidewalls . . . . . . .

Fiberglass loosefill

Rock wool battRock wool loose

fillCellulose loose

fill

Fiberglass batt

Rock wool batt

Cellular plasticsheathings

Wood fibersheathings

Reflectivesurfaces

Floors . . . . . . . . . . . Fiberglass battRock wool battReflective

surfaces

—Retrofit

Fiberglass BattFiberglass loose

fillRock wool battRock wool loose

fillCellulose loose

fillVermiculite

Fiberglass loosefill

Rock wool loosefill

Cellulose loosefill

Fiberglass battRock wool battReflective

surfacesSOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/ation

Materials and Systems for Building Appl/cat/ens, prepared byBrookhaven National Laboratory, Publlcatlon No BNL-50862, June1978, p.10

unaffected by age. Its thermal conductivitycan be affected by moisture content, althoughthe material, after drying, regains its originalproperties. When dry, rock wool does not sup-port fungal growth, bacteria, or vermin; exudesno odor; and is noncorrosive. 1

Fiberglass

Fiberglass is manufactured in a high-technol-ogy process in which glass raw materials arecombined and melted in a furnace, then ledout through a forehearth to the fiberizationdevices. Phenolic resin is a commonly usedbinder that is applied to the fiber as it flowsthrough a collection chamber. The fiber withresin is collected on a moving beIt and passedthrough an oven to cure or set the resin, andthe finished product is removed from the end

‘An A s s e s s m e n t of Thermal /nsu/ation Materia/s andSystems for Building A~~/ications, prepared by Brook-haven National Laboratory, Publication No. BNL-50862(U.S. Department of Energy, June 1978), p. 82

Table A-3.—Rock and Slag wool

Material property Value

Thermal resistance (R-value)per 1" of thickness at75° F. . . . . . . . . . . . . . . . . .

Water vapor permeability . .Water absorption. . . . . . . . .Capillarity . . . . . . . . . . . . . .Fire resistance. . . . . . . . . . .

Flame spread . . . . . . . . . .Fuel contributed . . . . . . .Smoke developed. . . . . . .

Toxicity . . . . . . . . . . . . . . . .Effect of age

Dimensional stability. . . .

Thermal performance . . .Fire resistance . . . . . . . . .

Degradation due totemperature . . . . . . . . . . .CyclingA n i m a l . . . Moisture . . . . . . . . . . . . . .Fungal/bacterial. . . . . . . .Weathering. . . . . . . . . . . .

Corrosiveness . . . . . . . . . . .Odor . . . . . . . . . . . . . . . . . . .

3.2-3.7 (batts)2.9 (loose fill)

>100 perm-in270 by weight

nonenoncombustible

1500

none

none (batt)settling (loose-f ill)

nonenone

nonenonenone

transientdoes not support growth

nonenonenone

SOURCE U S Department of Energy, An Assessment of Thermal InsulationMater/a/s and Systems for Building Applications, prepared byBrookhaven National Laboratory, Publication No BNL-50862, June1978, p 81

of the line and packaged. Fiberglass is usuallysold in the form of batts and blankets (with orwithout a vapor barrier) or shredded, lubri-cated, and packaged as blowing wool. The R-value for fiberglass batts or blankets is about3.2; the R-value for loose-fill is 2.2 per inch. Itappears that fiberglass batt insulation does notsettle or shrink with age, but loose fill may set-tle. The thermal performance of this materialis reportedly unaffected by age. Fiberglassdoes not promote bacterial or fungal growthand provides no sustenance to vermin. Insula-tion materials made from fiberglass are non-corrosive and have no objectionable odor. 2

Cellulose

Cellulose insulation is manufactured by con-verting used newsprint, other paper feedstock,or virgin wood to fiber form with the incor-poration of various chemicals (e. g., boric acid,borax, or aluminum sulfate) to provide flame

‘Ibid , p 79

Appendix A —Insulation ● 2 7 9

Table A-4.— Fiberglass


Density . . . . . . . . . . . . . . . . . 0.6-1.0 lbs/ft3

Thermal conductivity y(k factor) at 75° F. . . . . . . . varies with density

Thermal resistance (R-value)per 1" of thickness at 3.16 (batts)75° F. . . . . . . . . . . . . . . . . . 2.2 (loose fill)

Water vapor permeability . . >100 perm-inWater absorption . . . . . . . . . <1 % by weightCapillarity . . . . . . . . . . . . . . . noneFire resistance. . . . . . . . . . . noncombustible

Flame spread . . . . . . . . . . 15-20Fuel contributed . . . . . . . 5-15Smoke developed. . . . . . . 0-20

Toxicity . . . . . . . . . . . . . . . . . Some toxic fumes coulddevelop due to combustion ofbinder.

Effect of ageDimensional stability. . . . none (batt)

settling (loose-fill)Thermal performance . . . noneFire resistance . . . . . . . . . none

Degradation due toTemperature. . . . . . . . . . . none below 180 ‘FCycling . . . . . . . . . . . . . . . noneAnimal. . . . . . . . . . . . . . . . noneMoisture . . . . . . . . . . . . . . noneFungal/bacterial. . . . . . . . does not support growthWeathering. . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . noneOdor. . . . . . . . . . . . . . . . . . . . noneSOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/at/on

Materials and Systems for Building Applications, prepared byBrookhaven National Laboratory, Publication No. BNL-50862, June1978, p. 78.

retardancy. Cel lulose products are usual lyavailable as Ioose-filI or spray-on. The thermalresistance values for celIulose insuIation are inthe range of 3.7 to 3.2. However, compaction(caused by vibration and settling under its ownweight) can decrease its R-value in two ways:loss in thickness and an increase in conductivi-ty due to the increase in density. If cellulosicmaterial is properly treated, its weight gainfrom water absorption will not exceed 15 per-cent. However, poor quality control and im-proper selection of flame-retardant chemicalsmay increase the level of absorption. Somechemicals added to cellulose to provide flameretardancy are known to cause corrosion onmetals such as steel, aluminum, and copper.Fungal and bacterial growth can be a problem,unless chemicals are added to inhibit suchgrowth.

Cellular Plastics

A variety of different plastics, when pro-duced as foams, are useful as insulat ion

Table A-5.—Cellulose

Material property ValueDensity . . . . . . . . . . . . . . . . . 2.2-3.0 lbs/ft3

Thermal conductivity(k factor) at 75” F. . . .....0.27 to 0.31 Btu-in/ft2hr°F

Thermal resistance (R-value)per 1“ of thickness at75° F. . . . . . . . . . . . . . . . . .

Water vapor permeability . .Water absorption. . . . . . . . .Capillarity . . . . . . . . . . . . . . .Fire resistance. . . . . . . . . . .

Flame spread . . . . . . . . . .Fuel contributed . . . . . . .Smoke developed. . . . . . .

Toxicity. . . . . . . . . . . . . . . . .Effect of age

Dimensional stability. . . .Thermal performance . . .Fire resistance. . . . . . . .

Degradation due toTemperature. . . . . . . . . . .Cycling . . . . . . . . . . . . . . .Animal. . . . . . . . . . . . . . . .Moisture . . . . . . . . . . . . . .Fungal/bacterial. . . . . . . .Weathering. . . . . . . . . . . .

3.7 to 3.2high

5-200/. by weightnot known

combustible15-400-400-45

develops CO when burned

settIes 0-20%0

not knowninconsistent information

nonenot knownnot knownnot severe

may support growthnot known

Corrosiveness . . . . . . . . . . . may corrode steel, aluminum,copper

Odor. . . . . . . . . . . . . . . . . . . . noneSOURCE U.S. Department of Energy, An Assessment of Thermal /nsu/ation

Mater/a/s and Systems for Bu//d/ng App/icat/ens, prepared byBrookhaven National Laboratory, Publication No. BNL-50862, June1978, p. 83

materials. Foamed-in-place and board stockfoams ex is t . As d i f fe rences ex i s t i n thechemical composition of these materials, aseparate discussion is necessary for eachcelIular plastic insulation.

Polystyrene Foam

Polystyrene is a thermoplastic material pro-duced by the polymerization of styrene in thepresence of a catalyst. Polystyrene foam canbe produced by either intrusion or extrusion.3

Foam produced by extrusion has a more con-sistent density than foam produced by themolding process, in which variations in densityaverage about 10 percent. The R-value formolded polystyrene foam (3.85 to 4.35) is lowerthan the R-value for extruded polystyrene (5.0)as the former has air in the cells and the latterhas a mixture of air and fIuorocarbon.

Polystyrene foam must be protected fromdirect exposure to ultraviolet (UV) light, whichcan cause it to yellow and turn to dust. Its in-

‘Ibid , p 21


Table A-6.— Expanded Polystyrene Foam


Density . . . . . . . . . . . . . . . . . 0.8-2.0 lbs/ft3

Thermal conductivity 0.20 Btu-in/ft2hr°F (extruded)(k factor) at 75° F. . . . . . . . 0.23-0.26 Btu-in/ft2hr°F

(molded)Thermal resistance (R-value)

per 1“ of thickness at 5 (extruded)75° F. . . . . . . . . . . . . . . . . . 3.85-4.35 (molded)

Water vapor permeability . . 0.6 perm-in extruded1.2 to 3.0 perm-in molded

Water absorption. . . . . . . . . C 0.7°/0 by volume extruded< ().020/0 by volume extruded

< 4% by volume molded< 2% by volume molded

Capillarity . . . . . . . . . . . . . . . noneFire resistance. . . . . . . . . . . combustible

Flame spread . . . . . . . . . . 5-25Fuel contributed . . . . . . . 5-80Smoke developed. . . . . . . 10-400

Toxicity. . . . . . . . . . . . . . . . . develops CO when burnedEffect of age

Dimensional stability. . . . noneThermal performance . . . k increases to .20 after 5 yrs.

Fire resistance. . . . . . . . . /extruded

none molded( none

Degradation due toTemperature. . . . . . . . . . . above 165° FCycling . . . . . . . . . . . . . . . noneAnimal. . . . . . . . . . . . . . . . noneMoisture . . . . . . . . . . . . . . noneFungal/bacterial. . . . . . . . does not support growthWeathering. . . . . . . . . . . . direct exposure to UV light

degrades polystyreneCorrosiveness . . . . . . . . . . . noneOdor. . . . . . . . . . . . . . . . . . . . noneSOURCE: U.S. Department of Energy, An Assessment of Thermal /nsu/ation

Materials and Systems for Building Appl/cat/ens, prepared byBrookhaven National Laboratory, Publication No BNL-50862, June1978, p. 86

sulating properties, however, are not affectedby short-term exposure to UV light. Polysty-rene foam can tolerate temperatures up to1650 F, but higher temperatures may cause itto soften. Polystyrene does not promote fungalor bacterial growth, and is odorless and non-corrosive. 4

Polyurethane

P o l y u r e t h a n e s a r e p l a s t i c s p r o d u c e dthrough the reaction of isocyanates and alco-hols. Either rigid or flexible foam can be pro-duced. For example, slab stock is produced bymixing the necessary components and meter-ing the mixture onto a moving conveyor. Themixture forms a continuous foam that can becut to predetermined lengths. Foamed-in-place

‘I bid., p. 85

Table A-7.—Polyurethane/Polyisocyanurate Foams

Material property ValueDensity . . . . . . . . . . . . . . 2.0 lbs/ft3

Closed cell content . . . . . . . 90%Thermal conductivity 0.16-0.17 Btu-in/ft2hr°F

(k factor) at 75° F. . . . . . . . (aged & unfaced or sprayapplied)

0.13-0.14 Btu-in/ft2hr° F(impermeable skin faced)

Thermal resistance (R-value) 6.2-5.8per 1" of thickness at (aged unfaced or spray applied)75° F. . . . . . . . . . . . . . . . . .

Water vapor permeability . .Water absorption . . . . . . . . .Capillarity . . . . . . . . . . . . . . .Fire resistance. . . . . . . . . . .

Flame spread . . . . . . . . . .

Fuel contributed . . . . . . .

Smoke developed. . . . . . .

Toxicity . . . . . . . . . . . . . . . . .Effect of age

Dimensional stability. . . .

Thermal performance . . .Fire resistance . . . . . . . . .

Degradation due toTemperature. . . . . . . . . . .Cycling . . . . . . . . . . . . . .Animal. . . . . . . . . . . . . . . .Moisture . . . . . . . . . . . . . .Fungal/bacterial. . . . . . . .Weathering. . . . . . . . . . . .

Corrosiveness . . . . . . . . . . .Odor. . . . . . . . . . . . . . . . . . .

7.7-7.1(impermeable skin faced)

2-3 perm-inNegligible

nonecombustible

{30-50 polyurethane25 polyisocyanurate

{10-25 polyurethane

5 polyisocyanurate

i155-500 polyurethane

55-200 polyisocyanurateproduces CO when burned

0-120/. change0.11 new

0.17 aged 300 daysnone

above 250 ‘Fnot known

nonelimited information available

does not promote growthnonenonenone

SOURCE U S. Department of Energy, An Assessment of Thermal InsulationMater/a/s and Systems for Building Applications, prepared byBrookhaven National Laboratory, Publication No. BNL-50862, June1978 p 89

polyurethane are prepared by mix ing ormetering the components and manually orautomatically dispensing them. Specially de-signed units are now available for spray-on ap-p l i c a t i o n s .

The R-value for polyurethane is around 6.Because of the closed cell structure of thismaterial, water absorption and permeabilityare very low. I n curing and aging, polyurethanefoam is reported to demonstrate a dimensionalchange. The degree to which this foam ex-pands or shrinks is related to conditions oftemperature and humidity and the duration ofexposure to extreme conditions. 5 One Ameri-can Society for Testing of Materials (ASTM)test procedure indicated a change in volume

5 I bid.

Appendix A —Insulation ● 2 8 1

Table A-8.—Urea-Formaldehyde andUrea-Based Foams


Density . . . . . . . . . . . . . . . . . Wet - approximately 2.5 lb/ft3

Dry -0.6 to 0.9 lb/ft3

Thermal conductivity(k factor) at 75° F. . . . . . . . 0.24 Btu-in/ft2hr°F

Thermal resistance (R-value)per 1“ of thickness at75° F. . . . . . . . . . . . . . . . . . 4.2

Water vapor permeability . . 4.5 to 100 perm-inat 50% rh 73° F

Water absorption . . . . . . . . . 32% by weight (0.35% volume)95% rh

18% by weight (0.27% volume)60% rh 68° F

180 = 3,800% by weight( 2 - 4 2 % v o l u m e ) i m m e r s i o n

Capillarity. . . . . . . . . . . . . . . slightFire resistance. . . . . . . . . . . combustible

Flame spread . . . . . . . . . . 0-25Fuel contributed . . . . . . . 0-30Smoke developed. . . . . . . 0-1o

Toxicity. . . . . . . . . . . . . . . . . no more toxic than burningwood

Effect of ageDimensional stability. . . . 1 to 4% shrinkage in 28 days

due to curing4.6 to 10% shrinkage at 100” F

100% rh for 1 week30 to 45% shrinkage and 158° F90 to 100% rh-10 days

Thermal performance . . . No changeFire resistance

Degradation due toTemperature. . . . . . . . . . . decomposes at 415° FCycling . . . . . . . . . . . . . . . no damage after 25

freeze-thaw cyclesAnimal. . . . . . . . . . . . . . . . not a feed for verminMoisture . . . . . . . . . . . . . . not establishedFungal/bacterial. . . . . . . . does not support growthWeathering. . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . noneOdor. . . . . . . . . . . . . . . . . . . . may exude formaldehyde

until curedSOURCE: U.S. Department of Energy, An Assessment of Therma/ Insulation

Materials and Systems for Building Applications, prepared byBrookhaven National Laboratory, Publication No. BNL-50862, June1978, p. 91.

of up to 12 percent after 14 days. This materialwi l l begin to decompose at temperaturesabove 2500 F. Polyurethane foam is resistantto fungal and bacterial growth, and is odorlessand noncorrosive.

Urea-Formaldehyde Foam

Urea-formaldehyde foam is produced at thesite of application “by the combination of anaqueous solut ion of a urea-formaldehydebased resin, an aqueous solution foamingagent which includes a surfactant and acid

Table A-9.—Perlite

Value

Material property Loose fill Perlite concrete

Density . . . . . . . . . . . . . . . . . . . . . . 2-11 lb/ft3

K app at 75°F . . . . . . . . . . . . . . . . . 0.27-0.40Thermal resistance (R-value)

per 1“ of thickness at 75° F. . . . 3.7-2.5Water vapor permeability . . . . . . . highWater absorption . . . . . . . . . . . . . . lowCapillarity. . . . . . . . . . . . . . . . . . . . noneFire resistance. . . . . . . . . . . . . . . noncombustible

Flame spread . . . . . . . . . . . . . . . 0Fuel contributed . . . . . . . . . . . . 0Smoke developed . . . . . . . . . . . 0

Toxicity. . . . . . . . . . . . . . . . . . . . not toxicEffect of age

Dimensional stability . . . . . . . . noneThermal performance . . . . . . . . noneFire resistance . . . . . . . . . . . . . . none

Degradation due toTemperature. . . . . . . . . . . . . . . . none under

1,200” FCycling . . . . . . . . . . . . . . . . . . . . noneAnimal. . . . . . . . . . . . . . . . . . . . . noneMoisture . . . . . . . . . . . . . . . . . . . noneFungal/bacterial. . . . . . . . . . . . . does not pro-

mote growthWeathering. . . . . . . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . . . . . . noneOdor. . . . . . . . . . . . . . . . . . . . . none

0.50-0.93

2.0-1.08high

nonenoncombustible

o00

not toxic

nonenonenone

none under500” Fnonenonenone

does not pro-mote growth

nonenonenone

SOURCE U.S. Department of Energy, An Assessment of Thermal InsulationMaterials and Systems for Building Applications, prepared byBrookhaven National Laboratory, Publication No. BNL-50862, June1978, p. 94.

catalyst (or hardening agent), and air. In themixing or foaming gun, compressed air ismixed with the foaming agent to producesmall bubbles which are expanded and coatedwith the urea-formaldehyde resin. The foam isdelivered at about 75 percent water by weightand immediately begins to cure.”6

Urea-formaldehyde has an R-value of 4.2.According to a National Bureau of Standards(NBS) study, shrinkage and resistance to hightemperature and humidity may be a problem.The magnitude of the shrinkage and the timeperiod over which it occurs are subjects of de-bate. The study presented some data on mate-rial that had been installed in a wall of a testhouse. Periodic inspections were made of theinsulated wall and in about 20 months thefoam had undergone an average linear shrink-age of 7.3 percent. 7 The NBS data are only pre-liminary; until more studies are concluded onthe inservice performance of this material, thequestion of durability will remain unanswered.

‘l bid,, p. 23,7Urea-Based Foam Insulations: An Assessment of Their

Thermal Properties and Performance, Technical Note 946(National Bureau of Standards, July 1977), p. 34.


Table A-10.—Vermiculite

An odor of formaldehyde may occur duringthe application of ureaformaldehyde-basedfoam insulation. Under normal circumstances,the odor should dissipate quickly and lingerfor only a few days. According to one majormanufacturer, “formaldehyde gas is emittedfrom the foam, in the part per million range,during the drying and curing process, whichwill be over in 2 weeks.”8

highly resistant to water and to moisture. TheR-value of perlite is between 3.7 and 2.5. As aninorganic material it resists rot, vermin, andtermites. Perlite is noncorrosive and odorless.It is primarily used as loose-fill insulation, or asaggregate in insuIating concrete.

Vermiculite

Vermiculite is a generic name for micalikeminerals. When subjected to high tempera-tures it expands to a corklike consistency. TheR-value for this material is 3.0 to 2.4. Ver-miculite is water repellant and noncombusti-ble. As an inorganic material it is resistant tovermin, rot, and termites and is not affected byage, temperature, or humidity. Vermiculite isnoncorrosive and does not exude an odor. Likeperlite, it is primarily used as loose-fill insula-tion, or as aggregate in insuIating concretes.

Aluminum Multifoil

Aluminum mult i fo i l insulat ion consists ofseveral sheets of aluminum foil separated byair spaces. The outer layers of the foil sand-wich are usually backed with kraft paper forstrength. The foil reflects infrared heat radia-tion, and the air spaces add to the insulationvalue. The R-value of this material depends onspecific location. Three Iayers of foil with 4 airspaces can have an R-value of 29 under thefloor, 14 in a wall, and 9.8 in the ceiling i nwinter. In summer, the same ceiling insulationcan have an R-value of 29 for keeping the air-conditioned house cool .9 Fo i l i n su la t ionweighs less and is less expensive than fiber-glass

PerliteGlass Foam

Perlite is a glossy volcanic rock mineral, in-digenous to the western United States. It con-tains between 2 and 5 percent water by weight.Perlite ore is composed primarily of aluminumsi l icate. When heated to a sui table point(1,000 0 C), the crushed ore particles expand tobetween 4 and 20 times their original volumeand contain numerous cavi t ies. I t i s thentreated with nonfIammable siIicone to become

‘I bid., p. 58.

Glass foam insulation is a rigid, closed-cellfoam that is entirely resistant to water, fire,decay, vermin, and chemicals. [t can be madefrom recycled glass . Its R-value is 2.6 perinch. Present costs are about 20 times as high

‘J R Schwartz, President, Foil Pleat Inc., personalcommunication, January 1979.

‘°Foarrrg/ass /risu/ation (Baltimore, Md.: PittsburghCorning Product Literature, Publication No F1-132 (rev.),Apr-1 I 1 975)

Appendix A— Insulation ● 2 8 3

as the more common insulation materials. tions requiring its noncompressibil ity, 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-ent production capacity of the insulation in-dustry, the Ieadtime for new insulation manu-facturing facil it ies, and any roadblocks tolarge increases in production capacity. TableA-11 summarizes the data. Various projectionsof future insulation production capacity arenot included here because they are so depend-ent on what manufacturers decide to do in the

future. Decisions will depend on their percep-tions of the market at a given time, and thoseperceptions will depend to a large extent onGovernment actions to encourage energy con-servation and other future events. As an alter-native to existing projections, this section givesIeadtimes and constraints to capacity in-creases to illustrate just how fIexible the futurecan be.

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

The “present capacity” figures presentedhere must be regarded with some caution sincethe references did not always distinguish be-tween the amount of insulation produced in ayear and the amount that could be produced ifthe factory were running at fuII capacity. Sinceinsulation has been in short supply recently,factories have probably been operating closeto full capacity, and any differences are prob-ably not very great. Production capacitiesgiven include all the material produced, notjust that sold for residential use. This gives abetter idea of actual capacity for making thematerial. In several cases, the references didnot make clear whether they were presenting

total production or just residential insulation,so some figures in table A-11 may be less thanfull production capacity. Finally, most of thesefigures are for capacity in January 1977, andcapacity has been growing steadily since thattime

Fiberglass

Fiberglass insulation production is a high-technology, capital- intens ive industry. Thefour manufacturers are Owens-Corning Fiber-

‘‘ Porter-Hayden Company, personal communication,January 1979.


glas Corporation, Johns-Manville Corporation,Certain Teed Corporation, and Gebr. KnautWestdeutsche Gipswerke.12 Owens -Corn inghas about half of the fiberglass insulation mar-ket, and Johns-Manville has about a quarter.Even for an established firm, an additionalfiberglass plant can cost about $25 million. ’3“Industry estimates of the time required foradding an additional line to an existing plant isabout 12 to 18 months. A new plant would re-quire 24 to 36 months to become fully oper-ational once ground breaking has occurred.’” 4

Cellulose

It is fairly easy to get into the cellulose in-sulation manufacturing business, and manypeople are doing it. Between 70 and 100 newmanufactur ing companies were started in1 9 7 715 and by mid-1978 there were over 700companies in business. Most of these are verysmall businesses.

16 It is possible to get into

business for less than $10,000 with a smallmachine on the back of a truck, but somelarger manufacturers claim that it takes atleast $300,000 to set up a factory capable ofproducing cellulose that can meet safetystandards consistently.17

Concern is frequently expressed that shortsupplies of borax and boric acid, used as fireretardants, could constrain rapid growth in thecapacity of celIulose production. However, ifshortfalls are met with imports, capacity couldgrow rapidly. Furthermore, “several chemicalcompanies . . . are in the process of investigat-

‘2An Assessment of Thermal Insulation Materials, op.cit, p. 32.

‘ ‘R. Kurtz, U.S. Consumer Product Safety Commission,memorandum to H. Cohen, CPSC, on “Potential Effectsof CPSC Regulations Upon Supply, Demand, and Utilityof Home I nsu]ation: Initial Speculation, ” Dec. 29, 1977,p. 4.

“Report on Insulation: Supply, Demand, and RelatedIssues, Office of Conservation and Solar Applications,preliminary draft, prepared by the Task Force on Insula-tion (U.S. Department of Energy, May 1978), ch. 6, p. 6.

‘ “’Home Insulation Sales are Almost Too Hot, ” Busi-ness Week, September 1977, p. 88

“Report on Insulation, op. cit , p. 5‘ ‘R. Kurtz memo on “Potential Effects of CPSC Regula-

tions,” pp. 3-4.

ing different formulations requiring less boricacid. ” 8

Urea-Formaldehyde Foam

Urea-formaldehyde foam is produced at thehouse using a specially designed foam gun.Cons iderab le skill is required to apply thefoam properly. Poorly installed urea-formal-dehyde foam can shrink and crack within a fewmonths, and can release formaldehyde fumesfor many months. The l imited number oftrained installers could limit rapid expansionof the near-term market. 19

Most of the chemicals are produced by fourcompanies, and one of them, RapperswilI Cor-poration, reportedly has 80 percent of the U.S.market for urea-formaldehyde insulation .20The other major producers are Borden Chemi-cal, Brekke Enterprises, and C. P. ChemicalCompany. 21 Based on a projected tenfold in-crease in production within 2 years, 22 it ap-pearsrough

Boric

that the leadtime for new capacity “isy a year.

Boric Acid and Borax

acid and borax are used in the manu-facture of both cellulose and fiberglass insula-tion. I n the manufacture of fiberglass, borax isused to reduce the drawing temperature of thefibers to less than 1,0000 C as well as tostrengthen the fibers. In the production of cel-lulose, borax improves the fire-retardant capa-bilities of boric acid and reduces its acidity.Both chemicals have recently been reported tobe in short supply nationally. Therefore, pricesmay go up as more is imported.

Total U.S. boric acid production capacity in1978 was around 180,000 metric tons, of whichU.S. Borax and Chemical Corporation was re-sponsible for about 65 percent.23 Ker r -McGeeChemical Corporation and Stauffer Chemical

“An Assessment of Thermal Insulation Materials, o p .cit., p 3 4

“Report on Insulation, op. cit., p, 6,20Energy Users Report, Aug. 18,1977, 210:16,2’ An A s s e s s m e n t o f Therma/ /nsu/ation Materia/s, op.

cit., p 3622 I bid2‘ I bid , p 34.

Appendix A— Insulation ● 2 8 5

Corporation share the remainder of the pro-duct ion. The major foreign producers areFrance, U. S. S. R., Turkey, Chile, and Italy. In1977, the United States exported 33,000 metrictons and imported 13,000 metric tons.24

Boric acid has been used as an importantfire retardent chemical in cellulose insulation.Some cellulose manufacturers and chemicalcompanies are investigating fire-retardant for-mu [as that use less boric acid and borax.25

Dur ing 1977 , U .S . p roduct ion o f boronminerals and compounds was estimated to be1.3 million metric tons. Exports were 241,000tons and imports about 46,000 tons. The threeU.S. producers of borax are U.S. Borax andChemical Corporation, American Borate Cor-poration, and Kerr-McGee Chemical Corpora-tion. 26

Since 1975 there has been a growth in de-mand for borax and other berates attributableto increased demand for fiberglass, mineralwool, and celIulosic insulation. Current data isnot avaiIable on how much borax is used in themanufacture of these products. However, theBureau of Mines (BOM) estimates 35,000 tonsof borax and other berates were used to manu-facture cellulosic insulation

The real and potential health

n 1976.27 Current-

HEALTH

hazards as soc i -ated with various types of insulation materialshave attracted much attention. This sectionaddresses some of the major health-relatedproblems.

Fiberglass and Mineral Wool

It has been known for a long time that fiber-glass can produce eye and skin irritation. It isclassified by the Occupational Health andSafety Administration (OSHA) as a nuisancedust. Furthermore, fiberglass workers some-times experience respiratory tract irr itation

Iy, BOM is surveying the three borax producersto obtain specific end-use data on their sales tomanufacturers, Domestic shortages of boraxmay occur in the future “if a producer alters itsprocess to consume borax and produce addi-tional boric acid by using the borax it other-wise wouId have produced.”28

Concern over the possibility of a boric acidshortage led to the formation of an Inter-agency Task Force which pointed out four ob-vious opt ions fo r i nc reas ing supp ly . Theamount of minerals mined could be increased.This would not necessarily solve the problemas large amounts of berates are presently usedfor other products. A second option would beto increase refinery capacity and expand pro-duction of boric acid. This is seen as an unlike-ly response s ince long-term demand forberates is uncertain and boric acid refineriesare not easily convertible to other uses. Someof the berates now going elsewhere in themarket could be reallocated to boric acid pro-duction, or more boric acid could be im-ported .29 At present, market forces are re-sponding adequately to meet boric acid de-mand, so Federal intervention does not appearnecessary.

HAZARDS

characterized by bronchitis, rhinitis, sinusitis,pharyngitis, and/or laryngitis. These irritationsare caused by mechanical injury to the skinand mucous membranes by small glass fibersand are “considered to be transitory sincesymptoms disappear without treatment whenexposure to fiberglass is ended.”30

As there is a fairly well-established link be-tween asbestos and several types of cancer,31 anumber of researchers have been attempting

281 bid.29 I bid., pp. 4-5.‘“Memorandum by Dr. Rita Orzel, Acting Director,

Division of Human Toxicology and Pharmacology, Of-fice of the Medical Directorr Consumer Product SafetyCommission, 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 interna-tional, Publication No. N I H 79-1681, May 1978, p, 1,


to determine if other inorganic fibers act likeasbestos f ibers in contr ibut ing to cancer.Studies of the relationship between fiberglassor rock wool and cancer have produced mixedresults. Glass fibers surgically implanted in thelungs of rats have produced cancers, but theimplantation process is artificial and does notallow the natural cleansing actions of the lungto remove the fibers. 32 Several early studiesfound that workers in glass wool plants did nothave any higher cancer rates than similar per-sons who did not work with fiberglass. 33 T odate there is no evidence that fiberglass as nor-mally manufactured and used is related to theoccurrence of cancer in humans.

However, over the years, the average diam-eter of manufactured glass fibers has been de-creasing. In the case of the implanted fibers, itis the small diameter fibers (0.5 to 5 microns)that have caused the most concern.34 In the1930’s, the average fiber diameter of insulatingrock and slag wool and fiberglass was 15 mi-crons or more. Today, the average diameter is6 microns with a fraction of the fibers fallingbelow 3.35 Over the years, manufacturers havebeen changing the composition of the bindersand lubricants coating the fibers,36 so the fiber-glass handled by workers 30 years ago was notthe same material that is manufactured today.

32M. F. Stanton, “Fiber Carcinogenesis: Is Asbestos theOnly Hazard?” )ourna/ of the Nationa/ Cancer /nstitute,51 :633-636. Cited by J. Milne, “Are Glass Fibers Car-cinogenic to Man? A Critical Appraisal, ” British )ourna/o f I n d u s t r i a l M e d i c i n e , 33:47,

‘Jcrjteria for a R e c o m m e n d e d S t a n d a r d . . OCCLJPa-

tiona/ Exposure to Fibrous Class, prepared by Tabershaw-Cooper Associates, Inc., Publication No. NIOSH-77-I 52(National Institute for Occupational Safety and Health,April 1977), pp. 30-40.

“M. F. Stanton, “Some Etiological Considerations ofFiber Carcinogenesis, ” Biological Effects of Asbestos,Proceedings of a Working Conference, published by theInternational 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, Publ icat ion No.AA I-238 3I2384-1OO-TR-2 (U.S. Consumer Product SafetyCommission, December 1976), p, 9.

35J. W. Hill, “Health Aspects of Man-Made MineralFibres, A Review,” Ann. Occup. F/yg., 20:1 61-162

361 bid., p. 162.

Because the latency period for cancer canbe 20 to 50 years, there has been in sufficienttime to assess fully the effects of exposure tosmall glass fibers and the newer resin systems.Several American studies are underway, butthe resuIts are not in. 37

Until more studies and tests are completed,it seems prudent to minimize exposure to fiber-glass, especialIy where smalI particles areprevalent. Areas calling for special care in-clude:

. factories where fiberglass and fiberglassproducts are produced,

● handling during installation,● a i r ducts that couId bring fiberglass par-

ticles into the house, ands unwanted mater ials and debr is f rom

demolition or renovation of buildings.

Cellulose

Cellulose fiber appears to present no signifi-cant health problems. However, the boratesalts that are used to impart flame retardancyto the shredded paper can be toxic if ingested.The estimated lethal dose is 15 to 20 grams foradults and 5 to 6 grams for infants; young in-fants are part icular ly susceptible. Acuteborate exposure can affect the central nervoussystem and cause persistent vomiting and diar-rhea, followed by profound shock and coma.Borate salts can be absorbed through the skin.

Investigators have so far determined cellu-lose dust to be a nuisance. That is, it does nothave the potent ial to produce pathologicchanges However, as the handling of cellu-Ios ic mater ial can generate considerableamounts of dust, the user is advised to weargloves, cover up, and wear a mask.

37M Sloan, personal communication, ) anuary 1979.

Appendix A—Insulation . 287

Cellulose Plastics

Polystyrene

According to the Consumer Product SafetyCommission (CPSC), finished foam resins suchas polystyrene generally do not produce ad-verse health effects.38 Although Sax classifiespolystyrene as a “suspected carcinogen” whenin the body,39 there appears to be no hazardfrom normal use.

Polyurethane

Polyurethane foam is an isocyanate-polyol-resin blend to which flame-retardant chemi-cals are usually added. As the isocyanates aretoxic, extreme caution must be exercised dur-ing application. Appl icat ion must be per-formed by qualified persons using appropriatesafety equipment such as goggles, gloves, headcovers, and respirators.

It appears that the health hazards associ-ated with polyurethane foam are in the han-dling, mixing, spraying, and other applicationprocedures encountered in occupational situ-ations. Sax classifies polyurethane as a “sus-pected carcinogen.”40

Urea-Formaldehyde

Formaldehyde is a strong irritant. Exposureto its vapors can cause irritation of the mucous

membranes of the eyes, nose, and upper res-piratory tract. The level of irritation is a func-tion of the formaldeyhde concentration and ofindividual sensitivity. With increased concen-trations, these irritations become more pro-nounced and tolerable for onIy a few minutes.

Repeated exposure may increase sensitivityto formaldehyde. Skin problems have alsobeen reported after exposure to even smallamounts in the air.

After the curing process, odor normally dis-appears, but it has been known to recur— insome cases persisting for 10 to 12 months.Some consumers have complained of formal-dehyde released from wal lboard, part ic leboard, or fiberboard bonded with urea-formal-dehyde resin. The continued odor has requiredthat the wallboards be removed from the in-teriors of homes in some cases.

The safe application of this material re-quires a qualified person who knows how tohandle, mix, and use the chemicals involved.

Perlite and Vermiculite

No potential health hazards have been asso-ciated with the use of perlite or vermiculite asan insulation material. A DOE study indicatesthat both are nontoxic and odorless. ”

FIRE HAZARDS

Data on the fire hazards associated withvarious insulation materials are plentiful butsketchy. Most fire data identify only the firstmaterial ignited and do not indicate those in-stances where insulation may play a significantrole in the growth of a fire started by anothermaterial.

qaMemorandum by Dr. Rita Orzel, P. 3.39N. 1, Sax, D a n g e r o u s P r o p e r t i e s o f /ndustria/ Materi-

a/s, fourth cd., Van Nostrand Reinhold Co,, 1975, pp.1037-1038.

‘“I bid., p. 1038.

Fiberglass

Fiberglass itself is considered nonflammableuntil subjected to very high temperatures. Inflammability test procedures, however, flam-mable backing or vapor barrier materials areoften not included. In the manufacturing offiberglass, flammable oils and resins are in-troduced to reduce dust and solidify the in-sulation material. But often the flammabilitytests are performed on fiberglass that doesn’tcontain these organic materials. Additionally,

“An Assessment of Therma/ lrtsu/ation Materia/s, o p .cit., p 92.

. .


the absence of appropriate practices in themanufacture and installation of this materialcan increase the risk of fire and resultingsmoke inhalation.

CPSC has discussed the potential flammabil-ity and organic burden of fiberglass insulationwith representatives of Owens-Corning, JohnsManville, Certain Teed, and NBS and has con-cluded: 42

1.

2.

3.

4.

Most paperbacking (foil and kraft) on themarket today is fIammable.Most paperbacking is situated underneathbatts or blankets of fiberglass insulationa n d i s u n e x p o s e d t o l i k e l y i g n i t i o nsources. But NBS has indicated that iffiberglass is improperly instaIled (e.g.,faceup in an attic space) or left exposed(e.g., in a garage beneath the second storyof a house), it might be exposed to an igni-tion source.There is currently no requirement to testfiberglass insulation with paperbacking in-tact. Some manufacturers do test fiber-glass insulation with paperbacking intactand measure a higher flame spread thanfiberglass insulation alone.Phenolic binder, although combustible,does not promote flame spread in fiber-glass insulation.

Cellulose

According to a petition filed by the DenverDist r ict Attorney’s Consumer Off ice withCPSC, several fires have been observed and re-lated to cellulosic insulation. Factors believed

‘*Paul Lancer, U.S. Consumer Product Safety Commis-sion, memorandum to Bernard Schwartz, CPSC, on“Home Insulation,” Jan. 31,1977

by the petitioner to be related to the fires in-clude: 43

1.

2.

3. .

4.

5.

6.

7.

Poor quality control, which contributes towide fluctuations in fire retardancy.Inadequate knowledge about levels of fireretardancy necessary for proper protec-tion.Uncertainty about the permanency of theflame-retardant chemicals.Certain fire retardants utilized and the ex-tent to which sublimation and moistureaffect the permanency of these fire re-tardants as the insuIation ages.

Failure to add proper amounts of fire re-tardants at the manufacturing or installa-tion stages, coupled with the absence ofonsite testing.Variance of flame spread requirementsand, the lack of smoldering-resistance re-quirements.Lack of uniform test methods, hence un-satisfactory flame spread and smolderingread i rigs.

This petition was rejected by CPSC on March5,1979.

Improper installation of cellulose insulationon or near electrical wiring, recessed lightingfixtures, attic furnaces, heating ducts, andother heat-bearing and heat-producing ele-ments can cause fires. The absence of regula-tions by industry or Government is to be noted.There are no standard test methods used fordetermining the toxicity of combustible prod-ucts.

Other Materials

Polystyrene and polyurethane foams arecombust ible; rock wool, vermicul i te, andperlite are not.

‘ ] Petition filed by the Denver District Attorney’s Of-fice of Consumer Affairs with the U.S. Consumer ProductSafety Commission, Oct. 8,1976, pp. 3-4

Appendix A— Insulation . 289

MATERIAL STANDARDS AND ENFORCEMENT

Test imony before Congress , the FederalTrade Commiss ion, and the CPSC hasdemonstrated a great need for new and im-proved mater ials s tandards and test pro-cedures to ensure the efficacy, durability, andsafety of residential insulation materials.

The General Services Administration (GSA)and the ASTM are the principal bodies respon-sible for the testing of insulation materials andthe promulgation of materials standards. Withone exception, however, these standards arenot mandatory for residential insulation.

GSA Standards and Specifications

GSA sets standards and specifications forgoods purchased directly by the Federal Gov-ernment. This program encompasses 4,500 Fed-eral specifications and 1,500 standards. Includ-ed in this program are specifications for cellu-Iosic or wood fiber loose-fill insulation (HH-l-515C), m inera l f ibe r loose- f i l l i n su la t ion(H H-I-1030), and mineral fiber blankets andbatts (H H-I-521 ).

These specifications, however, do not have adirect application to thermal insulation pur-chased by consumers. They apply only to Fed-eral procurement of thermal insulation forGovernment-owned bui ld ings, etc. Never-theless , i t i s the pract ice of many manu-facturers of insulation for residential use toclaim that their products meet current GSAspecifications. T h e r e i s n o e n f o r c e m e n tmechanism to discourage false claims.

GSA began in 1976 to upgrade its insulationspecifications. In November 1977 it issued itsproposed new standards for insulation pur-chased by the Federal Government.

Some of the most important changes pro-posed by GSA were contained in its proposedspecifications for loose-filI cellulose insulation(H H-I-515 D). For example, the new specifica-tions include a requirement concerning fungalgrowth, as it is now recognized “that this con-dition could cause the degrading of the ther-mal properties of the insulation by destroying

the structure of the fibers. It could provide asource of fungal spores which might penetratethe living area and cause health problems. Itcould increase the corrosive action of the in-sulation material through the accumulation ofmetabolic products.”44

Other changes include a requirement thatall “cellulose tests be conducted at the prod-uct’s settled density, i.e., the density of theproduct that would be expected to be found inthe field sometime after installation.” 45 Th i swould eliminate the current practice of somecellulose manufacturers of having their prod-ucts tested at an arbitrary density to enhancetheir chances of passing the corrosion test orto obtain a better fire safety test result. Thenew standard for cellulose also includes asmoldering test that is not included in the HH-1-515C specifications. This test is to determinewhether cellulose wil l continue to smolderbeyond the area of an initial heat source, suchas a hot electrical wire or a recessed lightingfixture.

Further revisions to the existing HH-I-515Cspecifications for cellulose insulation includenew tests for flammability. The GSA based itsdecision to switch to a radiant panel flam-mabiIity test and to adopt a smoldering test ona number of factors:

1. The poor relationship between the Steinen

2

3

4

tunnel flammability test and an actualattic situation.Failure of the Steinen tunnel test to ad-dress a small open flame or a smolderingignition source.Unsuitability of the Steinen tunnel test forlow-density materials such as cellulose.N B S f i r e da ta tha t demonst ra te tha tcovered electrical or heating devices orwiring hot spots may cause ignition of ex-posed insulation, factors which are notsimulated in the Steinen tunnel test.

“U.S. Congress, House Committee on Interstate andForeign Commerce, Subcommittee on Oversight and ln-vestigations, Home /nsu/ation, 95th Cong., 2d sess., Apr.26, 1978, p. 24.

“lb Id,


DOE estimates that while 80 percent of themanufacturers can pass the existing GSA Cspecifications, perhaps only 10 to 30 percentcan pass the new version. The president of theSociety for the International Cellulose Insula-tion Manufacturers (SICIM) disagrees. It wasreported that most of the SICIM member com-panies recently passed both the radiant paneland smoldering tests performed by CertifiedLaboratories of Dalton, Ga. However, thesetests appear to be silent on the manufacturers’ability to meet the D standard if the fire-retard-ant formulae were changed.46

In June 1978, GSA issued the new HH-I-515Dspecifications for Ioose-fi l I cellulose insula-tion. They reflect only slight alterations to theoriginally proposed specifications. The pro-posed specifications for mineral wool, whichinclude s imi lar test ing requirements, havebeen resubmitted for additional comments.

Enforcement of GSA StandardHH-I-515C for Residential Application

As discussed earlier, there are almost nomandatory performance standards for residen-tial insulation. One exception, however, a p -plies to the most recent enforcement of the“C” standard for cellulose insulation.

The Interim Consumer Product Safety RuleAct of 1978, which establishes an interim con-sumer product safety standard, went into ef-fect September 8, 1978. Under this Act, CPSCwill adopt the requirements for flame resist-ance and corrosiveness as set forth in GSA’sHH-I-515C specifications for cellulose insula-tion. The “C” standard is to be enforced in thesame manner as any other consumer productsafety standard.

A c c o r d i n g l y , a n y c e l l u l o s e i n s u l a t i o nmaterial that is produced or distributed forsale to the consumer is to have a flame spreadrating of 1 to 25, as such rating is set forth inGSA’s specification HH-I-515C. Each manufac-turer or private labeler of cellulose insulationis required to include on any container of cel-lulose insulation a statement indicating that

“Ibid., pp. 25-26

the material meets the applicable minimumFederal flammability standard. The statementmust also indicate that the standard is basedon laboratory tests that do not reflect actualconditions in the home.

Until a final consumer product safety stand-ard takes effect, CPSC will incorporate into theinterim safety standard for cellulose insulationeach revision superseding the requirements forflame resistance and corrosiveness as promul-gated by GSA.

The adoption of the “C” standard by CPSCthus marks the first federally supported ini-tiative to protect the consumer against varioushazards associated with cellulose insulation.At this writing, however, it is difficult to deter-mine whether other thermal insulation materi-als will be covered by the Interim ConsumerSafety Rule Act of 1978.

Problem Areas in Materials Testingand Standards

One of the major bodies responsible for thedevelopment of materials testing and stand-ards is ASTM Committee C16 on Thermal andCryogenic Insulation Materials. The commit-tee was established by the American Manufac-turing Industry about 40 years ago. The devel-opment of ASTM standards is based on “con-sensus” documents, which reflect the views ofthe “manufacturer,” “user,” and “general in-terest members. ” After a standard is produced,it is usually reviewed every 5 years and revisedas current technology and knowledge dictates.One criticism of this process is that the gesta-tion period for a standard is at times too long.

Many testing methods are currently beingrevised or discarded in l ight of the criticalproblems now appearing. Given the numberand variety of testing methods and standards,only general comments will be offered in thisdiscussion.

Although a number of adequate testingmethods do exist for determining the mechani-cal, thermal, and physical performance char-acteristics of a material under laboratory con-ditions, there is an immediate need for the ex-tension of this knowledge to real life condi-

Appendix A— Insulation . 291

tions and for complete systems. That is, the in-terrelationships between materials and overallsystem performance must be investigated.

The development of new test methodstechnical revis ions to ex is t ing methodslengthy and expensive and until recently has

oris

been beyond the means of any organizationoutside of the major manufacturers and Gov-ernment bodies. Given the existence of newtesting needs, it is argued by some that in-creases in public funding will be necessary tosupport the level of effort that is needed in ashort time (5 to 10 years), and to develop testmethods that can be used in actual field condi-tions.

Another problem has been the absence of ageneral set of testing procedures that pertainto all materials. As is often the case, materialsare compared with each other based on theresults of di f ferent test methods used toevaluate their properties. It becomes impor-tant, therefore, that material standards containthe correct and relevant test methods andspecifications.

Two of the immediate concerns about mate-rials testing are the adequacy of organizations

currently available to undertake the volume oftesting and evaluation that will be required inthe future, and the reliability ofsuch organizations can obtain.to be great dissatisfaction infield over these factors.

the results thatThere appearsthe insulation

Widely divergent claims are made aboutmaterial properties, such as thermal perform-ance. In some cases, it has been found thatsuch claims are made with no physical basis. Ingeneral, however, the common view is that thetest methods are not at fault; rather, someorganizations make unsubstantiated perform-ance claims. Moreover, equipment or ap-paratus for testing has been designed that doesnot meet specified guidelines. I n other cases,the testing technique employed is often notthe appropriate technique for the material. Inview of these concerns, the Cl 6 Committee inmid-1 976 recommended to the Department ofCommerce that a voluntary laboratory accred-itation program be established in order toresolve some of the current problems of mate-rials testing and standards.

Appendix B

Thermal Characteristics of Single-FamilyDetached, Single-Family Attached, Low-RiseMultifamily, and Mobile Homes—1975-76by the National Association of Home BuildersResearch 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 ofmobile home units built July 1976 through June 1977.

Scope and Method

In the last half of 1976, the National Associa-tion of Home Builders (NAHB) Research Foun-dation conducted a survey of the builder mem-bers of NAHB to determine construction prac-tices for homes and apartments built in 1975and 1976. Included in the survey were ques -tions on general characteristics, thermal char-acteristics, and specific material use practices.Data were summarized by nine (9) census re-gions. Responses by building type was as fol-lows:

Building Type Number of UnitsSingle-family detached 112,942Single-family attached 12,990Low- r ise mul t i f ami ly 44,960

In addition, a survey of mobile home ther-mal and general characteristics was conductedin the summer of 1977. Response was receivedfor almost 175,000 units, two-thirds of whichwere “single-wide” units and one-third“double-wide” units. This represented about60 percent of all mobile home units built dur-ing that period.

1975-76 SINGLE-FAMILY DETACHED UNITS

This sect ion contains character is t ics of Included are tables which show national usealmost 113,000 single-family detached homes of insulation by house price and size.built in 1975-76, summarized by nine censusregions.

292

Single-Farnily Detached Housing Units

1.

2 .

3.

4.

5.

NewE n g l a n d

Number of Stories (% by r e g i o n )

O n e s t o r y 35Two story 31B i - leve l 30Spl i t leve l 4

Foundation Type (% by region)

Basement 67Partial basement 29Crawl space 2Slab 2

EastMid- North

A t l a n t i c C e n t r a l

34 4137 2921 14

8 16

68 5316 21

8 118 15

Floor Area By Type (averages by r e g i o n )

O n e s t o r y 1 , 2 8 0 1 , 4 2 0 1,500Two story 2,010 2,100 2,110B I - l e v e l 1,710 1,685 1,660S p l i t l e v e l 1,860 1,820 1,860Overall average 1,658 1,760 1,757

A v e r a g e S e l l i n g P r i c e ( a v e r a g e s b y r e g i o n )( I n c l u d i n g l o t )

W e s tN o r t h

C e n t r a l

46122814

8115

22

1 , 4 9 02,1101,6801,8501,667

41,30060,50045,50052,20046,3o6

Price Per Square Foot (averages by region)

One story 31.1 29.2 27,5 27.7Two story 29.0 28.6 29.1 28.7Bi-level 25.7 26.6 27,2 27.1Sp l i t l e v e l 26.6 26.8 28.3 28.2All h o u s e s 28.5 28.2 28.1 27.8

EastS o u t h s o u t h

A t l a n t i c C e n t r a l M o u n t a i n P a c i f i cU.S.

T o t a l

1975-76 HOUSlNG CHARACTERISTICSSingle-Family Detached Housing Units

6. Size In Increments200 SF-% By Region

Less than 800800 - 9991000 - 11991200 - 13991400 - 15991600 - 17991800 - 19992000 - 21992200 - 23992400 - 25992600 - 27992800 and more

of

7 . Insu la t ion (% by reg ion )

NewEngland

Exterior Wall

None oLess than R - 7 oR-7 0.4R - n 58.2R-13 35.6R-19 4.5Other 1.3

EastMid- North


East WestSouth South South

At lant ic Centra l Centra l Mountain Paci f ic

1975-76 HOUSING CHARACTERISTICSSingle-FamiIy Detached Housing Units

East West East WestNew M i d - N o r t h N o r t h S o u t h S o u t h S o u t h Us.

E n g l a n d A t l a n t i c C e n t r a l C e n t r a l A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c T o t a l

7. (continued)

Cei l ing

NoneR-7R-11R-13R-19R-22R-25R-26R-30R-31

More than R-31Other

B e t w e e n F l o o r Joists (% of all h o u s e s )

63.11.9

18.56.58.91.3

0.60.4

65.71.1

14.37.7

11.2.0

1.43.86.0

23.651.15.31.6

75.01.8

16.82.53.60.3

75.7 99.14.4 0.111.5 0.44.3 0.14.1 0.3

0 0

5.6 0.70.4 0.30.3 2.513.4 12.642.8 80.922.9 0.91.0 00.2 020.3 0.81.1 0.31.9 0.40.1 0.4

88.3 88.9 80.10.4 1.1 1.44.1 7.3 11.20.9 0.3 2.66.2 1.3 4.20.1 1.1 0.5

IIU

1975-76 HOUSING C H A R A C T E R I S T I C SS i n g l e - F a m i l y D e t a c h e d H o u s i n g U n i t s

E a s tNew M i d - N o r t h

E n g l a n d A t l a n t i c C e n t r a l

E a s t W e s tS o u t h S o u t h

C e n t r a l C e n t r a l M o u n t a i n P a c i f i c

1975-76 HOUSING CHARACTERISTICS S i n g l e - F a m i l y D e t a c h e d H o u s i n g U n i t s

8. H e a t i n g / C o o l i n g% by Type

b y R e g i o n

H e a t i n g E q u i p m e n t

G a s w a r m a i rE l e c t r i c w a r m a i rO i l w a r m a i rG a s h o t w a t e rO i l h o t w a t e rHeat pumpE l e c . b a s e b o a r d

o r r a d i a n tc e i l i n g

S o l a r

H e a t i n g F u e l

GasE l e c t r i cOilS o l a r

C o o l i n g E q u i p m e n t

NoneC e n t r a lHeat pumpE v a p o r a t i v e c o o l e rW i n d o w o r w a l l

NewEngland

E a s tM i d - N o r t h


WestN o r t h

C e n t r a l

71122106

80

722620

23.370.06.00.60.1

EastSouth South

A t l a n t i c C e n t r a l M o u n t a i n P a c i f i c

5915o20

15

90

613900

47.224.415.013.4

o

6421oio2

12o

653500

65.528.92.03.30.3

U s .T o t a l

4129522

13

80

435070

36.746.913.52.30.6

lfu

1975-76 HOUSING CHARACTERISTICS

Single-Family Detached Housing Units

NewE n g l a n d

9. Window Glazing% by Region

S i n g l e g l a z e 37.6S i n g l e w / s t o r m 2 5 . 3I n s u l a t i n g g l a s s 36.9I n s u l . w / s t o r m 0.2

10. Window Square Feetby R e g i o n

S i n g l e g l a z e 81.7Single w/storm 55.0Insulating glass 80.3Insul. w/storm 0.5

Totals 217.5

11. Sliding Glass Doors

Sliding glass doorsNumber per unit 0.88S q u a r e feet per uni t 35 .2

1 2 . E x t e r i o r D o o r s ( % b y r e g i o n )( E n t r a n c e )

N o t i n s u l a t e d 41.0Insulated 59.0



26.621.650.01.7

47.838.789.83.1

179.4

1.0240.8

16.183.9

W e s tN o r t h

C e n t r a l

14.340.642.22.9

23.466.971.04.9

166.2

0.9337.2

46.153.9

E a s t W e s tS o u t h S o u t h S o u t h

A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c

58.815.525.60.1

105.425.844.8

0

176.0

0.8935.6

69.630.4

49.622.726.7

0

84.135.141.7

0

160.9

0.6827.2

69.230.8

80.212.17.7

0

123.416.411.1

0

150.9

0.8433.6

78.821.2

2 2 . 622.753.90.8

49.755.192 .7

1 .2

198.7

1.0040.0

56.543.5

U.S.Total

44.020.035.0

1.0

82.032.656.9

2.1175.6

0.9538.0

57.942.1

13. Insulation By Priceand By Size

Exterior Wall Insulation

Price Range

Less than $30,000$30,000- 34,99935,000 - 39999940,000 - 44,99945,000- 49,99950,000 - 54,99955,000 - 59,99960,000 - 64,999

$65,000 and over

S i n g l e - F a m i l y D e t a c h e d H o u s i n g U n i t s

I n s u l a t i o n P e r c e n tL e s s

N o . o f U n i t s None Than R 7 R7 R11 R13 R19— —

7 , 2 5 21 7 , 1 2 620,72218,83714,26511,5127,0725,0639,282

0.80.1

00.1

00

0.40.20.2

0.90.93.31.31.01.30.60.90.6

71.876.267.069.770.073.367.472.465.8

C e i l i n g I n s u l a t i o nM o r e T h a n

P r i c e R a n g e None R7 R11 R13 R19 R22 R25 R26 R30 R31

L e s s t h a n $ 3 0 , 0 0 0$30,000- 34,99935,000 - 39,99940,000 - 44,99945,000 - 49,99950,000 - 54,99955,000 - 59,99960,000 - 64,999$65,000 and over

0.5 0.7 2.5 21.1 52.51.1 0.3 6.o 18.8 52.30.7 0.7 6.9 14.7 47.91.6 0.5 4.3 20.1 55.81.0 1.4 2.3 16.1 54.71.1 3.4 2.2 25.9 38.41.0 0.2 2.8 25.2 37.61.0 0.3 3.6 22.9 53.21.4 1.2 2.2 19.9 51.4

R31

O t h e r

0.60.62.40.90.71.00.50.70.5

Other

0.52.91.90.23.12.01.60.11.6

S i n g l e - F a m i l y D e t a c h e d H o u s i n g U n i t s

13. (continued)

Exterior Wall InsulationI n s u l a t i o n P e r c e n t

Size Range (SF)

L e s s t h a n 1 0 0 01 0 0 0 - 11991200 - 13991400 - 15991600 - 17991800 - 19992000 - 21992200 - 23992400 - 25992600 - 27992800 and over

C e i l i n g i n s u l a t i o n

S i z e R a n g e ( S F )

L e s s t h a n 1 0 0 01 0 0 0 - 11991200 - 13991400 - 15991600 - 17991800 - 19992000 - 21992200 - 23992400 - 25992600 - 27992800 and over

. .

R 1 3

2 2 . 11 8 . 32 1 . 41 8 . 91 4 . 12 0 . 42 2 . 72 2 . 13 2 . 91 2 . 01 6 . 0

R26

22.822.025.015.121.824.120.024.922.331.7

R 3 0

R-19 Other2.2 0.5

R31

M o r eThan

R31

23.117.013.912.99.8

13.513.16.810.010.712.3

0.21.32.61.91.22.81.82.23.11.62.3

0 . 20.80.40.60.50.10.20.30.90.22.4

2 . 43 . 86 . 02 . 32 . 62 . 9

0.70.80.50.60.10.71.21.10.91.70.1

0.72.62.03.63.12.91.83.14.01.96.4

1.71.91.92.11.21.92.51.90.90.40.1

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 s ing le - fami l y a t tached

h o u s i n g u n i t s .

NewEngland

1. Type of Unit - Percentb y R e g i o n

Town HousesT w o F a m i l y U n i t sT h r e e F a m i l y U n i t sF o u r F a m i l y U n i t s

2 . F o u n d a t i o n T y p e s -% b y T y p e b y R e g i o n

Town Houses

F u l l B a s e m e n tP a r t i a l B a s e m e n tC r a w l S p a c eS l a b

T w o F a m i l y U n i t s


T h r e e F a m i l y U n i t s


F o u r F a m i l y U n i t s

B a s e m e n tP a r t i a l B a s e m e n tC r a w l S p a c eS l a b

5 8 . 21 5 . 1

6 . 42 0 . 3

2 9 . 70

5 2 . 417.9

100.0000

11.10

88.;

7.00

2.390.7



6 1 . 219.14.515.2

61.42.4

23.113.1

42.86.715.235.3

22.424.542.910.2

1.87.2

91.:

E a s tS o u t h S o u t h


68.8

W e s tS o u t h

C e n t r a l

76.620.80.91.7

0.94.4

13.181.6

000

100.0

000

100.0

000

100.0

M o u n t a i n P a c i f i c

46.1 77.724.7 14.4

1.3 1.227.9 6.7

34.54.3

28.532.7

26.46.46.8

60.4

0

76.;23.1

6.70.7

14.278.4

2 0 . 60

2 0 . 159.3

00

100.0o

00.513.785.8

3. Number of Stories% by Type by Region

Town Houses

O n e S t o r yT w o S t o r yT h r e e S t o r yMore than 3

Two Family Units

One StoryTwo StoryThree StoryMore than 3

Three Family Units

One StoryTwo StoryThree StoryMore than 3

Four Family Units

One StoryTwo StoryThree StoryFour Story

NewE n g l a n d

10.859.529.7

0

4.780.514.8

0

29.670.4

00

25.672.12.3

0

M i d -A t l a n t i c

15.683.2

1.20

6.071.222.8

0

0000

14.385.7

00

E a s tN o r t h

C e n t r a l

11.586.12.4

0

41.059.0

00

49.051.0

00

4.895.2

00

W e s tN o r t h

C e n t r a l

3 2 . 538.626.8

2.1

51.522.426.1

0

47.552.5

00

92.77.3

00

E a s tS o u t h S o u t h


6.084.88.70.5

18.581.5

00

100.0000

77.222.8

00

21.469.29.4

0

36.110.753.2

0

0000

13.359.127.6

0

West

S o u t hC e n t r a l M o u n t a i n P a c i f i c

17.372.99.8

0

75.724.3

00

85.714.3

00

61.538.5

00

44.555.5

00

38.857.24.0

0

76.923.1

00

36.o59.05.0

0

25.072.82.2

0

72.523.41.22.9

27.372.7

00

34.265.8

00

U s .T o t a l

1 7 . 674.67.60.2

48.039.511.90.6

47.552.5

00

38.457.73.9

0

4 . F i n i s h e d F l o o r A r e a -% b y R e g i o n

S q u a r e F o o t a g e

L e s s t h a n 8 0 08 0 0 - 9 9 91000 - 11991200 - 13991400- 15991600 - 17991800 - 19992000 - 2199More than 2200

5. W i n d o w G l a z i n g -% b y R e g i o n

“ R e g u l a r ” W i n d o w s

S i n g l e G l a z eS i n g l e w / S t o r mI n s u l a t e d G l a s sI n s u l . w / S t o r m

“ P i c t u r e ” W i n d o w s

S i n g l e G l a z eS i n g l e w / S t o r mI n s u l a t e d G l a s sI n s u l . w / S t o r m



W e s tN o r t h

C e n t r a l

1.421.347.110.011.43.31.21.92.3

22.127.848.41.7

25.330.644.1

0



o1.0

21.956.11.55.212.90.90.5

40.645.913.5

0

36.048.115.9

0

017.827.127.111.05.84.86.4

0

28.62.6

68.80

12.85.6

81.60

6. Window Square Feetb y R e g i o n

S i n g l e g I a z eS i n g l e w i t h s t o r mI n s u l a t e d g l a s sI n s u l . w i t h s t o r m

T o t a l s7 . S l i d i n g G l a s s D o o r s

S . G . D . p e r u n i tS q u a r e f e e t p e r

u n i t

8 . E x t e r i o r D o o r s- P e r c e n tb y T y p e b y R e g i o n

N o t i n s u l a t e di n s u l a t e dS t o r m d o o r s

9. Exterior WallStructure% by Region

First Floor2x4, 16’’o.c.2x4, 24’’o.c.2x6, 24’’o.c.Steel studConcrete blockLoad-bearing

brickOther


A t l a n t i c C e n t r a I

W e s tN o r t h

C e n t r a l

1 8 . 92 6 . 55 6 . 8

1 . 41 0 3 . 6

0 . 9 7

3 8 . 8

3 7 . 86 2 . 22 6 . 8

9 0 . 89 . 2

000

00



9. (Continued)

U p p e r F l o o r s2 x 4 , 1 6 ’ ’ o . c .2 x 4 , 2 4 ’ ’ o . c .2 x 6 , 2 4 ’ ’ o . c .S t e e l s t u dC o n c r e t e b l o c kL o a d b e a r i n g

b r i c kO t h e rN o t a p p l i c a b l e

1 0 . E x t e r i o r W a l lS h e a t h i n g

None1 / 2 ” f i b e r b o a r d25/32 “1 / 2 ” p l y w o o d3/8” IIAlum. foil faced1/2” gypsumboard3/4” polystyrene1" II1 “ u r e t h a n e1 x b o a r d sO t h e r


A t l a n t i c C e n t r a lSouth

A t l a n t i c



11. Insulation-Percentby Locationby Region

C e i l i n g

R7R9RllR13R19R22R25R26R30More than R30Other

Exter io r Wa l ls

NoneR7R11R 1 3R 1 9

Between FloorJ o i s t s

None2 - 1 / 4 ’ ’ b a t t s R - 7 2 . 73 - 1 / 2 ” u R - 1 1 7 . 63 - 5 / 8 1 1 ~ R - 1 3 3 1 . 86 “ II R-19 13.7Other o

W e s t

SouthCentral Mountain P a c i f i c

1 1 . ( C o n t i n u e d )

B a s e m e n t W a l l s

N o n e2 - 1 / 4 ” b a t t s R - 73 - 1 / 2 " II R - 1 13 - 5 / 8 " !1 R - 1 36 “ tl R - 1 9O t h e r

C r a w l S p a c eW a l l sN o n e2 - 1 / 4 ” b a t t s R - 73 - 1 / 2 " II R - 1 13 - 5 / 8 " II R - 1 36 “ II R - 1 9Other

Slab Perimeter

NoneOne-inchTwc-inchOther

Change From 1975

No changeIncreasedDecreased

EastM i d - N o r t h

A t l a n t i c C e n t r a lS o u t h

A t l a n t i c

83.27.19.7

000

94.52.41.5

01.10.5

14.376.20.68.9

38.761.3

0



97.60000

2.4

97.600

2.400

96.93.1

o0

89.810.2

0

86.12.83.85.8

01.5

63.80

28.55.9

01.8

62.537.5

00

40.759.3

0

U.S.T o t a l

1 2 . H e a t i n g / C o o l i n g% by Type

b y R e g i o n


NoneW a r m a i r f u r n a c eH o t w a t e r s y s t e mH e a t p u m pElec. baseboard

or rad iantc e i l i n g

Heating Fuel

GasE l e c t r i co i l

Cooling Equipment

N o n ePort of heating

equipmentSeparate from

heatingHeat pumpEvaporative

c o o l e r

C o o l i n g F u e l

GasE l e c t r i cNone

NewE n g l a n d— .

o24.127.55.2

43.2

2.669.727.7

59.0

26.0

9.85.2

0

41.:59.0



o57.12.8

10.2

29.9

35.946.417.7

26.6

50.5

12.710.2

0

3.669.826.6

i.274.50.1

22.0

2.2

43.056.70.3

10.4.

66.7

0.922.0

0

8.780.910.4

SouthA t l a n t i c

E a s tSouth

Central

0.682.7

011.5

5.2

37.562.5

0

1.0

78.1

9.411.5

0

099.01.0

M o u n t a i n P a c i f i c——

0.267.30.815.5

16.2

67.432.6

0

37.8

i4.9

30.115.5

1.7

0.661.637.8


1975-76 LOW-RISE MULTIFAMILY UNITS

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

dwelling units.

1 . T y p e U n i t s - P e r c e n tb y R e g i o n

E f f i c i e n c i e sOne BedroomTwo BedroomT h r e e o r m o r e B d r m .

2 . F o u n d a t i o n T y p e s -P e r c e n t b y R e g i o n

N o B a s e m e n tL i v e - i n B a s e m e n tL i v e - i n / U t i l i t y B s m tU t i l i t y B a s e m e n t

3. F i n i s h e d F l o o r A r e a -P e r c e n t b y R e g i o n

S q u a r e F o o t a g e

L e s s t h a n 4 0 04 0 0 - 5 9 96 0 0 - 7 9 98 0 0 - 9 9 91 0 0 0 - 1 1 9 91 2 0 0 a n d m o r e

E a s t W e s t E a s t W e s tNew M i d - N o r t h N o r t h S o u t h S o u t h S o u t h

E n g l a n d A t l a n t i c C e n t r a l C e n t r a l A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n p a c i f i c

2 1 . 23 5 . 43 7 . 5

5 . 9

73.112.24.3

10.4

0.921.923.132.714.96.5

77.65.11.0

16.3

015.526.830.419.67.7

4.638.250.56.7

75.96.41.0

16.7

5.424.764.75.2

52.730.20.416.7

2 . 54 . 6

1.01.8

25.534.820.216.7

2.925.061.011.1

95.03.71.10.2

8.344.039.08.7

98.2

1.8

2 . 23 7 . 250.110.5

61.529.50.88.2

1.613.233.22 7 . 316.68.1

1 1 . 53 3 . 84 8 . 9

5 . 8

92.62.51.73.2

1.718.347.825.29.57.5

U s .T o t a l

6.038.147.08.9

82.87.72.17.4

0.810.033.731.116.87.6

4 . W i n d o w G l a z i n g -P e r c e n t b y R e g i o n

S i n g l e G l a z eS i n g l e w / S t o r mI n s u l a t e d G l a s sI n s u l . w / S t o r m s

5. Window Square Feetby Region

S i n g l e G l a z eS i n g l e w / S t o r mI n s u l a t e d G l a s sI n s u l . w i t h S t o r m s

NewE n g l a n d

6.333.460.3

0

4.329.444.9

0

E a s t W e s t E a s t W e s tM i d - N o r t h N o r t h S o u t h S o u t h S o u t h

A t l a n t i c C e n t r a l C e n t r a l A t l a n t i c C e n t r a l C e n t r a l

4 . 25 0 . 64 5 . 2

0

4.951.144.0

0

6. Entrance Doors -Totals 78.6 100.0

P e r c e n t b y R e g i o n

U n i t E n t r a n c e

N o t I n s u l a t e d 50.1Insulated 49.9

3 4 . 16 5 . 9

0.31 2 . 56 6 . 7

5 2 . 048.0

19.535.033.412.1

53.746.3

43.648.28.2

0

3 0 . 86 9 . 2

86.50.612.9

0

5 1 . 20.37.7

0

59.2

89.410.6

98.90.60.5

0

9 7 . 22.8

M o u n t a i n P a c i f i c

79.30

20.70

90.023.7

00

U.S.T o t a l

. .

NewE n g l a n d

7. Exterior Wall Sheathing% by Type by Region

None1 / 2 ” f i b e r b o a r d2 5 / 3 2 ” f i b e r b o a r d1 / 2 ” p l y w o o d3 / 8 ” p l y w o o dA l u m . f o i l - f a c e d b o a r d1 / 2 ” g y p s u m b o a r d3 / 4 ” p o l y s t y r e n ei “ p o l y s t y r e n e3 / 4 ” u r e t h a n el “ u r e t h a n eO t h e r

8 . I n s u l a t i o n - P e r c e n t b yL o c a t i o n b y R e g i o n

C e i l i n g I n s u l a t i o n

2 - 1 / 4 ” b a t t s R - 73 - 1 / 2 ” b a t t s R - 1 13 - 5 / 8 ” b a t t s R - 1 36" batts R - 1 96 - 1 / 2 ” b a t t s R - 2 28 - 1 / 2 ” b a t t s R - 2 69 - 1 / 2 ” b a t t s R - 3 04 " l o o s e f i l l R - 9

5 “ I o o s e f i l l R - 1 16 “ l o o s e f i l l R - 1 38 - 3 / 4H l o o s e f i l l R - 1 91 0 ” I o o s e f i l l R - 2 21 2 ” l o o s e f l l l R - 2 51 3 - 3 / 4 ” I o o s e f i l l R - 3 01 4 ” I o o s e f i l l R - 3 1O t h e r

E a s tN o r t h

C e n t r a l

W e s tN o r t h

C e n t r a l


A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i cU.S.

T o t a l

18.935.13.86.96.31.1

24.00.70.91.00.50.8

0.50.2

EastNew Mid- North

E n g l a n d A t l a n t i c C e n t r a l

8. Exterior Wall Insulation (continued)

None2 - 1 / 4 ” b a t t s , R - 7

3 - 1 / 2 " b a t t s , R - 1 13 - 5 / 8 ” b a t t s , R - 1 36" batts, R-19Pleated aluminumOther

I n s u l a t i o n B e t w e e n J o i s t s

None2 - 1 / 4 " b a t t s R - 73 - 1 / 2 " b a t t s R - n3 - 5 / 8 " b a t t s R - 1 36" batts R-19O t h e r

Crawl Space W a l l s

None2 - 1 / 4 ” b a t t s R - 73 - 1 / 2 ” b a t t s R - 1 13 - 5 / 8 ” R - 1 36 " b a t t s R - 1 9O t h e r

I n s u l a t i o n B a s e m e n t W a l l s

None2 - 1 / 4 ” b a t t s R - 73 - 1 / 2 ” b a t t s R - n3 - 5 / 8 ” b a t t s R - 1 36 " b a t t s R - 1 9O t h e r

00

40.958.4

00

0.7

70.71.4

14.69.63.7

0

55.810.019.41.1

10.13.6

96.50.51.80.90.3

0


A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c— .

2 1 . 11 5 . 23 2 . 3

9 . 28 . 9

01 3 . 3

6 6 . 52 . 6

3 0 . 70 . 2

00

9 4 . 50 . 94 . 40 . 2

00

8 7 . 91 . 2

1 0 . 200

0 . 7

02.7

93.31.22.4

00.4

59.6029.51.49.5

0

96.60

2.50.9

00

94.20

5.8000

8. (continued)Practice Change

from ’75

No changeIncreased

Perimeter Slab-on-grade

NoneOne InchTwo InchO t h e r

9 . H e a t i n g / C o o l l n g% b y T y p e b y R e g i o n

H e a t i n g B y E q u i p m e n t

C e n t r a l b o i l e rw / a i r h a n d l e r

C e n t r a l b o i l e rw / f a n c o i l s

C e n t r a l b o i l e rw/hot w a t e rbaseboard

Ind. warm airfurnace

Ind. hot watersystem

nd. heat pumpInd. elec. base-

board or radiantceiling

Other

NewE n g l a n d

8 9 . 81 0 . 2

1 8 . 61 3 . 96 7 . 5

0

0

0

46.5

7.3

01.1

45.10

E a s tMid- North

Atlantic Central

8 0 . 71 9 . 3

2 5 . 25 7 . 21 7 . 6

0

1 0 . 8

0

4 . 7

5 2 . 3

03 . 2

1 8 . 91 0 . 1

35.264.8

21.935.334.28.6

0

0

12.4

64.3

0.39.1

14.20

WestN o r t h

C e n t r a l

7 3 . 02 7 . 0

3 0 . 33 2 . 83 3 . 1

3 . 8

8 . 3

0

5 . 1

4 5 . 5

01 . 8

3 9 . 30

East WestSouth South South

A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c— .— .

6 0 . 33 9 . 7

5 6 . 84 3 . 2

00

1 1 . 0

0 . 7

0

5 4 . 7

01 1 . 6

0 . 92 1 . !

95.24.8

64.935.1

o0

0.2

0

2.6

78.8

02.9

15.50

U.S.Total

6 9 . 930.1

56 .02 9 . 712.8

1 .5

6 . 2

1 .5

7.1

57 .2

5 . 4

18.04 . 6

9. (continued)

Heating Fuel

GasElectricOil

Cooling Equipment

NoneCentral systems

chiller/alrhandler

chiller/fancoils

Ind.unit systemsPart of heating

equip.Separate from

heat equip.Heat pumpEvaporative

coolerRoom units


NoneGasE l e c t r i c

WestS o u t h

C e n t r a l M o u n t a i n P a c i f i c

Appendix B—Thermal Characteristics of Homes Built in 1975-76 . 317

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

NewEngland

1 . Average Size (SF)

S i n g l e w i d e 935

Double wide 1249

2 . I n s u l a t i o n( P e r c e n t o f u n i t s )

S i n g l e w i d eC e i l i n g s

R11 to R12R13 to R18R19 to R21R22 or moreS i n g l e w i d e

W a l l s

R7R11R 1 2R13R19

Single wideFloors

R7R9R11R13R14R15R19

7.192.9

000

00

100.00000



MOBILE HOME UNITS

E a s t W e s tS o u t h S o u t h S o u t h U s .

A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c T o t a l— . . — —


MOBILE HOME UNITS

D o u b l e W i d eC e i l i n g s

R 1 1 t o R 1 2R13 to R18R19 to R21R22 or more

D o u b l e W i d eW a l l s

R7R11R12R13R19

Double WideFloors

R7R9R11R13R14R15R19

EastMid- North

Atlantic Central

E a s t W e s tS o u t h U s .C e n t r a l M o u n t a i n P a c i f i c T o t a l

MOBILE HOME UNITS

3. Windows & Doors

Single Wide

Average numberAverage size (SF)

Double Wide

Average numberAverage size (SF)

Glazing (percent)

S i n g l e n o s t o r m sS i n g l e w i t h s t o r m sI n s u l . n o s t o r m sI n s u l . w i t h s t o r m s

D o o r s( p e r c e n t o f u n i t s )

I n s u l a t e dN o t i n s u l a t e d

NewE n g l a n d

1 1 . 7102.0

11.8131.0

14.859.2

026.0

50.549.5

E a s tH i d - N o r t h


12.4118.7

12.4140.0

30.869.2

00

50.549.5

W e s t E a s t W e s tN o r t h S o u t h S o u t h S o u t h

C e n t r a l A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c— .

1 1 . 31 1 5 . 9

1 2 . 21 5 7 . 7

2 1 . 376.22.5

0

47.352.7

1 1 . 51 1 3 . 5

12.3137.1

41.558.5

00

48.052.0

10.3109.0

11.5145.9

38.561.10.20.2

37.962.1

11.0107.1

12.3137.1

60.628.910.20.3

37.962.1

Us.T o t a l

1 1 . 41 1 3 . 4

1 1 . 91 4 5 . 6

3 7 . 85 8 . 1

2 . 31 . 8

4 6 . 15 3 . 9

NewE n g l a n d

4 . H e a t i n g / C o o l i n g

H e a t i n g f u e ls o u r c e( p e r c e n t )

Gas 2 7 . 4oil 53.9Electric 18.7


MOBILE HOME UNITSEast West East West

M i d - N o r t h N o r t h S o u t h S o u t h S o u t h Us.A t l a n t i c C e n t r a l C e n t r a l A t l a n t i c C e n t r a l C e n t r a l M o u n t a i n P a c i f i c T o t a l— —

C o o l i n g e q u i p m e n tp l a n t i n s t a l l -e d ( p e r c e n t )

Appendix C

Thermal Characteristics of Homes Builtin 1974, 1973, and 1961

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

INTRODUCTION

This report contains information in thermal characteristics of homes built in 1973 and i n1974, and thermal insulation data for 1961 homes. In addition, comments from 83 buildersregarding levels of insulation being installed in 1976-77 are included.

Scope and Method

In 1974, the Research Foundation conducteda national survey of builder practices for theN a t i o n a l A s s o c i a t i o n o f H o m e B u i l d e r s(NAHB). The study covered a wide range ofhome builder practices for homes built in 1973.Results represented a composite of about84,000 homes built by over 1,600 builders se-lected at random from NAHB membershiprolIs. Data were summarized for four (4) censusregions.

I n 1975, a survey of over 120,000 single fami-ly dwellings was completed for homes built in1974. This survey was taken from the entiremembership of NAHB and was summarized bynine (9) census regions. Housing characteristicdata were collected in sufficient detail forthermal characteristics to be analyzed.

In 1961, F. W. Dodge Corporation conducteda detailed material inventory of 1,000 random-ly selected dwellings. Data from this inventoryare included in this report.

Another extensive survey is being conductedby the Research Foundation for homes built in1975 and 1976. Data from this survey are notyet available but a review of several thousandquestionnaires revealed many builders are in-stalling more insulation than the average andsome bui lders are instal l ing less insulat ionthan the average. Eighty-three of these un-typical builders were surveyed in an attempt tod i scover what causes bu i lde r s to makechanges related to energy conservat ion.Results of that survey are included.

1974 HOUSING CHARACTERISTICS

This sect ion contains character is t ics of Regionabout 120,000 single family detached homes N e w E n g l a n d ( N . E . ) . . .

bui l t in 1974, summarized by nine census M i d d l e A t l a n t i c ( M . A . ) . . . .

r e g i o n s . F o l l o w i n g a r e t h e r e g i o n s a n d t h eEast North Central (E. N. C.)West North Centra l (W.N.C. ) .

p e r c e n t a g e o f t h e t o t a l n u m b e r o f h o m e s S o u t h A t l a n t i c ( S . A . )with in each region. East South Central (E.S.C.), .,

West South Central (W. S. C,) .,Mountain (M ) ...P a c i f i c ( P . )

Percentof homes

31015

720

615

915

3 2 2


la. Finished Floor Area - Percent by Region

Square Footage N . E . M.A. E.N.C.

Under 800800 - 9991000 - 11991200 - 13991400 - 15991600 - 17991800 - 19992000 - 21992200 - 23992400 - 2799Over 2800

Total 100 100 100

Average SF 1 , 5 1 8 1 , 5 7 0 1 , 5 0 7

W . N . C .

57

232713575332

100

1 , 4 2 9

S . A . E . S . C .

12

142 417111210432

100

1,584

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

Percent on1st Floor 72 .3 67 .5 76 .0 79.9 89 .2

Sq. Footage 1,098 1,060 1,145 1 , 1 4 1 1 , 4 1 3

1c. Wood Frame vs. C o n c r e t e Slab 1st F l o o r , b y R e g i o n

;’:L e s s t h a n 1 %

W.S.C. M. P . T o t a l U . S .

25

16212211

510332

100

1,535

87.71,346

4966051

686

II

1217261610853I

100

1,604

83.31,336

4458856

748

100

1 , 5 8 5

8 4 . 21 , 3 3 4

5 26 9 4

4 86 4 0

2. Number of Stories - Percent by Region

Type House N.E. M.A. E.N.C.

One Story 36 35 48Two Story 31 33 24Bi-Level 26 25 12Split Level 7 7 16— ——

Total 100 100 100

A v e r a g e S t o r i e s / H o u s e * 1 . 4 1.4 1,4

3. Square Footage of

Opaque WallWindows & Doors

Total SF

E x t e r i o r W a l l - b y R e g i o n

1 , 1 9 0 1 , 2 2 1 1 , 1 8 82 8 7 2 9 6 2 8 2— ——

1 , 4 7 7 1 , 5 1 7 1 , 4 7 0

W.N.C.

53122015

100

1.3

1,087282

1,369

S.A. E.S.C. W.s.c. M. P . T o t a l U . S .

771346

100

1.2

1,134297-

1,431

6911128

100

1.2

1,201294

1,495

8712

11

736

1011

100

1.1

1,193324

1,517

100

1.2

1,091297

1,388

100

1.3

1,194298

1,1192

6518107

100

1.3

1,162295

1,457

;:Bi - l eve l cons idered one s to ry , sp l i t l eve I t w o s t o r y

4. Heating and Cooling Equipment - Percent by Type


W a r m a i r f u r n a c eH o t w a t e r s y s t e mH e a t p u m pE l e c t r i c b a s e b o a r dE l e c t r i c r a d i a n t

c e i l i n gNone

Heating Fuel

GasElectricOil

Cooling Equipment

NoneC o m b i n a t i o n h e a t i n g

& cooling (coolingpart of heatingsystem)

Individual r o o mSplit s y s t e m

( c o o l i n g s e p a r a t ef r o m h e a t i n g )

H e a t p u m pO t h e r


GasE l e c t r i c

N . E .

28.237.9

033.9

00

39.338.522.2

81.8

14.22.1

1.900

018.2

E . S . C .

69.00

22.23.9

4.30.6

34.265.2

0

6.o

51.35.9

14.222.6

0

2.291.8

81.21.2

11.64.2

1.60.2

55.742.91.2

33.3

36.50.8

9.111.68.7

3.563.2

P. Total U.S.

5. Thermal Resis tance (R) Va lues of Insu la t ion - Percent

E x t e r i o r W a l l s

R - V a I u e s

NoneR - 3R-7R- I 1R-19Other

C e i l i n g / R o o f

NoneR - 9R - 1 1R-1 3R - 1 8R - 1 9R - 2 2R - 2 6O t h e r

F l o o r J o i s t s

N . E . M . A . E.N.C. W . N . C .

02.8

020.76.9

32.729.14.83.0

1.60.711.49.33.6

46.027.20.2

0

1.900

90.55.71.9

2 . 38 . 9

S . A . E . S . C . w . s . c . M. P. T o t a l U . S .

6 . 09 . 6

1 5 , 16 9 . 2

00. 1

4 . 84 . 5

1 6 . 32 8 . 2

4 . 44 1 . 6

0 . 10

0 . 1

NoneR-7R-11R-19Other

6 . A v e r a g e N u m b e r o f W i n d o w s a n d S l i d i n g G l a s s D o o r s P e r H o u s e

Windows by Glazing N . E . M . A . E . N . C .

Single glaze - nos term 4 . 6 5 . 7 4.1

Double insulatingg I ass 1 .6 3 . 6 4.1

S i n g l e g l a z e w i t hs t o r m s 4.7 6.36.2 —

Total 12.4 14.0 14.5

S l i d i n g G l a s s D o o r s 0 . 6 0 . 8 0 . 5

W i n d o w s b y F r a m e T y p e

Wood 11.9 10.5 9.4Aluminum 0.3 2.5 5.1Other 0.2 1.0 0

Total 12.4 14.0 14.5

7. Average Number of Exterior Doors Per House

D o o r s b y T y p e

Wood 2 . 7 4 1.84 1.69Steel (Insulated) 0.71 1.48 1.72Other 0.06 0.040.03 —

Total 3.48 3.38 3,45

Storm Doors 1.90 1.20 1.80

W . N . C .

4.7

2.7

6.3

13.7

0.8

10.23.5

0

13.7

2.940.530.10

3.57

2.70

S . A .

8.6

1.6

2.2

12.4

0.6

6.65.8

0

12.4

2.750.710.16

3.62

1 .50

3.66

1.70

1 1 . 4

2 . 8 30 . 3 10 . 0 3

3 . 1 7

1 . 1 0

Total U.S.

6 . 4

2 . 9

3 . 0

12.3

0 . 7

5 . 66 . 7

0

12.3

2 .570 . 7 90 . 0 5

3.41

1.50

. .

8. Weighted Average Thermal Resistance (R) Values of All Other Materials in Walls, Ceil ings and Floors

E x t e r i o r W a l l “ R ” V a l u e s N . E .

O u t s i d e s u r f a c e f i l m 0.17Siding 0.71Sheathing 0.68Interior surface materialmaterial 0.44

Interior surface film 0.68

Subtotal 2.68

Insulation 10.30

Total 12.98

Ceiling/Roof

Outside surface film 0.61Interior surfacematerial 0.44

Interior surface film 0.61

Subtotal 1.66

Insulation 17.90

Total 19.56

Wood Floor

Inside surface film 0.92Finished flooring 0.98Underpayment &

sheathing 1.19Underfloor surface

S . A .

0.170 . 6 70 . 6 9

0 . 4 40 . 6 8

2 . 6 5

7 . 2 0

9 . 8 5

0 . 6 1

0 . 4 40 . 6 1

1 .66

1 4 . 8 0

1 6 . 4 6

0 . 9 21 . 2 0

1 . 1 3

0 . 9 24 . 1 75 . 4 09 . 5 7

W . S . C .

0.170.510.82

0.450.68

2.63

10.30

1 2 . 9 3

0.61

0.450.61

1.67

15.1O

16.77

0.921.25

1 . 2 1

T o t a lM. P. Us.— —

0.17 0.17 0.171.02 0.48 0.570.55 0.44 0.82

0.44 0.46 0.440.68 0.68 0.68— — —

2.86 2.23 2.68

6.70 8.80 9.20— — —

9.56 11.03 11.88

0.61 0.61 0.61

0.44 0.46 0.440.61 0.61 0.61— —

1.66 1.68 1.66

1 8 . 1 0 1 4 . 6 0 1 5 . 8 0— ——

19.76 16.28 17.46

0.92 0 . 9 2 0.921.24 1.25 1.22

1.17 1.46 1.19

Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 329

1973 Housing Characteristics

T h i s s e c t i o n c o n t a i n s c h a r a c t e r i s t i c s o f a b o u t 8 4 , 0 0 0 h o m e s b u i l t

i n 1 9 7 3 , a p r e o i l e m b a r g o y e a r . D a t a a r e s u m m a r i z e d b y f o u r

c e n s u s d i s t r i c t s : N o r t h e a s t , N o r t h C e n t r a l , S o u t h a n d W e s t .


l a . Finished Floor Area By Region

Under 1,000 SF1,000 - 1,1991,200 - 1,3991,400 - 1,5991,600 - 1,7991,800 - 1,9992 ,000 - 2 ,1992 ,200 - 2 ,3992 ,400 - 2 ,799Over 2 , 8 0 0

T o t a l 1 0 0

A v e r a g e S F 1 , 5 1 4

North

2 32 617

66634

3

100

1,515

;:L e s s t h a n 1 %

2. N u m b e r o f S t o r i e s

Type House

O n e S t o r yT w o S t o r yB i - LeveIS p l i t L e v e l

T o t a l

Percent by Region

NorthEast

34.332.725.77.3

100.0

Average Stories/House 1 .4

3. Square Footage of Exterior Wall, by Region

Opaque Wall 1,187Windows and Doors 286

Total SF 1,473

NorthCentral

47.920.415.416.3

1 0 0 . 0

1.4

1,178287

1,465

South

7 6 . 51 2 . 2

5 . 85 . 5

100.0

1 . 2

1,186312

1,498

W e s t

6 6 . 21 7 . 6

7 . 88 . 4

1 0 0 . 0

1.3

1,133291

T o t a lU s .

5 7 . 81 8 . 91 3 . 8

9 . 5

10.0

1.3

1,171298

1,469

4. Heating and C o o l i n g

Heating Equipment

Warm air furnaceHot water systemHeat pumpElectric baseboard

Equipment - Percent by Type

NorthEast

43.321.4

0.130.3

E l e c t r i c r a d i a n t c e i l i n gO t h e r

Heating Fuel

GasE l e c t r i cO i l

Cooling Equipment

NoneCentral systemI n d i v i d u a l r o o mHeat p u m p


C.44.5

38.742.219.1

59 .236 .24.50.1

NorthCentral

93.?2.00.42.01.21.3

70.428.90.7

37.961.40.30.4

3 1 . 66 7 . 2

1 . 2

west

80.919.0O.1

47.546.41.84.3

GasE l e c t r i c

1.051.5

5a . Thermal Resistance (R) Values of Insulation - Percent

NorthEast

NorthCentral

TotalU s .South West

Exter io r Wa l ls

R-Values

NoneR-3R-7R - nOther

o0,6

27.070.61.7

0.10.3

26.771.41.5

3.52.36.6

81.95.7

2.50.5

20.970.45.7

2 . 11 . 2

1 7 . 17 6 . 1

4 , 5

Cei l ing /Roof

NoneR-7R-9R-11R-13R-18R-19Other

0.51.82.6

30.O11.74.6

46.72.1

0.20.85.6

16.839.415.416.15.7

3.00.2

17.011,538.51.2

16.811.8

W o o d F l o o r

NoneR-7R - nR-19Other

53.96.2

35.13.71.2

70.53.618.56.31.1

44,928.216.06.54.4

8 2 . 01 0 . 2

6 . 90 . 20.7

61.414.117.64.82.1

5b. Weighted Average “R” Values

9.815.25.0

WallsCeilingFloor

9.914.23.5

9.612.71.5

10.11 5 . 2

5 . 2

10.014.44.0

N o r t hC e n t r a l

T o t a lU . S .

4.07.82.4

8.71.7

9 . 21 . 50.5

7.53. 12.01.8

1 4 . 2 1 2 . 2 1 1 . 2 1 2 . 6

9.64.6

0

WoodAluminumOther

Tota1

10.72.0

0.110.80.3I .0

13.7

of E x t e r i o r D o o r s P e r H o u s e

1 . 8

1 2 . 2 1 1 . 2 12.6

7. Average Number

Doors by Type

Wood I .91.6

2 . 50.7

0

2.50.50.1

2.3“1 .0Stee l ( insu la ted) 1 . 6

Other 0.1

T o t a l 3.5

S t o r m D o o r s 0.4

0.1 0.1

3.6 3 . 2 3.1 3.4

1 . 2 0.5 0 . 3 0.6

8 . W e i g h t e d A v e r a g e T h e r m a l R e s i s t a n c e ( R ) V a l u e s o f A l l M a t e r i a l s i n W a l l s , C e i l i n g s a n d F l o o r s

E x t e r i o r W a l l M a t e r i a l sl n s u l a t i o n

T o t a l

Ceiling/Roof MaterialsI n s u l a t i o n

T o t a l

W o o d F l o o r M a t e r i a l s

I n s u l a t i o n

T o t a l

N o r t h N o r t hE a s t C e n t r a l South w e s t

2.5 2.9 2 . 7 2 . 59 . 8 9 . 9 1 0 . 1 9 . 8

1 2 . 3 1 2 . 8 1 2 . 8 1 2 . 3

1.7 1.7 1.7 1.715.2 14.2 15.2 12.7

16.9 15.9 16.9 14.4

4.0 4.2 4.3 4.45.0 3.5 5.: 1.5

9.0 7.7 9.5 5*9

T o t a lU.S.

2.710.0

1 2 . 7

16.1

8.3


1961 Housing Characteristics

T h i s s e c t i o n c o n t a i n s a s u m m a r y o f h o u s i n g c h a r a c t e r i s t i c d a t a f o r

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

by F.W. Dodge and are summarized b y f o u r c e n s u s d i s t r i c t s .

Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 337

1.

2 .

3.

4.


--

T w o o r M o r e

C r a w l S p a c e

C e i l i n q / R o o f

9 2100857092

S p l i t - L e v e l

Concrete Slab

P e r i m e t e r


5. Heating Fuel Percent By Region

R e g i o n Gas E l e c t r i c O i l

4917145

22

Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 “ 339

Builder Survey

T h i s s e c t i o n c o n t a i n s t h e r e s u l t s o f a s u r v e y o f e i g h t y - t h r e e s i n g l e

f a m i l y h o m e b u i l d e r s . A n i n - d e p t h s u r v e y o f a l l h o m e s b u i l t i n 1 9 7 5

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.


BUILDER SURVEY RESULTS

1 .

2 .

3.

4.

5.

6.

7.

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

Uses R-19 in walls and R-30 in cei l ing with insulat ing glass windows.May consider more insulation i f fuel costs continue to increase.

W a r w i c k , R I b u i l d e r o f f i f t e e n $ 3 7 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 2 2 i n c e i l i n g a n d s t o r m w i n d o w s . R e c e n t l yi m p r o v e d i n s u l a t i o n v a l u e s i n c e i l i n g b e c a u s e o f e n e r g y c o s t s .

W e s t Haven, CT builder of forty to f i f ty $50,000 homes.

U s e s R - n i n w a l l s , R - n i n c e i l i n g a n d s i n g l e p a n e w i n d o w s , a l ll o w v a l u e s f o r N e w E n g l a n d . B u i l d e r d o e s s h a d e s o u t h e r l y f a c i n gw i n d o w s w i t h r o o f o v e r h a n g . H e o f f e r s R - 1 9 i n s u l a t i o n i n c e i l i n ga s a n o p t i o n b e c a u s e h e “ o f f e r s t h e b u y e r t h e c h o i c e , n o t s i m p l ydictate what I or anyone else thinks best!”

Builder bel ieves fuel costs in a free economy wil l require maximuminsulation levels without more regulations. “We have enough regu-lations al ready,” he said.

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

Uses R-13 in walls and R-19 in cei l ing. Does not plan on changinglevels of insulat ion in the next year. Provides storm windows.E n e r g y c o s t s m a y l e a d h i m t o i n c r e a s e l e v e l s o f i n s u l a t i o n .

M o n t p e l i e r , V T b u i l d e r o f $ 3 8 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l s , R - 3 8 i n c e i l i n g s a n d i n s u l a t e d g l a s s w i n d o w sw i t h s t o r m w i n d o w s . P l a n t s d e c i d u o u s t r e e s t o p r o v i d e s h a d e i ns u m m e r f o r s o u t h f a c i n g w i n d o w s . P l a n s o n r e t a i n i n g t h e s e l e v e l si n t h e n e x t y e a r . I f c l i m a t e t u r n s c o l d e r a n d e n e r g y c o s t s g e th i g h e r , h e w i l l c o n s i d e r i n c r e a s e d i n s u l a t i o n l e v e l s .

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

Uses R-13 in walls and cei l ings and single glazed w i n d o w s . P l a n so n i n c r e a s i n g t o R - 2 2 i n c e i l i n g s n e x t y e a r b e c a u s e o f e n e r g y s a v i n g s .

Burlington, VT builder of thirty $28,000 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 3 0 i n c e i l i n g s a n d s t o r m w i n d o w s i n h i s h o m e sw h i c h a r e l o w c o s t . H e p l a n s t o i m p r o v e l e v e l s b y i n s u l a t i n g b a s e -m e n t w a l l s , u s i n g i n s u l a t e d d o o r s , p o l y s t y r e n e b e h i n d e l e c t r i c a lo u t l e t b o x e s a n d m o r e l i b e r a l u s e o f c a u l k i n g . H e w i l l d o t h e s et h i n g s b e c a u s e o f c u s t o m e r d e m a n d a n d a w a r e n e s s .

H e m a y i n c r e a s e i n s u l a t i o n l e v e l s b e c a u s e o f e c o n o m i c f a c t o r s a n db e c a u s e o f a s e n s e o f n a t i o n a l a n d l o c a l r e s p o n s i b i l i t y .


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

Uses R-19 in walls , R-30 i n ceiling and storm windows. Does notplan on making any changes in future because, “We feel we havereached 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.P l a n s o n c h a n g i n g t o R - 3 8 i n c e i l i n g s n e x t y e a r . B e l i e v e s c o n s e r -v a t i o n f e a t u r e s t o b e a m a r k e t i n g p o i n t a n d h a s b u i l t t o t h e s e h i g hi n s u l a t i o n s t a n d a r d s f o r p a s t t e n y e a r s .

10. S o u t h e r n N e w J e r s e y b u i l d e r o f t h i r t y $ 4 0 , 0 0 0 h o m e s .

U s e s R-16 in wa l ls , R-30 in c e i l i n g s a n d s t o r m w i n d o w s . A c h i e v e sR - 1 6 w i t h R - 1 1 f i b e r g l a s s b a t t s a n d D o w R - 5 S t y r o f o a m s h e a t h i n g .D o e s n o t p l a n o n m a k i n g a n y c h a n g e s b e c a u s e , “ W e a r e c u r r e n t l yb u i l d i n g h o u s e s w h i c h e x c e e d a l l i n s u l a t i o n s t a n d a r d s n o w i n e f f e c t . ”R i s i n g f u e l c o s t s m i g h t c a u s e h i m t o i n c r e a s e i n s u l a t i o n l e v e l s .

11. Pi t ts ford , NY bu i lder o f twe lve $ 7 4 , 0 0 0 h o m e s .

U s e s R - 1 5 w a l l s , R - 3 0 c e i l i n g s a n d s t o r m w i n d o w s . P o l y s t y r e n es h e a t h i n g i s u s e d t o o b t a i n R - 1 5 . H a s b e e n u s i n g t h i s m e t h o d f o ro v e r a y e a r . P l a n s o n i n s u l a t i n g b a s e m e n t w a l l s n e x t y e a r b e c a u s eo f P u b l i c S e r v i c e C o m m i s s i o n r e g u l a t i o n s . P u b l i c d e m a n d c o u l dc a u s e h i m t o i n c r e a s e i n s u l a t i o n l e v e l s a n d p u b l i c r e f u s a l t o p a yf o r i n c r e a s e d l e v e l s m i g h t c a u s e h i m t o l o w e r i n s u l a t i o n l e v e l s .

12. R o c h e s t e r , N Y b u i l d e r o f t w e n t y $ 4 5 , 0 0 0 h o m e s .

U s e s R - 1 1 i n w a l l s a n d e i t h e r R - 3 0 o r R - 3 8 i n c e i l i n g s . A l s o u s e ss t o r m w i n d o w s . P l a n s o n i n c r e a s i n g c e i l i n g l e v e l s a n d i n s u l a t i n gb a s e m e n t n e x t y e a r b e c a u s e o f i n c r e a s e d h e a t i n g c o s t s .

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

U s e s R - n w a l l s , R - 1 9 c e i l i n g s a n d s t o r m w i n d o w s . P l a n t s t r e e s t os h a d e s o u t h e r n w i n d o w s f r o m s u m m e r s u n . P l a n s o n i n c r e a s i n g c e i l i n gt o R - 3 0 a n d i n s u l a t i n g b a s e m e n t . A l s o p l a n s t o c a u l k a r o u n d a l ld o o r s a n d w i n d o w s .

14. R e a d i n g , PA bui lder o f f i f teen $64 ,000 homes.

U s e s R - n w a l l s , R - 1 9 c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s . M a yi n c r e a s e l e v e l s i n f u t u r e i f f u e l c o s t s i n c r e a s e o r a v a i l a b i l i t yb e c o m e s a p r o b l e m . A l s o m a y i n c r e a s e l e v e l s b e c a u s e o f “ s a l e sa p p e a l . “

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

R - 1 9 i n w a l l s , R - 3 0 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i t h s t o r m


1 6 .

1 7 .

1 8 .

1 9 .

2 0 .

21 .

2 2 .

wIndows . Does not pIan on making changes because ‘‘I feeI presentl e v e l s a r e a d e q u a t e . ”

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

U s e s R - n i n w a l l s , R - 3 0 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .D o e s n o t p l a n o n c h a n g i n g l e v e l s i n t h e f u t u r e .

S y r a c u s e , N Y b u i l d e r o f t w e n t y $ 5 0 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 3 0 i n c e i l i n g s a n d s t o r m w i n d o w s . P l a n s o nr e d u c i n g a i r i n f i l t r a t i o n a n d i m p r o v i n g w a l l s h e a t h i n g f o r b e t t e rR v a l u e s .

P h i l a d e l p h i a , P A b u i l d e r o f t w e n t y $ 4 0 , 0 0 0 h o m e s .

U s e s R - 1 2 i n w a l l s , R - 2 2 i n c e i l i n g s a n d s i n g l e g l a z e d w i n d o w s .D o e s n ’ t p l a n o n m a k i n g a n y c h a n g e s n e x t y e a r .

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

Uses R-13 in walls, R-36 in ceilings and storm windows. May go totriple glazed windows and s l id ing g lass door in near fu ture .Michigan energy code (effective 7/1/77) may influence builder tomake changes. Public awareness of insulation levels may cause someincrease in R-values.

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

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

Uses R-19 in wa l ls , R -40 in ce i l ing and s torm windows. D o e s n o tp l a n o n c h a n g i n g i n s u l a t i o n l e v e l s b u t d o e s p l a n o n i m p r o v i n gi n s t a l l a t i o n p r o c e d u r e s . B u i l d e r s a y s h i s c u s t o m e r s a r e v e r ys a t i s f i e d a t p r e s e n t . H i g h e r u t i l i t y b i l l s m i g h t m a k e h i m i n c r e a s einsu la t ion l eve ls .

C a n t o n , O H b u i l d e r o f t w e n t y $ 5 1 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R-37 in cei l ings and tr iple glazed windows.Does not plan on changing next year. Wil l retain present levelsb e c a u s e o f f u e l s a v i n g s a n d b e c a u s e h o m e b u y e r st h e s e l e v e l s .

D e e r f i e l d , I L b u i l d e r o f t h i r t y $ 1 0 5 , 0 0 0 h o m e s .

U s e s R - 1 1 i n w a l l s a n d R - 1 3 i n c e i l i n g . S o m e ss o m e i n s u l a t i n g g l a s s a n d s o m e s t o r m s a r e i n s t aL o w l e v e l o f c e i l i n g i n s u l a t i o n i s “ s t a n d a r d ” wo f f e r e d a s o p t i o n s t o b u y e r s . B e l i e v e s i n p r o vr e q u e s t s a n d c a n a f f o r d t o s p e n d .

a r e r e q u e s t i n g

n g l e g l a z e d ,l e d a s o p t i o n s .t h h i g h e r l e v e l sd i n g w h a t c u s t o m e r

Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 343

23.

24.

25.

26.

27.

28.

29.

Energy crisis , government credits and customer, requests will influenceb u i l d e r t o i n c r e a s e i n s u l a t i o n l e v e l s .

Lindenhurst, I L L b u i l d e r o f t w e n t y - f i v e $ 5 8 , 0 0 0 h o m e s .

U s e s R-n in walls, R-19 in cei l ings and storm windows or insulat ingglass windows. May increase insulation levels next year because ofpublic awareness, c o n s e r v a t i o n a n d u t i l i t y c o s t s .

F l i n t , Ml bu i lde r o f $70 ,000 to $140 ,000 homes .

Uses R-13 in walls, R-24 in cei l ing and insulat ing glass windows.D o e s n o t p l a n o n m a k i n g c h a n g e s n e x t y e a r . B e l i e v e s h e i s a to p t i m u m n o w .

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

Uses R-19 in walls, R-30 in cei l ing and insulat ing glass w i n d o w s .B u i l d e r b e l i e v e s t h a t p e o p l e a r e q u i t e c o n s c i o u s o f t h e v a l u e o fi n s u l a t i o n i n s a v i n g h e a t i n g d o l l a r s a n d a r e w i l l i n g t o p a yi n i t i a l l y f o r i n c r e a s e d i n s u l a t i o n . H e a l s o b e l i e v e s b u y e r s t e n dt o a s s o c i a t e b e t t e r i n s u l a t i n g p r a c t i c e s w i t h b e t t e r a l l a r o u n db u i l d i n g p r a c t i c e s .

W o u l d d e c r e a s e l e v e l s o n l y i f c o m p e t i t i v e b u i l d i n g t e n d s t o r e d u c ep r i c e o f h o m e s t o a p o i n t w h e r e m i n i m u m l e v e l s o f i n s u l a t i o n w o u l db e a c c e p t a b l e .

M i l w a u k e e , W I b u i l d e r o f 1 2 5 s i n g l e f a m i l y d e t a c h e d d w e l l i n g s a n d75 single family attached dwellings with $53,000 average sellingprice.

Uses R-13 wall and R-22 ceiling insulation and storm windows.24” overhang shades windows from summer sun. Plans on retainingp r e s e n t i n s u l a t i o n l e v e l s b e c a u s e o f f u e l c o n s e r v a t i o n . L o w e r c o s ti n s u l a t i o n w o u l d p r o m p t h i m to u s e m o r e .

F a r g o , N D b u i l d e r o f f i f t e e n $ 7 0 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l s a n d R - 5 2 i n c e i l i n g s . W i n d o w s a r e a l l i n s u l a t i n gg l a s s . Uses a 36” overhang to shade south facing windows fromsummer sun. B e l i e v e s h e h a s a l r e a d y a t t a i n e d m a x i m u m i n s u l a t i n gl e v e l s .

I n d e p e n d e n c e , M O b u i l d e r o f 1 0 0 $ 4 1 , 0 0 0 h o m e s .

U s e s R - n i n w a l l s , R - 1 3 i n c e i l i n g a n d s t o r m w i n d o w s . W i l l i n c r e a s el e v e l s o n l y i f c o d e s o r c o m p e t i t i o n r e q u i r e i t .

H u t c h i n s o n , K S b u i l d e r o f $ 5 5 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l s , R - 3 8 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .2 ’ - 6 ” o v e r h a n g s s h a d e s o u t h f a c i n g w i n d o w s f r o m s u m m e r s u n . P l a n son using 5/8” foil-faced foam plastic sheathing in the future.


30.

31.

32.

33.

34.

35.

36.

S t . L o u i s , M O b u i l d e r o f 1 2 0 $ 4 5 , 0 0 0 h o m e s .

U s e s R - 1 1 i n w a l l s , R - 1 9 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .P l a n s o n i n c r e a s i n g i n s u l a t i o n l e v e l s n e x t y e a r b e c a u s e b u y e r sa r e a s k i n g f o r i t . W i l l d e f i n i t e l y i n c r e a s e l e v e l s i f r e q u i r e d b yg o v e r n m e n t a l r e g u l a t i o n s .

S h a k o p e e , M N b u i l d e r o f f i f t e e n $ 5 5 , 0 0 0 h o m e s .

Uses R-18 in walls, R-38 in ceiling and triple glazed windows. Doesnot plan to add to present levels. A d d e d p o l y s t y r e n e s h e a t h i n gl a s t y e a r .

S i o u x F a l l s , S D b u i l d e r o f t w e n t y - f i v e $ 7 9 , 0 0 0 h o m e s .

Uses R-19 in walls, R - 3 8 i n c e i I i n g a n d t r i p l e g l a z e d w i n d o w sin some homes. Next year wi l l u s e m o r e t r i p l e g l a z i n g .

W i c h i t a , K S b u i l d e r o f t w e n t y $ 4 4 , 0 0 0 h o m e s .

U s e s R - 1 8 i n w a l l s a n d R - 1 9 i n c e i l i n g . A l s oD o e s n o t p l a n o n m a k i n g a n y c h a n g e s u n l e s s u th i m t o i n c r e a s e i n s u l a t i o n .

L i n c o l n , N E b u i l d e r o f e i g h t e e n $ 4 7 , 0 0 0 h o m e s

U s e s R - n i n w a l l s , R - 1 9 i n c e i l i n g a n d s t o r m

u s e s s t o r m w i n d o w s .l i t y c o s t s f o r c e

w i n d o w s . P l a n s o ni n c r e a s i n g i n s u l a t i o n a m o u n t s a n d i m p r o v i n g i n s t a l l a t i o n m e t h o d sn e x t y e a r b e c a u s e h o m e b u y e r s a r e r e q u e s t i n g i t a n d b e c a u s e o fe n e r g y s a v i n g s .

T o p e k a , K S b u i l d e r o f f i v e $ 5 6 , 0 0 0 h o m e s .

U s e s R - 1 7 i n w a l l s , R - 3 0 i n c e i l i n g a n d d o u b l e g l a z e d w i n d o w s .H e k e e p s g l a s s a r e a t o a m i n i m u m a n d p r o v i d e s 2 4 ” o v e r h a ng t os h a d e w i n d o w s f r o m s u m m e r s u n . I s c o n s i d e r i n g 2 x 6 w a l l s f o re l e c t r i c a l l y h e a t e d h o u s e s b e c a u s e o f n a t u r a l g a s s h o r t a g e .B u i l d e r b e l i e v e s a d d e d i n s u l a t i o n i s a s e l l i n g f e a t u r e a n dc o n s i d e r s w o r k m a n s h i p o f i n s u l a t i o n i n s t a l l a t i o n m o r e i m p o r t a n tt h a n h i g h “ R ” v a l u e s . W o u l d p r e f e r p r o p e r l y i n s t a l l e d R - n t op o o r l y i n s t a l l e d R - 1 9 w i t h g a p s , e t c .

H e b e l i e v e s w e m u s t e n c o u r a g e i n s u l a t i o n o f a t t a c h e d g a r a g e w a l l sa n d c e i l i n g s , i n s u l a t e d b a s e m e n t s o r c r a w l s p a c e s v e r s u s c o n c r e t es l a b s , o p e n l i v i n g a r e a s f o r b e t t e r a i r c i r c u l a t i o n , n a t u r a l o ra r t i f i c i a l s h a d e a r o u n d A . C . c o m p r e s s o r , a t t i c p o w e r v e n t i l a t o r s ,e t c .

H e b e l i e v e s w e m u s t d i s c o u r a g e h i g h v a u l t e d c e i l i n g s , d u c t e dr a n g e h o o d s , e x c e s s i v e g l a s s , f i r e p l a c e c h i m n e y s o n o u t s i d ew a l l s , e t c .

C e d a r R a p i d s , 1 A b u i l d e r o f $ 5 1 , 0 0 0 h o m e s .

U s e s R - 1 2 i n w a l l s a n d R - 1 9 i n c e i l i n g . P l a n s o n u s i n g m o r e


37.

38.

39.

40.

41

insulation in ceiling to save fueI. Installs storm windows .

Winter Haven, FL builder of fifty $21,000 homes .

U s e s n o i n s u l a t i o n i n c o n c r e t e b l o c k w a l l s a n d R - 9 i n c e i l i n g i nt h e s e v e r y l o w c o s t h o m e s . U s e s s i n g l e g l a z e d w i n d o w s . P l a n so n m a k i n g n o c h a n g e s i n t h e f u t u r e .

M y r t l e B e a c h , S C b u i l d e r o f f r o m t h r e e t o s i x $ 1 1 2 , 0 0 0 h o m e s .

V a r i e s i n s u l a t i o n f r o m R - 1 6 t o R - 1 9 i n w a l l s a n d f r o m R - 3 0 t oR - 3 8 i n c e i l i n g s . U s e s i n s u l a t i n g g l a s s w i n d o w s . S o m e o f h i sh o m e s h a v e l a r g e o v e r h a n g s t o s h a d e w i n d o w s f r o m s u m m e r s u n .

H e o f f e r s g o o d i n s u l a t i o n p a c k a g e a n d s a l e s p i t c h o n w h a t t h el o w e n e r g y h o m e s h o u l d s a v e i n t h e l o n g r u n . T h e f i n a l d e c i s i o nis the buyer’s and his ability to pay.

B u i l d e r b e l i e v e s h i s c u s t o m e r s a r e i n t e r e s t e d i n l o w e n e r g y h o m e sa n d t a k e s p r i d e i n h i s h o m e s a n d i n g i v i n g t h e b u y e r s w h a t t h e yw a n t .

H e n o r m a l l y u s e s l - i n c h t h i c k p o l y s t y r e n e s h e a t h i n g t o o b t a i na n R - 1 6 w a l l b u t i s c o n s i d e r i n g a n o t h e r s h e a t h i n g p r o d u c t w h i c hi s m o r e e x p e n s i v e b u t w i l l i n c r e a s e t h e w a l l t o R - 1 9 .

B u i l d e r u s e s h e a t p u m p s a n d w o u l d l i k e t o u s e m o r e w a t e r t o a i rh e a t p u m p s . A t t i c s a r e v e n t i l a t e d b y f a n . C o n c r e t e s l a b s a r ei n s u l a t e d w i t h r i g i d f o a m p l a s t i c a r o u n d t h e p e r i m e t e r . I n c r a w ls p a c e h e m s , 6 " b a t t i n s u l a t i o n i s i n s t a l l e d b e t w e e n j o i s t s . H e

t a l k s c u s t o m e r s i n t o u s i n g l i g h t s h a d e s o f r o o f i n g .

W i l k e s b o r o , N C b u i l d e r o f 1 2 0 $ 3 9 , 0 0 0 h o m e s .

U s e s R - 1 7 i n w a l l s , R - 3 0 i n c e i l i n g , R - 1 9 i n w o o d f l o o r s a n di n s u l a t i n g g l a s s w i n d o w s . B u i l d e r b e l i e v e s h e h a s d o n e a l l t h a ti s p o s s i b l e b u t w i l l c o n f o r m t o a n y c o d e r e q u i r e m e n t i n t h e f u t u r e .

T h e c h a n g e t o h i g h e r l e v e l s o f i n s u l a t i o n w e r e m a d e t o h e l p t h ec u s t o m e r . Wi l l decrease leve l o n l y i f p o w e r c o m p a n y r a t e s a r elowered.

Ft. Lauderdale, FL builder of sixty $35,000 townhouses.

Uses R-19 in walls and R-19 in cei l ings. Wil l increase insulationl e v e l s i f c o n s u m e r s r e q u i r e i t . B u i l d e r b e l i e v e s a d e v e l o p i n gm a r k e t s h o r t a g e i s c a u s i n g m a t e r i a l c o s t i n c r e a s e s t o t h e p o i n tw h e r e i n e x p e n s i v e a l t e r n a t i v e s f o r l o w t o m o d e r a t e h o u s i n g a r en o t a v a i l a b l e .

S e m i n o l e , F L b u i l d e r o f f i f t e e n $ 4 6 , 0 0 0 h o m e s .

U s e s R - 5 i n w a l l s a n d R - 1 9 i n c e i l i n g s . S i n g l e g l a z e d w i n d o w sa r e u s e d . D o e s n o t p l a n o n m a k i n g a n y c h a n g e s n e x t y e a r .


4 2 .

43.

44.

45.

46.

47.

48.

49.

50.

51.

Pinellas County, F l b u i l d e r o f f i f t y $ 6 2 , 0 0 0 h o m e s .

U s e s R - 8 i n w a l l s , R - 2 2 i n c e i l i n g a n d s i n g l e g l a z e d w i n d o w s . Useso v e r h a n g s a n d / o r t i n t e d g l a s s t o s h a d e a g a i n s t s u m m e r s u n o n s o u t hf a c i n g w i n d o w s . D o e s n o t p l a n o n m a k i n g c h a n g e s b e c a u s e h e b e l i e v e sh i s l e v e l s a r e a d e q u a t e f o r F l o r i d a .

Warrenton, VA builder of twelve $77,000 homes.

U s e s R - 2 8 i n w a l l s , R - 4 0 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .B u i l d e r b e l i e v e s h e i s a t m a x i m u m i n s u l a t i o n l e v e l s a n d t h e r e f o r ep l a n s n o c h a n g e s . Uses 2x6 walls and 1" polystyrene sheathing.

Louisville, KY builder of twenty $40,000 homes.

Uses R-n in walls, R-19 in ce i l ing and s torm windows. P l a n s o nr e d u c i n g a i r i n f i l t r a t i o n b y u s i n g p o l y f i l m v a p o r b a r r i e r i nf u t u r e . P l a n s o n b u i l d i n g 2 x 6 w a l l s o n a p r e s o l d b a s i s o n l y .B e l i e v e s pay back wil l be in from 5 to 7 years.

Lexington, KY builder of twenty $52,000 homes.

Uses R-13 in walls and R-25 in cei l ing. I n s t a l l s i n s u l a t i n gg l a s s w i n d o w s .

L o u i s v i l l e , K Y b u i l d e r o f t w e n t y $ 6 0 , 0 0 0 h o m e s .

U s e s R - 1 1 i n w a l l s , R - 2 2 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .D o e s n o t p l a n o n c h a n g i n g i n s u l a t i o n l e v e l . “ C o n s u m e r p a r a n o i a ”w o u l d b e t h e o n l y r e a s o n h e w o u l d i n c r e a s e l e v e l s .

L o u i s v i l l e , K Y b u i l d e r o f t h i r t y - f i v e $ 7 7 , 0 0 0 h o m e s .

U s e s R - 1 6 i n w a l l s a n d R - 2 2 i n c e i l i n g . I n s t a l l s i n s u l a t i n g g l a s sw i n d o w s w i t h s t o r m w i n d o w s . M a y c h a n g e t o p o l y s t y r e n e s h e a t h i n gto conserve energy and satisfy buyers.

Louisville, KY builder of ten $54,000 homes.

U s e s R - n in wal ls , R - 3 0 i n c e i l i n g a n d s t o r m wp l a n o n m a k i n g c h a n g e s i n n e x t y e a r b e c a u s e “ W ew e h a v e t h e b e s t i n s u l a t i o n f o r t h e a r e a a n d d o

ndows. D o e s n o tf e e l t h a t p r e s e n t l yl a r s p e n t . ” M i g h t

i n c r e a s e i n f u t u r e i f t h e c o s t o f f u e l i n c r e a s e s .

L o u i s v i l l e , K Y b u i l d e r o f t w e n t y - t h r e e $ 6 5 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s a n d R - 3 0 i n c e i l i n g . W i l l n o t i n c r e a s e b e c a u s eh e b e l i e v e s l e v e l s a r e a d e q u a t e f o r t h e c l i m a t e .

F o r t T h o m a s , K Y b u i l d e r o f t w e l v e $ 4 8 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l , R -30 in ce i l ing and s t o r m w i n d o w s . Plans onincreasing walls to R-24 next year because he bel ieves i t wil l bec o s t - e f f e c t i v e . Other increases may be made due to sales appeal.

Lexington, KY builder of seventy single family detached and 206


single family attached dwellings .

U s e s R - 8 i n w a l l s , R - 1 4 i n c e i l i n g s a n d s t o r m w i n d o w s . W i l l i n c r e a s el e v e l s i f s a l e s a r e i n c r e a s e d o r i f e l e c t r i c b i l l s b e c o m e e x c e s s i v e .

5 2 . B i r m i n g h a m , A L b u i l d e r o f t w e l v e $ 6 6 , 0 0 0 h o m e s .

U s e s R-8 in wal ls, R-13 in cei l ing and single glazed w i n d o w s .P l a n s o n i n c r e a s i n g c e i l i n g t o R - 1 9 b e c a u s e o f i n c r e a s e d f u e lc o s t s . C u s t o m e r c o n c e r n m a y a l s o l e a d t o i n c r e a s e d i n s u l a t i o nl e v e l s .

53. Lexington, KY builder of six $65,000 homes.

U s e s R - 1 9 i n w a l l s , R - 3 8 i n c e i l i n g a n d s t o r m w i n d o w s . P l a n s o nmaking no changes.

54. Lubbock, TX builder of 120 $28,000 homes.

U s e s R-22 in walls, R-30 in cei l ing and tr iple glazed windows.Uses roof overhang to shade south facing windows from summer sun.Builder upped insulat ion program this past year and wil l continueto update as new and better products come on the market. Ispresently testing how various plans sold over 12 month period andi s m o n i t o r i n g e n e r g y c o s t s . D e p e n d i n g o n r e s u l t s , i n s u l a t i o n l e v e l sm a y b e c h a n g e d .

55. Tulsa, OK builder of forty $36,000 homes.

Uses R-23 in walls, R-39 in cei l ing and insulat ing glass windows.Does not plan on making changes next year because he believes hishomes are insulated well enough. He would increase levels ofi n s u l a t i o n i f b u y e r s s h o w e d e n o u g h i n t e r e s t .

56. Lewisville, TX builder of thirty $60,000 homes.

U s e s R-16 wal ls , R-26 i n ce i l ing and s ing le g lazed w indows w i ths t o r m w i n d o w s a s a n o p t i o n . B u i l d e r c l a i m s h i s h o m e s m e e t u t i l i t yc o m p a n y r e c o m m e n d e d l e v e l s s o d o e s n o t p l a n o n m a k i n g c h a n g e s .

B u i l d e r w i l l i n c r e a s e a m o u n t s w h e n p u b l i c d e m a n d s i t o r w h e ne n e r g y c o s t s r e q u i r e i t .

57. Arlington, TX builder of twelve $54,000 homes.

Uses R-19 in walls, R-30 in ceil ing and insulating glass windows.Bui lder says he is ded icated to bu i ld ing e n e r g y e f f i c i e n t h o m e s .

58. Tyler, TX builder of forty $28,000 homes,

U s e s R - 1 3 i n w a l l s , R - 2 0 i n c e i l i n g a n d s i n g l e g l a z e d w i n d o w s .W i l l i n c r e a s e i n s u l a t i o n l e v e l s i f m a r k e t d e m a n d s a n d i f u t i l i t yc o s t s i n c r e a s e .


59.

60.

61.

62.

63.

64.

65.

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67.

Dallas, TX builder

Uses R-11 in walIsBuilder does not pthe present levels

M a r i o n , A K b u i l d e r

U s e s R - 1 9 i n w a l l s ,

o f o n e t h o u s a n d $ 3 4 , 0 0 0 h o m e s .

R - 2 2 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .a n o n i n c r e a s i n g l e v e l s b e c a u s e h e b e l i e v e sa r e o p t i m u m f o r t h e c l i m a t e .

o f t w e n t y - f i v e $ 3 6 , 0 0 0 h o m e s .

R - 3 8 i n c e i l i n g a n d t r i p l e g l a z e d w i n d o w s .U s e s o v e r h a n g t o s h a d e w i n d o w s f r o m s u m m e r s u n . B u i l d e r d o e s n o tp l a n o n c h a n g i n g l e v e l s i n t h e n e a r f u t u r e . Th is i s t h e b u i I d e rwho developed the “Arkansas Story” method of building energye f f i c i e n t h o m e s .

Fort Worth, TX builder of three hundred $34,000 homes.

U s e s R - 1 1 i n w a l l s , R - 2 2 i n c e i l i n g a n d s t o r m w i n d o w s . p l a n s o nr e t a i n i n g p r e s e n t l e v e l s b e c a u s e o f b u y e r i n t e r e s t a n d e n e r g yc o n s e r v a t i o n .

B o u l d e r , C O b u i l d e r o f t h i r t y $ 4 4 , 0 0 0 h o m e s .

Uses R-19 in walls, R-30 in ceil ing and insulating glass windows.Roof overhang shades south windows against summer sun. Plans oni n c r e a s i n g r o o f i n s u l a t i o n t o R - 4 0 a n d c h a n g i n g t o w o o d w i n d o w s .B u i l d e r b e l i e v e s i t i s v e r y i m p o r t a n t t o b u i l d m u c h s m a l l e r h o m e s ,s a y 1 , 0 0 0 s q u a r e f e e t . H e s a y s " W e a r e t o t a l l y g o i n g t o r u n o u to f f u e l . W e h a v e t o r e d u c e t h e s i z e o f h o m e s ! ! "

S a l t L a k e C i t y , U T b u i l d e r o f s e v e n t y - t w o $ 4 1 , 0 0 0 h o m e s .

Uses R-19 in walls, R - 3 8 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .Plans on no changes because present levels are considered suff icient.

S a l t L a k e C i t y , U T b u i l d e r o f s i x t y $ 4 0 , 0 0 0 h o m e s .

U s e s R - n i n w a l l s , R - 1 9 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .P l a n s o n i n c r e a s i n g c e i l i n g i n s u l a t i o n i n t h e n e x t y e a r t o h e l pr e l i e v e t h e e n e r g y c r i s i s a n d h e l p s a l e s .

B o i s e , I D b u i l d e r o f t w e n t y $ 7 2 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 3 0 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .B u i l d e r i s u n s u r e i f h e w i l l m a k e c h a n g e s n e x t y e a r . I f s o , h ew i l l i n c r e a s e l e v e l s f o r e n e r g y s a v i n g s .

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 lineu p . ”

Denver , CO bu i lder o f fo r ty $ 5 7 , 0 0 0 h o m e s .

U s e s R - n i n w a l l , R - 1 9 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .

Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 349

68.

69.

70.

71.

7 2 .

73.

M a y p o s s i b l y c h a n g e i n s u l a t i o n l e v e l s n e x t y e a r d e p e n d i n g o n m a r k e tc o n d i t i o n s a n d c o s t .

C o l o r a d o S p r i n g s , C O b u i l d e r o f s e v e n t y $ 5 8 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 3 8 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .P l a n s o v e r h a n g s t o r e d u c e s u m m e r s u n e f f e c t o n s o u t h w i n d o w s . P l a n sn o c h a n g e s n e x t y e a r .

M e s a , A Z b u i l d e r o f t w e n t y - f i v e $ 3 5 , 0 0 0 h o m e s .

Uses R-6 to R-13 in wal ls and R-30 i n c e i l i n g . I n s t a l l s i n s u l a t i n gg l a s s w i n d o w s . O v e r h a n g s h a d e s s o u t h f a c i n g w i n d o w s f r o m s u m m e r s u n .D o e s n o t p l a n o n a n y c h a n g e s f o r n e x t y e a r . W i l l m a k e c h a n g e s b a s e do n c u s t o m e r d e m a n d .

P h o e n i x , A Z b u i l d e r o f f i f t e e n $ 1 2 5 , 0 0 0 h o m e s .

U s e s R - 6 o r R - 1 9 i n w a l l s , R - 3 8 i n c e i l i n g s a n d a b o u t o n e - h a l fs i n g l e g l a z e d a n d o n e - h a l f d o u b l e g l a z e d w i n d o w s . A n o v e r h a n g o f2 ’ t o 3 ’ h e l p s s h a d e s o u t h f a c i n g w i n d o w s f r o m t h e s u m m e r s u n .P l a n s o n u s i n g m o r e i n s u l a t i n g g l a s s w i n d o w s n e x t y e a r b e c a u s e i t i sa g o o d s a l e s f e a t u r e . I n c r e a s i n g e l e c t r i c r a t e s m a y s o m e d a y r e s u l ti n i n c r e a s e d i n s u l a t i o n l e v e l s .

M o u n t a i n H o m e , I D b u i l d e r o f o n e h u n d r e d $ 3 5 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l s , R - 3 8 i n c e i l i n g a n d i n s u l a t i n g g l a s s w i n d o w s .U s e s t r e e s t o s h a d e s o u t h f a c i n g w i n d o w s . B u i l d e r d o e s n o tp r e s e n t l y p l a n o n a n y c h a n g e s , b u t s a y s , “ I f a b e t t e r p r o d u c tb e c o m e s a v a i l a b l e , w e w i l l m a k e u s e o f i t . W e h a v e a v e r y s t r o n ge n e r g y c o n s e r v a t i o n p r o g r a m a n d w i l l c o n t i n u e t o u s e n e w e n e r g ys a v i n g c o n c e p t s . I t i s o u r i n t e n t t o g i v e o u r c u s t o m e r s t h eb e s t d e a l p o s s i b l e f o r h i s h o u s i n g d o l l a r . ”

D e n v e r , C O b u i l d e r o f t w o h u n d r e d $ 7 3 , 0 0 0 h o m e s .

U s e s R - 1 3 i n w a l l s , R - 2 2 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .S h a d e s s o u t h f a c i n g w i n d o w s w i t h o v e r h a n g s , a n d p o r c h a n d p a t i or o o f s . D o e s n o t p l a n o n m a k i n g a n y c h a n g e s s o o n . “ A s l o n g a sn a t u r a l g a s i s a v a i l a b l e a t c u r r e n t r a t e s , w h i c h a r e s t i l l l o w ,t h e r e i s n o n e e d t o g o f u r t h e r o n i n s u l a t i o n , ” h e s a i d .

W i l l i n c r e a s e w h e n t h e r e i s a d e m a n d f r o m b u y e r s o r a n a w a r e n e s so f f u t u r e e n e r g y p r o b l e m s .

Phoenix, AZ builder of two hundred $36,000 homes.

Uses R-22 in walls, R-33 i n ce i l ing and s ing le g lazed w indows.U s e s o v e r h a n g t o s h a d e s o u t h w i n d o w s . P l a n s n o c h a n g e s b e c a u s e ,“ W e h a v e t h e h i g h e s t i n t o w n . ”


74. Denver, CO builder of one thousand, four hundred $45,000 homes.

U s e s R - n i n w a l l s , R - 3 0 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .D o e s n o t p l a n a n y c h a n g e s b e c a u s e h e b e l i e v e s i t i s n o t e c o n o m i c a lf o r h o m e o w n e r o r b u i l d e r t o i n c r e a s e R - v a l u e s o v e r a b o v e a m o u n t s .M i g h t c o n s i d e r i n c r e a s e f r o m R - n t o R - 1 3 w a l l i n s u l a t i o n b e c a u s eo f t h e m i n o r c o s t i n c r e a s e . B u i l d e r b e l i e v e s i t w o u l d b e i m p o s s i b l ef o r h o m e o w n e r t o r e c a p t u r e a n y a d d i t i o n a l c o s t s p a s s e d o n b y t h eb u i l d e r b e c a u s e o f i n c r e a s e d c o s t o f i n s u l a t i o n .

75. Fort Collins, CO builder of fourteen $69,000 homes.

U s e s R - 1 3 t o R - 2 1 i n w a l l s , R - 3 5 i n c e i l i n g a n d i n s u l a t i n g g l a s sw i n d o w s . H a s 2 ’ o v e r h a n g t o s h a d e s o u t h f a c i n g w i n d o w s . P l a n so n 2 x 6 e x t e r i o r w a l l s o r u s e o f s t y r o f o a m s h e a t h i n g o n 2 x 4 w a l l sb e c a u s e c u s t o m e r s a r e b e c o m i n g m o r e a w a r e . E n e r g y c o s t s a n d p u b l i ca w a r e n e s s o f t h e v a l u e o f w e l l i n s u l a t e d h o m e s w i l l c a u s e b u i l d e rt o c o n s i d e r i n c r e a s e i n i n s u l a t i o n .

76. Maui , HI builder of twenty $95,000 homes.

U s e s n o i n s u l a t i o n i n w a l l s , n o i n s u l a t i o n i n c e i l i n g s a n d s i n g l eg l a z e d w i n d o w s b e c a u s e , a c c o r d i n g t o t h e b u i l d e r , “ T h e y a r e n o tn e e d e d i n H a w a i i . "

77. Walnut Creek, CA builder of $110,000 homes.

U s e s R - n i n w a l l s , R - 1 9 i n c e i l i n g s a n d s i n g l e g l a z e d w i n d o w s .N o t p l a n n i n g o n c h a n g e s b e c a u s e c o n s i d e r s p r e s e n t l e v e l s a d e q u a t ef o r c l i m a t e .

78. Fresno, CA builder of forty $55,000 homes.

U s e s R - 1 9 i n w a l l s a n d R - 3 0 i n c e i l i n g s . A t t e m p t s t o g e t 4 8 ”overhang to shade south windows in summer. I s c o n s i d e r i n g u s i n gl - i n c h s t y r o f o a m s h e a t h i n g . I n c r e a s e d l e v e l s o f i n s u l a t i o n g o o ds a l e s p o i n t .

Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 351

79.

80.

81.

82.

83.

Seattle, WA builder of twenty-five $65,000 homes.

Uses R-19 in walls, R-30 in ceil ing and insulating glass windows.Does not plan on changes in future. Says, “We have always insulatedthis way”.

Tampa, FLA builder of 150 $59,000 homes.

Uses R-3 masonry walls, R-13 in wood frame walls, R - 2 6 i n c e i l i n g sa n d s i n g l e g l a z e d w i n d o w s . P l a n s o n n o c h a n g e s n e x t y e a r b e c a u s e ,“ W e f e e l t h a t , w i t h o u r p r e s e n t l e v e l s , w e a r e g i v i n g o u r b u y e r st h e b e s t i n s u l a t i n g e n v e l o p e f o r t h e i r d o l l a r . I n c r e a s i n g R v a l u e sw o u l d s p e n d o u r c u s t o m e r ’ s d o l l a r w i t h o u t a d e q u a t e r e t u r n ” .

M inneapo l is , MN bu i lder o f twenty - four $ 9 7 , 5 0 0 h o m e s .

Uses R-20 in walls, R - 3 0 i n c e i l i n g s a n d i n s u l a t i n g g l a s s w i n d o w s .P l a n s o n i n c r e a s i n g w a l l a n d c e i l i n g i n s u l a t i o n a n d t r i p l e g l a z i n gm o r e w i n d o w s t o r e d u c e e n e r g y c o s t s a n d t o u p g r a d e h o m e s .

H u t c h i n s o n , K a n s . b u i l d e r o f t h i r t y $ 4 7 , 0 0 0 h o m e s .

U s e s R - n i n w a l l s , R - 1 9 i n c e i l i n g s a n d s t o r m w i n d o w s . S h a d e ss o u t h f a c i n g w i n d o w s w i t h w i d e o v e r h a n g s a n d p o r c h e s . P l a n s o ni n c r e a s i n g i n s u l a t i o n a m o u n t s n e x t y e a r b e c a u s e o f c o n s u m e r d e m a n da n d b e t t e r s a l e s . H e a l s o b e l i e v e s i t t o b e i n t h e p u b l i c i n t e r e s t .H e s a i d , “ W e t h i n k t h e i n d u s t r y n e e d s t o e s t a b l i s h ( i n s u l a t i o n )s t a n d a r d s . A l l w e a r e g e t t i n g i s s l a n t e d i n f o r m a t i o n f r o mm a n u f a c t u r e r s ” .

I n d i a n a p o l i s , I n d . b u i l d e r o f t h i r t y $ 6 3 , 0 0 0 h o m e s .

U s e s R - 1 9 i n w a l l s , R - 3 0 i n c e i l i n g a n d d o u b l e g l a z i n g i n w i n d o w s .D o e s n o t k n o w w h e t h e r h e w i l l c h a n g e i n s u l a t i o n l e v e l s b u t m a y“ T o s a t i s f y t h e b u y e r a n d c o n s e r v e e n e r g y ” . I s c o n c e r n e d a b o u ti n c r e a s i n g c o s t s a n d b u y e r ’ s a b i l i t y t o a f f o r d n e w h o m e s .


The following three tables represent the homes built by the

e i g h t y - t h r e e s u r v e y b u i l d e r s . T h e d a t a h a v e l i t t l e , i f a n y , s t a t i s t i c a l

v a l i d i t y b e c a u s e t h e s a m p l e w a s n o t chosen a t random and the response

d i s t r i b u t i o n d o e s n o t r e s e m b l e t h e t o t a l p o p u l a t i o n d i s t r i b u t i o n .

T h e t a b l e s a r e p r e s e n t e d o n l y t o g i v e a n i n d i c a t i o n o f h o w t h e

e i g h t y - t h r e e r e s p o n d e n t s c o l l e c t i v e l y i n s u l a t e t h e i r h o m e s a n d h o w m u c h

t h o s e h o m e s c o s t .


W e i g h t e d A v e r a g e I n s u l a t i o n a n d P r i c e B y R e g i o n

R e g i o n

N e w E n g l a n d

M i d d l e A t l a n t i c

E a s t N o r t h C e n t r a l

W e s t N o r t h C e n t r a l

S o u t h A t l a n t i c

E a s t S o u t h C e n t r a l

W e s t S o u t h C e n t r a l

M o u n t a i n

P a c i f i c ( 1 )

P a c i f i c ( 2 )

Tota l U .S . (1 )

H o u s e s

222

184

523

372

461

434

1567

2321

85

65

C e i l i n g R

2 1 . 2

2 7 . 8

2 5 . 4

2 1 . 6

2 4 . 1

1 7 . 7

2 3 . 4

3 0 . 0

2 2 . 9

3 0 . 0

Weighted AveragesWall R

14.913.9

13.5

13.2

13 .0

13.1

12.513.1

14.519.0

G l a z i n g

1 . 6

2 . 0

2 . 0

2 . 1

1 . 3

2 . 0

2 . 0

1 . 9

1 . 3

1 . 4

6169 25.6 13.1 1.8

Price

$43,94653,223

56,23751,393

47,38053,115

34,121

44,65566,88258,231

$44,532

(1) including Hawaii

(2) Excluding Hawaii


P r ice Range

$25-35,000

36-45,000

46,55,000

56-65,000

66-75,000

76-125,000

T o t a l s

H o u s e s

1675

1008

2373

497

316

230

6099

W e i g h t e d A v e r a g e I n s u l a t i o n B y P r i c e R a n g e

A v e r a g e A v e r a g eC e i l i n g R W a l l R

23.6 12.7

26.5 12.6

26.8 12.2

26.7 13.0

25.4 14.0

28.5 16.1

25.9 12.7

A v e r a g eG l a z i n g

2 . 0

1 . 7

2 . 0

1 . 5

2 . 0

2 . 3

1 . 9

N o t e : N o t i n c l u d e d i n a b o v e w e r e ( 5 0 ) $ 2 1 , 0 0 0 F l o r i d a h o m e s w i t h R - 9 i n c e i l i n g a n d O i n w a l l sw i t h s i n g l e g l a z e d w i n d o w s a n d ( 2 0 ) $ 9 5 , 0 0 0 H a w a i i h o m e s w i t h O i n c e i l i n g a n d O i n w a l l sw i t h s i n g l e g l a z e d w i n d o w s .


A v e r a g e P r i c e o f L o t a n d H o u s e , B y R e g i o n

R e g i o n

N e w E n g l a n d

M i d d l e A t l a n t i c

E a s t N o r t h C e n t r a l

W e s t N o r t h C e n t r a l

S o u t h A t l a n t i c

E a s t S o u t h C e n t r a l

W e s t S o u t h C e n t r a l

M o u n t a i n

P a c i f i c ( 1 )

P a c i f i c ( 2 )

N a t i o n a l ( 1 )

Lot

$10,1079,846

15,240

7,5556,823

10,410

6,7557,993

19,19516,712

8,636

%

23.018.527.114.714.419.619.817.928.728.719.4

H o u s e

$33,83843,377

40,99743,838

40,55742,705

27,366

36,66247,687

41,519

35,896

%

77.0

81.5

72.9

85.385.6

80.4

80.282.1

71.371.380.6

T o t a lSe l l ing Pr ice

$43,946

53,223

56,237

51,393

47,380

53,11534,121

44,655

66,882

58,231

44,532

( 1 ) I n c l u d i n g H a w a i i

( 2 ) E x c l u d i n g H a w a i i

o