Energy Rated Homes of Colorado

Description

The Energy Rated Homes of Colorado (ERHC) program combines an energy ratings system with financial incentives to encourage Colorado homeowners, builders and buyers to invest in energy-efficient buildings and appliances.

Through its leading-edge home energy rating system, called E-Star^TM, ERHC provides to homeowners and builders an energy-efficiency analysis of a current or proposed structure.  Based upon this analysis, ERHC recommends improvements that would increase energy efficiency, save money and reduce air pollution through reduced energy use.

In addition to the savings provided through reduced energy consumption, the program offers financial incentives up front.  The program helps participants take advantage of state laws that allow lenders to add the cost of energy improvements to a new home purchase or home refinancing loan, and that allow homeowners and builders to increase the appraised value of their homes by an amount equal to the present value of the projected energy savings.

Additionally, an E-Star home energy rating from ERHC provides Colorado lenders and appraisers with a reliable estimate of how much monthly income a home will consume for energy use.  Lenders can use that information to offer better qualifying rates to purchasers of energy-efficient homes, thus for the first time giving market signals for the benefit of energy efficiency investments.

Finally, the program is creating environmentally-sound employment in Colorado through increased demand for qualified professionals to perform home improvements and to provide energy ratings of structures.  The shift of resources from energy consumption to energy efficiency is particularly beneficial to the community, as money paid to installers of energy upgrades usually stays in the community, while money paid to utilities usually flows out.

Through these efforts, it is the goal of the program to institutionalize energy ratings and energy improvements within the home buying process and to make energy rating as commonplace as home inspection.

Program Highlights

Program Details

• Currently, the program offers an energy-efficiency rating based upon a review of a structure's size, its construction type, insulation levels, heating system efficiency, air tightness and solar orientation. Over time, the ratings will expand to include additional factors and so too will the number of recommended improvements.
• Eventually, the goal is to enable weatherization agencies to use energy ratings to provide for their low-income clients by evaluting cost-effective opportunities for energy improvements and tracking projected annual energy savings.
• The program will be expanded in the future to generate ratings of HUD-code dwellings such as mobile homes.

Local utilities provide to participants estimates of air emissions, such as carbon dioxide, carbon monoxide, particulates, nitrous oxides and sulfur dioxide, that will be avoided by making the recommended upgrades.

The program promotes the use of solar energy.  Credits for other renewable energy systems (such as wind power and micro hydro power) are also available.

• Homeowners can qualify for larger loans to help pay the cost of improvements.
• Because the cost of improvements can be included in a home appraisal, the program helps to raise property values.
• The program creates local jobs.
• Nationally, only ERHC has been effective at securing the participation of utilities as paying cosponsors, which ensures market support for the initiative.
• The programs include more than $1 million in consumer and builder incentives to encourage the pursuit of energy efficiency upgrades.
• The program is projected to reach the break even point and become financially self-sufficient in its fourth year of operation.

Vital Statistics

• Program Management/Partnerships: The Energy Rated Homes of Colorado program is administered by the Colorado Housing and Finance Authority and works in partnership with the Colorado Office of Energy Conservation, Freddie Mae and Freddie Mac, numerous utilities, lenders, appraisers and realtors.
  
  
• Budget: Total administrative program costs for the first year were $300,000.  Costs are expected to drop 20% in the third year and to drop again in the fourth.
  
  
• Community Served: The more than 2 million Colorado residents living in 850,000 owner-occupied dwellings.
• Measures of Success:
  • To date, 60 E-Star raters have been certified, and more than 1,500 E-Star^TM lenders, appraiser and realtors have been trained to participate fully in the program.

• During the first year, 400 ratings were performed and 22 Colorado builders committed to building their homes to a higher energy standard.
  
  
• Fifteen states have applied to Freddie Mae and Freddie Mac to adopt the Colorado energy and lending guidelines.

  Projections are that, when fully implemented:

• The program will help more than 3,500 first-time buyers qualify for home ownership in the state.
• Over 20 years, the program will create more than 400 permanent jobs in the state.
• The program will reduce consumer energy costs by $83 million.
• The program will save more than 19 million cubic feet of natural gas.
• The program will reduce carbon dioxide (CO₂) emissions by 830,000 tons.
  
  

 

 

Published: May 1997

Success stories designed by Mark W. Nowak

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