Residential Energy Conservation

July 1979

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

For sale by the Superintendent of Documents, U.S. Government Printing Office

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

This report is the result of a request from the Technology Assessment Board

that the Office of Technology Assessment (OTA) analyze the potential for conserving energy in homes in terms of energy and costs. The report reviews existing and

promising technologies, and a broad set of issues affecting why these technologies

are or are not used, how their level of use and effectiveness can be improved, and

related Federal programs and policies.

The choices Congress makes in framing energy conservation policy reflect society’s views of the present and the future, its concept of the appropriate role of Government, and its sense of urgency about the changing energy picture. The diverse

nature of residential housing in this country, the many decisions involved in planning, building, buying, and operating a home, and the basic desire of consumers to

be allowed the maximum freedom of choice– all of these factors make policy decisions in this area difficult.

This study focuses on the demand aspect of residential energy use, specifically

those functions that consume most of a home energy budget— fuel to heat and cool

space and to heat water. A number of related issues are relevant to this topic but go

beyond the scope of the study: land use patterns, transportation habits, protection

of residential customers as purchasers of certain types of energy, centralized versus

decentralized power sources, and cogeneration. While these issues are important,

this study deals only with ways to improve energy efficiency within the 80 million

existing housing units and in housing to be constructed over the next two decades.

Active solar systems are not included, because of the recent publication of OTA’s

Application of Solar Technology to Today’s Energy Needs.

Conservation as discussed in this analysis is the substitution of capital, labor,

and ingenuity for energy, in the form of products that make a home more energy

efficient. This definition relies on making productive investments that provide the

same level of comfort and convenience with less energy. Homeowners and renters

who also choose to change their styles of living could achieve savings beyond those

resulting from conservation technologies alone. This is a conservative definition of

conservation that does not treat ethical arguments or other areas of debate.

Although based on the technology of energy conservation, the report also addresses

human factors that play such a major role in shaping energy consumption. Choices

open to builders, designers, suppliers, local and State officials, lenders, utilities,

owners, renters, and others are examined Thus, this work attempts to address comprehensively a problem that at first appears simple, but proves to contain many economic, behavioral, and motivational variables, many technical and human unknowns, and many possible policy paths.

As this report goes to the 96th Congress, the problems generated by an altered

energy supply situation are clear and dramatic. I n addition to broad policy questions such as the contribution that conservation can make and the choice between

types of policy approaches, very specific questions—such as standards for new

housing–face the Nation. I believe this report can assist Congress in dealing with

these vital issues.

DANIEL DE SIMONE

Acting Director

iii
Residential Energy Conservation Staff

Lionel S. Johns, Assistant Director

Energy, Materials, and Global Security Division

Richard E. Rowberg, Energy Group Manager

Nancy Carson Naismith, Project Director

David Claridge Steve Plotkin Joanne Seder

Pamela Baldwin Doreen McGirr

Richard Thoreson John Furber Rosaleen Sutton

Lisa Jacobson Lillian Quigg

Contractors and Consultants

Booz, Allen & Hamilton John Bell

Consumer Federation of America Richard Bourbon

Design Alternatives Robert D. Brenner

Malcolm Lewis Associates Robert Dubinsky

NAHB Research Foundation Dennis Eisen

Oak Ridge National Laboratory Frederick Goldstein

Technology & Economics C. Alexander Hewes, J r

OTA Publishing Staff

John Murray McCombs

Joseph Mohbat

Lee Stephenson

Robert Theobald

John C. Holmes, Publishing Officer

Kathie S. Boss Joanne Heming
Residential Energy Conservation Advisory Panel

John H. Gibbons, Chairman

Director, Environment Center, University of Tennessee

John Richards Andrews

Architect

Robert E. Ashburn

Manager, Economic Research Department

Long Island Lighting Company

Edward Berlin

Leva, Hawes, Symington & Oppenheimer

Ellen Berman

Executive Director

Consumer Energy Council of America

Joel Darmstadter

Senior Fellow

Resources for the Future

Sherman B. Given

President

Morley Construction Company

Donald Holtzman

President

Holtzman Petroleum Company

William Konyha

First General Vice President

United Brotherhood of Joiners &

Carpenters

W. B. Moore

Vice President Operations/Marketing

Gulf Reston, Inc.

Donald Navarre

Vice president, Marketing

Washington Natural Gas Company

Harold Olin

Director of Construction Research

U.S. League of Savings Association

David Rickelton

Consulting Engineer

Andy Sansom

Energy Institute

University of Houston

Samuel Stewart

Car/son Companies, Inc.

Grant P. Thompson

Senior Associate

The Conservation Foundation
Reviewers and Friends

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

study.

Robert Naismith Lee Schipper

Atlantic Research Corporation Lawrence Berkeley Laboratory

Alan Ackerman, Energyworks, Massachusetts

George Amaroli, Public Utility Commission, State of California

Carl Bernstein, Lawrence Berkeley Laboratory

Ed Bistany, Office of Energy Resources, State of Georgia

Ken Bossong, Center for Science in the Public Interest

Mary Love Cooper, Legislative Counsel Bureau, State of Nevada

Alan S. Davis, National Consumer Law Center

Gary DeLoss, Environmental Policy Center

Bruce Hannon, University of IIIinois

Craig Hollowell, Lawrence Berkeley Laboratory

Betsy Krieg, Lawrence Berkeley Laboratory

Sally Cook Lopreato, University of Texas

Ed Meyer, Office of Energy Resources, State of Georgia

Harvey Michaels, Energy Office, State of Massachusetts

David Norris, Energy Task Force, New York City

EIliott Wardlaw, Energy Management Office, State of South Carolina

Edith Woodbury, Woodward East, Detroit
Contents

Chapter

1.

Il.

Ill .

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, SingleFamilyAttached, Low-Rise Multifamily, and Mobile

Homes–1975-76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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Volume ll—Working Papers

(These working papers will be available from the National Technical Information Service.

PIease contact the OTA Public Affairs Office for details)

1. Low-Income Consumers’ Energy Problems and the Federal

Government’s Response: A Discussion Paper–prepared by

Consumer Federation of America

Il. Description and Evaluation of New Residential Energy

Efficient Technologies—prepared by Technology &

Economics

vii
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY

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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FIGURES

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

Americans are responding to a changed

energy situation by rapidly curtailing the direct

use of energy in their homes. The patterns of

energy use established by households in the

1960’s have changed dramatically, Residential

energy use, which grew at a rate of 4.6 percent

per year during the 1960’s, has grown at an

average annual rate of 2.6 percent since 1970.

In 1977, Americans used 17 quadrillion Btu*

(Quads) of energy in their homes, 22 percent of

the total national energy use. Had the growth

rate of the 1960’s continued, the Nation wouId

have used an additional 2.5 Quads–equivaIent to 430 million barrels of oil – in 1977.

As impressive as these figures are, they can

be better. Savings of more than 50 percent in

average use by households, compared to the

early 1970’s, are already being achieved in

some new homes, and experiments with existing homes indicate that similar reductions in

heating requirements can be realized through

retrofit. These savings can be achieved with existing technology, with no change in lifestyle

or comfort— and with substantial dolIar savings to homeowners. However, more sophisticated design, quality construction, and careful

home operation and maintenance will be required.

For the residential sector as a whole, the

potential energy savings can be seen in

another way. If the trend of the 197o’s were to

continue for the balance of the century, the

residential sector would use about 31 Quads of

energy in 2000. But if investments were made

in home energy conservation technologies up

to the point where each investor received the

highest possible dollar savings (in fuel costs)

over the investment’s life, energy use in the

year 2000 would be reduced to between 15 and

22 Quads, depending on the price of energy.

The cumulative savings between now and 2000

compared to the 1970’s trend would be equivalent to between 19 biIIion and 29 billion barrels of oil. Despite the sound economic reasons

for achieving these savings, there are reasons

why they may not be reached. This report ex-

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

amines the underlying problems and what to

do about them.

Following this section, the study’s major

findings are presented. They lead to these conclusions, among others:

1.

2.

Analysis of data on price and consumption, combined with research on consumer motivation, indicates that the desire to

save money is the principal motivation for

changes in energy habits (turning down

the thermostat at night) and investment in

conservation (purchasing insulation or

having the furnace improved). This report

outlines the approximate level of energy

savings that might result from investments

up to the point where dolIar savings over

the life of the investment are greatest. If it

is national policy to encourage energy

savings beyond this point—for example,

to the point where investments in energy

savings provide smaller economic return

but greater energy savings– additional incentives would be required. The difference between these two points is substantial in energy terms, because once a dwelling is efficient, costs of operation are

relatively insensitive to energy prices.

Such a shift would be analogous to the

standards set in 1975 to improve energy

performance of new cars. In addition to

price or economic incentives, regulation

could also increase energy savings.

One of the principal ways to improve energy use Iies in the area of information

and technology transfer. Those who actually implement policy need more training.

Policy may be made in Washington, but is

carried out by tradespersons, builders,

local code inspectors, loan officers, appraisers, energy auditors, heating technicians, State and local officials, do-ityourselfers — literally thousands of individuals. The essentially human nature of

the effort is both a strength and a weakness — many are willing to take some action, but there are many obstacles to

perfect performance.

3
4 . Residential Energy conservation

3. The diversity of the housing stock, number of persons involved, requirements for

technology transfer, and product availability all argue for careful pacing of Federal policy, based on setting goals over at

least a decade. For example, short-term

programs, aimed at one particular solution, appear to constrain the market and

may not encourage optimal solutions.

This is particularly true of programs

aimed at the existing housing stock. Anticipation of the tax credit for insulation

caused increased prices and spot shortages and may not have produced substantial insulation beyond what would have

occurred in any event. Another reason for

deliberate policymaking is that knowledge of the nature of a house as an energy

system is imperfect. Although a good deal

is already known about saving energy,

more remains to be learned. Because

choices will vary with climate, local resources need to be developed; these resources will include both trained personnel and improved data.

Policy choices will reflect the goals for savings and costs. If the current trajectory is appropriate, present programs appear to be adequate in number and range. A lower growth

rate can probably be accomplished by vigorous congressional oversight, some administrative adjustments, review and fine-tuning of

program operation, and improved information

efforts. If the sector is already moving fast

enough, less emphasis could be placed on residential energy use. In order to move much

more rapidly, stronger measures wiII be required. A great deal of energy could be saved

in homes above present levels; these savings

would stilI be cost-effective to the consumer.

A stronger program approach might reflect national security goals and a high return on the

housing dollar.

The following sections consider the trends illustrated by this volume and the major factors

affecting residential energy use and conservation: price, consumer attitudes, the poor, existing housing stock, building industry response, design opportunities, the role of States

and localities, the utilities, and Government

programs.

Trends in Residential Energy

Consumption

The decade of the 1970’s has brought significant changes in the historical patterns of

growth in energy consumption in the residential sector. Earlier, Americans as a group were

increasing their use of energy in the home at an

average rate of 4.7 percent per year; in the

1970’s, the annual growth rate has averaged 2.6

percent. Moreover, the remaining growth is attributable primarily to a growth in the number

of households; the amount of energy used in

each household has remained almost constant

between 1970 and 1977. In 1970, 63.5 million

households collectively used 14 quadrillion

Btu of energy (Quads) or about 230 million Btu

apiece. (A Quad is equivalent to 500,000 barrels of oil per day for 1 year—or the annual

energy required for the operation of eighteen

1,000-MW powerplants–or 50 million tons of

coal. )

In 1977, residential use of energy accounted

for 22 percent of total energy consumption,

totaling 17 Quads. By comparison, the commercial sector in 1977 used 11 Quads (1 4.5 percent of total), transportation accounted for 20

Quads (26 percent), and industry used 28

Quads (37 percent). Total 1977 U.S. energy use

was 76 Quads.

Many factors have contributed to the

slowed growth in residential energy use in this

decade. Among them are energy price increases, economic fluctuations, demographic

trends, the OPEC embargo, and consumers’ responses to rising awareness of energy. Demonstrating a precise cause-and-effect relationship

between any one of these factors and the

lower growth rate is statistically impossible.

Fortunately, isolating and quantifying the contribution of each factor is probably of limited

utiIity to policymaking.

The rapidity of the slowdown suggests that

actions taken to reduce consumption so far are

primarily changes in the ways people use their
Executive Summary ● 5

existing energy equipment — e.g., turning down

thermostats and insulating. A longer time

frame is normally required to bring about

widespread replacement or improvement of

capital stock, including heating equipment

and housing units.

No one can say with certainty whether the

residential energy growth rate will stabilize at

today’s rate, drop still further, or creep back

up toward earlier trends. Countervailing forces

could work in either direction. The current

demographic trend toward slower population

growth is expected to continue for the near

term, but household formation rates are likely

to exceed population growth rates. Energy use

in the residential sector can be expected to

grow faster than population as long as new

households are forming at a higher rate,

although construction of highly efficient new

housing would alter that presumption.

On the other hand, if energy prices continue

to rise, greater investments in conservation

(energy productivity) measures will become

cost-effective for consumers. Moreover, while

there will be more households, each is likely to

be smaller; having fewer people at home generally means smaller dwelling units and lower

levels of energy consumption in each home.

Very few experts believe that residential energy growth rates will ever again approach the

very high pre-1970 rates.

If residential energy use were to continue

growing by 2.6 percent annually until the year

2000, total residential consumption in that

year would approximate 31 Quads. This is considerably lower than the 48 Quads American

homes would consume in 2000 if growth patterns of the 1960’s had continued. Yet actual

consumption in 2000 might be even lower than

31 Quads, driven down by rising prices and a

number of other factors, including improved

design and technology as well as evolving consumer awareness of the economic benefits of

conservation.

If residential energy growth were to match

the rate of household formation — that is, if the

energy consumption per household were to remain constant between now and 2000—total

residential sector consumption in that year

would be 24 Quads. This trend wouId represent

an annual growth rate of 1.6 percent, which is

the household formation rate projected by the

Oak Ridge National Laboratory housing

model. This modest decline from 1970-77

trends would appear to be relatively easy to

achieve under current laws and programs (with

improvements in their implementation in some

cases) and without sacrificing personal comfort, freedom, or social goals that require increases in energy consumption for those at the

low end of the economic spectrum. Much of

the decline could be accomplished through replacement of capital stock and construction of

smaller, more efficient housing units to accommodate new households.

An even lower consumption Ievel in 2000

could be achieved through an optimal economic response — one in which all residential

consumers made the maximum investment in

conservation technologies that they could

justify through paybacks in reduced energy

costs over the remaining Iives of their dwelling

units. Such responses would depend on the

levels of energy prices over the next two

decades. Using a range of plausible energy

prices, possible residential energy consumption levels were projected to be between 15

and 22 Quads in 2000, based on optimal economic response. Few observers expect the

lower end of the range to be achieved even

using the highest price assumptions, because

of imperfections in the marketplace. Circumstances requiring especially vigorous public

policies could create additional incentives to

consumers to approach this level of savings.

The middle ground between the 1970’s trend

and the optimal economic response trend is

seen by many as a reasonable public policy

target. Measuring our progress toward this conservative goal would be relatively easy; each

year, the goal would be to maintain constant

national average energy consumption per

household by keeping the growth in residential

energy use to a rate determined by the household formation rate. This target appears to be

manageable within our current social, political, and economic situation. This option would

not involve sacrifice, because it would allow

for a constantly improved level of residential
6 ● Residential Energy Conservation

amenities that can be achieved by means of

improved energy productivity (less energy per

unit of amenity provided). Some critics will

view this goal as too easy, too modest; considering depletion of nonrenewable resources,

maximum return on housing dollars, environmental quality, and the national security implications of our oil imports. (Comparative

energy use projections showing these Quad

levels appear graphically in figure 1.)

Figure 1 .—Comparative Energy Use Projections

(Residential sector)

Quads

50

40

30

20

10

0

1970 1975 1980 1985 1990 1995 200 0

Year

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

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

C – Residential consumption based on constant level of

energy use per household; growth results from increase in number of households.

D-E – Range of “optimal economic response” based on

assumption that energy saving devices are installed as

they become cost-effective. Range is formed by price;

upper boundary represents response to lowest projected price, lower boundary represents response to

highest projected price.

NOTES: These curves are not given as predictions of the future, but as points of

comparison for discussion See chapter I for detailed information.

For SI users. Quads can be substituted using exajoule (EJ) on this

figure within the accuracy of the calculations. One Quad ~ 1 EJ.

Residential Energy Prices

Rising energy prices appear primarily responsible for reduced residential consumption

in recent years. Rapid growth in the 1960’s accompanied a decline in real energy prices,

while the growth slowdown of the 197o’s has

concurred with a rise in real prices. The increase in energy prices has been especially

marked since 1974, when the embargo reached

its peak and the Arab oil cartel began a quintupling of oil prices. The OPEC nations’ recent

decision to raise oil prices in 1979 and other

Middle East developments can be expected to

affect U.S. energy consumption patterns further

For the residential consumer, the 1970’s

have already brought a 65-percent rise in home

oil-heating bills, a 37-percent increase in the

natural gas bill, and a 25-percent rise in the

electricity biII (in constant 1976 dolIars). I n current dollars, the increases have been far more

dramatic Even so, price controls on oil, average costing of electricity, and Government regulation of natural gas prices at the wellhead

have resulted in subsidized retail prices that

fail to reflect the full replacement cost of oil,

gas, and electricity generated from either nuclear or fossiI fuels.

It is important that energy prices represent

true replacement costs whether this is higher

or lower than current energy prices. It is only

under this circumstance that consumers have a

correct signal to use in determining how much

to invest in conservation if they are to achieve

maximum dollar savings. Furthermore, if society decides that information on items such as

environmental damage, resource depletion,

and reliance on foreign oil would not be accurately given by normal market forces, than it is

possible to adjust the replacement cost accordingly or to provide equivalent financial incentives. I n any case, since dollar savings are

the principal motivation for energy conservation, it is important that conservation policy be

concerned with energy prices.

Price increases clearly mean less disposable

income for consumers. Stretching the available resources through higher productivity of

energy use is a less costly approach than developing new supplies. Improving energy productivity in household use helps to counter the inflationary impact of rising costs. A number of

policy responses are possible between holding

prices steady or allowing them to rise directly

in response to costs; these include matching
price increases with income subsidies for all or

some portion of the population, using taxes to

protect against windfall profits, and other

strategies. Price-based policy will be unacceptable to those who believe that consumers cannot withstand higher costs, or who believe that

price increases do not reflect true scarcity or

rising marginal costs.

Consumer Attitudes

The level of energy use in a given home is

greatly influenced by the attitudes, choices,

and behavior of its occupants, within a range

circumscribed by the limitations of the structure itself. Energy consumption in identical

houses may vary by as much as a factor of two

depending solely on these variables.

Available research data indicate that consumer motivation to invest in conservation

measures stems largely from a basic desire to

save money and resist rising prices. This is the

prime concern of homeowners. Energy costs

are now about 15 percent of the average annual cost of homeownership, and in the heating and cooling season monthly payments may

approach the level of the mortgage payment.

The dramatic increase in fuel costs, over the

very low costs of the 1960’s and early 1970’s,

has graphically demonstrated to residents that

reducing direct energy use is a wise investment. Early experiments in helping consumers

to change their energy use patterns suggest

that providing feedback, or quick response information on how much energy a home is

using, helps people conserve. Experiments with

special meters, report card billing by utilities

(bills that compare use for a month compared

to the same month last year), and similar techniques are now underway.

Consumers are frequently unsure about

what changes are most effective. Knowledge

about effective communication argues for improving local resources. Consumers have more

trust in information from their locality or State

than from remote institutions. The information

provided by the Federal Government and by

large oil companies is not well received.

It is unreasonable to expect that consumers

will make major housing or behavioral choices

based on energy alone. Having adequate space

for a growing family, being near schools and

shops, feeling certain that a home is warm

enough to ensure health and comfort—these,

too, are important consumer values.

Data on attitudes and behavior indicate that

information programs that emphasize the

positive economic benefits of conservation are

more likely to show results than those based

on ethical urgency. Moreover, public statements or campaigns that link conservation and

sacrifice, such as suggestions that conservation means residents should be cold in their

homes, may be ineffective, if not counterproductive.

More research on actual household energy

use patterns, as welI as attitudes and behavior,

would improve the policy makers’ ability to

select successful motivational strategies.

Low-Income Consumers

Although rising energy prices provide a

strong incentive for widespread conservation,

they present special hardships for low-income

consumers who cannot absorb higher utility

and fuel bills, and have Iittle access to investment capital. For the 37 million persons (17

percent of the U.S. population) with household

incomes at 125 percent of the poverty level or

below, utility costs typically consume between

15 and 30 percent of the family budget.

Some low-income families spend as much as

half their budgets on energy in the heating season, yet a significant portion of this heat is lost

because of substandard housing. Poor and

near-poor households in rented housing are

handicapped with regard to energy, as they

usually do not control their heating systems or

their dwelling’s maintenance and improvement.

Efforts to relieve the energy-based economic

problems of the poor have taken two ap-
8 ● Residential Energy Conservation

preaches: first, providing home improvements

intended to reduce energy needs, and second,

providing financial assistance to meet energy

bills. Neither approach has been totally satisfactory or adequately deployed. Although

direct aid by “weatherization” appears highly

cost-effective in the long run, it is impossible

under current funding to reach more than 3

percent of all eligible homes each year. Labor

shortages and other programmatic problems

have also hampered the Federal weatherization efforts, although the basic concept is both

sound and popular. Because the poor frequently cannot reduce consumption and have no access to capital to improve their housing, Federal funds can cause energy savings that would

not be achieved without such assistance, as

well as improved Iiving conditions.

Financial assistance for payment of utility

bills is more controversial. Questions about

this approach reflect a larger issue, which may

be described as the “right to energy” doctrine.

As energy is as necessary as decent housing,

adequate nutrition, and medical care— al I of

which the Government subsidizes to some extent— consumer advocates have argued that a

basic minimum quantity of energy should also

be subsidized for low-income persons. Socalled “lifeline” utility rates are one means of

subsidizing energy; early experiences with such

rates suggest, however, that they may provide

neither conservation incentives nor adequate

financial relief for many of the poor.

Other proposals include energy stamps and

large programs of emergency financial aid,

legal aid for poor persons dealing with utilities

and fuel providers, and procedures to prevent

shutoff of heat and power because of nonpayment during winter months. These programs

meet social needs but do not provide resiliency

to the problem. Because of a growing concern

among elected officials and the wider public

about the inabiIity of financial aid programs to

address basic causes of poverty, weatherization and broader housing programs designed

to put all persons in decent homes may offer a

better approach. Such a policy subsidizes

energy efficiency rather than price.

Existing Housing

Improving energy efficiency in existing housing wiII be a principal area of policy emphasis

in the next decade, as most of the population

wilI continue to be housed in the 80 million existing units. Both the largest savings of energy

and the largest amount of protection against

the impact of rising prices will come from “retrofitting” existing homes. owner-residents,

rather than builders, are the principal audience

for this effort.

Making homes use less energy without

lowering the level of comfort is not technically

difficult, but it requires careful attention to

the specific needs of the structure, quality

workmanship in improvements, and continuing

attention to the energy use patterns of the

residence. An audit by someone trained in

home energy use is necessary to identify the

optimal package of changes for a specific

home. Data on the energy characteristics of

the existing stock are inadequate, and this

complicates policy formulation. While Federal

level efforts at data collection may be the

most effective, States and localities are in a

better position to stimulate local conservation

efforts and to provide accurate technical information and guidance to occupants. States

and localities, along with trade and professional groups, wilI bear major responsibility for

training and for improving the quality control

of retrofit projects. Dissemination of technical

information by the Federal Government and

Federal work on appliance labeling and standards wiII underpin local efforts.

I n addition to the savings available through

tightening the thermal shell of the building,

substantial energy savings can be obtained

through retrofit of the heating and cooling

equipment, and through replacing the heating

and cooling devices with more efficient systems.

Present tax credits will encourage retrofit,

although such credits may represent a substantial revenue loss while not adding a large increment of investment. (The Congressional Budg-
Executive Summary ● 9

et Office estimates that many persons who install insulation, for example, would have done

so without the credit. ) Grants and direct assistance, such as weatherization, are most responsive to the needs of low-income persons. Home

improvement loans have not been attractive to

those making changes to their homes costing

less than $1,000, but this could change if fuel

prices continue to rise and pressure to retrofit

is increased.

As in the case of new housing, lending institutions that finance mortgage lending could

play a critical role. If lending institutions reviewed energy costs of a home when considering a mortgage application, a total cost picture

would be made available to the prospective

purchaser. Funds available to the buyer to

finance conservation investments through the

mortgage would be amortized over a long period and would bring down monthly operating

costs. A more vigorous policy initiative would

require that existing housing be brought to a

specified standard of energy efficiency prior to

sale, or prior to utiIity connection.

Building Industry Response

The homebuilding industry appears to be responding to consumer demand, information,

and price and taking advantage of opportunities to improve energy efficiency. Typical new

construction already matches the preliminary

energy standards recently adopted by many

States (ASH RAE 90-75 or Model Code levels).

New building reflecting these standards is still

considerably below the level of energy efficiency indicated as cost-effective by OTA

analysis. Tighter code requirements, combined

with information targeted at builders and buyers, will help sustain and intensify the trend to

better homes.

Although the design and construction industry is fragmented and generally cautious

toward major change, it can respond quickly

and readily re-adapt its designs and methods

once the economic and technical feasibility of

new housing features or construction techniques are proven and accepted in the marketplace. For example, many builders are now

altering frame construction to utilize 6-inch

studs instead of the standard 4-inch studs. This

technique makes it easy to increase the

amount of insulation in the walls, and the

distance between the studs allows the change

without economic penalty. Encouraging

change in the industry requires making economic and technical determinations, judging

what will work and what will save money, and

providing that information to the key actors at

the right time. Principal actors for the residential sector are:

1 .

2.

3.

100,000 builders, who make the basic

decisions to build in response to what

they perceive market demand to be,

within the requirements of specific building codes and available materials;

21,000 lending institutions, which approve

financing for both builders and buyers;

and

homebuyers, who by their purchasing decisions determine the demand for housing

of varying types and prices, and thus influence the perceptions and decisions of

builders and lenders.

Building standards and codes directly affect

new construction. The stringency of codes will

reflect the policymaker’s views of the abilities

of the industry and the urgency of the energy

situation. Performance standards, now being

drafted by the Federal Government, are

needed to allow for flexibility and experimentation in construction. Application of performance standards in housing may be particularly delicate, because of problems of methodology and the resources of builders. The

average U.S. homebuilder constructs less than

20 homes a year, does not use sophisticated architects or engineers, and works in a highly

leveraged market. These builders may prefer a

simple code that can be easiIy followed by carpenters and laborers.

I n addition to standards and codes, changes

in the economics of the market can encourage

energy conservation. Broad interpretation of

tax credits and use of tax incentives, particularly tax incentives provided directly to the

builder, will stimulate greater change in new

housing.
10 ● Residential Energy Conservation

Affordability

Properly selected conservation choices will

lower utility’ costs and thus reduce the total

costs of homeownership and operation. The

possible effect of eliminating marginal buyers

from the housing market must be weighed

against the consequences of encouraging these

buyers to acquire homes that are likely to have

substantial and rapidly increasing monthly

energy bilIs. As fuel costs continue to rise, a

broader view of “affordability” is necessary.

Better dissemination of information on costeffective opportunities and Iifecycle costs to

builders, equipment suppliers, lenders, and

buyers may be a promising approach for increasing conservation investments.

Energy conservation features often add to

the initial cost of homes. Builders and lenders

are cautious about decisions to increase purchase costs, especially in Iight of dramatic increases in the price of housing in recent years.

Slightly increased first costs mean that marginal buyers may have to scale down their expectations. First-time homebuyers who have

limited savings for downpayments are more affected by increased downpayments than are

previous owners who have an equity to invest.

On the other hand, a substantial amount of

energy can be saved without great expense—

typically $1,500 to $2,000--and without complicated or untried devices. Some of the most

effective actions involve reducing air infiltration through caulking and weatherstripping, investments in storm windows and insuIation,

and improving the energy efficiency of heating

and cooling systems. The energy efficiency of

many new homes can be substantially increased by adding enough thermal protection

to allow a reduction in the size of heating and

ventilating equipment; in some instances this

choice has actual [y meant lower first costs.

Lending institutions can improve the flow of

information on total costs of homeownership

and operation by including energy costs when

calculating monthly payments on mortgage

applications. The mortgage transaction is a

critical intervention point, as buyers are focused on the home and money is being borrowed to be repaid over a long time period. A

calculation that includes likely energy costs

would give buyers, and lenders, a more complete estimate of total costs and could encourage cost-cutting investments. Federal leverage

could be used to provide additional funding

for conservation improvements at the time of

sale, subsidize downpayments or interest rates

for energy-efficient homes, or deny mortgage

funding to homes not meeting an energy standard. Federal and State energy agencies could

help lending institutions determine standards

appropriate to local conditions.

Design Opportunities

Energy-conscious design is a paradox: once

the most ancient of the builders’ skills, it is

being rediscovered as a modern trend. Proper

orientation of the home on the lot, thoughtful

placing and sizing of the windows, and

planned-in natural ventilation combined with

shading by eaves and trees produce houses

that use astonishingly little energy. Even

though the ideas are as old as shelter itself,

modern materials and design techniques can

adapt and improve the concepts for urban

America. Such homes are neither expensive

nor outlandishly designed, and need to be encouraged by Government action. However,

policy actions are difficult to develop because

energy-conscious design is part of the fabric of

the building itself. Unlike discrete, technological add-ens, energy-conscious design features

cannot easily be listed in a tax regulation or

building code. Special policy focus by Government on such designs may be particularly appropriate because there are few natural market forces to promote such building choice.

Even if the full advantages of energy-conscious design are not explored, quite conventional, off-the-shelf technologies now exist to

reduce heating and cooling loads at least 50

percent below those of homes built in the early

1970’s. Houses built using these technologies

will reduce energy use through greater efficiency with no change in living habits or level

of comfort. In fact, comfort may be increased

through reduction of drafts and cold spots.

The real bonus results from the low purchasedenergy costs of operating such homes. These
Executive Summary . 11

technological solutions to energy consumption — such as heat exchangers, “smart” thermostats, and draft-excluding devices — can be

easily encouraged by Government action

assisting the market.

Improved data collection is needed on

homes that use little purchased energy. Construction of such homes on a demonstration

basis, perhaps one in every county, could provide the type of direct learning experience

most valuable and influential for builders and

buyers.

Technologies now in the development or

commercialization stage will offer opportunities for energy savings well beyond the options

now available. More efficient furnaces, new

approaches for the design and construction of

walls and windows, and electronic systems to

monitor and control the operation of homes

are now being tested and used experimentalIy.

As these devices become more reliable and

lower in cost, the options for reducing home

energy use will increase dramatically.

States and Localities

States and localities bear the major responsibility for implementation of federally authorized residential conservation programs. Building code revision and enforcement, information and education efforts, quality control,

and regulation of utilities all come within the

jurisdiction of States, counties, and towns. The

priority assigned to conservation goals by

these levels of government will directly influence the level of effort and thus the resources

available to consumers and builders.

Current Federal policies both help and

hinder State and local efforts. Central difficulties include rapid pacing of Federal initiatives that may not match the capabilities of

the locality; failing to involve States and localities in preparing guidelines and reguIations;

placing responsibility for administering a large

number of complicated programs on State

energy offices that are frequently small, understaffed, and underfunded; and imposing Federal priorities that may not match local needs.

Programs designed with the needs and capabilities of the States in mind are most likely to

take root and remain effective as Federal priorities change and Federal funding fluctuates.

Localities work most closely with new construction through the building permit process.

Local code inspection offices may require

special help, both technical and financial, to

improve their level of activity. This will certainly be the case if Federal actions to mandate energy changes in building codes continue. WhiIe the needs of localities may press a

State energy office beyond its capabilities,

these off ices must recognize the importance of

providing resources to localities.

Transfer of information and technology

from the Federal ‘Government can be improved. Trained personnel, either from Washington offices or regional offices, could greatly

assist States in working out technical problems

and establishing ground rules for program

operation.

Utilities

The ways in which gas and electric utilities

can most effectively stimulate energy conservation in the residential sector are just beginning to be understood and exercised. As experience with utility-based conservation activities

is gained, early concerns about utility involvement in nontraditional activities (such as insulation financing) and uncertainty about the

impacts of innovative pricing and service delivery options (particularly time-of-use pricing

and load management) are being replaced with

encouraging empirical data.

Utilities can encourage residential energy

conservation through information programs

and home energy audits; financing and/or marketing insulation and other conservation devices; altering the rate structures to reflect

costs that vary with time of use; and instituting

programs of load management in the residential sector. Relatively few utilities have carried

out aggressive conservation programs to date,

although most electric and gas companies

have undergone some adjustments in their

management and planning functions as a resuIt of changing circumstances. WhiIe eco-
12 ● Residential Energy Conservation

nomic and social criteria encouraged rapid

energy growth in the years before 1973, more

recent phenomena — including rising fuel

costs, massive increases in capital requirements for new capacity, uncertainty about

future demand, and changing regulatory requirements – have all caused utilities to expect

and even encourage diminished growth.

Activities authorized by the National Energy

Conservation Policy Act of 1978 should yield

usefuI data over the next few years. The effects

of audit programs, cost-based rates, load management, and time-of-use pricing should be

carefully analyzed and the information widely

shared. Following evaluation, Congress may

wish to consider removal of the prohibition

against utility involvement in sale or installation of residential conservation measures.

Indoor Air Quality

Potential health effects of changes in the

quality of indoor air caused by energy conservation must be carefully monitored, and attention should be given to preventing negative effects as houses become tighter. As new standards lower the amount of “fresh” air moving

through homes to reduce heat (and cooling)

losses, concentrations of undesirable substances already present in indoor air will be intensified. Technological control measures are

available to prevent the buildup of concentrations of pollutants indoors.

There is strong evidence that concentrations

of several air pollutants tend to be high indoors. Existing houses with gas heating and

cooking appliances have been shown to experience levels of carbon monoxide (CO) and nitrogen dioxide (NO2

) that approach or exceed ambient air quality standards. Other pollutants

that may be significant in the indoor environment include respirable particulate, particulate sulfur and nitrogen compounds, nitric oxide (NO), sulfur dioxide (SO2

), radon, and

various organics. Aside from heating and cooking appliances, the sources of these pollutants

include building construction materials, cigarettes, aerosol sprays, cleaning products, and

other sources. If air exchange rates of new and

existing houses are significantly decreased

from present rates, indoor concentrations of

these polIutants will increase.

Control measures currently available to reduce the concentrations include filters and

electrostatic precipitators to reduce particulate levels; kitchen ventilation to reduce cooking-generated polIutants such as CO, NO, NO2

,

and SO2

; spray washing, activated carbon filters, and oxidizing chemicals to reduce airborne chemicals and odors; and forced ventilation with heat recovery (to minimize heat loss)

to reduce concentrations of all indoor-generated pollutants. A comprehensive approach

should include reduction of emissions by improved maintenance and design of stoves and

furnaces, reduction in household use of polluting chemicals, and similar measures.

Evaluation of these control measures requires an understanding of health effects of

ambient levels of indoor pollutants and the

concentrations of such pollutants with and

without controls in different housing situations. Thus far, the Federal Government does

not appear to have recognized the significance

of indoor air quality as a potential health problem. The Department of Energy (DOE) and the

Environmental Protection Agency (EPA) have

sponsored some early work in this area, but the

level of support has been very small. As might

be expected from the scarcity of research conducted, the level of understanding of the effects and causes of indoor air quality is insufficient to allow the definition of an optimum

strategy for linking energy saving construction

requirements and air treatment requirements.

Federal Conservation Programs

Federal programs support housing production and the maintenance of existing housing

by providing subsidies to certain classes of occupants, as well as mortgage loans, insurance,

and guarantees to lenders and property owners. Federal programs affect housing through

standards for construction and rehabilitation

of housing, regulation of the lending industry,

maintenance of a secondary market for mortgage lending, research and development

(R&D), financial assistance for community

development, tax credits and incentives, and
Executive Summary ● 1 3

programs specifically designed to provide information or technical assistance to encourage

conservation. Direct Federal construction,

such as housing provided by the Department

of Defense, affects the market for housing

technology and appliances through the procurement process and the use of standards.

Because of the wide variety of programs influencing both housing and conservation,

many mechanisms exist to affect energy consumption in homes. Recent legislative and administrative changes will help to save energy.

Energy conservation has not been a major priority for most Federal programs, and there has

not been strong coordination of the various

departmental efforts. A stronger commitment

to energy conservation, combined with improved technical work and more sophisticated

cost analysis, could mean a much stronger

response to conservation goals from both the

public and the private sector.

Some of the most important Federal actions

are Iisted here.

HOUSING STANDARDS

As a result of postembargo legislation, the

Federal Government is now more deeply involved than ever in defining energy-based

housing standards, which will eventually influence local building codes. Codes are an effective mechanism for altering construction practices, but they are implemented at the local

level, and great care is needed to ensure that

adequate time and resources for training accompany this new Federal-State-local approach.

States have been encouraged through Federal funding and training to adopt codes based

on an engineering approach. Existing legislation calls for the adoption of performancebased standards by 1980. Performance standards offer a unique and valuable way to encourage energy efficiency while allowing innovation and providing equal market access to

all types of construction. This type of standard

is also a totalIy new method, and there is no

agreement on the correct methods for calculation and review, particularly for residential

buildings. Despite a sincere desire by DOE to

solicit comments on draft standards, time

pressures generated by the current schedule do

not allow for adequate review and thoughtful

analysis. As a result, commitment to the current schedule will almost assuredly result in

litigation and dissatisfaction by both supporters and opponents of the standards.

A substantial period may be needed for

review and field testing of the new standards in

certain areas and markets. Transition to performance standards closely tied to existing

methods of analysis and review wilI increase

the Iikelihood of compliance.

RESEARCH AND DEVELOPMENT

The short-term focus of current DOE conservation R&D ignores some longer term options

that also have high returns. The attention to

commercialization strategies that characterize

the program is questionable, as rising prices

should enable the private market to absorb

commercialization costs. Research on attitudes, energy use patterns, institutional and

legal barriers to conservation, and similar important areas have not received adequate emphasis. Research and policy decisions on energy technology do not adequately consider the

conservation applications of new technologies; the potential of conservation to reduce

demand and provide time for shifting to new

energy systems is not fully appreciated. The

policy appears to reflect an attitude by DOE

and the Office of Management and Budget

that conservation should be viewed as a stop

gap that merits little Federal research funding,

in sharp contrast to new production approaches.

TAX POLICY

Federal tax policy is probably the major element in decisions by owners of rental property

on construction and rehabilitation. HistoricalIy, the tax code has encouraged low first-cost

(and therefore energy inefficient) housing, and

has protected owners to the extent that most

program efforts to improve tenant energy use

have been futile. Broader use of tax incentives

should increase the conservation response. At

least, policies should be examined to ensure
14 ● Residential Energy Conservation

that they do not continue to encourage energywasteful construction.

Similarly, the tax system can be used to

reward homeowners for investing in conservation. Critics of this policy believe that homeowners are sufficiently rewarded by the savings in fuel bilIs, and that the number of people 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 that

many conservation investments can save much

energy but are only a breakeven choice without additional incentives. Early Internal Revenue Service decisions on the eligibility of items

under the recently authorized conservation tax

credits show a reluctance to interpret the law

broadly, and raise special problems for energyconscious design approaches.

FEDERAL HOUSING PROGRAMS

Federally owned and subsidized housing

represents both a special responsibility and a

special opportunity for saving energy and

lowering total costs. Energy conservation has

had very low priority in most of this housing.

Funds and authorizations recently approved

by Congress will help to improve the efficiency

of these dwelIings. Improved levels of conservation wouId demonstrate real Federal commitment, improve the comfort level of the

housing, and save money as utility costs, which

are frequently subsidized, continue to rise.
Chapter I

TRENDS
Chapter I.—TRENDS

Page

Trends in Residential Energy Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Energy, Demographics, and Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Analysis of Electricity and Natural Gas Use as Functions of Weather

and Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Projections of Future Residential Demand . . . . . . . . . . . . . . . . . . . . . . 22

Discussion of Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Technical Note—Residential Energy Consumption Analysis. . . . . . . . . 26

I. Residential Energy Use by Fuel . . . .

2. National Average Annual Heating Bills

Page

. . 17

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

FIGURES

Page

2. Fuel Prices 1960-77. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3. Energy Use per Household . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4. Comparative Energy Use Projections . . . . . . . . . . . . . . . . . . . . 22

5. Comparative Price Projections. . . . . . . . . . . . . . . . . . . . . . . . . 23
Chapter I

TRENDS

TRENDS IN RESIDENTIAL ENERGY USE

This chapter analyzes residential energy use since 1960, gives energy use projections to

the year 2000, and discusses the potential for energy savings in the residential sector. Aided

by computer analysis of residential electricity and natural gas use since 1968, consumer response to changing prices is examined. Finally, computer projections are made of energy demand over a range of possible future energy prices assuming ideal economic behavior.

ENERGY, DEMOGRAPHICS, AND PRICES

Table 1 shows aggregate energy use for the

residential sector, adjusted for annual weather

differences and broken down by fuel use and

by function, for 1960, 1970, and 1977. From

1960 to 1970, adjusted residential energy use

increased at an average rate of 4.7 percent,

while from 1970 to 1977 it grew by only 2.6 percent. This substantial reduction has not been

spread evenly through the 1970’s, however. Between 1970 and 1972, the average annual

growth rate for weather-adjusted residential

energy use was 3.4 percent; from 1972 to 1975

consumption declined by 1.8 percent; and

from 1975 to 1977 it leapt back up to a 3.7-percent average annual growth rate.

Electricity use is growing fastest. From 1960

to 1970 electricity use grew at an average annual rate of 8.3 percent; from 1970 to 1977 the

increase was about 5.5 percent. In 1977, electricity represented 45 percent of all the energy

used in the residential sector. Unlike total

energy use, however, the growth rate in electricity use since the embargo has not departed

from that over the entire 1970-77 period.

Even though growth rates have declined for

both electricity and total energy use for

1970-77 compared with 1960-70, the ratio of

electricity growth to total energy growth has

‘Data for total residential energy use are corrected for

weather differences by assuming that 50 percent of the

total is for heating, and is therefore weather-sensitive,

and by adjusting that portion using a ratio of the average

number 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 7.80

Oil . . . . . . . . . . . . . . . . 2.37 2.81 2.98

Natural gas. . . . . . . . . 3.34 5.31 5.83

Other. . . . . . . . . . . . . . 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 Year

2000: Conservation and Economics,” ORNL/CON-13, September 1977.

The 1977 figures are from the Energy Information Administration, Department of Energy.

1977 Components of Residential Energy Use (Quads)

Space Water

heating Cooling heating Other*

Electricity. . . . . . . . . . 1.55 1.13 1.16 3.96

Oil . . . . . . . . . . . . . . . . 2.67 0.31

Natural gas. . . . . . . . . 3.97 1.03 0.83

Other. . . . . . . . . . . . . . 0.55 – 0.04 0.01

Total percent

of national

consumption . . . . . 11.8 1.5 3.4 6.5

“Includes cooking, clothes drying, refrigeration and freezing, lighting, appliances, 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 in

electric heating over the period; about 50 percent of new homes have been constructed with

electric heat since 1974, compared with less

than 30 percent in 1970. The proportion of new

electrically heated homes using heat pumps is

rising rapidly. This trend toward electric heating may be slowing, however, as there appears

to be a resurgence of gas space-heating in new

homes.

17
18 . Residential Energy Conservation

Many variables have contributed to the

gradual reduction in residential energy growth

in this decade, but it is difficuIt to demonstrate

a cause-and-effect relationship between demographic trends, prices, and other economic

fluctuations on the one hand, and energy consumption statistics on the other. The sharp dip

to an absolute decline in weather-adjusted

residential energy use between 1972 and 1975

can probably be attributed to the dominant

events of that period —the Arab oil embargo

and the 1974-75 national bout with “stagflation,” or combined recession and double-digit

inflation. Beyond that, however, it becomes

more difficult to isolate causes of reduced

consumption.

Demographic contributions to reduced

home energy use can be glimpsed by reducing

the consumption statistics to the individual

household level. Between 1960 and 1970,

energy consumption grew rapidly in each

household–that is, total residential energy

use grew considerably faster than either the

population or household formation growth

rates. While total weather-adjusted residential

energy use grew by 4.7 percent annualIy, population increased at an annual rate of only 1.3

percent and the number of households rose by

only 1.9 percent annually. The rapid increase

in each household’s energy consumption can

be attributed to the trend toward saturation in

major energy-consuming home appliances

such as air-conditioners, dishwashers, and

clothes dryers, and to increased energy-intensiveness in such appliances as frost-free refrigerators.

The trend toward higher per-household energy consumption has been halted in the 1970’s.

A recent study by the General Accounting Office reports that total energy use per household has remained essentially constant in this

decade. 2 Demographic trends help to explain

this reversal: as population growth has slowed

to an annual increase of 0.6 percent, the rate

of household formation has picked up to 2.4

‘The Federal Government Should Establish and Meet

Energy Conservation Goals, Comptroller General of the

United States, June 30,1978, Washington D.C.

percent. At the same time, the average number

of persons in each household has declined.

One- and two-person households increased

their share of total households from 45.8 to

51.2 percent between 1970 and 1976, while

households with four or more persons dropped

from 21.1 to 15.9 percent. The high rate of

household formation and smaller household

size result from the “coming-of-age” of babyboom children and, to a lesser extent, higher

divorce rates, greater longevity, and the increasing tendency of older persons to live

alone.

Smaller households, typically occupying

smaller homes, use less energy. But each additional household adds more energy consumption to the total than the same number of persons would use in a combined larger household, as each new household normally means

an additional furnace and water heater and additional appliances. Therefore, while energy

use per household does not grow, total household energy use does increase faster than

popuIation.

Projections of future population growth and

household formation suggest that the demographic trends of the 1970’s are likely to continue. The Bureau of the Census mediumgrowth projection (Series 11) for population in

2000 is 260 million, or an average annual

growth of 0.8 percent between 1976 and 2000.

A housing model developed by the Oak Ridge

National Laboratory (ORNL)3 predicts a household formation rate that continues to outstrip

population growth; ORNL projects an average

growth of 1.6 percent in the housing stock between 1975 and 2000. The highest growth (2.1

percent annually) will occur in the 1975-85

period, with a drop to 1.3 percent per year between 1985 and 2000. Households in 2000 are

expected to total approximately 106.5 million.

Combined with the Series I I population projection, this would mean an average household

size of 2.40 persons, compared to 2.95 persons

in 1976.

3

“An Improved Engineering– Economic Model of

Residential Energy Use,’’ Oak Ridge National Laboratory,

Oak Ridge, Tennessee.
Ch. I—Trends . 19

Most observers agree that the price of energy, and particularly dramatic changes in price,

affect residential (and other) energy use.

Again, however, documenting the exact relationship between price changes and reduced

household energy consumption is virtually impossible, given the scanty data collected during the short period of time when price increases have occurred. Figure 2 shows prices

for electricity, natural gas, and heating oil

from 1960 to 1977 in constant 1976 dollars (to

remove the effects of inflation). The figure

shows that all energy prices, in real terms, have

increased dramatically in the last few years.

Figure 2.— Fuel Prices 1960.77

(in constant 1976 dollars)

1960 1965 1970 1975 1977

Year

SOURCE: U.S. Energy Demand: Some Low Energy Futures, Science,

vol. 200, Apr. 14, 1978, p. 144.

Since 1970, real oil prices have increased an

average of 7.6 percent per year (with a 35-percent increase from 1973 to 1974); real natural

gas prices increased 4.9 percent annually; and

electricity prices rose 3.4 percent per year. Between 1960 and 1970, by contrast, all these

prices decreased in real terms.

Viewing these price changes in another way,

table 2 presents national average annual heating 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 cost

of heating dropped substantialIy from 1960 to

1970 for all three fuels before beginning to

grow. The greatest increase has occurred in the

oil heating bill, which has increased 65

since 1970. Natural gas and electric

bills have increased 37 percent and 27

respectively since 1970.

Table 2.—National Average Annual

Heating Bills by Fuel (1976 dollars)

percent

heating

percent

Year Electricity Oil Natural gas

1960 . . . . . . . . . . . . . . $690 $280 $220

1970 . . . . . . . . . . . . . . 450 260 175

1975 . . . . . . . . . . . . . . 510 400 200

1977 . . . . . . . . . . . . . . 570 430 240

NOTE These estimates of electricity and natural gas were obtained by using

the heating energy requirements for 1970, 1975, and 1977 shown in

figure 3 and prices for all years from figure 2. The 1960 estimate of use

per household is assumed equal to 1970 and the heating energy requirement for oil is assumed to be equal to that for natural gas. Keep in

mind that oil heat is used largely in the coldest parts of the country.

The relative costs of the three fuels are also

instructive. As expected, electricity is the most

expensive, about 2.3 times that of gas in 1977

and about 32 percent higher than oil. In 1970,

however, electric heat was about 73 percent

more expensive than oil and 2.6 times higher

than gas. If electricity prices continue to grow

at a slower rate than oil and gas, and heat

pumps capture a greater share of the electric

heat market, these price differentials should

continue to narrow substantially and could

contribute to increased electrification of the

residential heating market.
20 . Residential Energy Conservation

ANALYSIS OF ELECTRICITY AND NATURAL GAS USE

AS FUNCTIONS OF WEATHER AND PRICE

I n an effort to isolate the impact of price increases on residential use of electricity and

natural gas, OTA employed regression analyses that separated weather-related and nonweather-related use of each energy source on a

per-household basis. The analysis covered

1967-77 for natural gas and 1970-77 for electricity. The results of these analyses are shown

graphically in figure 3. Major conclusions from

the analyses are:

1.

2.

3.

4.

The per-household use of natural gas for

heating, measured in 1,000 ft3 per degree

day, declined by about 10 to 15 percent

between 1967 and 1977. (Similar results

were obtained in a study by the American

Gas Association.)

Similar changes have occurred in nonweather-related household use of natural

gas (such as cooking) over the decade examined. Interesting shorter term trends

are also evident: consumption in this

category rose about 10 percent through

1973, and dropped by about 25 percent

between 1973 and 1977.

Per-household weather-related use of

electricity, measured as kilowatthours

consumed per heating and/or cooling degree day, dropped sharply from 1971 to

1974, but has been rising over the last 3

years.

Conversely, non-weather-related uses of

electricity per household increased steadily from 1970 to 1974 and then dropped

sharply from 1974 to 1977.

The linear model used in OTA’s analysis was

not able to indicate a quantitative relationship

between those consumption changes and price

changes over the same periods. This does not

mean that the price effect can be dismissed,

however, as the above results do track with increasing prices in most cases. In the case of

natural gas, real prices have increased by 35

percent since 1973 (see figure 2). The drop in

gas use per degree day that occurred in 1974

was probably caused largely by the embargo,

but the continued downward trend since then

has likely been a result of price. The nonheating use of gas shows an even greater correlation to price in that the decline has accelerated in the last 2 years, when price increases have been the greatest. The principal

conclusion here is that some price response is

evident but it is complex and extremely difficult to demonstrate conclusively or quantitatively.

Electricity use shows a much weaker correlation to price. It must be noted that real electricity prices have increased the Ieast among

the residential energy sources—only 14 percent since 1973. In fact, the real price of electricity in 1977 was just equal to that in 1965.

Therefore, one would not expect to see as

much change in electricity use as in other

energy sources. There has been a substantial

increase in weather-related electricity use per

household since 1974 while non-weather-related uses have declined about 25 percent.

While these trends are correct, it is possible

that the size of the changes which have occurred is smaller than shown in figure 3. Effects due to changed thermostat settings and

weatherproofing could cause the linear model

used to overstate the actual changes. Perhaps

these changes indicate that the modest electricity price increases that have occurred have

motivated users to conserve where conservation involves the least discomfort— in lighting,

cooking, and use of appliances — but not in the

basic amenities of heating and cooling.

The ability of any model to document a relationship between price and consumption in a

decade or less– and particularly in the postembargo period of sharp changes in both variables — is Iimited. Analysis over a longer period

should shed further light on the price effects,

especially since a longer period is required to

test for, the most significant response to price,

a replacement of energy-consuming durable

goods such as furnaces, refrigerators, water

heaters, and other appliances. While shortterm 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.
22 ● Residential Energy Conservation

the thermostat and lowering the water heater the potential of a new and more efficient furtemperature have some effect on total con- nace or water heater.

sumption, this effect is small compared with

PROJECTIONS OF FUTURE RESIDENTIAL DEMAND

This section presents a series of projections

of residential energy demand — not to indicate

what is likely to happen, but to establish the

potential for residential energy conservation.

Demand is projected to 2000 along two curves

as if 1960-70 and 1970-77 trends were to continue. Another projection shows potential demand if all consumers behave in an economically optimum manner. The latter case is applied to a range of possible future energy

prices.

The results of these projections are shown in

figure 4. The upper curve, showing residential

use reaching 48.4 quadrillion Btu* (Quads) by

2000 if the growth rate resumes its 1960-70

value, is for illustrative purposes only and is

not considered likely to occur. Although the

growth rate has picked up over the last 3 years,

it still does not approach the 1960-70 levels,

and it is unlikely to do so because energy

prices are unlikely to fall and saturation is

being reached in a number of energy-intensive

appliances in the residential sector.

The second trend curve, reaching 31.3

Quads in 2000, is more realistic because it represents continuation of the 1970-77 growth rate

of 2.6 percent per year. This projection implies

that future response to increased prices and

supply uncertainty would follow 1970-77 patterns, and energy prices would not increase

relative to income for the remainder of the

century. Because the last 3 years have shown a

marked increase in the growth rate, a continuation of the 1975-77 trend until 2000 would

result in substantially more actual energy use.

It is important to remember, however, that the

trends of the last few years do not yield

enough information, especially in light of the

enormous price changes that have occurred, to

be 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)

Quads

50

40

30

20

10

0

Projections

1970 1975 1980 1985 1990 1995 2000

Year

A – Residential consumption based on simple extrapolation

of 1960-70 trend.

B – Residential consumption based on simple extrapolation

of 1970-77 trend.

c – Residential consumption based on constant level of

energy use per household; growth results from increase in number of households.

D-E – Range of “optimal economic response” based on

assumption that energy saving devices are installed as

they become cost-effective. Range is formed by price;

upper boundary represents response to lowest projected price, lower boundary represents response to

highest projected price. (See figure 5—Price)

1 Quad= 1.055 EJ.

increase, it is probable that actual residential

energy demand will fall below 31.3 Quads.

How far below is the key question, To test

the conservation potential of hypothetical

consumer behavior based on maximum economic self-interest, projections were calculated from the residential energy demand

model developed by ORNL. The projections

assume that consumers make selected investments designed to increase residential

energy efficiency to a point where their

marginal cost equals marginal savings — that is,
Ch. l—Trends 23

the point where an additional dollar invested

would return less than a dollar over the life of

the investment— and then no more is invested.

The resulting consumption levels range from

15.4 to 21.8 Quads in 2000.

Certain assumptions about future energy

prices, available equipment, and financial variables are inherent in the projections; the range

of future energy prices used is displayed in

figure 5. The low price projections correspond

to the 1977 Department of Energy price projections. These curves from 1975 to 2000 show a

growth rate for prices in 1975 constant dollars

of 4.0 percent per year for natural gas, 1.0 percent per year for electricity, and 1.7 percent

per year for fuel oil. The Department of Energy

is currently revising its price projections upward. The high price projections are placed

somewhat above the high Government projections prepared by the Brookhaven National

Laboratory (BNL). The rationale for doing this

is explained in the OTA report Application of

Solar Technology to Today’s Energy Needs,

Volume II, September 1978. According to this

price range calculation, between 1975 and

2000 the average annual rate of increase in

constant dollars is 5.0 percent for natural gas,

4.7 percent for electricity, and 4.8 percent for

fuel oil. The 1978 prices (in 1975 dollars) are

shown for each of these three fuels for easier

comparison.

This analysis assumes that a residential

customer would decide to invest his money in

a manner calculated to realize a maximum

return while meeting his future energy needs.

The customer would divide his available funds

between energy conservation technologies and

fuel purchases to minimize the amount of

money spent over the useful life of his investment. Therefore the amount spent on the conservation technologies would be less than the

cost of energy saved.

Another way of seeing this tradeoff is to consider the equivalent cost of a barrel of oil

saved by an investment in residential conservation and compare it to the cost of the energy

purchased in the absence of the investment.

This computation may be made using the

ORNL model, which considers investments in

technologies that reduce the heating and coolFigure 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 new

single-family homes (e. g., insulation, storm

windows). This calculation shows that an initial investment of $550 in selected measures

would reduce the combined heating and cooling load for a new home by about 52 milIion

Btu per year in an average climate. Over a 20-

year period (the life of the technologies purchased with the investment) the total energy

savings wouId amount to 1.04 million Btu or

the equivalent of 180 barrels of oil. Therefore
24 ● Residential Energy Conservation

the investment is equivalent to paying a little

over $3.00 per barrel in 1977 dollars— a price

far lower than retail consumers actually pay

for oil. Thus, a clear advantage exists for investments in conservation as long as fuel

prices stay above this value.

Even though the dollar savings in the above

example would be substantial, investments in

improvements to the building shell alone may

not be the best way to maximize return from

residential conservation investments. By putting some money into more efficient equipment (e. g., appliances, air-conditioners, space

heaters) an even greater return may be realized. Other calculations using the ORNL

model indicate this result.

The model also assumes that only technologies now available will be purchased for increasing efficiency of buildings and equipment

for the remainder of the century. In this sense

the model is quite conservative. The model

also assumes that investors will discount

future investments and savings using a discount rate of 10 percent, after inflation. This,

too, is a conservative choice and tends to

understate the potential for conservation.

Finally, the model accounts for the effect of

legislation enacted prior to 1978 in carrying

out the computations. It has not, however, accounted for the tax credits granted in the National Energy Act of 1978. The effect of these

measures in this calculation would be to

change the ruIes governing computation of the

optimal investment level. With the credit, the

investor wilI realize a greater return for a given

investment than without the credit. Therefore

he can go to a higher level of thermal protection before the marginal costs and savings

become equal. In essence, Congress decided

by enacting the tax credit that our national

energy situation requires energy savings

greater than those that could be achieved

through market price considerations without

Government intervention.

DISCUSSION OF PROJECTIONS

The range of projections based on the economic optimum case shows annual residential

energy growth rates of – 0.5 to 1.0 percent,

considerably below any value that could be

verified as a present trend, and probably too

low to be realistic future projections. Residential consumers often fail to make economically optimum investments in energy conservation for many reasons, which are discussed

elsewhere in this report. Also, the model uses

as a payback period for each investment the

entire life of the technology being purchased,

while most residential conservation “investors” have a time horizon considerably shorter,

typically no more than 5 years. Finally, these

projections assume continued energy price increases at higher rates than inflation; if this

should not occur, energy use in 2000 would fall

between the economic optimum path and the

1970-77 trend curve. (A thorough discussion of

the plausibility of future energy price increases

is given in the OTA solar report previously

cited.)

The economically optimal projections do

show, however, what one could expect if consumers had access to all necessary information

and no other constraints existed. A residential

consumer would then presumably make the investment decisions assumed in the model, as

doing so would maximize economic return. Although these projections should not be considered as predictions of what will happen, they

are a valid target, and a valid basis for policy

measures to reinforce private decisions.

It is worthwhile putting these projections in

another perspective. If one assumes that national average household energy use in 1977

does not change for the remainder of the century, then the residential sector would use 24.7

Quads in 2000. This is based on the ORNL projection of about 106 million residences in 2000.

Therefore the 31.1 Quad projection from the

1970-77 trend line implies an increase in the

average 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 cooling

requirements were cut in half from the value

projected by the 1970-77 trends. A reduction of

this size is reasonable as shown in the section

on current technology, chapter II. In 1977

about 57 percent of residential energy went for

space heating and cooling. Continuation of

that percentage, coupled with the 1970-77

trends projection, would mean that about 18

Quads would be needed for heating and cooling in 2000. Reducing heating and cooling by

50 percent to 9 Quads would give a total residential consumption of 22.3 Quads. Therefore,

the projections made under the optimal investment assumption are not as far from reach as

they may at first seem.

Going back to these latter projections, one

can see a substantial potential for savings in

residential energy use. I n the highest price projection, a 50-percent reduction in energy use

from the 1970-77 trend is possible. For the

lower price projection, the savings potential is

still more than 30 percent compared with the

extrapolation of 1970-77 experience. This savings represents 9.2 to 15.6 Quads in 2000, or

the equivalent of about 4.6 million to 7.8 million barrels of oil per day. The cumulative savings that couId be achieved from now until the

end of the century, compared to the 1970-77

trends extrapolation, range from 96.7 to 167.8

Quads for the equivalent of about 16.7 billion

to 28.9 billion barrels of oil — roughly comparable to two to three Alaskan oilfields of the

size discovered in 1967.

It is apparent that large savings are possible

in the residential sector, and that they can contribute substantially to reducing imported

energy needs. Although the potential savings

may be too optimistic, because consumers are

not now likely to behave in a strict economically optimum manner, they are not impossible and are worth reaching for. This study

discusses many reasons why a gap between actual and optimum savings exists and what

might be done to narrow the gap.
26 . Residential Energy Conservation

TECHNICAL NOTE–RESIDENTIAL ENERGY

CONSUMPTION ANALYSIS

Regression analyses was applied to total res- Gas usage was treated similarly

idential consumption of gas and electricity to ing was not included in the

obtain figure 3. used was obtained from the following

Residential electric usage was separated

into weather-related and non-weather-related

consumption by regressing consumption

against heating and cooling degree days in the

form:

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

where S is total electric sales per residential

customer; C is the non-weather-related use per

residential customer; Dh and Dc are heatingand cooling-degree-days respectively; Ce, Ceh,

and Cec are total residential electric, electric

heating, and electric cooling customers, respectively; Bh is the electric heating use per

residential electric heating customer per

heating degree day; and Bc is the electric cooling use per residential electric cooling customer per cooling degree day. Monthly data was

used to determine C, Bh, and Bc for each year.

Annual customer data was interpolated to

estimate customers on a monthly basis.

 except coolregression. Data

sources :

Monthly electric sales: Edison Electric Institute, “Annual 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, “Monthly 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, Regional, and National Heating Degree Days Weighted

by Population, ” U.S. Department of Commerce,

NOAA Environmental Data Service, National

Climatic Center, Asheville, N.C.

Monthly cooling degree-days: Monthly State, Regional, and National Cooling Degree Days Weighted by

Population,” National Climatic Center, Asheville ,

N C
Chapter H

RESIDENTIAL ENERGY USE

AND EFFICIENCY STRATEGIES

Chapter II.-- RESIDENTIAL ENERGY USE AND

EFFICIENCY STRATEGIES

Page

Heat Losses and Gains . . . . . . . . . . , . . 30

The Thermal Envelope . . . . . . . . . . . . . . 30

insulation Effectiveness . . . . . . . . 37

Heating, Ventilation, and Air-Conditioning Systems . , . . . . . . 39

Furnaces . . . . . . . . . . . . . . 39

Furnace Retrofits . ., . . . . . . . . . . . . 39

Heat Pumps. . . . . . . . . . . . . . . 41

Air-Conditioners . . . . . . . . . . . . . . . . 41

Appliance Efficiency and Integrated

Appliances . . . . . . . . . . . . . . . . . . 42

Page

The ACES System . . . . . . . . . . . . . . . . 44

Energy Savings in Existing Homes —

Experiments . . . . . . . . . . . . . . . . . . . 46

Integrating Improved Thermal Envelope,

Appliances, and Heating and Cooling

Equipment . . . . . . . . . . . . . . . . . . . . . . . 50

Lifecycle Costing . . . . . . . . . . . . . . . . . . . . 52

Technical Note on Definitions of Performance

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

Page

3. Disaggregate! Cooling Loads for a

Typical 1,200 ft2 “1 973” House in

Three Different Climates. . . . . . . . . . . . 34

4. Sources and Amounts of Internal Heat

Gain During the Cooling Season for

Chicago and Houston . . . . . . . . . . . . . . 34

5. R-Value of Typical Building Sections

and Materials . . . . . . . . . . . . . . . . . . . . 35

6. Performance Comparison for Three

Thermal Envelopes in Three Different

Climates . . . . . . . . . . . . . . . . . . . . . . . . 36

7. Effective R-Values for Different Walls

in a Range of New Mexico Climates . 38

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

Total Energy Consumption . . . . . 44

9. Energy Consumption of Improved

Appliances for the Prototypical Home 44

10. Full-Load Performance of the

ACES System. . . . . . . . . . . . . . . . . . . . . 44

11. Actual Space- and Water-Heating

Energy Requirements of the ACES

Demonstration House. . . . . . . . . . . . . . 46

12. Comparison of Reductions in HeatLoss Rate to Reductions in Annual

bleating Load. . . . . . . . . . . . . . . . . . . . . 49

13. Preretrofit Steady-State Winter HeatLoss Calculations . . . . . . . . . . 49

14. Postretrofit Steady-State Winter HeatLoss Calculations . . . . . . . . . . . 49

15. Primary Energy Consumption for

Different House/Equipment

Combinations . . . . . . . . . . . . . . 50

16. Equipment Used in Prototypical

Baltimore Houses . . . . . . . . 51

17. Levelized Monthly Energy Cost in

Dollars for Energy Price Ranges

Shown (All electric houses) . . . . . . . . . . 53

18. Levelized Monthly Energy Cost in

Dollars for Energy Price Ranges

Shown (Gas heated houses). . . . . . . . . . . 53

19, Structural and Energy Consumption

Parameters for the Base 1973 SingleFamily Detached Residence . . . . 56

20. Specifications and Disaggregate

Loads for “1973” Single-Family

Detached Residence . . . . . . . . . . . . 57

21. Specifications and Disaggregate

Loads for “1976” Single-Family

Detached Residence . . . . . . . . . . . . 58

22. Specifications and Disaggregate

Loads for Low-Energy Single-Family

Detached Residence . . . . . . . . . . . . . 59

23. Disaggregated Energy Consumption

for Different Combinations of

Thermal Envelope and HVAC Equipment

for Houses in Houston, Tex. . . . . . . . . . 60

24. Disaggregated Energy Consumption

for Different Combinations of

Thermal Envelope and HVAC Equipment

for Houses in Baltimore, Md. . . . . . . . . 61

25. Disaggregated Energy Consumption

for Different Combinations of

Thermal Envelope and HVAC Equipment

for Houses in Chicago, Ill.. . . . . . . . . . . 62

FIGURES

Page

6. Residential Energy Use in the United

States . . . . . . . . . , . . . . . . . . . . . . . . . 29

7. Disaggregate Energy Usage in the

“Typical 1973” House Located in

Baltimore, Md., for Three Different

Heating and Hot Water Systems . . . . . 32

8. Heat Losses and Gains for the Typical

1973 House in Chicago and Houston ––

Heating Season . . . , . . . . . . . . . . . 33

9. Heating Load/Cost Relationship––

Kansas City . . . ... , . . . . . . . . . . . . . . . 36

10. Residential Heating Systems. . . . , . . . . 40

11 Performance of Installed Heat Pumps . 42

12, Handbook Estimates of Loss Rates

Before and After Retrofit . . . . . . . . . 48

13. Disaggregated Point of Use Energy

Consumption for the Low-Energy House

With Heat Pump in Baltimore, Md. . . . . 51

14. LifecycIe Cost Savings vs. Conservation

Investment for a Gas-Heated and

Electrically Air-Conditioned House in

Kansas City . . . . . . . . . . . . 54
Chapter II

RESIDENTIAL ENERGY USE

AND EFFICIENCY STRATEGIES

Technologies available now can substantially reduce home energy use with no loss in

comfort. This chapter demonstrates that total energy use in new and existing homes can

typicalIy be reduced by 30 to 60 percent and that these energy savings produce a large dollar

saving over the life of the home. The review focuses on the “thermal envelope” —the insulation, storm windows, and other aspects of the building shell —the equipment used to heat

and cool the home, and energy uses of the principal home appliances.

This chapter presents calculations showing how new homes can be built that use substantialIy less energy than those built just prior to the embargo. It then discusses experiments

on existing houses which indicate that simiIar savings are possible through retrofit measures.

Cost analyses are given that show these energy saving packages significantly reduce the cost

of owning and operating these homes.

There is little measured data on energy use

in a “typical” home. Experiments are difficult

to perform because of individual variations in

construct ion, equipment, and appliances;

moreover, the living and working patterns of

the occupants can change energy use by a factor of two.

Most of the data on residential energy use is

based on the interpretation of aggregate consumption data. Monthly gas sales are analyzed

to determine the weather-dependent portion

that is used for heating; information on light

bulb sales is combined with the average bulb

lifetime to determine the average household

use of energy for Iighting; and simiIar determinations are made for other appliances and

uses. The average residential use pattern as

determined by Dole’ after reviewing previous

studies and performing additional analysis is

shown in figure 6. This figure shows “primary”

energy usage, which accounts for distribution

losses for all fuel types and for electric generation losses.

Calculations based on aggregate consumption do not show the interactions that occur

between appliance usage and heating and

cooling needs, nor do they show the sources of

heat loss that greatly influence total energy

usage. It is necessary to consider a particular

‘Stephen H. Dole, “Energy Use and Conservation in

the Residential Sector: A Regional Analysis, ” (RAND Corporation, June 1975),R-1641 -NSF

Residential primary energy consumption, 1970—13 quadrillion Btu

SOURCE: Stephen H. Dole, “Energy Use and Conservation in the Residential

Sector: a Regional Analysis,” RAND Corporation, R-1641-NSF, June

1975, p. vi.

‘Hlttman Associates, Inc. , “Development of Residential Buildings Energy Conservation Research, Development, and Demonstration Strategies, ” H IT-681, performed under ERDA Contract No EX-76-C-01-2113 ,

August 1977

29
30 ● Residential Energy Conservation

HEAT LOSSES AND GAINS

The first calculation is based on a singlestory, three-bedroom, 1,200 ft2 home in Baltimore, Chicago, or Houston. Identified as the

“1973 house,” it has a full, unheated basement

and is constructed of wood frame with brick

veneer. Insulation levels and other characteristics are shown in tables 19 through 25 at

the end of this chapter. It is sufficiently

characteristic of the existing housing stock to

iIlustrate typical energy use patterns.

The energy use patterns of the 1973 house

are shown in figure 7 for a variety of fuel systems. Figures 7(a), (c), and (d) show the energy

used at the home and do not include losses in

generation or production and transmission of

energy. If these are included so that primary

energy is shown instead, the percentage distribution is changed dramatically. This is illustrated in figure 7(b) for the fuel case corresponding to figure 7(a).

Heat loss or gain through the building shell

results primarily from heat conduction through

the walls, windows, ceiling, and floors, and by

infiltration through cracks around windows,

doors, and other places where construction

material is joined. Figures 8 (a) and (b) show,

for the typical house in two climates (Chicago

and Houston) that heat losses are well distributed across the various parts of the thermal

envelope (as are infiltration losses). Thus, major reduction in heat loss will require that more

than one part of the shell be improved. Houses

will vary widely in this regard. For example, if

the house used in figure 8 had been built without any attic insulation, roof losses would

have accounted for about 40 percent of total

heat loss rather than the 12 to 14 percent

shown. Even though substantial reduction in

heat loss would occur if the attic were insulated, there would still be room for substantial

improvement in other parts of the shell as well.

Mechanical or electrical heating systems are

generally the principal source of heat to make

up for these losses to keep a home at a comfortable 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 gain

comes from cooking, lighting, water heating,

refrigerator and freezer operation, other appliances, and the occupants themselves. Although none of these internal gains is large,

they combine to provide nearly one-fifth of the

heat in the colder climates. Heat available

from sunlight depends primarily on the window area and orientation and can be considerably Increased if desired.

Everything (except the floor) that contributes to the heating load also contributes to the

cooling load. (The floor helps cool the house in

summer. ) Internal gains and solar gain from

windows that reduce the heating load requirements add to the cooling load, but in very different proportions. As shown in table 3 internal

heat gains constitute about half the cooling

load There is less infiltration in summer than

in winter, because of lower wind speed and

smalIer indoor-outdoor temperature differences, but humidity removal requirements increase. Thus, infiltration contributes about as

much fractionally to the cooling effort as it

does to heating. Additions to cooling load

from windows are much larger than to heating

because their conductive heat gain adds to the

solar radiation gain when cooling is considered Other parts of the building shelI contribute only 9 to 13 percent of the cooling load

in the three simulated locations. The floor,

however, does reduce cooling requirements

significantly.

Table 4 shows internal gains for the prototypical house in Chicago and Houston. Major

sources are the occupants, hot water, cooking,

lighting, and the refrigerator/freezer. All other

appliances together contribute about as much

as any one of the major sources.

The Thermal Envelope

Current practice in residential energy conservation often begins with attempts to reduce

the normal tendency of a house to lose heat

through the structure. The rate at which a particular component of a building loses heat
Ch. II—Residential Energy Use and Efficiency Strategies ● 31

Information dissemination centers were set up in each city. The trained specialist would utilize the conventional daytime

photography to locate a particular family’s home on the IR pictures; would interpret the prints, pinpointing areas of needed

roof insulation, and discussed many effective energy conservation options that would help the consumer. The cost was

estimated to be approximately 30¢ per home. Thousands of Minnesota homeowners were reached through this program and

informed on what they can best do to save energy and dollars.

Photo credits: U.S. Department of Energy

Since heat rises, poorly insulated attics usually result in situations like the one shown above
32 ● Residential Energy Conservation

Figure 7.— Disaggregated Energy Usage in the “Typical 1973” House Located in

Baltimore, Md., for Three Different Heating and Hot Water Systems
Ch. II— Residential Energy Use and Efficiency Strategies ● 33

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

and Houston— Heating Season

Heat losses

(a) Chicago (b) Houston

Heat gains

c) Chicago

1 MMBtu = 1.05 gigajoule (GJ).

SOURCE: Based on tables 19-25
34 ● Residential Energy Conservation

Table 3.—Disaggregated Cooling Loads for

a Typical 1,200 ft2 “1973” House in

Three Different Climates

Baltimore Chicago Houston

Structural heat gains percent percent percent

Roof . . . . . . . . . . . . . . . . . . . . . 4 4 5

Doors. . . . . . . . . . . . . . . . . . . . 1 1 1

Floor. . . . . . . . . . . . . . . . . . . . . — — 2

Walls . . . . . . . . . . . . . . . . . . . . 4 4 5

Window conduction and

radiation . . . . . . . . . . . . . . . 18 17 19

Infiltration . . . . . . . . . . . . . . . . 22 19 24

Total structural gains . . . . . 49 45 56

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

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

Heat losses

Floor . . . . . . . . . . . . . . . . . . . . . 33 40 —

Cooling system . . . . . . . . . . . . 67 60 100

Heat removed by cooling

system (MMBtu) . . . . . . . . . 18.0 14.0 56.9

1 MMBtu = 1.05 GJ

SOURCE: Based on table 20.

Table 4.—Sources and Amounts of Internal Heat

Gain During the Cooling Season for Chicago

and Houston (1973 House)

Chicago Houston

Percent Percent

of total of total

MMBtu heat gain MMBtu heat gain

Hot watera . . . . . . . . . 2.5 10 4.6 8

Occupants . . . . . . . . 2.8 12 5.2 9

Cooking . . . . . . . . . . . 1.3 5 2.4 4

Lighting . . . . . . . . . . . 2.3 10 4.3 7

Refrigerator/freezer . 2.0 8 3.6 6

Miscellaneous . . . . . . 2.3 10 4.2 7

1 MMBtu = 1.05 GJ

aHot water gains were assumed to be jacket losses PIUS 25 percent of the heat

added to the water.

boccupant heat gains were assumed to be 1,020 Btu Per hour for 3.75 months

and 7 months respectively based on an average of 3 people in the house.

cThe remaining categories are based on usage levels shown in table 18 for 3.75

and 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 since

it is vented outdoors.

SOURCE: OTA.

through conduction (and conversely, gains

heat in hot weather) is governed by the resistance to heat flow (denoted by the R-value)

and the indoor/outdoor temperature difference. Engineers and designers commonly

express the R-value of various components in

Btu per hour per ft2 per 0 F, which means the

number of Btu of heat that wouId flow through

1 ft2 of the component in an hour when a temperature difference of 10 F is maintained

across the component. Different parts of a

house have R-values differing by a factor of 10

or more, as shown in table 5(a). Tables 5(b) and

5(c) show the R-values of a variety of common

building materials and how they are added to

obtain the R-value of a specific wall.

Infiltration is described in terms of air

changes per hour (ACPH)— and 1 ACPH corresponds to a volume of outside air, equal to the

volume of the house, entering in 1 hour. The

rate of infiltration is affected by both the wind

and the difference between indoor and outdoor temperatures; it increases when the wind

rises or the temperature difference increases.

Less is understood about how to measure

and describe infiltration than about heat flow.

It is clear that specific actions can help lower

infiItration such as using good-quality windows and proper caulking and sealing. It is also

clear that the general quality of craftsmanship

throughout construction is important, and that

there may be factors at work that are not yet

welI understood. Half an air change per hour is

considered very tight in this country, although

rates below 0.2 have been achieved in buildings in the United States and Sweden. Many

U.S. houses have winter air change rates of two

or more. Tightening houses must be combined

with attention to possible increases in the indoor moisture level and quality of the indoor

air (see chapter X).

What can be done to reduce the heating and

cooling energy use? As an example, the 1973

home has been subjected to a number of

changes in the building shell by computer simulation.

3 Two levels of change have been

made, one improves the thermal envelope so it

is typical of houses built in 1976 and another

uses triple glazing and more insulation — it is

described as the “low-energy” house. Each

modification was done in the three climate

zones represented by Baltimore, Chicago, and

Houston.

The 1973 house uses R-1 1 wall insulation and

R-1 3 ceiling insulation and has no storm windows or insulating glass. The 1976 house increases ceiling insulation to R-19 and features

weather-stripped double-glazing and insulated

~ Ibid
Ch. II—Residential Energy Use and Efficiency Strategies ● 35

Table 5.—R-Value of Typical Building Sections and Materials

a) R-value of typical building sections

Building section R-value Building section R-value

Exterior frame wail. . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Attic with 6“ blown fiberglass . . . . . . . . . . . . . . . . . 15.0

Exterior wall with 31⁄2" fiberglass batts. . . . . . . . . . 13.0 Attic with 12” fiberglass batts . . . . . . . . . . . . . . . . . 40.0

Exterior wall with 51⁄2” blown cellulose. . . . . . . . . . 22.0 Single-glazed window (excl. frame) . . . . . . . . . . . . . .9

Uninsulated frame floor . . . . . . . . . . . . . . . . . . . . . . 4.6 Double-glazed window (excl. frame) . . . . . . . . . . . . 1.6

Uninsulated attic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0

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

Resist- ResistConstruction ance Construction ance

1. Outside surface (15mph wind) . . . . . . . . . . . . . . . 0.17 5.1⁄2" gypsum board . . . . . . . . . . . . . . . . . . . . . . . . . 0.45

2. Brick veneer (4 in. face brick) . . . . . . . . . . . . . . . . 0.44 6. Inside surface (still air) . . . . . . . . . . . . . . . . . . . . . 0.68

3. I/2” insulation board sheathing . . . . . . . . . . . . . . 1.3 2

A.S1/2“ fiberglass batt — R-1 1, 2x4 stud— R-4.53

(insulation w/studs on 16” centers)* . . . . . . . . . . 10.34 R-value of complete wall. . . . . . . . . . . . . . . . . . 13.40

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

c) R-values of other common building materials

Component R-value Component R-value

1/2“ Plywood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.6 2 51⁄2" fiberglass batt . . . . . . . . . . . . . . . . . . . . . . . . . . 19.0

1x8 wood siding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.79 31⁄2" blown cellulose. . . . . . . . . . . . . . . . . . . . . . . . . 13.0

4“ common brick . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.80 31⁄2" expanded polystyrene foam . . . . . . . . . . . . . . 17.5

Single-glazed window . . . . . . . . . . . . . . . . . . . . . . . . 0.94 3/4” still air space (nonreflecting surfaces) . . . . . . . 1.01

Double-glazed window (1⁄4” air space). . . . . . . . . . . 1.54 4" still air space (nonreflecting surfaces) . . . . . . . . . 1.01

Single-glazed window plus storm window . . . . . . . 1.85

NOTE: The R-values given here are based on the values and methodology given in the ASHRAE Handbook of Fundarnenfa/s, Carl MacPhee, cd., American Society of

Heating, Refrigerating, and Air-Conditioning Engineers, Inc., New York, N Y., 1972, chs. 20,22.

doors. The low-energy house is very heavily insulated, with R-38 ceilings, R-31 walls, and R-30

floors. It is carefully caulked and weatherstripped to reduce infiltration and has tripleglazing and storm doors. Results of the computer simulation of these houses are shown in

table 6. Detailed thermal properties and

energy flows are given in tables 19 through 25.

(The computer program did not provide hourly

simulation; if it had, it is likely that the lowenergy house in Houston would have required

a smalI amount of heating. )

Heat losses in winter are about 16 percent

less for the 1976 house than the 1973 house in

Chicago and Baltimore, but the calculations

show that the heat that must be supplied here

by the furnace is reduced by more than 20 percent. This is because the newer house receives

a higher proportion of its heat gain from sunlight, appliances, and other internal gains. (Extra glazing slightly reduces heat gain from

sunlight, but other internal gains are unchanged. ) Fractional savings for the 1976

house are even larger in Houston, for the same

reason. The “1976” summer heat gains are 8 to

10 percent lower than the 1973 house, and

cooling system loads are reduced by about 10

to 12 percent. Reduction in the cooling load

between the two houses is less than the reduction in heating load, because the thermal improvements do not affect the internal heat

gains.

Modifications in the low-energy house cut

the heating requirements dramatically. Thermal losses are cut by more than 50 percent.

When this is done, the low-energy Houston

house no longer needs a heating system (one

burner of an electric range at high heat would

keep this house warm in the coldest Houston

weather), and the heating requirements for

Chicago and Baltimore are reduced by 75 and

82 percent from the 1973 levels. Cooling requirements in Baltimore and Chicago increase,

as the heavily insulated floor no longer loses as

much heat to the relatively cool ground. In
36 ● Residential Energy Conservation

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

Winter heat losses

City

Baltimore

“1973” house . . . . . . . .

“1976” house . . . . . . . .

Low-energy house . . . .

Chicago

“1973” house . . . . . . . .

“1976” house . . . . . . . .

Low-energy house . . . .

MMBtu

794

661

287

1,057

887

405

I

Houston

“1973” house . . . . . . . . 211

“1976” house . . . . . . . . 153

Low-energy house . . . . —

1 MMBtu = 1.05 GJ.

SOURCE: Summarized from tables 19-21.

Percent of

1973 losses

—

83

36

—

84

38

—

73

—

Heat system load

MMBtu

554

437

99

811

647

202

84

52

0

Percent of

1973 losses

—

79

18

—

80

25

—

62

0

Summer heat gains

MMBtu

269

247

219

236

218

195

569

513

434

Percent of

1973 losses

—

92

81

—

93

83

—

90

76

Cooling system load

MMBtu

180

158

204

140

123

179

569

513

434

Percent of

1973 losses

—

88

113

—

88

128

—

90

76

Houston, however, the cooling load is still Figure 9.— Heating Load/Cost Relationship—

lower for the low-energy home, as floor heat

losses do not aid cooling in this climate.

A similar analysis was performed by Hutchins and Hirst of ORNL.4 This study used the

NBS heating and cooling load program to calculate changes in these loads for “typical”

new construction of a 1,200 ft2 home in 11

cities of differing climates. The results of that

analysis are in substantial agreement with

those discussed here. Figure 9 shows the

heating load reduction for a home in Kansas

City, Kans. as more and more improvements

are made to the building shell. The cost scale

refers to the additional investment needed to

instalI these improvements in a new home. It is

a net investment in that it accounts for the

added cost of the additional materials (insulation, storm windows, etc. ) as well as the reduced heating equipment cost that occurs because the heating system size is reduced as the

heating load decreases. It is important to remember that these costs are for new homes;

similar changes for existing homes wilI be more

expensive in some cases (e. g., adding walI insulation).

‘Paul F. Hutchins, J r., and Eric Hirst, “Engineering-Economic Analysis of Single-Family DwelIing Thermal Performance” (Oak Ridge National Laboratory, November

1978), ORNL/CON-35.

Kansas City

.

0 $500 $1,000 $1,500 $2,000

Additional initial costs (1 975– $)

SOURCE Paul F. Hutchins, Jr., and Eric Hirst, “Engineering-Economic Analysis

of Single-Family Dwelling Thermal Performance, ” Oak Ridge National

Laboratory, ORNL/CON-35, November 1978, p. 16.

The Kansas City results show a possible heat

load reduction of up to 70 percent with an investment of less than $2,000. (The baseline

house for the case had no insulation.) These

dollar levels compare well with those calculated for the two houses discussed above. In

this case it was estimated that the low-energy

house would cost about $3,200 more than the

1973 house while the 1976 house would be

about $600 more expensive. I n nearly all cases,
Ch. Il—Residential Energy Use and Efficiency Strategies ● 37

however, this added cost would be more than

recovered in reduced fuel bills over the life of

the home.

The results from these two models show

that, within the limits of computer simulation,

a substantial reduction in heating load is possible from homes built in the early 1970’s. When

cooling is considered, additional energy is

saved in most cases.

Insulation Effectiveness

What is possible for new homes based on

computer simulation and the stated characteristics of materials used to increase the efficiency of the building shell has been shown. A key

assumption is that the materials perform at

their specifications. For most of the items used

in improving the shell —weather-stripping,

storm doors, and windows — the assumption is

a safe one. With insulation, however, problems, may arise.

Researchers have only recently begun to try

determining the actual field effectiveness and

durability of insulating materials. (For information on health and safety questions about insulation, see appendix A). Van der Meer5 and

McGrew6 contend that insulation is often less

effective than commonly believed, owing to

degradation over time, and to the effect of

solar heat gain on the net heat loss through a

wall or attic over a heating season. It appears

from their work that uninsulated south walls or

attics, in particular, tend to collect significant

amounts of solar heat in the climates of Colorado and New Mexico. The absorbed sunshine

can offset a larger fraction of the heat lost

through a wall if the entire winter season is

considered.

Sunshine striking the roof or walls of a building 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 Housing for New Mexico, ” Report No. 76-163, prepared for the

New 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 heat

loss. When sunlight strikes a wall or roof, particularly a dark-colored one, it will be heated.

If the wind is blowing hard, the solar heat will

be removed so rapidly that it will have a very

small effect on the surface temperature of the

walI and hence on the heat flowing from inside

to outside. If the wind is relatively calm, the

surface can be heated considerably, and if the

outdoor temperatures are mild enough, the

flow will be greatly reduced and can even be

reversed so that heat is flowing into the house

when the outdoor temperature is below the

house temperature.

The heat loss through building components

and the economic value of insulation are generally calculated from the R-values discussed

earlier and the winter temperatures as expressed in degree-days. (A measurement of the

relative coldness of a location. ) [f the effect of

the Sun on a roof or wall as just described is

accounted for over the entire winter, the total

heat loss can be much smaller than a calculation based only on temperature. This led van

der Meer and Bickle7 to propose the use of an

effective R-value (reference discusses an effective U-value, which is the inverse of R-value; Rvalue is used here for consistency with the

earlier discussion). If a wall had an R-value of 5

but lost only half as much heat as expected

over the course of the winter because of solar

effects, it would have an effective R-value of

10.

Van der Meer and Bickle calculated effective R-values for a variety of different types of

wall construction for 11 different climatic

regions of New Mexico, which ranged from

2,800 to 9,300 degree-days and received different amounts of sunshine. Their results are

summarized for three wall types in table 7.

Results are shown for north- and south-facing

walIs and for Iight and dark colors. (Results for

other colors and orientations will be intermediate among those shown.) Clearly color is

very important. The effective R-value of a

light-colored south wall is very close to the lab7Wybe van der Meer, Jr., and Larry W. Bickle, “Effective “U” Factors— A New Method for Determining Average Energy Consumption for Heating BuiIdings, ” prepared for the New Mexico Energy Resources Board, Contract Nos. 76-161 and 76-164, Nov. 10, 1977.
38 ● Residential Energy Conservation

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

Wall orientation

Nort h I South

I

Light Dark Light Dark

Brick veneer wall with 3%” insulation (R = 13.3) 11.6 -13.0 14.5 -17.2 12.8 -14.1 20.8 -90.9

Uninsulated frame wall (R = 3.7). . . . . . . . . . . . . . 3.7- 4.0 4.5- 5.3 3.9- 4.4 6.3- 41.7

Brick veneer wall with 6“ insulation (R = 19.2) . . 16.4 -18.5 20.8 -23.8 17.9 -20.0 29.4-111

oratory value for all three walls shown. However, the dark north walls all have an effective

R-value slightly higher than the laboratory

value. The effective R-values of dark southfacing walls show dramatic increases above

the theoretical values. The extremely high effective values for uninsulated walls occur only

in the warmer parts of New Mexico.

Several caveats must be applied to the interpretation of this work. Effective R-values in

most parts of the country will be closer to the

steady state values than for the sunny New

Mexico climate. These results consider only

the winter heating season, and unless overhangs or other shading measures are employed, increased heat gain in summer could

offset much of the benefits of the winter gain.

This is another illustration of the need to

make standards responsive to the site. Although increased amounts of insulation almost

always reduce the total heat loss of a house, it

will not have as large an effect as anticipated

in some cases, and hence will be less cost effective than calculated using standard values.

Insulation can also degrade in several ways

as it ages. Loose-fiII insulation in attics can settle, foam insulation can shrink and crack, and

moisture buildup can reduce the effectiveness

of different types of insulation. The Minnesota

Energy Agency recently measured the properties of retrofitted insulation in 70 homes where

the insulation ranged in age from a few months

to 18 years (with an average age of 21⁄2 years).8

The R-values of the cellulose and urea-formaldehyde insulation were 4 percent lower on

average than expected based on the density of

‘Minnesota Energy Agency, “Minnesota Retrofit Insulation In-Site Test Program, ” HCP/W 2843-01 for U.S.

Department of Energy under Contract No. EY76-C-0202843, June 1978.

the insulation. The R-values of the mineral

fiber (fiberglass and rock wool) insulation

varied from 2.35 to 4.25 Btu-1 hr ft2 0 F; but the

wide variation was due to differences in the

material itself rather than to differences in age

or thickness. McGrew9 measured the R-values

of insulation installed in several houses and

found that while thin layers of insulation had

R-values corresponding to their laboratory

values, thicker layers fell below their laboratory values. Three inches of rock wool with a

lab value of R-11 had a measured value of 9.9,

and 6 inches of fiberglass with a lab value of

R-1 9 had a measured value of 13.4. These are

consistent with the general trend of his other

field measurements.

Neither of these studies can be regarded as

definitive since both sample sizes were small

and limited to particular geographic areas. It is

also possible that the moisture content and Rvalue wilI vary throughout the year in a significant manner. More work is needed to establish

the long-term performance of different types

of insulation in various climates.

A related problem, which seems to have received very little attention, is provision of

vapor barriers for insulation retrofits, particularly walls. With the exception of foamed

plastics, the insulations used to retrofit wall

cavities are degraded by the absorption of

water vapor. Exterior walls that were built

without insulation seldom include a vapor barrier. This problem is now being investigated.

One solution may be the development and use

of paints and wallpapers that are impervious

‘Jay L. McGrew and George P. Yeagle, “Determination

of Heat Flow and the Cost Effectiveness of Insulation in

Walls and Ceilings of Residential and Commercial Buildings” (Applied Science and Engineering, Inc., October

1977)
Ch. II--Residential Energy Use and Efficiency Strategies “ 39

to water vapor. While some paints are marketed with vapor barrier properties, most of

the work on coatings impervious to water

vapor appears to have been done by the paper

industry for use in food packaging. Application of this work to products for the housing industry appears desirable.

Heating, Ventilation, and

Air-Conditioning Systems

The efficiency of heating and air-conditioning systems varies widely depending on the

quality of the equipment and its installation

and maintenance, but the average installation

is less efficient than generally realized. This is

partially due to the fact that efficiencies listed

by the manufacturer are those of the furnace

or air-conditioner operating under optimum

conditions. These estimates do not include the

losses from the duct system that distributes

conditioned air to the house. The confusion

between potential and actual efficiency is increased by the fact that the performance of

different equipment is defined in different

terms —the “efficiency” of a furnace, the

“coefficient of performance” (COP) for heat

pumps, and the “energy efficiency ratio” (EER)

for air-conditioners. These different approaches are explained in a note at the end of

this chapter. For purposes of comparison, this

discussion will emphasize the seasonal system

performance, which attempts to measure the

actual performance of the system in a real

home situation.

Furnaces

The average seasonal efficiency of oil furnace installations is about 50 percent (including duct losses) as shown in figure 10.

However, the Department of Energy (DOE) has

determined that the seasonal efficiency of a

properly sized and installed new oil furnace of

1975 vintage is 74 percent, ’” which suggests

that inadequate maintenance, duct losses, and

oversizing may be increasing the amount of oil

‘“Department of Energy, “Final Energy Efficiency lmprovement Targets for Water Heaters, Home Heating

Equipment (Not Including Furnaces), Kitchen Ranges and

Ovens, 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 possible

to achieve an industry-wide productionweighted average seasonal efficiency of 81.4

percent by 1980. ” These improved furnaces

would incorporate stack dampers and improved heat exchangers. While the efficiencies

cited by DOE do not include duct losses, these

losses can be eliminated by placing the furnace and the distribution ducts within the

heated space.

The average seasonal efficiency of gas furnace installations is 61.4 percent. This is much

closer to the seasonal efficiencies that DOE

found for 1975 gas furnaces –61.5 percent–

than would be expected. While gas furnaces

do not require as much maintenance as oil furnaces and can be made more easily in small

sizes, duct losses would be expected to introduce a larger discrepancy than observed.

DOE estimates that use of stack dampers,

power burners, improved heat exchangers, and

the replacement of pilot lights with electric ignition systems can improve the average seasonal efficiency of new furnaces to 75.0 percent. 2

Steady-state and seasonal efficiencies above

90 percent have been measured for furnaces

and boilers employing the “pulse combustion”

principle, A gas-fired pulse combustion boiler

will be marketed in limited quantities during

the latter part of 1979 and an oil-fired unit has

been developed by a European manufacturer

who has expressed interest in marketing it in

the United States. Research on a number of

fossil fuel-fired heat pumps is underway and is

sufficiently advanced that gas-fired heat

pumps with coefficients of performance of 1.2

to 1.5 may be on the market in as little as 5

years. These furnaces and heat pumps are discussed in chapter Xl.

Furnace Retrofits

A number of different organizations are conducting tests of the improvements in furnace

efficiency that can be achieved by retrofits, including the American Gas Association (AGA),

1 I Ibid.

“[bid.
40 ● Residential Energy Conservation

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 a

few results are available now, but these indicate that meaningful savings can be

achieved by retrofits.

The AGA program, which is known as the

Space Heating System Efficiency improvement Program (SHEIP), involves tests in about

5,000 homes in all parts of the country. Preliminary findings based on the installations that

were retrofitted prior to the 1976-77 winter

found that adding vent dampers, making the

furnace a more appropriate size, and other

combinations all saved energy. 13 The size of

 ‘American C-as Association, “The Gas Industry’s

Space Heating System Efficiency Improvement Program — 1976/77 Heating Season Status Report."

Average 61 .4%

the data sample is small and not adequate for

generalizations. The savings provided by the

adjusted system apparently depended on the

initial condition of the heating system, the

degree of oversizing, the location, and the vent

system design.

Northern States Power Company (Minneapolis, Minn. ) is participating in SHEIP and has

monitored 51 homes that had been retrofit

prior to the winter of 1977-78.14 A variety of

different retrofits were installed ranging from

simply derating the furnace and putting in a

vent restrictor to replacement of the furnace.

While the sample is too small to draw conclu14 Northern States Power Company, “1977-78 Season

SHE I P Report “
Ch. II—Residential Energy Use and Efficiency Strategies ● 41

sions about most of the individual retrofits, it

is interesting to note that the retrofits resulted

in an average reduction in fuel use (adjusted

for weather) of 14. I percent for a cost savings

of $42. The average installation cost of the

retrofits was $163, but did not include the

markup on the materials, which would have

added $20 to $25 per installation on average.

These results were achieved on furnaces that

were all in good enough condition that they

were expected to last for at least 5 years, so it

is Iikely that their annual efficiencies were

sIightly higher than average. Thus, it seems

probable that seasonal efficiencies of 70 percent can be achieved in gas furnaces that are

in condition adequate for retrofitting. These

retrofits did not include duct system insulation, which is clearly effective if the exposed

ducts are in unconditioned space.

Heat Pumps

The seasonal performance factor for 39 different heat pump installations was recently

measured in a study conducted by Westinghouse. ” The heat pumps studied were made by

several different manufacturers and were installed in 8 different cities. Figure 11 shows the

actual performance of the installations (O and

6) measured over two winters and the solid

line represents the average measured seasonal

performance factor as a function of the heating degree-days. Manufacturers performance

specifications were used together with the

measured heating demands of each house to

calculate the theoretical seasonal performance factor for each installation, and the results were averaged to obtain the broken Iine

shown in the figure. The horizontal dotted line

represents the performance of an electric furnace. The figure shows that the average installation achieves 88 percent of the expected

electricity savings in a 2,000 degree-day climate, but only 22 percent of the expected savings in an 8,000 degree-day climate.

The study also found that of the 39 installations, only three exceeded the theoretical

‘

sPaul J. Blake and William C. Gernert, “Load and Use

Characteristics of Electric Heat Pumps in Single-Family

Residences,” prepared by Westinghouse Electric Corporation for EPRI, EPRI EA-793, Project 432-1 Final

Report, vol. 1, June 1978, pp. 2,1-12,13,

seasonal performance factor16 and four others

had a seasonal performance factor at least 90

percent of the theoretical value. Six of the

systems that performed near or above specification were located in climates with less than

3,000 heating degree-days, including all three

that exceeded the theoretical value. (Duct

losses were not included in either measuremerit. )

The deviation between the measured and

the theoretical performance did not correlate

with the age or size of heat pump model, but

there was some indication that the theoretical

performance underestimated the defrost requirements. Measurements made by NBS17 on

a single heat pump installation found a difference between measured and calculated

seasonal performance factors virtually identical to that given by the equations on figure

11 for Washington, D.C. Much of this difference was due to inadequate consideration

of defrost requirements in the calculated

seasonal performance factor. While it was not

possible to place a quantitative measure on installation quality, there seemed to be a

qualitative correlation between the experience

of the installer and the performance of the instalIation. 18 Inadequate duct sizing and improper control settings appeared to degrade

the performance. Thus, it seems plausible that

a combination of improved installer training

and experience and modest technical improvements in heat pumps can result in more

instalIations that achieve the theoretical performance levels.

Air-Conditioners

The average COP of air-conditioners on the

market in 1976 was 2.0 under standard test

“Insufficient data was available to calculate the theoretical performance factor for one of these cases, but the

measured performance exceeded the theoretical performance of any other installation in that location.

‘ ‘George E. Kelley and John Bean, “Dynamic Performance of a Residential Air-to-Air Heat Pump,” National Bureau of Standards, NBS Building Science Series

93, March 1977.

18Paul Blake, Westinghouse Electric Corporation, personal communication, December 1978.
42 . Residential Energy Conservation

Figure 11 .—Performance of Installed Heating Systems

conditions. 9However, some units were on the tional Energy Act, air-conditioners with larger

market that had COPS of 2.6. California will condensers and evaporators, more efficient

not allow the sale of central air-conditioners compressors, two-speed compressors, multiple

with a COP below 2.34 after November 3, 1979, compressors, etc., are coming into the market.

and 11 5-volt room air-conditioners must have a

COP of at least 2.55 after that date. It is

estimated that the cost of increasing the COP Appliance Efficiency and Integrated

of air-conditioners from 2.0 to 26 is about $10 Appliances

per MBtu of hourly cooling capacity. 20 T o

meet these standards and the Federal stand- Although the discussion so far has concenards 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 California achieved 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 appliances

compared to some components of the buiIding

shell, such as the walls.

The effect of appliances includes the energy

used to operate them and changes in the

house’s internal heat gains that change the

heating and cooling load. As most appliances

are used in conditioned space, they exhaust

some heat into that space. As with any other

change in the house, a careful examination of

the system interaction must be made to determine the overalI effect of an apparently simple

change.

The overall effect of an improved appliance

that consumes 100 kWh per year less than the

unimproved version is illustrated in table 8.

This figure shows the effect of such a change

on two electric homes, one with resistance

heating and one with a heat pump, in two

climates. I n Chicago, where heating is the

largest need, the improved appliance reduces

total consumption only by half of the appliance savings when resistance heat is in use, but

by 79 percent when a heat pump is used. This

results from a drop in the appliance contribution to heat gain, due to greater appliance efficiency. I n Houston, where cooling is more important, total savings are greater than the savings of the appliances alone, since internal

heat gain is reduced.

The Department of Energy has published

what it has determined to be the maximum

feasible improvements, technically and economically, for major appliances by 1980.2’ 22 If

appliances in the prototypical home were improved according to these estimates, the consumption of the improved appliance would be

that shown in table 9. These target figures do

not represent final technological limits, but

only limits the Department believes can soon

be achieved industry-wide. Some appliances

now on the market equal or exceed these per2’Department of Energy, “Energy Efficiency Improvement Targets for Nine Types of Appliances, ” Federal

Register, vol. 43, p. 15138 (Apr. 11, 1978).

“Department of Energy, “Energy Efficiency Improvement Targets for Five Types of Appliances,” Federal

Register, vol. 43, p, 47118 (Oct. 12, 1978),

formance levels. A British study has estimated

that the average energy use of the appliances

shown in table 9 (other than water heaters)

could be reduced to 41 percent of present consumption. 23

As water heating is the second largest use of

home energy (after heating) in most locations,

a number of methods are under study to reduce this demand below the incremental improvements reflected in table 9. Heat pumps

designed to provide hot water are in the works,

and proponents expect they may be able to

operate with an annual water heating COP of 2

to 3.24 Because a heat pump removes heat

from the air around it, a typical heat pump

water heater will also provide space cooling

about equal to that of a typical small window

air-conditioner (one-half ton) in summer. Such

a heater is expected to cost about $250 more

than a conventional water heater.

Other approaches to the problem of heating

water include use of heat rejected from the

condenser of an air-conditioner, refrigerator,

or freezer, or the recovery of heat from drain

water. Air-conditioner heat pump recovery

units now on the market cost $300 to $500 installed. Estimated hot water production ranges

from 1,000 to 4,600 Btu per hour per ton of airconditioning capacity.25 The air-conditioner

heat recovery unit is identical in concept to

the heat pump water heater, but is fitted to

existing air-conditioners or heat pumps. A unit

installed on a 3-ton air-conditioner in the Baltimore area would reduce the electricity used

for heating hot water in a typical home by

about 26 percent. 26

“Gerald Leach, et al., A Low Energy Strategy for the

United Kingdom (London: Science Reviews, Ltd., 1979),

pp. 104,105.

“R. L. Dunning, “The Time for a Heat Pump Water

Heater,” proceedings of the conference on Major Home

Appliance Technology for Energy Conservation, Purdue

University, Feb. 27- Mar. 1,1978 (available from NTIS).

*’David W. Lee, W. Thompson Lawrence, and Robert P.

Wilson, “Design, Development, and Demonstration of a

Promising 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 family

using 80 gal Ions of hot water per day.
44 . Residential Energy Conservation

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

on Total Energy Consumption

Chicago Houston

Resistance Efficient Resistance Efficient

heat heat pump heat heat pump

Appliance savings. . . . . . . . . . . . . . . . . . . . . . . . . . 100 100 100 100

Cooling savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 12 39 22

Additional heating . . . . . . . . . . . . . . . . . . . . . . . . . 69 33 37 14

Total savings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 79 102 108

NOTE: It is assumed that the resistance heating system has an efficiency of 0.9 (1O-percent duct losses) and a system cooling COP of 1.8. The heat

pump system has a heating COP of 1.9 in Chicago and 2.36 in Houston with a cooling COP of 2.6. The heating season is assumed to be 7

months in Chicago and 4 months in Houston. The cooling season is assumed to be 35 months in Chicago and 7 months in Houston.

SOURCE: OTA

Table 9.—Energy Consumption of Improved

Appliances for the Prototypical Home

Appliance Energy consumption

Hot water heater -Gas. . . . . . . . . . . . . . . . 216 therms

-Electric. . . . . . . . . . . . . 3,703 kWh

Cooking range/oven . . . . . . . . . . . . . . . . . 1,164 kWh

Clothes dryer. . . . . . . . . . . . . . . . . . . . . . . 950 kWh

Refrigerator/freezer. . . . . . . . . . . . . . . . . . 1,318 kWh

Dishwasher . . . . . . . . . . . . . . . . . . . . . . . . 290 kWh

NOTE: One therm = 29.3 kWh

SOURCE: OTA.

As knowledge of home energy use increases

and prices of purchased energy rise, the use of

appliance heat now wasted should become

more common. Some building code provisions

may have to be adjusted to encourage these

uses.

The ACES System

The Annual Cycle Energy System (ACES) is

an innovative heat pump system that uses

substantially less energy than conventional

heat pump systems. ” A demonstration house

incorporating the ACES system has been built

near KnoxvilIe, Term., and uses only 30 percent

as much energy for heating, cooling, and hot

water as an identical control house with an

electric furnace, air-conditioner, and hot water

heater.

The ACES concept, which was originated by

Harry Fischer of ORNL, uses an “ice-maker”

27A, s, Holman and V. R. Brantley, “ACES DemonWation: Construction, Startup, and Performance Report, ”

Oak Ridge National Laboratory report ORNL/CON-26,

October 1978.

heat pump in conjunction with a large ice bin

that provides thermal storage. During the

winter, the heat pump provides heating and

hot water for the house by cooling and freezing other water. The ice is stored in a large insulated bin in the basement and used to cool

the house during the next summer. After the

heating season, the heat pump is normally

operated only to provide domestic hot water.

However, if the ice supply is exhausted before

the end of the summer, additional ice is made

by operating the heat pump at night when offpeak electricity can be used.

The efficiency of the system is higher in all

modes of operation than the average efficiency of conventional systems. The “heat source”

for the heat pump is always near 320 F so it is

never necessary to provide supplemental resistance heating and the ACES operates with a

measured COP of 2.77 as shown in table 10.

When providing hot water, the system has a

COP slightly greater than 3, which is comTable 10.— Full-Load Performance of the

ACES System

——

Function Full-load COP

Space heating with water heating . . . . . . . . . . 2.77

Water heating only . . . . . . . . . . . . . . . . . . . . . . 3.09

Space cooling with stored ice . . . . . . . . . . . . . 12.70

Space cooling with the storage

> 32° F and < 45° F. . . . . . . . . . . . . . . . . . . 10.60

Night 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 for

the chilling when it is later used for space cooling. This procedure results in

a COP of 0.5. If the chilling credit and the water-heating credit are taken at

the time of operation, then a COP of 2.5 results.
Ch. II--Residential Energy Use and Efficiency Strategies ● 45

Photo credit: Oak Ridge National Laboratory

The Annual Cycle Energy System (ACES) design is passive energy design utilizing, as its principal component, an insulated

tank of water that serves as an energy storage bin

Photo credit: U.S. Department of Energy

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

parable to the heat pump water heaters under

development and much better than the conventional electric hot water heater COP of 1.

The system provides cooling from storage with

a COP of more than 10.

The ACES demonstration house is a 2,000-

ft2

, single-family house. It is built next to the

control house that has a simiIar thermal envelope so both houses have nearly identical

heating and cooling loads. Both houses are

well insulated although not as highly insulated

as the “low energy house” of this chapter. The

thermal shell improvements reduce the annual

heating requirements (20.3 MMBtu) to less

than half those of a house insulated according

to the Department of Housing and Urban Development (HUD) minimum property standards (43.8 MMBtu) but increase the seasonal

cooling requirement from 22.7 to 24.1 MMBtu.

The use of natural ventilation for cooling when

practical lowers the cooling requirements of

the ACES house to 17.1 MMBtu.

The actual space- and water-heating energy

requirements for the ACES house are shown in

table 11 for a 5-month period during the

1977-78 winter. The ACES system used 62 percent less energy than wouId have been required if the house had used an electric furnace with no duct losses and an electric hot

water heater. It used 35 percent less energy

than the theoretical requirements of a conventional heat pump/electric hot water heater

system. These measurements combined with

estimates of the summer cooling requirements

show that the ACES system will use only 30

percent of the energy for heating, cooling, and

hot water that would be used by the control

house with a conventional all-electric system.

This is only 21 percent of the energy that

would be used for these purposes by this house

if constructed to HUD minimum property

standards (This is nearly identical to the reduction shown for the low-energy house. )

Table 11.—Actual Space- and Water-Heating Energy

Requirements of the ACES Demonstration Housea

——. —

Elec. furnace, Heat pump,

elec. water elec. water

ACES heater heater

Load consumption consumption consumption

(kWh) (kWh) (kWh) (kWh)

Heating . - 10,54 6

4,960

10,546 5,021

Hot water 2,657 2,657 2,657

Total. . 13,203 4,960 13,203 7,678

acovers period from Oct. 31, 1977 through Mar. 26, 1978.

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

ENERGY SAVINGS IN EXISTING HOMES–EXPERIMENTS

Although the calculations of heating and

cooling loads discussed above were given for

new homes, they hold as welI for retrofit of existing homes to the extent retrofit is feasible.

As the majority of the housing stock between

now and the year 2000 is already built, however, it is important to examine the potential

for savings by retrofit in more detail. To improve the thermal qualities of the shell, consumers are urged to weatherstrip, caulk, insulate the attic, and add storm windows, often

in that order. This is correct for most homes,

but resulting savings will vary. Princeton University and NBS have conducted extensive and

thoroughly monitored “retrofits” of houses,

and Princeton has undertaken an extensive

project involving retrofit and monitoring of 30

townhouses in an area known as Twin Rivers,

N.J. The results of this work suggest that large

savings are possible on real houses through

careful work but that much field work is

needed before the full impact of changes is

understood.

Thirty townhouses near Princeton, N. J., were

improved with different combinations of four

options thought to be cost-effective. The

houses were constructed with R-11 insulation

in the walls and attic, and some units had double glazing. Thus, they were more energy efficient than the average existing house built up

to that time. Improvements used by the Princeton researchers were: 1 ) increasing the attic insulation from R-11 to R-30; 2) sealing a shaft
Ch. II—Residential Energy Use and Efficiency Strategies ● 47

around the furnace flue, which ran from the

basement to the attic and released warm air

past the attic insulation; 3) weatherstripping

windows and doors, caulking where needed,

and sealing some openings between the basement and fire walls that separate the houses;

and 4) insulating the furnace and its warm air

distribution system and adding insulation to

the hot water heater.28

These retrofits showed winter heating savings averaging about 20 percent for the two attic retrofits and up to 30 percent for the total

package. 29 30 Savings varied considerably; this

was due to changes in temperature and sunlight combined with changing living patterns

of the occupants (al I houses were occupied).

The savings measured are consistent with

the reduction in heating required in 600 houses

that received attic insulation retrofit through

the Washington Natural Gas Company (Seattle) in autumn 1973. These houses indicated an

average reduction of gas consumption of 23

percent.31

While the Twin Rivers retrofits were conventional, there were some choices the average

homeowner would have missed. These choices

were important. Plugging the space around the

flue and the spaces along the firewall stopped

heated air from bypassing the insulation. (Closing openings in the basement also contributed. ) Engineering analysis indicated that up to

35 percent of the heat escaping from the townhouses as built occurred via the insulation

bypass–heated air was flowing up and out of

the house by direct escape routes! 32

28Davld T, Harrje, “Details of the First Round Retrofits

at Twin Rivers,” Energy and Buildings 1 (1977/78), p. 271.

*’Robert H. Socolow, “The Twin Rivers Program on

Energy Conservation in Housing: Highlights and Conclusions,” Energy and Buildings 1 (1977/78), p. 207.

JoThomas H. Woteki, “The Princeton omnibus Experiment: Some Effects of Retrofits on Space Heating Requirements” (Princeton University Center for Environmental Studies, 1976), Report No. 43, 1976.

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

26.

“Jan Beyea, Bautam Dutt, and Thomas Woteki, “Critical Significance of Attics and Basements in the Energy

Balance of Twin Rivers Townhouses, ” Energy and Bui/dings 1 (1 977/78), p, 261.

This experience suggests that retrofit will be

most effective when based on an energy audit

by someone who can identify specific characteristics of the structure, and it further suggests

the need for more carefully monitored experiments to identify other common design

defects.

Princeton researchers also conducted an intensive retrofit on a single townhouse with

careful before-and-after measurements. Attic

insulation was increased to R-30 as in the

group retrofit, and the hole around the flue

and gaps along the firewall were plugged as

before. For this experiment, however, the old

insulation was lifted and additional holes

around pipes and wires entering the attic were

plugged. More holes along the partition walls

at the attic were filled; the joint between the

masonry and the wood at the top of the foundation was sealed, and basement walls were insulated. Careful caulking and weather-stripping was used, and a tracer test to locate small

air leaks identified tiny holes. Total labor involved in reducing infiltration was 6 workerdays, and the final infiltration rate was less

than 0.4 air changes per hour, even with winds

higher than 20 mph.

Different treatments were used for windows.

Sliding glass doors were improved through

adding a storm door. Windows not used for

visibility were covered with plastic bubble

material placed between two sheets of glass.

This type of window covering created an Rvalue of 3.8, compared with 1.8 for single glass

plus a storm window. The living room windows

were equipped with insulating shutters, to be

closed at night.

Figure 12 shows engineering estimates of the

losses through various parts of the house,

before and after retrofit. Largest reductions

came from lowered infiltration, but it is clear

that total reduction in thermal losses was produced by many small adjustments. Thermal

losses were reduced to 45.5 percent of their

preretrofit value, and annual heating requirements (calculated considering internal

heat gain and sunlight) showed the heating

system would have only one-third the load of

the original system. These impressive numbers

are especially significant because the house
48 ● Residential Energy Conservation

Figure 12.— Handbook Estimates of Loss Rates

Before and After Retrofit

Loss rate: W/” C

o 20 40 60

Through attic

Outside walls Front

Back

Front door

South windows:

Living room

Bedroom

North windows:

Family room

Bedrooms

Basement:

Walls above grade

Walls below grade

Floor

Air infiltration:

Basement

1st & 2nd floors

L 1 1 I i 1 1 1 1 I 1 1 1

0 50 100

Loss rate: Btu/° F-HR

SOURCE: F. W. Slnden, “A Two-Thirds Reduction (n the Space Heat Requirement of a Twin Rivers Town house,” Energy and Bu//dirrgs 1, 243,

1977-78.

Shaded areas indicate loss rate following retrofit

was built in 1972, and thus had lower thermal

losses as built than most existing stock.

The materials cost $425 and required some

20 worker days for installation. Some items

were hand built, so labor requirements were

high. Since this work, additional loss mechanisms have been discovered in the party walls

of adjoining townhouses,33 and correction of

these flaws should reduce the heating requirement to 25 percent of the original value.

The National Bureau of Standards monitored the heating requirements of a 2,054 ft2

house (commonly called the Bowman house) in

the winter of 1973-74, and continued to

monitor during a three-stage retrofit the

following winter.34 A single-story wood-frame

house with unheated half basement and crawl

space, the house was buiIt with R-11 attic in-

“Robert H Socolow, “1 ntroduction, ” Energy an d

~ui/dif?gS 1 (1977/78), p. 203.

“D. M Burch and C M Hunt, “Retrofitting an Existing

Wood-Frame Residence for Energy Conservation – An Experimental Study,” NBS Building Science Series 105, July

1978.

sulation, and uninsulated walls and floors.

Windows were single-glazed except for a Iiving

room picture window. The house is surrounded

by trees on all sides and has dense shrubbery

along the north wall. It showed evidence of

above-average craftsmanship in construction.

All these factors combined to produce air infiltration rates ranging from one-quarter to

two-thirds air change per hour in extreme conditions; this is unusually low.

First retrofits were planned to reduce infiltration — careful caulking, weather-stripping,

replacement, or reglazing of window panes.

The fireplace damper was repaired, a springIoaded damper was installed on the kitchen

vent-fan, and the house was painted inside and

out. There was no measurable difference in infiltration after the retrofits.

The next step was to install wooden-sash

storm windows, which cut the heat loss of the

house by 20.3 percent.

Finally, blown cellulose insulation was

added to increase the attic to R-21, al I exterior
Ch. Il—Residential Energy Use and Efficiency Strategies “ 49

walls were insulated (with blown fiberglass,

blown cellulose, and urea-formaldehyde foam

in different walls), R-11 insulation was placed

under the floor over the basement, and R-1 9

over the crawl space. The addition of this insulation cut the heat loss from the house by

another 23 percent, but actually resulted in a

slight increase in the infiltration rate, a result

not fulIy understood.

Table 12 shows the resulting reduction in

thermal losses of the house, based on an

assumed occupancy pattern. Thermal losses

went down 43.3 percent, and the annual heating system load was reduced by 58.5 percent.

Tables 13 and 14 show calculated steady-state

heat losses before and after retrofit.

Table 12.—Comparison of Reductions in Heat-Loss

Rate to Reductions in Annual Heating Load

Reduction in Reductions in

heat-loss rate annual heating

Retrofit stage % load, %.

Preretrofit (and Stage 1) . . 0 0

Stage 2 . . . . . . . . . . . . . . . . 20.3 25.2

Stage 3 . . . . . . . . . . . . . . . . 23.3 33.3

Combination . . . . . . . .’. . . 43.3 58.5

SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-Frame

Residence for Energy Conservation-an Experimental Study,” NBS

Building Science Series 105, July 1978.

Table 13.—Preretrofit Steady-State Winter

Heat-Loss Calculations

Heat-loss Heat-loss-rate

path Btu/h

Percent of

total

Walls. . . . . . . . . . . . . . 9,617

Ceiling . . . . . . . . . . . . 4,020

Floor

Over crawl space. . 3,201

Over basement . . . 292 }

3,493

Windows

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

}

Insulating glass. . . 1,877 ‘

Doors . . . . . . . . . . . . . 924

Air Infiltration . . . . . . 6,010

(1 = 0.51 h-l)

a

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

; 28.0

11.7

9.3

0.9

24.4

5.5 }

29.9

2.7”

17.5

100

Table 14.—Postretrofit Steady. State Winter

Heat-Loss Calculations

Heat-loss Heat-loss-rate Percent of

path Btu/h total

The summer cooling load was slightly increased. Insulation added to the walls and

attic reduced heat gain and a polyethylene

sheet placed in the crawl space reduced the

moisture entering the house, but these reductions were offset by the reduction in cooling

resulting from the passage of air through the

floor to the basement space.

The experiments at NBS and Princeton suggest possible heating savings of at least 50 percent through straightforward improvements,

even in well-constructed houses. They also

show that these levels will be reached only

through careful examination of the structure,

and that our general knowledge of the dynamics of retrofit is not very sophisticated. Additional careful monitoring of actual houses is

needed. Such data will help us to obtain better

values for public and private investments.

aBased on Preretrofit air-infiltration correlation, indoor temperature of 68° F

and outdoor temperature of 32” F.

SOURCE: D. M. Burch and C. M. Hunt, “Retrofitting an Existing Wood-Frame

Residence for Energy Conservation-an Experimental Study,” NBS

Building Science Series 105, July 1978.
50 ● Residential Energy Conservation

INTEGRATING IMPROVED THERMAL ENVELOPE, APPLIANCES,

AND HEATING AND COOLING EQUIPMENT

The overall reduction in household energy

use is not determined solely by the thermal

envelope improvements; it is also influenced

by the type and efficiency of heating, cooling,

and water heating equipment used as well as

the other appliances. This can be seen in table

15, which shows the total primary energy consumption for five different sets of equipment

in the three different simuIation houses discussed earlier.

The equipment packages assumed range in

performance from that typical of many existing installations to systems with above

average but still below many existing commercial facilities. Gas and electric heating equipment is used to illustrate around the country.

Price, availability or other considerations lead

to the choice of oil, wood, or solar in many

new homes.

The effect of the thermal envelope or equipment improvements is rather similar in Chicago and Baltimore. The extra attic insulation,

storm windows, and insulated doors of the

1976 house reduce consumption by 12 to 14

percent. Replacing the electric furnace with a

heat pump cuts consumption to 72 percent of

the baseline 1973 performance. The lowenergy, all-electric house starts with a well-insulated and tight thermal shell, uses a heat

pump installed to meet predicted performance, and improved appliances. The only

equipment not now commercialIy available in

residential sizes is the heat pump providing the

hot water. This house uses 36 to 39 percent of

the energy of the 1973 house. The low-energy

gas-heated house is comparably equipped, except that it uses an improved furnace, air-conditioner, and hot water heater as shown in

table 16. It uses about 55 percent of the energy

of the baseline gas-heated house. The reduction is smaller than for the all-electric house,

as heating represented a much larger fraction

of the primary energy consumption in the

baseline all-electric house than in the gasheated house.

In Houston, the qualitative changes observed are similar, but the absolute and fractional reductions observed are generally considerably smalIer since heating and cooling are

initialIy a smaller fraction of the total consumption. For the 1976 house, the heating load

is already small enough that the heat pump

cuts only 3 percent from total consumption. It

Table 15.—Primary Energy Consumption for Different House/Equipment Combinations

(in MMBtu)

Chicago Bait i more Houston

Percent of Percent of Percent of

Consumption 1973 use Consumption 1973 use Consumption 1973 use

All-electric houses

“1973” house with

electric furnace. . . . . . . . . . 491 100 400 100 294 100

“1976” house with

electric furnace. . . . . . . . . . 424 86 351 88 271 92

“1976” house with

heat pump . . . . . . . . . . . . . . 353 72 286 72 261 89

Low-energy house

with heat pump. . . . . . . . . . 176 36 154 39 161 55

Gas-heated houses

“1973” house . . . . . . . . . . . . . 311 100 271 100 252 100

“1976” house . . . . . . . . . . . . . 277 89 244 90 240 95

Low-energy house . . . . . . . . . 168 54 150 55 160 63

NOTES: Primary energy consumption is computed assuming that overall conversion, transmission, and distribution efficiency for electricity is 0.29 and that

processing, transmission, and distribution of natural gas is performed with an efficiency of 0.89

1 MMBtu = 1.05 GJ.

SOURCE: OTA
Ch. II--Residential Energy Use and Efficiency Strategies ● 51

Table 16.—Equipment Used in Prototypical Baltimore Houses

— — . .

House Heating system Cooling system Hot water Appliances

-. — ——

All electric

“1973” house with electric

furnace. Electric resistance furnace

with 90°/0 system efficiency

“1976” house with electric

incl. 10°/0 duct losses.

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

“1976” house with

heat pump . . . . . . . . . . Electric heat pump with

seasonal performance factor

of 1.26 (Chicago), 1.48

(Baltimore), or 1.88 (Houston)

incl. 1OO

/. duct losses.

Low-energy house with

heat pump. . . . . . . . . . . . . Electric heat pump with seasonal performance factor of

1.90 (Chicago), 2.06 (Baltimore), and no duct losses.

Houston has no heating

system. —

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-conditioning system with COP = 1.8

incl. 10% duct losses.

Same as above

Electric heat pump with

COP = 18 incl. 10% duct

losses,

Electric heat pump with

COP = 2.6 and no duct losses.

— ——

Central electric air-conditioning system with

COP = 18.

Same as above

is also interesting to note that in all three

cities, the primary energy requirement for the

gas-heated low-energy house is almost the

same as that of the one with the heat pump.

The changes that have been incorporated in

the low-energy house vastly alter the fraction

of total consumption that goes to each end

use. Figure 13 shows that appliances and

lighting now use 61 percent of the total (in

Baltimore) while they used only 25 percent of

the total for the 1973 house. Appliance use has

been reduced slightly, but the total for other

uses has been reduced by 80 percent. The disaggregate use for each house is shown in

tables 23, 24, and 25.

Part of the reductions shown in table 15 are

due to the use of improved heating and cooling equipment. The low-energy gas-heated

house uses a furnace with a seasonal efficiency of 75 percent while the 1976 house has an

efficiency of only 60 percent. The improved

furnace is equivalent to thermal envelope imCentral electric air-conditioning system with COP = 2.6

and no duct losses.

Electric hot water Appliances and usage

heater 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 except

COP =2. Hot water supplied by heat recovery

from air-conditioner

during cooling season.

Gas hot water heater

with 44% efficiency.

Same as above.

Gas hot water heater

with 55% efficiency.

usage given by

table 9 for

appliances listed

there.

Appliances and usage

as shown in table 19.

Same as above

Same as above except

usage given by

table 9 for appliances Iisted there.

Figure 13.—Disaggregated Point, of Use Energy

Consumption for the Low-Energy House With Heat

Pump in Baltimore, Md.

1 MMBtu = 105 gigajoule (GJ)

Source Based on tables 19-25
52 . Residential Energy Conservation

provements that reduce the heating load by 20

percent, which points out that the retrofit of

equipment needs to be considered for existing

housing. It may pay to consider an improved

furnace before retrofitting wall insulation.

Each case must be decided separately, but

where insulation already exists in accessible

places (attic, storm windows) the heating system offers considerable potential.

A number of additional steps— not considered in the computer simulation — could be

taken to reduce consumption even further.

Cooling requirements could be reduced by

using outside air whenever temperatures and

humidity are low enough. South-facing windows could easily be increased to reduce the

heating requirements and it might be possible

to reduce the hot water requirements by lowering the water temperature or using water-conserving fixtures. Appliance usage could clearly

be cut because no fluorescent lighting is used,

and the “efficient” appliances used represent

only the industry-weighted average performance, which can be achieved by 1980.

LIFECYCLE COSTING

Dramatic savings in energy consumption

have been shown to be readily achievable

through existing technology. However, most

consumers are more interested in saving

money than saving energy. Comparison of

two alternative purchases— buying additional

equipment now and making smaller operating

payments versus paying less now but assuming

larger operating cost– is always difficult. Few

homeowners resort to sophisticated financial

analysis, but they may consider the “payback”

time required for operating savings to return

the initial capital investment. This figure is frequently calculated without considering future

inflation in the operating costs— and hence in

operating savings —or interest on the money

invested.

A more sophisticated approach involves

“lifecycle costing,” which can be useful for

policy purposes even if individual homeowners

do not use it. Lifecycle costing, as used in this

section, combines the initial capital investment with future fuel and operating expenditures by computing the present value of all

future expenditures. The Ievelized monthly

energy cost is then computed as the constant

monthly payment that would amortize over 30

years a loan equal to the sum of the initial investment and the present value of al I future expenditures. The methodology and assumptions

used are described in detail in volume 11,

chapter I of the OTA solar study .35 The “inter35 Application of Solar Technology to Today’s Energy

Needs (Washington, D. C.: U.S. Congress, Office of

Technology Assessment, September 1978), vol. 11.

est rate” assumes that three-quarters of the investment is financed with a 9-percent mortgage and that the homeowner will receive a 10-

percent after tax return on the downpayment.

It also considers payments for property taxes

and insurance and the deductions from State

and Federal taxes for interest payments. Future

operating expenses include fuel costs, equipment replacement, and routine equipment operating and maintenance costs, all of which

assume that inflation occurs at a rate of 5.5

percent. The present value of these expenses is

calculated using a discount rate of 10 percent.

It is generally agreed that future energy costs

will not be lower than now (in constant dollars), but beyond that projections differ as a

result of the different actions possible by the

Government, foreign producers, and consumers. This study calculates Ievelized monthly

costs for three different energy cost assumptions: 1) no increase in constant dollar prices;

2) oil and electricity prices increase by about

40 percent, while gas prices double (in constant dollars) by the year 2000 as projected by a

Brook haven National Laboratory (BNL) study;

and 3) a high projection where prices approximately triple by the year 2000 (see figure 4,

chapter l). The detailed assumptions about the

energy costs are given in volume 11, chapter I I

of the OTA solar study above.

The Ievelized monthly costs for each of the

houses described in table 15 are presented in

tables 17 and 18 for each of the energy price

increase trajectories described above. Two different starting prices are assumed, correspond-
Ch. II--Residential Energy Use and Efficiency Strategies . 53

Table 17.—Levelized Monthly Energy Cost in Dollars for Energy Price Ranges Shown

(All electric houses) ‘

-

—

Primary energy Price range 1976-2000 in 1976 dollarsb

—

3.22-7.03 3.22-10.60

All-electric houses 4.4 4.4-6.4 4.4-14.4

Chicago

“1973” house with

electric furnace. . . . . .

“1976” house with

electric furnace. . . . . .

“1976 house with

heat pump. . . . .

Low-energy house

with heat pump. . .

491

424

353

176

183

170

175

138

158

150

156

136

129

128

150

123

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

282 541

219 403

Baltimore

“1973” house with

electric furnace. . . . . .

“1976” house with

electric furnace. . . . . .

“1976” house with

heat pump . . . . . . . . . .

Low-energy house

with heat pump. . . . . .

400

351

286

154

416

381

351

257

252

235

230

185

Houston

“1973” house with

electric furnace. . . . . .

“1976” house with

electric furnace. . . . . .

“1976” house with

heat pump . . . . . . . . . .

Low-energy house . . . . .

294

271

261

161

328

315

331

248

204

199

218

173

aprimaw ~nerqY ~On~umption is Computed assumina that overall conversion, transmission, and distribution efficiency fOr electricity is 0.29 and that processing

transm”ission~and distribution of natural gas is perfor-med with an efficiency of 0.89

bGas prices in $/h.frd Btu and electricity in dkWh.

Table 18.— Levelized Monthly Energy Cost in Dollars for Energy Price Ranges Shown

(Gas heated houses)

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

Gas-heated houses (MMBtu) Electricity: 2.5 2.5-3.6 2.5-8.2 4.4 4.4-6.4 4.4-14.4

Chicago

“1973” house . . . . . . . . .

“1976” house . . . . . . . . .

Low-energy house . . . . .

311 111 160 272 204 323 553

277 111 155 261 193 298 511

168 117 144 232 168 225 387

Baltimore

“1973” house . . . . . . . . .

“1976” house . . . . . . . . .

Low-energy house . . . . .

271 106 148 257 188 288 507

244 107 145 249 181 270 475

150 110 135 221 157 206 364

Houston

“1973” house . . . . . . . . .

“1976’ ’house. . . . . . . . . .

Low-energy house . . . . .

252 114 151 280 186 261 501

240 115 150 274 184 254 484

160 117 142 238 169 217 397

aprimary energy consumption is computed assuming that overall conversion, transmission, and distribution efficiency for electricity is 0.29 and that Processing,

transmission, and distribution of natural gas is performed with an efficiency of 0.89

bGas prices in $lMMBtu and electricity in ~lkwh

1 MMBtu = 1.05 GJ.
54 “ Residential Energy Conservation

ing to prices in different parts of the country.

The price ranges shown at the top are those in

1976 and in 2000, both expressed in 1976 dollars. Only in the case of gas-heated homes and

constant energy prices for low-priced gas

($1.08/MMBtu) does it appear not to pay to go

to the low-energy home. Thus, not only can investment in conservation provide substantial

energy savings but also significant dolIar savings as well. It is interesting that heating requirements for the 1976 house in Houston are

so small that the added capital investment for

a heat pump is not justified.

It is important that although the low-energy

home reduces Iifecycle costs it does not

necessarily represent the combination of improvements that would have the lowest possible Ievelized monthly costs for a given set of

economic assumptions. Although such a calculation has not been performed for this set of

houses, one has been done for the houses modeled by ORNL discussed above. The ORNL calculations show only improvements to the

building shell, rely on an uninsulated baseline

house, and require a higher return on investment than the OTA calculations. Figure 14

shows the combined heating and cooling energy savings relative to the base case, and total

costs (investment and fuel) over the life of the

house plotted against the initial investment.

While energy savings continue to increase as

investments grow, the total dollar savings

reach a maximum (corresponding to minimum

lifecycle cost) at an investment of about $550.

After that the increase in investment to get

more energy savings grows faster than the increase in fuel cost savings. This calculation

was done for the BNL fuel cost projection, and

if one used the higher price range, the investment for minimum Iifecycle cost would be

much greater than $500 — meaning greater

energy 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 Analysis

of SI ngle-Family DwelIing Thermal Performance, ” Oak Ridge National

Laboratory Report ORNL/CON-35, November 1978, tables 7 and 8.

Although one could not reasonably expect a

person to go beyond the point that gives a

minimum Iifecycle cost (indeed, this is the

point assumed in the projections discussed in

chapter l), additional energy savings are possible. If these savings are desirable from society’s point of view, then other economic incentives, such as tax credits, are called for to

make the additional investments attractive.

TECHNICAL NOTE ON DEFINITIONS OF PERFORMANCE

EFFICIENCY

At least eight different terms are used to

describe the energy efficiency of furnaces,

heat pumps, and air-conditioners, and the list

could grow. Manufacturers have traditionally

used efficiencies based on operation under

specified steady-state conditions, but there has

been growing interest in seasonal measures

that would more nearly reflect performance of

a home installation. The Energy Policy and

Conservation Act (EPCA– Public Law 94-163)

as amended by the National Energy Conservation Act (NEPCA — Public Law 95-619) required

DOE to establish testing standards for the

determination of estimated annual operating

costs and “at least one other measure which

the Secretary determines is likely to assist con-
Ch. II—Residential Energy Use and Efficiency Strategies ● 55

sumers in making purchasing decisions” for

heating and cooling equipment and a number

of appliances. Manufacturers are required to

use these test procedures as the basis for any

representations they make to consumers about

the energy consumption of their equipment.

The test procedures developed by DOE emphasize the use of seasonal efficiency measures. These should eventually be more useful

to consumers but are likely to lead to increased confusion at first.

The performance of furnaces is customarily

described in terms of efficiency. The “steady

state efficiency” of a furnace refers to the fraction of the chemical energy available from the

fuel (if burned under ideal conditions), which is

actually delivered by the furnace when it is

properly adjusted and all parts of the system

have reached operating temperature. An actual home installation is seldom in perfect adjustment, heat is lost up the chimney while the

furnace is not operating, and the duct systems

that distribute heat always have some losses

unless they are completely contained within

the heated space. Thus, the “seasonal system

efficiency” is typically much lower than the

steady state efficiency. DOE has developed

procedures for determining a seasonal efficiency, which is called the “annual fuel utilization efficiency. ”

Air-conditioners “pump” heat out of the

house and are able to remove more than a Btu

of heat for each Btu of electrical input. The

usual measure of air-conditioner performance

has been a somewhat arbitrary measure called

the “energy efficiency ratio” or EER, which is

defined to be the number of Btu of cooling

provided for each watt-hour of electric input.

The standard conditions for determining the

EER have been 800 F dry bulb and 670 F wet

bulb indoors and 950 F dry bulb and 750 F wet

bulb outdoors.36 DOE has retained the use of

the EER for room air-conditioners in its test

JGAir-Conditioning and Refrigeration Institute, “Directory of Certified Unitary Air-Conditioners, Unitary Heat

Pumps, Sound-Rated Outdoor Unitary Equipment, and

Central System Humid ifiers,” 1976 (Arlington, Va.), p. 85.

procedures37 but has also adopted the use of a

seasonal energy efficiency ratio (SE E R) for central air-conditioners.38 The seasonal energy

consumption of an air-conditioner is increased

by cycling the machine on and off since it does

not operate at full efficiency for the first

minute or so after it is turned on. An offsetting

factor is provided by the increase in EER that

occurs as the outdoor temperature drops. The

seasonal energy efficiency ratio incorporates

both of these effects and is defined on the

basis of a typical summer use pattern involving

1,000 hours of operation, Use of the SEER

became effective January 1,1979.

A final word should be added about heat

pumps and their air-conditioning mode. The

proposed DOE standards for heat pumps define tests for the heating seasonal performance

factors (HSPF) in each of six different broadly

defined climatic regions of the country. Cooling seasonal performance may be specified by

a cooling seasonal performance factor (CSPF)

or an SEER. In addition, an annual performance factor (APF) is defined as a weighted

average of the HSPF and the CSPF based on

the number of heating and cooling hours in different parts of the country.39

Since heat pumps, as their name implies,

pump heat into the house from outdoors, they

can provide more heat to the house than

would be provided if the electricity were

“burned” in an electric heater or furnace. The

Coefficient of Performance (COP) is the ratio

of the heat provided by the heat pump to that

which would be provided by using the same

amount of electricity i n an electric heating element. The COP of a heat pump decreases as

the outdoor temperature drops, and the Air

Conditioning and Refrigeration Institute has

specified two standard rating conditions for

“’’Test Procedures for Room Air Conditioners, ”

Federal Register, vol. 42, 227, Nov 25, 1977, pp. 60150-7

and federal Register, vol. 43, 108, June 5, 1978, pp.

24266-9.

‘8’’Test Procedures for Central Air Conditioners, ”

Federal Register, vol. 42,105, June ~, 1977, pp. 27896-7.

“’’Proposed Rulemaking and Public Hearing Regarding Test Procedures for Central Air Conditioners Including Heat Pumps, ” Federal Register, vol. 44, 77, Apr.

19, 1979, pp. 23468-23506.
56 “ Residential Energy Conservation

heat pump heating performance. ’” Both specify indoor temperature of 700 F dry bulb and

600 F wet bulb with outdoor temperature for

the “high temperature heating” condition

being 470 F dry bulb and 430 F wet bulb, and

specifications for “low temperature” being

170 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 heating

load must be met by supplementary resistance

heat at lower temperatures, lowering the overall COP still further. A useful measure of the

total heating performance is the “seasonal performance factor,” which is the average COP

over the course of the winter for a typically

sized unit in a particular climate. The seasonal

performance factor includes the effects of supplementary resistance heating and cycling but

does not include any duct losses.

Table 19.—Structural and Energy Consumption Parameters for the

Base 1973 Single-Family Detached Residence

———

Structural parameters:

Basic house design

Foundation

Construction

Exterior walls:

Composition

Wall framing area, ft2

Total wall area, ft2

Roof:

Type

Composition

Roof framing area, ft2

Total roof area, ft2

Floor:

Total floor area, ft2

Windows:

Type

Glazing

Area, ft2

Exterior doors:

Type

Number

Area, ft2

3-bedroom rancher, one story, 8-ft

stories.

Full basement, poured concrete.

Wood frame, 2x4 studs 16“ on ctr.

Brick vener, 4"

1⁄2" insulation board

31⁄2” fiberglass batts

1⁄2" gypsum board

203 sq. ft.

935 Sq. ft.

Gable

Asphalt shingles, 3/8” plywood

sheating, air space, 6“ fibreglass

loose-fill insulation, 1⁄2” gypsum

board

78 sq. ft.

1,200 Sq. ft.

1,200 Sq. ft.

Double hung, wood

Single

105 Sq. ft.

Wood frame

Two

40 Sq. ft.

Patio door(s):

Type Aluminum, sliding

Glazing Double

Area, ft2

40 Sq. ft.

Energy consumption parameters:a

Energy consuming equipment:

Heating system Gas, forced air

Cooling system Electric, forced air

Hot 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

days b

Monthly cooling degree

days b

Monthly discomfort

cooling indexb

————— aFigure~ ~h~~n in parentheses represent energy input to Structure for each aPPliance.

b~ependent On IOCdiOn.

SOURCE: Hittman Associates, Inc., “Development of Residential Buildings Energy Conservation Research, Development, and Demonstration,” HIT-681, performed

under ERDA Contract No. EX-76-C-01-21 13, August 1977, p. III-4.
Ch.!!– Residential Energy Use and Efficiency Strategies ● 57 . . 

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

‘Therm = 1 x Btu = 106 megajoule (MJ)

SOURCE: Hlttman Associates, Inc “Development of Residential Energy Research Development, and Demonstration Strategies, ” HIT-681,

performed under ERDA Contract No EX-76-C-01-21 13, August 1977 p IV 9
58 . Residential Energy Conservation — 

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

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

SOURCE: Hittman Associates, Inc., “Development of Residential Buildings Energy Research, Development, and Demonstration Strategies,” HIT-681,

performed under ERDA Contract No EX-76-C-01-2113, August 1977, p IV-9
Ch. II--Residential Energy Use and Efficiency Strategies ● 59

Table 22.—Specific etached Residence

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

SOURCE Hittman Associates, lnc. “Development of Residential Research Development and Demonstration Strategies, ” HIT-681

performed under ERDA Contract No EX 76-C-01 -2113, August 1977 p 
60 • Residential Energy Conservation . —.— —

Table 23.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and

HVAC Equipment for Houses in Houston, Tex. (in MM Btu*)

 consumption IS computed assure ng that overal I Conversion efficiency for electricity IS O 29 and that 

 and of natural gas has an r? of O 89

bTh I on the electricity used t hot heat Pum P hot IV I heat recovery from the heat pump which heats and cools the

house

 s the gas by the hot heater hot water IS provided b very from the alr-conditioner

‘1 MMBtu = 105 (GJ)
Ch.II--Residential Energy Use and Efficiency Strategies ● 61 — . . 

Table 24.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and

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

 efficiency for IS and that processing,

 and of natural gas has an efficiency of O 89

 figure only the hot water heat provided by heat recovery from the pump which heats and cools the

house

 figure the hot heater hot water j heat recovery from the air-conditioner

 = 105 (GJ)
62 ● Residential Energy Conservatio n

— —.—— . —

Table 25.—Disaggregated Energy Consumption for Different Combinations of Thermal Envelope and

HVAC Equipment for Houses in Chicago, Ill. (in MM Btu*)

aprlmary energy ~on~umpt Ion Is computed 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 electricity USerj ~ f ‘h’ ~1 1, A ~t~c heat pump Some hot wate t< I rI )V d( t ‘ I ~ heat recovery from the heat pump which heats and cools the

house

cTh ,s figure in~(udes only the gas used by the hot ~ ~fer heater Some hot water IS prov(ded t ! hear r,+ {very from the alr-cond itloner

‘1 MMBtu = 105 glgajoule (GJ)
*
Chapter III-- CONSUMER

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 Shortages

Lack 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

68

68

69

70

70

71

71

73

74

TABLES

Homebuyers Willing to Spend $600 or

More at Outset to Save $100 or More Annually on Energy,

by Family Income and House Price Range . . . . . . . . . . .

Percent of Homebuyers Desiring Energy-Saving Features in

Five Major Housing Markets, 1978 . . . . . . . . . . . . . . . . . .

. .

. .

72

73
Chapter Ill

THE CONSUMER

Americans want to own their homes. Few social phenomena have been more influential

in shaping present-day American society than this strong and widespread desire for a home —

particularly for a detached single-family home— that has swept the country since World War

11. The result has been a profound impact on land use, transportation, community development, family life, and many other areas. Our present concern, however, is with the rapid

growth in residential energy consumption that has accompanied the growth in household formation, population, and homeownership.

Energy use in the home accounts for approximately 20 percent of our total energy use,

and of that amount, about 60 percent is used for heating and cooling. Residential energy use

grew about twice as fast as the number of households between 1950 and 1970, reflecting the

increase in use within each household. Household consumption of fossil fuels and electricity

grew from 7 quadrillion Btu* in 1950 to 16 quadrillion Btu in 1974; with the number of

households increasing from 43 million to 70 million, this represents an increase of 65 MMBtu

per household between 1950 and 1974.

The relationships between homeowners and

other housing decisionmakers such as lenders,

builders, architects, manufacturers of building

supplies, and contractors for heating and cooling equipment installation, are very complex.

No single group determines the ultimate energy consumption in a home. It is clear, however,

that consumers are in control of a significant

portion of the decisions that affect consumption directly or indirectly. Homeowners pay

the utility and fuel bills and adjust their consuming behavior when prices rise. They maintain the heating and cooling equipment in their

homes. They control thermostat settings and

window and door openings, and they choose

appliances. They make— or fail to make— investments to improve the energy efficiency of

their homes, through structural or equipment

changes. In short, within the very real limits of

finances, technical capabilities, and comfort,

they control the operational aspects of home

energy consumption.

In a less well-recognized area, home consumers affect residential energy use levels

through their influence on the homebuilding

industry. There is evidence that builders ignore

consumer preferences at their peril, for attempted innovations that have run counter to

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

consumer tastes have generally failed to catch

on and left builders with financial losses. Consumers appear to be conservative in their housing tastes, resisting radical changes in the

design, comfort, or space of a home. The major trade associations and publications of the

building industry spend considerable time and

money surveying the attitudes and preferences

of buyers, with the result that builders, too, are

often conservative about major innovations

that affect buyer perceptions. Efforts to lead,

rather than follow, consumer tastes have not

always succeeded. For example, the recent

movement to buiId “no frilIs” housing in an attempt to bring families of modest means into

the new home market is now considered a failure by the building industry. It appears that

buyers would rather wait a year or two longer,

if necessary, to buy the kind of house they really want–one with amenities such as a fireplace, a family room, a garage, and an extra

bathroom.

In light of the rapid turnover of houses in the

current-day real estate market, some of this

buyer conservatism can be attributed to purchasers’ concern with resale value. Homeownership represents the single largest financial investment made by most families, and its attendant risks can be minimized by investing in

“safe” properties— those with the largest appeal. If the buyer decides to invest in extras, he

65
66 . Residential Energy Conservation

wants to be sure that value will be easily acknowledged by potential future buyers.

This concern about resale values has implications for decisions about energy-conserving

features. Until recently, homeowners would

undoubtedly have been correct in deciding

that extra insulation was not a feature likely to

“turn on” later buyers. Now, however, with rising energy prices and occasional spot shortages of some fuels, prospective buyers have

begun to demand information about utility

costs, and to insist on more efficient houses.

It is important to bear in mind, however,

that energy is only one of several items about

which consumers are concerned. Efforts to

conserve energy through design or construction methods often conflict with other values–for example, the desire to take advantage of a fine view by installing large amounts

of north-facing glass. In determining which

energy-conserving technologies will be attractive to consumers, builders and policy makers

need to keep these conflicting values in mind.

Just as important as consumer attitudes

toward housing are their attitudes toward the

energy problem generally, and toward its

causes, effects, and remedies as these relate to

their own lives. Social scientists have carried

out considerable research on consumer attitudes and behavior.

Many studies have been collected and analyzed by Sally Cook Lopreato and her colleagues at the University of Texas Center for

Energy Studies. ’ Several of these studies indicate that many consumers have serious doubts

about the severity of our energy problem, and

are more concerned about issues like inflation,

crime, and unemployment. Most people do not

share the official views of either Government

or business regarding the causes of the problem. In fact, it appears that most consumers

‘Compilations and analyses by Lopreato et al. are

found in Sally Cook Lopreato and Marian Wossum Meriwether, “Energy Attitudinal Surveys: Summary, Annotations, Research Recommendations” (unpublished: 1976),

and in William H. Cunningham and Sally Cook Lopreato,

Snergy Use and Conservation Incentives: A Stucfy of the

Southwestern Unitecf States (New York: Praeger Publishers, 1977).

mistrust both Government and industry—especially the oil industry–as sources of information about energy issues.

One major study by Jeffrey S. Milstein, of

the Department of Energy’s (DOE) Office of

Conservation and Solar Applications, indicates

that although a majority of Americans in 1977

did not believe that fuel shortages were real,

an even larger majority did believe it was important to conserve energy.2 More than onehalf of the respondents in Milstein’s national

survey believed that fuel shortages were artificial, but 50 percent said the need to conserve energy was “very serious” and another 33

percent believed it was “somewhat serious. ”

Perhaps consumers find it important to conserve because of high energy costs rather than

because energy shortages require it.

Unfortunately, most consumer studies reveal that even when the energy crisis is perceived and accepted as real, this attitude does

not necessarily lead to conservation behavior.

Marvin E. Olsen of the Battelle Human Affairs

Research Center concluded from his surveys

that “with only a few minor exceptions, all the

research conducted thus far has found little or

no relationship between belief in the reality or

seriousness of the energy problem and any actual conserving behavior.”3 However, Olsen

points out that consumers’ belief in the seriousness of energy problems may make them

more accepting of Government policies requiring conservation.

A number of factors appear to contribute to

consumer inaction: a lack of practical knowledge about what to do; a lack of sense of personal involvement in the problem, a “them

first” approach to potential sacrifices, and a

confIict with other personal goals such as comfort and convenience. Not surprisingly, when

queried about their willingness to undertake

specific conservation measures, consumers indicate their highest levels of support for the

2Jeff rey Milstein, “How Consumers Feel About Energy:

Attitudes and Behavior During the Winter and Spring of

1976-1977” (unpublished: 1977).

3Marvin E. Olsen, “Public Acceptance of Energy Conservation, ” in Seymour Warkov, Energy Policy in the

United States: Social and Behavioral Dimensions, p p.

91-109.
Ch. Ill—The Consumer ● 6 7

easiest measures (like turning out lights), and

lowest support for measures that call for major

changes in lifestyles. Governmental and

media-oriented public relations efforts, using

catchy slogans such as “Don’t Be Fuelish,” appear to result in passive responses (“Something

should be done . . .“ ) rather than active ones

(“1 will do the following . . ").4

Studies also show that consumers often deceive themselves (and policy makers) about

conservation steps they claim to be taking or

be willing to take. For example, the Gallup Organization sampled households nationwide in

February 1977 and found that the average temperature at which consumers said they set their

home thermostats was 66° F during the day

and 640 F at night. But pollsters for Gallup and

for Louis Harris who actually measured temperatures of homes 1 month later found average temperatures were 700 F (plus or minus 20,

during the day and 690 F (plus or minus 20, at

night. Reflecting on this finding, Milstein concludes that the discrepancy “indicates a feeling on the part of people that they ought to

have lower temperatures.” He also notes that

many thermostats may be miscalibrated.5

Many consumer studies indicate that the

prospect of real cost savings is the most effective factor in moving people to conserve energy in their personal lives. Other motives, such

as altruistic concerns about the Nation’s future

energy supply, independence from OPEC cartel manipulation, or the quality of the environment are less successful in generating conservation action. b

W. B. Doner, Inc., determined in a study

done for the Michigan Department of Commerce that among Michigan consumers the

single most powerfuI motivator for conservation is represented by the statement that

‘Kenneth Novic and Peter Sandman, “How Use of

Mass Media Affects Views on Solutions to Environmental Problems,” journalism Quarterly, vol. 51, no. 3, pp.

448-452, cited in Cunningham and Lopreato, op. cit., p. 22

and p. 29.

sMi Istein, op. cit., p. 5“

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

“conserving energy saves money.”7 The Gal I up

Organization, in conducting a series of group

discussions on energy during 1976 for the

Federal Energy Administration (FEA) (now part

of DOE), found widespread agreement that

monetary incentives are the critical conservation motivator.8 A Texas study reached the

same conclusion after surveying about 800

households before and after the oil embargo.9

Adding insulation is the most widely documented conservation action taken by cost-conscious consumers. About 80 percent of U.S.

households were found to be insulated to

some extent in Milstein’s 1977 survey— up

from 70 percent in 1976 and 62 percent in 1975.

A Gallup survey conducted in January 1978

found that 17 percent of those surveyed had

added some attic or crawl-space insulation

and 11 percent had added wall insulation in

the previous 12 months; less than one-third of

the Gallup respondents had failed to take action to improve the energy efficiency of their

houses in 1977. ’0

Studies suggest a wide variety of reasons for

some consumers’ failure to take conservation

actions, including: 1 ) lack of social pressure or

reinforcement for conserving behavior; 2) disparity in effects of the energy problem, as well

as in opportunities to conserve, among different income groups; 3) conflicts between conservation objectives and other goals such as

comfort, convenience, and “fairness;” 4) distrust of information providers and disbelief

that shortages are “real;” 5) lack of practical

knowledge about how to conserve; 6) complacency caused by faith in a technical solution

to future energy supply problems.

‘W. B. Doner, Inc. and Market Opinion Research,

“Consumer Study– Energy Crisis Attitudes and Awareness” (Lansing, Mich.: Michigan Department of Commerce, 1975), cited in Cunningham and Lopreato, op. cit.,

p. 130.

8Gaiiup Organization, Inc., “Croup Discussions Regarding Consumer Energy Conservation” (Washington,

D. C.: Federal Energy Administration, 1974), cited in Cunningham and Lopreato, pp. 131-132.

‘David Gottlieb, Socia/ Dimensions of the Energy Crisis

(Austin, Tex.: State of Texas Governor’s Energy Advisory

Council, 1974), cited in Cunningham and Lopreato, pp.

134-135.

‘°Ca[lup Organization, Inc., “A Survey of Homeowners Concerning Home Insulation” (Washington, D. C.: U.S.

Department of Energy, 1978).
68 ● Residential Energy Conservation

LACK OF REINFORCEMENT

Robert Leik and Anita Kolman of the Minnesota Family Study Center maintain in a 1975

paper that social pressure could serve to reinforce conservation behavior. Without a strong

national ethic to conserve energy, little or no

social pressure for conservation exists. Consequently, consumers rely almost exclusively on

economic reinforcement. However, Leik and

Kolman maintain that much of the potential

for economic reinforcement is lost because

consumers pay for energy not as they use it but

monthly or even less often. Also, because bills

are usually paid by one member of a household, other members are not aware of economic savings or penalties unless informed by the

person 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 Rational to be Wasteful ?,” in Warkov, op. cit., pp. 148-163.

and conservation can enhance people’s efforts

to conserve. Summertime electricity consumption among households studied was reduced

by 10.5 percent when people were provided

with almost daily feedback on their consumption performance and were exhorted to conserve. In a separate study, residents given a

goal of a 20-percent reduction in electricity

use actually cut back by 13 percent when provided with frequent feedback. In still a third

experiment, use of a light that flashed whenever cooling could be achieved through open

windows rather than air-conditioners led people to conserve 15.7 percent of their electricity. While these were relatively short-term experiments (3 to 4 weeks), they do suggest that

frequent feedback to the consumer could provide substantial savings of energy. 2

‘

2 Clive Seligman, John M. Darley, and Lawrence J.

Becker, “Behavioral Approaches to Residential Energy

Conservation,” Energy and Bui/dings, April 1978, pp.

325-337.

DISPARITY OF EFFECTS AND OPPORTUNITIES BY INCOME GROUPS

A 1975 Ford Foundation study, since confirmed by several other consumer surveys,

found that household energy use (including

transportation) rises with income and that the

largest gaps in consumption between income

groups are accounted for by elective or luxury

uses. At the same time, the percentage of

household income that is used for energy

drops sharply as income rises. While the poor

spent 15.2 percent of their household income

on direct energy use in 1972-73, the more affluent spent only 4.1 percent. This means that

while lower income households have the greatest need to conserve, they also suffer from a

lack of opportunities to do so. There is very little fat in the poor family’s energy budget. ’3

An Austin, Tex., study found that short-term

response to electricity price increases among

‘

3 Dorothy K. Newman and Dawn Day, The American

Energy Consumer: A Report to the Energy Po/icy Project

of the Ford Foundation (Cambridge, Mass.: Ballinger Publishing Company, 1975), cited in Cunningham and Lopreato, pp. 145-146.

household energy users varied sharply by income group. Upper income households increased consumption despite rising prices; the

small impact on total household budgets was

not sufficient motivation for most to conserve.

Lower income households showed very little

change in consumption because, the researchers concluded, they are already at the minimum consumption level they can manage for

reasonable comfort in homes that lack adequate insulation and efficient appliances.

Only among middle-income families were consumption declines widespread in response to

price increases. The authors conclude that the

middle-income group offers the greatest potential for conservation, since this group has

both a margin for conserving and economic incentive to do so. 4

“Nolan E. Walker and E. Linn Draper, “The Effects of

Electricity Price Increases on Residential Usage by Three

Economic Groups: A Case Study,” Texas Nuc/ear Power

Po/icies 5 (Austin, Tex.: University of Texas Center for

Energy Studies, 1975), cited in Cunningham and Lopreato, pp. 155-156.
Ch. Ill—The Consumer b 69

CONFLICTS BETWEEN CONSERVATION AND OTHER GOALS

A number of studies suggest that the energy

crisis—at least at recent levels of severity— is

not a sufficient incentive to deter consumers

from their pursuit of comfortable lifestyles.

Participants in the Gallup Organization’s 1976

group discussions on energy represented a

cross-section of consumers, varying by income,

education, place and type of residence, age,

and sex. Summarizing the attitudes Gallup discerned regarding Iifestyles, values, and conservation, Cunningham and Lopreato wrote:

Participants hear ‘Deny yourself’ as the implicit theme in most conservation communications and are answering with ‘1 have earned the

right to indulge’ . . Convenience and immediate gratification are primary goals, limited

only by financial pressure. Saving energy when

it is ‘convenient’ provides a sense of contributing and helps relieve guiIt.15

This factor of “convenience” does appear to

limit personal support for conservation measures and actual conservation behavior. An Illinois survey found that consumers, both before

and after the embargo and accompanying

price increases, placed “high value emphasis

on privacy, autonomy, and mobility.” The

researchers conclude that conservation campaigns affecting “deeper lifestyles” cannot

succeed at present. ’b The fact that consumers

value convenience and comfort, plus the fact

that energy costs are still a small portion of the

cost of operating a home, indicates that prices

may need to rise much more dramatically

before they will outweigh these competing

values.

Family welfare was also mentioned often by

consumers as a reason for not conserving.

When Milstein asked certain consumers why

they had not turned down their thermostats,

many mentioned that their families would be

uncomfortable 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, Methodological Assessment, and Base Data (Champaign, Ill.: University of Illinois College of Engineering, 1975), cited in

Cunningham and Lopreato, p. 141.

sick or elderly people in the house. In the Twin

Rivers study, concern with health and comfort

correlated closely with levels of summer energy consumption; the stronger the respondent’s

perception that energy conservation led to

discomfort and illness, the greater was his

energy consumption. The Twin Rivers researchers also found that participants who believed

that the effort involved in saving energy was

too great for the cost savings achieved —for

example, that it was too much trouble to turn

off the air-conditioner and open the windows

whenever it got cool enough outside— also

had higher consumption levels. The third significant predictor of energy consumption

found in the Twin Rivers research was the perception that the actions of individual homeowners could have only a negligible effect on

national energy consumption. 7

Milstein’s respondents believed strongly that

conservation policies must be “fair” to be acceptable. Sometimes, this concern with equity

appeared to lead to support for contradictory

policies. For example, only 30 percent believed

that “consumers have the right to use as much

energy as they want to and can afford to, ” and

only 10 percent believed that “people should

be allowed to drive their cars and heat their

homes as much as they want to even if we all

become dependent on foreign countries.”

While these attitudes might suggest support

for a strong regulatory approach, the same

respondents overwhelmingly believed that the

best way to get people to save energy is by “encouraging voluntary conservation” (70 percent) rather than “passing and enforcing laws”

(20 percent). Nor did Milstein’s participants

favor a free-market approach: 70 percent

agreed with the statement that “raising [the]

price of fuel is not fair, because rich people

wiII use all they want anyway.’” 8

‘

7 Milstein, op. cit., p. 5

‘

8

1 bid., pp. 12-13.
70 . Residential Energy Conservation

DISTRUST OF INFORMATION PROVIDERS AND DISBELIEF

IN REALITY OF SHORTAGES

In February 1977, a month with widespread

natural gas shortages, three-fifths of the consumers in Milstein’s national sample believed

that fuel shortages were “real. ” By March,

however, fewer than half the sampled population thought so; this percentage has been consistent most of the time since the end of the

Arab oil embargo. One-third of Milstein’s respondents said they believed shortages are

contrived by vested interests for economic or

political gain. ’9

The National Opinion Research Center at

the University of Chicago found in a year-long

series of weekly surveys that consumers held a

widespread belief that the Federal Government and the oil industry—two major sources

of advertising campaigns urging conservation —were actually responsible for the energy

crisis through mismanagement and/or design. 20

‘

g

Ibid., p. 5.

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

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

A number of other studies also found that

consumers blame the energy problem on oil

companies, utilities, “big business,” and Government. In one public opinion survey, respondents blamed “oil company actions” and

“Government favoritism to the companies”

most for fuel shortages, but also placed some

blame on “wasteful energy consumption. ”

Very few believed the world was running out

of fossil fuel. z

’ Nine out of ten in Milstein’s

1977 survey agreed with the statement that the

Government should investigate oil and natural

gas companies to make sure they do not hold

back production.22

“Gordon L. Bultena, Pub/ic Response to the Energy

Crisis: A Study of Citizens’ Attitudes and Adaptive /3ef-taviors (Ames, Iowa: lowa State University, 1976), cited in

Cunningham 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 governmental and business advocates of conservation is the disincentive created by lack of consumer understanding about how to save energy. Milstein found that 36 percent of the respondents to a 1976 survey did not know that

lower wattage light bulbs use less electricity,

and 59 percent thought that leaving a light

burning used less energy than switching it on

and off as needed. Although water-heating is

the second largest energy-consuming activity

in the home (after heating and cooling), only 42

percent knew where to find their water heater

controls or how to set them. Only 13 percent of

respondents to the 1976 survey believed their

houses needed additional insulation,23 al23jeffrey S. Milstein, Attitudes, Knowledge and

Behavior of American Consumers Regarding Energy conservation With Some Implications for Governmental Action (Washington, D. C.: Federal Energy Administration,

October 1976), p. 6.

though Milstein’s 1977 survey found that 20

percent of all homes had no insulation at all

and many more were inadequately insulated.

Consumers do know that lowering thermostats

saves energy and money, but MiIstein found in

1977 that half the public believed that thermostats must be turned down 50 or more to save

energy. 24

Government efforts to help consumers determine savings potential and to provide practical “how to” information have either been

too complex or not been made widely available, owing to funding problems. The information problem is particularly challenging because of regional variations in prices, heating

requirements, and fuel mixes, as well as infinite variations in the thermal characteristics of

the 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 technological achievements, especially in producing

“modern conveniences” and in glamorous accomplishments such as putting men on the

moon. A 1975 study by Angell and Associates

found respondents optimistic about prospects

for solving the energy problem through American technological “know-how.”25 Similarly,

ZsAngell and Associates, Inc., A Qualitative StuCfY of

Consumer Att;tu~es Towarcf Energy Conservation (Chicago, Ill.: Bee Angell and Associates, 1975), cited in Cunningham and Lopreato, pp. 121-122.

Bultena found consumers favoring “technological solutions” much more strongly than

policies to reduce demand or promote efficiency. 26 This optimistic view may dampen

consumers’ motivation to conserve, as it

places the burden of a remedy on others, specifically the U.S. scientific community.

2’Bultena, op. cit.

CONSUMERS AND THE BUILDING INDUSTRY

The preceding discussion focused on consumer attitudes and behavior relative to the

overalI energy problem and to conservation in

particular. It is appropriate now to turn to the

area of the consumer’s role in the energy conservation aspects of decision making on housing.

As noted earlier in this chapter, families purchasing new homes typically make a series of

judgments and comparisons, weighing such

factors as attractiveness, size, location, convenience, comfort, and — not insignificantly—

affordability. Since very few homes are likely

to be regarded as one’s dream house, buyers

must weigh the pluses and minuses of each

potential choice.

What role does energy conservation play in

these choices? Until recently, it would have

been safe to say little or none. The presence of

a fireplace, a family room, wall-to-wall carpeting, a picture window, a powder room —factors like these, along with external attractions

such as convenience to schools, shopping, and

transportation dominated the choice of a new

home. Indeed, these factors remain very important in buyers’ perceptions. But a 4-year

series of surveys conducted by Professional

Builder magazine suggests that families entering the market for new homes are increasingly

aware of energy considerations as part of the

choice process, and are expressing willingness

to alter their buying habits somewhat to

realize cost savings in energy .27

It has become commonplace to argue that

builders and buyers alike tend to look only at

first costs and ignore lifecycle costs when determining what features to include in a house.

The Professional Builder survey suggests that

this may no longer be the case when it comes

to energy conservation.

In querying families currently in the market

for newly constructed homes, Professional

Builder asked this question in 1975,1976,1977,

and 1978:

Suppose you were interested in a new home

and a builder told you that by spending $600

more at the time of construction, he could cut

your heating and cooling bills by $100 per

year. What would be your reaction?

In answering the question, respondents were

given four choices:

1. I would spend the additional $600.

“Data from the Profession/ Builder Annual Consumer/Builder Surveys of Housing can be found in the following issues of the magazine: 1975 data, January 1976; 1976

data, January 1977; 1977 data, December 1977; and 1978

data, December 1978.
72 ● Residential Energy Conservation

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

more.

3. I would not spend the $600 because the

savings take too long to recover.

4. I would not spend the $600 because the

savings are not believable.

Results were tabulated according to type of

home sought (detached single-family, attached

single-family, or multifamily), economic status

(measured by family income and by price

range of home to be purchased), and geographic region. The results, described below, suggest

that buyer attitudes are not an impediment to

energy conservation, even when long-range

conservation requires an increased initial investment.

Among 248 potential buyers of single-family

homes in 1975, 80.5 percent expressed their

willingness to spend $600 to realize an annual

saving of $100 in energy costs, and another 8.8

percent said they would spend even more if

the saving would be increased as well. In 1976,

the percentage willing to spend $600 or more

remained nearly constant (89.1 percent), but of

that fraction, a larger group than before (1 5.1

percent of the total sample of 596) expressed a

willingness to pay even more than $600 for a

greater annual saving. In 1977, 93.2 percent of

respondents were willing to spend $600 or

more to save $100 or more in annual energy

costs. In 1978, the fraction of willing energy

savers returned to its 1975-76 level of 89 percent.

It is particularly interesting to note that this

willingness on the part of new-home consumers to increase their first costs to save money

on energy over the long run can be found in

similar percentage of every income group and

every house price-range group. This is shown in

table 26.

In its 1977 survey, Professional Builder asked

potential buyers whether they would purchase,

or consider purchasing either now or in the

future, solar heating and water heating systems in order to reduce their fuel bills. The results indicate that solar is an idea whose time

has not yet come, in terms of public acceptability, but that homebuyers are keeping an

open mind and might well consider solar more

Table 26.—Percent of Potential Homebuyers Willing

to Spend $600 or More at Outset to Save $100 or

More Annually on Energy, by Family Income and

House Price Range

1975 data 1976 data

By family income

Less 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 range

Under $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 income group and house price range.

seriously in the future. Told that solar space

heating might cost them $7,000 in additional

first costs but could reduce fuel bills by 30 to

70 percent, only 8.4 percent of respondents

said they would purchase the solar option;

another 35.6 percent indicated they would

consider purchasing it; 35.1 percent would not

do so now but might in the future; and 20.4

percent said a flat no to solar heat. Consumers

were also asked to consider a solar water heating system that would cost $1,200 and save between 50 and 80 percent of water heating

costs. Among those responding, 7.1 percent indicated they would purchase the system; 37.7

percent would consider the option; 39.5 percent might do so later; and 14.0 percent would

not be interested, period.

Looking at six major housing markets in

mid-1 978, l-lousing magazine surveyed buyers

to learn what energy-saving options (among

other housing choices) they wanted in the

homes they would purchase. Costs for the options varied from city to city; in showing the

results in table 27, cost ranges are provided.

Given the complex interplay between builders and buyers in determining what features

and designs will be included in new homes, it is

useful to look not only at buyers’ opinions, but

also at builders’ perceptions of buyers’ opinions. Builders remain the primary decisionmakers in new construction, but their decisions

refIect 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 83

Double-glazed windows. . . . . $750-2,000 91 70 86 68 34

Solar water heater. . . . . . . . . . $1,800-2,000 34 58 25 41 36

Solar space and water . . . . . . $7,000-13,000 32 48 21 42 24

“Phoenix, surveyed only with regard to upgraded insulation, is excluded from the table.

SOURCE: “What Home Shoppers Seek in Six Major Markets,” Housing, October 1978.

acteristics of market demand. In early 1978, or “very important, vital to buying decision”

Professional Builder asked housing contrac- (44 percent). Given this overwhelming evitors, “How important is energy conservation to dence, it is safe to say that purchasers of new

your customer?” Ninety-seven percent said it housing are indeed energy-conscious, and that

was either “somewhat important” (53 percent) builders are sensitive to this concern.

CONSUMER BEHAVIOR AND ENERGY CONSERVATION

IN HOME OPERATION

Does consumer behavior really make a significant difference in energy consumption? If

not, consumers will have Iittle incentive to cut

back. But if so—and if the answer is measurable in dollars and cents — a residential energy

conservation campaign will find a receptive

audience.

Data on the direct impact of behavior on

energy consumption have only recently become available—and the early returns, based

on utility bills and other records, along with

the experience of fuel suppliers— indicate that

the way a home is used makes a substantial

difference in how much energy is used. There

are savings to be had — and while they will not,

in the long run, compare with the vast savings

derived from a house designed to save

energy—the savings are real and can play a

large role in reducing energy use in existing

housing.

Thermostat and air-conditioner settings are

an obvious example. The use of hot water can

be a major energy drain. Opening or closing

shades and curtains, using natural or mechanical ventilation, opening and closing doors,

leaving windows open at night–all these and

other choices combine to affect the total energy consumption for any given family.

Even more dramatic are certain observa-

 tions about variable energy use levels in

houses of similar or identical design. Wybe

observed two houses, built by the same contractor, which were expected to have identical

thermal characteristics. One used 2.2 times as

much heat and 75 percent more total energy

than the other.28 Jay McGrew observed in a related analysis that the occupants’ knowledge

of proper energy management was generally

more important in achieving low energy consumption than the quality of the construction. 29

Princeton University researchers found similar evidence in the Twin Rivers Project. In a

sample of nine identically constructed townhouses, each with similar orientation, consumption of gas for heating varied by as much

as a factor of 2 to 1. When occupants changed,

gas consumption also changed. In the nine

townhouses where gas consumption was monitored from 1972-76, one house moved from the

highest consumer (1975) to the lowest consum2’Wybe J. van der Meer, “Energy Conservative Housing

for New Mexico,” report 76-163, prepared for the New

Mexico Energy Resources Board, 1977, p. 19.

*’Jay McGrew, President, Applied Science and Engineering, Inc., private communication.
74 ● Residential Energy Conservation

er (1976) when occupancy changed, dropping

almost 50 percent. When these nine houses

were retrofitted, the gas consumption of each

fell by an average of approximately 30 percent, but the ranking of the houses remained

essentialIy the same. 30

30R. H. ‘jocolOW, “The Twin Rivers program on Energy

Conservation in Housing: Highlights and Conclusions,”

Energy and Buildings, vol. 1, no. 3, April 1978, p. 225.

Although it is clear that the way people live

is important in residential energy consumption, it is more difficult to determine how

much energy could be saved by behavioral

change, because the major determinants of

use are the number and age of occupants,

combined with living and working patterns,

Also, large savings reflecting purely behavioral

effects should drop as houses are better constructed and more energy sensitive from the

beginning.

CONCLUSIONS

Using data from the large number of studies

that have been completed in the area of consumer attitudes and behavior with respect to

energy conservation, it is possible to state the

following general conclusions with policy implications:

1.

2

Consumer decisions on housing are complex, and it would be unrealistic to propose energy conservation options that fail

to recognize this. Homebuyers look for

many things besides energy efficiency in a

home. They are conservative about drastic changes in house design or in home

lifestyles. There is, however, great latitude

for efficiency improvement in the structure and operation of the home within the

confines of consumer tastes and needs.

Consumers are becoming more aware of

the need for conservation, but this

awareness does not necessarily lead to

conservation behavior. Many consumers

lack practical knowledge about how to

accomplish conservation and harbor a

degree of mistrust about Government and

industry as information sources. Much of

the available technical information appears to be too complicated or inaccessible for consumer use.

3.

4.

5.

6.

Consumers are most easily motivated by

the prospect of monetary savings. Exhortations about the need to reduce imports

or prevent energy-related environmental

problems do not move most people to

take conservation steps,

Consumers are undertaking minor adjustments (lights out, thermostats down) to

their energy-consuming practices, but are

displaying reluctance about major investments or lifestyle changes.

There are significant discrepancies in actual conservation opportunities (as well as

incentives) among different income

groups. Low-income consumers have little

latitude to conserve, and upper income

families lack the financial incentive, leaving conservation mostly in the hands of

the middle-income householders.

Impediments to consumer conservation

include inadequate information, conflicts

with other goals, lack of perceived financial reward, doubts about others’ motivations and commitments, and complacency about forthcoming technological solutions
Chapter IV

LOW-INCOME CONSUMERS
Chapter IV.– LOW-INCOME CONSUMERS

Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Weatherization . . . . . . . . . . . . . . . . . . . . . . . . 81

Low-Income Tenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Emergency Financial Assistance for Utility Payments.. . . . . . . . . . . 83

Utility Policies for the Poor and Near-Poor . . . . . . . . . . . . . . . . . . . 85

l-lousing, Energy, and the Poor. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

TABLES

Page

28. Consumption of Electricity and Natural Gas in U.S.

Households by lncome Group, 1975. . . . . . . . . . . . . . . . . . . . 86
Chapter IV

LOW-INCOME CONSUMERS

INTRODUCTION

Energy problems hit hardest in low-income households. About 17 percent of the U.S.

population — or 35 million Americans— have incomes below 125 percent of the official poverty line, ’ and this group feels the most severe effects of inflation, unemployment, and high

energy bills.2

Utility costs erode the meager budget of a low-income family. Utility costs account for

15 to 30 percent of the total available income for the low-income family,3 depending on the

‘This 17-percent figure includes approximately 25 million people whose incomes are below, and approximately 10 million people with incomes no more than 25 percent above, the poverty level, as based on a poverty index developed by the Social Security Administration in

1964, modified by a Federal Interagency Committee in

1969, and revised in 1974. For a nonfarm family of four in

1978, the poverty line was set at an income level of

$6,200 per year.

Zusing Consumer price Index (C PI) data as a measure

of inflation, gas, electricity, fuel oil, and coal costs rose

at rates 1.6 to 3.0 times the rate at which the CPI rose between 1972 and 1977. No other major CPI item had rates

of increase as high.

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

Ratio of increase

Increase in CPI of all items:

1972-77 to each item

All items. . . . . . . . . . . . . . . . . . . . . . . . . . . 55.3 —

Food . . . . . . . . . . . . . . . . . . . . . 68.2 1.2

Rent . . . . . . . . . . . . . . . . . . . . ., 33.0 .6

Home ownership. . . . . . . . . . . . . . . . . . . . . 62.2 1.1

Fuel oil and coal . . . . . . . . . . . . . . . . . . . . 164.1 3.0

Gas and electricity . . . . . . . . . . . . . . . . . . . 90.4 1.6

Apparel and upkeep . . . . . . . . . . . . . . . 31.1 .6

Transportation, public . . . . . . . . . . . . ., 38.1 .7

Transportation, private. . . . . . . . . . . . . 60.3 1.1

Medical. . . . . . . . . . . . . . . . . . . . . . . . 68.0 1.2

The costs of food and medical care, for example, increased at rates only 1.2 times greater than did the overall CPI, while the costs of rent, apparel, and public transportation increased at rates less great than did the overall 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 the

reduction of poverty since 1959. I n that year there were

approximately 55 million persons below 125 percent of

the poverty level, constituting about 31 percent of the

total population. The greatest reduction occurred in the

1959-68 period, at the end of which 35.9 million persons

or 18 percent of the population, were below 125 percent

of the poverty level. There has been no significant reduction in poverty since then. See Statistical Abstract of the

United States 1977, U.S. Bureau of the Census, 98th edition, Washington, D. C., 1977, table 733, p. 453.

3

These figures on average household expenditures for

home fuels as a percentage of disposable income were

submitted by the Federal Energy Administration (FEA) to

the U.S. Senate’s Special Committee on Aging. The

figures were taken from FEA’s Household Energy Expenditure Model (HE EM). The H E E M data shows:

Table B.—Average Annual Household Expenditures on Home Fuels as a

Percent of Disposable Income by Age of Household Head, United States

Household head

under 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 all

households have total incomes of $5,000 or under (1976).

In other words, the first two brackets up to $5,000 income correspond reasonably well to the 20 percent of

the population at poverty line or below. Thus, a range of

15 to 50 percent would seem to be justified. However,

the percentages in the above tables were calculated

assuming the mean household incomes within each income bracket was equal to the midpoint of the bracket,

i.e., that the mean household income within the less than

$2,000 bracket is $1,000. Given that welfare payments for

a single person are $177 per month or $2,124 per year, the

number of households subsisting on $1,000 per year is

probably very small.

Thus, only a small percentage of households within

that bracket are paying 50 percent of their incomes for

energy. Twenty-five percent would be a more statistically meaningful figure, giving a range of 15 to 25 percent.

Middle-income families typically pay less for utility

cost partly because most utility companies use some

variation of the declining-block rate structure; the first

block of energy consumed is charged the highest price,

per unit price additional increments of energy consumed, the lower the average price that is paid.

(Continued)

77
78 ● Residential Energy Conservation

type of housing and the cost of different forms of energy in various parts of the country. Middle-income Americans, on the other hand, spend only about 5 percent of their total available

income on utility bills. Further, increases in welfare payments and other assistance tied to the

Consumer Price Index have not kept up with escalating energy costs. In 1972-79, fuel oil

prices rose 197.3 percent, and gas and electricity prices rose 134 and 78 percent; meanwhile,

the Consumer Price Index rose only 68.6 percent.4 Hence the substantial and growing proportion of a low-income family’s budget that goes for utilities affects the family’s ability to pay

for other essentials such as food, rent, and clothing. Data from crisis intervention and weatherization programs sponsored by the Community Services Administration (CSA) have shown a

large number of poor families spending 40 to 50 percent of their household budgets on fuel

and utility costs during the heating season.5

Some of these families face a choice between

paying for food and having their utilities shut off. Low-income families lack discretionary income that they couId divert from other expenses to meet escalations in energy costs.

(Continued)

(See The Impact of Rising Energy Costs on Older Americans, 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 disposable income range, also see Hollenbeck, Platt &

Boulding, An Analysis of the Effects of Energy Cost on

Low-lncorne Households, table 2 submitted to the

Bureau of Applied Analysis, Regional Impact Division,

Department of Energy, on Apr. 6, 1978, in response to a

request by OTA; and Dorothy K. Hewman and Dawn

Day, The American Energy Consumer, ch. 5 and 7 (Cambridge, Mass.: Ballinger, 1975).

‘See note 1. In 1973 (the last year for which data was

available) before taxes, the poorest half of the U.S. lowincome population (those making less than $3,400 yearly)

spent an average of 52.1 percent for food: an estimated

20.0 percent for rent; 21.4 percent for gas, electricity, and

other fuels; and had 6.5 percent left for apparel, medical

care, and other expenditures.

Energy costs (see note 2) have risen at rates three times

that of other costs. Projections of energy costs for people

with disposable income below the poverty line indicate

that energy costs, which represented 20.5 percent of a

poor household’s disposable income in 1974, may represent 31.8 percent by 1985 (Hollenbeck, Platt, Boulding,

op. cit., tables 2 and 8). Any little discretionary income

low-income people have will be eliminated and substitutions 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 Labor

Statistics.)

5

From testimony given by Mr. Tony Majori, Associate

Director, Community Relations-Social Development

Commission of Milwaukee County, Milwaukee, Wis.,

before the U.S. House Select Committee on Aging, Subcommittee on Housing and Consumer Interest, Sept. 26,

1978.

Nearly half (49 percent) of all low-income

households live in the Northeast and NorthCentral regions, where winters are cold and

prices for electricity and natural gas are high.6

More than half (54 percent) of all low-income

families occupy single-family detached dwellings, which require more energy to heat than

apartments or rowhouses. Fifty-five percent of

the poor and near-poor rent their housing

units; this tends to diminish their opportunities

to control residential energy requirements or

to make conservation-related home improvements. I n the colder Northeast, 59 percent of

low-income families live in apartments, reducing their energy needs (relative to occupants of

free-standing homes) but also reducing their

control over energy consumption.

Forty-two percent of all low-income households live in rural areas or in small towns. For

these 5.9 million families, home is often a

small, old, substandard, uninsuIated, and poorly heated single-family house. Only 51 percent

have central heating, and 28 percent use supplementary room heaters. The large number of

poor and near-poor families living outside metropolitan areas accounts for the fact that persons in this income group are five times as IikeIy as those in the middle and upper groups to

use wood, kerosene, coal, or coke to heat their

homes instead of the more common oil, gas, or

electricity.

‘All statistics in this section describing energy-related

characteristics of low-income households are from

Eunice S. Crier, Colder. . . Darker: The Energy Crisis and

Low-Income Americans (Washington, D. C.: Community

Services Administration), #B6B5522, June 1977.

80 ● Residential Energy Conservation

About 37 percent of all low-income households are headed by elderly persons; conversely, about 37 percent of all elderly households

are classified as poor or near-poor. Just over

half of these elderly low-income households

live in the Northeast and North-Central regions. They tend to use more natural gas than

other low-income households — and to pay a

higher portion of their incomes for it–while

consuming much less electricity. This means

that a bigger share of the low-income elderly

household’s energy use can be attributed to

space heating, the most essential use.

The poor and the elderly are usually not in a

position to lower fuel bills by reducing consumption. Available data show that the average low-income household in 1975 used 55.4

percent less electricity and 24.1 percent less

natural gas than the average middle-income

U.S. household. In the aggregate, low-income

households used only 11 percent of total U.S.

residential energy, although they accounted

for 17 percent of population. These figures are

especially significant because at least 43 percent of low-income households have no insulation, and 58 percent have no storm doors or

storm windows — factors that drive up the

amount of home fuel use required to maintain

minimum conditions of health and comfort.

Moreover, 39 percent of low-income households have no thermostat or valve with which

to control their heat, and among low-income

renters 49 percent lack such control. Given

these circumstances, recent increases in utility

and fuel bills severely penalize poor people

who cannot significantly cut consumption

without enduring health hazards in their

drafty, uninsulated homes. Similarly, lack of

funds to pay for air-conditioning in hot climates has resulted in death from heat prostration for some low-income citizens. According

to a newspaper account, the 20 persons who

died from heat in Dallas, Tex., in July 1978

were elderly, poor, and without air-conditioning.7 The elderly, who comprise a substantial

‘See Crier, ibid., p. 3; The Washington Post, “Life and

Death in the Heat,” July 22,1978, p. A8; and A. Henschel,

et al., Heat Tolerance of Elderly Persons Living in a SubTropical Climate (Washington, D. C.: DHEW, Bureau of

Disease Prevention and Environmental Control, National

Center for Urban and Industrial Health, Occupational

Health Program, February 1967).

proportion of the poor and near-poor population, are more susceptible than the general

population to health problems that are aggravated by cold (e. g., respiratory ailments, arthritis, or hypothermia) and by heat, because their

bodies are less able to adapt to extreme temperatures. 8

Three types of policy questions emerge:

●

●

●

How can it be ensured that the energy

problems of the poor and the elderly are

not overwhelming in either a financial or a

health sense? Because low-income citizens are normally the last to move into

newer and more energy-efficient housing,

their proportion of residential energy consumption could actualIy increase over

time.

How can the financial hardships faced by

the poor and elderly in purchasing adequate energy supplies be addressed without creating a dependency on long-term

Federal financial subsidies or relief programs? How can a self-reliant approach be

encouraged?

How can low-income persons participate

best in solving their energy problems,

perhaps acquiring skills and preparing

themselves for future jobs at the same

time?

The questions are especially challenging

because policy makers face difficult choices.

Given limited Government financial resources,

what criteria should be used to ensure that the

neediest are reached first? How many Federal

dollars should be directed toward helping poor

households reduce energy consumption, and

how many to help to pay utility and fuel bills?

How should energy-related needs be coordinated with other social needs such as day care

centers, job training, or medical care? How

8See K H Collins, et al., “Accidental Hypothermia and

Impaired Temperature Homostasis in the Elderly,”

British Medical Journal, 1977, 1, 353-356; G. L. Mills, “Accidental Hypothermia in the EIderly,” British Journal of

Hospital Medicine, December 1973; Robert D. Rochelle,

“Hypothermia in the Aged,” Institute of Environmental

Studies, University of California, Santa Barbara; Fred

Thumin and Earl Wires, “The Perception of the Common

Cold, and Other Ailments and Discomforts, as Related to

Age, ’ International Journal of Aging and Human Development, vol. 6(1), 1975.
Ch. IV—Low-income Consumers ● 81

does a national goal of raising energy prices to

levels that reflect true costs affect the poor?

How could the Federal Government mitigate

these adverse side-effects of an otherwise

desirable policy?

Price mechanisms that encourage conservation through the marketplace do indeed exacerbate the financial problems of low-income

persons. Tax incentives and penalties also discriminate against the poor. Direct subsidies,

such as energy stamps patterned after food

stamps, could address some of the problems

the poor face in paying utility bills—at least

temporarily. However, critics argue that such

subsidies fail to get at the sources of the problem and tend to become self-perpetuating.

WEATHERIZATION

The most effective way to cope with higher

prices is to reduce energy requirements by

“weather i zing” homes. Federally sponsored

weatherization grant programs have demonstrated the benefits of this approach. The

Federal Government operates three separate

but similar weatherization grant programs– in

the Department of Energy (DOE), the Community Services Administration (CSA), and the

Farmers’ Home Administration (FmHA). Before

passage of the National Energy Conservation

Policy Act of 1978 (NECPA), these three programs operated under varying eligibility requirements and other administrative rules. The

new law unifies the programs, all of which are

designed to provide direct assistance to low-income homeowners and occupants by sending

workers into the field to install insulation,

storm windows, and other conservation devices. Recipients pay nothing for this service.

Labor is provided primarily through the Department of Labor’s Comprehensive Employment and Training Act (CETA) program.

The weatherization program of FmHA was

limited, until passage of NECPA during the

final days of the 95th Congress, to loans of up

to $1,500 at 8-percent interest to rural homeowners; no outright grants were available to

those unable to afford to go into debt in order

to save energy. The new energy law adds grants

to FmHA programs on the same terms as those

in the DOE and CSA programs, except that

FmHA provides extra funds for labor when

CETA workers are unavailable.

Unfortunately, low funding levels during the

early years of the weatherization grant programs in DOE and CSA permitted only 3.5 percent of all low-income housing in need of

weatherization to be retrofitted with conservation materials through October 1978.9

Several other problems also emerged in the

first 2 years of Federal weatherization efforts,

particularly in the DOE program. Among them

were overly restrictive Iimits on expenditures

for weatherization materials and transportation of workers and equipment to the work

site, a firm Iimit of $400 in expenditures on

each housing unit, and exclusion of all mechanical devices costing more than $50 from

the list of conservation materials to be installed. A labor shortage plagued the programs; without special funding for labor, both

DOE and CSA relied almost exclusively on

CETA workers, who were often unavailable.

Finally, because families had to be at the

poverty level or below to be eligible for DOE

weatherization services, many near-poor

households with substantial need for energysaving improvements were excluded from the

program.

The recent National Energy Conservation

Policy Act of 1978 and Comprehensive Employment and Training Act Amendments of

1978 have remedied some of these difficulties.

‘This determination of the “total need,” or the total

number of poor and near-poor housing units that could

be weatherized, is based on the fact that there are approximately 14 million households below 125 percent of

the poverty level. Sixty percent are single-family dwellings and 22 percent are apartments of eight units or less,

thus yielding approximately 11,480,000 potentially

weatherization units. According to the Community Services Administration, approximately 400,000 units had

been weatherized by October 1978,
82 . Residential Energy Conservation

The eligibility ceiling for DOE weatherization

has been raised to 125 percent of the poverty

line to include all those households generally

considered to be low-income. The legal definition of weatherization materials has been expanded to include replacement burners for furnaces, flue dampers, ignition systems to replace pilot lights, clock thermostats, and other

items that may be added by regulation. The

new law also calls for development of procedures to determine the most cost-effective

combination of conservation measures for

each home, taking into account the cost of

materials, the climate, and the value of the

energy to be saved by the materials. The limit

on allowed expenditures for each dwelling has

been raised to $800, an amount that includes

materials, tools, and equipment; transportation; onsite supervision; and up to $100 in

repairs to the house that are needed to make

the energy improvements worthwhile. Most important, the DOE program funding authorizations have been increased to $200 million annually for FY 1979 and 1980. The new FmHA

grant program is authorized at $25 million for

FY 1979.

Weatherization programs are especially appealing because they can help low-income persons not only to save energy, but in some cases

also to obtain job training and improve their

permanent employment prospects. Title VI of

CETA authorizes county and local governments or private nonprofit “prime sponsors” to

hire unskilled, underemployed, or hardcore unemployed labor for public service work, including weatherization. The primary objective

of the program is to facilitate private employment for CETA workers after a 6-month or 1-

year training experience. Marriage between the

weatherization and CETA programs, born of

convenience and fraught with difficulties,

nonetheless has the potential to make some

headway against two of the Nation’s most

pressing problems –the energy crisis (including inflation in energy prices) and unemployment. More than 30,000 low-income unemployed persons had received training in weatherization skills— installation of home insulation, storm windows, and other conservation

devices– by the end of 1978.

‘“Public Law 95-524, sec. 123 (c).

The chief difficulty in using CETA workers

for weatherization has centered on community

action agencies’ inability to marshall the

needed manpower when and where it was

needed. Because CETA jobs have been statutorily limited to short periods of time, and because the CETA program as a whole has had to

function with only 1-year lifespans (until extended by the new legislation), it has been virtually impossible to plan ahead for adequate

labor supplies.

Along with the difficulty of training and

scheduling CETAs, lack of authorization to use

funds to hire supervisors as well as inadequate

funds for training have resulted in limited

skills. Program analyses at the local level have

shown that little effective training has occurred, and that the more extensive skills that

the trainee might have been able to Iearn and

use in construction industry jobs (e. g., basic

carpentry) have not been taught. Such factors

have limited the trainee’s effectiveness on the

job and eventual desirability as an employee.

The 1978 CETA Amendments direct the Secretary of Labor to facilitate and extend projects for work on the weatherization of low-income housing, providing adequate technical

assistance, encouragement, and supervision to

meet the needs of the weatherization program

and the CETA trainees. According to Gaylord

Nelson, chairman of the Senate Subcommittee

on Employment, Poverty, and Migratory Labor,

the weatherization provisions of the CETA bill

were needed to prevent three-quarters of the

1,000 active weatherization projects in the Nation from shutting down for lack of workers.

In spite of the difficulties confronting CETA

weatherization, some programs have been effective if not outstanding. For many others,

however, continued effort by the Department

of Labor, DOE, and CSA will be necessary if

the program is to effectively meet its several

goals.

Weatherization is not a panacea; this approach offers little help to those beyond the

program’s reach who face immediate hardship

trying to pay high utility bills. Those least likely to receive weatherization assistance are the

55 percent of all low-income families who live
Ch. IV—Low-income Consumers ● 83

in rental housing and those living in severely

deteriorated housing for which bandaid improvements cannot be justified. For these persons, a number of additional policies may be

required.

What additional policy options might be

considered? The development of weatherized

and rehabilitated public and private housing is

one possibility. Or, if the rehabilitation of

some housing is too costly, considering its

useful life, the construction of new energyefficient housing for the poor might be a more

cost-effective use of Federal funds. But given

the emphasis that Federal assistance programs

usually place on ownership as a precondition

to any housing development activity, perhaps

programs in individual or cooperative ownership might be developed. In any event,

whether these, or other options for renters

such as continuing emergency financial

assistance are chosen, some action should be

taken to address the problems of low-income

renters in housing whose energy inefficiency is

continually increasing.

LOW-INCOME TENANTS

The problems of low-income families living

in rental housing are especially difficult to address. Those whose units are metered and

billed individually have reason to seek ways to

reduce energy consumption, but their opportunities to do so are limited. Even if they can afford to invest in conservation measures–

which most cannot—their investments bring

them no personal benefits unless they continue living in the unit for a long time. Most

tenants are understandably reluctant to improve properties they do not own. Many tenants cannot even control the thermostats or

water heaters that serve their units. Individual

tenants’ relatively low levels of energy consumption mean that they pay the highest rates

in the standard declining-block rate design.

(See chapter VI.) Landlords who pay utility

bills for their properties and pass the cost

along to tenants through rent have little incentive to invest in weatherization improvements.

When they do make such investments, they

pass those costs along, too--so that tenants

who move before the payback period is complete fail to receive the financial benefit of the

lower utility bills.

Energy costs, along with property taxes and

escalating maintenance costs, contribute in a

major way to the tendency of slum landlords

to abandon substandard buildings. Tenants are

seldom well-enough organized to pressure municipal governments into enforcing building

codes or retrofitting and renovating buildings

that cities acquire through tax liens.

Federal weatherization programs have offered little help to low-income renters, particularly those living in apartments. CSA regulations prohibited use of the agency’s funds for

retrofitting multifamily housing until recently.

The laws governing DOE and FmHA weatherization require that multifamily weatherization projects be designed to benefit tenants

rather than landlords and direct the program

managers to ensure that rents are not raised as

a result of weatherization improvements and

that no “undue or excessive enhancement” of

the property results from weatherization activities. 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 necessiefforts and the severity of recent winters, many ties to meet utility and fuel costs or finding

low-income families have faced the unpleas- their gas, oil, or electricity cut off. To avoid
84 ● Residential Energy Conservation

these difficulties, three Federal programs have

been used to help low-income consumers pay

utility bills. They are the Department of

Health, Education, and Welfare’s (HEW) Emergency Assistance and Title XX programs, and

the much larger CSA Special Crisis Intervention Program (SCIP).

HEW’s Emergency Assistance (EA) Program

is available to poor families with one or more

children through the welfare system in 22

States. Emergency assistance payments are

made to prevent imminent hardship, such as

loss of fuel services. Close to 90 percent of the

EA caseload is carried by only seven States,

however. The Federal Government provides a

matching share of 50 percent to States that offer the program. Some States find the required

50-percent non-Federal share too expensive.

Welfare officials often find it difficult to

document the legitimacy of emergency needs

claimed by applicants. ’ Litigation in some

States has resulted in court rulings that some

State restrictions on the use of EA funds are illegal; State response has sometimes been to

stop offering emergency assistance. 2

Other factors have also limited this program’s effectiveness. The program is available

only to families with children, and only to

public-assistance recipients. Further, a family

may not receive EA payments for more than 1

month during any 12-month period.

Funds available through title XX of the

Social Security Act of 1975 may also be used

to permit low-income consumers to pay fuel

bills. Title XX funds have traditionally been

used for such social-service purposes as providing clothing and groceries for needy families, or for meeting the needs of handicapped,

mentally ill, retarded, or other poor persons

with special problems. HEW regulations were

amended in January 1978 to permit the use of

title XX funds for reimbursement of low-in-

‘ ‘Consumer Federation of America, Low-Income Consumer Energy Problems and the Federal Government’s Response, 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 fuel

bills in emergencies. This provision has been

controversial because HEW officials have expressed a concern that utility payments could

consume such a great portion of title XX funds

that too little would remain for more traditional social services. 3 Furthermore, at Ieast

one State– North Dakota–found title XX an

impractical tool for utility payments because

of the requirement that bills be paid in full

before reimbursement funds are released. ”

These problems, particularly the issue of competing needs for limited funds, may jeopardize

the availability of title XX funds for energy-related financial assistance.

The Community Services Administration’s

SCIP was initially funded by a supplemental

appropriation of $200 million in March 1977.

The program was intended to make available a

variety of financial assistance mechanisms

that included grants, loans, fuel vouchers, or

stamps; payment guarantees, mediation with

utility companies or fuel suppliers, and financial counseling; and maintenance of emergency fuel supplies, warm clothing, and blankets.

In practice, assistance was limited to emergency grants in most cases.

Although funded for $200 million, SCIP did

not come close to helping all those in need.

The maximum payment to individuals or families, limited to $250 by Federal regulations,

was often too low to cover the total bill, and

some States set lower ceilings because the

number of applications was too high for the

available money. When consumers could not

meet their entire bills with SCIP payments,

utilities sometimes failed to establish deferredpayment plans and proceeded instead to shut

off gas or power. Some utilities reportedly

failed to reduce their customers’ bills to reflect

SC I P payments.

SCIP’s major problems in the first year resulted from poor timing. Congress’ action in

appropriating funds in March was aimed at

assisting with bills accumulated during the

winter just ending, yet funds did not become

available to community action agencies for

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

“ibid., p 138.
Ch. IV—Low-income Consumers ● 85

distribution until late summer. By then, many

poor families had already had their utilities

shut off or had sacrificed other essential needs

to pay their bills. When funds finally became

available, they had to be distributed in the

short time remaining in the fiscal year or else

revert to the CSA weatherization program, a

worthy program but one that could not meet

the immediate and critical financial needs of

many poor families. Of the amount appropriated in FY 1977, 82 percent was actually distributed to the needy population.

Community action agencies functioned with

a frenzy of activity in order to handle SCIP

funds in August and September 1977. With no

funds provided for administration of the program, the agencies operated with staff hastily

borrowed from other community action projects. They undertook efforts to communicate

with eligible persons through newspaper,

media, and poster advertising, but some failed

to reach enough people to use all available

funds, despite evidence of a large target population. Others succeeded in their public relations efforts but found potential recipients

discouraged by long waiting lines for application processing and lack of transportation

assistance, particularly in rural areas.

To be eligible for SCIP payments, utility and

fuel customers were required to show written

notice from their suppliers of intent to terminate service. Many small dealers in propane,

butane, and wood were accustomed to operating informally—for example, farmers who

sold wood to their neighbors to earn extra wintertime income— and failed to provide such

notice. Their customers were therefore ineligible for SC I P assistance.

Many local SCIP coordinators objected to

the program because they felt it forced their

agencies into an uncomfortable role: handing

out money (like a social service agency) to try

to alleviate the effects, rather than the causes,

of a problem. They saw this as restraining them

from focusing their efforts to do something

about the causes of the local energy problem,

and as providing local people with an erroneous perception of the agencies’ role in their

communities: that is, as surrogate welfare departments rather than as organizations which

help people become more self-sufficient.

Some local antipoverty workers also took offense at the practice of making payments from

Federal CSA funds to private utility companies

and fuel oil distributors. They saw SCIP as a

continuing subsidy to utilities, and not as a

help to the poor. ”

CSA’s second-year financial assistance program, also funded at $200 million, was known

as the Emergency Energy ‘Assistance Program

(EEAP). In FY 1978, funds were made available

sooner and program administrators were able

to benefit from many of the first year’s experiences.

UTILITY POLICIES FOR THE POOR AND NEAR-POOR

Emergency payments to low-income persons, discussed in the previous section, are intended to forestall utility shutoffs and ensure

enough energy to meet basic needs. A number

of governmental jurisdictions have imposed

additional policies, however, to protect lowincome consumers in their dealings with utilities.

In California, all utilities have been required

by law since 1975 to design their electric and

gas rate structures so that the first blocks of

energy consumed — the amount needed to provide necessary amounts of heat, light, refrigeration, cooking, and water heating— are sold

1

‘Data derived from telephone interviews with 44 CAP

weatherization, energy, and overall program directors,

and interviews with community leaders at OTA. Telephone interviews discussed the structure and problems

encountered with CSA energy education programs,

which included extensive discussion of weatherization

activities and problems with CSA/DOE and other programs, and SC I P, while additional interviews at OTA with

local energy personnel visiting in Washington centered

on the effect of and improvements that could be made in

SCIP and other community energy conservation programs,
86 ● Residential Energy Conservation

at reduced rates. Utility revenues lost through

the so-called “lifeline” subsidy are recovered

by charging higher rates for energy consumed

above the minimum allowance. This policy

represents a reversal of the traditional utility

“declining block” rate structure.

The California law is premised on a finding

that “light and heat are basic human rights and

must be made available to all people at low

cost for minimum quantities. ” Lifeline rates

are discussed in the context of utility policy for

energy conservation in chapter VI of this report. Here, they are discussed in terms of their

purpose in meeting social welfare goals—that

is, in preventing severe hardship caused by

high energy prices or by termination of essential utility services as a result of inability to

pay.

For lifeline rates to function as effective income-transfer devices, low-income households

must hold their electricity and gas consumption at or near the low levels needed to meet

only essential needs. Available data indicate

that on the average, low-income households

do indeed consume less energy than households in higher income brackets. A study by

the Washington Center for Metropolitan

Studies found that in 1975, the average low-income household consumed 60.6 million Btu*

of electricity and 110.1 million Btu of natural

gas, compared with an average of 94.2 million

Btu of electricity and 136.3 million Btu of

natural gas for all households. Table 28 indicates how gas and electricity consumption in

low-income households compared with use of

these energy sources in middle- and upper-income households.16 

Table 28.—Consumption of Electricity and Natural

Gas in U.S. Households by Income Group, 1975*

(millions of Btu)

Income

$25,000

Low- $14,000- a n d

income 20.500 above

Electricity. . . . . . . . . . . . . . . . . . 60.6 111.3 137.5

Natural 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 consumption among low-income users indicate,

however, that looking at average household

consumption patterns may not be the best way

to evaluate the effectiveness of lifeline rates in

meeting social welfare goals. Looking instead

at the number of households in various income

groups that exceeded lifeline allowance levels,

the Pacific Gas & Electric Company (PG&E)

found that significant numbers of low-income

households exceed not only the lifeline consumption levels, but also the utility system’s

average consumption per household. For example, PG&E determined that nearly 50 percent of its low-income customers in the San

Francisco Bay area outside San Francisco consume more than the area’s average monthly

household level of 300 kWh.17 High consumption levels among low-income customers were

found to be very weather-sensitive and especially prevalent during winter peak-heating

periods, probably because of the poor thermal

integrity of many homes occupied by low-income consumers. PG&E concluded that large

numbers of low-income consumers were being

penalized, rather than helped, by lifeline

rates.18

In a recent critique of the California lifeline

policy, Albin J. Dahl expressed a doubt that

landlords receiving lifeline allowances for

units in master-metered buildings would in all

cases pass on utility cost-savings to their tenants through lowered rents. He also pointed

out that California residential gas consumers

were paying for much of the gas they consumed at rates far below the costs borne by

utilities in purchasing and delivering that gas.

Dahl argued that the tax and welfare systems

were more appropriate vehicles for solving the

energy-based financial problems of low-income persons. 19

Other utility-related policies that might

assist low-income persons include prohibitions

on wintertime utility shutoffs, legal aid to indigent utility customers, and requirements of

third-party notification prior to shutoff.

“j, Dahl Albin, “California’s Lifeline Policy,” Public

Utilities Fortnight/y, Aug. 31,1978, p. 20.

‘

8

1 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 energy

use in the home are a subset of the larger problems of poor housing quality in general. Opportunities to lower residential energy consumption — and reduce utility bills — are sharply limited for people who live in substandard

housing, unless a way can be found to rehabilitate or replace such housing. Weatherization

programs, financial assistance, and preferential utility rates cannot provide full remedies

for either owners or renters of low-quality,

energy-guzzling homes. A number of Federal

programs address the housing needs of lowincome persons. Efforts are directed at both

tenants and homeowners.

Programs affecting rental housing include:

Federal assistance to local housing authorities for construction, maintenance,

and subsidization of rents in public housing projects;

Rent subsidies under section 8 of the National Housing Act which make up the difference between 25 percent of recipient

families’ incomes and the fair market rent

for the private housing units they occupy;

Mortgage insurance, interest and rent subsidies, and energy-related home improvement financing for rental housing under

section 236 of the National Housing Act,

as amended; and

FmHA’s Section 515 Rental and Cooperative Housing Loan Program, which

finances housing for low- and moderateincome families developed by public,

private, or nonprofit organizations.

Programs aimed at owner-occupied housing

include:

● The Department of Housing and Urban

Development’s (HUD) section 312 program, providing loans at 3-percent interest

to low-income homeowners in certain designated areas, for the purpose of rehabilitating their homes and bringing them into

compliance with current local building

codes;

●

●

●

Mortgage insurance and interest subsidies

made available under section 235 of the

National Housing Act to permit low- and

moderate-income persons to purchase

new and existing housing under affordable financing terms;

FmHA’s Section 502 Homeownership

Loan Program, offering either loan

guarantees or direct loans for the purchase or rehabilitation of homes under

financing terms that vary depending on

the recipient’s income; and

FmHA’s Section 504 Home Repair Program, which offers loans and grants to

elderly rural low-income homeowners to

remove certain dangers to health and

safety.

Programs that can affect both rental and

owner-occupied housing are:

●

●

Community development block grants

made available annually to local governments to meet broadly specified Federal

objectives (which include the provision of

adequate housing, a suitable living environment, and expanded economic opportunities for low-income groups) through

projects designed at the local level; and

HUD’s urban development action grants

designed to stimulate new construction

and economic development in low-income areas.

All these programs have helped low-income

persons to acquire “decent, safe, and sanitary

housing” without the expenditure of an unreasonable portion of their incomes for housing. It

is not clear, however, that the programs have

helped in a noticeable way to make poor families’ homes more energy-efficient. For most

programs, energy conservation is a concern far

from the minds of program administrators in

Washington, D. C., and in the field; similarly,

lenders, builders, owners, developers, nonprofit groups, and others on the receiving end

of Federal housing funds have only rarely included energy efficiency in their planning or

cost calcuIations.
88 . Residential Energy Conservation

Public housing projects, for example, were

constructed without effective thermal standards until 1963, and from 1963 to 1973, Federal

guidelines for thermal standards were voluntary. In recent years, the emphasis within the

public housing program has shifted from new

construction to rehabilitation of existing projects, and energy efficiency has been designated as a “priority expenditure category” as

part of rehabilitation. Since utility costs have

been estimated by HUD to account for between 20 and 30 percent of project operating

expenses, in many cases upgrading insulation,

windows, and energy-consuming equipment in

public housing units is a cost-effective use of

public funds. Unfortunately, however, HUD

cannot supply accurate estimates of the level

of energy-related improvements being made in

the public housing sector, or of the energy savings that are resuIting.

The rental assistance program under section

8 of the National Housing Act assists over

350,000 low-income families by making up the

difference between 25 percent of their family

incomes and the fair market rent for the housing units they occupy. Tenants in both public

and private housing are eligible for section 8

subsidies if their incomes do not exceed 80 percent of the median income in their geographic

areas; nearly a third of all recipients earn less

than half of the median income. As with the

public housing program, section 8 guidelines

pay little attention to energy efficiency. Only

in the case of newly constructed apartments

are section 8 subsidies tied even indirectly to

requirements for thermal integrity in the buildings; newly built homes must meet HUD minimum property standards to be eligible for participation in the section 8 program. Older units

are not subject to any energy standards for

eligibility

Chapter Vlll describes each of the Federal

housing programs listed above, and evaluates

their effectiveness (or lack thereof) in encouraging energy efficiency to keep utility costs

down for low-income owners and tenants.
Chapter V

HOUSING DECISIONMAKERS
Chapter V.— HOUSING DECISIONMAKERS

Page

Introduction . . . . . . . . . . . . . . . . . 91

Characteristics of the Existing Housing

Inventory . . . . . . . . . . . 91

Characteristics of New Housing . . . . . . 93

Housing Processes and Participants . . . . 94

New Construction. . . . . . . . . 95

Retrofit . . . . . . . . . . . . . . . . 97

Manufactured Housing. .,,. . . . 98

The Existing Housing Stock. . . . 99

Trends in Housing and Conservation ~ ~ ...101

Trends in Housing Costs .. ...101

Trends in Utility Costs .. ...104

Findings and Opportunities for Energy

Conservation. . . . . . . . . . . . .112

Builders’ Attitudes . . . . ..113

Property Owners’ Attitudes. . .......113

ls the Cost of Adding Energy Conservation

Features to New or Existing Housing

an impediment to Conservation? 114

Are Problems of Financing Impeding the

Pace of Residential Conservation? 114

What Are the Current and Potential Roles

of the Federal Government in

Encouraging Residential

Conservation ? 115

Directions for the Future .116

TABLES

29

30

31

32.

33.

34.

35.

36.

37.

38.

Structure Type: Year-Round Housing

Units, 1976 . . . . . . . . . . . . . . . . . .

Tenure and Number of Units by Type

of 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 Homes

for the United States and Each Region

by Price Class, 1977 . . . . . .

Private Housing Starts by Type of

Structure, 1977 . . . . . . . . . . . .

Private Housing Completions by

Location, 1977. . . . . . . . .

Sales Price of New One-Family Homes

Sold, 1977 . . . . . . . . . . .

91

91

92

92

92

92

93

93

94

94

39

40

41

42

43

44

45

46

47

48

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 existing

housing. It identifies the opportunities for and impediments to more residential conservation. The characteristics of residential buildings, the factors that influence property owners’

attitudes and behavior toward energy conservation, the participants and processes involved

in new housing development and improvement of existing housing, and trends and institutional factors that encourage or discourage conservation are examined. Based on those judgments, some policy options and considerations that might further energy conservation are

noted.

CHARACTERISTICS OF THE EXISTING HOUSING INVENTORY

To understand the context within which residential conservation actions occur, it is useful

to review the general characteristics of existing

housing. The types of units, tenure arrangements, the age of the housing stocks, and the

income of property owners all influence the

need, potential, and feasibility of energy conservation. In 1976 the inventory totaled nearly

81 million units, of which more than 79 million

were all-year housing units and 74 milIion were

occupied. The housing stock is diverse, varying

by age, construction quality, size, design, and

amenities. Most structures are single-unit

buildings and most housing is occupied by

owners. As shown by table 29, 53.6 million

units or 67.6 percent are one-unit structures.

Only 11.9 million units or 15.0 percent are in

buildings with five or more units.

Table 29.—Structure Type:

Year-Round Housing Units, 1976

——.

Units in

Type thousands Percent

1 unit. . . . . . . . . . . . . . . . . . . . . 53,611 67.6

2-4 units . . . . . . . . . . . . . . . . . . . 10,189 12.8

5 or more units. . . . . . . . . . . . . . 11,888 15.0

Mobile homes or trailers. . . . . . ———3,627 4.6

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

—————.—.

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

Urban Development, Arrnua/ Hous/rrg Survey, 7976 U S and Regions,

Part A‘ Genera/ Housing Characteristics, p 1

Table 30 gives information on tenure and

structure size. Nearly two-thirds of all AmeriTable 30.—Tenure and Number of Units

by Type of Structure, 1976

(units in thousands)

Owner Renter

occupied occupied Total

Occupied units . . . . . . . . . 47,904 26,101 74,005

l-unit structure . . . . . . . . . 42,136 8,477 50,613

2- 4-unit structure . . . . . . . 2,143 7,116 9,259

5 or more unit structures . 638 9,867 10,505

Mobile homes . . . . . . . . . . 2,987 640 3,627

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 Genera/ Housing Characteristics, p 1

can families are owner-occupants; 47.9 million

units or 64.7 percent are owner-occupied; and

only 26.1 mill ion units or 35.3 percent are occupied by renters. The percentage of owneroccupied housing is increasing, with the biggest changes having occurred in the 1940’s and

1950’s. In 1940, owner-occupied units represented only 43.6 percent of all units; by 1960,

they accounted for 61.9 percent of all units.

Most one-unit structures and mobile homes

are owner-occupied, but a significant number

are rented. Only 14 percent of all units are in

buildings with five or more dwellings.

Most housing is located in urban areas.

More than two-thirds of all housing is in standard metropolitan statistical areas (SMSAs). But

as shown in table 31, only 31.0 percent of the

housing stock is found in central cities, and

91
92 . Residential Energy Conservation

most housing in SMSAs is not in central cities

but in suburban areas.

Table 31 .—Year-Round Housing Units

by Location, 1976

Units in

Location thousands Percent

Inside SMSAs ., . . . . . . . . . . . . 53,606 67.6

Within central cities . . . . . . . (24,547) (31.0)

Not in central cities. . . . . . . . (29,059) (36.6)

Outside SMSAs. . . . . . . . . . . . . 25,710 32.4

Total . . . . . . . . . . . . . . . . . . . . 79,315 100.0

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 3

Housing tenure varies by location. As shown

by table 32, the incidence of rental housing is

greater in SMSAs than outside SMSAs and

more prevalent in central cities than in suburban areas. Nearly half the housing in central

cities is rented, but in suburban areas of

SMSAs rental housing makes up only 29 percent of all units. The Northeastern section of

the country has the largest percentage of rental housing and the North-Central section the

smallest.

Table 32.—Tenure by Location, 1976

(units in thousands)

Percent Owner- Percent

Rental within occupied within

Location units location units location

Inside SMSAs . . . . . . 19,557 38.8 30,895 61.2

Within 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 and

Urban 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 have

low or moderate incomes. (See table 33.) Nearly 35 percent of homeowners had an income of

less than $10,000 in 1976; this group could be

expected to be particularly affected by the increasing costs of homeownership.

More than one-third (34.3 percent) of the

stock predates 1940, even with the high level

of construction over the past three decades. As

noted in table 34, a large fraction of the stock

is new: 27.9 percent of the inventory has been

built since 1965.

Table 33.—income by Type of Occupancy, 1976

(numbers in thousands)

Number Number

of 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 1,268

Median 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 in

Year structure built structure Percent

April 1970 or later. . . . . . . . . . . . 12,493 15.8

1965-70 (March) . . . . . . . . . . . . . 9,581 12.1

1960-64 . . . . . . . . . . . . . . . . . . . . 8,093 10.2

1950-59 . . . . . . . . . . . . . . . . . . . . 13,840 17.4

1940-49 . . . . . . . . . . . . . . . . . . . . 8,103 10.2

1939 or earlier . . . . . . . . . . . . . . 27,206 34.3

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. 1.

A significant amount of the housing stock

changes hands each year. In 1977, more than

3.5 million existing homes were bought and

sold. The cost of existing housing has been rising rapidly. The median price in 1972 was

$27,100; in 1977, it was $42,900. The median

sales price disguises a significant variety of

home prices, generally and by region. Nearly

15 percent of all existing houses sold for less

than $25,000, but nearly 16 percent of all sales

exceeded $70,000. Table 35 provides a breakdown of sales by price class and region for

1977. Housing in the West is substantially more

expensive than in other parts of the country.

The incidence of lower cost housing is greatest

in the North-Central and Southern sections of

the country.

Based on this data it would appear that the

focus of a residential conservation program

should be on owner-occupants, most of whom

occupy single-unit properties. Even though

they own their own homes, many owner-occupants have limited incomes. Homes of many
Ch. V—Housing Decisionmakers “ 93

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

(percentage distribution)

Price class United States Northeast North-Central South West

Under $14,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9 2.3 4.3 3.2 0.5

$15,000-19,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 3.5 6.8 5.7 1.0

$20,000-24,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 5.7 9.9 8.6 2.2

$25,000-29,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 9.4 12.8 11.5 4.6

$30,000-39,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 20.4 20.8 24.3 21.4 13.3

$40,000-49,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 19.1 18.2 16.4 16.3

$50,000-59,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9 14.0 10.5 12.2 16.6

$60,000-69,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 9.1 6.1 8.2 14.2

$70,000-79,999 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 5.4 3.1 4.8 9.7

$80,000 and over . . . . . . . . . . . . . . . . . . . . . . . . 10.2 10.7 4.0 8.0 21.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0

Median price.... . . . . . . . . . . . . . . . . . . . . . . . . $42,900 $44,400 $36,700 $39,800 $57,300

SOURCE: National Association of Realtors, Existirtg HomeSales, 1977, p. 32.

—

types and classes are available in spite of sig- half the occupants are renters. Differences in

nificant inflation in the cost of existing hous- Location, tenure, price, and age of housing and

ing. Most housing is located in metropolitan in the resources and interests of occupants inareas, but most homeowners live outside cen- fluence the incentives and barriers to energy

tral cities in suburbs. In central cities nearly conservation in residential buildings.

CHARACTERISTICS OF NEW HOUSING

The construction industry is a cyclical industry whose production varies widely year by

year. In recent years, production has ranged

from a low of 1.2 million units in 1975 to 2.4

million units in 1972. In 1977 nearly 2 million

units were started, and 277,000 mobile homes

were shipped to dealers. As might be expected,

singl e-f am i I y construction predominated.

Table 36 provides a breakdown of housing

starts by type of structure. More than 73 percent were single-unit structures, only 21 percent were in structures of five or more units.

Table 36.—Private Housing Starts

by Type of Structure, 1977

(units in thousands)

Number

Type of units Percent

1 unit. . . . . . . . . . . . . . . . . . . . . . . 1,451 73.1

2 units. . . . . . . . . . . . . . . . . . . . . 61 3.1

3-4 units . . . . . . . . . . . . . . . . . . . 61 3.1

5 or more units. . . . . . . . . . . . . . 413 20.8

Total . . . . . . . . . . . . . . . . . . . . 1,986 100

Mobile 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 total

1.986 million housing starts) were located

within SMSAs. Housing construction activity is

greatest in the South and West, where the

population is growing fastest. New construction is heavily concentrated in fast-growing

metropolitan areas. Ten market areas are expected to account for 372,289 units or nearly

19 percent of all construction starts in 1978,

with Houston and Dallas-Fort Worth alone accounting for nearly 109,000 units.

Table 37 shows the regional distribution of

completed housing construction for singlefamily and multifamily housing. Over 38 percent of the completions occurred in the South.

More than one-third of all multifamily completions were located in the West, an area with

only 27 percent of total completions. The

‘ National Association of Home Builders’ estimate. The

top 10 markets are Houston, 62,706; Dallas-Fort Worth,

46,000; Chicago, 44,000; Phoenix, 40,000; Los AngelesLong Beach, 38,500; Riverside-San Bernardino, 35,000;

Seattle-Everett, 31 ,320; San Diego, 28,000; DenverBoulder, 23,400; and Detroit, 23,360.
94 ● Residential Energy Conservation

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

SOURCE: Department of Housing and Urban Development Office of Housing

Statistics.

Northeast had a small fraction of activity

relative to its popuIation.

The cost of new housing has been rising

rapidly and is significantly higher than the

average cost of existing housing. In 1977, the

average sales price of a new home was

$54,200, but the price of housing varied by

region of the country. As is the case with existing housing, the highest average costs are in

the West and East. In the Northeast, the average sales price was $54,800; in the South

$48,100; and in the West $60,700.2

In 1978 prices have continued to escalate

and to reflect a diversity in housing costs.

Housing magazine reported that in the first

half of 1978 new single-family detached

houses sold and conventionally financed averaged $60,100. San Francisco had the highest

prices at $88,200 per unit, followed by Los

Angeles ($83,800), San Diego ($80,600), and

New York City ($78,000).

Table 38 presents a breakdown by price

class of housing sold in 1977. A majority of the

housing sold was in the $30,000 to $60,000

‘Characteristics of New Housing (Bureau of the Census

and Department of Housing and Urban Development,

1977).

Table 38.—Sales Price of New One-Family

Homes Sold, 1977

Price class Percent

Under $30,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

$30,000-39,000. . ~ . . . . . . . . . . . .0.0..... .. .....21

$40,000-49,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

$50,000-59,999 . . . . . . . . . . . . . . . . . . . . . . . . . . .. .-18

$60,000-69,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

$70,000 or over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SOURCE Bureau- o~the–C~n;;s~nd the Department of Housing and Urban

—.—

Development, Characteristics of New Housing, 1977

range, but 18 percent sold for more than

$79,000.

New homes sold in 1977 totaled 819,000, of

which 782,000 were financed. More than threefourths of these homes were financed by

banks, savings and loans, and other mortgage

lenders without the involvement of the Federal

Government. The Federal Government’s role in

housing finance is relatively modest except in

the case of lower income home purchasers, but

Federal insurance programs and secondary financing mechanisms provide important leverage on the financing actions. Table 39 provides

data on the role of Federal financing activities

and shows that the average federally assisted

loan is much smaller than the average conventional mortgage.

Table 39.—New Homes Sold, Sales Price

by Type of Mortgage Financing, 1977

—

Number of

Type of mortgage units in Median

financing thousands Percent sales price

FHA insured. . . . . . . . 73 9 $37,700

VA guaranteed. . . . . . 93 12 41,600

Conventional . . . . . . . 592 76 53,400

Farmers 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 the

it is important to understand the attributes and attitudes and interrelationships of the key

institutional structure of the three general decisionmakers in each market. The design,
Ch. V—Housing Decisionmakers . 95

construction, financing, and operation of

housing involve a multitude of participants.

Each of these participants operates under different circumstances and conditions and each

attempts to maximize profits and Iimit risks.

New Construction

The development of new housing is a complex entrepreneurial activity, involving many

participants whose interactions and cooperation are necessary for its successful completion. The manner and extent of participation

and interaction differ between single-family

and multifamily construction and between

housing constructed on behalf of an owner

and that constructed on a speculative basis,

which is more common. Participants in the

process include the builder or developer’ who

plans, initiates, and carries out the development; lenders who provide construction and

mortgage financing; specialized subcontractors who undertake construction activities;

construction workers; architects and engineers

who design the housing; local government officials who establish and administer local land

use regulations, including zoning and building

codes; realtors who assist in the sale or rental

of the housing; and the homeowner, owneroccupant, or investor.

A new residential construction project,

regardless of type, involves five basic steps: 1 )

determining whether the project is financially

feasible and marketable; 2) detailed planning

and securing the site and financial commitments; 3) detailed design and engineering and

the organization and securing of labor and

materials; 4) construction; and 5) sale or rental

of the completed project or home. At each

step the builder works closely with one or

more of the participants.

The building industry is fragmented into

many small producing units, none of which

controls a significant percentage of the housing market. There are more than 100,000

builders. The largest single-family builder in

1977 produced only 8,830 units and the largest

multifamily builder 3,974 units.3 In 1976 the

top 419 builders built 21 percent of all new

housing. The average builder operates a small

business and builds fewer than 20 houses a

year. 4 A 1970 survey of the building industry

found that three-fourths of all builders who

built only single-family housing built less than

25 houses, and 46 percent built less than 10

houses a year. Only 2.5 percent of these builders constructed more than 100 houses annually. Firms that built both multifamily and singlefamily housing tended to be larger. As a result

only 57 percent of them built less than 25 units

each year and 11.7 percent built more than 100

units. Firm’s that handled only multifamily

housing were the largest. Only 17.6 percent

constructed less than 25 units a year and 52.6

percent buiIt more than 100 units.

No builder dominates or controls a particular housing market, and the competition

among builders is intense. Except in the largest

housing development firms, the planning, design, construction management, and financing

functions are carried out by different parties.

Most builders have few full-time employees.

(An average builder employs 2.8 full-time executives, 3.4 office personnel, and 24.8 supervisors and tradesmen).5 The size of the firm

and the precise role of the builder vary with

the type of housing being constructed, as does

the role of the builder and his relationship to

other participants. Some builders only coordinate the developmental process; they rely

fully on specialized subcontractors to construct the various building elements. Others

carry out all or some part of the construction

process. Some builders only build for clients

on a custom basis. Most, however, build speculatively. A speculative project may involve a

single lot or a large subdivision. Sixty-one per-

*The term builder is typically used in single-family

construction. In multifamily construction the builder

may be the developer or may only build the project for

the developer. In this study the terms are used interchangeably.

3“California Builders Still Going Strong,” Housing, November 1978, p. 18.

“’Housing Giants on the Grow Again,” Professional

Builder, July 1977.

‘Michael Sumichrast and Sara A. Frankel, Profile of the

Builder and His Industry.
96 ● Residential Energy Conservation

cent of the single-family housing started in

1976 was built for sale or rent; the remainder

was built by the owner or by a contractor for

the use of the owner.

The builder is involved in a high-risk, highly

leveraged situation, with his success or failure

dependent on his ability to judge market demand and conditions accurately. Builders try

to avoid situations that increase risk or that

may hurt the marketability of the housing they

produce. To be successful the builder must respond to local tastes and produce housing that

is competitively priced. During the construction process decisions must be made quickly

to deal with a constant stream of unforeseen

events.

An analysis of the building industry commissioned by OTA noted:

Despite apparent outward similarities, the

resulting product is quite heterogeneous in

nature. It must be produced for al I types of

unique building sites and in an incredible

range of community types and climatic regions. Viewed in this light, the production of

housing would seem to demand a significant

combination of market sensitivity and managerial/organizational talent. This suggests

that entrepreneurship is almost more ‘important’ than the other inputs because it is the entrepreneur who must organize, become at

least practically responsible for, and eventually commit those resources. b

As the entrepreneur, the builder or developer determines the character of the housing.

If he is building on a speculative basis, the

builder must decide what type of house is in

demand and will sell at a profit within the local

market and price class. The builder must not

only weigh and evaluate the multitude of

features that might be used but must gauge his

market correctly in terms of price, style, and

amenities, and compete with other builders

serving the same market. Typically a builder

keeps track of local market conditions and

competitive projects. The National Association of Home Builders (NAHB)–to which most

homebuilders belong–and material suppliers

alert builders to new trends and products.

Homebuilders tend to use stock plans, draft

their own plans, or modify designs they or

competitors have used previously; most homes

are not directly designed by architects or engineers. Only 27 percent of homebuilders reported they used staff or consultant architects. 7 Architects and engineers are more frequently used in multifamily projects because

of their greater complexity.

Builders are adaptable and willing to change

the characteristics of the housing they build,

but only as a result of proven market demand.

Most builders are reluctant to pioneer unproven changes that may adversely affect the

marketability of housing and may meet consumer resistance. Builders must be concerned

about the cost of their product and the cost of

adding standard features will be carefully

weighed against the advantages of those

features in helping to sell the housing. First

cost is given more consideration than Iifecycle

cost. Large builders are in a better financial

position to take risks–but even they must

carefully assess the risks and opportunities involved in deviating from established market

practices.

The builder of custom homes is in a different

position and need not make all the market

judgments of the speculative builder. Many

decisions will be made by the owner, perhaps

on the builder’s advice. The builder does have

to manage the construction process so that

costs fall within the budget of his client while

the builder earns a profit.

The role of the builder and the financial

management is different in the multifamily

market. In the case of multifamily housing the

builder may or may not be the owner/developer of the project. The owner/developer

assumes the key decision making role and determines the character of the project. Project

design 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 of

unit. Rent projections determine an acceptable level of construction cost, which in turn

serves to determine the features to be included

in the project. The terms and conditions of

available financing determine the ultimate

feasibility of multifamily construction. Most

developers build multifamily projects with

only a token equity so that project characteristics and features are determined by the extent

to which lenders believe they add to the value

of the project and are willing to finance their

inclusion. Multifamily property is an investment, and decisions are based on their impact

on profit. The profit to be realized can be in

the form of cash flow, depreciation, future appreciation, or amortization of debt. Additional

cash investment to add a special feature may

be avoided, in some cases, even if such an investment would be profitable over the long

run. Developers seek to achieve maximum leverage; thus f rent-end costs may be more important to them than Iifecycle costs.

These concerns, combined with the requirements of local codes and regulations, provide

the context within which the builder selects a

site, determines what he can pay for the site,

and makes decisions about the housing design

and the specifications and quality of the different construction components.

Lenders are key participants in the housing

construction process. Housing normalIy involves long-term debt financing. Lenders provide interim financial assistance to builders,

developers, and subcontractors during the

development process, and long-term mortgage

loans to house purchasers or multifamily investors. Lenders seek to make profitable loans

and protect themselves against default. Because they lend money, by nature and circumstance they tend to be conservative. Typically,

lenders do not examine homebuilders’ plans in

detail. They rely instead on the experience and

reputation of the builder in deciding whether

to provide short-term financing. In terms of a

level of mortgage debt, lenders base their willingness to finance particular homes on appraisers’ estimates of value, on the perceived

risk of the investment over the term of the

loan, and on the credit-worthiness and ability

of the borrower to afford the expense of homeownership. Appraisers play a key role in determining the availability of financing by estimating the value of the property to be financed.

Appraisals are intended to reflect market

values, so appraisers discount any housing

features they believe are not accepted in the

marketplace. Because multifamily loans are

larger, plans and specifications for multifamily

projects are scrutinized more carefully than

for single-family homes, but typically lenders

would not review indepth the specifications

for the project. Lenders make financial judgments based on appraisers’ estimates of value

and, perhaps to some degree, on the demonstrated skills and experience of the developer/owner.

Funds for housing construction are made

available by banks, savings and loan associations, life insurance companies, and federally

related credit agencies such as the Federal National Mortgage Association (FNMA) and the

Federal Home Loan Mortgage Corporation

(FHLMC). For multifamily lending, savings and

loan associations and Federal credit agencies

are the most active lenders; for single-family

housing, savings and loan associations are the

dominant lenders. There are more than 23,000

lending institutions throughout the country.

Other participants play less central roles in

development. Subcontractors and workers

working under the direction of the builder

carry out specified construction tasks. Architects and engineers may be involved in the

design of housing. Government agencies may

be involved in a number of ways: the Federal

Government for example, may provide subsidies, loans, or mortgage insurance to lenders to

assist in the development or financing of housing. Such housing must be designed to Federal

construction standards. These programs are

discussed in detail in chapter IX. Local governments establish and administer local building

codes to which most new housing must conform. Realtors may be employed to sell or rent

completed housing.

Retrofit

The home-improvement or retrofit market,

which involves upgrading or improving existing
98 “ Residential Energy Conservation

housing, functions differently from the new

construction market. Typically, the property

owner determines what improvements should

be made to the property and how the work

should be done.

Improvements can range from minor paintup/fix-up activities to substantial modifications to a building’s structure or condition.

Work can be accomplished by hiring a homeimprovement contractor or installer, or by the

do-it-yourself approach. Home-improvement

contractors are not normally involved in new

construction projects. Property owners often

look to hardware stores, lumber yards, or home

supply centers for information on particular

products or names of contractors. An estimated one-half of all property improvements

are done on a do-it-yourself basis. The property

owner usually specifies the work to be done,

although some contractors promote and solicit

business for particular types of work. This

means that the homeowner must be knowledgeable about what improvements he or she

wants or have access to reliable information or

contractor advice. The most common types of

retrofit energy-saving improvements are installation of insulation, storm windows, caulking and weatherstripping around doors and

windows, and furnace replacement or improvements in furnace efficiency.

Qualified Remodeler magazine estimates

that professional remodelers will be responsible for $21.5 billion of remodeling in 1979,8 including both residential and commercial activity. Nearly 31,000 firms do remodeling work.

Firms vary from large and sophisticated enterprises capable of undertaking any type of

renovation work, to one-person outfits specializing in a particular trade such as electrical

work or storm window instalIation. Most firms

are small; the average remodeler employs only

nine full-time and two part-time employees.

Most projects are also small, and contractor

profits as a percentage of overall cost are

higher than in new construction. More than

half do less than $250,000 worth of business a

year, while only 11.6 percent have an annual

volume in excess of $1 million.

8“Market Report: Five Year Forecast for Remodeling is

Rosy,” Qualified Remodeler, September 1978.

In terms of conservation improvements, the

average firm instalIs $58,000 worth of insulation annually, and on an average each firm instalIs 663 storm windows and 152 storm doors.

As might be expected, contractors are predominantly involved in installing blown-in insulation. In 1978, contractors were expected to

carry out 647,000 jobs involving blown insulation, 375,000 jobs using foam insulation, and

91,000 using batt insulation. Approximately

three-fourths of all remodelers install storm

windows and doors, and about 13,000, or 43

percent, install insulation. ’

Financing is less important in retrofit work

than in new construction because most projects are small. The most common energy improvements represent relatively small sums of

money, ranging from $100 to $1,000 for most

homes. Improvements may be made all at

once or over an extended time. In 1976, the

average maintenance and improvement expenditure for owner-occupants of single units

was $450 per property. Expenditures varied

widely by income group; those with incomes of

less than $5,000 averaged $203; those whose income exceeded $25,000 averaged $822. As a

result of the smalI sums involved, most improvements are paid for by cash on hand,

short-term credit, or savings. It is estimated

that only 17 percent of home improvements

are financed by lending institution home-improvement loans. Small loans are not profitable to these institutions because of the high

overhead costs in relation to the interest

earned. Many lenders do not make home-improvement loans for less than $1,000 or even

$1,500. As a result they are not involved in

most home-improvement projects.

Manufactured Housing

Manufactured housing, including mobile

homes and modular housing, is built in a factory Construction and sales processes for

manufactured housing bear little resemblance

to onsite construction. The housing is constructed by factory workers, rather than by

9Booz, Allen, and Hamilton, l?ui/cfing l-lousing Out/ine:

Energy Conservation Assessment Study for the Office of

Technology Assessment, p. I I I-10.

IOM. Sumichrast, op. cit.
Ch. V—Housing Decisionmakers ● 99

subcontractors. As a result, the manufacturer

maintains total control over the construction

process.

About 276,000 mobile homes were shipped

in 1977. Single-width homes range in price

from $7,000 to $25,000; double-widths cost

$13,000 and up. All mobile homes built since

June 1976 conform to the Federal Mobile

Home Construction Standards, which preempt

earlier and inconsistent State requirements.

Homes are typically designed by company

staff or consultants who might be draftsmen or

engineers who have specialized in mobile

home design.

Besides the manufacturer, the other key participants are the distributors or dealers who

sell mobile homes and arrange financing, commercial banks who finance the manufacturing

firms, and commercial banks, finance companies, and other lenders who finance the purchase of mobile homes. Manufacturers sometimes help distributors with financing. Mobile

homes are considered personal property, although there is a growing trend to consider

them real property. Mobile home loans, which

are considered chattel mortgages, commonly

run for 7 to 10 years at 12- to 1 3-percent interest.

THE EXISTING HOUSING STOCK

How existing houses are built must be

known before realistically assessing how much

their thermal envelopes can be improved in a

cost-effective manner. Very Iittle information

exists about the thermal characteristics of existing housing. A good deal of information

about the generaI characteristics of the housing stock is contained in census data and in information collected by the Federal Housing

Administration (FHA) for houses with FHA

mortgages. But the only study of the thermal

characteristics of existing houses seems to be

that of Rowse and Harrje,11 which combines information from census data, FHA data, and

historical trends in insulation use in the construction industry to estimate the potential for

upgrading the thermal shells of existing housing. The situation is further complicated by the

lack of information about the massive retrofits

that have been underway for the last 3 or 4

years.

Nearly two-thirds of the houses existing in

1975 were built after 1940; almost a quarter

were built in the 1960’s. (See table 40.) Thus a

majority of the housing stock has been constructed since insulation materials were gener1

‘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).

ally available. Tabulated information on the

thermal characteristics of houses is shown in

table 41. Nearly three-fourths of the homes

have at least some attic insulation, with more

than two-thirds of the houses in all parts of the

country reporting attic insulation. Over half

the homes have at least some storm windows

or other double glazing, but these are largely

concentrated in the Northeast and North-Central regions. Similar results hold for storm

doors.

Rowse and Harrje12 point out that insulation

was rare in homes built before 1940, and even

for the 27 percent of the homes built between

1940 and 1960, the standard attic insulation

was 2 inches of mineral wool. Thus all of these

homes are potential candidates for retrofit.

Additional savings are possible even for housing constructed in the 1970’s, as illustrated by

the experiments at Twin Rivers, N.J. Rowse and

Harrje conclude that more than two-thirds of

the existing housing stock is ripe for additional

attic insulation.

From a practical viewpoint, it is likely that

considerably less than the 90 percent of houses

noted by Rowse and Harrje will actually be

retrofitted, as the payback for the homes containing some insulation is not likely to appear

‘21bid.
100 ● Residential Energy Conservation

Table 40.—The Original 1975 Annual Housing Survey Data Plus Tabulated Data for Years Prior to 1940

Expressed as a Percentage of the Total Housing Units in the United States

Year built United States Northeast North-Central South West

1970-75 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5 1.8 3.1 6.1 3.4

1960-70 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.1 3.8 5.5 8.7 5.0

1950-59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.5 3.2 4.2 6.1 4.0

1940-49 ......., . . . . . . . . . . . . . . . . . . . . . . . . 10.3 2.0 2.3 3.9 2.1

1930-39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 1.5 1.7 2.1 1.2

1920-29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 2.6 2.5 2.0 1.3

1910-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 1.7 2.0 1.3 .8

1900-09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 2.0 2.1 1.1 .5

1890-99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 1.4 1.5 .4 .2

1880-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 .8 .9 .2

1879-earlier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 1.6 .8 .3 ::

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 22.5 26.6 32.3 18.6

NOTE: Totals may not add to IOO due to rounding.

SOURCE: R. E. Rowse and D.T. Harrje, “Energy Conservation: An Analysis of Retrofit Potential in United States Housing’’ (unpublished~ Center for Environmental

Studies, Princeton University.

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

a) Attic or Roof Insulation

United States Northeast North-Central South West

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.0 78.7 84.0 67.3 67.4

No . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5 13.8 9.0 22.5 18.8

Don’t know . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 5.7 5.4 8.5 12.0

Not reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 1.8 1.6 1.7 1.8

b) Storm Windows or Other Protective Coverings

All occupied units . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0

All windows covered . . . . . . . . . . . . . . . . . . . . . 46.0 76.3 80.5 21.7 11.9

Some windows covered . . . . . . . . . . . . . . . . . . 10.0 14.6 10.7 8.5 7.2

No windows covered.. . . . . . . . . . . . . . . . . . . . 42.9 8.0 7.6 68.9 79.7

Not reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 1.2 1.2 1.0 1.2

c) Storm Doors

All occupied units . . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0

All doors covered. . . . . . . . . . . . . . . . . . . . . . . . 47.8 77.9 82.0 25.0 11.1

Some doors covered . . . . . . . . . . . . . . . . . . . . . 11.7 12.7 9.2 14.6 8.9

No doors covered. . . . . . . . . . . . . . . . . . . . . . . . 39.4 8.1 7.6 59.4 78.8

Not reported. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 1.3 1.3 1.1 1.3

debasement

All year round units . . . . . . . . . . . . . . . . . . . . . . 100.0 100.0 100.0 100.0 100.0

With basement. . . . . . . . . . . . . . . . . . . . . . . . . . 47.9 85.2 70.5 18.3 21.7

No basement . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.1 14.8 29.5 81.7 78.3

SOURCE: U.S. Department of Commerce and U.S. Department of Housing and Urban Development, Annual Housing Survey, 1976 U.S. and Regions, PartA: Genera/

Housing Characteristics, p.1.

attractive to many owners, and the 15.6 per- isting housing.13 Its studies indicate that apcent of homes that have masonry or concrete proximately three of every four owner-occuwalls 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 to

energy conservation through reinsulating ex- the Federal Energy Administration, Feb. 25,1977.
Ch. V—Housing Decisionmakers ● 101

or an inaccessible attic. In this part of the housing market only 10.9 percent of respondents

reported their dwelling had no insulation, but

the majority of homes appear underinsulated,

with less than 4 inches of insulation in the attic. Only 15.3 percent of respondents had more

than 6 inches of attic insulation.

A Gallup survey for the Department of

Energy (DOE) in early 1978 is generally consistent with the Owens-Corning findings. Nearly

three-fourths of all homeowners reported that

they have attic insulation or some storm windows or storm doors.

In 1977, Construction Reports conducted a

study of insulation requirements and estimated that the market for additional insulation totaled 25.5 million single-family and twoto four-family units. The report notes, however, that there is no agreement on the actual

number of homes or properties that need insulation or on how many owners could cost-effectively reinsulate their homes.

Table 42 characterizes the types of heating

equipment and fuel used in occupied units.

The majority of housing units are heated by

warm air furnaces. Gas is the dominant heating

fuel, followed by fuel oil or kerosene. Gas and

electricity are the predominant fuels used for

cooking.

Table 42.—Heating Equipment and Fuels

for Occupied Units, 1976

(in thousands)

Number Percent

Total occupied units . . . . . . . . . . . . . . . 79,315 100

Warm air furnace. . . . . . . . . . . . . . . . . . . . 40,720 51.3

Steam or hot water . . . . . . . . . . . . . . . . . . 14,554 18.3

Built-in electric units. ., . . . . . . . . . . . . . . 5,217 6.6

Floor, wall, or pipeless furnace . . . . . . . . 6,849 8.6

Room heaters with/without flu. . . . . . . . . 8,861 11.2

Fireplaces, stoves, portable heaters. . . . 2,398 3.0

None. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 716 .9

Total occupied housing units. . . . . . . . 74,005 100

House heating fuel:

Utility gas. . . . . . . . . . . . . . . . . . . . . . . . 41,219 55.7

Fuel oil, kerosene . . . . . . . . . . . . . . . . . 16,451 22.2

Electricity. . . . . . . . . . . . . . . . . . . . . . . . 10,151 13.7

Bottled gas or LP gas . . . . . . . . . . . . . . 4,239

Coke or coal/wood/other. . . . . . . . . . . . 1,482 ;::

None. . . . . . . . . . . . . . . . . . . . . . . . . . . . 463 .6

Cooking fuel:

Utility gas. . . . . . . . . . . . . . . . . . . . . . . . 32,299 43.6

Electricity. . . . . . . . . . . . . . . . . . . . . . . . 35,669 48.2

Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,748 7.8

None. . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 .4

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, pp. 7,8.

TRENDS IN HOUSING AND CONSERVATION

Trends in Housing Costs

It is clear that property owners and the

building industry have become more aware of

the importance of energy conservation and, as

knowledge has improved and the cost of energy has risen, have taken steps to improve the

energy efficiency of housing. This trend is apparent in both new construction and in the

retrofit market.

“Gallup Organization, Inc., A Survey of Homeowners

Concerning Home Insulation, conducted for the Department of Energy, April 1978.

‘

5 Bureau of Census, “Estimates of Insulation Requirements and Discussion of Regional Variation in Housing

Inventory and Requirements,” Construction Reports,

August-September 1977.

Interest in conservation coincides with

rapidly rising costs both for new and existing

housing. Builders have been particularly concerned about the negative impact that rising

costs may have on the ability of purchasers to

afford housing. Table 43 provides a breakdown

of changes in the Consumer Price Index during

the period 1968-76, when the costs of homeownership nearly doubled. Fuel and utilities

represent a rapidly rising element in housing

costs over the past few years, although their

total contribution to owning a home is still

well below other factors.

Figure 15 portrays the relationships among

the increases in median housing costs, ownership costs, income, and the Consumer Price Index between 1970-76. For the median-price
102 ● Residential Energy Conservation

Table 43.—Selected Housing Series of the Consumer Price Index: Selected Years

(1967 = 100)

Home ownership

Home

First mortgage Property maintenance Fuel and

Year Sheltera Rent Total b

interest rates insurance rates and repairs utilities

1968. . . . . . . . 104.8 102.4 105.7 106.7 104.7 106.1 101.3

1969 . . . . . . . . 113.3 105.7 116.0 120.0 109.3 115.0 103.6

1970. . . . . . . . 123.6 110.1 128.5 132.1 113.4 124.0 107.6

1971 . . . . . . . . 128.8 115.2 133.7 120.4 119.9 133.7 115.1

1972 . . . . . . . . 134.5 119.2 140.1 117.5 123.2 140.7 120.1

1973 . . . . . . . . 140.7 124.3 146.7 123.2 124.4 151.0 126.9

1974 . . . . . . . . 154.4 130.6 163.2 140.2 124.2 171.6 150.2

1975 . . . . . . . . 169.7 137.3 181.7 142.1 131.4 187.6 167.8

1976. . . . . . . . 179.0 144.7 191.7 140.9 144.3 199.6 182.7

‘Includes rent, homeownership, and hotel and motel room rates.

blnc[udes home purchase, mortgage interest, real estate taxes, property insurance, and home maintenance and repairs.

SOURCE: Department of Housing and Urban Development, 1976 HUD Stafistica/ Yearbook, p 258

.

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

I 1 1 1 1 !! I 1 . -1- .

I J

n I I I I

u

46.047. 0 65. 4 73. 4 88. 9 102.3 ’

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 of

doubled (102.3 percent), and for the existing all families could afford the median-price new

homebuyer they have increased 73.4 percent. home and 36 percent the median-price existing

During the same period median income in- home. By 1976 only 26 percent of all families
Ch. V—Housing Decisionmakers ● 103

could afford the median-price new home and

36 percent the median-price existing home. ’G

A recent Department of Housing and Urban

Development (HUD) study of housing costs

also determined that housing costs outpaced

family income in the period 1972-76. ’7 During

that period median family income increased at

an average annual rate of 7.05 percent. During

the same period the average annual rate of increase in the median sales price of new onefamily homes was 12.49 percent, and the median sales price of existing one-family homes

increased 9.30 percent.

Even with the rapid escalation of housing

costs demand for both new and existing homes

has been strong. Several reasons explain why

demand continues in the face of rapidly rising

prices. Homeownership provides attractive tax

advantages over rental housing. Buyers anticipate that owning a home is a sound and

profitable investment and will cost more in the

future. Many home purchasers buy existing

housing rather than newly constructed housing. Americans are willing to devote more of

their income to housing than would be expected based on traditional income/housing

cost guidelines. As a result, the majority of

Americans has been able to afford a house. In

1977, nearly 60 percent of all homebuyers had

incomes of less than $25,000 and nearly 40 percent less than $20,000.18

Several factors have enabled families to

continue to afford housing. A traditional industry rule of thumb has been that housing

cost should not exceed 25 percent of gross income. In fact only 52 percent of all homeowners spend less than 25 percent, 24 percent

spend 25 to 30 percent, and 14 percent spend

more than 30 percent. Table 44 breaks down

the percentage of buyers who exceed the 25-

percent income rule.

“The Nation’s Housing: 1975-1985 (Joint Center for Urban Studies of the Massachusetts Institute of Technology and Harvard University, 1977), p. 103.

‘7Fina/ Report of the Task Force on Housing Costs

(Washington, D. C.: Department of Housing and Urban

Development, May 1978), p. 3.

“Homeownership: Affording the Single Family Home

(U.S. League of Savings Association, 1978), p. 27.

Table 44.—Percentage Distribution by Income

of Homebuyers Exceeding the 25. Percent Rule

Percentage of

Annual income all homebuyers

Less 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 the

Single Family Home, p. 32.

There are two general types of homebuyers–first-time homebuyers and repeat homebuyers. Repeat homebuyers tend to be older,

have higher incomes, and have an equity from

their old house to invest in the purchase of

their new home. As a result they can afford to

buy more expensive housing. The median price

for first-time homebuyers is $37,500 but for repeat buyers it is $48,500. First-time homeowners are often able to afford a home because

they are willing to buy existing housing.

About 43 percent of first-time homebuyers

purchase housing constructed before 1955,

compared with 25 percent of repeat buyers. By

contrast, 29 percent of repeat buyers purchase

new housing, versus 18 percent of the first-time

buyers. Table 45 describes the difference between the two types of buyers.

Table 45.—Percentage Distribution of Age of Homes

Purchased by First-Time and Repeat Homebuyers

Year of construction of First-time Repeat All

home purchased buyers buyers buyers

Before 1945. . . . . . . . . . . . . . 26.5 16.2 19.9

1945-54 . . . . . . . . . . . . . . . . . 16.0 8.8 11.5

1955-64 . . . . . . . . . . . . . . . . . 17.8 16.0 16.7

1965-69 . . . . . . . . . . . . . . . . . 8.1 9.7 9.0

1970-75 . . . . . . . . . . . . . . . . . “ 13.3 19.9 17.5

New homes. . . . . . . . . . . . . . 18.3 29.4 25.4

SOURCE: U.S. League of Savings Associations, Homeownership: Affording the

Single Family Homes, p. 46.

First-time homebuyers are able to purchase

housing partly because of the availability of

liberal financing. Forty-five percent mak e

downpayments of less than $5,000, and 73 percent put down less than $10,000. Forty-seven

percent of first-time buyers make downpayments of less than 20 percent of the purchase

price. By contrast, only 11 percent of repeat

buyers make downpayments of less than 20

percent of the purchase price.
104 ● Residential Energy Conservation

It is also important to recognize that housing costs and markets vary significantly by

region of the country and community size.

Table 46 shows the substantial cost variation

in new housing by metropolitan localities of

different sizes.

Table 46.—Median Home Purchase Price, 1977

Median home

Metropolitan area purchase price

All U.S. metropolitan areas with

population of 1.5 million or more . . . $49,500

All U.S. metropolitan areas with

populations between 250,000-1.5

million . . . . . . . . . . . . . . . . . . . . . . . . . $42,900

All U.S. metropolitan areas with

populations of less than 250,000 . . . $37,000

All of the United States . . . . . . . . . . . . $44,000

SOURCE: U.S. League of Savings Associations, Homeownership: Affording the

Single Family Home, p. 13.

The increase in housing costs is pricing most

lower middle-income families out of the new

housing market; they must purchase existing

housing or improve the dwellings they are currently living in. Only 3.7 percent of all house

purchasers in 1975-76 earned less than $10,000,

although this income bracket represents 32

percent of the population. Families earning

$10,000 to $14,999 represent more than 22 percent of the population but bought only 13.4

percent of the new housing. ’9 While the pace

of construction has remained high, much of

the housing is being built for upper income

groups. Families earning more than $25,000

comprise 14.1 percent of the population, but

they bought 32.4 percent of the new housing.20

Trends indicate that the new construction

market is increasingly oriented to the upper income buyer. In 1965-66 the top quarter of the

population, in terms of income, bought 58 percent of the new homes. By contrast the lower

third of the population bought only 4 percent

of the new housing in 1975-76, but bought 17

percent of the new housing in 1965-66.2’

Trends in Utility Costs

Historically, utility costs have been a small

component of housing costs. As a result, build-

‘

g

Ibid.

201 bid.

2’ Ibid.

ers and consumers were not concerned, until

recently, about the energy efficiency of housing. While utility costs have been rising substantially, so have other elements of homeownership, particularly in larger communities.

As shown in table 47, utility costs are not

uniform and also vary by region. They are

highest 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 $720

North Central. . . . . . . . . . . . . . . 60 720

South . . . . . . . . . . . . . . . . . . . . . 70 840

West . . . . . . . . . . . . . . . . . . . . . . 50 600

SOURCE: U.S. League of Savings Associations, Homeownerahip Affording the

Single Family Home, p. 22.

Table 48 documents that utility costs still

represent a relatively small fraction of monthly housing expenses. In metropolitan areas the

mortgage payment is the largest element of

monthly costs, followed by utilities and taxes.

But in small communities, where taxes are low,

utilities represent a much larger cost element

than real estate taxes.

Buyers seem to be demanding reasonable

levels of insulation and double-glazing or

storm windows in most housing markets.

Because of this demand, builders are including

these features in their homes and appraisers

and lenders are recognizing the added costs in

their lending judgments. Although the larger

downpayments and increased carrying costs

may affect the ability of the marginal purchaser to buy a home, the overall marketability for housing has not been significantly affected by including such features, which

builders view as adding to the appeal and

salability of their homes.

Trade publications report strong buyer interest in energy-saving features. As noted in

chapter 11, surveys by Professional Builder in

1974-77 indicate that the proportion of homebuyers willing to spend $600 or more initially

to save $100 per year in energy costs increased

from 78 to 93 percent.22 As figure 16 shows,

*

z

’’ Consumers Tell What They Want in Housing,” Professional Builder, December 1977.
Ch. V—Housing Decisionmakers ● 105

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

Total

Mortgage Real estate Hazard monthly

Metropolitan area payment taxes insurance Utility costs expenses

All U.S. metropolitan areas with populations

of 1.5 million or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.6 15.8 2.9 13.6 100

All U.S. metropolitan areas with populations

between 250,000 and 1.5 million . . . . . . . . . . . . . . . . . . . . . . . 69.1 11.8 3.4 15.7 100

All U.S. metropolitan areas with populations

less than 250,000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.8 9.4 3.7 17.7 100

All of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.3 13.5 3.3 15.0 100

SOURCE: U.S. League of Savings Associations, Homeownership: Affording the Single Family Home, p. 25.

generally similar attitudes are apparent in all

parts of the country.

A survey of builders reported by Professional

Builder confirms this trend. It documents

strong consumer interest in and builder response to energy conservation features in new

homes. 23 Builders report that buyers believe

energy conservation is an important consideration in buying a home— and that for a majority of buyers in some regions it is a very important consideration. Such interest does not vary

significantly by housing price.

The Professional Builder study reports that

double-glazed windows are now a standard

feature employed by almost 7 out of 10 builder

respondents. Almost three of every four builders use some type of attic ventilation, and

nearly two out of three use a zoned heating/cooling system with separate thermostats

in different rooms.24 As a result, about half of

the builders indicated they have been able to

reduce the size of the heating and cooling systems used, thus mitigating the added costs of

other energy-conserving features.

Simple conventional equipment and materials are most typically used by builders to upgrade the energy efficiency of their homes. The

most common features used in the past 2 years

are: increased attic (ceiling) insulation (83 percent), double/triple glazing (67 percent), improved weatherstripping/caulking (50 percent),

roof overhangs (50 percent), heat pumps (39

percent), and attic fans (29 percent) .25

23’’ Energy and the Builder,” op. cit.

241 bid.

251 bid.

Buyers are clearly concerned about energy

costs and will invest in energy-saving improvements. Housing magazine recently conducted

a survey of approximately 400 prospective new

homebuyers in five market areas around the

country to determine their attitude toward different features including energy-saving improvements. 26 While the estimated costs of

these improvements varied by region, the

survey revealed some attitudinal similarities

and some clear-cut differences among the

market areas. The willingness to pay $500 to

$1,500 for upgrading insulation was strongly

evident in all five markets. Outside California,

a large majority of respondents were willing to

pay for double-glazed windows. Both types of

improvements seem well accepted by consumers and would appear to be viewed as a worthwhile investment. Table 49 presents the data

on the five markets. ——

The National Association of Home Builders

Research Foundation conducted detailed

surveys of members of NAHB in 1974, 1975,

and 1976 to gain a comprehensive summary of

the thermal characteristics of homes built in

recent years. Table 50 compares the average

levels of insulation and the glazing characteristics of more than 120,000 homes built in 1974

and more than 112,000 homes built in the last

half of 1975 and the first half of 1976.

The data show a rather remarkable jump in

the levels of insulation and in the use of

double- and triple-glazing. The levels of both

ceiling and wall insulation increased in all nine

census regions and now show surprisingly little

*

b

’’What Home Shoppers Seek in Six Major Market,”

Housing, October 1978.

Ch. V—Housing Decisionmakers ● 107

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

Washington, D.C. Miami Chicago San Francisco San Diego

Upgraded insulation

% want. . . . . . . . . . . . . . . . . 97 88 95 95 83

% don’t want. . . . . . . . . . . . 3 12 5 5 17

Double glazed windows

% want. . . . . . . . . . . . . . . . . 91 70 86 68 34

% don’t want. . . . . . . . . . . . 9 30 14 32 66

Solar water heater

% want. . . . . . . . . . . . . . . . . 34 58 25 41 36

% don’t want. . . . . . . . . . . . 66 42 75 59 64

Solar water heater and

house heater

% want. . . . . . . . . . . . . . . . . 32 48 21 42 24

% don’t want. . . . . . . . . . . . 68 52 79 58 76

Heat pump

% want. . . . . . . . . . . . . . . . . 92 — 44 — —

% don’t want. . . . . . . . . . . . 8 — 52 — —

SOURCE: Housing, October 1978, p. 54.

variation by region, with the average R-value

of the wall ranging from 10.9 in the South

Atlantic region to 12.2 in New England and the

East North Central (States bordering on the

Great Lakes) regions. Somewhat more variation is shown for attic insulation, with a low of

16.9 in the South Atlantic region and a high of

22.5 in the Mountain States. These data reflect

the greater variety of materials used in attics

and the ease of installing different amounts.

The use of insulation between the floor joists

actually showed a decrease, but this may reflect the fact that the 1976 survey separately

tabulated basement wall insulation and insulation of the crawl space walls, rather than an actual decrease in the amount of floor insulation. A significant decline in the use of singleglazed windows is also evident, with only the

East South-Central States (Kentucky, Tennessee, Mississippi, and Alabama) showing an appreciable increase in the use of single glazing.

Triple glazing was not tabulated separately in

the 1974 survey, but it is now being used in a

small number of homes in the Midwest and

East.

It should not be inferred that similar increases have occurred every year since the oil

embargo of 1973, because the NAHB survey of

houses built in 1973 showed insulation levels

very similar to 1974, with weighted average Rvalues 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 1,000

randomly selected homes built in 1961 and

found that 65 percent contained exterior wall

insulation, 92 percent had ceiling insulation,

and 7 percent had perimeter insulation.26 B y

contrast, 99 percent of the houses built in

1975-76 had both ceiling and wall insulation

and 11 percent had perimeter insulation .29

The percentage of homes built in 1975-76

with various levels of insulation is shown in

table 51. Almost 100 percent have ceiling insulation of some kind, with 83 percent having

R-1 3, R-19, or R-22. Nearly 100 percent of the

houses have wall insulation, with 93 percent

having either R-11 or R-13 because of the

almost universal use of 2x4 studs. It may seem

surprising that only 20 percent of the houses

have insulation between the floor joists, but

this may be due to the fact that in many areas

substantial cooling is provided through the

floor in summer, offsetting the winter heating

savings of floor insulation to a considerable

degree. However, it is clear that a large

number of houses with ventiIated crawl spaces

would benefit from insulation; increased in27 Therma/ Characteristics of Sing/e Family Detached,

Single Family Attached, Low Rise Multi-Family, and

Mobile 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 Houses

Built in 1974 and in 1975-76

East West East West

New Middle North North South South South

England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S.

Average exterior wall insulation R-value

1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average ceiling or roof insulation

1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average insulation R-value between

floor joists

1974. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1975-76 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Window s

1974

Single glazing. . . . . . . . . . . . . . . . . . . . . . .

Double glazing (insulation glass or

single w/storm) . . . . . . . . . . . . . . . . . . .

1975

Single glazing . . . . . . . . . . . . . . . . . . . . . . .

Double glazing (insulation glass or

single w/storm) . . . . . . . . . . . . . . . . . . .

Triple glazing (insulation w/storm. .,...

10.3

12.2

9.3

11.8

10.6

12.2

11.3

12.0

7.2

10.9

10.3

12.0

10.3

11.9

6.7

11.0

8.8 9.2

11.4 11.7

17.9

18.2

17.9

18.7

15.7

18.5

16.6

19.3

14.8

16.9

15.1

18.0

15.1

18.4

18.1

22.5

14.6 15.8

18.0 18.4

4.8

5.0

4.8

6.7

2.8

5.0

5.2

4.8

5.4

3.7

5.2

2.9

6.6

0.1

1.8

1.8

1.8 4.3

1.4 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 1.0

SOURCE: NAHB Research Foundation, inc. See appendix B of this volume for this and all other referenced NAHB data.
Table 51.– Insulation Characteristics of 1975-76 Single= Family Detached Housing Units

East West East West

New Middle North North South South South

England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S.

Ceiling (% of all houses)

None. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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 all

houses)

None . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1" rigid . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2" rigid . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.7

7.0

24.1

52.7

8.1

7.2

0.2

0

0

0.4

58.2

35.6

4.5

1.3

63.0

0.9

16.5

19.6

99.6

0.4

87.0

13.0

99.3

0.4

0.2

0.5

0

12.3

7.8

46.7

14.2

12.4

6.6

0

0

0.5

73.0

21.7

4.0

0.8

51.0

1.7

32.9

14.4

98.7

1.3

93.5

6.5

96.7

2.6

0.7

0

0.6

4.5

30.6

28.4

25.3

9.2

1.4

0

0

0

61.1

33.7

3.4

1.8

63.1

1.9

18.5

16.7

98.7

1.3

93.0

4.6

92.6

5.1

2.2

0.5

0.6

3.0

25.7

25.5

22.8

18.7

3.7

0

0

0

63.8

32.5

3.4

0.3

65.7

1.1

14.3

18.9

99.7

0.3

81.8

18.2

99.3

0.6

0.1

0

1.4

9.8

23.6

51.1

5.3

6.9

1.9

0.6

8.0

0.9

69.3

18.6

2.1

0.5

75.0

1.8

16.8

6.4

97.1

2.9

97.4

2.6

86.3

11.0

2.3

0.4

1.5

4.2

25.6

42.6

17.0

8.1

1.1

0

0

0.3

64.5

30.0

4.6

0.6

75.7

4.4

11.5

8.4

97.5

2.5

95.1

4.9

88.8

9.3

1.3

0.6

0

3.0

20.7

59.5

6.8

7.8

1.2

0

0

0.2

77.8

15.5

5.9

0.6

99.1

0.1

0.4

0.4

99.8

0.2

99.8

0.2

89.0

9.1

0.9

1.0

5.6

0.7

13.4

42.8

22.9

24.5

0.1

0.2

2.0

8.7

62.8

22.1

2.6

0

88.3

0.4

4.1

7.4

98.2

1.2

93.9

6.1

93.3

6.1

0.1

0.5

0.7

2.8

12.8

80.9

0.9

1.5

0.4

0.2

0

8!;

8.9

3.0

0

88.9

1.1

7.3

2.7

93.6

6.4

97.7

2.3

91.9

2.6

0.8

0

1.0

5.4

20.4

50.0

12.3

9.3

1.8

0.2

1.4

1.1

71.0

21.8

3.5

1.0

80.1

1.4

11.2

7.3

98.2

1.8

96.0

4.0

89.3

8.3

2.1

0.3

SOURCE: NAHB Research Foundation, inc.
110 ● Residential Energy Conservation

sulation of basement walls and increased use

of insulation between the floor joists are the

most obvious areas where added insulation

would be useful in new construction.

The window and door characteristics of the

houses built in 1975-76 are shown in table 52. It

shows that 42 percent of the entrance doors

were insulated.

Table 53 shows the percentage of homes by

price that have R-11 or greater levels of insulation in the exterior walls and R-13 or greater

levels of insulation in the ceiling. More than 94

percent of all houses had exterior insulation

levels of R-11 to R-19, and the incidence of less

than R-11 levels does not seem to correlate

with housing price. The data related to ceiling

insulation are similar. Nearly 90 percent of all

houses had ceiling insulation levels of R-13 or

greater, and housing price does not seem to affect the levels of insulation.

There appears to be some buyer resistance

to expensive conservation packages; many

homeowners would prefer to invest in additional amenities rather than more conservation

improvements. A Los Angeles Times30 article

about Chicago builders indicated that while

most builders provide R-11 exterior wall insulation and R-19 ceiling insulation, customers

pass up beefed-up conservation packages for

such luxury options as extra rooms or garages.

One builder offered a $3,800 optional energy

package, but only 18 of 77 homebuyers bought

it. Another reported a lack of interest in an optional feature to double the amount of insulation in the homes in one subdivision.

While builders have responded to consumer

demand for energy-saving improvements, lenders have begun to promote saving in lending.

Some lenders have promoted energy conservation through advertising the advantages of

conservation - and providing special arrangements and rates for conservation loans. Many

lenders have offered conservation home-improvement loans at interest rates below normal market rates. One California bank offers

30 Don Debat, “Lending Institutions Say That Energy

Expenses May Exceed Monthly Mortgage Payments,” Los

Angeles Times, Oct. 8,1978.

to rewrite homeowner loans and lend 100 percent of the cost of adding a solar system

without raising the interest rate on the home

mortgage and normally without increasing the

total monthly payments. A bank in Washington State offers preferential terms for loans on

homes that meet certain energy conservation

requirements. 31 A Minnesota bank promotes

its conservation program as “the way lenders

can help, ” while an IIlinois bank group offers a

home inspection at a $50 cut-rate fee to detect

heat-loss problems.32 A survey by the Savings

Institutions Marketing Society of America indicated that 20 percent of the 656 institutions

surveyed featured energy-related homes in

their 1977 advertising. 33 But while lenders have

launched many types of programs, many have

dropped them or lowered their expectations in

the face of weak consumer response. Belowmarket interest rates appear to offer only a

limited incentive to take conservation actions.

Presumably, this reflects the general low-level

of demand for small home-improvement loans

(see Retrofit, page 97).

Data on retrofit are less precise, but many

homeowners have been improving the energy

efficiency of their homes. As noted in table 54,

Building Supply News estimated that in 1977

4.2 million jobs involved insulation and 1.3 million jobs involved storm windows and doors.

Extensive retrofit is confirmed by OwensCorning data. To monitor the extent of ceiling

reinsulation activity by homeowners, OwensCorning conducted surveys in 1975 and 1976.

During this period the average insulation installed increased from 41⁄4 to 51⁄2 inches. The

extent to which reinsulation occurred did not

vary widely across income groups: in fact,

households with incomes under $10,000 had a

slightly higher rate of activity than their percentage of the population. Based on other

studies Owens-Corning estimated that between

1974 and 1976, 8 million homeowners appeared to have reinsulated their ceilings, an

additional 7 million did so in 1977. In 1978, 5

31 Urban and Community Economic Development

(American Bankers Association, May 1977).

32 I bid.

33 Energy Savings Is Good (Savings Institutions Marketing Society of America).
Table 52.—Window and Door Characteristics of 1975-76 Single-Family Detached Housing Units

East West East West

New Middle North North South South South

England Atlantic Central Central Atlantic Central Central Mountain Pacific Total U.S.

Window glazing (% by region)

Single glaze . . . . . . . . . . . . . . . . . . . . . . . . 37.6

Single w/ storm . . . . . . . . . . . . . . . . . . . . . 25.3

Insulating glass. . . . . . . . . . . . . . . . . . . . . 36.9

Insulating w/ storm . . . . . . . . . . . . . . . . . . 0.2

Window (ft2 per unit by region)

Single glaze . . . . . . . . . . . . . . . . . . . . . . . . 81.7

Single w/ storm . . . . . . . . . . . . . . . . . . . . . 55.0

Insulating glass. . . . . . . . . . . . . . . . . . . . . 80.3

insulating w/storm . . . . . . . . . . . . . . . . . . 0.5

Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . 217.5

Sliding glass doors

Number per unit. . . . . . . . . . . . . . . . . . . . . 0.88

Square feet per unit. . . . . . . . . . . . . . . . . . 35.2

Exterior doors (% by region)

(Entrance)

Not insulated . . . . . . . . . . . . . . . . . . . . . . . 41.0

Insulated. . . . . . . . . . . . . . . . . . . . . . . . . . . 59.0

SOURCE. NAHB Research Foundation, Inc.

26.6

21.6

50.0

1.7

47.8

38.7

89.8

3.1

179.4

1.02

40.8

16.1

83.9

5.8

27.2

62.3

4.8

7.5

42.0

104.9

8.2

162.6

0.88

35.2

23.1

76.9

14.3

40.6

42.2

2.9

23.4

66.9

71.0

4.9

166.2

0.93

37.2

46.1

53.9

58.8

15.5

25.6

0.1

105.4

25.8

44.8

0

176.0

0.89

35.6

69.6

30.4

49.6

22.7

26.7

0

84.1

35.1

41.7

0

160.9

0.68

27.2

69.2

30.8

80.2

12.1

7.7

0

123.4

16.4

11.1

0

150.9

0.84

33.6

78.8

21.2

22.6

22.7

53.9

0.8

49.7

55.1

92.7

1.2

198.7

1.00

40.0

56.5

43.5

76.0

4.9

18.6

0.5

152.8

9.2

35.8

0.9

198.7

1.26

50.4

89.4

10.6

44.0

20.0

35.0

1.0

82.0

32.6

58.9

2.1

175.6

0.95

38.0

57.9

42.1

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

Exterior wall insulation Ceiling insulation

Price range Less than R-1 1 R11-19 Other Less than R-13 R-13 or Greater Other

Less than $30,000 . . . . . . . . . 2.7 96.7 .6 3.7 95.8 .5

$30,000 -34,999 . . . . . . . . . . . 4.6 94.8 .6 7.4 89.7 2.9

$35,000 -39,999 . . . . . . . . . . . 3.5 94.1 2.4 8.3 89.8

$40,000 -44,999 . . . . . . . . . . .

1.9

2.6 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. . . . . . . . . .

.1

1.3 98.2 .5 4.8 93.6 1.6

SOURCE: NAHB Research Foundation, Inc.
112 ● Residential Energy Conservation

Table 54.—Estimates of Insulation and Storm Door/

Storm Window Activity in the Retrofit Market, 1977

Dollar Average

volume Number cost

Type of activity ($000) of jobs per job

Additional insulation $1,035,292 4,243,000 $244

Storm windows &

doors . . . . . . . . . . . $ 212,901 1,339,000 $159

SOURCE: Building Supply News, Homeowners Remodeling/Modernization

Study, 1978.

million to 5.5 million more homeowners were

expected to invest in ceiling reinsuIation.

The Gallup survey conducted for DOE in

early 1978 found that 1 out of 6 respondents

said that they had added insulation and 1 out

of 10 installed storm doors or windows in the

previous 12 months. Thirty-six percent of those

with insulation believe more is needed.34

Ninety-three percent believe their bills will be

lower-–(but only 44 percent know how large

the savings will be). More than 80 percent of

the homeowners said they know the type of insulation they want, where to buy it and how to

install it. On the other hand, only 50 percent

know what a fair price would be.

Energy conservation is a concern for the

mobile home industry. The Federal standards

under which all mobile homes are built include

thermal performance standards. Three different thermal performance standards are used

depending on the zone of the country. The

NAHB study of 175,000 mobile homes built in

1976-77 shows that most homes had R-13 to

R-18 levels of insulation in the ceilings, though

sizable portions had R-19 to R-21. Walls and

floors were typically insulated to an R-11

standard. Most units had single-glazed windows with storm windows, but in units to be

sold in southern areas single-glazed storm windows were common. The Federal standards

have had a positive effect in raising insulation

standards in mobile homes. Most existing

mobile homes have some insulation but its effectiveness is not known. Few mobile homes

have storm windows or storm doors. Due to the

nature of the industry, Federal regulation has

been welcomed, and improved standards

shouId not represent a major barrier.

FINDINGS AND OPPORTUNITIES FOR ENERGY CONSERVATION

Operating practices and market conditions

largely determine the incentives for and obstacles to energy conservation. Opportunities for

energy conservation differ among the three

housing submarkets– new construction, manufactured housing, and existing housing. These

differences must be considered in setting

energy conservation goals and programs. Differences in practices, levels of knowledge, and

attitudes toward conservation vary depending

on whether the housing is investor-owned and

rented or owner-occupied, and whether the

housing is single-family or multifamily. These

differences affect the economic circumstances, attitudes, and characteristics of the

participants in the housing sector and the incentives needed to motivate property owners

to take energy-saving actions.

34 Gallup Organization, Inc., op. cit.

There is no single national housing market;

each locality has its own characteristics and

features. Practices, attitudes, and requirements vary by such factors as geography, supply and demand for housing, climate, tradition, cost and availability of fuel, patterns of

tenure, community size, and type of construction. As a result, housing costs and characteristics differ widely depending on locality or

region. These variations, true of both the existing housing stock and the new construction

market, affect the attractiveness of investing

in energy conservation improvements and determine in part the building industry response

to conservation. The attitudes of property

owners toward energy costs and energy conservation have changed significantly over the

past 5 years. In response, many builders have

raised their standards for energy efficiency in

homes and are now actively promoting energy

features in sales. Persons owning homes have
Ch. V—Housing Decisionmakers ● 113

begun to alter their homes to save energy; this

effort is being augmented and supported by

contractors, utilities, and some lenders.

Despite the growing response of the building

industry and individuals, a great deal more can

be accomplished. New construction offers

more energy-saving potential per dwelling than

existing housing, as many improvements possible during construction cannot be added, or

can be added only at high cost, after the

building is finished. Because most new construction must conform with local building

codes, a system is in place to inspect plans and

construction practices.

Because of the size of the existing housing

stock — some 80 million units — retrofit wilI be

most productive in saving energy in the short

run. The level of thermal performance of the

total housing stock will change only slowly as

a result of new construction, with annual starts

of 2 million units on the average.

Builders’ Attitudes

The construction industry responds to wideranging changes in taste and demand. Since

the new construction market is highly competitive, and most firms are relatively small,

builders must compete in terms of price, design, and amenities as demanded by the public

at a given time. Builders therefore add energy

conservation improvements to their houses to

the extent they expand or improve the marketability of the house.

In addition to watching buyer demand closeIy, builders also stay in close touch with building material suppliers, and some follow the

research and publications of NAHB and similar

groups. From such marketer’s associations and

other builders, they learn of new industry

trends, practices, and products. Features like

air-conditioning, once considered a luxury,

became standard in a short time in response to

buyer demand and technology transfer. Thus,

education through building trade groups, combined with growing public concern over energy

cost, should work to accelerate the use of conservation options by builders.

Although most builders now seem generally

aware of opportunities for conserving fuel,

their expertise is limited. Most building companies do not have design or engineering skills,

but rely on architectural and engineering

firms, utilities, design reviewers, and lending

institutions to make decisions on energy-based

changes. Designing energy-efficient housing requires consideration of climate, site, style, material costs, and specifications, financing

costs, and taxes. Builders often cannot afford

to hire experts in all these areas. Without proper engineering and design, housing can contain

many “energy saving” features and yet fail to

operate efficiently.

Builders appear willing to experiment with

new materials, particularly if others in their

area are also experimenting. I n 1978, a Professional Builder survey found that 25 percent of

the builders had tried 2x6 framing with 6

inches of insulation to obtain an R-19 wall; this

number was up from 20 percent of the builders

surveyed in 1977.35

The other factor that determines how builders build is the local building code, Inspections

normally include both design review and onsite inspection. As code requirements relating

to energy use become more stringent, builders

will presumably comply. Most homes are constructed by builders who use prescriptive

codes; i.e., acceptable materials and practices

are clearly specified. These builders will easily

cope with most new codes that can be translated into simple, easy to follow formats. (See

the section in chapter VI 1 I on standards.)

Property Owners’ Attitudes

The price of energy seems to be the most

powerful incentive to conserve, and future

conservation will depend on property owners

realizing increased economic benefits. Where

fuel costs are high and climatic conditions extreme, it appears that consumers are especially

wilIing to invest in energy efficiency.

35’’ Energy and the Builder,” op. cit.
114 ● Residential Energy Conservation

A Iifecycle costing analysis, while commonly used to make investment decisions of certain types, is not typically used by the homeowner. The commercial real estate investor

may conduct a lifecycle cost analysis in an informal manner, balancing the analysis with

judgments about the future of the property,

the investment required, and other investment

plans. Short ownership periods and investment

horizons mitigate against adoption of Iifecycle

costing approaches.

The marketplace makes distinctions between conservation improvements that are

clearly cost-effective and those which return

the investment over a longer pried. This partially explains the greater interest in insulation

and double-glazed windows than in, for example, solar energy systems. The difference in attitude may also reflect consumers’ and building professionals’ different levels of awareness

and information about various conservation

technologies.

Homeowners and investors assess energy

conservation opportunities differently. Homeowners view conservation improvements in

terms of their potential for reducing energy

costs, effect on the downpayment and the

monthly carrying costs, and the possibility of

future maintenance difficulties. Investors in

rental housing consider conservation improvements in terms of improved profitability, reduced risk, or additional income or profit. If increased energy costs can be directly passed on

to tenants by increasing rents, conservation

may not be an attractive investment. (See the

section in chapter VI I I on tax policy.)

The principal opportunity for additional

conservation activity in the retrofit market

centers on ways to motivate the homeowner to

improve the efficiency of his home. The homeowner can be made more aware of conservation opportunities through the media, utility

advertising and energy audit programs, and

publicity by manufacturers and suppliers of

building materials. Realtors and lenders can

also encourage homeowners and homebuyers

to take conservation action.

Is the Cost of Adding Energy

Conservation Features to New or

Existing Housing an Impediment

to Conservation?

The inclusion of conservation improvements

in new housing is tempered by market conditions and considerations. The dramatic rise in

the price of housing in recent years has made

builders sensitive to increases in first costs or

in carrying charges.

Including energy conservation features in a

new home often increases downpayment requirements and fixed monthly charges. While

it does not follow that if builders choose to

upgrade the energy-saving characteristics of

their housing and increase the price accordingly, households are priced out of the market

altogether, marginal buyers might have to

scale down their expectation. For example,

assuming a 10-percent interest rate and 30-year

term, a house cost of $50,000 and $45,000 loan,

and a $5,000 downpayment, a monthly mortgage payment of $394.91 would be required.

Extra improvements of $2,000 financed on the

same terms would increase the downpayment

$200 and the monthly payment would rise to

$410.18. The $15.27 monthly increase would

add $183.24 a year to housing costs. Using the

rule of thumb (which is no longer universally

used) that a purchaser shouId spend 25 percent

of his income for housing, a purchaser would

have to earn an additional $733 of annual income to afford the house. This additional cost

might affect the marketability of the home;

NAHB estimates that 39.8 percent of the public–22,771,000 households–could afford a

$50,000 home with the financing described

above. Increasing the price to $52,000 reduces

the number of households who can afford the

house to 21,283,000 households or 37.2 percent

of all households, according to NAHB. The

builder therefore makes a decision to increase

cost with great care.

Are Problems of Financing Impeding

the Pace of Residential Conservation?

Lenders generally have been willing to

finance the added cost of energy-efficient
Ch. V—Housing Decisionmakers ● 115

housing. Financing has not been a problem for

the credit-worthy borrower. Lenders rely on appraisers to make judgments about the extent to

which conservation improvements add to the

value of a property; standard conservation improvements are not seen as valuation problems. Houses based on “solar passive” principles or other design approaches may not be

acceptable to lenders if the houses have an

unusual appearance or require no purchased

energy; they are considered experimental.

Lenders appear increasingly willing to make

conservation-related home improvement

loans, although most conservation improvements are inexpensive and not profitable for

banks to finance. Most homeowners, however,

pay for home improvements through cash on

hand, savings, or short-term credit arrangements such as credit cards. Those who do need

financing may not meet requirements for income and established credit. Low-income

homeowners have more difficulty financing

conservation improvements and may need

some form of subsidy to make those improvements. The Community Services Administration (CSA) and DOE weatherization program

partially meets the needs of low-income homeowners, but many may fail to qualify for or be

reached by weatherization assistance. Newly

authorized utility audit programs may also

assist those who need financial help.

Lenders have limited interest in promoting

energy conservation and do not consider it a

significant factor in lending decisions. On the

other hand, some financing institutions estimate utility costs in calculating the monthly

housing expenses of a potential borrower.

Some lenders may view energy-conserving improvements as potential means of reducing

lending risks by reducing fuel costs, or as ways

to improve resale value, but most do not

evaluate the energy efficiency of housing they

finance. Many lending institutions have initiated special, below-market interest-rate loan

programs to promote conservation activity.

These programs have not generated strong

consumer response. Lenders therefore give

these programs a low priority, treating them

primarily as public relations endeavors.

Few lenders are concerned with the energy

efficiency of the homes they finance. Since

financing is essential to homeownership for

most Americans, a change in the attitude of

lenders could quickly facilitate a shift to much

higher levels of conservation. If review of

mortgage applications included a review of

energy costs, much greater investments in saving energy couId be expected.

What Are the Current and Potential

Roles of the Federal Government in

Encouraging Residential Conservation?

The Federal Government currently affects

the housing sector through programs that regulate lenders, through tax policy, programs that

provide housing subsidies, insurance, and guarantees, and standards setting. The impact of

Federal actions is much greater than the level

of Federal insurance, guarantees, or subsidies

would suggest. The role and impact of Federal

programs are reviewed in chapter VllI.

The implementation of HUD’s Building Efficiency Performance Standards (BEPS) and the

adoption of federally sponsored “model code”

standards should raise the energy efficiency of

new housing. By using nationally developed

energy standards and enforcement guidelines

for all new construction, builders and local

building code officials will be in a better position to understand and implement conservation actions. The process of reviewing and implementing standards should improve consumer awareness of energy conservation. (See

chapter VII l.)

Other Federal initiatives that will affect

energy efficiency in the residential sector have

been mandated by the National Energy Policy

and Conservation Act of 1975 and the Housing

and Community Development Amendments of

1978, which established programs to finance

energy-conserving improvements and promote

solar energy and energy conservation in HUDassisted housing. Tax credits for conservation

improvements have been enacted.
116 . Residential Energy Conservation

DIRECTIONS FOR THE FUTURE

Much remains to be done to upgrade residential structures and to encourage property

owners to adopt energy-conserving practices.

Tens of millions of homes require reinsulation

and other energy-saving improvements. The

design and features provided in new housing

could be significantly upgraded even beyond

current levels to improve their energy efficiency.

The key issue is whether the current pace of

change is satisfactory, or whether additional

Federal actions directed to property owners or

the building industry are required to increase

either the pace or the direction of current

trends. Available information provides no conclusive answer, but signs indicate that increasing energy prices, greater awareness among

property owners and industry participants, and

previously enacted Federal legislation are encouraging property owners to invest in conservation. Legislation enacted in 1978, recent

changes in Federal policies and practices, and

the promised issuance and implementation of

BEPS promise to bring about further improvement in the energy efficiency of residential

buildings. Other new incentives for energy

conservation in both the public and private

housing sectors are described in detail in

chapter VII I.

These new initiatives, plus those related to

other aspects of residential energy conservation discussed elsewhere, should help to expand the awareness and knowledge of property owners and building industry participants

about energy conservation, and stimulate further investments in conservation improvements. In the context of rising energy prices,

further conservation can be expected.

Given the breadth of these recent Federal

initiatives and the market dynamics of the

housing industry, it seems appropriate to move

cautiously in terms of proposing additional actions. A cautious approach is warranted to

avoid Federal actions that may be unnecessarily costly, provide windfalls, or have a negative

impact on housing costs. Actions that increase

housing costs must be weighed carefully in

terms of costs and benefits.

Assuming that the availability and price of

energy remain about as expected, it may be

most efficient to focus on improving the quality or expanding the coverage of existing conservation programs, and to monitor the impact

of the new initiatives, before mounting any

major new efforts. Priority should also be

given to modifying policies or practices that

act as barriers to conservation.

Efforts to inform the building industry and

property owners about the opportunities and

techniques for saving energy need to be improved. Industry needs better technical information, and the average homeowner needs

simpler, more useful information. The quality

of information now available varies widely and

is disseminated unevenly. The expanded

energy audit program appears to be a promising educational approach. The Government

should continue to work closely with trade

groups to assure that building professionals

are not only aware of the importance of considering energy costs in making housing decisions, but know how to design and construct

more energy-efficient houses. Demonstration

efforts promote the market for energy-saving

improvements and should be continued.

More research should be directed to conservation. Promising technological approaches

must be encouraged. More information is

needed about the thermal efficiency of the

housing stock and the extent and character of

retrofit actions. A better understanding of real

estate investors’ attitudes and motivations,

and the extent to which they are making conservation improvements, is needed.
Chapter VI

UTILITIES AND FUEL OIL

DISTRIBUTORS
Chapter Vl.– UTILITIES AND FUEL OIL DISTRIBUTORS

Page

Electric and Gas Utilities . . . . . . . . , 119

introduction . . . . . . . . . . . . . . . . . . . .119

Electric Utility Industry Structure and

Historical Development . . . .. ...119

The Regulatory Environment . . . .. ....120

The Problems of Recent Changes for the

Electric Utility Industry. . .. ..121

Gas Utility Structure and Regulatory

Environment . . . . . . . . . . .123

Recent Changes in the Gas Utility

Industry. . . . . . . . . . . . . . . . . .124

Utilities and Residential Consumers .. ..125

Utility Activities in Residential Energy

Conservation. . . . . . . . . . . . .. .126

Information Programs. . . . . .126

Conservation Investment Assistance

Programs. . . . . . . . . . . . . . . . . .127

Rate Reform for Electric Utilities . . .. ..130

Lifeline Rates . . . . . . . . . . . .131

Load Management . . . . . . . . .132

Federal Programs and Opportunities in

Utility-Based Issues. . . . . . . .133

New Legislation on Conservation

Investment Assistance. . . . .134

New Legislation on Utility Ratemaking

and Load Management . . .134

DOE Electric Utility Rate

Demonstration Program . . . . . .135

DOE Load Management Activities . . .138

Conservation Programs of the Federally

Owned Power Authorities . .. ...138

Conclusions for Utility Policy .. ..139

The Fuel Oil Distributors . . . . . . .139

Industry Size. . . . . . . . . . . . . . . .139

Fuel Oil Marketers . . . . . . . . . . . . . .140

Sales of Distillate Fuel Oils. . .........140

Service Activities . . . . . . . . . . . . . . .140

New Construction . . . . . . . . . . . . .143

The Role of Oil Heat Distributors in

Energy Conservation Practices . . . .143

Introduction . . . . . . . . . . . . . . . , 143

Marketing of Energy Conservation

Products . . . . . . . . . . . . . .......143

Reduction in Annual Fuel

Consumption. . . . . . . .143

Page

Factors That InfIuence and Limit

Market Entry . . . . . . . . . . . . . . .144

Fuel Oil Customer Accounts . . . . . . .144

Technical Notes–Computer Simulation: The

Effect of Conservation Measures on

Utility Load Factors and Costs . . .. ..145

The Question . . . . . . . . . . . . . . . . . . . .145

Background . . . . . . . . . . . . . . . . . . . . .. 145

OTA Analysis of Conservation Impact on

Utility Loads and Costs . . . . . . . .147

Results . . . . . . . . . . . . . . . . . . .. ...148

Discussion. . . . . . . . . . . . . . . .149

TABLES

Page

55. Residential Natural Gas and Electric

Prices . . . . . . . . . . . . . . . . . . . ......125

56. Percentage Changes in Real Utility

Prices, Selected Periods, 1960-77......125

57. DOE EIectric Rate Demonstration

Program kWh Consumption Effects . . .136

58. DOE EIectric Rate Demonstration

Program kW Demand Effects . . . . . . .137

59. Average Yearly Demand for Distillate

Fuel 011 . . . . . . . . . . . . . . . . . . .......141

60. 1985 Projection of Heating Unit Mix and

Basic Loads . . . . . . . . . . . . . . . . . . .. ..148

61. 50-Percent Electric Resistance Heating

by 1985 . . . . . . . . . . . . . . . . . ........148

62 Simulated Utilities’ Load Factors, Peaks,

Summer-Winter Ratio by 1985 . ......148

FIGURES

Page

17. Sales of Distillate Fuel Oil Use as

Percent of Total . . . . . . . . . . . .. ...142

18. Dispatching Generation to Meet a

Cyclical Load , . ..................146

19. Daily Load Curve . . . . . . . . . . . .146

20. 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 industries

serve as the conduit through which American

households receive most–and sometimes

all —of the energy used in their residences.

Sharp increases in utility bills in recent years,

along with such emergencies as blackouts and

brownouts, have made American homeowners

and renters increasingly aware of the critical

role that utility companies play.

Probably no industry — not even the petroleum industry— has experienced the profound

impact on its operations and policy decisions

felt by the utility industry in the wake of the

energy crisis of the 1970’s. Other industries

have experienced increased prices and or curtailed supplies; so have the utilities. But utility

companies have also come up against societal

demands for change in their fundamental purposes, plans, financial management, and delivery of service.

Thus, the entire relationship between utilities and their residential customers has shifted.

After years of enjoying declining or stable real

prices, promoting greater energy use, and responding to rapid growth in residential energy

consumption, utilities are suddenly being

asked to help their residential consumers use

less gas and electricity.

To understand the role of electric utilities in

the consumption and conservation of energy

in the home, it is useful to review briefly the

structure and historical development of the industry and the regulatory environment in

which it operates. Following a discussion of

these items, this chapter examines utility activities as they relate to residential energy conservation. Information programs, energy

audits, conservation investment assistance,

rate reform, and load management are examined.

Electric Utility Industry Structure and

Historical Development

The electric utility industry is a diverse

group of more than 3,500 companies, both

publicly and privately owned, collectively

comprising one of the Nation’s largest industries. Some companies engage in all three

of the industry’s major functions —the generation, transmission, and distribution of electric

power. Most, however, serve only as local distributors of power. Publicly owned municipal

and cooperative companies, in particular, tend

to purchase electricity from generating companies that may be investor-owned or federally

operated entities such as the Tennessee Valley

Authority (TVA). The term “electric utility,” as

used here, refers to a distributor of electricity,

regardless of whether the company generates

its own power. EIectric utilities may also serve

as distributors of natural gas.

Although publicly and cooperatively owned

electric companies outnumber private investor-owned firms by almost 10 to 1, the private

companies dominate the industry in terms of

generating capacity and quantity of electricity

delivered. Furthermore, the largest 200 (out of

a total of 400) investor-owned companies account for three-quarters of the Nation’s total

electric-generating capacity and serve 80 percent of all electric customers.

The electric utility industry is the Nation’s

most capital-intensive industry. In 1977, investor-owned electric power companies had aggregate plant investments of $190.4 billion and

annual revenues of $58.8 billion, or a total investment of $3.24 for each dollar of annual

sales 2 Attracting the capital needed for plant

‘ Booz, Al Ien & Hamilton, Inc., Utility Role in Residential Conservation, report to OTA, May 1978

2Energy Data Reports, Department of Energy, CRN

78032 )9919, Mar. 22,1978

119
120 ● Residential Energy Conservation

expansion was not difficult for the utility sector until recently, as the industry’s high ,

steady, and seemingly predictable growth, and

its regulated return, were attractive to investors seeking secure earnings.

Before the oil embargo of 1973-74, personal

incomes and retail prices paid for consumer

goods in the United States grew much faster

than retail electricity prices, so that “real”

power prices — adjusted for inflation —fell.

While the Consumer Price Index rose 31 percent and real family income rose 34 percent

between 1960 and 1970, the price of electricity

grew by only 12 percent. By contrast, medical

care cost 52 percent more in 1970 than in 1960,

while the increase for food was 31 percent and

for homeownership 49 percent.3 The growth of

electricity use in the United States, closely

related to these economic trends, was also encouraged by the promotional activities of the

electric utilities.

Low fuel costs for power generation have

been one reason for traditionally low electricity prices. Another reason is that utilities have,

until recently, enjoyed increases in productivity through economies of scale in generating

equipment and improvements in thermal efficiency of boilers. The prospect of scale economies made the utilities’ promotion of electricity beneficial to both shareholders and consumers during the pre-embargo period. As falling real prices and promotional activities encouraged growth, steady increases in consumption led to lower unit costs and, incidentally, made future planning a straightforward

process of extrapolating from past trends.

As long as the electric utilities enjoyed rising

productivity, they remained a declining marginal cost industry —that is, the incremental

cost of electricity generated to meet new demand was lower than the average costs incurred by the power companies to meet existing demand. This situation facilitated the

financing of new powerplants, the construc3Statistica/ Abstract of the United States (Washington,

D. C.: 1977).

tion of which could be planned, financed, and

carried out in a few years.

The result of all these advantages, in the

period before the mid-1970’s, was long-term

security in the electric power sector. Today, by

contrast, utility companies find themselves

facing high costs for new capacity and for fuel;

new regulatory requirements for environmental protection, nuclear safety, and energy conservation; and uncertain future growth projections and capital availability prospects.

The Regulatory Environment

For investor-owned utilities, most regulation

occurs at the State level. The Federal Energy

Regulatory Commission (FERC), formerly the

Federal Power Commission, regulates only the

interstate transmission of power and the sale

of power for resale (wholesale sales). State

regulation is carried out by public utility commissions whose members are either elected or,

more commonly, appointed by Governors

(sometime with legislative consent) to serve

fixed terms. The commissions function as

quasi-judicial bodies and hand down decisions

on rates and powerplant sitings after public

hearings. Municipally owned utilities are usually regulated by local government officials,

while cooperatively owned power systems are

regulated by elected boards representing the

consumer-owners. Regardless of ownership, all

utilities are constrained from the arbitrary use

of their monopoly power by the regulators,

who require them to perform certain duties

(such as providing a reliable power supply to

all those who pay for it) in exchange for authorizing a “fair and reasonable” rate of

return.

Electric utility rate regulation involves two

major steps. The first step is to approve a level

of revenues adequate to cover costs for operation and maintenance, debt service, depreciation, and taxes, plus a “fair and reasonable”

rate of return on invested capital. The utility

commission attempts to establish a rate of return that is high enough to attract capital for

future expansion, yet not so high as to overcharge consumers or violate the “fair and reasonable” standard.
Ch. V/—Utilities and Fuel Oil Distributors ● 121

The second step in utility regulation is to

establish the rates at which electricity is to be

sold in order to produce the allowed revenues.

The ratemaking process is normally based on a

“cost-of-service study,” a tool used by utilities

to break down their total costs over a specified

time period among the different functions

(generation, transmission, and distribution),

customer classes (residential, commercial, and

industrial), and cost classifications (customer,

demand, and energy).

Cost classifications require some explanation. Customer costs include such expenses as

meters, distribution lines connected to the

customer’s service address, billing, and marketing. As a general rule, customer costs vary

hardly at all with consumption levels. Demand

costs are fixed costs reflecting the company’s

investment in plant capacity and a portion of

the transmission and distribution expenses;

they represent the cost of providing the maximum (or peak) amount of power required by

the system at any time. Energy costs are variable; they depend directly on the amount of

power used by the system’s customers. This

cost category includes fuel costs, costs involved in running and maintaining the boilers,

or in producing hydroelectric power (including

pumped storage), and certain costs incurred in

purchasing power from other generating companies.

Assigning customer costs and energy costs

to different classes of customers is a fairly

straightforward exercise, but allocating demand costs is more difficult. Here, a degree of

judgment is required. Once the total contribution of each consuming class to the functional

and classified costs is estimated, the totals are

divided by the number of billing demand units

in each class and translated into rates. In most

cases — and in almost all situations involving

residential customers — the customer, energy,

and demand charges are not identified separately for the customer. Rather, they are

lumped together in a single kilowatthour rate.

For residential consumers, the customer

charges are usually included in the rate

charged for the first increments (or blocks) of

power consumed each month (measured in kilowatthours), in order to ensure that they are

recovered. Power companies usually charge a

minimal fee even when no power at all is used,

to cover these fixed customer costs. Consequently, the first blocks of power are more expensive than additional blocks consumed in

the same month and the most common rate design is called a “declining block” rate. Until

recently, most utility commissions have left

the details of this second regulatory step, the

design of rates, largely to the discretion of the

utilities, with pro forma commission approval.

The Problems of Recent Changes for

the Electric Utility Industry

In recent years, utilities have experienced

changes — many of them traumatic — in every

aspect of their operations. Like all fossil fuel

consumers, utilities have faced drastic increases in the price of fuel, particularly oil.

While utility fuel cost rose 24 percent between

1965 and 1970, they jumped a startling 248 percent between 1971 and 1976.4 In the face of

such rapid cost increases, regulators have permitted the electric companies to pass on

higher fuel costs to their electric customers

through automatic “fuel adjustment clauses,”

without waiting for normally lengthy ratemaking proceedings before increasing rates. These

clauses have reduced hardships that utilities

would otherwise have experienced by shortening the regulatory lag and eliminating the need

for constant repetition of hearings and findings

in response to requests for rate increases.

Whether fuel adjustment clauses have also

served as disincentives to energetic utility

searches for inexpensive fuels or alternative

energy sources is a question currently under

review in many State utility commissions. They

have been major contributors to continuous increases in residential electric customers’ bills,

making the utilities the target of resentment

and suspicion. Low-income customers and persons on fixed incomes have suffered particularly from large increases in their bills. Delinquent accounts have increased, as hav e

‘Electric Utility Rate Design Study, Rate Design and

Load Control; Issues and Directions, A Report to the National Association of Regulatory Utility Commissioners,

November 1977, p. 10.
122 ● Residential Energy Conservation

meter tampering and theft. In the two successive cold winters of 1976-77 and 1977-78,

there were occasional news accounts of poor

people freezing to death after utility shutoffs

for nonpayment of bills. Some States enacted

emergency relief programs that prohibited

such shutoffs, and the Federal Government offered grants and loans to help pay the bills.

Utility managers have expressed surprise at

their apparent fall into disfavor with many

customers as rates have risen; typically, the

electric (and gas) companies see themselves as

analogous to the Greek messenger who was executed for bearing bad tidings. Public opinion

surveys document a widespread public belief

that the utilities are profiting from the energy

crisis and are highly suspect as sources of information about the crisis and its remedies. ’

Many consumers appear not to understand the

reasons behind their higher bills, and they attribute all rate increases to attempts to increase profits.6

Fuel prices accounted for approximately 60

percent of all rate increases in 1974, but they

are not the only reason for rising utility bills.

Plant costs have also risen sharply, According

to figures compiled by the Department of Energy (DOE), a single 1,000-MW nuclear plant

begun in 1967 and brought online in 1972 cost

an average of approximately $150 million to

build, while a similar plant begun in 1976 and

expected to be ready in 1986 will have total

projected costs of $1.15 billion–10 times as

high. A coal-fired plant begun in 1966 and

placed in service in 1972 cost $100 million,

whiIe a comparable plant constructed between

1976 and 1986 will cost $950 million—again

almost a tenfold increase. ’ A greatly lengthened period of planning and construction accounts for a significant portion of these higher

plant costs. Caused in part by what John H.

Crowley calls an “exponential increase in regulatory requirements,” these delays contribute

in turn to massive increases in interest paid on

borrowed capital during construction. Pro5Electric 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 labor

costs, added hardware for safety and environmental protection, and higher interest rates all

add to plant costs. I n 1950, the average interest

rate paid by utilities on newly issued bonds

was 2.8 percent; in 1970, the rate was 8.8 percent, and by 1975 it had reached 10.0 percent.8

Utilities must now look to external sources for

most of their capital needs. As a result of all

these factors, the electric utility sector is now

an industry of increasing marginal costs—that

is, the incremental cost of producing one more

demand unit is higher than the average unit

cost for meeting existing demand.

Regulatory changes have also caused some

discomfort for the utilities. While the electric

light and power industry could hardly be considered a textbook illustration of the free

enterprise system at work — marked, as it is, by

governmental regulation of profits and prices,

as well as by its own monopoly control of markets and the power of eminent domain – utility

managers have nonetheless tended to identify

with business interests and to resent the expansion of Government power. They have, consequently, found themselves in an increasingly

adversary relationship with regulators at both

the State and Federal levels, as utility commissions and Federal agencies have reached ever

deeper into their operations.

Utility regulators have responded to newly

felt public needs to conserve energy, protect

the environment, and deal with new consumer

activism. Some State commissions began in

the earl y 1970’s to disallow the costs of promotional advertising as operational expenses.

Some attempted to prohibit advertising altogether. A few have required experiments in

new rate designs, such as peakload (time-ofday and seasonal) pricing and “lifeline” rates

to subsidize poor and elderly consumers. Many

commissions, most notably the California Public Utilities Commission, have begun to take a

closer look at requests for new generating

capacity, to see if energy conservation programs could delay or eliminate the need for

proposed additional powerplants. Some have

required utilities to initiate conservation pro8Electric Utility Rate Design Study, op. cit., p. 11.
Ch. VI—Utilities and Fuel Oil Distributors ● 123

grams involving the sale, installation, or financing of insulation and other energy-conserving features for consumers. These new initiatives have come both from aggressive interpretations of existing mandates and from new

State legislation.

Utilities are also being asked to meet new requirements imposed at the Federal level. Air

and water quality standards mandated by Congress and enforced by the Environmental Protection Agency have accelerated the retirement of some older plants and required the installation of sophisticated control equipment

on both existing and new pIants. Many companies have altered their boiler fuels more

than once to respond to Federal directives;

after shifting from coal to oil or gas to meet air

quality requirements, they have been asked by

the Federal Energy Administration (and the

more recent DOE) to convert back to coal to

avert oil and gas shortages and cut imports. As

nuclear power has begun to produce an important share of the Nation’s total generating

capacity, power companies have found it necessary to deal at great length and expense with

the Nuclear Regulatory Commission (formerly

the Atomic Energy Commission).

Gas Utility Structure and

Regulatory Environment

Most gas utilities serve only as retail distributors, purchasing natural gas at wholesale

rates from a relatively small number of 13

pipeline companies, which purchase in turn

from producers. Among the 1,600 retail natural

gas distributors, private companies predominate in terms of both their share of the industry

(two-thirds of all gas companies) and the quantity of gas they sell, as a percentage of total

sales (90 percent). Many of these companies

are combination gas-and-electric companies;

these account for 40 percent of all natural gas

saIes. 9

Almost two-thirds of the natural gas sold by

utilities comes from the interstate market,

where its price is regulated by FERC. Intrastate

gas prices have been regulated by the public

9Booz, Allen & Hamilton, op. cit.

utility commissions of States in which the gas

is produced and consumed. With passage of

the Natural Gas Policy Act of 1978, intrastate

prices have been slated to come under Federal

reguIation.

The separate regulatory systems for intrastate and interstate gas have contributed, over

the years, to imbalances in both price and supply. Intrastate gas, which is not regulated at

the wellhead, has generally been priced closer

to competitive or substitute fuels such as distillate fuel oil. Interstate wellhead prices, on

the other hand, which are subject to costbased Federal regulation, have been lower

priced than substitute fuels. As a consequence,

producers have kept as much gas as possible

within the producing States which has helped

bring about an imbalance in supply between

the two systems. Even though wellhead prices

are generally higher in producing States, the

prices residential consumers pay is lower with

some exceptions. This discrepancy in part is

due to higher transmission costs for those living far from the producing regions and the

need to supplement the flowing gas supply in

the nonproducing regions in times of shortage.

The intrastate/interstate price discrepancies

have increased during the last few years, as

gas-short utilities in the nonproducing States

have had to turn to high-priced supplemental

gas sources such as imported liquefied natural

gas (LNG) or synthetic natural gas (SNG) and

propane just to meet their existing customers’

needs. Expansion of their markets has been

precluded in many areas by the supply shortages. Industrial customers in some consuming

States have wearied of constant interruptions

in their gas service and have permanently

turned in large numbers to other fuels, particularly distillate fuel oil. Ironically, industrial

fuel shifts have freed up enough gas in some

places to cause pocket surpluses. But where

utiIities were prohibited from providing service

to new customers, they had no market for this

surplus gas and had to relinquish it to other

distributors.

Historically, the gas utility industry has

relied primarily on long-term debt to finance

its capital needs. Its capital intensity has

declined over the last 25 years, going from
124 ● Residential Energy Conservation

$3.00 in total investment per $1.00 of sales

revenues in 1950 to $1.75 in total investment

per $1.00 of sales in 1975. ’0

Recent Changes in the Gas

Utility Industry

Like the electric utilities, gas companies

have experienced a number of traumatic

changes in recent years. In many regions,

utilities have been totally unable to take on

new customers and have had to curtail not

only their large industrial customers whose

contracts anticipated interruptions in service

at times of peak demand, but also some customers whose contracts and rates were based

on more expensive “firm” service. Allocations

of scarce gas supplies by Federal and State

agencies have caused some utilities to lose gas

to other companies. While the need to conserve gas has been obvious from a national

policy standpoint, the most immediate and

direct benefits of such conservation have not

always been available to the companies that

were able to save supplies, only to see them

allocated to others.

Recent passage of the National Gas Policy

Act has brought a prospect of major changes

for gas utilities and their customers. The new

law paved the way for gradual deregulation of

most gas prices and brought intrastate gas

under Federal regulation for the first time,

reducing the price gap between interstate and

intrastate gas. High-cost gas is to be deregulated first, and the regulated price of other gas

will be allowed to rise gradually from legislatively mandated ceiling prices, using annual

inflation rates as guides for increases. Deregulation will be virtually complete by 1985.

Utilities will pay much higher prices for gas

under the new legislation. Interstate pipeline

companies will pass on to utilities the higher

prices paid by pipelines for gas supplies, and

the utilities will pass on the increases in turn to

their own customers. Residential gas utility

customers will be sheltered initially, however,

from the increase in natural gas prices because

of a provision for “incremental pricing” under

‘“I bid.

which large industrial customers using gas as a

boiler fuel will bear the full additional price

burden –to a point. When incremental pricing

causes industrial gas rates to exceed the cost

of alternative fuels, the burden of higher gas

prices in excess of alternative fuel costs will be

shared by al I gas consumers.

Just how soon residential gas users feel the

impact of the new legislation on their monthly

utility bills is a matter of considerable debate.

The number of industrial customers subject to

the incremental pricing provisions is limited

somewhat by the new law; only interstate customers, and only those who use gas as a boiler

fuel (as opposed to a process feedstock), are

affected. If rising industrial gas prices or requirements of the coal conversion legislation

cause many industries to shift to alternative

fuels (including, perhaps, imported fuel oil),

then the fixed costs associated with gas pipeline transmission and storage must be shared

by the remaining customers. The smaller the

group of industrial customers subject to incremental pricing, the sooner the peak price—

on a par with alternative fuels — is reached and

the high-cost burden becomes dispersed

among residential and commercial customers

as welI as industries.

As residential natural gas prices continue to

rise steeply —and the Energy Information Administration estimates that they could reach

$3.31 per mcf in 1976 dollars by 1985–homeowners will have an even stronger incentive to

conserve and overall consumption growth in

the residential sector will continue to decline.

On the other hand, the higher prices could

cause special hardships for the poor and the

elderly. Even without direct increases in gas

prices, families will bear indirect costs through

higher prices for products of industrial gas

users subject to incremental pricing.

Also uncertain is the effect the new legislation will have on gas supplies for utilities and

residential users. Experts in the producing industry believe that the new higher prices will

stimulate exploration and production in fields

previously inaccessible for economic reasons,

and that ample supplies will tend to hold down

prices to some extent. Consumer advocates, on
Ch. V/—Utilities and Fuel Oil Distributors ● 125

the other hand, dispute the claim that deregulation will stimulate growth in production

before 1985 and that a competitive market is

at work which will restrain price increases.

Utilities and Residential Consumers

The 74 million U.S. households accounted

for one-third of the electric utility industry’s

sales of 1.85 trillion kWh of electricity in 1976,

and for just under 40 percent of the utility

revenues of $53.5 billion. The average American family consumed 8,400 kWh of electricity

in 1976, spending $288, or 3.45 cents per kWh

(as compared with 2.89 cents per kWh for

customers who heat electrically). Virtually all

homes in the United States are served by electricity, with 12.6 percent of all occupied housing units heated electricalIy in 1976.2

Forty-one million households with natural

gas service accounted for one-third of the gas

utility industry’s sales of 14.8 quadrillion Btu

(Quads) in 1976, bringing in revenues of $9.9

billion, or 41.9 percent of the industry’s total

revenues of $23.6 billion. Gas was the heating

fuel for 56.4 percent of all occupied housing

units in 1976.3

Utility bills, like taxes, are a continuing

source of particular unhappiness to consumers. I n fact, however, utility price statistics

reveal just how great a bargain electric and gas

consumers have enjoyed, at least until recently. Using constant 1976 dollars, which take account of inflation, table 55 indicates that real

utility prices fell steadily during the 1960’s.

Although that trend has since been reversed,

real gas prices in 1977 were still only 12.2 percent higher than their 1960 levels, while real

electricity prices were still 17.7 percent lower

in 1977 than in 1960. Table 56 shows the percentage 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 $.024

1965 . . . . . . . . . . . . . . . . . 1.76 1.05 .035 .022

1970 . . . . . . . . . . . . . . . . . 1.58 1.90 .028 .021

1971 . . . . . . . . . . . . . . . . . 1.58 1.15 .028 .021

1972 . . . . . . . . . . . . . . . . . 1.64 1.21 .031 .022

1973 . . . . . . . . . . . . . . . . . 1.64 1.29 .031 .023

1974 . . . . . . . . . . . . . . . . . 1.69 1.43 .031 .028

1975 . . . . . . . . . . . . . . . . . 1.77 1.70 .032 .032

1976 . . . . . . . . . . . . . . . . . 1.98 1.98 .034 .034

1977 . . . . . . . . . . . . . . . . . 2.21 2.34 .035 .037

SOURCE: Adapted from Demand and Conservation Panel of the Committee on Nuclear and Alternative Energy Systems, “U.S. Energy Demand: Some Low Energy

Futures,” Science, Apr. 14, 1978, pp. 142-153.

Table 56.—Percentage Changes in Real Utility

Prices, Selected Periods, 1960-77

Period Natural gas Electricity

1960-65 . . . . . . . . . . . . – 10.7 -17.6

1965-70 . . . . . . . . . . . . – 10.2 – 21.1

1970-75 . . . . . . . . . . . . + 12.0 + 14.3

1975-77 . . . . . . . . . . . . + 24.8 + 10.6

SOURCE: Adapted from Science, Apr. 14,1978, pp. 142-152.

‘l factbook on the Proposed Natura/ Gas Bill, prepared

by 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 by

the suddenness of the increases and the degree

to which they have contradicted long-term historical experience. For consumer activists who

follow utility rate increase proceedings, the aggregate amounts requested in recent years also

boggle the mind. Total annual rate increases

granted to electric utilities across the country

between 1961 and 1968 came to $16 million.

From 1969 to 1976 the annual total was $1.4

billion, almost a tenfold increase. ”

1‘Ibid.

“Electric Utility Rate Design Study, op. cit., p, 13.
126 . Residential Energy Conservation

The high prices consumers are paying (and

to a lesser extent, the perceived threat of shortages) have created a new interest in the possibilities of conservation. Investment in insulation, weatherstripping and caulking, thermostats with automatic nighttime setbacks, and

furnace efficiency improvements have all

begun to look attractive to homeowners.

Many utility companies have tried to help

their residential customers to conserve by initiating a variety of conservation programs, ranging from simple “bill-stuffers” providing information on how to conserve to extensive programs of insulation financing and installation,

rate reform, and load management. The balance of this section describes these programs

and analyzes the policy issues they raise for

utiIities and their consumers.

Utility Activities in Residential Energy

Conservation

Information Programs

The simplest (and often the first) conservation activity undertaken by utility companies

is to promote conservation by providing, in

flyers sent to customers with their monthly

bills, “how-to” information and reasons for

cutting down on waste. These efforts, now

common among gas and electric companies

throughout the Nation, are natural substitutes

for the “bill-stuffers” of earlier years. Only the

products have changed: while the brochures of

the 1950’s and 1960’s urged homeowners to invest in electric heating and air-conditioning,

frost-free refrigerators, and other energy-consuming commodities, the current promotional

literature extolls the merits of insulation and

weatherstripping, along with practices such as

lowering thermostats and cooking one-dish

meals. This kind of information dissemination

costs the utility little and can be useful to consumers. Attitudinal surveys provide evidence,

however, that consumers generally regard utilities as suspect sources of information, ’ 5 Unfortunately, there are no easy ways to measure

the cause-and-effect relationship between

‘‘I bid., p. 83.

these information programs and consumers’

actions in undertaking conservation measures.

More concrete information is provided to

residential consumers by utilities that provide

“energy audits” of individual homes. Making

use of specially trained staff members and

computer programs, utility audits include a

survey of the home to determine the current

level of insulation, the presence or absence of

storm windows, and other structural details.

The audits also include information about the

historical energy consumption and costs associated with energy use in the home. They generally conclude with information about the

cost of upgrading the thermal integrity of the

structure through investments in insulation

and other features, estimates of the energy and

money that could be saved, and the amount of

time needed to amortize the conservation investment through savings on utility bills.

Many utility companies conduct audits for

all requesting homeowners in their service

areas regardless of the fuel used for heating

the home. Gas and electric companies, for example, audit homes that are heated by oil. In

such cases they must rely on estimates or on

customers’ records (often incomplete) for historical heating cost data, and, inaccuracies in

projected savings may be a problem. Even

when relying on complete past billing records,

auditors may either overestimate or underestimate both the potential savings and the

lifecycle costs of insulation investments. Utility managers are concerned about the credibility and liability problems they may incur if

customers are dissatisfied after relying on

utility-conducted audits for promises of savings of energy or dollars that do not materialize. Despite the imperfections inherent in

home energy audits, they are valuable tools for

homeowners seeking practical guidance in improving the energy efficiency of their dwellings

Other conservation information programs

carried out by utilities may include guidance

for builders about energy-efficient construction and efficient appliances and heating systems. The Tennessee Valley Authority, for example, offers free seminars on heat pump design and installation for builders and contrac-
Ch. VI—Utilities and Fuel Oil Distributors ● 127

tors. Some companies offer special awards to

builders who construct energy-conserving

houses. Seattle’s Washington Natural Gas

Company contacts all builders who obtain

local building permits, urging them to use energy-efficient structural materials and heating,

ventilating, and air-conditioning (HVAC)

systems, A few utilities have constructed

demonstration homes to display the latest in

energy-conserving construction and systems

and to improve their own conservation information through research and monitoring.

Conservation Investment Assistance Programs

A more direct involvement in conservation

can be seen with utilities that offer customers

installation and financing services for insulating their homes. Typically, loans offered

by the utilities may be repaid through regular

monthly bills. Michigan Consolidated Gas

Company, an early entrant into the insulation

business, offers its customers up to $700 in

loans to purchase ceiling insulation, with no

downpayment requirement, at 12-percent annual interest, with 3 years to pay. Actual installation is done either by utility-approved

contractors or by the homeowners themselves.

The company estimates that approximately

140,000 homes within its service area have

been insulated since its program began, but

only 800 customers have taken advantage of

the financing opportunity. Michigan Consolidated considers its insulation program a public

service and the State’s public service commission concurs; as such, its administrative costs

are included among the company’s allowable

operating expenses. This means that all customers, whether or not they participate in the

insulation program, share these costs in their

utility bills. Some experts believe this situation

constitutes unjust discrimination in ratesetting, while others find it justifiable since all

customers presumably benefit from the utility’s increased supply of gas acquired through

conservation. One proponent of the Michigan

Consolidated approach, the former chairman

of the Michigan Public Service Commission,

points to the similarity between the practice of

including conservation program costs in the

utility’s revenue requirement and the nowdefunct policy– upheld in the courts—of subsidizing hookups for new customers in order to

benefit all customers through economies of

scale. 16

Washington Natural Gas Company has

taken a different approach in its ambitious

energy conservation program. It offers not

only ceiling insulation, but also sidewall insulation, night setback thermostats, storm windows, furnace ignition devices (to eliminate

pilot lights), and new furnaces and water

heaters that meet certain efficiency standards.

Because of the large total expense incurred by

customers who buy several of these items, 45

percent of Washington Natural Gas’s conservation customers take advantage of the company’s financing arrangements. Even this number is lower than the company expected at the

outset; it suggests a greater-than-anticipated

consumer ability to pay for energy improvements. The utility’s conservation business is

carried out as a merchandising operation,

which recoups its own costs and earns a

modest profit. Hence, the gas company’s normal operations and rates are not affected by

its conservation activities. The company uses

independent contractors to install the conservation devices, and the utility’s management

believes its program has benefited these small

businessmen by stimulating a substantial

volume of business. 7

A number of policy issues emerge from this

new area of utility activity. The companies

themselves have expressed concern about possibly adverse legal, financial, and management

effects of conservation investment assistance

programs, particularly if company participation were to be made mandatory by State or

Federal legislation. Insulation manufacturers

have worried about potential supply problems

and consequent “demand pull” inflation stemming from utility-produced demand for their

products. (See appendix A for a discussion of

the insulation supply problem.) And some consumer advocates fear that utilities will use

“William G. Rosenberg, “Conservation Investments by

Gas Utilities as a Gas Supply Option,” Public Utilities

Fortnight/y, Jan. 20,1977, p.19.

‘ ‘Information provided to OTA by Don Navarre, Vice

President for Marketing, Washington Natural Gas Company
128 . Residential Energy Conservation

their conservation programs to realize windfall

profits, extend their monopoly powers into a

currently competitive market, justify unfair or

unnecessary rate increases, or otherwise work

in ways contrary to the public interest.

Little empirical information is available to

substantiate or refute these concerns. The

debate about utilities’ roles in residential

energy conservation is primarily theoretical. It

is useful, however, to review the major points

of concern and outline the Iimited avaiIable information about the corporate, societal, and

consumer impacts of utility conservation

assistance programs.

In recommending the installation of supplemental insulation and other conservation

devices, utilities are often asked to estimate

the amount of energy and money that could be

saved by the proposed conservation investments. Utility spokesmen fear they will be held

legally liable if customers later fail to achieve

the promised savings. A discrepancy between

projected and actual savings is not unlikely in

some cases, given the difficulty of accounting

for individual families’ energy-consuming

habits and keeping pace with the moving target of rising electric and gas rates. In fact,

however, there is no record of any liability

suits being filed or of judgments being made

against utilities for failing to deliver promised

savings, and the likelihood of such suits seems

low. Utilities should be able to protect themselves through careful explanation of their

methods of estimating savings and of the

residual uncertainty that invariably remains.

A more serious liability threat may lie in the

“implied warranty” offered by utilities who

sell, finance, or even simply recommend

specific insulation products or contractors.

Managers have expressed concern about the

quality control that customers may expect

them to exercise over the efficacy and safety

of insulation materials and the integrity of

manufacturers and installation contractors.

This matter has arisen with at least one utility’s

active conservation program. Some insulation

“Ken Bossong, “The Case Against Private Utility Involvement in Solar/lnsuIation Program s,” Solar Age,

January 1978, pp. 23-27.

dealers used by the utility as installation contractors were found to be engaging in fraudulent activities, “puffing up” blown-in insulation to make it appear more substantial in

volume (and, hence, in insulating value), and

installing insulation that was a dangerous fire

hazard. The problem appears especially acute

in the cellulose insulation industry, which is

characterized by large numbers of small manufacturers and installers who are outside any

recognized regulatory authority. Cellulose insulation is normally mixed on the job site, making quality control virtually impossible. Recent

recognition of the need for standards of quality and performance has produced voluntary

certification programs developed by the insulation industry (and in a few cases by utiIities

or State government agencies) in some areas.

Yet the impossibility of guaranteeing absolute

quality control is likely to necessitate utility

actions such as disclaimers and liability insurance to protect themselves from responsibility for contractors’ fraud or safety failures.

Logically, if many of an electric utility’s

customers decide to take advantage of the

company’s conservation investment assistance

program (hereafter referred to simply as an “insulation program”), they will use less electricity individually and reduce the utility rate of

load growth collectively. A vigorous insulation

program may reduce the utility’s peakload

temporarily, but the long-term effect will most

likely be a reduction in the growth rate, not an

absolute demand drop.

An important question remains: Will the

utility’s total costs be reduced by this change

in demand patterns, allowing the savings to be

passed on to consumers in the form of lower

bills–or at least slower growing bills? The

answer appears to depend on a number of factors, which vary from utility to utility. A consulting group commissioned by OTA to survey

utilities’ experiences with and attitudes toward

insulation programs found this area of uncertainty to be a matter of major concern among

the companies surveyed. ’9

In planning for future capacity and capital

needs, as well as for revenue and rate re-

‘9Booz, Allen & Hamilton, op. cit.
Ch. VI—Utilities and Fuel Oil Distributors ● 129

quirements, utilities must consider the variations they typically experience between average and peakloads. If insulation programs temporarily reduce their average (or base) loads,

revenues will be reduced accordingly. However, if peakloads are not reduced as well,

capacity requirements will remain as great as

they would be without the insulation program.

In such a case, the utility must still operate expensive peaking plants during peak periods–

and with lower revenues, they must raise rates

to meet the fixed costs. Such an occurrence

could wipe out consumer savings.

A technical note at the end of this chapter

contains a detailed discussion of this perceived problem and of an OTA computer simulation that tests the likelihood of insulation

programs having an adverse effect on utility

load factors and costs. Using a model developed for the recent OTA study, Application of

Solar Energy to Today’s Energy Needs, OTA had

simulated the total loads of hypothetical utilities in four cities that represent a cross-section

of climatic variations throughout the United

States. The utilities were designed to be typical

in their heating and cooling loads, with a mix

of single-family homes, townhouses, low- and

high-rise apartments, shopping centers, industry, and streetlighting. The model tested the effect of altering the insulation levels and

heating and cooling equipment for certain

fractions of each utility’s 1985 residential load.

The results suggest that insulation programs

have only a small effect on a system’s load

factor–that is, on the ratio of its baseload to

its peakload—and by extension, on total system costs. The effect is, in most cases, positive

(a higher load factor). The impact of insulation

in each case depends on such things as the

utility’s air-conditioning load, service area

climate, and electric-heating load. Table 62 in

the technical note illustrates the findings,

which still need to be verified through actual

experience. If they prove to be correct, they

should reduce the fear that insulation programs will lead to higher costs and higher

rates.

The long-term picture is clearer. By slowing

demand growth, insulation programs should

delay 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 insulation programs is peculiar to the gas companies. This problem centers on whether the

gas utilities will be permitted to add new

customers to provide a market for any gas the

company saves through existing customers’

conservation efforts. As residential customers

save natural gas through improved insulation

and other conservation measures, they free up

gas supplies for possible use by an expanded

number of customers. Until recently, however,

many gas companies were prohibited from

adding new customers, and during periods of

especially short supply companies often lost a

portion of their available supplies to other

companies through mandatory allocation programs. Without a promise of being able to

keep and sell “conservation gas” at attractive

prices — a so-called “finder-keepers” policy—

gas companies correctly perceive their customers’ gas-saving efforts as not necessarily

beneficial to their operations. Indeed, conservation in the absence of a “finders-keepers”

policy means the companies will have to

spread fixed-distribution costs over reduced

sales.

Although a large number of utilities have initiated insulation programs either voluntarily or

in response to State requirements, the major

trade associations representing both publicly

and privately owned utilities have gone on

record to oppose detailed uniform national

directives for such programs. They fear that

such requirements, which were included in different forms in the House and Senate versions

of the National Energy Act before being modified substantially by the Conference Committee, fail to recognize each company’s unique

needs arid circumstances.

Some utilities are also reluctant to undertake the new roles of moneylenders and sellers

of hardware, although in fact neither activity is

totally new to the industry. (In former days,

many utilities sold appliances to their

customers and permitted them to make installment payments on their utility bills.) The electric and gas companies’ strange bedfellows, in

this viewpoint, are the consumer activists.
130 ● Residential Energy Conservation

Consumer groups are particularly fearful

that small businessmen in the conservationdevice and insulation businesses would suffer

from unfair competition at the hands of the

utilities. 20 The Washington Natural Gas experience suggests, however, that the opposite

effect could also result. WNG made extensive

use of small businessmen to install conservation materials.

Rate Reform for Electric Utilities

The area of electric utility rate design may

eventually represent the most significant

departure from past practices brought about

by the changed circumstances of recent years.

Declining-block rates, the rate structure usually applied to residential users, came into

widespread use during the early days of electrification when lighting comprised most of the

utilities’ loads. Since the utilities had to maintain adequate capacity to meet a sharp peak in

demand during evening hours, it made sense to

promote other uses of power to fill the “valleys” of demand. Customers and utilities alike

benefited from the economies of scale, and

the load leveling that came with growth that

was encouraged through declining-block rates.

Now, however— as new capacity costs and fuel

costs exceed average system costs, and as

growth exacerbates peaking problems—promotional rates cease to be beneficial.

A number of State utility commissions have

begun requiring utilities to experiment with

departures from their traditional decliningblock rate structures, using “peakload pricing,“ or “time-of-use rates” that rise at times of

peak seasonal and/or daily demand, to encourage users to change their habits and reduce

peak loads.

The area of innovative rate design — and particularly time-differentiated rate structure— is

complex and controversial. This report can

only touch briefly on the subject, yet its significance for residential electricity use is great

enough to warrant a limited discussion of the

issues surrounding peakload pricing.

2oBossong, OP. Cit

The basic argument for peakload pricing is

clear: A utility’s costs vary with the season and

the time of day, due to the equipment and fuel

mix that must be used to meet different levels

of demand. These cost variations have increased in recent years, with the result that the

highest operating costs are now incurred when

reserve plants are pressed temporarily into

service to provide peak power levels. Although

these peaking plants require lower capital cost

than baseload plants, they employ expensive

fuels such as petroleum distillates, and they

operate less efficiently than baseload plants.

As a result, peak power costs run as much as

four times higher than base power costs, therefore, the premise that rates should be related

to costs in order to achieve objectives of equity and efficiency leads to the conclusion that

rates shouId vary with time.

Each utility’s peakload pricing system must

be “custom made” to reflect the company’s

load characteristics, peak patterns, weather

conditions, and generational equipment. The

time-differentiated rate design recently offered by the Virginia Electric Power Company

(VEPCO) to its residential customers is fairly

typical: 2,000 VEPCO customers, chosen from

among 17,000 who volunteered for the program, have had special meters (which cost the

company $250 apiece) instaIled at their homes

to record their total kilowatthour usage and

their 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 meters

also measure each customer’s peak demand

during any 30-minute onpeak period of the billing period; the demand figure, in kilowatts, is

not calculated during off peak hours. The

customer’s monthly bill is broken down into

three separate parts:

1, A basic customer charge of $11.50 per billing month;

2. A kilowatt demand charge for onpeak demand, calcuIated at the following rates:

–$.031 per kW of onpeak demand during

billing months of June through September;

–$.022 per kW of onpeak demand during

billing months of October through May;
Ch. VI—Utilities and Fuel Oil Distributors . 131

3. An energy charge calculated on the basis

of the following rates:

–$.023 per kWh of on peak use.

–$.01 5 per kWh of off peak use.

The kilowatthour charges may be adjusted

for changes in fuel costs (i.e., fuel adjustment

clause).

Because VEPCO’s time-of-use experiment

has only recently begun, the company does not

yet have data on the effects of the experimental rates on participants’ electricity consumption or bills, or on the VEPCO system’s peaks,

costs, or revenues. The Virginia utility is also

experimenting with time-of-use rates that are

applicable to water heaters only, and with

voIuntary time-differentiated rates for

churches and other charitable organizations

whose electricity demand tends to be greatest

during evenings and weekends. VEPCO has

also identified 9,000 residential customers with

histories of substantial summer electricity consumption (at least 3,500 kWh during at least

one summer month of 1976 or 1977); these

customers have been required to participate in

a metering experiment in which they are not

actually charged according to time-of-day

rates, but are given monthly statements comparing their electricity bills under traditional

pricing (which they actually pay) with costs

under peak load pricing.

Because peakload pricing of electricity

reflects the higher costs associated with

generating and distributing power during the

periods of highest demand on a utility system,

such rate structures provide customers with

“fair” and “appropriate” price signals. The actual level of demand elasticity—that is, customer response (through behavior changes) to

price differences — is not well-understood at

this time, but federally funded rate experiments are beginning to produce empirical

data. (These experiments are discussed below.)

The reasons for shifting to such innovative

rates go beyond a desire of economists to

perfect the workings of the marketplace. From

the standpoint of national policy, such rates

are desirable if they resuIt in an energy savings,

particularly of scarce and expensive fuels such

as oil and gas.

Electricity savings at the point of end-use

may or may not occur as a result of time-differentiated 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 to

generate their baseloads. Although these

recently built plants typically represent large

capital investments (and hence, high fixed

costs) for the companies, their efficient thermal performance makes them the least expensive to run because they require fewer Btu of

energy input per kilowatthour of output than

do the usually older, smaller, less efficient

peaking plants. Furthermore, baseload plants

are more likely to use nuclear energy or coal,

while peaking plants generalIy rely on imported oil or scarce natural gas.

To the extent that shifts in demand caused

by peakload pricing can minimize use of the

peaking plants and increase the proportional

use of the efficient baseload plants, a net savings of energy and of operational costs should

result. Over the long run, leveling peak demand could also save on fixed costs by reducing the need for construction of new plants. AlI

these savings —of scarce fuel input, of fixed

and operating costs, and perhaps of end-use

electricity — represent conservation in the

broad sense of the word.

Lifeline Rates

If the trend toward time-differentiated rates

reflects a growing belief in the appropriateness

of cost-based rates, a countervailing belief has

affected some utility rates differently. “Light

and heat are basic human rights and must be

made available to all people at low cost for

basic minimum quantities,” says section 1 of

the California Energy Lifeline Act of 1975.

Based on this premise, the Act required California utilities to set rates below cost for certain minimum quantities of gas and electricity—the estimated amount needed by an

average family of four living in a well-insulated

1,000 ft2 single-family house to provide enough

Iighting, cooking, refrigeration, water, and

space heating to maintain health and a

reasonable level of comfort.
132 “ Residential Energy Conservation

So-called lifeline rates, which have also

been implemented in Ohio, Georgia, and Colorado but were rejected on a national scale

during the congressional debate over the Public Utilities Regulatory Policy Act of 1978,

have two essential goals. First, they are intended to provide financial relief and avoid

hardship for low-income families who consume only the minimum essential amount of

energy in their homes. Second, they are intended to promote conservation by reversing

the traditional declining-block rate structure

and charging progressively higher rates for

greater quantities of gas and electricity consumed. The California experience to date in

striving to achieve the first purpose is discussed in chapter IV, “Low-Income Consumers.” With regard to the second objective,

that of promoting conservation, the California

experience is not encouraging. The Pacific Gas

and Electric Company found virtually no

change in the average residential use of electricity during the first 2 years of the lifeline

rate policy and determined that there was “little conclusive evidence as to the link between

lifeline and conservation . . . customers respond more to their total bill than to any

marginal price for the block in excess of

lifeline (allowances).”21

Load Management

Load management is the deliberate manipulation of electricity demand at the point of end

use, in order to maximize cost savings for the

consumer, the utility system, or both. When a

customer alters his energy-consuming habits to

take advantage of time-differentiated rates,

that customer is practicing a simple form of

load management. His actions might include

deferring dishwashing, clothes washing, and

drying to off peak hours. On a slightly more

sophisticated level, the homeowner might install a timer on the water heater to limit its

operation to off peak hours. Forms of load

2“’Lifeline Electric Rates in California: One Utility’s

Experience,” presented by William M. Gallavan, vice

president, rates and valuation, Pacific Gas and Electric

Company, to the ninth annual Conference of the Institute of Public Utilities, Graduate School of Business

Administration, Michigan State University, Dec. 14,1977,

p. 9.

management that are under the consumer’s

(rather than the utility’s) control are called indirect load management.

The term “direct load management” refers

to actions under the direct control of the utility company. With the consumer’s prior consent, the utility installs electromechanical

means by which it can manipulate a certain

portion of the customer’s load. When the system approaches peak levels, preceded signals

transmitted over high-voltage wires or radio

waves can be used to disconnect certain appliances such as hot water heaters, air-conditioner compressors, and heat pumps. Customers are sometimes given compensation for any

inconvenience caused by load management, in

the form of credits against their utility bills. By

carefully designing the patterns in which these

appliances are cycled on and off throughout

the utility system, the electric company can

shave the sharp spikes in demand that require

the expensive operation of peaking plants. In

certain cases, it may also be possible to use

load management as a means of deferring or

eliminating the addition of new capacity; this

prospect however, is considerably less certain

than the probability of saving fuel costs

associated with short-term operations.

Load management has been practiced widely in Europe for many years. There, mechanical

cycling or timing devices have been combined

with time-differentiated rates and energy storage systems to expand the use of load management practices to heating. At least one U.S.

utility, the Central Vermont Public Service

(CVPS) Company, has also experimented with a

heat storage/load management combination.

Twenty-five of CVPS’s customers have installed electric heating systems that heat water

during off peak hours (11 p.m. to 7 a.m.), cease

heating during onpeak hours, and keep the

customers’ houses warm during the daytime by

circulating the preheated water throughout the

house. The company calculates that in 1974-75

each customer paid approximately the same

amount for this system as he would have expended for oil heat, but that a customer who

would have spent $724 per year for electric resistance heat paid only $348 under the heat

storage option. For the utility, the important
Ch. VI—Utilities and Fuel Oil Distributors “ 133

result of the experiment was the finding that

each customer reduced his onpeak demand an

average of 22 kW, or a total of 565 kW for the

system as a whole.22

One danger associated with the combination of load management and time-of-day

rates is the possibility that their appeal to consumers will be so successful that they will

simply “chase the peaks around the clock,” as

a Wisconsin utility regulator put it. I n Germany, preferential rates induced such a largescale shift to storage heating systems that

higher nighttime peaks occurred and the rates

had to be altered, thereby reducing the economic benefits enjoyed by consumers.23

Direct load management, keyed to mechanisms such as temperature readings, is being

tried by a number of utilities. Compared with

peakload pricing, direct load management has

the advantage of assured response; the utility

knows for certain that it can reduce a peakIoad by a specific amount through mechanical

means, rather than hoping for an estimated

price elasticity.

Residential consumers account for an estimated average of 30 percent of U.S. utility

peakloads.

24 Detroit Edison estimated that

residential cooling accounts for 50 percent of

summer temperature-sensitive load, the fraction of total system load that is most volatile.25

Only a fraction of this load can be eliminated

through management. A typical arrangement

shuts off air-conditioner compressors and outside fans for 10 to 15 minutes for each hour, in

two periods, while leaving inside fans running

to circulate air throughout the participating

houses. The cycling signal is activated, typically, when outside temperatures are high enough

to generate a substantial systemwide demand

for air-conditioning. By shutting down air-conditioners in 50 homes for 15 minutes per hour

between 2 and 5 p.m. on days when temper-

‘

z

’’Storage Heat Shifts Load on Time at Central Vermont,” Electric Light and Power, Mar. 15,1976, p. 3.

23 Gordon C. Hurlbert, improvedLoad lvlanagement–

New Emphasis, Sept. 24,1975.

“’’Survey Scrutinizes Load Management,” Electrical

World, July 15,1976.

*

s

’’ Cooling-Demand Controls Look Good,” Electrical

Wor/d, July 15,1976.

atures exceeded 750 F, Detroit Edison was able

to achieve a 25-percent reduction in these

customers’ air-conditioning demand. The utility’s systemwide savings achieved through management of both air-conditioning and water

heating were limited, however, by the fact that

its summer peaks tend to be broad —that is, a

high demand level is sustained for many hours

during the day. While savings through water

heater control amounted to 200 MW in the

winter, they were only 50 to 60 MW in the summer.

A 1977 study by the Federal Energy Administration (FEA) indicated that a simulated coalburning utility’s load management program

could achieve a substantial shift from peaking

plants to baseload plants, and could result in

significant fuel cost savings. Furthermore,

when adequacy of reserve margin is the criterion for planning new capacity additions, the

hypothetical utility could justify the delay of

some construction plans. FEA cautioned, however, that such delays probably could not be

achieved in real-life situations because of the

ever-growing problems of rising costs, financing problems, and delays in Iicensing and construction. 26

Load management represents a significant

departure from utilities’ historical obligations

to provide electrical service in any quantity

customers desire and are willing to pay for. It

represents a form of rationing, a practice that

economists argue is unnecessary when a free

marketplace employing cost-based prices allocates resources. Increasingly, however, utilities

and their regulators are coming to view load

management as one more tool in the diverse

collection of policies that can aid in encouraging utility-based residential energy conservation.

Federal Programs and Opportunities in

Utility-Based Issues

Because responsibility for utility regulation

rests, for the most part, with States, Federal opZGFederal Energy Administration, The /mPaCt of Load

Management Strategies UporI E/ectric Utility Costs and

Fuel Consumption, June 1977.
134 ● Residential Energy Conservation

portunities to encourage utility actions to

stimulate residential energy conservation are

limited. However, recent Federal legislation

and programs do provide a framework of sorts

for such utility activities.

New Legislation on Conservation Investment

Assistance

The National Energy Policy Act of 1978,

although not as ambitious as President Carter’s

original proposal to Congress, does require

utilities to establish conservation programs for

residential buildings of four units or less.

Under the new law, utilities must inform their

customers of suggested conservation measures

and of available means of purchasing and financing investments in such measures. Utilities must offer onsite audits and services to

assist homeowners in finding instalIation contractors and lenders. If the customer chooses,

a utility must permit repayment for conservation investments on the regular monthly utility

bill. Gas and electric companies may themselves lend customers up to $300 each for conservation investments, but they are prohibited

from direct involvement in the installation of

conservation measures other than furnace efficiency modifications, clock thermostats, and

load management devices. Utilities already

engaged in installation of other conservation

measures as of the date of enactment are exempt from this prohibition.

Utilities are also prohibited, under the new

law, from incorporating the administrative

costs of their residential conservation programs

in their rates. Instead, they must charge those

customers who use their conservation services.

New Legislation on Utility Ratemaking and

Load Management

The Public Utilities Regulatory Policies Act,

(P. L. 95-617), passed in October 1978 as part of

the overall energy legislative package, increases the level of Federal involvement in

electric utility ratemaking activities. The new

law does not preempt State authority, but it requires State utility regulators to consider the

adoption of certain federally proposed standards in their rate determinations, and either to

adopt such standards or to state in writing the

reasons for not doing so. The Federal standards

applicable to residential buildings are:

1. rates that reflect the cost of service to

2

3

4

5

A

various classes of electric consumers, to

the maximum extent practicable;

prohibition of declining-block rates for

the energy component of electric rates,

except where such rates can be demonstrated to refIect costs that decline as consumption increases for a given customer

class;

time-of-day rates reflecting costs of serving each customer class at different times

of the day, except where such rates are

not cost-effective with respect to a

customer class;

seasonally variable rates, to the extent

that costs vary seasonally for each

customer class; and

load management techniques offered to

consumers when they are determined by a

utility to be practicable, cost-effective,

reliable, and advantageous to the utiIity in

terms of energy or capacity management.

second set of standards under the Act

deals with master metering of multifamily

buildings, automatic adjustment clauses, information to be provided to consumers about

rates applicable to them, procedures for termination of electric service, and limitations on

the inclusion in rates of costs attributable to

utility promotional and political advertising.

The new law’s most significant opportunity

for Federal participation in utility ratemaking

may well be its provision for intervention in administrative proceedings. The Secretary of

Energy (along with affected utilities and consumers) is allowed to “intervene and participate as a matter of right in any ratemaking

proceeding or other appropriate regulatory

proceeding relating to rates or rate design

which is conducted by a State regulatory authority.” (16 U.S.C. §2601) According to the

report of the conference committee on the legislation, such intervention is for the purpose of

participating in the consideration of the

Federal standards “or other concepts which

contribute to the achievement of the purposes

of the title. ” The report also states a congressional intent that the phrase dealing with
Ch. VI—Utilities and Fuel Oil Distributors “ 135

“other concepts” be construed broadly “so

that no one will have to prove his case in advance before being allowed to intervene. ” I n

effect, this provision for Federal intervention

affords DOE a means of monitoring and encouraging effective state implementation of

the Act through direct involvement in State

regulatory proceedings.

DOE Electric Utility Rate Demonstration

Program

Because empirical data on consumer response to alternative rate structures are

scarce, the Federal Government’s most helpful

role may be in providing such data.

The electric utility rate demonstration program, initiated by FEA in 1975 and continued

to the present by DOE seeks to analyze the

results of 16 experiments with innovative rates

undertaken by utiIities across the country.

The rate demonstration program, on which

$9.2 million in Federal funds (supplemented by

at least 10-percent State and local funding)

were expended through FY 1978, has focused

primarily on time-of-use rates applied to

residential customers. Approximately 18,000

households have been studied, either as testing

units or as control points. DOE, along with

cooperating State utility commissions, utilities, and consulting analysts, has been watching customers’ total electricity consumption,

kilowatt demand peaks, and temporal use patterns to determine the degree of price elasticity among residential users over a period of

2 to 3 years. Although the analytical phase of

the rate demonstration program is still underway, some results have become available and

preliminary conclusions have been drafted by

DOE.

Tables 57 and 58 list the projects in DOE’s

rate analyses and describe the innovations

tried in each test. On the basis of complete test

data from two States and partial data from

four more, DOE has arrived at the following

tentative general findings:27

“’’Electric Utility Rate Demonstration Program Fact

Sheet,” Economic Regulatory Administration, November

1977.

●

●

●

●

customers have uniformly been found to

respond significantly to changes in electricity prices at all hours of the day, including peak periods;

peak period kilowatthour price elasticity

(i.e., “responsiveness”) appears to exceed

off peak elasticity;

t i me-of-use rates reduce residential

customer peak demands even on the hot

test days of the year; and

customer attitudes toward time-of-use

rates are decidedly positive.

More specifically, DOE has observed surprisingly uniform—and encouraging—results

among the various time-of-use demonstration

programs, even though the study designs

varied considerably from test to test. Some

studies metered consumption and demand

during two different periods–onpeak and offpeak –while others employed at least one additional rating period, a “shoulder” or

“intermediate” time of the day. The duration

and the time used for each period varied according to different utilities’ peakloads. While

some time-of-day customers were compared

with their own utility records from a year

earlier, others were examined in comparison to

groups of control customers with similar

demographic, economic, and historical electricity consumption characteristics. The

number of participating customers in each

study ranged from fewer than 100 to several

thousand. Some experiments lasted only a

year, while others are continuing for up to 5

years. Finally, the ratios of onpeak to off peak

rates differed substantially among the studies.

Specific results of time-of-use tests in six

States, dealing with kilowatthour consumption, kilowatt demand, and shifts among rating

periods, are summarized in tables 57 and 58.

In a few cases, utilities attempted to estimate actual or potential effects of time-of-use

pricing on their system loads and fuel costs.

Connecticut Light & Power Company, for example, perceived an actual reduction in

system peak of 8 to 13 MW in its peak winter

month, and 70 to 83 MW in its peak summer

month. Arkansas Power & Light projected a

fuel cost saving of $20 million “over the short

run” if the experimental rate design were to be

implemented on a systemwide basis.
Table 57.—DOE Electric Rate Demonstration Program

kWh Consumption Effects —

Onpeak “Shoulder” period Off peak Net change in

State consumption consumption consumption consumption

Arizona T-O-D customers reduced, Increased slightly, compared Inconclusive evidence

compared with same with year earlier, suggests slight decline

customers a year earlier according to inconclusive

evidence

Arkansas T-O-D customers reduced Slight decline on

to level 18-26% below average summer days, larger

control customers on average larger decline on peak day

summer days, and 15-59%

below control customers

on system annual

peak day

California T-O-D customer reduced Increased, compared with

compared with same year earlier

customers a year earlier

Connecticut T-O-D customers reduced T-O-D reduced to “sign if i cant- T-O-D consumed “significantly T-O-D consumed 9-13%

“considerably” compared with Iy less” than control in more” than control in winter, less than control in

control customers i.e., con- summer, but consumed at same level as control summer, was “not sigsumption 23% lower same level in winter in summer nificantly different” in

winter

Ohio -

 – T-O-D customers reduced T-O-D consumption increased T-O-D customers consumed

“considerably” compared with in winters; no noticeable 3.5% less overall than control

control customers change in other months

Vermont T-O-D customers reduced T-O-D increased some from T-O-D increased about 3%

some compared with year year earlier compared with year earlier

earlier (amount not quantified) (not quantified)

Six-State summary T-O-D customers reduced T-O-D customers increased in T-O-D consumed

15-30% compared with comparison with control 5-8% less overall than control

control customers or year customers or year earlier customers. Exception: Vermont,

earlier Most reductions occur in

summer. Some increases occur

in winter
Ch. VI—Utilities and Fuel Oil Distributors ● 137

Lu
138 . Residential Energy Conservation

Much analysis of the rate demonstration

program data remains to be done, but the initial findings appear to confirm the usefulness

of time-differentiated rates as means of encouraging more efficient, cost-effective electricity delivery. Evidence of consumer acceptance of such rates may well be among the

more important observations to date. It should

be emphasized, too, that long-term implementation of time-differentiated rates can be expected to produce greater consumer response

than the present experiments. This is because

short-term response relies almost entirely on

behavioral changes in the usage rate and time

of use of presently owned appliances, while

long-term response could include widespread

changes in capital stock, such as purchases of

water heaters with timing devices to limit their

operation to off peak hours.

DOE Load Management Activities

The Department of Energy encourages load

management through a small program in the

Department’s Economic Regulatory Administration (ERA). DOE provides States with

funds and technical assistance to advance current knowledge and experimentation with load

management programs, and will monitor the

States’ compliance with the new requirements

for consideration of Federal standards (including load management) in future ratemaking

proceedings. The Department’s Electric Energy

Systems Division and Energy Storage Division

also carry out research and development activities to assist the development of new load

management technologies.

Conservation Programs of the Federally

Owned Power Authorities

The federally owned segment of the electric

power industry, which accounts for about 10

percent of the Nation’s installed generating capacity and 5 percent of total kilowatthour

sales, has always served as a “yardstick” for

certain national policies. For most of the history of the two largest Federal power authorities–the Tennessee Valley Authority (TVA)

and the Bonneville Power Administration —

they have served as models for effective expansion of electricity service to rural areas at

low cost. More recently, they have begun to

function as models for programs in energy conservation.

The Tennessee Valley Authority encourages

conservation among its customers in a number

of ways. TVA offers consumers interest-free

loans, payable over 3 years, for purchasing and

installing insulation in their attics. The insulation program will soon expand to allow 7-year

interest-free loans of up to $2,000 for a number

of conservation measures, including storm

windows, floor insulation, caulking and

weather-stripping, and insulation of duct work.

TVA will determine which measures are costeffective for each customer and will inspect

the installation before releasing funds. Additionally, TVA offers customers now using electric resistance heating systems a means of converting to heat pumps by providing 81/2-percent loans repayable over 10 years.

[n the area of rates, TVA asserts that its rate

structure is based on cost of service and encourages conservation by applying automatic

adjustment clauses only to that portion of a

customer’s electricity consumption that exceeds 500 kWh in any billing period. TVA is

also experimenting with four different rate

structures designed to encourage conservation. In one study, time-of-use rates are being

applied, with kilowatthour consumption billed

at 9 cents per kWh during onpeak periods and

1.5 cents per kWh during off peak periods.

Analysis of the results of the study is just

beginning.

The Bonneville Power Administration has

concentrated its conservation efforts on its

own Internal operations and on information

dissemination among its employees, its utility

customers, and end-users. The Bonneville outreach effort has included workshops on insulation, energy audits, and training sessions for

CETA workers employed in weatherization

programs. Bonneville has also undertaken certain research programs aimed at conservation;

these include experimental use of aerial and

ground-based infrared sensors to detect heat

loss from buildings, and the installation of

wind data recording stations to determine

where wind-driven electric generator systems

couId be installed to supplement hydroelectric

energy in the Bonneville service area. Bonne-
Ch. VI—Utilities and Fuel Oil Distributors “ 139

vine has not developed an insulation financing

program or experimented with conservationoriented rates.

Conclusions for Utility Policy

In response to the dramatically different circumstances in which utilities have had to

operate in recent years, electric and gas companies are undertaking a number of new activities to encourage residential users to

reduce their consumption and aid in leveling

system peakloads. Because many of these

activities — including energy audits, insulation

programs, rate reforms, and load management — are recent in origin and used by only a

relatively small number of companies, important areas of uncertainty about their efficacy

THE FUEL OIL

The distribution of home heating oil, as an

industry, was developed by oil appliance

manufacturers and their retail installers.

Today, nearly 80 percent of heating oil demand in the United States is served by independent fuel oil marketers.

Although the heating oil industry operates

nationwide, about 90 percent of the heating

oils are sold in only 28 States, principally along

the northern tier of the United States from the

Pacific Northwest to New England and down

the east coast to Florida.28 Over 16 million residential buildings depend on fuel oil for space

heating. 29

Historically, the fuel oil industry has not

been regulated. In recent years, however, the

industry has been subject to Federal regulations on pricing and allocation during periods

of short supply. No such regulations are

presently in effect.

‘

aSales of Fuel Oil and Kerosene in 1977 (Department

of Energy, Energy Information Administration, 1978), p.

6.

zgAnnua Housing Survey, 7976 (Department of commerce, Bureau of the Census, 1978), p. 6.

remain to be clarified. The opportunities for encouraging conservation through utility actions

appear promising, but the adjustments to new

methods of operation are proving difficult in

some cases for both the utilities and their

customers.

The great diversity among the Nation’s 3,500

electric utility companies and 1,600 retail

natural gas distributors precludes the development of a single national policy for conservation. Rather, there must be a flexible approach

enabling each utility to design a residential

conservation program around its unique system load, supply and cost situation, climate,

and other variables. An examination of Federal

programs and opportunities suggests that

recently enacted legislation and programs offer a good start.

DISTRIBUTORS

Unlike the utilities with whom the industry

competes for space-heating markets, most fuel

oil marketers do not have captive customers,

nor do they have a monopoly on product or

service territory. The marketers are forced to

compete within the oil industry for product

supply, advantageous pricing, and customers.

As marketers are in direct contact with the

consumers, the success of their business

depends entirely on customer satisfaction.

One of the major concerns of fuel oil marketers is the need to maintain customer goodwill in light of national energy and conservation policies that could conceivably discriminate against fuel oil consumers and jeopardize the competitive position of the marketers.

Industry Size

In 1972, the Bureau of the Census of the

Department of Commerce estimated that there

were 7,276 fuel oil dealers with payrolls. This

estimate, however; includes only those fuel oil

dealers who list the sale of fuel as their principal business. However, in many markets, particularly nonurban markets, petroleum marketers may distribute both gasoline and heating
140 “ Residential Energy Conservation

oil, with gasoline predominant. According to

industry estimates, the total number of fuel oil

suppliers, including those who distribute more

gasoline than fuel oil, falls between 10,000 and

12,000 marketers.

The predominant distillate oil consumed in

residential space heating is No. 2 fuel oil.

Heavier heating oils (No. 5 and No. 6 oil) are

used primarily by industrial accounts, and are

usually purchased directly from refineries or

terminal facilities. Consumption of No. 2 fuel

in 1977 amounted to 1.2 billion barrels.30 No. 1

fuel oil (kerosene) and No. 4 oil are also used

for space heating. The demand for these distillate oils in 1973-77 appears in table 59.

Fuel Oil Marketers

About 85 percent of independent heating-oil

marketers sell directly to consumers. Therefore, they are regarded as retailers rather than

jobbers. However, a dual petroleum marketer

will often have different suppliers or brands

for its heating oil and its gasoline. It is not

unusual for a distributor to be a jobber for one

product and a retailer of the other.

A marketer may service from several hundred to 50,000 or more customer accounts. According to a 1978 survey, 16 percent of the

marketers had more than 3,000 customers;

their share represented 55 percent of the

customers recorded .3’ Forty-seven percent of

the companies had between 1,000 and 3,000

accounts, representing 41 percent of the

customers. Forty-two percent of the marketers

had fewer than 1,000 customer accounts, accounting for approximately 14 percent of the

customers. The survey also indicated that all

fuel oil marketers sold No. 2 fuel oil, about

half sold No. 1 fuel oil (kerosene), and less than

10 percent sold other fuel oils. The survey indicated that about 80 percent of marketers

sold and serviced oil heat equipment, accounting for 62 percent of that end of the business.

Seventy-eight percent of the heating oil marketers surveyed operate a bulk plant (large

storage) 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 fuel

oil by end use sector for the period 1973-77. As

indicated by the table, nearly 50 percent of all

sales of distillate fuel oil goes to heating. The

data presented does not indicate what percentage of total sales is earmarked for the residential sector. However, according to one DOE official, approximately 85 to 90 percent of No. 2

heating oil is sold in the residential sector.

In general terms, fuel oil marketers deliver

more than 2 million barrels of distillate oil

daily from November through March to meet

residential space-heating needs. The delivery

schedules are temperature-sensitive and established according to the calculated “degree

days.” The average consumption per heating

season for residential home heating varies

from about 900 gallons in the South-Atlantic

region to about 1,600 gallons per heating season in the New England region.

Service Activities

For the 1977-78 heating season, about 67 percent of all fuel oil consumers had their oil heat

equipment checked and serviced as part of annual efficiency checkups. About 40 percent of

fuel oil consumers have service contracts providing for annual efficiency checkups. These

annual service calls are generally considered

essential to maintain furnace efficiencies and

promote fuel conservation.

In the same heating season, the average

serviceman was responsible for 440 customers

and managed to make six calls per day, exclusive of efficiency checkups.32 About 53 percent of the servicemen serviced burners exclusively. The remainder either installed burners

only or serviced and installed them.

The lifetime of oil heat equipment is approximately 20 years while other equipment— such

as gas furnaces — may be in place much longer.

Improvements in oil burner efficiencies over

the years have acted as an incentive for more

rapid replacement of oil furnaces.

32 Margaret Mantho, “Annual Service Management

Analysis, ” Fue/ Oi/ and Oi/ l-feat, May 1978, p. 36.
Ch. VI—Utilities and Fuel Oil Distributors . 141

Table 59.—Average Yearly Demand for Distillate Fuel Oil

(in thousands of barrels)

Domestic

demand Production Imports Stocks

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

3,835

3,849

3,164

2,852

2,450

2,377

2,309

2,309

2,385

2,887

3,157

3,853

2,948

3,953

3,967

3,293

3,094

2,382

2,266

2,112

2,173

2,163

2,675

2,544

3,778

2,849

4,298

3,687

3,336

2,788

2,519

2,436

2,255

2,237

2,618 c

3,028

3,714

3,724

4,654

3,130

5.237

2,629

2,820

2,880

2,399

2,226

2,522

2,704

2,783

2,792

2,705

2,552

2,700

2,801

2,924

2,668

2,852

2,679

2,531

2,486

2,431

2,574

2,589

2,592

2,812

2,744

2,767

2,783

2,653

2,734

2,961

2,793

2,655

2,738

2,885

2,959

2,982

2,947

2,995

3,180

3,199

3,273

2,925

3.374

181

392

464

306

287

220

268

220

221

125

152

237

454

515

289

324

302

256

110

136

68

106

92

129

103

96

124

153

164

207

151

96

97

151

126

131

147

141

135

136

166

142

471

alsd,zad

alg6,@l

181,179

149,125

128,822

160,645

141,806

160,645

182,458

198,673

208,269

209,908

212,875

223,717

199,715

176,696

161,111

146,214

152,027

163,306

181,472

197,323

220,732

226,113

235,749

208,787

165,428

150,439

138,306

137,249

147,057

165,064

190,861

217,930

232,230

235,599

223,648

221,178

183,500

. —’ 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 December

January 1977 data are from American Petroleum lnstitute (APl).

c= Revised.

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

New burners installed today are expected to 84 percent. To date, there has been little Federoperate at seasonal efficiencies of 80 percent, al support for development of high-efficiency

and new promising technologies have pro- oil heat equipment. Furthermore, most marketduced burners with seasonal efficiencies up to ers cannot afford to establish R&D programs
Figure 17 –-Sales of Distillate Fuel Oil Use as Percent of Total

(millions of dollars]

Vessels and

railroads

❑ Electric

utilities Heating

$1,150.9

1973 “ 974

$1,2310

 5.1% 

1976

2

3

4

5

6
Ch. VI—Utilities and Fuel Oil Distributors ● 143

for high-efficiency equipment; research efforts

are therefore centered in the furnace manufacturing industry.

New Construction

In 1971-77, from 8 to 11 percent of new

homes were heated by oil. The following chart

compares the relative position of oil, gas, and

electricity in the new home market:

Percent of New Homes by Type of Heating Fuel33

Oil Gas EIectricity

1971 . . . . . . . . . . . . . 8 60 31

1972. . . . . . . . . . . . . 8 54 36

1973. . . . . . . . . . . . . 10 47 42

1974. . . . . . . . . . . . . 9 41 49

1975. . . . . . . . . . . . . 9 40 49

1976. . . . . . . . . . . . . 11 39 48

1977. . . . . . . . . . . . . 9 38 50

In the Northeast, however, the figures indicate an increase in the oil share of the new

home market in 1971-76. The following chart

shows the comparisons for the Northeast:

Percent of New Homes by Type of

Heating Fuel34

Oil Gas Electricity

971. . . . . . . . . . . . . 31 42 26

972. . . . . . . . . . . . . 33 36 29

973. . . . . . . . . . . . . 35 34 28

974. . . . . . . . . . . . . 32 29 38

975. . . . . . . . . . . . . 41 24 33

976. . . . . . . . . . . . . 51 15 31

977. .........,.. 4 9 17 31

Thus, while oil heat has grown slowly in the

national new home market, stilI accounting for

only slightly over a tenth of the units, oil heat

in new homes in the Northeast has grown from

just under a third of the market in 1971 to over

half in 1976. The decline of the gas share in the

early- to mid-1 970’s, both nationwide and in

the Northeast, can be attributed to prohibitions on new gas hookups by several State public utility commissions in response to supply

shortages. Recent increases in gas supply and

termination of moratoria on new hook-ups

may 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 in

Energy Conservation Practices

Introduction

Given the relatively small and highly concentrated nature of the residential oil-heating

market, a number of factors affect— and limit — the role of fuel oil distributors in residential energy conservation. This section outlines

the industry’s assessment of its current role in

the energy conservation practices of its customers. The assessment is the product of a

questionnaire that was mailed to 48 fuel oil

distributors and 19 State, regional, and local

trade associations in late November 1977.

Twenty-one distributors and five trade associations responded from all regions of the country

where fuel oil is consumed for space heating.

Marketing of Energy Conservation Products

Very few fuel oil distributors are actively

selling residential insulation, storm windows

and doors, and other conservation hardware.

However, most fuel oil distributors are involved in helping their customers reduce the

amount of fuel oil consumed. As mentioned

earlier, about 69 percent of the residential consumers of fuel oil have their heating equipment checked and/or tuned at least once a

year through a direct service offered by the

distributors and many of the refiner markets.

More fuel oil distributors use independent

contractors to provide insulation and other

energy conservation products to their customers than sell these materials directly.

Besides the basic energy hardware (e.g., replacement burners, boilers, furnaces, insulation, etc.) that is being marketed by fuel oil

distributors, some have attempted to market

other energy conserving equipment such as

automatic stack dampers, stack heat reclaimers, outdoor temperature controls, humidifiers,

attic vents, fireplace heaters, and other related

items.

Reduction in Annual Fuel Consumption

More than half of the respondents reported

that 50 percent or more of their customers

have reduced their annual consumption by
144 . Residential/ Energy Conservation

more than 15 percent since the 1973 price rise.

States in the colder climates reported the

highest percentage of customers conserving

fuel oil.

In the 1972-73 heating season (adjusted for

actual rather than average degree days), residential oil consumption reflected predictable

regional patterns, influenced by climate—for

example, a low of 800 gallons in South Carolina to a high of 1,750 gallons in northern New

England. It should be noted that homeowner

consumption can vary widely even within a

community. This divergence is largely attributed 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 entered

the business of marketing insulation and storm

windows and doors, while most have not? The

reasons most often cited include the expectations of increased profits, increased service of

existing customers, and the prevention of customer switches to other fuels.

What prevents fuel oil distributors from marketing insulation and other related items? Reasons most frequently cited include the lack of

available qualified independent contractors to

service the distributor’s customers, and the

lack of capital to get into the conservation

business. Furthermore, most competing distributors are simply not marketing this hardware.

Other disincentives include the apparent shortage of insulation and other energy materials,

the inability of homeowners to pay for or

finance energy conservation measures, and the

limited public interest in energy conservation.

Advertising is one of the major vehicles by

which fuel oil distributors penetrate the market. Bill-stuffers are the most popular form, accounting for 5 to 30 percent of total advertising budgets. Direct mail to potential customers

runs from a low of 10 percent to a high of 90

percent of advertising budgets. Radio is also

used, but it accounts for a relatively low

percentage of the total advertising budget.

A number of marketing choices that are exercised by fuel oil distributors are based on

technical information about energy conservation. Some of the most frequently cited

sources include State trade associations,

magazines and other publications of general

circulation, and local industry trade associations Suppliers and manufacturers of energy

conservation materials, however, are considered the most reliable sources of technical information

Fuel Oil Customer Accounts

Since 1973, when costs of fuel oil began to

rise, oil distributors’ delinquent customer accounts (past due by more than 30 days) have increased significantly. Many distributors reported increases of about 15 percent or

greater, and some distributors have reported

an increase in delinquent accounts by 50 percent or more. Obviously, customers with delinquent accounts cannot normally finance additional expenditures, such as conservation improvements. A large number of delinquent accounts affects the ability of distributors to set

aside capital or to acquire financing for the

purpose of developing energy conservation

guidelines.

One of the most significant problems facing

fuel oil distributors in terms of their ability to

carry delinquent accounts or to offer credit

terms for financing conservation efforts is the

elimination by wholesale suppliers of discount

terms for payments. Another problem frequently cited is the increased interest charges

associated with financing more expensive inventory. Furthermore, increases in insurance

costs have also contributed to oil distributors’

cash flow problem.
Ch. VI—Utilities and Fuel Oil Distributors ● 145

TECHNICAL NOTES–COMPUTER SIMULATION:

THE EFFECT OF CONSERVATION MEASURES ON UTILITY

LOAD FACTORS AND COSTS

The Question

Will widespread adoption by residential

electric customers of conservation measures,

particularly insulation, result in utility load

changes that are economically counterproductive to the utilities and/or their customers?

Background

Many residential consumers of electricity

are investing in energy-saving materials and

devices for their homes in hopes of reducing

their utility bills, or at least stemming the rapid

increases they have experienced recently. Adding insulation to existing homes is the action

most commonly taken, but some homeowners — and builders of new homes— are also

choosing HVAC systems with energy efficiency

and cost savings in mind. Electric heat pumps

are becoming widely used for this reason. Consumer attitudinal surveys indicate that electric

customers investing in conservation measures

are motivated primarily by the hope of saving

money.

Whether or not consumers experience lower

or even slower growing utility bills in the

future depends ultimately on whether or not

their utility companies can achieve cost savings that can be passed on, in turn, to ratepayers. Many factors affect utility costs, and

consumer conservation actions will not be the

only determinant of the direction in which

rates will go in the next few years. But utility

managers have raised questions about the possibility that conservation practices could have

some adverse effect on load factors and systemwide costs, thereby contributing to a need

for higher rates. From the consumer’s standpoint, this would surely be the ultimate example of “Catch-22.”

The fear of cost increases caused by conservation actions is based on the fact that utility

costs are positively correlated to seasonal and

daily variations in the demand for electricity,

and on the possibility that insulation and other

conservation measures could magnify these

variations in uneconomic ways. EIectric companies must have available to them at any

given time enough generating capacity to meet

the highest level of demand expected at that

time, plus a reserve margin of capacity to use

in the event that some powerplants are shutdown by emergencies or for routine maintenance. But since the peak demand level may

be reached on only a few days each year, and

for only a few hours even on those days, utilities are Iikely to have a considerable fraction

of their total generating capacity idle much of

the time.

Idle generating capacity is expensive, and

certain kinds of powerplants are more expensive to keep idle than others. Although a company pays for fuel and other operating costs

only when the plant is operating, many fixed

costs —

such as interest on the capital borrowed to build the plant— must be paid regardless of how much the plant is used. It follows,

then, that newer, bigger, more capital-intensive plants (particularly nuclear plants) are the

most expensive to shutdown, while older,

smaller plants (like oil-fired turbines) are the

least expensive to hold in reserve. Conversely,

new plants are often the least expensive to

operate, while the older ones (which usually

use the most expensive fuels) are the most

costly to run.

A utility’s daily or yearly “load’ ’-the total

amount of electricity it must generate during

that time— is usually thought of as having

three components. The baseload–-that which

is demanded nearly all the time— is the largest

component and is usually generated with the

company’s newest, largest, and most technologically advanced plants. The intermediate

load–an increment that is demanded less of

the time— is typically derived from slightly

older and smaller plants, fired with fossil fuels.
146 ● Residential Energy Conservation

The peakload — a sharply greater demand component that may be demanded only occasionalIy — is usually met with small oil- or gas- fired

turbines, or with pumped-storage hydroelectric

plants, or by purchasing power from other

companies sharing the same distribution grid.

Figures 18 and 19 illustrate a typical system

load and the three major generating components.

Figure 18.—Dispatching Generation to Meet a

6,000 Cycling generation

4,000

3,000

2,000

1,000

0

12M 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 of

Regulatory Utility Commissioners, November 1977

The costs of keeping and operating these different kinds of plants vary, typically, as follows:

●

●

Baseload plants–high fixed costs, low

operating costs, resulting in the lowest

overall costs when in operation.

Intermediate-load plants— medium fixed

costs, medium-to-high operating costs, resulting in medium overalI costs when in

operation.

● Peakload plants — low fixed costs, very

high operating costs, resulting in the highest overalI costs when in operation.

Figure 19.— Daily Load Curve

o

12M 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 of

Regulatory Utility Commissioners, November 1977.

A major determinant of total utility costs

and generating capacity needs is a company’s

“annual load factor, ” which is the ratio of the

average utility load over the year to the peakIoad during any time period (usually 15

minutes] during the year. The higher the load

factor, the less total downtime the company

experiences in its generating capacity. Up to a

certain point, the utility benefits from keeping

its plants running, generating sales revenues

with which to cover both fixed costs and operating costs. Some idle capacity is needed, however, to allow normal maintenance operations

to take place, to substitute for other plants in

emergency outages, and to meet the peaks.

When all plants are operating and additional
Ch. VI—Utilities and Fuel Oil Distributors ● 147

OTA Analysis of Conservation Impact

on Utility Loads and Costs

A model developed for OTA’s recent study,

Application of Solar Energy to Today’s Energy

Needs, analyzed the impact of conservation

measures on utiIity operations.

OTA’s model simulates utilities in four U.S.

cities. The utility loads, shown in table 60, consist of a mix of single-famiIy homes, townhouses, low- and high-rise apartments, shopping centers, industry, and streetlighting. Each

of the four cities has the same number of units

although the heating and cooling loads are

determined by the weather conditions, taken

from 1962 data, of each city. The residential

heating and cooling equipment mix is initially

set to match conditions in 1975 and then forecast. to 1985 using a residential energy use

model developed by ORNL. All the singlefamily homes are initially set to the same level

of Insulation, which the model can increase to

a higher value. The insulation levels in the

other buildings do not vary. The change for

single-family homes corresponds to a heat load

reduction of 31 to 49 percent, depending on

the location. In addition to the insulation

level, the type of heating equipment can be

changed to allow the possibility of varying the

percentage of homes that are electrically

heated. Diversity is built into the model so that

the peakloads of the individual homes do not

alI occur simultaneously. 35

To determine the effects on utility loads of

increased insuIation among resident i al

 details about the model and the hypothetical

ut I I loads can be found in Application of Energy

 Energy Needs, vol. 1, chapter V, and vol. 11,

chapter V 1.
148 ● Residential Energy Conservation

Table 60.—1985 Projection of Heating Unit Mix

and Basic Loads (number of buildings)

Albu- Fort

querque Boston Worth Omaha

Single family units

Electric heat. . . . . . 10,470 8,080 11,790 7,720

Fossil heat. . . . . . . 45,450 47,840 44,130 48,200

Electric 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 6,960

Low rise units . . . . . . 2,160 2,160 2,160 2,160

High rise units. . . . . . 600 600 600 600

Shopping 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 all

single-family homes at the baseline insulation

level and again at the high insulation level,

using the forecast 1985 mix of home heating

systems initially, and then using an assumption

that 50 percent of the homes were electrically

heated. (The latter case was included to simulate utilities with winter peaks.) All other load

characteristics remained constant throughout

the analysis. The heating and cooling mix for

single-family homes for the 1985 forecast is

shown in table 60. Table 61 shows the numbering of buildings assumed to have electric heat

in the case when it was assumed that 50 percent of residences use electric heat.

Results

The load factor and seasonal peak demands

are given in table 62 for the reference and the

high insulation cases for both mixes of residential heating —1 985 projection and high electric

resistance. The results show that an increase in

insulation does not change the load factor significantly. In all but two situations, the load

factor Increases as insulation is added, but the

increase does not exceed 4 percent. The two

exceptions are the utilities with 50-percent

electric resistance heat that still experience

their peak loads in the summer.

Table 61 .—50-Percent Electric Resistance Heating

by 1985 (number of buildings)

Electric Fossil

City 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 High

case insulation case insulation——case insulation case insulation

 . .

Base case

Load factor. . . . . . . . . .

Winter peak (MW,

month). . . . . . . . . . . .

Summer peak (MW,

month). . . . . . . . . . . .

Summer-winter ratio . .

Load factor. . . . . . . . . .

Winter peak (MW,

month). . . . . . . . . . . .

Summer peak (MW,

month). . . . . . . . . . . .

Summer-winter ratio . .

Load factor. . . . . . . . . .

Winter peak (MW,

month). . . . . . . . . . . .

Summer peak (MW,

month). . . . . . . . . . . .

Summer-winter ratio . .

0.534

1,359

Jan.

1,386

Aug.

1.02

0.472

1,677

Jan.

1,368

Aug.

0.79

0.465

1,632

Jan.

1,373

Aug.

0.85

0.537 0.498 0.505 0.470

1,315 1,316 1,263 1,562

Jan. Feb. Feb. Jan.

1,352 1,354 1,320 1,942

Aug. Jul. Jul. Aug.

1.03 1.03 1.05 1.24

50-percent electric resistance heating case

0.485 0.466 0.492 0.483

1,569 1,600 1,433 1,842

Jan. Feb. Feb. Jan.

1,348 1,392 1,362 1,958

Aug. Jul. Jul. Aug.

0.86 0.87 0.95 1.06

50-percent heat pump case

0.484 0.446 0.483 0.470

1,528 1,587 1,426 1,778

Jan. Feb. Feb. Jan.

1,351 1,400 1,368 1,976

Aug. Jul. Jul. Aug.

0.88 0.88 0.96 1.11

0.475

1,472

Feb.

1,873

Aug.

1.27

0.481

1,594

Jan.

1893

Aug.

1.19

0.476

1,569

Jan.

1,906

Aug.

1.21

0.448

1,453

Feb.

1,823

Jul.

1.25

0.483

1,787

Feb.

1,847

1.03

0.463

1,787

Feb.

1,861

Jul.

1.04

0.453

1,397

Feb.

1,768

Jul.

1.26

0.467

1,603

Feb

1,805

1.13

0.457

1,599

Feb.

1,815

Jul.

1.14
Ch. VI—Utilities and Fuel Oil Distributors ● 149

The effect on the summer-winter peak difference, shown in table 62, is more pronounced. For all summer peaking utilities, for

either mix of heating systems, the ratio of the

summer to winter peak increases as a result of

increased insulation. These increases range

from 1 to 12 percent and are greatest for the

utilities with the highest percentage of electric

heat. For the winter peaking utilities, the ratio

decreases by about 8 percent when the residential insulation level is increased.

Discussion

These simulations indicate that the effect of

extensive additions of insulation by residential

customers depends greatly on the amount of

residential electric heat in the utility’s load,

since adding insulation affects heating loads

more than cooling loads. Utilities that have

winter peaks or small electric heat loads (relative to their cooling loads) experienced increases in their load factors; this means that

their peakloads were reduced more than their

average loads by the addition of insulation. On

the other hand, two of the simulated utilities —

those with summer peaks accompanied by

large electric heating loads–experienced

moderate drops in their load factors after insulation was added. Summer-winter peak

ratios change very Iittle — under 2 percent— in

the cases for which the electric heating load is

small, but as that load increases, the change in

the ratio also grows until the winter peak

begins to exceed the summer peak.

In sum, OTA’s simulation indicates that

most utilities will not be measurably affected

by the widespread addition of insulation by

residential customers, unless at Ieast a third or

so of their residential customers use electric

heat If more than half use electric heat, the

utility will still experience an improved load

factor as long as its peak comes in the winter.

In such cases, the increase in load factor and

the leveling of differences between summer

and winter peaks can assist in bringing about

more efficient use of generating capacity.
Chapter Vll

STATES AND LOCALITIES
Chapter Vll.—STATES AND LOCALITIES

Page

EPCA/ECPA: Legislative Foundation . . . . . . . . . . . 154

Federal Energy Policy Leadership and Federal Funds for State Energy

Conservation Programs Will Continue to be Necessary to Stimulate

Many State Activities. . . . . . . . . . . . . . 160

WeII-Defined State Energy Policy Has Not Emerged . . . .161

Energy Production Is the Predominant Concern of Energy-Rich States .161

New State Organizations Are Emerging to Grapple With Current

Energy Problems . . . . . . . . . . . . . . . . . . . . 162

Information Flow From Federal to State and From State to State

Government Requires Attention . . . . . . . . . . . . . 162

State Legislatures Have Focused on Seven Major Issues in Energy

Conservation . . . . . . . . . . . . . . 163

Four Residential Energy Conservation Programs Serve as the

Foundation of State Efforts . . . . . . . . . . . . . 164

TABLES

Page

63. Residential Energy Conservation Legislation, 1974-77 .. ....155

64. Residential Energy Conservation Programs . . . . . . . .157

65. State Issues in Residential Energy Conservation . . . . . .158
Chapter Vll

STATES AND LOCALITIES

The problems of federalism have a special bearing on residential energy conservation.

States are the vehicles used to implement many of the federally defined programs aimed at

reducing residential energy consumption, and States are the mechanism through which

localities receive Federal dollars for many efforts. But the wide differences among States in

attitudes, resources, climate, geography, population, size, governmental organization, and

history combine to remind the policy maker of the diversity of the American political fabric.

Policies that fail to recognize these differences face difficulty from the beginning.

It is not possible to examine a “representative sample” of States, but some information

can be gleaned from viewing the States in the aggregate and a few States more carefulIy. This

chapter reflects a close look at 10 States, with some information about all 50. Although conservation programs have been in place only a short time, it is possible to make some clear

statements about areas of difficuIty and areas of promise.

All States, plus the trust territories, have submitted plans for Federal approval under the

Energy Policy and Conservation Act (EPCA) and the Energy Conservation and Production Act

(ECPA). The eight mandatory areas defined in these laws form the core of State activities.

Some States have launched broad and imaginative programs and seem to have achieved success. In these States, such as Minnesota, Iowa, and California, State agencies, localities, interest groups, and others have joined to produce innovative and fruitful responses to the

problem. On the other hand, many States have done very Iittle.

Most States have simply responded to the

Federal initiative and available Federal funding for the mandatory programs. Thus, the

Federal Government tends to define State and

local solutions. As the energy problems have

been defined as a national problem and Congress has indicated that national policies will

be forthcoming (and indeed are in effect), most

States have been hesitant to initiate policy independently. Many States feel that the programs initiated and the organizations set in

place, while responsive to the Federal view, are

inappropriate to the particular State. Most

States have substantial problems in program

integration, technical assistance, and funding.

Too few persons are trained to deal with the

varied and overlapping aspects of energy conservation, and State agencies need more technical help than they are receiving. The usual

problems—the pacing of Federal programs,

uncertainties about guidelines and reguIations,

communications problems, late release of Federal funds, and changing players in national

and regional Department of Energy (DOE)

off ices — add to the confusion.

Beyond these complaints, which characterize the early stages of many Federal efforts,

are problems relating to the States’ energy

viewpoint. States with substantial energy resources are less concerned with conservation

than with obtaining a “fair shake” in the solution of the problems. States with large resources of fossil fuels place conservation in a

secondary role compared to production issues.

Legislative attention in these States tends to be

directed toward resource extraction and development.

Of particular difficulty to the States has

been the need to measure the energy savings

the ‘approved State plan” will produce. This

problem is well stated by one of the leading

State energy agency directors, John Millhone

of Minnesota:

The requirement that the State plan save at

least 5 percent of the 1980 energy consumption presumed a statistical sophistication that

doesn’t exist. Most rudimentary State energy

data systems have an error of plus or minus 5

percent or more. The Act provided that part of

153
154 ● Residential Energy Conservation

a State’s grant would be based upon its purported energy saving, stimulating exaggeration

when accuracy about the real energy savings is

sorely needed. The emphasis was placed on

Btu savings alone, penalizing States that

sought conversion from precious to more

abundant fuels — natural gas to coal, for example—when conversions meant more Btu

wouId be used. 1

Another problem with the 5-percent goal

relates to the funding level. The State energy

conservation program required energy savings

equivalent to about 800 million barrels of oil

by 1980, and provided only $150 million in

funding authority. This meant that the Federal

Government was trying to buy a barrel of oil

through the program for 10 cents. 2

A review of the findings from the 10-State

study sample reveals a number of useful findings. More specific information appears in

tables 63, 64, and 65.

EPCA/ECPA: LEGISLATIVE FOUNDATION

The Energy Policy and Conservation Act

(Public Law 94-163) and the Energy Conservation and Production Act (Public Law 94-385)

provide the foundation for Federal energy conservation policy. (The former Federal Energy

Administration (FEA) weatherization program

has been brought under these Acts.) These acts

authorize funding to States that develop approved State energy conservation plans (SECP).

The plans must address eight mandatory areas:

●

●

●

●

●

●

●

●

mandatory Iighting efficiency standards;

programs promoting vanpools and public

transportation;

mandatory standards on energy efficiency

that govern State and local procurement

practices;

mandatory thermal efficiency standards

and insulation requirements;

laws permitting a right-turn-on-red;

public education;

intergovernmental coordination in energy

matters; and

energy audits for buildings and industrial

plants.

A State may propose other activities to

receive Federal funding. The proposed programs must cumulatively achieve a 5-percent

reduction in energy demand by 1980.

Every State, plus the trust territories, has

submitted plans for Federal approval. Each

State plan outlines many programs, but relatively few program elements have been

started Some programs rely on State legislative action. In most cases the legislatures have

not passed legislation specified in the plans.

Most of the Federal funds for programs, moreover, were not dispersed until January 1, 1978.

Planning activity predominated prior to that

date

Seven major conclusions emerge from examination of these States. They include organizational or administrative difficulties as a

result of funding characteristics, the emergence of new agencies in fields previously

dominated by existing organizations, and problems in providing qualified technical expertise.

None of these is trivial in the development of

successfuI conservation programs.

‘John Millhone, Analysis of Energy Conservation Pro- ‘Iblci Much of the information in this chapter is based

grams, paper prepared for the annual meeting of the or, state ~es;~ent;a/ Energy Conservation: Attitudes, ~0/-

American Association for the Advancement of Science, [c e~ an(~ Programs, prepared for Office of Technology

February 1978 AC se$srnent by Booz, Allen& Hamilton, May 1978
Table 63. -– Residential Energy Conservation Legislation, 1974.77

~..... . . --- . .-

Ione

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

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

1 I ..— —. . . -.—

Appliance efficiency

standards

None

None

Requires listing of

energy consumption

information and

average operating

cost of appliances

before sale (1975)

Requires disclosure

of energy consumption & efficiency

info. 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 an

issue (Residential

Conservation is of

primary concern to

Calif. as an energy

issue

- CPUC & ERCDC

have stated a

policy that conservation is the

equiv. of an

alternative

source of supply

of energy

- Very concerned

about finderskeepers issue

& natural gas

Energy conservation does not seem

to be a major issue.

Has been given

relatively Iittle

attention

Coal conversion &

exploration, nuclear

waste management

& disposal are most

important: conservation a secondary

issue

Conservation considered an imporant issue by

government

Other major issues

are:

nuclear facility

siting

Natural gas availability & curtailment

Energy producer

vs. importer

Energy importer

— Heavily dependent on natural

gas

— Dependent on

supplemental gas

both foreign &

domestic

Georgia is a very

strong energy importer; it imports 97% of

its energy. However

Historically low energy prices & a mild

cIimate make it difficult to convince the

public that conservation is necessary

None

Imports 80-90% of

s energy

Intergovernmental

interaction

(& local interaction

There appears to be

extensive cooperation

among the actors in

California although

CPUC & ERCDC

appear critical of one

other’s actions

All agencies appear

committed to the same

goal of achieving max.

conservation & work

together toward this

goal

There is relatively little

interaction among the

SEO, PSC, and LEG.

PSC focuses on rate

structure and the

Iegislature considers

energy to be of minor

Importance. Energy is

left, for the most part,

[o the SEO

The GMA (Ga. Municipal Association is an

extremely powerful

body in Ga. & GPC is

working w/govt. at the

local level to implement conservation

programs

None

All agree that

intergovernmental

relationships are

cooperative

—— . . . . ..

Policymakfng

responsibility

in State gov’t

Lack of comprehensive

energy policy has

slowed conservation

efforts

Seems that the energy

commission & legislature play the key role!

in formation of energy

policy

— very strong energy

commission

The Ga. SEO (Office c

Energy Resources) we

created by executive

order & maintains a

close relationship w/

the governor Policy

is formulated in the

Governor s office w/

strong dependence

on the OER

Division of Energy

ICC in lead (according

to the ICC and Governor’s Office of

Manpower & Human

Development)

All agencies see the

Energy Policy Council

& the Iowa Commerce

Commisslon as major

actors

SecondariIy. State

geological survey &

council on

environmental

quality

Attitude

toward

Federal program<

Strong belief

among all actors

that the Federal

Government has

not been the impetus for Calif. ’s

aggressive conservation efforts

The State wants

the Fed’s not to

preempt

Lack of understanding by Feds

of State problems

—lack of cooperation with States

on Important Issues In pursuing

conservation

Feds. can play a

role in setting

materials

There exists a

positive attitude

w/in Ga. govt. toward Fed, intervention in State

programs. The

OER expressed

the view that the

Fed’s are flexible w/respect to

their program requirements,

even the’ they

may not address

the most crucial

energy 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 FUNDS

FOR STATE ENERGY CONSERVATION PROGRAMS WILL

TO STIMULATE

TIES
Ch. VII—States and Localities ● 161

missions, which may have many employees,

have generally not devoted themselves to

questions beyond ratemaking. States appear to

have trouble stimulating public support for increased State energy research funding. Most of

the individuals interviewed suggested it would

be imprudent for the State either to duplicate

Federal analytical efforts or the ability of Federal laboratories to perform technical research. This viewpoint has its notable exceptions: California, for example, has established

a large agency in addition to the existing

Public Utilities Commission. The agency has

been charged with conducting research and

developing material, building, and appliance

standards, as well as performing independent

energy forecasting. One of the largest energyproducing States, Texas, has garnered sufficient revenue from energy expiration activities to be able to invest State money in seeking solutions to State energy problems.

Federal funding is a mainstay of State conservation programs. Without this support

many States would be limited in their programs. Most States provide some contribution

to conservation programs; some— like Colorado — rely on Federal funds. Federal legisiaWELL-DEFINED STATE ENERGY

Many States can reach political consensus

on nonenergy matters, such as education, and

present that consensus to Federal decisionmakers. In such cases, it is quite clear what a

State wants from Washington. But with energy,

no State has developed well-defined, comprehensive programs and policies. In some intion has been the prime motivation for the

development of conservation programs in

most States.

Two other aspects of Federal action are of

concern to States: program flexibility and technical assistance. States want Federal programs

to provide sufficient flexibility to accommodate individual State needs. States view

guidelines more favorably than strict standards, for example. States are also receptive to

technical assistance from the Federal Government. Georgia officials suggested that the lack

of technical staff to develop lighting standards

could be accommodated by Federal technical

support. Only in Minnesota was it determined

that DOE had provided someone to assist with

conservation program design. Although Federal assistance in both manpower and funding

are desirable from the State viewpoint, most

State officials interviewed were critical of the

accountability requirements, which involve a

significant amount of paperwork. These officials felt that Federal reporting procedures

were an unreasonable burden given the number of persons and amount of time required to

comply with Federal procedures.

POLICY HAS NOT EMERGED

stances, States have been able to coalesce

their concerns on some (but not all) issues,

such as California’s position on the importance

of liquefied natural gas, Texas’ views on natural gas deregulation, or Pennsylvania’s stand

on coal extraction. But these are the exceptions.

ENERGY PRODUCTION IS THE PREDOMINANT CONCERN

OF ENERGY-RICH STATES

States with large reserves of coal, oil, or gas coal. I n contrast, States that must import enerare far more concerned with production than gy perceive domestic energy resources as a naconservation. Moreover, States with plentiful tional resource, rather than a State commodiresources desire to exploit and maintain State ty. These States, such as Maine and Georgia,

discretion over allocation. Thus, Louisiana want to ensure that domestic energy products

disagrees with policies requiring it to distribute are equitably distributed.

gas out of the State and convert some users to
162 ● Residential Energy Conservation

NEW STATE ORGANIZATIONS ARE EMERGING TO GRAPPLE

WITH CURRENT ENERGY PROBLEMS

Many organizations play a role in State

energy policymaking. These bodies may create

new laws or rules to suit existing authority. The

Governors, legislatures, and public service

commissions are traditional participants in

energy policy formulation. However, these

organizations have accumulated new duties or

new considerations for the conduct of their activities. Others have begun to consider issues

previously left to administrative agencies,

private enterprise, or the Federal Government.

The functional relationships between these expanding and new organizations are not fully

established. Uncertainty may disappear as

Federal policy becomes established, State entities gather more experience, and as issues

become more clearly defined for State, local,

and Federal decisionmakers. Meanwhile, State

decisionmakers may tend to defer difficult

issues for study, or to shift highly sensitive

issues to other decision makers (e. g., the Federal Government). Moreover, State energy policy

will continue to be developed on a case-bycase basis.

INFORMATION FLOW FROM

State Energy Off ices (SEOs) and Public Service Commissions (PSCs) share responsibility for

the conduct and implementation of conservation programs. The PSC utility regulatory

responsibility and the SEO role in residential

energy conservation programs provide a basis

for interaction between these two State agencies. It is not uncommon, however, to find

these agencies communicating very little with

one another. PSCs are addressing the subject

of rate reform and encouraging voluntary participation by utilities in energy conservation.

SEOs, on the other hand, are primarily responsible for developing and implementing energy

conservation programs. Many proposed SEO

programs promote utility involvement in informing customers of conservation options,

providing audits and, in some cases, financing.

The lack of coordination between PSCs and

SEOs can be a problem for utilities as well as

consumers.

FEDERAL TO STATE AND

FROM STATE TO STATE GOVERNMENT REQUIRES ATTENTION

Though Federal agencies gather a lot of information, States have limited access to and

benefit from this information. State officials

reported their inability to secure information

that they believed would be useful. No Federal

effort was identified to discern State needs

and uses for federally derived information.

The same informational problems exist

among States. Thus, each State must address a

problem from scratch, without significant

benefit from previous similar efforts at the

Federal level or in other States. Information

must be disseminated. The Energy Extension

Service and the Solar Heating and Cooling Information Center are examples of ways to do

this. The Extension Service is designed to work

with individuals and organizations to define

problem areas and to provide informational

and technical assistance. The Information

Center is a federally funded repository for information on specific issues available to

anyone who desires it. More trained individuals who can work directly with groups are

needed.
Ch. VII—States and Localities “ 163

●

●

STATE LEGISLATURES HAVE FOCUSED ON SEVEN

MAJOR ISSUES IN ENERGY CONSERVATION

Thermal efficiency standards. States are

required to develop thermal efficiency

standards in order to receive funds for

SECP. In some cases, this may be done ad- ●

ministratively (as in Massachusetts); in

others new legislation is required. Most of

the State effort here has been to adopt

directly or to model one of three model

codes, American Society of Heating, Refrigeration, and Air Conditioning Engineers 90-75, National Conference of

States on Building Codes and Standards,

●

or the Department of Housing and Urban

Development (HUD) minimum property

standards. Twenty-six States have the legislative authority to establish energy conservation standards for new buildings.

Twenty-one States have authority to establish standards for all new buildings,

and one State, Washington, has authority

to establish residential standards only. ●

One more State, New York, has administrative authority to set standards for

homes. Only six States have explicit legislative authority to enforce the standards

when local jurisdictions do not. Enforce- ●

ment has traditionally been a local, voluntary choice. State legislation has been introduced to adopt one of the approved

codes, usually in a modified form as part

of a State building code. I n many cases, ●

proposed thermal efficiency code legislation refines existing law, such as in Tennessee and California.

California has adopted insulation material

standards; several other States have considered similar legislation. States have not

moved ahead strongly and appear to be

waiting for Federal action.

Minnesota and California have enacted

appliance efficiency standards. Pennsylvania and Tennessee require disclosure information to assist consumers in selecting

energy-efficient appliances. Here, too,

most States are deferring to Federal action.

Insulation programs have been enacted in

4 of the 10 States studied. Many other

States have passed similar legislation.

Most of the legislation authorizes State

expenditures for weatherization for lowincome and elderly homeowners. In California, the legislature directed the Public

Utilities Commission to authorize utility

insulation and financing programs.

Tax incentives to encourage homeowner

conservation are being considered by

lowa, Missouri, and Nevada. Alaska has

made a $200 tax credit available since

1977.

Utility rate reform has been a major issue

in most States. Maine, Tennessee, and

California have enacted legislation requiring consideration of conservation rates by

the State PSCs.

Solar energy has been a popular legislative topic. Many States have passed or

considered legislation on sun rights, tax

credits, and solar system testing. Most

States view the use of solar energy as an

element of conservation policy.
164 ● Residential Energy Conservation

FOUR RESIDENTIAL ENERGY CONSERVATION PROGRAMS

SERVE AS THE FOUNDATION OF STATE EFFORTS

States have emphasized four programs in ●

residential energy conservation.

Consumer education –The complexity of

energy issues may be the most significant

obstacle to motivating consumer action in ●

conservation. States have placed much

emphasis on the development of consumer education materials and programs.

Weatherization programs–These programs were initially sponsored by FEA.

Energy audits –Utility-sponsored audits

have been one of the most successful and

widely used programs. Audits have been

instrumental in the encouragement of retrofit insulation activities by homeowners.

Insulation retrofit– State energy office

media presentations and utility bill-stuffers have provided strong motivation for

consumer participation in retrofit programs. Many consumers are financing

their retrofits through the utilities.

State conservation plans have, in many in- Besides these four programs, a few States

stances, provided for the continuation of have studied the need for State-determined

these programs. In some cases, State heating, ventilating, and air-conditioning

funds have been used to augment the Fed- standards and for time-of-sale insulation reeral allocations. Weatherization programs quirements. Neither of these issues has rehave received the most Federal energy ceived sufficient support to warrant State proconservation dollars. grams.

Educating the consumer on energy conservation through brochures and bill stuffers is being undertaken by

States and utilities
Chapter Vlll

FEDERAL GOVERNMENT AND

ENERGY CONSERVATION

Chapter VllI.— FEDERAL GOVERNMENT AND

ENERGY CONSERVATION

Page

Introduction . . . . . . . . . . . . . . . . .. ....167

Department of Housing and Urban

Development . ..................169

Housing Programs Directed to Lowand Moderate-Income Families . . . . . 169

Low-Rent Public Housing . . . . . . . .169

Section 8 Low-Income Rental

Assistance . . . . . . . . . . . . . . . ., 170

Section 236 Rental and Cooperative

Housing Assistance for Lower

Income Families . . . . . . . . . . . .171

Section 202 Direct Loans for Elderly

and Handicapped Housing . . . . . 171

Section 312 Rehabilitation Loans .. 171

Section 235 Homeownership Assistance

for Low- and Moderate-income

Families. . ..................171

Conservation Policies and

opportunities . . . . . . .........172

Public Housing . . , . . . . . . . . . . , .. 172

Section 8, Section 202, and Section

236 Projects. . . . . . . . . . . .. ....173

Section 312 Rehabilitation Loans .. 174

Section 235 Homes . . . . . . . . . . . .174

Page

Mortgage and Home Improvement

Insurance Programs . . . . . . . . . . .. ..175

Section 203(b) and (i) One- to FourFamily Home Mortgage

Insurance. . . , . . . . . . . . . . . . . .175

Section 221(d(2) Homeownership

Assistance for Low- and ModerateIncome Families . . . . . . . . . . .. .175

Section 233 Experimental Housing

Program. . ..................175

Section 207 Multifamily Rental

Housing. . ..................175

Section 221(d)(3) and (4) Multifamily

Rental Housing for Low- and

Moderate-Income Families . ., .. 176

Section 223(e) Housing in Declining

Neighborhoods . .............176

Title I Home Improvement and

Mobile Home Loan Program .. ..176

Conservation Policies and

opportunities . . . . . . . . . . .......176

other HUD Programs . ..............177

Community Development Block

Grant Program. . .............177
Page Page

Acquired Property Management and

Disposition . . . . . . . . ........178

GNMA Guaranteed Mortgage-Backed

Securities and Special Assistance

Mortgage Purchases . . . .. ....178

Research and Demonstration

Projects . . . . . . . . . . . . .. ....178

Minimum Property Housing

Standards . .................179

Conservation Policies and

Opportunities . . . . . . . . .. .179

Community Development Block

Grant Program. . . . . . .........179

Acquired Property Management and

Disposition . ................180

Government National Mortgage

Corporation. . ...............181

Minimum Property Standards .. ...181

Farmers Home Administration . . . . . . .. .181

Section 502 Homeownership Loan

Program. . . . . . . . . . . . . . . . . . . . .182

Section 504 Home Repair Loan and

Grant Programs. . ..............182

Section 515 Rural Rent and Cooperative

Housing Loans. . . . . . . . . . . . . . .. 182

Conservation Policies and Opportunities 182

Veterans Administration. . . . . . . . . . .. 184

VA Loan Guarantee and Direct Loan

Programs. . . . . . . . . . . . . . . . . . . . . .. 184

Conservation Policies and Opportunities 184

Other Federal Departments and Programs .185

CSA Emergency Energy Conservation

Program. . . . . . . . . . . . . . . . .185

DOE Weatherization Assistance

Program. . . . . . . . . . . . . . . . . . . . . .185

DOE Division of Buildings and

Community Systems . . . . . ......186

DOE Obligations Guarantee Program. 186

Department of Defense. . . . . . . .. ...186

Treasury Department: Tax Policy . .. .187

Conservation Policies and

Opportunities . . . . . . . . ...........187

Housing Secondary Mortgage Market and

Regulatory Agencies . . . . . . . . . . . . .187

Regulatory Agencies. . . . . . . . . . . .. .188

Federal Home Loan Bank Board .. .188

Federal Deposit Insurance

Corporation. . . . . . . . . .......188

Conservation Policy and

Opportunities . ................188

Secondary Mortgage Market . ........188

Federal National Mortgage

Association . . . . . . . . . . . . .. 189

Federal Home Loan Mortgage

Corporation . . . . . . . . . . . . . . . 89

Conservation Policies and

Opportunities . . . . . . . . . . . . . . . 189

Energy Conservation and Federal Tax

Policy . . . . . . . . . . . . . . . . . . . . . .190

Present Law (Prior to the Energy Tax Act

of 1978) . . . . . . . . . . . . . . . . . . . . . . .. 190

1 he Effect of Present Law on Energy

Conservation. . ..................191

1 he Energy Tax Act of 1978...........191

Further Changes to Encourage Energy

Conservation Expenditures . . . . . . . . .192

Investment Tax Credit. . . ., . .........193

Rapid Amortization . . . . . . . . . . . . . . . .193

Conservation R&D Activities, Office of

Conservation and Solar Applications,

Department of Energy. . . . . . . . . . . .. 194

Program Objective and Strategy. . . . . 194

Budget Allocation. . . . . . . . . . . . . . . . . .194

Activities of the BuiIdings and

Community Systems Program . ......196

Program Evaluation . . . . . . . . . . . . . . .. 197

Conclusion . . . . . . . . . . . . . . . . . . . . . . .199

Standards and Codes . ................200

Minimum Property Standards. . .......200

Farmers Home Administration Thermal

Performance Standards. . ........202

Model Code for Energy Conservation in

New Buildings . ..................203

Building Energy Performance Standards. 204

TABLES

Page

66. Federal Housing Programs Delivery

Systems. . . . . . . . . . . . . . . . . . . . . .. ..168

67. New Privately Owned and Publicly

Owned Housing Units Started, Including

Farm Housing, 1977. . . . . . . . . . . . . . . . 169

68. New Privately Owned Housing Units

Started by Type of Financing 1977 .. ..169

69. Originations of Long-Term Mortgage

Loans 1977 . . . . . . . . . . . . . . . . . . . . .. 187

70 Net Acquisitions of Long-Term Mortgage

Loans on Residential Properties by

Lender Groups. . . . . . . . . . . . . . . . . . . .188

71. FY 1979 Budget Estimates for Residential

and Commercial Components of DOE’s

Conservation Mission . . . . . . . . . . . . . .196

72. FY 1979 Budget Estimates for DOE

Energy R&D. . . . . . . . . . . . . . . . . . . . . .196
Chapter Vlll

FEDERAL GOVERNMENT AND

ENERGY CONSERVATION

INTRODUCTION

The Federal Government exerts substantial influence on the character of the Nation’s

existing housing and on the location, type, and level of new construction activity. It would be

logical to conclude that Washington is thus a leader in the drive for energy conservation in

residential housing. But the Federal record is a mixed one. The Federal Government has not

developed a coordinated or standardized policy to encourage residential energy conservation. The level of interest in promoting conservation varies by agency and program. Although

there is evidence of greater concern and sensitivity about conservation by Federal agencies

and important additional legislative authority was enacted in 1978, there are opportunities

for accelerating conservation and for developing more systematic agencywide approaches.

This section of the report examines the major Federal agencies involved in housing and

energy conservation and reviews what they are doing or could do to promote conservation.

The important conservation-related programs are described in terms of their key features, authorization, and program activity. How these programs and activities affect lending institutions, the building industry, State and local governments, and property owners—and how

they influence the knowledge and awareness of all of these sectors about energy conservation — is explained.

The Federal Government has been actively

involved in promoting the objective of “a decent home and a suitable living environment”

for all Americans through a variety of housing

programs and regulatory activities. The Department of Housing and Urban Development

(HUD), the Farmers Home Administration

(FmHA) of the Department of Agriculture

(USDA), the Veterans Administration (VA), and

the agencies that regulate lending institutions

are the major Federal agencies bearing on the

housing industry. Federal activities are

directed to lenders, property owners, developers, and lower income tenants and homeowners<

●

●

●

●

●

Types of activity and assistance include:

loan insurance for private lenders;

subsidies to lower income families and

owners of lower income housing projects;

direct Government loans to property owners;

establishment of construction standards;

grants to local Government for housing infrastructure;

●

●

●

●

demonstration projects to pioneer new approaches;

research related to residential buildings;

regulation of housing, financing, and market support activities; and

direct construction and ownership of

housing (by the Department of Defense

(DOD)).

Federal assistance involves a number of Federal agencies and programs, private lenders,

and State and local governments. Table 66 illustrates the fragmented nature of the delivery

system. The types of lenders and agencies differ depending on the type of construction and

the housing occupants.

For all of its regulations and standards–

which do affect general housing activities —

the direct Federal role in housing development

is relatively small in relation to nonfederally

assisted housing. (The exceptions are lowincome housing development and providing

mortgage insurance or guarantees for the

167
168 “ Residential Energy Conservation

Table 66.—Federal Housing Programs

Delivery Systems

Number of field offices/

Type of institution participating institution:

1. Federal agencies

HUD

Area/insuring offices . . . . . . . . . . . . . . . . .

Regional offices . . . . . . . . . . . . . . . . . . . . .

FmHA

County offices. . . . . . . . . . . . . . . . . . . . . . .

FNMA regional offices. . . . . . . . . . . . . . . .

VA

Regional offices . . . . . . . . . . . . . . . . . . . . .

Federal Home Loan Bank Board

Regional banks . . . . . . . . . . . . . . . . . . . . . .

2. State and local government agencies

States

State housing agencies . . . . . . . . . . . . . . .

Local government agencies

CDBG recipients. . . . . . . . . . . . . . . . . . . . .

CDBG recipients proposing housing/

rehab type programs. . . . . . . . . . . . . . . .

Section 312 agencies . . . . . . . . . . . . . . . . .

3. Private institutions (categories overlap)

Lenders

Commercial banks . . . . . . . . . . . . . . . . . . .

Savings and loan associations . . . . . . . . .

Mutual savings banks. . . . . . . . . . . . . . . . .

Credit unions. . . . . . . . . . . . . . . . . . . . . . . .

Title I lenders

Approved . . . . . . . . . . . . . . . . . . . . . . . . . . .

Active. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FHA mortgages

Approved . . . . . . . . . . . . . . . . . . . . . . . . . . .

Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FNMA originators

Approved . . . . . . . . . . . . . . . . . . . . . . . . . . .

Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Very active. . . . . . . . . . . . . . . . . . . . . . . . . .

FHLMC originators

Federally supervised savings & loans....

Active . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GNMA originators

Approved (all are FNMA approved

originators) . . . . . . . . . . . . . . . . . . . . . . .

VA mortgages

76

10

1,760

5

49

12

39

3,200

1,470

200-250

14,697

4,858

473

22,421

10,000

4,600

11,700

7,500

3,000

1,500

400-500

2,048

1,400

1,000

No approval system . . . . . . . . . . . . . . . . . . NA

SOURCE: RUPL Federal incentives for Solar Homes, 1977, table lV.7. National

Association of Mutual Savings Banks, 1977 National Facfbook of

MutualSavings Banks, 197LP. 12.

Iower end of the market.) Publicly owned housing is a small fraction of new construction

starts as table 67 shows.

Most housing is built and financed without

Federal assistance. [n 1977 only one in six

privately owned housing starts were insured by

HUD’s Federal Housing Administration (FHA)

or guaranteed by VA (table 68). FmHa financed

an additional 126,000 units. Federally assisted

housing totaled 435,000 units or 22 percent of

all starts in 1977.

Even though most housing is conventionally

financed and developed without direct Federal

assistance, the Federal Government’s influence on housing is significant and its role in

promoting energy conservation can be important. Whether or not energy conservation is

made a priority concern, Federal housing programs and policies affect residential energy

conservation. In assisting in the development,

maintenance, and financing of housing, the

Federal Government is in a position to influence directly and indirectly the thermal

characteristics of a significant portion of the

existing housing inventory and plans for new

construct ion.

In terms of reducing energy consumption,

the Federal Government has an opportunity

not only to promote energy conservation

through requiring high thermal standards for

newly constructed federally assisted housing

or by retrofitting existing structures in which

HUD has an interest, but it can also promote

the adoption of energy conservation standards

in State building codes and encourage mortgage lenders and secondary market mortgage

purchasers to consider energy costs and the

energy conservation characteristics of residential properties they finance. These latter activities could have a larger impact on the housing sector than many more direct Federal housing support activities. But as the following examination of agencies and programs indicates,

conservation may be given inadequate priority

in Federal programs and in funding decisions.
Ch. Vlll—Federal Government and Energy Conservation “ 169

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

(in thousands)

Type of structure Inside Outside

Total 1 unit 2 units 3 to 4 units 5 units or more SMSAS SMAS

Total . . . . . . . . . . 1,990 1,452 61 —.

61 415 1,378 612

Privately owned. 1,987 1,451 61 61 414 1,377 610

Publicly owned . 3 1 — — 1 1 2

NOTE: Figures may not total due to rounding.

—

SOURCE: HUD Office of Housing Statistics.

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

Number of housing units Number Percent of total starts Percent

FHA FHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Homes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 VA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Projects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Total FHA & VA. . . . . . . . . . . . . . . . . . . . . . . . . 16

VA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Total FHA & VA. . . . . . . . . . . . . . . . . . . . . . . . . 309 SOURCE: HUD Office of Housing Statistics.

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,678

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,987

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

The Housing and Urban Development Act of

September 9, 1965, established HUD. It is the

principal Federal agency responsible for programs concerned with housing needs and improving and developing the Nation’s communities. It operates programs in all parts of the

country except that for rural and small-town

areas served by FmHA. HUD administers a

variety of housing programs, including mortgage insurance programs for private lenders,

rental and homeowners hip subsidy programs

for lower income families, and programs to improve the availability of mortgage credit and

policy research support programs. Local development activities are assisted by the community development block grant program. Through

its promulgation of minimum property standards, HUD sets construction standards for all

HUD-assisted, VA-guaranteed, and FmHAassisted housing.

HUD operates through a field structure of 10

regional offices and 82 field offices including

39 area offices.

The Assistant Secretary for Neighborhoods,

Voluntary Associations, and Consumer Protection is the Department’s principal energy conservation officer. An Office of Energy Conservation has been established. Energy conservation does not appear to be a priority departmental concern and the role of the Energy

Conservation Office is limited. Individual programs have established policies toward energy

conservation but the Department has no overall policy or consistent priority for meeting

conservation goals.

The Senate, Banking, Housing, and Urban

Affairs Committee and the House Banking,

Currency, and Housing Committee handle

HUD’s legislation.

The most important HUD programs are reviewed below. Housing programs designed to

benefit low- and moderate-income families are

discussed first. Subsequent sections discuss

the principal mortgage insurance programs

and other types of HUD programs with energy

conservation potential. Each program’s conservation policy is described, and its level of activity noted.

Housing Programs Directed to Lowand Moderate-Income Families

LOW-RENT PUBLIC HOUSING

This program provides financial and technical assistance to local public housing agencies
170 ● Residential Energy Conservation

(PHAs) to develop, own, and operate lowincome housing projects. Projects are financed

through the sale of tax-exempt local obligations that are guaranteed by the Federal Government. HUD provides annual contributions

to pay the debt service of PHA obligations so

as to assure low rents and maintain adequate

services and reserve funds. Rents, based on the

residents’ ability to pay (25 percent of adjusted

gross income), contribute to the cost of managing and operating the housing.

Additional public housing can be developed

by PHAs acting as the developer, by private developers under the “turn key” program, or

through acquisition and rehabilitation of existing housing.

Two related programs–modernization and

operating subsidies – provide financial support to the existing public housing inventory.

Under the modernization program, HUD

finances capital improvements in public housing projects to upgrade living conditions, correct physical deficiencies, and achieve operating efficiencies and economies. The development cost is amortized through annual Federal

contributions toward the debt service. I n addition, the National Energy Act authorized a

special program to finance the cost of energyconserving improvements for public housing.

HUD also provides operating subsidies to

help PHAs maintain and operate their projects,

retain minimum operating reserves, and offset

certain operating deficits. The operating subsidies are based on the Performance Funding

System, a formula designed to calculate operating subsidies based on what it costs a wellmanaged PHA to operate its units.

Program Activity.–As of December 1977,

more than 4,000 localities had public housing

programs; 1,187,693 units were available for

occupancy, of which about 25 percent were

designated for the elderly. In 1977, an additional 6,229 units were made available for occupancy, and 6,321 were placed under construction or rehabiIitation.

In FY 1978, some 800 PHAs were expected to

participate in the modernization program,

$42.6 million in contract authority was allocated to finance capital costs of $475 million.

In FY 1978, $685 million was appropriated

for 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 assistedhousing program, makes rental subsidies available to help lower income families rent standard privately owned housing. Eligible families

must earn less than 80 percent of the median

income for the area. Thirty percent of the

families assisted must earn less than so percent of the median income for the area.

The program makes up the difference between what a lower income household can afford (no more than 25 percent of adjusted

gross income) and the fair market rent for an

adequate housing unit. Housing thus subsidized must meet certain standards of safety

and sanitation, and rents for these units must

fall within the range of fair market rents as

determined by HUD. This form of rental assistance may be used in existing housing or newly

constructed or substantially rehabilitated

units Project sponsors may be private owners,

profit-motivated, nonprofit or cooperative

organizations, public housing agencies, and

State housing finance agencies.

Local PHAs administer the existing housing

program. They certify eligible tenants, inspect

the units proposed for subsidy, and contract

for payment with landlords whose units have

been approved. Proposals for new construction or substantial rehabilitation are submitted

for approval to HUD or State housing finance

agencies.

Program Activity. -Through December 1977,

reservations had been established for 982,439

units. As of that time, 25,636 new units, 4,341

rehabilitated units, and 327,797 existing units

were occupied. A significant portion of program funds were being used to assist families

living in HUD-financed projects that have been

reacquired or assigned to HUD or are in financial difficuIty.

Authorization.– Section 8 of the U.S. Housing Act of 1937 (Public Law 73-379) as amended
Ch. Vlll—Federal Government and Energy Conservation ● 171

by the Housing and Community Development

Act of 1974 (Public Law 93-383).

SECTION 236 RENTAL AND COOPERATIVE

HOUSING ASSISTANCE FOR LOWER

INCOME FAMILIES

The section 236 program provides mortgage

insurance and interest subsidies to lenders to

reduce the rent that lower income households

pay for housing. No additional commitments

are now being made under the program. Under

section 236, HUD insures mortgages and

makes monthly payments to lenders on behalf

of project owners to reduce mortgage interest

costs to as low as 1 percent. The amount of

subsidy provided is based on the income of the

occupants. Projects are developed by nonprofit, limited-dividend, or cooperative organizations. In 1974 HUD began to pay additional

subsidies to cover the differences between the

tenants’ contribution and the actual costs of

operating the projects.

Program Activity. – In 1977, 561 units were insured. The program has financed more than

393,000 units since its inception.

Authorization. — Section 236 of the National

Housing Act (1934) (Public Law 73-479) as

amended by section 201 of the Housing and

Urban Development Act of 1968 (Public Law

90-448).

SECTION 202 DIRECT LOANS FOR ELDERLY

AND HANDICAPPED HOUSING

The section 202 program for the elderly and

handicapped provides long-term direct loans

to eligible, private, nonprofit sponsors to

finance rental or cooperative housing facilities

for elderly and handicapped persons. The interest rate is based on the average rate paid on

Federal obligations during the preceding fiscal

year. A minimum of 20 percent of the section

202 units must also be assisted by the section 8

program.

A household of one or more persons, the

head of which is at least 62 years old or handicapped, is eligible to live in section 202 projects.

Program Activities.– In 1977, reservations for

32,801 units were made and projects involving

10,322 were started.

Authorization. – Section 202 of the Housing

Act of 1959 (Public Law 86-372).

SECTION 312 REHABILITATION LOANS

The section 312 program provides rehabilitation loans in federally aided community development block grant, urban homesteading, and

neighborhood strategy areas. The program

makes available direct Federal loans to

finance the rehabilitation of residential,

mixed-use, and nonresidential properties. A

loan may be used to insulate or weatherize

properties. Loans may not exceed $27,000 per

dwelling unit or $50,000 for nonresidential

properties. The interest rate is 3 percent except

for families whose income is above 80 percent

of the median family income when the rate is

tied to the Treasury borrowing rate. The loan

term is for a period up to 20 years or threefourths of the property’s remaining useful life.

The applicant must evidence the capacity to

repay the loan and be unable to secure necessary financing from other sources on comparable terms and conditions. Preference is given

to low- and moderate-income applicants.

Program Activity.– Through December 1977,

$430 million of rehabilitation loans involving

80,327 units had been approved. In 1977 alone,

5,787 loans were made, involving 7,942 units

with a total loan amount of $65.3 million.

Authorization. – Section 312 of the Housing

and Urban Development Act of 1964 (Public

Law 88-560).

SECTION 235 HOMEOWNERSHIP ASSISTANCE

FOR LOW- AND MODERATE-INCOME FAMILIES

The section 235 program provides mortgage

insurance and interest subsidies to lenders.

HUD insures mortgages and makes monthly

payments to lenders on behalf of low- and

moderate-income homebuyers to reduce their

mortgage interest costs to as low as 4 percent.

The program originally enacted in 1968 was

significantly revised in 1975.

The homeowner must contribute 20 percent

of his adjusted gross income to the monthly

mortgage payments and must make a downpayment of 3 percent of the cost of acquisition. The income limit for initial occupancy is

95 percent of the area median income. Mort-
172 ● Residential Energy Conservation

gage limits are $32,000 ($38,000 for homes for

five or more persons) and in high-cost areas

$38,000 ($44,000 for homes for five or more

persons).

Program Activity. — In 1977, 6,485 loans were

insured for a total value of $174 million. The

program has financed nearly 485,000 units.

Authorization. — Section 235 of the National

Housing Act (1934) (Public Law 73-479) as

amended by section 101 of the Housing and

Urban Development Act of 1968 (Public Law

90-448).

Conservation Policies and Opportunities

Legislation enacted in 1978 and changes in

program policies have made energy conservation a more important policy concern in

assisted housing programs than it had been

previously. Recent legislative changes and the

conservation policies of the different programs

are discussed below.

The 1978 National Energy Conservation Policy Act and the Housing and Community

Development Amendments of 1978 enacted

important new energy conservation authorities

and funding. I n the Housing and Community

Development Amendments the Secretary of

HUD is encouraged to promote cost-effective

and economically feasible solar energy systems in housing assisted through sections 8,

312, and 202. The Secretary is also directed to

promote cost-effective and economically feasible solar energy instalIations in residential

housing in general, taking into account the interests of the low-income homeowners and

renters. The Act requires that section 312 financed improvements and section 8 substantial rehabilitation projects meet cost-effective

energy conservation standards. The National

Energy Conservation Policy Act included several provisions that affect assisted housing. A

$10 million authorization of contract authority

specifically for the purchase and installation

of energy conservation improvements was authorized. A $25 million grant program was authorized to finance conservation improvements for sections 236, 221(d)(3), and 202 projects that are in financial difficulty as a result

of energy costs. The law requires that the savings resulting from the grants must either benefit tenants in the form of reduced rent or

reduced Federal operating subsidies.

HUD has an opportunity to influence energy

conservation in assisted housing in two general

ways: as a part of the approval of the plans and

specifications of new construction or substantial rehabilitation projects and, once the housing is built, in conjunction with the provision

of annual subsidies that maintain the low- and

moderate-income character of the housing.

Because of the manner in which the program

functions, the opportunities to promote conservation in the section 312 program are more

limited and are explained below.

All assisted housing programs have similar

policies governing the inclusion of energysavings improvements in new construction or

substantialIy rehabiIitated projects with the exception of the section 312 loan programs. All

newly developed assisted housing must conform to HUD’s minimum property standards

(MPS) Improvements financed by section 312

loans must conform to local building code requirements. The conservation requirements of

the MPS have been raised periodically and will

be made more stringent as a result of the

future adoption of the building energy performance standards. The upgrading of the MPS

may increase the capital costs of new projects,

which wilI over the short-run increase the

amount of Federal subsidies required. Over the

long run, however, the energy savings that will

result from improved thermal performance

wiII decrease Federal subsidy requirements.

The opportunities for improving conservation activities and saving energy in existing

housing are significant. HUD policies related

to conservation are in the process of being

upgraded. Some of the specific policies and

issues are reviewed on a program by program

basis.

PUBLIC HOUSING

Concern for energy conservation in the management of public housing projects has been a

distinct and often stated HUD policy. Conservation improvements for existing projects can

be financed through the modernization program, and conservation has been identified as
Ch. Vlll—Federal Government and Energy Conservation “ 173

one of five areas for priority funding. The

extent to which modernization funds are used

for conservation is not known but it appears

that significant numbers of projects involve

some conservation activities. Some PHAs have

funded conservation projects out of their own

surplus funds without looking to HUD for special funding but few PHAs have significant

surplus reserves and most must rely on HUD

for funds to make conservation improvements.

The energy efficiency of the public housing inventory is not known but because of historic

construction cost limitations and the age of

the housing stock it can be assumed that a

large portion of public housing is not energy

efficient. Recently HUD has encouraged PHAs

to install individual utility meters in projects if

it was judged cost effective.

HUD has proposed new regulations that

would expand and extend energy conservation

efforts in public housing and involve PHAs in

systematic conservation programs. All PHAs

would be required to conduct energy audits of

their projects within 3 years. Based on the

audits, PHAs would have to establish a list of

conservation improvements ranked by their

degree of cost effectiveness and to make improvement decisions based on the priority

ranking. The scope of the audits would have to

cover an assessment of certain specialized

types of improvements. The regulations would

require PHAs to buy appliances with the

highest energy efficiency, thermostats would

have to be set at no more than 750 F, water

heaters would have to be set at 1200 F, and individual utility check meters would have to be

installed unless other actions were considered

more cost effective.

Adoption of these requirements could result

in significant energy savings. PHAs currently

spend $400 milIion for utilities and the increase in the cost of utilities has been a major

factor in the large operating losses sustained in

public housing.

Prior to the development of these regulations, HUD and PHAs had not established energy conservation standards and goals. PHAs

had been encouraged to include conservation

projects in their modernization activities but

there was no HUD review of conservation

practices. Increased utility expenses were

simply funded by the operating subsidies program. Operating subsidy funding decisions

were not reviewed in order to determine how

outlays could be reduced by making cost effective conservation improvements to projects.

The conservation potential in public housing

is large for a number of reasons. Many projects

are not now energy efficient. The information

chain between HUD and PHAs is relatively

short. Information can be easily distributed

through established communication channels.

Financing is a relatively modest problem. The

modernization program could become primarily an energy conservation program through

administrative action.

The operating subsidies program could be

reoriented to give greater consideration to

energy conservation. The performance funding

system, the formula used to allocate operating

subsidies, could be revised to provide incentives for conservation. Operating data could

be reviewed to provide a clearer picture of the

energy conservation potential of particular

projects. Incentives could be created for PHAs

to encourage them to give energy conservation

more attention and priority.

SECTION 8, SECTION 202, AND

SECTION 236 PROJECTS

These projects are largely owned by private

nonprofit or limited dividend-for-profit corporations. Because of debt service payments

and operating cost requirements owners have

very limited cash flow or reserve funds available to finance energy conservation improvements. Most sponsors are unwilling to increase

their equity in projects even if the investment

will result in reducing operating costs.

Although the relationship between HUD and

these private housing owners is not as direct as

with public housing agencies, owners should

be sensitized and encouraged to make conservation improvements.

Motivating owners to retrofit their projects

may be difficult. Project owners may not have

an incentive to make conservation improvements because many have little investment or

personal interest in the projects. Because util-
174 . Residential Energy Conservation

ities in many projects are paid by the tenants,

owners have no financial incentive to invest in

conservation improvements.

HUD might use its authority to approve rent

increases to get owners to make conservation

improvements. The extent to which proposed

increases in rent represent utility cost increases could be ascertained and, in situations

where improvements would be cost effective,

such improvements couId be required as a condition of the rent increase. A similar requirement might be made as a condition of receiving section 236 operating subsidies. In granting

operating subsidies HUD does not evaluate the

energy efficiency of projects nor determine the

impact of energy costs on operating costs.

Prior to 1978 there was no funding available to

finance such improvements but the National

Energy Conservation Policy Act authorized a

grant program to assist section 236 and section

202 projects, and loans for conservation improvements, solar energy systems, and installation of individual utility meters can be insured

under section 241 of the National Housing Act.

Although HUD requires reserves for capital

improvements in properties with HUD income

mortgages, and those reserve funds might, in

some cases, represent a source to cover conservation capital expenditures, that resource

has limited potential. Many projects are in

financial difficulty and many do not have adequate reserves. Applying stringent policies

about making conservation improvements

could increase the cash flow problems of projects and couId bring about increased mortgage

defaults and foreclosures.

In the section 8 existing housing program,

HUD does not evaluate the energy efficiency

of the units occupied by program beneficiaries, Assistance is calculated based on prototype utility costs and fair market rent determinations. As a result, actual energy costs are

not considered in approving units and determining subsidy payments in the program.

Although it would pose many administrative

problems, the section 8 housing standard

could be modified to require consideration of

the energy characteristics of units eligible for

assistance or consideration of the actual costs

of utiIities.

Recently proposed regulations would encourage PHAs to provide technical assistance,

work writeups, and cost estimates to landlords

participating in the section 8 existing program

to help them determine what energy savings

improvements wouId be cost effective.

Proposed regulations for the section 8

moderate rehabilitation program would allow

owners to make conservation improvements

such as installing storm windows and storm

doors as long as the improvements are judged

cost effective over the 15-year term of the subsidy contract.

Because virtually all section 202 elderly

projects are on a sound financial footing and

owned by experienced church and union sponsors, retrofitting existing projects offers an excel lent opportunity for saving energy. The area

of prime potential for unrealized conservation

measures in this program relates to projects

built before 1973 when thermal standards were

lower. Separate financing might be required to

enable sponsors to make conservation improvements, but given the nature of the tenant

group and the financial sources of these projects, such financing, especially if backed by a

Government guarantee, should be readily

avaiIable.

SECTION 312 REHABILITATION LOANS

Borrowers can make conservation improvements with proceeds from section 312 rehabilitation loans. The program has not specifically

promoted conservation but consideration is

being given to establishing energy conservation guidelines. Since properties assisted

through section 312 must be brought up to

local code standards, the effectiveness of the

program in terms of saving energy could be improved by the upgrading of local energy conservation codes. Since most loans go to lowand moderate-income property owners there

are tradeoffs that have to be made in establishing standards between additional energy saving and the ability of property owners to afford

the extra costs.

SECTION 235 HOMES

No special conservation policies or opportunities have been identified for the section 235
Ch. Vlll—Federal Government and Energy Conservation ● 175

homeownership program beyond those relating to acquired property disposition and those

which would result from changes to the MPS.

Mortgage and Home Improvement

Insurance Programs

SECTION 203(b) AND (i) ONE- TO FOUR-FAMILY

HOME MORTGAGE INSURANCE

The section 203(b) and (i) program provides

mortgage insurance to lenders for loans to

finance the purchase, construction, or rehabilitation of one- to four-family properties — up to

97 percent of the property value up to $25,000

and 95 percent for the value in excess of

$25,000–for terms up to 30 years. The loans

may finance homes in both urban and rural

areas (except farms). The maximum mortgage

loan on a single-family home is $60,000.

Program Activity.– In 1977, 42,760 new construction and 241,504 existing home loans were

insured for a total value of $7.7 biIIion.

Authorization.– Section 203(b) and (i) of the

National Housing Act (1934) (Public Law

73-479).

SECTION 221(d)(2) HOMEOWNERSHIP

ASSISTANCE FOR LOW- AND MODERATEINCOME FAMILIES

The section 221 (d)(2) program provides mortgage insurance to lenders for loans to finance

the purchase, construction, or rehabilitation of

low-cost, one- to four-family housing. The maximum insurable loan for an owner occupant is

$31,000 for a single-family home (up to $36,000

in a high-cost area). For a large-family home

$36,000 (or up to $42,000 in a high-cost area) is

the maximum insurable loan. Higher mortgage

limits apply to two- to four-family housing. A

downpayment of 3 percent is required, and

mortgage terms are for up to 30 years.

Program Activity. — In 1977, 1,039 new construction and 33,594 existing units were insured for a total value of $736.2 million.

Authorization. – National Housing Act (1934)

(Public Law 73-479) as amended by section 123

and section 221(d)(2) of the Housing Act of

1954 (Public Law 83-560).

SECTION 233 EXPERIMENTAL HOUSING

PROGRAM

The section 233 program provides insurance

for experimental single-family and multifamily

projects involving unconventional housing systems or subsystems without the requirements

that they adhere to normal HUD-FHA processing and MPS requirements. The program is intended to assist in lowering housing costs and

improving housing standards, quality, livability, or durability of neighborhood design

through the use of experimental technology or

experimental property standards. The rationale for the program is to develop experience with a concept before the concept is

written into the MPS. OccasionalIy, cases being considered by FmHA or VA that cannot be

approved under their procedures are referred

to the section 233 program for final action. No

example of this procedure being used to facilitate processing of energy-conservation-oriented loans has been identified.

Program Activity. -Through September 1977,

$8 million in insurance on single-family housing had been issued, and $97 million in insurance on multifamily projects had been

issued. I n 1977, 14 single-famiIy loans were insured at a total value of $399,300. No multifamily projects were insured in 1977.

SECTION 207 MULTIFAMILY RENTAL HOUSING

The section 207 program provides mortgage

insurance to lenders for loans to finance the

construction or rehabilitation of multifamily

rental housing (eight or more units) by private

or public developers. The housing project must

be located in an area approved by HUD for

rental housing and in which market conditions

show a need for such housing. The mortgage

cannot exceed the lesser of 90 percent of value

or unit-size cost limitations. The mortgage

term is Iimited to 40 years.

Program Activity.– In 1977, 2,884 units were

insured at a value of $49 miIIion.

Authorization. — Section 207 of the National

Housing Act (1934) (Public Law 73-479).
176 ● Residential Energy Conservation

SECTION 221(d)(3) AND (4) MULTIFAMILY

RENTAL HOUSING FOR LOW- AND

MODERATE-INCOME FAMILIES

This program provides mortgage insurance

to lenders for loans to finance the construction

or rehabilitation of multifamily (5 or more

units) rental or cooperative housing for lowand moderate-income or displaced families.

The insured mortgage amounts are controlled

by statutory dollar limits per unit, which are intended to insure moderate construction costs.

Section 221(d)(3) mortgages may be obtained

by public agencies, nonprofit, limited-dividend, or cooperative organizations. Section

221(d)(4) mortgages are limited to profit-motivated sponsors. Under section 221(d)(3), HUD

may insure 100 percent of total project cost for

cooperative and nonprofit mortgages, but it

may insure only 90 percent under section 22 I

(d)(4) irrespective of the type of mortgage.

The National Energy Conservation Policy

Act authorizes a grant program to finance the

cost of energy-conserving improvements in

section 22 I (d)(3) projects.

Program Activity. — In 1977, 70,809 units were

insured for a total value of $1.57 biIIion.

Authorization. — Section 221(d)(3) and (4) of

the National Housing Act (1934) (Public Law

73-479) as amended by the Housing Act of 1954

(Public Law 83-560).

SECTION 223(e) HOUSING IN DECLINING

NEIGHBORHOODS

The section 223(e) program provides mortgage insurance to lenders for loans to finance

the purchase, construction, or rehabilitation of

housing in older, declining, but still viable urban areas where conditions are such that normal requirements for mortgage insurance cannot be met. The terms of the loans vary according to the HUD/FHA program under which the

mortgage is insured, but the loan must be an

acceptable risk.

Program Activity.– In 1977, 8,511 loans were

insured under this authority.

Authorization. –Section 223(e) of the National Housing Act (1934) (Public Law 73-479)

as amended by section 103(a) of the Housing

and Urban Development Act of 1968 (Public

Law 90-448).

TITLE I HOME IMPROVEMENT AND MOBILE

HOME LOAN PROGRAM

The title I home improvement and mobile

home loan program provides co-insurance to

lenders for loans to finance major and minor

improvements, alterations, and repairs of individual homes, nonresidential structures, and

mobiIe homes.

Title I loans may be made in amounts up to

$15,000 for a term of up to15 years at an interest rate not to exceed 12 percent. Loans of less

than $7,500 are generally unsecured personal

loans, Under the program HUD reimburses

lenders for 90 percent of any loss under the

program.

Under title 1, mobile home loans may be

made in amounts up to $16,000 and 12 years

on single-module units and up to $24,000 and

15 years for double-module units at any interest rate up to 12 percent.

Program Activity.– More than 32 million

loans, of which more than 60,000 are mobile

home loans, for a value of over $26 billion,

have been insured under the program since its

inception. Program activity in 1977 was

345,579 loans with a value of $1,341 million.

Authorization. — Section 2, title I of the National Housing Act (1934) (Public Law 73-479)

as amended by the Housing Act of 1956 (Public

Law 84-1020).

Conservation Policies and Opportunities

Conservation efforts in HUD mortgage insurance programs occur primarily through the

requirements imposed by HUD’s MPS (in the

case of new construction) and standards of accepted practice (in the case of existing

buildings). These standards are implemented

through the relationships among area office

staff, lenders, and applicants for mortgage insurance. Field staff are sensitized to conservation measures through formalized training of

technical personnel (architects and engineers)

who interact with the field representatives and

applicants. An applicant who wants to incorporate a novel or first-cost intensive system in
Ch. Vlll—Federal Government and Energy Conservation ● 177

new construction can generally secure a full

hearing for his case before local office personnel. If his costs are higher than those generally

accepted for the kind of structure in that particular area, he will be persuaded to modify his

approach to conform to accepted costs. [f his

approach involves a system or a technique not

provided for in the MPS, he may elect preferential processing under the experimental program (section 233 described above).

It is difficult to evaluate the impact the title

I home improvement loan program has on energy conservation since this activity is administered primarily by lending institutions with

HUD-FHA carrying out postaudits of insurance

claims. Although the written instructions to the

lending institutions are broad enough to allow

practically any kind of conservation loan, no

specific attempt is made to generate loans for

conservation purposes. Further, there appears

to be no effort to determine whether such

loans are being made, and if so, what problems

might exist. The 1974 Housing and Urban Development Act specificalIy authorized title I to

insure loans for energy conservation improvements. The MPS do not apply to title I loans

but HUD has specified standards for solar

energy installations. The National Energy Conservation Policy Act authorizes Federal secondary market institutions to buy and selI title

1 loans that financed energy conservation improvements.

The National Energy Conservation Policy

Act has increased the opportunity for insuring

homes and multifamily projects with solar

energy systems. Section 248 of the act authorizes HUD to increase the size of insured loans

under sections 203 and 207 by up to 20 percent

due to increased costs for the installation of

solar energy systems.

The dissemination of conservation information by HUD to the portion of the housing market that relies on HUD mortgage insurance appears potentially effective, despite the number

of participants involved, because of the large

number of HUD area offices, the regular contacts that owners and the housing industry

have with HUD staff and the variety of HUD

publications going to the different parts of the

housing industry. These channels, however, do

not seem to be used as aggressively as they

might be for transmitting information on conservation techniques and opportunities.

Other HUD Programs

COMMUNITY DEVELOPMENT BLOCK GRANT

PROGRAM

The community development block grant

program (CDBG) makes available block grants

to local governments to fund a wide range of

community development activities. Metropolitan areas–generally cities over 50,000 population — and qualified urban counties—those

with populations in excess of 200,000— are

guaranteed an annual grant or “entitlement”

based on needs. Smaller communities compete

for the remaining “discretionary” funds.

Spending priorities are determined at the local

level, but the law enumerates general objectives that the block grants are designed to fulfill, including the provision of adequate housing, a suitable Iiving environment, and expanded economic opportunities for lower income groups. Grant recipients are required to

estimate their lower income housing needs and

address them in the overall community development plan they submit.

Funds may be used to finance or subsidize

housing improvement and rehabilitation.

CDBG rehabilitation assistance is provided in a

variety of forms, including direct loans, loan

guarantees to private lenders, interest subsidies, and loan writedowns to reduce the size

of 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 received

grants, of which 1,300 received entitlement

grants. The amount of funds earmarked for rehabilitation was estimated at $418 million in

FY 1977, and about 1,500 communities expected to have rehabilitation programs.

Authorization. –Title 1 of the Housing and

Urban Development Act of 1974 (Public Law

93-383) as amended by the Housing and Urban

Development Act of 1977 (Public Law 95-128).
178 . Residential Energy Conservation

ACQUIRED PROPERTY MANAGEMENT AND

DISPOSITION

In the course of its activities, HUD acquires

title to many properties it insured or assisted

because of mortgage defaults by property

owners. HUD’s policy is to Iiquidate properties

in such a manner as to assure the maximum

return to the mortgage insurance funds existent with the need to preserve and maintain

residential areas and communities.

Program Activities.– At the end of FY 1978 it

is estimated that HUD will own 63,119 properties of which 25,701 would be houses and

37,418 multifamily units. Total acquisitions for

1978 are estimated at 50,575.

Authorization. — Not applicable.

GNMA GUARANTEED MORTGAGE-BACKED

SECURITIES AND SPECIAL ASSISTANCE

MORTGAGE PURCHASES

The Government National Mortgage Association (GNMA), a corporate entity within HUD,

was originalIy established to provide a secondary market for federally insured residential

mortgages not readily salable in the private

market. These mortgages generally financed

housing for special groups or in areas of

special needs. Prior to September 1, 1968,

GNMA’s functions were carried out by the Federal National Mortgage Association (FNMA).

More recently GNMA was authorized to purchase both federalIy insured and conventional

mortgages at below-market interest rates to

stimulate lagging housing production. These

mortgages are then resold at current market

prices, with the Government absorbing the loss

as a subsidy under the “tandem” plan. HUD-,

FNMA-, or Federal Home Loan Mortgage Corporation (FHLMC)-approved lenders may apply

to sell mortgages to GNMA.

Twenty-five special assistance programs

have been implemented since 1954. Between

January 1974 and September 1977 GNMA

issued $20.5 billion in commitments to purchase below-market interest rate mortgages.

GNMA also guarantees the timely payment

of principal and interest to holders of securities issued by private lenders and backed by

pools of HUD-insured and VA-guaranteed

mortgages. The guarantee is backed by the full

faith and credit of the U.S. Government. Applicants must be FHA-approved mortgagees in

good standing and generally have a net worth

in excess of $100,000.

Program Activity. –GNMA guaranteed more

than $152 billion in mortgage-backed, passthrough securities in FY 1978. In FY 1978 it

made tandem commitments of $2.1 billion.

Authorization.— Tandem plan activities were

authorized by the Housing and Urban Development Act of 1968 and 1969 (Public Law

90-488 and 91-1 52), the Housing and Community Development Act of 1974 (Public Law

93-838), the Emergency Home Purchase Act of

1974 (Public Law 93-449), the Emergency Housing Act of 1975 (Public Law 94-50), and the

Housing Authorization Act of 1977 (Public Law

95-1 28). GNMA’s guarantee authority is authorized by the Housing and Urban Development

Act of 1968 (Public Law 90-44).

RESEARCH AND DEMONSTRATION PROJECTS

Solar Heating and Cooling Demonstration.–

As part of the national solar energy program

administered by the Department of Energy

(DOE), HUD is responsible for a demonstration

of the practical application of solar energy in

residential heating and cooling. The program

includes 1) residential demonstrations in

which solar equipment is installed in both new

and existing dwelIings, 2) development of performance criteria and certification procedures

for solar heating and cooling demonstrations,

3) market development to encourage acceptance of solar technologies by the housing industry, and 4) data gathering and dissemination of demonstrations and market development efforts.

Program Activity. –As of December 1977 the

first four of five funding cycles have been

completed. A total of 325 grants valued at

$13.5 million, involving 6,924 dwelling units,

had been made.

Authorization. – Solar Heating and Cooling

Act of 1974 (Public Law 93-409).

Energy Performance Standards for New Buildings. –The purpose of this research, managed
Ch. Vlll—Federal Government and Energy Conservation “ 179

by HUD, is to develop energy performance

standards for new buildings. It is divided into

three phases: an assessment of how much energy buildings are designed to use; an assessment

of how much less energy buiIdings could be designed to use; and the testing and evaluation

of standards. For analysis purposes buildings

were divided into two major groups — nonresidential buildings, including multifamily

homes, and low-rise multifamily housing, and

mobile homes.

The work is being carried out by the AIA

Research Corporation and its subcontractors.

Data is being collected on 6,254 buildings,

which were constructed in 1975 and 1976 in

different metropolitan areas.

Program Activity. –The Phase I report has

been completed. In November 1978, a draft set

of standards and regulations and target

numbers for different climatic regions were

issued by DOE, and HUD issued draft implementation regulations for comment. After public review and comment, standards will be

promulgated. Approximately $10 million has

been devoted to standards development.

Authorization. –Title I I I of the Energy Conservation Production Act of 1976 (EC PA) (Public Law 94-385).

MINIMUM PROPERTY HOUSING STANDARDS

HUD has established MPS for its programs,

which prescribe minimum levels of design and

construction. The preamble of the National

Housing Act (1934), which established FHA, authorized the agency to promote the upgrading

of housing standards. There are MPS for oneto two-family new construction, multifamily

new construction, nursing homes, and rehabilitation. The rehabilitation standards are more

in the form of guidelines than standards. The

MPS are used not only by HUD but by VA and

FmHA, except that the latter’s standards for

insulation differ somewhat from HUD’s MPS.

(See later section on Housing Standards.) The

construction of all mobile homes is governed

by HUD’s Mobile Home Construction and

Safety Standards.

Anyone may suggest modifications to the

MPS; important changes are issued for comment through the Federal Register.

Program Activity. – Not applicable.

Authorization. — National Housing Act (1934)

(Public Law 73-279).

Conservation Policies and Opportunities

COMMUNITY DEVELOPMENT BLOCK GRANT

PROGRAM

Energy conservation activities are not specifically promoted nor precluded as one of the

eligible activities under CDBG. Localities may

choose to assist virtually any list of projects,

provided there are community improvement

activities and are primarily oriented toward

helping low- and moderate-income families.

Many approaches to energy conservation

could be justified under these conditions; the

most obvious would be an energy conservation

CDBG-funded component tied into a housing

rehabilitation or a public housing modernization program. Because individual communities

select and design the projects they will undertake, HUD has no easy way of knowing to what

extent energy conservation improvements are

current] y encouraged.

The use of CDBG funds for conservation improvements in rehabilitation financing programs has been made explicit in draft regulations issued by HUD. The regulations would

allow CDBG rehabilitation financing to be

used for measures to increase the efficient use

of energy in structures through such means as

installation of storm windows and doors,

siding, wall and attic insulation and conversion, modification or replacement of heating

and cooling equipment, including the use of

solar energy equipment. The regulations also

propose that in considering discretionary

grants for new communities, HUD will give

some weight to proposals that demonstrate the

potential of energy conservation.

The CDBG program could give greater attention to how its funds could be used to save

energy. Better coordination of efforts between

CDBG and the Community Services Administration’s weatherization program could be an

effective approach to promoting residential
180 . Residential Energy Conservation

conservation. The weatherization program

could be administered to dovetail with HUDfinanced rehabilitation projects, thus meeting

particular needs.

Many jurisdictions, especially suburban and

small communities, have had little involvement in HUD programs but may be eligible for

discretionary CDBG grants. The situation surrounding the planning of an application or expenditure of CDBG funds in such communities

may be fluid, and—with encouragement—

they might find the promotion of energy conservation in housing worthwhile. I n this context, energy conservation would appear to be

an ideal activity for the CDBG program to

foster.

In larger cities CDBG funds can and frequently do go to agencies or organizations that

may be particularly interested in energy conservation. These agencies are frequently neighborhood-oriented, close to citizens, and may

be willing to launch energy conservation activities. Such groups could be encouraged to promote conservation. Urban planning activities,

now supported by the block grant program,

could be directed toward articulating the need

for and scope of energy conservation programs.

There appear to be few procedural roadblocks to encouraging conservation in CDBG

rehabilitation programs. HUD and local government personnel do not seem to be opposed

to an energy efficiency emphasis but need encouragement and greater awareness of the

magnitude of the opportunity and potential to

use the CDBG program to achieve energy conservation objectives.

ACQUIRED PROPERTY MANAGEMENT AND

DISPOSITION

Although three Federal agencies (HUD,

FmHA, and VA) administer housing acquired

due to default on Government-financed mortgages, HUD has the largest inventory consisting of both single- and multi-famiIy units.

HUD and VA closely coordinate their activities in administering and disposing of reacquired properties. Field offices determine

whether properties are sold “as is” or rehabilitated and then marketed. For those properties

that are fully repaired before resale, there are

no statutory maximums placed on the dollar

amount of improvements aIlowed per structure. A major goal of HUD, FmHA, and VA, insofar as their reacquired housing inventory is

concerned, is to dispose of the units as quickly

as possible with the highest dolIar return.

In 1978, HUD modified its property disposition policies so that all single-family homes

have to include certain energy conservation

features, or the purchaser has to agree to add

the features to the home as a condition of sale.

The only exceptions to the policy are homes

scheduled to be demolished, properties sold in

conjunction with section 312 financing for

rehabiIitation by the purchaser, and properties

transferred to local governments. Local

governments, however, are required to agree

that conservation measures will be included

in their repair requirements for the homes.

HUD required energy-savings features include

weatherstripping and caulking as needed, replacement of warped or ill-fitting doors and

windows, Insulation of the attic, air ducts, and

hot water heating pipes, and installation of

storm doors and windows in certain climatic

zones. If heating or air-conditioning equipment is replaced, proper sized equipment must

be selected.

Multifamily properties are not required to

conform to a specific conservation standard.

Field offices have discretion in determining

what should be done or in the case of “as is”

sales whether the making of conservation improvements should be a condition of sale.

An energy conservation emphasis by HUD

may, in fact, have greater utility in helping prevent mortgage default and housing reacquisition by the Government than in rescuing properties once defaulted. The major area of concern for HUD (and FmHA) revolves around

multifamily projects that are heading for but

have not yet defaulted and been acquired. A

possible first step might be for the agency to

review its lists of publicly financed low- and

moderate-income housing, using annual reports submitted for the projects as well as

audit reports to identify those projects approaching default. Those projects where
Ch. Vlll—Federal Government and Energy Conservation “ 181

energy cost factors are the major financial

problem could be identified and targeted for

immediate action to improve the energy management situation. While it might or might not

be possible to influence tenant attitudes

toward saving energy, pinpointing such problem projects could encourage project managers to display a greater conservation consciousness. If escalating energy costs are the

prime cause of the financial difficulty and major conservation expenditures are indicated,

secondary financing could be made available

and the financial problems that led to mortgage default might be lessened or eliminated.

This approach may be particularly appropriate

for projects using electric heat.

GOVERNMENT NATIONAL MORTGAGE

CORPORATION

Because all its purchases are federally insured or guaranteed, HUD’s MPS determine

the energy efficiency of housing financed

through GNMA. GNMA would presumably accept whatever increased standards and energysavings priorities were established by HUD.

The National Energy Conservation Policy

Act provides authority to GNMA to purchase

title I insured loans made to low- and moderate-income families to finance the instalIation

of solar energy systems. Such loans cannot exceed $8,000 and total purchases and commitments cannot exceed $100 million at any one

time. The interest rate can range from a rate

that is not less than the average yield on outstanding interest-bearing obligations of the

U.S. Government of comparable maturities

then forming a part of the public debt to the

maximum rate authorized by title 1. The Act

also provides standby authority to buy and sell

title I or section 241 loans made for the purpose of installing energy-conserving improvements.

MINIMUM PROPERTY STANDARDS

Section 526 of the Housing and Community

Development Act of 1974 required that–to

the maximum extent feasible— HUD promote

energy conservation through the MPS. The National Energy Conservation Policy Act required

under the Energy Conservation Standards for

New Buildings Act of 1976 becomes effective. ”

The MPS have been upgraded recently. (See

section on standards.) HUD believes any upgrading of conservation standards requires a

balancing of the need to keep down construction costs and the potential fuel savings that

will result from energy conservation improvements, and tends to look with disfavor on additional requirements that might increase the net

monthly housing costs of borrowers.

FARMERS HOME ADMINISTRATION

The Farmers Home Administration of USDA

provides housing assistance in open country

and rural communities with populations up to

10,000. Its programs are also available in cities

of 10,000 to 20,000 population that are outside

standard metropolitan statistical area

(SMSA) and have a serious lack of mortgage

credit as determined by the Secretaries of

HUD and USDA. The Federal Housing Act of

1949 gave FmHA authority to make housing

loans to farmers; that authority has been

broadened to serve other groups over the

years.

The programs are administered by county

agents through a system of 1,760 county offices in rural areas (usually county seats) nationwide. Unlike HUD, most of FmHA’s programs are not dependent on banks or other approved lending institutions. FmHA makes

loans directly to families or sponsors using

funds secured by issuing Certificates of

Beneficial Ownership placed with the Federal

Financing Bank. FmHA also has the authority

to insure loans made by commercial lenders.

Housing developed under FmHA programs

must be modest in size, design, and cost and

must meet HUD’s MPS.

The Senate Banking, Housing, and Urban Affairs Committee and the House Banking, Cur-
182 . Residential Energy Conservation

rency, and Housing Committee handle FmHA

housing legislation.

Section 502 Homeownership Loan Program

The section 502 homeownership loan program provides loan guarantees to private lenders or direct loans to individuals to buy, build,

or rehabilitate homes. FmHA guarantees 90

percent of the principal and interest on

privately financed housing loans. The maximum repayment period is 33 years. New

homes and homes older than 1 year may be

financed with 100-percent loans. The interest

rate depends on adjusted family income and

can vary from 1 to 8 percent. Although there is

no maximum amount that an applicant can

borrow, the loan is limited by FmHA’s requirement that the housing be modest in size, design, and cost and what an eligible family can

afford for mortgage payments, taxes, and insurance within 20 percent of its adjusted income.

In addition to the use of “regular” section

502 loans for housing repair, families earning

less than $7,000 annually are eligible for

another type of home improvement loan under

section 502. Under the 1:2:4 program a family

can borrow up to $7,000 over a period of 25

years at an interest rate of 1 to 4 percent

depending on family income for improvements

that would bring its home up to standard conditions.

Program Activity. — In 1977, 121,614 loans

were made with a total value of $2,678 m i I I ion.

Authorization. –Title V of the Housing Act

of 1949 (Public Law 81-171) as amended.

Section 504 Home Repair Loan and

Grant Programs

The section 504 home repair program provides loans and grants to low-income homeowners with grants restricted to the elderly to

remove certain dangers to their health and

safety. An applicant must lack the income

necessary to repay a FmHA section 502 loan

and must own and occupy a home that has

conditions hazardous to health and safety. All

loans 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 evidenced by a promisory note. A combination

loan grant is made to applicants if they can

repay only part of the cost; if the applicant

cannot repay any of the cost a 100-percent

grant is made.

Program Activity. –During 1977, 3,843 loans

were made at a value of $9. I million.

Authorization. –Title V of the Housing Act

of 1949 (Public Law 81-171) as amended.

Section 515 Rural Rent and Cooperative

Housing Loans

The section 515 program provides loans to

private, public, or nonprofit groups or individuals to provide rental or cooperative

housing of economic design for low- and

moderate-income families and the elderly.

Funds may be used to construct new housing,

purchase new or existing housing, or repair existing housing for rental purposes. The interest

rate on loans varies from 1 percent to the

FmHA market rate, depending on the housing

sponsor and the incomes of the occupants.

Loans up to 50 years are made to elderly projects; for all other projects the term is up to 40

years. Section 8 assistance provided by HUD

can be used in conjunction with section 515

projects.

Program Activity.– In 1977, 1,509 loans were

made with a value of $647 m i I I ion.

Authorization. --Title V of the Housing Act

of 1949 (Public Law 81-171) as amended.

Conservation Policies and

Opportunities

The FmHA loan programs have no specific

energy conservation goals. They rely on conservation measures that may be integrated into

HUD’s MPS. Innovative approaches are discouraged in the new construction programs. As

with solar applications, any measure requiring

capital costs out of the ordinary must be separately financed and requires special review

and approval from Washington.
Ch. Vlll—Federal Government and Energy Conservation . 183

The National Energy Conservation Policy

Act requires the Secretary of Agriculture to

promote the use of energy saving techniques

to the maximum extent feasible. Such standards should be consistent as far as practical

with the HUD standards and be implemented

as soon as possible.

The FmHA section 504 program (grants and

low-interest loans for modifications to existing

housing) has made an effort to promote the

weatherizing of single-family homes generalIy

wherever local community action agencies

have been aware of FmHA’s program.

Housing assistance of FmHA is very personalized. FmHA, unlike HUD, is decentralized

down to the county level. Applicants always

meet directly with the FmHA county agent and

continue that relationship throughout the life

of the loan. The county agent inspects construction in progress and manages the loan

payment process. County agents have relatively complete authority, provided they deal with

conventional building systems and techniques.

On the other hand, the agents are not technicalIy expert in housing, and agency resources

are limited. FmHA usually has only one architect per State office. Several State offices, in

fact, cover more than one State, further reducing the technical attention that can be

given to individual projects.

Because of the rural nature of the program,

there is heavy reliance on electric heat so that

energy costs are an important concern. However, FmHA does not actively promote certain

kinds of buildings or utility systems. FmHA

reacts to what is proposed by builders, many

of whom previously built single-family homes

only.

Most FmHA financing is direct Government

lending, sometimes at a subsidized interest

rate. Conservation measures that exceed normal construction costs will therefore represent

an additional cost to the Government in the

latter case. FmHA rental projects typically

have only one-third the number of units of a

typical urban project, so larger apartment

builders and architects are not attracted to the

program and technical resources may be

limited.

Several steps could be taken to make housing built through FmHA more energy-efficient.

A much closer utility cost analysis could be required of every rental project applicant to

assure that alI feasible energy options are considered. Although FmHA has issued new insulation thermal efficiency standards, the Washington-level system for handling novel energy

conservation questions and for simplified and

sympathetic processing of such applications

does not appear to have generally penetrated

to the field level within the agency. Field staff

couId be encouraged to combine single-family

loans and grants (section 504) with the weatherization grants administered by local poverty

programs. The importance of energy conservation could be more actively promoted by

FmHA. The county agents could be provided

with more extensive information on conservation opportunities and given more extensive

technical support.

The FmHA State and county personnel appear to be diligent and service-oriented and

will respond to Government policy that encourages conservation if authority and direction are given. The message on energy conservation has so far been muted and very unclear,

with the exception of the recently published

thermal efficiency standards for insulation.
184 ● Residential Energy Conservation

VETERANS ADMINISTRATION

The Veterans Administration provides a variety of benefits to veterans and their dependents, including housing financing assistance on

more liberal terms than is available to the nonveteran. The assistance is in the form of loan

guarantees to private lenders. Where private

capital is not available direct loans are made.

The VA uses HUD’s MPS in evaluating properties.

The VA operates through 49 regional offices.

In the Senate and House, the Veterans Affairs Committees handle VA housing legislation.

VA Loan Guarantee and Direct

Loan Programs

The Veterans Administration provides loan

guarantees to private lenders and direct loans

to veterans to finance the purchase, construction, or rehabilitation of homes, mobile homes,

or condominiums. One- to four-unit owneroccupied properties are eligible for assistance.

The maximum guarantee is $17,500 or 60 percent of appraised value, whichever is less.

There are no limits on the value of properties

that can be guaranteed. No downpayment is

required and loans up to 30 years are eligible

under the guarantee.

Program Activity. — In 1977, 392,557 guarantee commitments were issued with a total

value of $13.9 billion. In addition 2,566 direct

loans were made for a total amount of $63.2

million. Of the total program activity 369,024

involved home purchases, 12,206 refinancing,

2,638 condominiums, 3,459 mobile homes, and

5,230 direct loans sold and guaranteed.

Authorization. – Servicemen’s Readjustment

Act of 1944 as amended, title 30 U.S.C. 1,

chapter 37.

Conservation Policies and

Opportunities

The Veterans Administration has no formal

system for promoting energy conservation in

its home loan guarantee program. VA follows

HUD’s MPS in approving loans for new construction. Existing properties are approved on

the basis of “value.” There is no statutory limit

on the value of structures the agency will

guarantee, but energy-conserving improvements wilI not be recognized if those costs exceed the appraiser’s notion of the “value” of

the structure. As the VA operates its program

through “approved lenders, ” (commercial

banks and mortgage Iending institutions), the

first consideration is the “approved lender’s”

policies. If the lender is liberally inclined

toward financing a house that includes extra

costs due to energy conservation equipment or

materials not fully recognized in the appraisal,

the lender must then be willing to seek VA approval of the particular case. The VA may then

review the appraiser’s statement of “value,”

and the questionable costs may be included

with in the mortgage. However, this is relatively

difficult because the VA housing program is

too thinly staffed for the case-by-case personalized attention this approach requires.

As far as new construction is concerned, VA

follows HUD’s MPS; therefore, any initiative or

the raising of energy efficiency requirements

in this area is up to HUD.

I n the existing home market, the determinations of value are largely made by fee

appraisers — local real estate personnel who

are not Government employees. Reaching

such a large group concerning energy conservation and influencing their thinking may be

best accomplished through the appraisal or

professional organizations and through HUD

channels, as these appraisers usually do FHA

appraisal work, as well.

The Veterans Administration could also play

an important role in educating VA lenders and

originators about the importance of considering energy conservation in lending decisions.

As VA does not guarantee the entire loan, but

just a portion, many lenders may have a different and more conservative attitude toward VA

loans than toward FHA loans. Moreover, VA is

proud of its relatively low default rate and

believes this is due to its conservative policies

in analyzing risk and judging “value.”
Ch. Vlll—Federal Government and Energy Conservation ● 185

OTHER FEDERAL DEPARTMENTS AND PROGRAMS

A number of other Federal departments play

important roles in supporting residential

energy conservation or housing production

and can have a significant impact in promoting

energy conservation. HEW’s Community Services Administration (CSA) administers the

emergency energy conservation program,

which includes research and development activities and a program to weatherize the homes

of low-income families. The DOE’s Division of

Buildings and Community Systems funds a

wide variety of residential conservation

research and demonstration activities. The Department also administers a weatherization

assistance program for low-income families

and is authorized to operate a loan guarantee

program for energy conservation improvements. The Department of Defense is an important developer of residential housing for

the military and is involved in energy conservation demonstrations. The Department of the

Treasury affects energy conservation practices

and housing production and maintenance

through its formulation and administration of

tax and fiscal policies.

CSA Emergency Energy Conservation Program

The emergency energy conservation program of CSA includes a weatherization component, which provides grants to low-income

families (up to 125 percent of the Office of

Management and Budget’s (OMB) poverty income guidelines) for housing repair and

energy-savings i m prove merits that will

minimize heat loss and improve thermal efficiency. Renters as well as homeowners are

eligible. Funds are allocated to States, which in

turn allocate funds to community action agencies (CAAs) or CSA can fund CAAs directly.

Funds may be used for insulation, storm doors

and windows, repairs of sources of heat loss,

and repair of heating systems. Of the funds

granted, 80 percent must be used for materials.

Expenditure limits per unit vary from region to

region and, since November 1977, can range

up to $800. CAAs are encouraged to attempt to

secure labor, supervision, and transportation

costs from other sources; most frequently manpower training funds provided under the Comprehensive Employment and Training Act

(CETA) are used.

The emergency energy conservation program also funds a variety of research and demonstration activities related to energy conservation in various sectors of the economy.

Program Activity. –Approximately 800 CAAs

participate in the weatherization program.

About $39 million was appropriated for weatherization grants in fiscal year 1978. As of

December 31, 1977, 268,252 households had

been assisted. The average grant was approximately $233. The research and demonstration

activities were funded at a level of $24 million

in FY 1978.

Authorization. –Section 222(a)(12) of the

Economic Opportunity Act of 1964 (Public

Law 88-452) as amended.

DOE Weatherization Assistance Program

The DOE weatherization assistance program

is intended to supplement other Federal

weatherization efforts. Grants are provided to

the States, based on climate and the extent of

poverty. The States contract with communitybased organizations, which in turn weatherize

the homes of low-income families, particularly

the homes of the elderly and handicapped. Priority is given to contracts with community action agencies. The income of recipients cannot

exceed 125 percent of the OMB poverty income guideline. Normally, grants cannot exceed $400 per household. Of the funds granted

90 percent must be used for program costs.

Labor, supervision, and transportation are expected to come from other sources, particularly CAAs and manpower training funds provided under CETA.

Program Activity. -The program was initiated in the fall of 1977 and 501 homes were

weatherized in 1977. About 1,000 organizations are participating. The FY 1978 appropriation was $65 million; the FY 1979 appropriation

$199 million.
186 ● Residential Energy Conservation

Authorization. – Title IV, part A, of the

Energy Conservation and Production Act of

1976 (Public Law 94-385). (See chapter III for

current information.)

DOE Division of Buildings and

Community Systems

The Division of Buildings and Community

Systems supports a variety of research projects

and demonstrations designed to: 1 ) encourage

and support the installation of energy-efficient

technologies, 2) develop and commercialize

systems to reduce the dependence on petroleum and natural gas, 3) develop and disseminate information about energy-efficient technologies, 4) promote the use of energy-conserving technologies and practices, 5) develop and

implement energy-efficient standards for new

buildings and appliances, and 6) implement

the weatherization assistance program. Activities include such projects as the testing of

heat pumps, energy feedback meters, and insulation; a nine-city demonstration to improve

the availability of energy conservation improvement financing; distribution of an energy

retrofit manual to homeowners and home improvement contractors; and the encouragement of State adoption of the NationaI Conference of States on Building Codes and Standards (NCSBCS) Model Code (Model Code for

Energy Conservation in New Building Construction).

Program Activity. —The 1979 appropriation

was $79.55 million. In 1978 it was $52.3 million.

Authorization. –The Department was established by the Department of Energy Organization Act of 1977 (Public Law 95-91) pursuant to

Executive Order 12009 of September 13, 1977.

(See p. 194 for discussion of program.)

DOE Obligations Guarantee Program

This program would provide loan guarantees

for a wide range of conservation or renewable

resource activities for existing commercial, industrial, and multifamily buildings. While

multifamily housing is specifically included as

one of the allowable uses of loan guarantees,

the program appears to be only incidentally a

housing program. To implement the housing

portion a system to service the housing market

would have to be established. Guarantees

couId be made if credit would not otherwise

be available.

The program has never become operational.

DOE has had second thoughts about whether

it would be useful. Potential demand for the

assistance is under study.

Program Activity. – None.

Authorization. – Section 451 of the Energy

Conservation and Production Act of 1976 (Public Law 94-385).

Department of Defense

The Department of Defense owns and operates 385,000 units of family housing within the

continental United States. DOD also leases

some units off base, but these leases typically

are short term to handle emergency situations.

Since 1976 DOD has operated a comprehensive energy conservation investment program

(EClP) designed to save energy in all types of

DOD-owned buildings. Approximately $13 million a year has been used for residential retrofit The ECIP requirements for FY 1976-84 are

estimated to be $1.5 bilIion.

Initially retrofit projects had to show a 5-

year payback period to be selected for implementation, but a Btu-saved formula is now being used. In FY 1979 al I projects must average

58 million Btu saved per $1,000 of investment,

but a project designed to save as low as 23

million Btu will be considered. Translated into

a payback formula, this approach results in

consideration of projects with payback periods

as long as 15 years.

The DOD program is goal-oriented and implemented through the chain of command,

and apparently the goals are being achieved.

Information access is regular and there are no

peculiar financing problems because all conservation is funded from Iine item appropriat ions.
Ch. Vlll—Federal Government and Energy Conservation ● 187

Under a DOD solar demonstration project,

DOD has retrofitted four houses.

Also, DOD appears to have a well-conceived

and relatively thorough training program for

upgrading housing managers and sensitizing

tenants in day-to-day conservation measures.

Program Activity. — Retrofit activity has averaged approximately $13 million a year during

the FY 1977-79 period.

Authorization. – Not applicable.

Treasury Department: Tax Policy

The Treasury Department has a significant

impact on the development and maintenance

of the Nation’s housing inventory and investment in conservation improvements through

its administration and enforcement of internal

revenue laws. These laws and their present and

potential impact on energy conservation are

discussed in detail at the end of this section.

Conservation Policies and

Opportunities

Both the CSA and DOE programs directly

support energy conservation. Tax policies are

discussed in another part of the report.

To expand its conservation activities, DOD

might consider using the annual appropriations for debt service dollars instead of direct

expenditure dollars. In that way, it could accelerate the conservation program and realize the

per unit savings of volume contracting at today’s costs rather than future costs, thus accelerating all the energy cost savings into 1

year rather than realizing them incrementally.

These earlier realized energy cost savings, plus

avoidance of contracting cost increases due to

inflation in future years, might be cost effective. Such an approach, which commits Congress to appropriations in advance, would require specific legislative approval but would

not require additional appropriations.

HOUSING SECONDARY MORTGAGE MARKET AND

REGULATORY

Nearly all of the capital for the housing industry is provided by a Variety of private lending institutions. Savings and loan associations,

banks, and mortgage companies are the primary loan originators as shown by table 69.

AGENCIES

Lending practices are affected by the policies

of lending regulatory agencies and the activities of secondary mortgage market institutions.

Table 69.—Originations of Long-Term Mortgage Loans 1977

(dollars in billions)
188 ● Residential Energy Conservation

Regulatory Agencies

Most lenders are subject to Federal and/or

State regulations. The two most important in

terms of their impacts on the housing industry

are the Federal Home Loan Bank Board

(FHLBB) and the Federal Deposit Insurance

Corporation (FDIC).

FEDERAL HOME LOAN BANK BOARD

The Federal Home Loan Bank Board is an independent executive agency that supervises

and regulates savings and loan associations,

which are the country’s major private source

of funds for financing housing. The Board governs the Federal Savings and Loan Insurance

Corporation, which provides deposit insurance

to savings and loan institutions. The Board

directs the Federal Home Loan Bank System,

which provides reserve credit and ancillary

services to member saving and loans. There are

12 regional Federal Home Loan Banks in the

system.

FEDERAL DEPOSIT INSURANCE CORPORATION

The Federal Deposit Insurance Corporation

is an independent executive agency that supervises and regulates certain activities of National and State banks that are members of the

Federal Reserve System and State banks that

apply for deposit insurance. FDIC provides deposit insurance to banks. The management of

the corporation is invested in a three-person

Board of Directors, one of whom is the Comptroller of the Currency. There are 14 regional

FDIC offices in the system.

Conservation Policy and Opportunities

The Federal Home Loan Bank Board has no

specific conservation policy. It is cooperating

with DOE’s attempt to sensitize all financial

institutions to energy efficiency in their residential lending practices. These activities include structured group interviews, discussions

about revision of loan appraisal procedures,

and investigations of different financing incentives.

The Federal Deposit Insurance Corporation

has no apparent energy conservation policy. It

does not believe that it has the authority or

leverage to encourage its members to adopt an

energy conservation policy as it regulates but

does not provide liquidity to banks as does

FHLBB.

Secondary Mortgage Market

A number of Government-sponsored agencies have been established to provide liquidity

to the mortgage market by purchasing loans

originated by private lenders. As noted earlier,

the Government National Mortgage Association (GNMA) purchases selected types of FHA

and VA mortgages. The Federal Home Loan

Mortgage Corporation provides a secondary

market for conventional mortgages made by

savings and loans and other lenders, and the

Federal National Mortgage Association

(FNMA) purchases mortgages originated by approved lenders. The important role of federally

supported loan pools can be noted in table 70,

which breaks down net acquisitions of longterm mortgage loans on residential properties

for 1977. The pools acquired 15 percent of the

one- to four-family loans made and 5.7 percent

of the multifamily loans made. (Comparing

this table to table 68 documents that mortgage

companies particularly make use of the secondary market to selI off loans they originate. )

Table 70.—Net Acquisitions of Long-Term Mortgage

Loans on Residential Properties by Lender Groups

(dollars in billions)

1-to 4-family Multifamily

Type homes projects

Savings and loan

associations. . . . . . . . . . . 84.2 6.5

Mutual savings banks . . . . . 10.3 1.7

Commercial banks. . . . . . . . 31.6 1.4

Life insurance companies. . .6 .9

Non insured pension funds. .1 .1

State & local retirement

funds. . . . . . . . . . . . . . . . . .3 .2

State & local government

credit agencies. . . . . . . . . 2.6 1.0

Credit unions . . . . . . . . . . . . .7 —

Mortgage investment

trusts. . . . . . . . . . . . . . . . . (a) .1

Federal credit agencies. . . . 4.5 1.1

Mortgage pools . . . . . . . . . . 22.5 1.2

State chartered credit

unions. . . . . . . . . . . . . . — .3

Total . . . . . . . . . . . . . . . . . 158.4 14.6

aunder $50 milllon.

NOTE Figures may not total due to rounding.

SOURCE: HUD Office of Housing Statistics.
Ch. Vlll—Federal Government and Energy Conservation ● 189

These secondary market institutions are important to energy conservation not only in that

they provide liquidity to lenders, but because

they employ appraisal and mortgage credit

standards, forms, and policies that are commonly used in the lending industry and have

energy conservation implications. Generally,

appraisal forms have not explicitly (with the

exception of the HUD/FHA forms) required an

estimate of energy costs. No forms require an

appraisal of the energy efficiency of the property. Neither FNMA nor FHLMC requires energy costs to be considered to evaluating a borrower’s credit.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

The Federal National Mortgage Association

is a Government-sponsored private corporation regulated by the Secretary of HUD. It provides supplementary assistance to the secondary market for home mortgages by supplying a

degree of liquidity for mortgage investments,

thereby improving the distribution of investment capital available for home mortgage

financing. FNMA buys FHA-insured, VA-guaranteed, and conventional mortgages. FNMA

makes mortgage funds available through periodic auctions of mortgage purchase commitments on home mortgages in which lending

institutions, such as mortgage companies,

banks, savings and loan associations, and insurance companies, make offers to FNMA,

generally on a competitive basis. It also offers

to issue standby commitments for both home

and multifamily mortgages on proposed construction at approved prices based on its auction prices. The Secretary of HUD may require

that a reasonable portion of the corporation’s

mortgage purchases support the national goal

of providing adequate housing for low- and

moderate-income famiIies.

Program Activity.– In 1977, FNMA made

commitments of $10.92 billion and as of December 31, 1977, had a net mortgage and loan

portfolio of $33.2 billion.

Authorization. – Housing and Urban Development Act of 1954 (Public Law 83-560) as

amended by the Housing and Urban Development Act of 1968 (Public Law 90-448).

FEDERAL HOME LOAN MORTGAGE

CORPORATION

The Federal Home Loan Mortgage Corporation (the Mortgage Corporation) promotes the

flow of capital into the housing market by

establishing an active secondary market in

mortgages for savings and loans and other

lending institutions. It operates under the

direction of FHLBB. The corporation’s purchase programs cover conventional mortgage

loans, participations in conventional mortgage

loans, and FHA-insured and VA-guaranteed

loans. Its sources of funds are borrowings from

Federal Home Loan Banks, the issuance of

GNMA mortgage-backed securities, the issuance of participation sale certificates, and

direct sales from its mortgage portfolio.

Program Activity. –At the end of 1977, the

Mortgage Corporation held $4.1 billion in

mortgages. Outstanding commitments totaled

$5.5 billion.

Authorization. — Emergency Home Finance

Act of 1970.

Conservation Policies and Opportunities

The National Energy Conservation Policy

Act authorized the Mortgage Corporation to

purchase title I loans whose proceeds were

used to finance energy conservation improvements and authorized FNMA to buy and sell

conservation and solar energy-related home

improvement loans.

FNMA and FHLMC have taken some actions

to promote conservation. They have issued a

new home mortgage appraisal form requiring

appraisers after March 1, 1979, to determine

whether insulation exists and is adequate,

whether the home has storm windows, and to

note any special energy features, their costs

and contribution to the property’s value. The

FHLMC has announced that it will purchase

refinance loans with loan-to-value ratio’s of up

to 90 percent rather than 80 percent if its proceeds will be used for rehabilitation, renovation, or energy conservation improvements.

FNMA and FHLMC are in a position to provide leadership to sensitize lenders to energy

conservation considerations in lending. Their

influence on lending practices is substantial
190 . Residential Energy Conservation

because lenders commonly follow secondary

market practices and requirements so that

mortgages will be readily salable if the lender

wants to dispose of them. Their forms are

widely used in the industry. DOE has tried to

encourage these institutions to induce lenders

to require energy-efficiency information on

mortgage applications, to consider energy

costs in approving properties and judging the

credit of borrowers, and to revise their

guideforms and lending guidelines accordingly. A number of actions could be taken to promote conservation. Forms and procedures

could require more explicit considerations of

the energy efficiency of properties. Appraisals

could take into account the actual energy

costs of specific homes. Appraisers could identify and give greater consideration to the existence or absence of conservation improvements. Lenders could be required to use energy

costs as a factor in determining the ability of

the purchaser to afford a home. These actions

would make homebuyers more aware of

energy conservation issues and would provide

financial incentives to purchasers of energyefficient properties.

The Mortgage Corporation is in a particularly strong position to change lender practices

because it can require sellers to repurchase

mortgages if it is determined that prescribed

procedures and practices were not followed in

originating the loan. On the other hand, appraisers and lenders are reluctant to to use information on the past energy consumption of a

home because of the importance of lifestyle

and family size in determining energy costs

and because of potential issues of liability that

might arise.

ENERGY CONSERVATION AND FEDERAL TAX POLICY

Federal tax policy can do much more than it

has to stimulate energy conservation. Taxes

have substantial impact on individual decisions about the construction, rehabilitation,

improvement, and ownership of all kinds of

residential property in the United States. Until

very recently, existing law has not encouraged

expenditures for energy conservation.

The tax laws may be used –as they have

been in a number of similar situations–to affect certain investment decisions and to require certain behavior as a prerequisite to the

availability of a financial benefit. If energy

conservation is accepted as a valid national

objective, long-term conservation goals may

be assisted substantially by changes in the tax

laws that affect the building and improvement

of residential housing.

Some tax law changes have already been

made to encourage energy conservation expenditures, and others could be made to

strengthen the incentives. These changes fall

into two categories: 1 ) Iimiting tax benefits to

cases where energy conservation needs have

been considered, and 2) providing new, specific tax incentives for energy conservation expenditures.

Present Law (Prior to the

Energy Tax Act of 1978)

Under present law, four types of tax law provisions principally affect the construction,

rehabilitation, improvement, and ownership of

residential property. They relate to the deductions available for the payment or incurrence

of: 1 ) interest on indebtedness, 2) real property

taxes, 3) depreciation, and 4) the costs of

operating residential property. Section 163 of

the Internal Revenue Code (the “Code”) provides a specific deduction for all interest paid

or incurred on indebtedness. Section 164 of the

Code provides a specific deduction for real

estate taxes paid or incurred. Section 167 of

the Code is the basic depreciation provision —

providing various methods of depreciation for

the owners of rented residential property, including a special 5-year amortization provision

for the rehabilitation of low- and moderateincome residential property. For certain properties having historic significance, Congress
Ch. Vlll—Federal Government and Energy Conservation Ž 191

added in 1976 a special 5-year amortization

provision for rehabilitation expenditures (section 191 of the Code). With respect to the cost

of operating rental residential property, sections 162 and 212 of the Code provide deductions for all of the ordinary and necessary expenses related to the operation of such property.

Single-family homeowners (whether the

dwelling is a freestanding house, a condominium unit, or a unit in a cooperative) who occupy their own homes may take only the interest and real estate tax deductions. Owners

of multifamily residential property (without regard to the number of rental units) are entitled,

additionally, to the benefits available under

the depreciation provisions and to deductions

for the costs of operating the property.

The Effect of Present Law on Energy

Conservation

The interest and real property tax deductions are both important factors in decisions

made by individuals to build, rehabilitate, improve, or purchase a single-family home. The

interest deduction reduces the real cost of the

mortgage loan. The real estate tax deduction

reduces the cost of providing shelter. The interest deduction indirectly encourages expenditures for capital equipment or structural

changes that conserve energy. For example, to

the extent that the cost of original construction or later rehabilitation or improvement is

financed by a mortgage loan, the interest deduction reduces the real cost of the energy

conservation expenditures. To the extent that

such expenditures increase the appraised

value of single-family homes — and thus, the

applicable real property taxes —the real estate

tax deduction reduces shelter costs.

While neither of these deductions is now

available to renters, an effort is underway to

make the real property tax deduction available. Under a recently enacted New York

statute, a renter would become directly responsible for the real property tax allocable to

his dwelling unit. The Internal Revenue Service

is considering whether this new State law results in the availability of the Federal tax

deduction to renters.

The interest and real property tax deductions are available to the owners of multifamily residential property, with similar

economic effects. I n addition, such owners

have the opportunity to recover the cost of

energy conservation expenditures through

depreciation —ordinarily, over the useful life

of the capital equipment or structural feature

involved. While the depreciation deduction

does afford cost recovery, it does not provide

any greater incentive to make an energy conservation expenditure than to make any other

capital equipment or structural expenditure.

While the knowledge that energy operating

costs will be reduced by such expenditures

may affect certain decisions concerning newly

constructed buildings, those costs have a

much lower priority in rehabiIitation and improvement decisions, particularly when utility

costs are simply passed on to tenants.

Overall, therefore, it may be concluded that

tax laws enacted before 1978 have provided

very Iittle encouragement to the owners of

residential property considering decisions to

make energy conservation expenditures.

The Energy Tax Act of 1978

To stimulate energy conservation expenditures by those homeowners who are not entitled to depreciation, the Energy Tax Act of

1978 provides certain new Federal income tax

credits. The credits may be applied only

against investments relating to a taxpayer’s

principal place of residence (whether owned or

rented), which must be located in the United

States and –to be eligible for the first category

of credits— have been “substantially completed” before April 20,1977.

The new law permits tax credits amounting

to 15 percent of the cost of energy conservation investments of up to $2,000 (i. e., a maximum credit of $300) made during a taxable

year between 1977 and 1985. Eligible investments include insulation, furnace efficiency

improvements, clock thermostats, storm windows and doors, caulking and weatherstrip-
192 Ž Residential Energy Conservation

ping, utility meters that show the cost of service, and any other items “of the kind which the

Secretary specifies by regulations as increasing

the energy efficiency of the dwellings.” Draft

regulations specifically exclude heat pumps,

according to Internal Revenue Service sources.

A second provision of the Energy Tax Act

provides tax credits amounting to 30 percent

of the cost of investments of up to $2,000 in

renewable energy sources, and 20 percent of

up to $8,000 in additional costs of such renewable energy sources (i. e., a maximum credit of

$2,200). The renewable-energy tax credit,

which may be used for newly constructed as

well as pre-1 977 dwellings, may be applied

against an investment in active or passive solar

systems, geothermal energy, wind energy, or

“any other form of renewable energy which

the Secretary specifies by regulation, for the

purpose of heating or cooling such dwelling or

providing hot water for use within such dwelIing.” At this writing, the draft regulations are

expected to prohibit application of the credit

to wood-burning stoves. They are also expected to be restrictive with respect to passive

solar features; they will exclude such things as

greenhouses, draperies, special materials used

in roofing, siding, or glazing, and any construction components that serve structural functions as welI as passive solar functions.

The new credits may be used only to reduce

tax liability, not to gain a refund. However, if

the eligible expenditures exceeds a taxpayer’s

tax liability for the year in which the investment is made, the amount of the tax liability

may be carried over to the next taxable year.

This provision seeks to avoid discrimination

against low-income persons with Iittle or no tax

liability.

Further Changes to Encourage Energy

Conservation Expenditures

Further changes in tax policy would encourage additional energy conservation expenditures. Two broad categories of change deserve

considerate ion:

1. Requiring that certain existing tax benefits

be available only if energy conservation

needs have been taken into account.

2. Providing new, specific tax incentives for

energy conservation expenditures.

Two special provisions of present law allow

owners of multifamily residential property to

recover their costs of rehabilitation and improvement over a 5-year period (rather than

the much longer useful life of the rehabilitated

or improved property).

Under section 167(k) of the Code, owners of

rehabiIitated low- and moderate-income residential property may recover their rehabilitation expenditures — to the extent of $20,000 per

residential unit—over a 5-year period. The

availability of this special provision should be

conditioned upon making energy conservation

expenditures that meet HUD standards. AS the

present $20,000 limitation on rehabilitation expenditures to which this special provision now

applies often does not cover the full cost of

the actual rehabilitation, the present provision

might be amended to provide simiIar treatment for up to an additional $2,000 per unit of

“certified energy conservation expenditures”

made in connection with such a project. Such

a requirement would produce a long-term

budgetary benefit through its reduction of the

long-range increase in section 8 housing

assistance payment costs in section 167(k)

housing projects. It would, thereby, offset the

revenue losses in early years from such a

change in tax policy.

Under sections 191 and 167(o) of the Code,

the owners of substantially rehabilitated historic properties have been afforded the ability

to deduct rehabilitation expenditures, without

limit, over a 5-year period (under section 191)

or to claim depreciation with respect to such

costs in the same manner as would the owner

of newly constructed residential property (section 167(o)). The availability of these special

provisions should also be conditioned upon

making energy conservation expenditures that

meet H U D standards. I n the case of owners

who make an election under section 191, no

new tax incentive is required, as all rehabilitation expenditures are deductible over a 5-year

period. I n the case of section 167(1) elections,

a substantial tax incentive already exists and it

seems improper to increase it at this time
Ch. Vlll— Federal Government and Energy Conservation ● 193

before any experience has been accumulated

concerning its use.

Somewhat different considerations apply to

owners of residential property who use it in a

trade or business, or hold it for the production

of income and are, therefore, entitled to claim

depreciation deductions. In such cases, the tax

laws have been utilized in two ways to encourage particular types of investments — either the

provision of an investment tax credit or the

provision of a form of rapid amortization of

the costs of the investment. Either technique

could be selected to encourage investments in

energy conservation.

Investment Tax Credit

The existing investment tax credit provisions

do not encourage energy conservation expenditures in that they do not now provide a credit

for the cost of buildings (or the structural components of buildings) or for any tangible personal property used in connection with residential property (see section 43 of the Code). It

wouId be necessary to amend the provisions of

present law to provide for an exception for

“certified energy conservation expenditures”

to encourage such investments.

Indirectly, Congress has given such a provision active consideration for expenditures in

connection with the rehabilitation of certain

commercial and industrial buildings. Under

section 314 of H.R. 13511 (which passed the

House and reached the Senate Finance Committee in the 95th Congress), the investment

tax credit would be available for qualifying

energy conservation and al I other expenditures

made in connection with a qualified rehabilitated building. These expenditures include investments in structural components of the

building as well as capital equipment expenditures that constitute personal property.

Having recognized the importance of making avaiIable the investment credit in such circumstances to encourage the recycling of existing commercial and industrial structures, it

would seem equally important to extend such

policy to “certified energy conservation expenses” — including structural components

and capital equipment— in both newly constructed and rehabilitated residential structures. While the definition of “certified energy

conservation expenditures” would require

careful drafting to avoid abuse, the principle is

the same as

credit.

in the expansion of the investment

Rapid Amortization

An alternative tax incentive to the expansion

of the scope of the investment credit provisions is the enactment of a special rapid amortization provision for “certified energy conservation expenditures. ” The technique of a 5-

year amortization provision has been used in

the past to encourage investments in such

areas as soil and water conservation (section

175), fertilizer (section 180), the clearing of

land (section 182), the rehabilitation of lowand moderate-income housing (section 167(k))

and, most recently, the rehabilitation of historic structures (section 191 ). Such a technique

seems particularly adaptable to encouraging

investments in energy conservation.

Congress has, in more recent years, expressed the belief that incentive tax provisions

should not become permanent parts of the Internal Revenue Code, but should be readily

susceptible to review, change, and elimination

as necessities and priorities change. Thus, for

example, the 5-year amortization of expenditures for the rehabilitation of historic

buildings applies only to expenditures made

between June 15,1976, and June 15,1981. Such

provision may be thereafter extended by Congress, as has the section 167(k) rehabilitation

expense deduction for further periods (generally, of 2 years each in duration). A separate 5-

year amortization provision for energy conservation expenditures should be easiIy susceptible to such treatment.
194 ● Residential Energy Conservation

CONSERVATION R&D ACTIVITIES, OFFICE OF CONSERVATION

AND SOLAR APPLICATIONS,

The buildings and community systems program of the Office of Conservation and Solar

Applications is the major division within DOE

that conducts R&D activities related to energy

conservation in the residential sector. Under

this program, there are a variety of subprograms which address specific areas of conservation R&D. The purpose of this discussion

is to provide a general description of the

various subprograms and to address some of

the problem areas in the R&D component of

residential energy conservation.

Program Objective and Strategy

Specifically, the near-term objective of the

buildings and community systems program, “is

to produce total energy savings through the

development and implementation of new technology equal to 2.4 million barrels of oi l

equivalent per day by 1985 by lowering unit

energy consumption 20 percent in existing

buildings and community systems; and 30 percent in new buiIdings, community systems, and

consumer products."1

The program is aimed at increasing energy

utilization efficiency, providing options to

substitute energy forms such as coal for

natural gas, and providing technologies that

decrease the need for energy to satisfy human

needs. AlI activities are directed toward providing these new technologies within an economicalIy and environmentalIy sound framework. Also, activities focus on preparing for

transfer of energy-efficient technologies following demonstration to the residential and

commercial sectors.

The strategy for attaining program objectives is to:

1. encourage and support the installation of

energy-efficient technologies as soon as

possible;

‘Management Review and Control Document, Office

of Conservation and Solar Applications, p. 1, Mar. 23,

1978

DEPARTMENT OF ENERGY

2

3

4

5

6

develop and commercialize systems that

will reduce dependence on petroleum and

natural gas;

develop and disseminate information

about new and existing technologies concerning energy-efficiency utiIization improvements;

promote the use of energy-conserving

technologies and energy-conserving practices in the facilities and operations of the

Federal Government;

develop and implement energy efficiency

standards for new buildings and appliances; and

implement the weatherization program to

meet certain energy needs of low-income

citizens. 2

Another important objective of the buildings and community systems program is to involve nongovernmental groups in research,

development, demonstration, and implementation activities to facilitate the transfer of

technology and information to potential users

as soon as the technology has been demonstrated to be economically and technically

feasible. A majority of the funds that support

these activities are spent with industry on a

large number of cost-sharing projects. The program also works closely with various trade and

non-Federal organizations to obtain comments

from a variety of sources, including the National Governors Conference, the National

Conference of States on Building Codes and

Standards, the League of Cities, Public Technology, Inc., the National Association of Home

Builders, the American Institute of Architects,

the American Society of Heating, Refrigerating

and Air Conditioning Engineers, Inc., and the

National Savings and Loan League.

Budget Allocation

Table 71 presents a summary of budget estimates (in thousands of dollars) by program ac2U 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 Mission

Viejo, Calif., designed to use less than half the energy of

surrounding conventional houses in a research project

supported by DOE, Southern California Gas company, and the Mission Viego Company, a real estate firm

Disseminating information on residential energy efficiency

involves 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, uses

passive solar concepts to provide “natural” heating and cooling. DOE is studying passive solar heating concepts

to determine how well they can work to save energy and money in buildings
196 ● Residential Energy Conservation

Table 71.— FY1979 Budget Estimates for Residential

and Commercial Components of DOE’S

Conservation Mission

(in thousands of dollars)

Activity — FY 1978 FY 1979

Residential & commercial

Buildings & community systems

Building systems . . . . . . . . . . . . . . $ 19,500 $ 17,600

Community energy utilization. . . . 12,800 19,400

Urban waste. . . . . . . . . . . . . . . . . . . 11,000 8,500

Technology & consumer products 9,200 20,350

Analysis & technology transfer. . . 2,590 2,800

Subtotal. . . . . . . . . . . . . . . . . . 55,090 68,650

Mandatory appliance standards . . . . 4,267 3,750

Other commercial. . . . . . . . . . . . . . . . 200 500

Weatherization . . . . . . . . . . . . . . . . . . 64,166 198,950

Capital equipment . . . . . . . . . . . . . . . 170 1,200

Total, residential & commercial. ... .$123,893 $273,050

Estimate, residential & commercial, FY 1979. . . . $27,050

Estimate, residential & commercial, FY 1978. . . . 123,893

— INCREASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . $149,157

tivity for the residential and commercial component of DOE’s conservation mission.

As the table indicates, the FY 1979 budget

authority for $273,050,000 represents an increase of $149,157,000 from FY 1978. Part of

this increase occurs in the community energy

utilization program where projects are moving

from the feasibility and design stages to

demonstration. However, most of the increase

occurs in the weatherization program to provide for weatherization of approximately

857,000 homes. The program essentially represents a balance between efforts which start to

accumulate savings in the near-term (i. e., architectural and engineering systems, consumer

products, weatherization, and utility retrofit

programs) and the mid-term (i. e., community

systems, urban waste, and technology development).

Table 72 represents a comparison of FY 1979

budget estimates for a variety of energy R&D

activities within DOE.

Table 72.—FY 1979 Budget Estimates for

DOE Energy R&D

Activity FY 1979

Energy conservation R&D . . . . . . . . . . . . . . . $707,101,000 

Fossil energy R&D . . . . . . . . . . . . . . . . . . . . . 576,888,000

Solar energy R&D . . . . . . . . . . . . . . . . . . . . . . 441,900,000

Geothermal R&D. . . . . . . . . . . . . . . . . . . . . . . 156,200,000

Fuels from biomass . . . . . . . . . . . . . . . . . . . . 42,400,000

Fusion R&D. . . . . . . . . . . . . . . . . . . . . . . . . . . 348,900,000

As the figures suggest, conservation R&D remains a high priority in the Federal energy

agenda.

Activities of the Buildings and

Community Systems Program

Building Systems. –The building systems objective is geared toward development and

commercialization of energy-efficient design,

methods of construction and operation, and

the development of standards for new and existing residential and commercial buildings.

For the residential sector, R&D attempts to

provide cost-effective and acceptable technologies for retrofit of existing buildings (e. g., applications of revised mechanical ventilation

and redesign of existing equipment to improve

overall seasonal performance). Another major

priority is the improvement of installation

practices for mechanical equipment and the

building envelope.

Community Systems.– There are three major

thrusts to the community systems program: 1 )

integrated systems, 2) planning design and

management, and 3) implementation mechanisms. All of these programs are moving from

feasibility studies and initial design into

demonstration activity, and the work is being

performed cooperatively with other programs

within other Federal agencies.

Some of the technological options of the integrated systems focus on energy sources

(coal, solar), scaling (small to large), kinds of

applications (new and retrofit), and targets of

implementation (municipalities, utility companies, etc.).

The planning, design, and management activities focus on the development and testing

of concepts, tools, and methodologies that

identify and define relationships between urban forms and functions and energy utilization. For example, many case studies are being

conducted on the tradeoffs between energy

conservation measures and other community

services, Iifestyles, and economic activities.

The implementation activity is intended to

provide data and develop strategies for implementation of the community energy systems
Ch. Vlll—Federal Government and Energy Conservation ● 197

and energy-conserving community design activities. Projects include market analysis for

the integrated community energy systems, as

well as development of financial strategies and

management techniques for minimizing capital and operating costs and maintenance of

community systems.

Technology and Consumer Products. -This

activity strives to develop and encourage the

commercialization of more energy-efficient

new technologies in heating, cooling, and ventilating equipment and systems; lighting and

windows; appliances; building controls; and

diagnostic equipment for determining energy

efficiency in buildings. Major activities are

directed at the development and commercialization of advanced heat pumps and the development and testing of improved oil- and gasfired furnace components and systems. Other

projects include the development and commercialization of high-efficiency gas- and oilfired space-conditioning systems and the development and testing of an integrated highefficiency space heating/domestic hot water

heating system. Laboratory investigation and

testing will continue to measure various properties of insulation materials.

Analysis and Technology Transfer.– The goal

of this activity is to encourage early acceptance of new means for improving energy efficiency through the development of information and technology transfer methods, to conduct research that will encourage consumer

purchase of more energy-efficient products,

and to encourage more energy-efficient practices in the home. Major effects are the provision of information on savings for energy-efficient products, information on Iifecycle costing and the cost effectiveness of energy-efficient products, and the provision of information on new technologies to the builder, homeowner, and manufacturer.

Appliances. –The major objectives of this

program include the development of test procedures, minimum efficiency standards, and

certification methods for a variety of appliances that include furnaces, central and room

air-conditioning, water heaters, etc. I n addition, a consumer education program is underway to introduce the use of Iifecycle costing

concepts in comparative shopping for more efficient appliances.

Weatherization Assistance Programs,— This

activity provides grants to the States for

weatherizing the homes of low-income persons, particularly the elderly and handicapped.

At least 90 percent of the grant funds are expended on weatherization materials and related costs. In 1979, approximately 857,000

homes will be weatherized.

Utility Insulation Service.– This effort is

designed to guide the programs of insulation

service that will be offered to the customers of

large electric and gas utilities, and home heating suppliers, as directed by the National

Energy Act of 1978. Implementation funding to

State regulatory agencies, intervention in some

hearings, and technical assistance to State

agencies and utilities is involved.

Other Programs.– Other activities include

the Energy Extension Service, designed to provide information and technical assistance to

building owners and renters on reducing energy use; the State Energy Programs mandated

under EPCA and EC PA; and the schools and

hospitals program that assists these institutions in retrofitting buildings.

Program Evaluation

Activities in DOE represent a broad approach covering a number of technologies, institutional factors, and surveys of consumer attitudes. The R&D program employs extensive

analytical techniques to choose priorities, including cost/benefit calculations and projections of energy savings from proposed new

technologies based on a sophisticated engineering-economic model. Despite this broad

approach and strong analytical base, there are

significant problems that are a result of both

the general R&D philosophy in the executive

branch and program operation.

Problem Areas in Conservation R&D.--This report has identified four areas with shortcomings in the current DOE conservation program. First, there is too much concentration on

projects for the short term (5 to 15 years). Second, there is an insufficient connection be-
198 ● Residential Energy Conservation

tween supply R&D programs, particularly

solar, and the goals of the conservation program. Third, there is an inadequate amount of

basic R&D relevant to increasing energy productivity. Fourth, there is no clear relationship

between the R&D activities and the policy and

other program (weatherization, energy extension service, etc. ) portions of conservation.

1. Time Horizon. As stated earlier, the current buildings and community systems R&D

program relies very heavily on sophisticated

cost/benefit analyses and energy use projections to determine its direction. While this has

merit in choosing between projects of nearterm (5 to 15 years) application, it tends to bias

against choice of anything that may have longterm (25 to 50 years) potential. The reason is

that the only way to calculate the payoff of a

project under this procedure is to estimate its

likelihood of success, its use, and the amount

of energy it wilI save. Such estimates became

harder and harder the more speculative a project and therefore tend to be more readily dismissed when making funding decisions.

A certain portion of the research budget

devoted strictly to more speculative proposals

would help solve this problem, if it was based

on a review process that did not have the shortterm bias built into the one just described. For

example, the appropriate technology program

not within the buildings and community systems division is designed to take some

chances; the principal technical requirement is

that the proposal not violate the laws of

physics. Beyond that, the review process specificalIy goes after innovative and novel proposals. The procedure involves considerably

more risk than the standard approach, and the

frequency of failure will naturally be high.

Change is needed because near-term technologies, such as the direct-fired heat pump, will

be undertaken by private interests as energy

prices continue to rise. The acceleration of

technology development, which is supposedly

the main reason for Government involvement

with such R&D, may be of marginal value in

the residential sector, particularly when the inherent difficulties of commercialization are

considered.

There is currently very little incentive to explore more efficient ways to use energy that

will not be economical for decades. This could

involve technologies requiring substantial

modification of existing construction practices, extensive use of solar or other onsite

generation, or new lighting, water heating, or

space-conditioning methods. Work in these

areas is not Iikely to gain support in the private

sector, because the risk is so great and the

potential payoff too far in the future.

2 Relation to Supply R&D. One of the principal guidelines of an R&D program on demand technologies is that it should address the

likely energy supply options. Currently, national research efforts are focused on synthetic fuel production from coal and biomass,

solar thermal and electricity, geothermal, and

electricity from nuclear and thermonuclear

resources. All of these options will be expensive, and therefore it is important that new

ways be found to use these sources efficiently.

This coordination of goals is not apparent in

the conservation R&D program. In particular,

there is little work going on to explore appliance technologies, building construction

techniques, and lighting schemes that would

make use of solar energy in novel ways. Most

of the work is directed toward conventional

heating and cooling methods with solar replacing fossil combustion or electricity. Are there

photochemical processes or passive solar designs that would dramatically reduce the

amount of solar energy that needs to be collected, and therefore collector and storage

costs? The OTA solar report indicated community solar energy systems couId be economically attractive even using today’s technologies if conventional energy prices continue to

rise. Might not there be novel community

designs and/or construction techniques that

could reduce material costs for such systems?

Although somewhat speculative, these proposals offer the potential for large economic

benefits several decades from now. Similar

arguments can be made about exploring ways

to use expensive synthetic fuels, direct heat

from geothermal steam, and electricity energy.

To reiterate, the important points are that

long-term, more speculative research should

receive greater emphasis, and that it should be
Ch. VIII-- Federal Government and Energy Conservation ● 199

directed at the “inexhaustible” energy sources

that will eventually be used.

3. Basic R&D. Basic R&D in the conservation

sector should be increased. Areas of importance include materials research for thermal insulation, optical coatings for windows,

energy storage, air handling, and distribution

to increase the overall efficiency of heating

and cooling systems, and electro- and photochemical processes for more efficient use of

electric and solar energy. Some work is underway in optical coatings and energy storage

materials, but is only loosely connected to the

residential conservation program, thus reducing the chances for application of results.

Other basic research areas concern nonhardware issues. For example, what constitutes

comfort? A better understanding of the psychological mechanisms could suggest more efficient ways of delivering or removing heat. As

suggested in the environmental section, indoor

air quality may become very hazardous as

buildings become tighter. Research on chemical pollutants that may be released in the

home and ways to control them could be very

useful in removing a potentialIy severe constraint to energy conservation.

More work needs to be done to learn how

people actually use energy in their homes. A

better understanding of use patterns is important for identifying areas for governmental action in education and information. Technological decisions must be initiated not solely on

the basis of technical feasibility, but on

whether or not consumers will accept and use

the technology.

The basic R&D efforts described here do not

necessarily have to fall within one division of

conservation for an effective program to exist.

What is important is that basic conservation

research be part of a comprehensive plan that

is guided in part by the principals discussed

above. Basic R&D is an essential part of any research effort that attempts to develop longterm, innovative technologies.

4. Relation to Conservation Policy and Programs. Under the Assistant Secretary for Conservation and Solar Applications in DOE there

are several programs directed at increasing

energy conservation in buildings. These include the weatherization and State energy

management programs, and the energy extension service. I n addition, the Assistant Secretary for Policy of DOE is charged with Federal

energy conservation policy. The issue here is

the manner in which conservation R&D is used

in carrying out the programs and developing

policy. Currently there is no indication that

this is done in a systematic fashion. The programs offer a unique opportunity to test new

results coming from the near-term aspect of

the R&D programs. If the latter had a specific

goal for assisting Federal conservation programs, rapid commercialization of new technologies and more cost-effective conservation

assistance could be possible.

The policy area is where the link between

supply and demand R&D can be best made. By

seeing to it that R&D on demand technologies

associated with long-term supply options is

given top priority, greater emphasis could be

placed on long-term research in conservation.

The policy could then be directed at encouraging the most economically efficient energy

systems rather than just supply options. If R&D

results identify technologies that use “inexhaustible” resources in novel and efficient

ways, a national energy policy that better accounts for the contribution of conservation

R&D can be outlined. The philosophy here is

that there might be cases where development

of new end use technologies could lower operating costs below that by improvement in energy production. For example, consider a home

using solar energy to supply its needs. New

construction techniques and materials might

lower its energy requirements and improve the

economics well below that resulting from any

improvement in the energy production and

conversion technologies. If policy is designed

to encourage only the latter, however, the

most economic solution would be missed.

Therefore energy conservation R&D should be

a major part of policy design with particular

emphasis on looking for means to use the longterm energy source most effectively.

Conclusion

These problem areas appear to be more related to the general philosophy of conserva-
200 . Residential Energy Conservation

tion apparently held by administration officials rather than to the management of the

residential R&D programs. An excessive concern for quick results has contributed to this

posture. Part of the responsibility lies with

OMB. It is in OMB that the decision to pursue

near-term R&D is most prevalent. This rests in

part on the need for OMB to maintain control

over the Federal budget. As we have argued,

however, if energy prices continue to rise,

many of the DOE projects wouId become attractive enough to be undertaken by private interests.

As a result, there is probably a considerable

amount of shifting that could take place

within the program’s current budget Iimits and

still meet the objectives discussed above. This

would seem to satisfy the OMB goals of budget restraint while simultaneously emphasizing

the important long-term and basic research

needs of residential energy conservation.

STANDARDS AND CODES

Building codes represent an obvious mechanism for improving the energy-use characteristics of new housing. In light of the growing

awareness of concern over energy cost and

availability, the Federal Government, both

Congress and the executive branch, has taken

an increased interest in codes. This section

reviews the current level and extent of Federal

activities that influence building codes with

regard to energy. Because of congressional action, this is an area of much activity and controversy. The effort of the Federal Government

to directly influence local building codes represents a new role in Federal-State-local relationships and raises many questions of equity,

compliance, measurement, regulatory philosophy, and enforcement.

The energy-consciousness of the postembargo era triggered a number of congressional initiatives for encouraging greater

energy efficiency in housing. Agencies with

housing responsibility also turned to standards

and codes. Building codes are adopted by

States and/or localities, normally in concert

with codes endorsed by one of the three national code groups. Without exception, the

principal responsibility for enforcement lies

with localities. (1 n some States, the State may

act if localities do not.) Thus, the Federal

Government does not write building codes.

The Federal Government does, however, determine standards for participation in a number

of federally funded housing programs. These

standards have often influenced codes and

practice.

Building codes have been used for nearly

4,000 years, to protect the safety and health of

occupants. The earliest known example is the

Code of Hammurabi, which dates from about

1750 B.C. Codes apply to new structures (or to

very substantial alteration of a structure) and

define acceptable materials and methods of

construction. In this country, the emphasis of

most codes has been to ensure a structurally

sound building, reasonably resistant to deterioration over time, and reasonably protected

against sanitation and fire hazards.

Two principal Federal programs have influenced building codes for a number of years: a)

Minimum Property Standards and b) Building

Energy Performance Standards.

Minimum Property Standards

The Department of Housing and Urban Development’s MPS define and describe the

minimum levels of acceptability of design and

construction of housing built under HUD mortgage insurance and low-rent public housing

programs. Although some of the requirements

permit flexibility of design, the bulk of the

standards are specified. In other words, they

tell a builder what materials and methods are

acceptable. This type of standard is known as a

“prescriptive” standard, and is the type of

standard of code in widest use today in the

homebuilding industry. Designers, builders,

and local code enforcement officials can refer

to MPS and be certain that a given design or

building is in compliance.
Ch. VIII—Federal Government and Energy Conservation ● 201

Minimum Property Standards are mandatory

national standards that cover one- and twofamily dwellings, multifamily housing, and certain care facilities insured or financed under

HUD or FHA programs. MPS are also used to

determine loan eligibility by VA and, until

recently, FmHA.

Minimum Property Standards grew out of

the National Housing Act of 1934. The purpose

of that Act was to encourage improvement in

housing construction and provide a base level

of acceptability for mortgage insurance as the

country began the great, federally supported

housing expansion. Since that time, standards

have been developed for a variety of housing

types and a variety of factors. However, it is

only recently that the use of MPS as a direct

method to encourage energy efficiency has

been perceived as a policy tool.

A decentralized network of HUD field offices (approximately 82) administers MPS in

which architectural analysis and construction

inspections are performed by architectural and

engineering personnel. Working drawings and

plans are reviewed and checked for compliance, and inspections are made during construction. If the construction does not meet

the standard, Federal funding can be refused

or withdrawn. This system of inspections has

served to ensure a high level of compliance

with MPS. It requires a substantial amount of

time.

In 1977, about one in six private housing

starts were insured by HUD’s FHA or guaranteed by VA.

Over the past 2 years, HUD has been involved in upgrading MPS in response to new

emphasis on energy conservation. The alterations to the standards have been controversial,

and as of February 1979 final action was not

complete.

The revised MPS reflect a decision to determine the acceptable level of certain measures

in houses—those measures that reduce heating or cooling requirements —on the basis of

costs over a 30-year period; the normal life of

the mortgage. In addition to this time period,

the DOE projected fuel costs are used. The use

of these price projections means that MPS as

altered will be a much more energy-efficient

standard than those currently in use.

HUD employed a National Bureau of Standards computer model that uses a prototypical

house with 15 different possible shell modifications to reduce heat transfer. The modifications include various levels of attic, wall,

and floor insulation, double- and triple-glazing, and storm doors. The prototypical house

has an unfinished attic and an unheated crawl

space below the slab. The National Bureau of

Standards load determination program

(NBSLD) was used to calculate heating and

cooling requirements of the house with various

modifications for 14 cities with different

climates. Cost data was determined by present

market levels and fuel prices were determined

by DOE price data for 10 regions. (These prices

assume increases until 1990 and a constant

real price level thereafter. ) A 6-percent inflation rate is assumed throughout, and a IO-percent discount rate. The computer program

combines all the variables, and calculates a

cost-benefit figure for each modification, in

each location, based on a 30-year Iifecycle

cost. Separate calculations are made for electric resistance heat, gas heat, oil heat, and heat

pumps. Results indicate whether each modification is cost-effective (savings over time exceed costs) or not.

The resulting new MPS thus attempts to balance costs, benefits, climates, and available

technology to reach an optimum level of reasonable energy conservation for new housing.

There are three pathways for compliance with

the standard.

The first method is the “component performance” approach, which defines the thermal transmission (U-value) through each of the

components in the buiIding. This approach sets

a target for heat transmission through any

component and allows flexibility in selecting

materials. For example, a certain level of heat

transfer for wall insulation, etc. Most homebuilders are expected to select this approach.

The second method is called an “overall

envelope approach;” the overall thermal transmission of the dwelling must meet a stated

value but components can be combined and
202 . Residential Energy Conservation

manipulated within the structure. For instance,

increased levels of insulation in the walls

might be used to compensate for high heat

losses through large window areas. This approach is the same conceptual method used in

the ASH RAE 90-75 standard (see Model Code,

below) but the standards as drafted appear to

be more stringent. Some builders are expected

to use this approach, particularly those building innovative housing and multifamily units.

Masonry industry builders generally favor this

approach, as it provides greater leeway for

compliance and suits the particular needs of

masonry structures.

The third avenue of compliance is “overall

structural performance.” Builders using this

approach must demonstrate that they can

meet or improve on the energy uses determined by either of the other two methods.

Builders of manufactured housing and some

masonry buiIders are expected to favor this approach.

The revised MPS are expressed in two forms;

one for homes heated by electric resistance

units and one for homes using heat pumps or

fossil fuels. Approximately 49 percent of HUDfinanced buildings are estimated to use electric resistance heat, close to 50 percent are

thought to use natural gas and only 0.5 percent

use oi1.

The new MPS will clearly mean an increase

in first-costs as a result of increased amounts

of insulation, more use of double- and tripleglazing, and possible increases in labor costs.

They are designed, however, to effect a net

savings in total costs through reduced energy

bills, and to lower the consumption of fossil

fuel.

A number of conservation groups, represented principally by the Natural Resources

Defense Council, have objected to various

aspects of the standards as not sufficiently effective in light of the necessity for lowering

consumption of fossil fuel. The homebuilding

industry has objected on the basis that the new

MPS will be overly stringent, require levels of

thermal protection that are not cost-effective,

and will present technical difficulties for

builders. (The National Association of Homebuilders has argued that conservation investments should payback over a 7-year period,

the time in which most homes are resold.)

Farmers Home Administration Thermal

Performance Standards

The Farmers Home Administration adopted

MPS in 1971 as the minimum design and construction criteria for all residential structures

constructed or purchased with FmHA loans or

grant funds. At that time, FmHA found MPS

provided adequate protection for its low- and

moderate-income borrowers. However, escalating fuel costs and other economic pressures

caused many FmHA borrowers to experience

serious financial difficulties in the 1970’s.

There was an increase in the rate of foreclosures, abandonments, and voluntary transfers of FmHA housing units. Given what was

then perceived to be HUD’s lag in revising

MPS, FmHA decided to act independently.

I n March 1978, FmHA issued its thermal performance standards. The goal of the standards

is to conserve energy and to control the

heating and cooling costs for its borrowers.

The economic rationale behind the thermal

performance standards closely parallels that

used by HUD for the revised MPS. However,

FmHA elected to standardize its basic energy

costs at 80 cents per 100,000 Btu delivered,

and did not adopt a dual fuel standard, as

most of their units (85 percent) are serviced by

electric resistance heating.

The standards are more stringent than the

proposed new MPS for fossil fuels, but are approximately the same for electric resistance.

Higher levels of insulation are required in the

ceilings, walls, and floors of dwellings. The

choice of compliance paths is the same as for

MPS – component performance, envelope performance, or overall structural performance.

Criticisms of the 1978 standards have been

similar to the criticisms of MPS; conservation

and some consumer groups have argued for

strong standards to protect residents against

rising costs; builders and some consumer

groups have argued for keeping first costs low.

One of the major differences between the

FmHA and the MPS programs is the approval
Ch. VIII—Federal Government and Energy Conservation ● 203

process. FmHA activity occurs primarily at the

county level; some 1,800 county offices serve

the national constituency of the agency. Applicant interviews, review of plans, appraisals,

and inspections are provided from the county

off ice.

The Farmers Home Administration accounts

for approximately 6 percent of the annual national housing starts. With the adoption of the

new standards, FmHA estimates that the number of new housing starts for FY 1978 will decrease by up to 12 percent.

Model Code for Energy Conservation

in New Buildings

In 1975, Congress enacted the Energy Policy

and Conservation Act (Public Law 94-1 63). One

of the numerous provisions of the measure is

an authorization for funds to assist States in

reducing the growth rate of energy consumption. States must initiate certain programs to

receive the funding. (See chapter VII for

discussion.) One of the requirements is the

adoption of mandatory thermal efficiency

standards and insulation requirements.

In implementing this legislative mandate,

DOE had to determine a measurement of acceptability for the standards chosen by the

States. This process led to creation of the

Model Code, and launched a major Federal initiative affecting local building codes. The

Department entered into a contractual agreement with NCSBCS. NCSBCS acts as a coordinator and an agent for uniformity and/or

compatability between the major code groups.

The major code groups are the Building Officials and Code Administration International,

Inc. (BOCA), the International Conference of

Building Officials, (ICBO), and the Southern

Building Codes Congress International (Southern). The Model Code reflects the technical

provisions of ASH RAE 90-75, “Energy Conservation in New Building Design, ” a document

prepared 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 its

basis in standard engineering analysis. It is

compatible with the language and approach of

existing codes. Selection of this approach

represented a major success for the engineering profession.

The provisions of the Code “regulate the

design of building envelopes for adequate

thermal resistance and low air leakage, and the

design and selection of mechanical, electrical,

and illumination systems and equipment that

wilI enable the effective use of energy in new

building construction. ” Three compliance

paths are offered:

1. Specified Acceptable Practice Provisions.

A basic component approach, allowing the

builder to check all materials and practices

against guidelines.

2. Subsystem Approach. Various building

elements can be combined to make a whole,

i.e., the thermal performance and energy use

of the envelope must be acceptable but there

can be variation within the several parts of the

structure [chapters IV through IX).

3. Systems Approach. Entire building and its

energy using systems. This approach allows

credit for the use of nondepletable resources

(chapters X and XI).

Once the Model Code was endorsed by

DOE, it began to enter the State and local

building code system through the various

adoption processes. It is now estimated that by

the end of 1979, 42 States will have adopted

the Model Code or a similar methodology,

either through direct adoption by the State or

by reference.

The Department of Energy has provided

funding for training programs for State and

local officials on the Model Code. The code

groups and NCSBCS have been the principal

instruments for training and test efforts, along

with engineering groups and other interested

trade groups. Basic training documents have

been prepared and tested in a few States.

Much of the training material developed thus

far is quite technical in nature. Early evaluation of training efforts conducted by some

States on an informal basis has indicated that,

due to the complexity of the provisions and the
204 ● Residential Energy Conservation

difference from existing practice, training will

be needed for a long time.

It is not possible to conclude from the

number of States that are in some stage of approving the Model Code the actual level of

code enforcement. There is very little information available on code enforcement in general,

in some jurisdictions a code is defined as enforced when it is adopted. This relieves the

jurisdiction of the necessity for granting

waivers. WhiIe local code inspectors have experience with traditional health and safety

aspects of codes, the energy provisions are

new and require learning new calculations and

practices. Building inspection as an activity is

traditionally underfunded, and inspectors frequently have very large work burdens and

slight technical preparation. I n the past few

years, budget trimming measures have often

kept the number of officials at low levels

despite increasing construction activity. (There

are about 50,000 local code officials in the

country. ) Building inspectors work for local

governments and must be responsive to the

desire of the locality and local builders to

move quickly through the inspection process.

In addition to the normal range of objections to the Model Code (as being either too lenient or too demanding), the following principal technical objections are often raised:

1. The Code is not based on a clear measure

2.

3.

4.

5.

of cost-effectiveness and therefore does

not truly serve the interests of the consumer.

The Code is deficient in that the building

envelope requirements are based entirely

on heating degree days, with no consideration given to cooling loads.

The Code does not provide incentives for

reducing the size of heating and cooling

systems.

The Code allows the same building envelope requirements whether the fuel source

is gas, oil, electric resistance, or heat

pump.

6. The structural performance path, characterized as the most flexible compliance

approach, is felt by some to be not sufficiently flexible to allow for real innovation in building design.

Building Energy Performance

Standards

In 1976, Congress once again turned to

building standards in enacting the Energy Conservation and Production Act (Public Law

94-385). This law requires that States and

localities adopt building energy performance

standards (BEPS). Such a standard is to consider the total energy performance of a

building design and set energy use parameters

without regard to specification of materials or

type of construction. As normally defined, a

performance-based standard specifies a goal

without specifying the methods, processes, or

materials used to reach the goal. The stated

purpose of the Act is to:

(1) redirect Federal policies and practices to

assure that reasonable energy conservation

features will be incorporated into new commercial and residential buildings receiving

Federal financial assistance;

(2) provide for the development and implementation, as soon as practicable, of performance standards for new residential and commercial buildings which are designed to

achieve the maximum practicable improvements in energy efficiency and increases in the

use of nondepletable sources of energy; and

(3) encourage States and local governments

to adopt and enforce such standards through

their existing building codes and other construction control mechanisms, or to apply

them through a special approval process.

(Public Law 94-385, sec. 302(b))

The adoption of such a standard as a national target was understood to represent the

most modern and far-sighted approach to

energy conservation in buildings. Proponents

of such standards, principally representatives

of the architectural profession and certain environmental groups, expressed the conviction

The Code does not deal adequately with that performance standards would allow free

the 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 than

materials or techniques, and in general raise

the level of utility of standards. The adoption

of performance standards was a victory for the

architects, just as adoption of ASH RAE 90-75

as the basis for the Model Code had been a

triumph for the engineering profession. It also

marked a very new approach to measuring the

energy use of building design. (No steps to require the building to actually meet the design

energy level have been authorized.)

In November 1978, the “Advanced Notice of

Proposed Rulemaking” (ANPR) containing the

initial DOE statement on BEPS appeared in the

Federal Register. Because of the legislative

origin of BEPS, the new approach to standard

setting BEPS represents, and the involvement

of numerous interest groups in this issue, a

great many important issues have emerged in

the debate. Numerous studies and analyses

have been prepared by the Government and

private groups. This report does not attempt to

restate the many complicated and thoughtful

reports and analyses that are available on this

topic. Six principal issues have been selected

for specific discussion. These issues are likely

to figure prominently in congressional debates.

1. The Unique and Complex Nature of the

Standard. A performance standard approach to

building design does offer the widest range of

options to a designer. It appears to provide important freedom for innovation, particularly in

the area of energy-conscious design (“passive

solar”), where the structure itself acts as the

heating and cooling mechanism. It also assures

a focus on the energy consumption as a principal characteristic of the structure. It does

not, automatically, ensure that a structure will

use less energy than a comparable structure

designed by standard code techniques. The

practical side of the question, however, is that

it has proven quite difficult to draw a performance standard that satisfies all the objectives and yet is correct for the majority of

buildings and agreed on by all players. There

are still many unanswered questions about the

dynamic performance of buildings. An accurate figure is difficult to determine for likely

actual infiltration rates. There is disagreement

over the accuracy of various computer programs and calculations used to derive energy

budgets. While initial calculations have been

expressed in Btu/ft2

/degree day, some critics

suggest that the function of various areas of

the structure must be included (different

budgets for homes with lots of bedrooms and

little communal space, for example). Thus, a

question exists as to whether the state-of-theart is adequate to determine a valid energy

budget equation, (not whether housing can be

improved).

I n addition to this issue, the draft statement

released by the Department in the ANPR contains provision for RUFs – Resource Utilization

Factors—and RIFs — Resource Impact Factors.

The Resource Utilization Factor weighs the

relative efficiency of total energy used in the

various typical home fuels, and assigns a

higher thermal integrity requirement to homes

using electric heating. Traditional codes have

measured energy from the input of the home

rather than from the point of origin. While

there are clearly different supply situations

and different thermodynamic characteristics

of various fuels, this issue has not been fully

addressed by Congress. RI F, which has not

been used as a meaningful factor as yet, represents an attempt to quantify the social, environmental, and similar “external” costs of

using certain fuels. Reaching agreement on a

quantitative value for RIF will be extremely

difficult. Both RUFs and RIFs reflect an attempt to design a standard that measures impacts well beyond the simple heat use of buildings. Both RUFs and RIFs represent areas of

great controversy and fuel the debate over

BEPS.

2. Regulatory Philosophy. I n any standard-setting process, there will be varying opinions on

the regulatory philosophy to be employed. Regarding BEPS, proponents of rapid energy conservation, including many environmental

groups, wish to have the initial standard set at

a level attainable by the construction industry

but well above the current level of practice.

Building industry representatives contend that

the existing codes are adequate, that the industry is responding to consumer demand for

energy conservation as quickly as possible,
206 ● Residential Energy Conservation

and that to require a higher level of performance would be injurious to the industry

and cross the “reasonable” boundary.

Resolution of this controversy is related to

many other problems in home energy conservation. No established and consistent strategy

exists to reduce residential energy consumption over time. No schedule has been established for upgrading MPS, the Model Code, or

BEPS regularly, and no second- or third-level

targets have been created. An example of target setting exists in the automobile industry.

Manufacturers were put on notice as to the acceptable levels of fleet average fuel consumption that would be expected over a number of

years. Some similar set of goals might be

useful for the housing industry. (The State of

Wisconsin has adopted such an approach.)

Goal setting is particularly necessary if some

form of sanctions is to be invoked for noncompliance, either now or in the future. Similarly, incentives that could be added to the

program could be tied to reaching certain

energy use levels prior to the required date.

In any event, the first BEPS levels were

based on 1974 construction data. Since 1974,

there has been a considerable improvement in

the level of insulation, use of double- and

triple-glazing, and other factors influencing

energy use. (See “Housing Decisionmakers,”

chapter V and appendix B.) To establish a

standard based on 1974 data may well be

drawing a standard below current industry

level of practice.

3. BEPS Timetable. Many of the problems that

now characterize the debate over BEPS appear

to result from DOE’s attempt to respond to an

unrealisticalIy accelerated timetable for

preparation and publication of a standard. The

first BEPS draft regulations were to appear at

least 1 full year prior to rulemaking, to allow

for full comment and review. This schedule

was not met. ANPR appeared on November 21,

1978, and hearings began on December 1,

1978. This timing has resulted in understandable cynicism from critics of ANPR regarding

the openness of the process. Principal consultation during the drafting period for BEPS

was with the construction industry, despite a

legislative requirement for full public participation. A proprietary computer program

was used for commercial building calculations. Since not only the specific formulas

used in BEPS but the assumptions and

premises of the supporting analysis are

presumably open to review, the time allowed

appears totally inadequate. Interestingly, the

Federal experience seems to be paralleling the

experience of the State of California. California prepared an energy conservation code, including some energy budget standards. The

standards were drawn quickly, and there was

not enough time to fulIy consider comments or

objections. The standard has met with resistance and litigation. While an agency cannot

protect against litigation by taking a long time

to act, the consequences of releasing a standard of such potential impact as BEPS without

very thorough and sincere public review and

involvement seem dire.

4. Implementation. Once agreement has been

reached on the determination of the standard,

very substantial problems will remain regarding Implementation. Implementation issues

need to be faced from the beginning, in order

that the standard as eventually promulgated

can be as productive as possible. Federal

standards that must be enforced by State and

local officials face many problems of compliance There is no indication that the problems

of implementation have been given the appropriate level of consideration. Implementation

problems are critical because DOE, through the

Model Code, has already launched States on a

very different code course. Several factors

stand out:

A) Preparation for the New Standard. Due to

the existing DOE State grant program,

States have put considerable effort and

resources into adopting the Model Code

or simiIar, engineering-based standards.

The training that has been done by code

and professional groups has concentrated

on that approach. No training has been

done to prepare States for BEPS. While

some HUD and DOE research studies and

contracts have been initiated to prepare

for the new standards, OTA interviews

with State officials and people working in

code enforcement indicates that there is
Ch. Vlll—Federal Government and Energy Conservation ● 207

essentially no understanding of the performance standard, and almost no awareness that the standard is about to be

adopted. The response of States contacted during the OTA study has been one

of surprise that such a standard was in the

pipeline, and skepticism about the seriousness of the Government in implementing it.

B) Equivalency. The enabling legislation

states that States must adopt BEPS or a

standard that will “meet or exceed the requirements” of the Federal standard. No

determination has been made as to how

the equivalency requirement will be defined. It could mean that all States and localities would have to adopt a performance standard using the same or similar

methodology as BEPS. It could also mean

that the localities must have in place, a

standard that results in limiting energy

consumption in buildings to approximately the same level. If this is the case, for example, changes in the Model Code to increase the level of effectiveness could

meet the equivalency test. Without an indication of how the equivalency requirement will be interpreted, States have little

guidance as to how to prepare. Will there

be two separate, overlapping standards?

If only a pure performance standard is acceptable, by whom will the design drawings be certified? Will computer analysis

be made available by DOE, or will builders be required to obtain the imprimatur

of an architectural and engineering firm

for certification? Will local code officials

be expected to interpret the BEPS

criteria? Will special assistance or review

be provided by DOE or HUD area offices?

Who will monitor the progress of the industry? What sort of financial and

technical assistance will be provided to

localities for additional inspections?

These problems are resolvable, but decisions must be made with the involvement

of State and local officials if compliance

is expected.

C) Transition. This issue relates once again to

target setting, as well as to preparation. If

a performance-based standard is designated as the only acceptable path of compliance, will the new approach be phased

in over time? States and towns cannot

modify building codes quickly. Traditional processes of review and approval

must be followed. Many States are still

moving through this process on the Model

Code effort. Who will train the building

inspectors, State energy office technicians, and others who will bear the brunt

of the effort?

5. Sanctions and Incentives. The enabling legislation requires that the Secretary of DOE recommend to Congress whether or not to adopt

the authorized sanction of the program. This

sanction is the withdrawal of Federal funding

mechanisms for housing, including FHA funding and Federal lending programs. If adopted,

the sanction would be extremely strong. If the

sanctions are not adopted, it is unclear what

mechanism or leverage would be available to

encourage compliance. The use of incentives

for the early periods has been suggested;

homes meeting low energy standards could

receive favorable loan terms from Federal programs or other forms of assistance. The new

standard could simply be adopted and

localities encouraged to incorporate it into existing codes, so that those wishing to use this

approach could take advantage of it. Data

could be collected on houses designed by this

approach and this data could be used to determine if broader application is desirable. Federal property, or property directly assisted by

Federal programs, could be required to meet

BEPS criteria. The Minimum Property Standards could be revised to incorporate BEPS.

Special grants could be made available to

localities to test BEPS and experiment with

alternative methods for measuring compliance. Awards for design competitions might

encourage BEPS usage. Congress couId consider adding any one of a number of options to

the existing legislation either in addition to or

in Iieu of the authorized sanctions.

6. Special Problems of Housing. The energy

consumption in commercial-sized buildings is

better understood than the consumption of

most houses. The principal involvement of ar-
208 ● Residential Energy Conservation

chitects and engineers is with larger buildings

rather than housing. Most housing in the

United States is constructed by small builders

who have little technical training or access to

technical assistance and few resources (see

chapter V). Most small builders use the simplest approach to meeting code approval; they

follow accepted practice for their area and the

prescriptive aspects of codes. Given the difficulties of determining an energy budget for a

house, and the problems of training small

builders to comply, it may be necessary to provide a simple methodology for the housing sector, such as previously approved designs that

have been translated into specifications. In the

Advanced Notice of Proposed Rulemaking on

BEPS, the residential sector was simply

directed to follow the National Association of

Home Builders Thermal Performance Guidelines. No rationale was given for this decision.

A number of technical problems exist within

the Thermal Performance Guidelines, although

they do appear to be more responsive to

climate and local conditions than the draft

BEPS, which rely on seven climate zones.

If housing is to be included under BEPS,

more thoughtful attention must be given to the

special needs of the sector.
Chapter IX

ECONOMIC IMPACTS
Chapter IX.– ECONOMIC IMPACTS

Page

Unemployment, Inflation, and Real Economic Growth. . ...........211

The Total Number of Jobs . . . . . . . . . . . . . . . . . . . . . . . . . . .211

Labor Productivity and the Distribution of Jobs and Income

Among Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213

Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . , ..............214

Real Economic Development . . . . . . . . . . . . ...............214

TABLE 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 this

report, this chapter assumes that real energy costs are rising and will continue to rise in the

future, and that eventually energy consumers or society as a whole will pay prices that reflect

these higher real costs. Given these assumptions, it is important to realize that this changing

supply situation has a variety of economic impacts that cannot rightly be attributed to

energy conservation in the home.

Higher real costs and prices have several effects. They mean that individual energy consumers and the United States as a Nation can

buy fewer goods and services than otherwise.

Money previously available for other purchases must now go to pay for energy. Higher

energy prices also redistribute income from

energy consumers to owners and producers of

energy resources. Some of this redistributed income now goes abroad to pay for fuel imports

and this further reduces domestic income.

Higher energy prices also change the mix of

job opportunities to reflect the buying patterns

of those who benefit from energy sales, including fuel-exporting foreign countries. Finally,

real domestic income may fall if energy prices

jump too abruptly, causing short-term unemployment and other economic dislocations.

Home energy conservation, by the substitution of more energy-efficient devices and

structures or by behavioral changes, is the

economic response by the residential sector to

higher energy prices and uncertain supplies.

This chapter examines the broader economic

effects of this response. Besides saving dollars,

residential conservation has other economic

implications because it redirects expenditures

away from fuel to other goods and services.

Production of nonenergy goods and services

generates income and it is important to see

how this income is distributed compared to the

distribution generated by energy production.

This comparison will be made in terms of the

proportion of national income going to

workers, which is determined by the total

number of jobs and by labor productivity.

After the issue of who benefits, there are important questions about whether these benefits are proper economic incentives. Do they

help or hinder the national economy in adjusting to the depletion of oil and gas supplies?

Does this redistribution of income improve the

utilization of labor and capital or does it

aggravate infIation?

THE TOTAL NUMBER OF JOBS

Home energy conservation can increase the sumption expenditures beyond what they

number of jobs in three ways: could if old energy consumption patterns

had been maintained. 1. by the substitution of domestic labor for

imported fuels; Each of these three factors is discussed

2. by the substitution of labor-intensive below and the order of discussion reflects the

3

goods and services for capital-intensive, sequence in which they arise. When energydomestically produced energy; conserving investments are made, employment

by yielding a net return or savings out of caused by this investment substitutes for

which families can increase personal con- employment in energy production (1 or 2).

211
212 . Residential Energy Conservation

After energy-conserving improvements have

been installed, consumers begin to accumulate

net

and

1.

2.

income from their profitable investments

this can be spent elsewhere (3).

Home energy conservation may reduce

the demand for imported fuels directly as

in New England where most home heating

oil is imported. It may also reduce imports

indirectly by freeing up domestically produced fuels that can substitute for imports elsewhere in the economy. In either

case, jobs created by conservation are not

offset by jobs lost anywhere else in the

domestic economy, and total employment clearly increases, assuming there are

unemployed people avail able.’ Furthermore, keeping income within the country

indirectly increases employment by an additional amount due to resending. One

dollar of additional (real) domestic income generated by import substitution

yields at least another in secondary expenditures, if unemployment is at a high

level, and on the average 75 percent of

this is spent on wages and salaries.2

Home energy conservation also reduces

the need for more domestically produced

energy. This would apply mainly to highcost supply alternatives since any lower

cost supplies saved from residential use

would reduce the need for new higher

cost alternatives elsewhere in the economy. High-cost energy supplies include

electricity and new sources of oil, gas, and

coal.

Labor intensities in terms of jobs are

either indicated or can be inferred from

the data presented in table 73. These are

average data for existing enterprise, but it

‘Of course payments abroad may be recycled in terms

of U.S. exports but on the margin this is probably not important since there is a general dollar surplus among fuel

exporting countries.

2

For a recent discussion of muItiplier effects, see

Albert A. Hirsch, “Policy Multipliers in the BEA Quarterly Econometric Model,” Survey of Current Business, June

1977, pp. 60-71. The estimate that 75 percent of secondary expenditures goes to labor is based on the fact that

the average labor share in national income is 75 percent.

See Statktica/ Abstract of the United States, 1978, table

718, p. 444.

Table 73.—Full-Time Employment Equivalents per

$100,000 Expenditure”

(1967 input/output data)

Sector

Manufacturing household appliances. . . . . . . . . . . 8.6

General maintenance and repair . . . . . . . . . . . . . . . 8.8

All investment in fixed capital . . . . . . . . . . . . . . . . . 9.2

Residential construction . . . . . . . . . . . . . . . . . . . . . 9.2

Personal consumption expenditure (average) .. ..10.2

Natural gas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7

Coal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2

Fuel oil #2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3

Electricity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5

● See Donna Amado, “Creation of Labor Data for 1963, 1967, and 1972,” Center

for Advanced Computation, technical memo No. 77, University of Illinois at

Urbana-Champaign, September 1976, pp. 66-72. Data includes both direct and

indirect labor Inputs.

3

can be safely inferred that new fuel

sources would not greatly increase labor

utilization over conventional supplies

since the former involve technically complex, capital-intensive stages of production added on to present fuel-producing

activities.

Compared to fuel production, home

energy-conserving activities are relatively

labor intensive. A comparison to home appliance manufacturing is pertinent when

conservation is accomplished by more

rapid turnover of the stock of heating,

ventiIating, and air-conditioning equipment as well as other home appliances. A

comparison to residential construction is

pertinent when conservation is accomplished by more rapid turnover or increased investment in housing stock.

Finally, a comparison to general repair

and maintenance is pertinent when conservation is accomplished by more rapid

turnover or increased investment in housing stock. Finally, a comparison to general

repair and maintenance is pertinent when

conservation is accomplished by retrofitting homes. In all of these comparisons,

based on the actual or inferred information contained in table 73, home energy

conservation is relatively labor intensive.

After energy-conserving investments

begin generating savings for families,

private consumption expenditures for all

goods and services can increase, offsetting to some extent the loss in real income

caused by rising energy prices. These ex-
Ch. IX—Economic lmpacts ● 213

penditures create more jobs per dollar

than any other type shown in table 73. The

size of this third effect depends on the

profitability of home energy-conserving

investments, and OTA analysis above

clearly suggests that these profits may be

substantial. (See chapter I I.)

Despite these three positive conclusions

about job creation, it should not be implied

that home energy conservation will solve the

national employment problem. Direct energy

expenditures account for only about 5 percent

of gross national product and residential consumption only for a fraction of that. However,

we can say that some jobs will be created and

this should make it easier to reduce the rate of

unemployment.

LABOR PRODUCTIVITY AND THE DISTRIBUTION OF JOBS

AND INCOME AMONG WORKERS

In analyzing labor productivity, it is important to reemphasize the distinction between

rising real energy costs and prices and subsequent conservation efforts. The former clearly

reduces average product per worker as it reduces real national production. Energy conservation on the other hand should increase both

by moving to a more productive mix of energy,

capital, and labor. This overall positive impact

of home energy conservation is clear, based

entirely on the fact that it is profitable. If

prices of capital, labor, and energy all reflect

real costs, then profitability is synonymous

with getting more total product and larger

average product per worker out of the same

package of resources.

Not all workers, however, will benefit from

reduced energy consumption in the home. In

particular, workers in displaced energy supply

activities may lose their jobs or be asked to accept lower incomes, and this prospect raises

issues that must be resolved politically. However, in these political discussions, two points

should be kept in mind.

First, a major advantage of home energy

conservation, when compared to increasing

energy consumption, is that jobs are less likely

to be concentrated at centralized points of

production such as at the wellhead, the mine

mouth, or at the electric power station. Home

energy conservation involves more extensive

downstream operations (distribution, sales,

construction, installation, and maintenance),

which means that employment opportunities

are spread out geographically in a pattern determined more by the location of the final consumer. This decentralization is beneficial

because it spreads income from employment

more evenly across the country and, in particular, it reduces the outflow of wealth from energy poor regions and districts that have suffered

the most due to rising energy prices.

Second, the threat of job or income loss for

presently employed people may not be significant if the national economy can reduce its

energy consumption per dollar of product and

stilI continue to grow apace with the size of

the labor force. If it can, and energy conservation is one of the engines for such growth, then

high-cost energy supply activities may not actually contract, but merely not grow as fast,

and present workers can stay on the job. In

other words, home energy conservation has

more impact on the locus and kind of new jobs

than on jobs that already exist. This situation

obtains in part also because most of the energy-conserving options considered here will require a decade or more to accomplish.
214 ● Residential Energy Conservation

INFLATION

Home energy conservation, as defined here,

is anti-inflationary because it costs less (for

roughly the same convenience and comfort) to

conserve or save a Btu of energy in the home

than to produce it. This saving is partly due to

the substitution of less expensive domestic

goods and services for imported fuels. Since

the United States has a serious balance of

payments problem, this reduces downward

pressure on the dollar and domestic inflation

caused by currency devaluation.

Anti-inflationary savings also derive from

the relatively broad geographical distribution

of energy-conserving jobs, compared to jobs in

energy supply, which makes them accessible

to a larger number of potential workers. A

large fraction of energy-conserving jobs can

also be accomplished by people with skills in

maintenance and repair. Such skills are fairly

widespread and can be acquired without extensive training. Consequently, it is unnecessary to bid up wages very far before large numbers volunteer for work, including many from

the large pool of chronically unemployed.

Finally, labor is substituted for energy

without bidding up wages and salaries when

families do a better job of housekeeping. The

factor of two difference in energy use among

people with the same basic energy services

(see chapter III) suggests that this form of increased self-employment may be quite important in increasing real incomes while decreasing infIation and energy consumption.

In capital markets, home energy conservation has two distinct advantages when compared to alternative investments that would

otherwise have to be made in energy supply.

First, home energy-conserving investments are

relatively profitable. There are exceptions of

course, and new supply technologies might

come along which are very profitable, but the

current situation is illustrated by comparing investment payoff periods. New electric powergenerating stations are commonly amortized

over 20 to 30 years because it takes that long

to accumulate sufficient revenues above operating costs. Investments in home energy conservation typicalIy pay off within 10 years and

may yield revenues above debt service costs

right from the very beginning. In other words, a

given stock of real resources and finance capital can support a greater total amount of investment activity if home energy conservation

reduces Investment in energy supply, and this

means less pressure on interest rates to rise.

Second, for the approximately 65 percent of

dwelling units that are owner occupied, home

energy-conserving investments have many attractive aspects. A dollar of payoff in terms of

reduced expenditures for energy is worth more

than a dollar of income to buy energy because

only the latter is subject to income tax. The

home owner/investor, in other words, has a tax

incentive to save rather than to buy energy.

Also, energy-conserving investments, unlike

savings accounts and other securities available

to small investors, do not have fixed rates of

return that can be wiped out by inflation. Furthermore, rates of return in terms of reduced

energy expenditures are very likely to increase

faster than inflation because price increments

for energy are likely to be above average. Both

of these factors are inducements to increase

savings beyond what homeowners might otherwise and, again, this takes pressure off of interest rates.

REAL ECONOMIC DEVELOPMENT

As defined in this report, home energy conservation saves money and so it can occur

largely as the result of private market

behavior. In addition, this profitability also

serves as an economic incentive toward reducing unemployment and inflation because it

redirects spending toward relatively plentiful

supplies of labor and capital, and results in a
situation overall in which goods and services

are delivered at a lower total cost. Home

energy conservation, in other words, can be

recommended both on the basis of its payoffs

to the Nation as a whole as well as its profits

for residential consumers.

Qualifications might be made based on

short-run adjustment rates for labor and capiCh. IX—Economic Impacts “ 215

tal markets (e. g., labor must be trained and interest rates may be temporarily very high), but

in the long run the progressive economics of

home energy conservation cannot be denied.

The fundamental point is that energy supplies

cannot be expanded without rapidly increasing

real costs, while cost increments for the expansion of labor and capital, as substitutes for

energy, are much smaller.
Chapter X

INDOOR AIR QUALITY
Chapter X.— INDOOR AIR QUALITY

Page

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

Energy Conservation Effects on Indoor Air Quality. . . . . ...........220

Expanding Our Understanding of indoor Air Quality . . . . ..........221

Protecting the lndoor Environment. . . . . . . . . . .......,........222

Air Change . . . . . . . . . . . . . . . . . . . . . . . . . . . ................222

Air Purification . . . . . . . . . . . . . . . . . . . . . ................223

Pollution Source Reduction . . . . . . . . . . . . . ................223

TABL E

Page

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

FIGUR E

Page

21. Nitrogen Dioxide Concentrations in a 27m3 Experimental

Room at Various Air Exchange Rates . . . . . . . . . . . . . . . . . . . . ....221
Chapter X

INDOOR AIR QUALITY

.

Energy conservation measures that decrease air exchange rates in buildings may increase problems associated with indoor air quality. Without appropriate control measures, a

“tighter” house may allow a significant buildup of air pollutants — carbon monoxide, nitrogen dioxide, hydrocarbons, respirable particulate, and others–that are generated within the

structure. An increase in indoor concentrations of these pollutants may have a serious effect

on the comfort and health of the occupants.

INDOOR AIR QUALITY

The air pollution control effort in the United

States has generally considered the pollutant

concentrations of outdoor air as the appropriate measure for population exposure. Exceptions to this emphasis have been the attention given the industrial workplace environment and building codes for office and public

buildings, which require minimum ventilation

rates. The indoor residential environment, to

the extent that it has been considered, has generally been assumed to shelter the occupants

from exposure to higher pollutant concentrations found outdoors.

It is now clear that indoor levels of several

important air pollutants can be as high as or

higher than outdoor levels. (See table 74.) Consider the results of a few recent research projects:

● Several studies have shown that household gas stoves can cause high indoor concentrations of carbon monoxide, nitrogen

oxides, and fine particuIates. Lawrence

Berkeley Laboratory’ and other sources

have shown that nitrogen oxide emissions

from such stoves are sufficiently high to

cause kitchen concentrations to exceed

the range of recommended 1-hour national ambient air quality standards (NAAQS).

Some studies have also indicated that carbon monoxide levels may be raised to levels above the short-term ambient standards, but results have been extremely variable from study to study.

‘Craig D. Hollowell and C. W Traynor, CombustionCer?eratecf Indoor Air Pollution (Lawrence Berkeley Laboratory, April 1978) Report LBL-7832

●

●

Danish scientists have found high levels

(up to nearly twice the legal occupational

exposure limit) of formaldehyde in homes

that have substantial quantities of particle board in their structure.2 Similarly high

levels of formaldehyde concentrations

have been found in mobile homes in the

United States.

Several studies have shown that smoking

seriously affects the indoor environment.

The particulate from cigarette smoking

are in the respirable size range; nicotine is

the second largest component of the

smoke. 3 Moderate smoking (a pack a day)

can cause particulate concentrations to

exceed the 24-hour ambient air quality

standard. 4

Internal sources of pollution include gas

stoves, a variety of building construction

materials including wallboard, paint, and insulation, cigarette smoking, aerosol spray, cleaning and cooking products, and products used

for hobbies and crafts. Even the concrete and

stone in the floors and walls of homes add

quantities of radon “daughters” (a fission

‘1 Andersen, “Formaldehyde in the Indoor Environmental-Health Implications and the Setting of Standards, ” /nternationa/ /ndoor C/imate Symposium (Copenhagen, Aug. 30- Sept. 1, 1978).

‘W C. Hinde and M. S. First, 1975, “Concentrations of

Nicotine and Tobacco Smoke in Public places, ” New

England )ourna/ of Medicine, 292:844-5.

‘For example, see S. J. Peakale and G. De Oliverira,

1975, “The Simultaneous Analysis of Carbon Monoxide

and Suspended Particulate Matter Produced by Cigarette Smoki rig,” Environment/ Research, 9:99-114.

219
220 ● Residential Energy Conservation

product of radon)-–potential causes of lung fects, and exposure levels of the important air

cancer–to the indoor environment. Table 74 pollutants found in significant quantities in

provides a brief summary of the sources, ef- indoor air.

Table 74.—Characteristics of Some Indoor Air Pollutants

Pollutant —

Sulfur dioxide (SO2) . . . . Outside air -. . , . ,, Usually somewhat lower than

Major sources Impacts Exposure indoors

Carbon monoxide (CO). . Outside air (autos), gas stoves,

smoking, infiltration from

garage

Nitrogen dioxide (NO2

). . Outside air, gas stoves, oil

or gas furnaces (when

imperfectly vented)

Photochemical oxidants Outside air

Total suspended Outside air and resuspension

particulate (including from physical activity;

trace elements). . . . . . . smoking, asbestos insulation,

gas stoves, etc.

Hydrocarbons. . . . . . . . . Outside air, smoking, pesticides, spray can propellants

(fluorocarbons), cleaning solvents, building materials,

etc.

Radon & radon Cement, stone, bricks, etc.

daughters . . . . . . . . . . .

Bacteria & spores. . . . . . Coughing, sneezing

Risk of acute and long-term

respiratory problems in

conjunction with particulate

Headache, dizziness at lower

concentrations; nausea,

vomiting, asphyxiation,

death at higher concentrations

Risk of acute respiratory

problems, possible long-term

respiratory problems, possible increased mortality

from cardiovascular disease

and cancer

Eye irritation, respiratory

discomfort; long-term problems not well-understood

Risk of short-term pulmonary

effects; some toxic components can have severe and

varied effects

Risk of a variety of severe

acute and long-term effects

Enhanced risk of lung cancer,

other cancers

Spread of respiratory illness

— —

outdoors

Can be high from indoor

sources; much outdoor

concentration is passed

indoors

Can be very high, especially

when gas stove is operating

Lower than outdoor concentration

Can be very high, especially

from smoking; particles

in respirable size range

dominate

Can be high, also can have

continuous low-level concent rations

May be sign if i cant

Higher than outdoors

ENERGY CONSERVATION EFFECTS ON INDOOR AIR QUALITY

A principal strategy for conserving energy in

homes is to lower the rates of air exchange

from infiltration and exfiltration, as this air exchange is a major heat loss mechanism (and a

major source of cooling loss in hot weather) in

buildings. Lowering air exchange rates is accomplished by sealing the structure, e.g., by

weatherstripping, caulking, sealing cracks, and

tight construction.

Lowering the air exchange rates in a structure also slows the diffusion of indoor-generated air pollutants to the outside. In other

words, the pollutants tend to be trapped inside

the structure. Many of the studies of indoor air

quality show a clear and strong inverse relationship between pollutant levels and air exchange rates. For instance, figure 21 demonstrates a very strong inverse relationship between air exchange rates and nitrogen dioxide

concentrations in the presence of an operating

gas oven. 5

Many of the indoor air quality problems

were discovered only when air exchange rates

were drastically reduced and the pollution effects became obvious to the building’s inhabitants. These effects tend to be odor and mois5Hollowell 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, as

the former are more commonly associated

with the housing environment. Problems of this

nature are not uncommon in Scandinavia,

where recently built housing is far tighter than

average new homes in the United States. Such

difficulties could seriously impair the credibility of energy conservation programs in the

same way that problems of flammable cellulose insulation have recently discouraged

buyers,

Promotion of energy conservation measures

for buildings may exacerbate an existing indoor air quality problem whose present dimensions are largely unknown. Thus, it is crucial

that the conservation effort be closely coupled

with a program to expand our understanding

of indoor air quality as welI as with measures

to protect the indoor environment.

EXPANDING OUR UNDERSTANDING OF INDOOR AIR QUALITY

The Federal research effort on indoor air

quality has been limited to a few small, piecemeal contracts. The total Federal effort appears to have been on the order of $1 million

yearly for the past several years. The Department of Energy (DOE) has funded most of its

small effort through Lawrence Berkeley Laboratory in California; the Environmental Protection Agency’s (EPA) major effort was with

Geomet, Inc., in Gaithersburg, Md. Neither of

these series of studies can be characterized as

a comprehensive, systematic effort to increase

our knowledge about the sources, characteristics, and effects of indoor air polIution.

This low level of effort is particularly difficult to understand because both DOE and EPA

have ample evidence to demonstrate that the

current system of air polIution monitoring

based on central measurement stations is

often not measuring true exposure. Besides the

obvious problem of indoor air pollution, the

exposure measurement problems that arise

from nonuniform pollution distribution, commuting activities, and other factors severely

limit the credibility of central-station-based exposure estimates.

As a result of these errors in measurement:

●

●

c

The current enforcement of air quality

standards based on central station pollution monitors may not be adequately protecting the public.

The emission control strategies designed

to support these standards may be either

too lenient, too strict, or else simply badly

skewed.

Epidemiological studies of pollutant

health effects suffer from severe errors in

measurement of popuIation exposure.

Thus the lack of understanding of indoor air

quality is part of a larger problem of determining total environmental exposure to air pollution. Any Government program designed to improve our understanding of the indoor environment should take care to integrate this research with research into the total exposure

problem.
222 “ Residential Energy Conservation

In the past few years, a number of excellent

personal air pollution monitoring instruments

have been developed for selected air pollutants. If monitors were available for a wider

range of indoor and outdoor air pollutants,

field studies could use them to measure real

exposures of a representative sample of the

urban population. The relationship between

existing air pollution monitors and actual exposures might be better understood, with the

following benefits:

●

●

●

A more accurate, uniform, and meaningful measure of air quality than is possible with today’s data. This would provide

a more realistic measure of the success of

present control strategies.

Identification of critical portions of the

population –by occupation, location, or

other factors — that require special attention, especially during episodes of extremely high polIution concentrations.

Development and validation of models

capable of predicting pollution exposure

to other than ambient pollutant concentrations.

● Exposure data that is necessary to conduct credible statistical studies of the

health effects of low levels of pollution.

Various experts estimate the cost of developing a personal monitor for a particular pollutant at $250,000. ’ A 1975 workshop’ at

Brookhaven National Laboratory recommended a national development program at

the level of $1.5 million per year for 5 years.

Such a program probably would suffice to produce the prototype personal monitors needed

for the most important pollutants.

Given the existence of personal monitors for

industrial applications, the first step of any

such development program should be a rigorous quality assurance testing and evaluation

of the existing technology to determine its applicability to exposure assessment studies. As

monitors for critical pollutants become available, they can be deployed to provide the assessments described above. These assessments, if conducted with careful attention to

discovering the socioeconomic and physical

characteristics that govern the variation of pollution exposure within an area, should provide

the understanding of indoor air quality that is

currently lacking.

PROTECTING THE INDOOR ENVIRONMENT

There are three basic approaches to protecting the indoor air environment:

1. maintenance of an adequate level of air

change,

2. air purification, and

3. reduction of indoor sources of air pollution.

Air Change

Because energy conservation involves deliberately reducing air infiltration and exfiltration — natural air exchange—the maintenance

of a satisfactory level of indoor air quality involves artificially inducing an air exchange

with some mechanism to recapture the heat in

the exhaust air. In Europe, and particularly in

Sweden, it is not uncommon to provide a heatrecovering system as part of the home ventilating system. An advantage of such controlled air change is that air removal points

can be located near the major sources of moisture, odor, and pollutants. For example, the

kitchen can be ventilated at a higher rate than

the remainder of the home. Also, development

of inexpensive monitoring equipment wil l

allow the rate of air change to be varied according to the (air quality) need. However, the

‘Lance Wallace, “Personal Monitors,” in vol. IVa (Environmental Monitoring Supplement) of Analytical Studies

for the U S Environmental Protection Agency, National

Academy of Sciences, Washington, D. C., November

1977

‘M. G. Morgan and S. Morris, “Individual Air Pollution

Monitors An Assessment of National Research Needs,”

report of a workshop held at Brookhaven National Lab

oratory, July 8-10, 1975, Energy Research and Development Administration, January 1976.
Ch. X—Indoor Air Quality ● 223

critical factor in avoiding the loss of the conservation benefits of reducing natural infiltration is still the exhaust air heat recovery. A

number of devices in varying stages of development are capable of extracting this heat and

transferring it to the incoming air. These include heat pumps, heat pipes, interpenetrating

ducting, heat wheels, and runaround systems

(see volume 11, p. 548, for a description of how

these systems work). The interpenetrating

ducting systems, which are heat exchangers

with the incoming and exhaust air streams in

parallel but opposite directions, are presently

available, can be extremely efficient, and are

the simplest of the systems; they appear to be

the most feasible systems for residential use.

Air Purification

Air purification is an alternative or a complement to air change as a method of assuring

good indoor air quality. Ventilation with heat

recovery may be inadequate to maintain adequate air quality if the outside air is polluted.

Without air purification devices to screen the

incoming air, the ventilation system can compromise the building’s “sheltering” effect in

protecting its occupants from outside pollution.

Indoor air pollutants vary sufficiently to require a variety of devices to ensure thorough

control. The pollutant categories that require

different methods of control are moisture, particulates, and airborne chemicals and odors.

Moisture can be controlled by dehumidification equipment in the heating season and airconditioning in the cooling season. Particulate

control is accomplished in most homes with

forced-air heating and cooling by inserting a

filter in the ducts. These filters are not efficient

collectors of finer respirable particulate. Electrostatic precipitators can be added to allow

control of a greater range of particle sizes; this

equipment is available today.

Reduced infiltration rates will most affect

the need for control of airborne chemicals and

odors. Aside from ventilation, the control technology categories are:

1.

2

3

Absorption by dissolving the pollutants in

liquids. Spray washing, which can also

capture particulate and provide a dehumidifying function, is often used in large

buildings.

Adsorption of the odors and chemicals on

a solid, usually activated carbon. This

method should have the greatest residential application.

Chemical reaction by oxidation to an inert,

odorless state. The oxidizing chemical can

be added to the water in a spray washer or

to the activated charcoal in an adsorption

filter for a combined effect.

Much work remains to be done on all these

technologies.

Pollution Source Reduction

Much indoor air pollution occurs because of

(or is increased by) poor maintenance or improper manufacturing techniques. For example, levels of formaldehyde emissions from

walIboard depend on proper curing of the material. Carbon monoxide emissions from gas

stoves can be increased by several orders of

magnitude by improper burner adjustment or

maintenance. Defects in the venting of gas and

oiI furnaces can and often do contribute to indoor air pollution. Many of the chemicals used

in cleaning and in hobby work are extravagantly and/or improperly used, and their contribution to degrading of indoor air quality

could be substantially reduced through increased awareness of their adverse effects. It

seems Iikely that many chemicals in use in the

home environment are inappropriate except

under carefully controlled conditions and

should be controlled; however, no analysis of

the appropriateness of such controls was conducted during this study.

A strategy for pollution source reduction

should clearly include an added emphasis on

combustion equipment maintenance and design, as well as far greater Government attention to the composition of common household

chemicals and their packaging and labeling,

plus the pollution-causing properties of

materials used inside the home.
Chapter Xl

TECHNICAL OPTIONS

Chapter XI.--TECHNICAL OPTIONS

Page

Improved Building Envelopes. . . . . . . . . .. 227

Insulation . . . . . . . . . . . . . . . . . . . . . . . .227

Interior and Exterior Cladding for

Wall Retrofit . .................22 8

Installation Quality . . . . . . . . .. 229

Wall Sandwich Configuration. . . . . .. 229

Infiltration Control . . . . . . . .. .229

Window Technology. . ................23 1

Improved Windows. . . . . . . . . . . . . . .233

Heating and Cooling Equipment. . .......240

Direct Fossil-Fired Heating Equipment .. 240

Oil arid Gas Furnace Efficiency

Improvements. . , . . . . . . , . . . . . .241

Advanced Fuel-Fired Equipment. .. ....242

Pulse Combustion Furnaces and

Boilers. . . . . . . . . . . . . . . . . . . . . .. 242

Fuel-Fired Heat Pumps . . ..........244

Electric Air-Conditioners and Heat

Pumps . . . . . . . . . . . . . . . .

Gas-Fired Heat Pumps and AirConditioners . . . . . . . . . . .

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. , . . . . . . . . . ..............254

Controls and Distribution Systems . . . . . . .254

Passive Solar Design . . . . . . . . . . . . .. .256

Direct Gain Systems . ...............25 7

Indirect-Gain Passive Buildings . . . . .. 259

Hybrid Passive Systems. . . . . . . . . . . . . .263

Cost of Heat From Passive Solar Heating

Systems. . . . . . . . . . . . . . . . . . . . . .264

Cost of Heat From Fossil Fuels and

Electricity . . . . . . . . . . . . . . . . . . . . 268

Summary. . . . . . . . . . . . . . . . . . . . . .. ..270

Technical Notes–– Fossil Fuel Prices. . . . . .272

TABLE S

75

76

77

78

79

Page

Summary of New Fenestration

Technologies. . . . . . . . . . . . . . . . . . . . . .239

Heating Equipment and Fuels for

Occupied Units in 1976.............24 0

Refit Modifications for Efficiency

Improvement of Oil-Fired Boilers . . . .. 241

California Standards for Cooling

Equipment . . . . . . . . . . . . . . . . . . . . .. 249

DOE Room Air-Conditioner EnergyEfficiency Improvement Target . . . . . .249
Page

80. DOE Central Air-Conditioner EnergyEfficiency Improvement Target .. ....249

81. Estimated Performance of Carrier Hot

Shot@ Heat Recovery Unit With a

3-Ton Air-Conditioner and a Family of

Four. . . . . . . . . . . . . . . . . . ..........253

82. Cost of Heat From Passive Solar Heating

Installations . . . . . . . . . . . .268

83. Cost of Heat Supplied to Houses From

Fossil Fuels and Electricity . .........269

FIGURE S

Page

22. Air Leakage Test Results for Average

Home of 1,780 sq. ft. . ..............230

23. The Double-Sided Blind . ...........234

24. Triple Blind, Winter Day Mode. .. ....234

25. Shades Between Glazing With Heat

Recovery. . . . . . . . . . . . . . . . . .235

26. Between Glazing Convection and

Radiation Control . ................23 5

27. Multilayer, RoIl-Up Insulating

Window Shade . ..................23 5

28. Insulating Window Shade . ..........236

29. Window Quilt Insulating Window

Shade . . . . . . . . . . . . . . . . . . . . .. ....236

30. Skylid . . . . . . . . . . . . . . . . . . . . .. ....236

31. Beadwall. . . . . . . . . . . . . . . . . . . . . .. .237

32. Beam Daylighting . ................23 7

33, Selective Solar Control . ............237

34. Heat Mirror. . . . . . . . . . . . . . . . . .. 238

35. Optical Shutter . . . . . . . . . . . . . . .. ..238

36. Weather Panel@ . .................23 8

37. Typical Energy Flow for a Gas

Furnace System. . . . . . . . . . ........241

38. Principles and Operation of the HydroPulse Boiler Which Uses the PulseCombustion Process . . . . . . . . . . .. ..243

39. A Typical “Split System” Heat Pump

Installation . . . . . . . . . . . . . . . . . . . . . .245

40. Air-Conditioning COP of Heat Pumps

and Central Air-Conditioning Units

Shipped in 1977 . . . . . . . . . . . . . . . . .. .246

41. Performance of the Carrier Split-System

Heat Pump . . . . . . . . . . . . . . . . . . . . .. 247

Page

42. The Seasonal Performance of Heat-Pump

Units as a Function of Local Climate. .. 248

43. Estimated Cost of Increasing the

Performance of Air-Conditioners From

the Industry Average COP of 2.0 to

the Performance Levels Indicated. . .249

44. Modified Saltbox Passive Solar Design

Home . . . . . . . . . . . . . . . . . . . .257

45. The Fitzgerald House Near Santa Fe,

N. Mex., is 95-Percent Solar Heated

by a Direct-Gain System at a 5,900

Degree Day Site . . . . . . . . . . . .. ...258

46. The Kelbaugh House in Princeton, N.J.,

Receives 75 to 80 Percent of Its Heat

From the Trombe Wall and the Small

Attached Greenhouse. . . . . . . . . . .260

47. The Crosley House in Royal Oak, Md.,

48.

49

50

51

Comblnes a Trombe Wall System With

Direct Gain and a Massive Floor, to Provide

50 to 60 Percent of Its Heating Needs . . 261

The Benedictine Monastery Off ice/

Warehouse Near Pecos, N. Mex., Uses

Direct Gain From the Office Windows and

Warehouse Clerestories Combined With

the Drumwall Below the Office Windows

to Provide About 95 Percent of Its

Heating Needs. . . . . . . . . . . . . . . . . . .262

The PG&E Solarium Passive Solar Home in

(California Uses the Large Skylight to Heat

Water-Filled Tubes on Three Walls of the

Solarium . . . . . . . . . . , . . . . . . . . . . . .263

This Retrofit Sunspace is Manufactured by

the Solar Room Co. of Taos, N. Mex.. . .264

This Retrofit Greenhouse is an Example of

Those Built by the Solar Sustenance

Project. . . . . . . . . . . . . . . . . .265

52. The Balcomb Home Near Santa Fe,

N. Mex., Combines the Use of a

Greenhouse With a Rock Storage Bed

to Provide 95 Percent of Its Heating

Needs . . . . . . . . . . . . . . . ..........266

53. This Home in Los Alamos, N. Mex.,

Combines a Large Trombe Wall With

Small Direct Gain Windows and a Rock

Storage Bed. . . . . . . . . . . . . . .. ...267

54. Solar Feasibility for Trombe Wall With

Night Insulation Alternative Fuel –

Natural Gas. . . . . . . . . . . . . . . . .. ....271
Chapter Xl

TECHNICAL OPTIONS

Technology is already available to at least double the energy efficiency of housing, but

further improvements in technology promise a significant impact on savings. Conservation,

possible with specific combinations of existing technology, is illustrated in chapter 11. This

chapter discusses a much broader set of technical options, including many still in the developmental stage.

Design of an energy-efficient house usually starts with a tightly built and well-insulated

thermal envelope (exterior walls, windows, etc.) and adds efficient equipment for heating,

cooling, hot water, and other energy needs. The thermal envelope and equipment technologies, which must be combined to build an efficient house, are considered individually in this

chapter. Interactions between different types of energy-using equipment, which were treated

earlier, are not repeated. Additional information about most of these topics appears in

volume 11 of this report.

Many improved window systems and passively heated buildings represent marked departures from present building technology and practice; most of the other technical changes

identified in this chapter are incremental improvements of existing materials or equipment.

This does not mean that further research and development is unimportant. Figure 14 in

chapter I I shows that the total cost of owning and operating a house with energy-saving improvements changes very little over a wide range of investment, so incremental improvements in technology would substantially increase the optimum investment level and energy

savings. Improvements being developed would also greatly increase the options available for

meeting a performance standard, such as the building energy performance standards (BEPS).

These added options could greatly increase the willingness of the housing decisionmakers to

invest in energy efficiency and hence lessen the institutional resistance to building energy- efficient houses.

IMPROVED BUILDING ENVELOPES

Insulation

Minimizing the amount of heat lost from the

interior is usually the first step toward constructing an energy-conserving house. This approach is almost always taken when the retrofit of a building is considered as well. It is frequently assumed that this merely means adding more insulation in the walls and over the

ceilings, using storm windows and doors, and

caulking and weatherstripping all of the cracks

in the building. However, new ways of using

these techniques are being implemented, and

significant new products are being developed.

Thermal transmission through walls, ceilings, and floors is the single largest source of

heat transfer in a typical house. While many

older homes were buiIt without insulation, virtually all new houses contain at least some insulation to reduce heat loss. Many different insulating materials are used including rock

wool, fiberglass, cellulose, cellular plastics

(such as polystyrene, urethane, and ureaformaldehyde), perlite, vermiculite, glass foam,

and aluminum multifoil. The characteristics of

these materials and insulation standards are

discussed in appendix A. That discussion includes insulation properties, health and fire

safety issues, and production capacity.

The choice of insulation depends on cost,

application, availability, and personal preference. New wall cavities are generally filled

with rock wool or fiberglass batts while plastic

foam sheathing may be added to the exterior.

Retrofit of walls built without insulation is

generally accomplished by drilling holes be227
228 ● Residential Energy Conservation

tween each pair of studs and blowing in fiberglass, cellulose, or ureaformaldehyde. Insulation is occasionally added to the exterior if

new siding is installed. Attics are insulated

with batts or loose-fill insulation. Fiberglass,

rock wool, and cellulose are widely used, but

perlite and vermiculite are also used in attics.

Floors are seldom insulated, but fiberglass

batts are the most frequent choice for this application. Foams such as polystyrene or urethane are generally used when foundations or

basements are insulated.

Cost-effective levels of insulation can substantially reduce heat losses as illustrated in

chapter II.

Thus it might seem that new insulation material and techniques wouId represent a new

technology area of substantial importance.

It appears, however, that this is not the case.

Contacts with industry and with national laboratories indicate that new technology developments will not make a large contribution to

insulation materials and practices. What advances do occur by 1985-90 wilI primarily augment existing techniques; not represent major

new directions. A basic difficulty in assessing

this area is that major companies carefully

keep their new product developments to themselves. Nevertheless, the following points

emerge:

1

2.

3

4.

Major breakthroughs in the cost per unit

of insulating value of major insulating materials are not expected, and no fundamentalIy new materials of high cost-effectiveness are anticipated.

In frame wall cavity retrofit, incremental

improvements may be expected in the

handling and performance characteristics

of the major materials, but no fundamental breakthroughs are anticipated.

New systems for reinsulating the exterior

surfaces of walls are being developed,

but, again, no fundamental change is expected.

Changes in wall sandwich configurations

for new buildings are being developed

that will result in more efficient wall performance.

5. The quality of installation is a major problem and may be the area in which insulation effectiveness can be most improved

over the next decade.

Each of these areas provides a range of new

opportunities, but institutional constraints

may limit implementation. The technical advances that are likely may be only incremental, but this could result in houses with substantially less energy consumption and lower

Iifecycle cost.

The price of insulation has increased sharply

in the last 4 years, but this is largely due to a

temporary lack of capacity in the industry, and

future increases should be more directly related to cost increases. However, it does not

appear that ways will be found to make significantly cheaper insulation, as the materials

already used are quite inexpensive. It is expected that the price of insulating materials

will generally keep pace with inflation.

Improved materials for retrofitting wal l

cavities would be useful since all of the materials now in use have at least one drawback. The

labor cost is typically one to two times as great

as the material cost for these retrofits. Thus,

any dramatic drop in the installed price would

require a less expensive material that also offered simplified installation.

Interior and Exterior Cladding for

Wall Retrofit

In retrofitting exterior walls for improved

thermal performance, an alternative to filling

the wall cavity is the application of a layer of

insuIation over the exterior or interior wall surface, followed by re-covering of the wall. The

advantage of this approach is that the insulation layer is monolithic (rather than broken by

framing members) and that a wide range of

durable and highly effective insulating materials is available for this application. This approach also has its disadvantages. If an interior

insulating layer is used, the available interior

space is reduced, the Iiving space must be disrupted, and there are refinishing problems. If

an exterior cladding is used, a sound weatherproof finish must be applied over it. Generally,
Ch. X/—Technical Options ● 229

exterior systems are more practical and have

received more attention in the marketplace.

A number of complete insulation and siding

systems are already on the market. None of

these, however, is cost-effective purely as an

energy-conserving measure; they are cost-effective only on the assumption that it is necessary to re-side the buiIding anyway. There is no

promising technical breakthrough on the horizon. Thus, it appears that wall cladding as a

method of retrofit will not become a major

energy strategy.

Installation Quality

It is well known that installation quality in

both new and retrofit insulation application is

a major and continuing problem.

In new construction, common defects include the failure to fill smalI or narrow cavities

with insulation, the failure to pack insulation

properly around and behind electrical and

plumbing fixtures, and the incomplete coverage of cavities with insulation. The last problem is particularly serious if the defect extends

vertically for a significant distance because

convection currents are thereby set up that

result in rapid heat transfer. I n general, the percentage increase of heat loss is disproportionate to the area of the defect, because of

the action of air infiltration and internal air

currents.

In the retrofit of existing construction, serious problems exist in reinsulation of wall cavities. As the framing pattern is not easily apparent from the outside of the building, it is

common to miss small cavities entirely. Even

when a cavity is located, the filling may be incomplete or the insulation may be hung up on

internal obstructions. The fact that the extent

of coverage of the completed installation cannot be seen results in a basic quality-control

problem.

It is likely that increased understanding of

these problems will result in corrective efforts

by conscientious builders and inspectors. lnfrared thermography can be used to detect installation defects by taking a “heat-loss picture” of a house, but the cost of the equipment

and other factors have limited its use to date.

Wall Sandwich Configuration

The typical exterior residential frame wall is

insulated by glass or mineral fiber insulation

with a thermal resistance value of R-11 or R-13,

fastened between 2x4 framing members. The

interior and exterior wall surfaces and framing

are composed of materials of low to moderate

insulating value. Exclusive of openings, 15 to

20 percent of the area in such a wall is given

over to framing. This portion of the wall area,

insulated only by standard building materials,

accounts for a disproportionate amount of the

total wall heat loss; a framing area of 15 percent accounts for approximately 30 percent of

the total heat loss through the wall.

A number of improved wall configurations

and details have been developed and are finding increasing use. These, in general, involve

increasing the total amount of insulation, usually from about R-1 3 to about R-20, and changing the wall sandwich to either reduce the size

of framing areas or to insulate them. Several of

these configurations are described on pp. 500-

505 of volume I 1.

Infiltration Control

Infiltration has traditionally been a major

source of thermal inefficiency in homes. According to various estimates, it accounts for

between 20 and 40 percent of all heat transfer

through the building envelope, in both old and

new construction. While the absolute magnitude of infiltration losses has declined with the

advent of tighter building components and

techniques, the decline has been comparable

to the reduction in conductive losses. There is

clear potential for large energy savings from

further infiltration control.

Infiltration depends on how a house is built

and used. It increases whenever the wind

speed or indoor-outdoor temperature difference increases and may vary from near zero on

a calm spring day to several air changes per

hour (ACPH) on a windy winter day. These

basic facts are well known, but overall infiltration behavior is rather poorly understood and

documented. A review of the literature several

years ago determined that the average infiltration 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 if

the builder uses the right materials with sufficient care. The “Saskatchewan Conservation

House” in Regina, Canada, has uncontrolled

infiltration of only 0.05 ACPH.2 However, it is

not known whether the average builder could

build houses this tightly. The present Swedish

building standard3 requires that a house have a

‘T. H. Handley and C. J. Barton, “Home Ventilation

Rates: A Literature Survey” (Oak Ridge National Laboratory, September 1973), ORNL-TM-4318.

2Robert W. Besant, Robert W. Dumont, and Greg

Schoenau, “Saskatchewan House: 100 Percent Solar in a

Severe Climate,” So/ar Age, May 1979, p. 18.

3Svensk Bygnorm 1975, Statens Planverks Forfattningssamling, Liber Tryck Publications (Stockholm, Sweden,

1978), PFS 1978:1, 3rd edition.

maximum leakage rate that corresponds to

about 0.3 AC PH. It is enforced by measuring

the leakage in a sample of the homes by each

builder.

Insulation standards can be very specific

and simple visual checks can determine

whether the standard has been met. By contrast, infiltration reduction requires the use of

materials and techniques in places that are inherently inaccessible and invisible. It appears

that the only way to ensure compliance with

an infiltration standard is to measure it as part

of the inspection process.

There are two basic approaches to infiltration measurement. In the first, a small amount

of sulfur hexafluoride (SF 6

) or some other

tracer gas is circulated through the house with

the furnace blower and its concentration is

measured several times during the next hour or

two. Analysis of these measurements determines the infiltration rate for the specific wind

and temperature conditions at the time of the

measurement. The air samples can be taken in

plastic bags and analyzed in a laboratory, so

no elaborate equipment is required at the

house. The other technique uses a large fan to

suck air out of the house and measures the

volume exhausted at different indoor-outdoor

pressure differences (fan speeds). This provides

a “leakage” measurement of the house that is

relatively independent of the weather conditions and individual leaks can be located with

the use of a smoke source such as incense. Several investigators4 have attempted to correlate

these measurements with actual infiltration

rates. The results have been highly variable so,

in a strict sense, these measurements should

only be considered leakage measurements.

The leakage test is used for standards enforcement in Sweden where it requires about 2

hours to test a house. ’ The equipment used in

the test can be purchased for about $500.

‘Investigators who have worked with air infiltration

and leakage measurements include Richard Grot, National Bureau of Standards; Robert Socolow, Princeton

University; Robert Sonderegger, Lawrence Berkeley Laboratory; Maurice Gamze of Gamze, Korobkin, and

Caloger, Chicago, Ill.; and Gary Caffey, Texas Power and

Light Company

5Stig Hammarsten, National Swedish Institute for

Building Research, private communication, May 1979.
Ch. X/—Technical Options ● 231

A house would use less energy if there were

no infiltration, but the occupants would negate this strategy whenever they opened the

windows. Alternatively, fresh air could be provided with very little loss of heat by a simple

heat exchanger. The Saskatchewan Conservation House heats incoming air with outgoing

air by running both through interpenetrating

ducts made of plastic sheets separated by

wooden spacers. This recovers over 80 percent

of the heat. Many Swedish houses that meet

the present building standard have experienced air quality problems (such as those discussed in chapter X) and excessive humidity

levels. The standard is presently being reviewed and, according to one observer, it will

likely be modified to require the installation of

a heat exchanger. G Minimum acceptable air

change rates for homes are not well defined,

but a number of people active in the field

believe that heat exchangers or some other

method of purification are needed if infiltration is below about 0.5 AC PH.

The “technology” for infiltration control is

and will remain primarily the plugging of holes

and cracks, weatherstripping, and attention to

the tightness and quality of construction. Existing products are being used more extensively

and others are being used in different ways;

plastic sheeting is increasingly used to provide

a vapor barrier instead of paper or foil insulation backing. Following the identification of

electrical outlets as a major infiltration source,

simple foam plastic gaskets that are placed

under the outlet covers have come on the market. 7 Improved sealants and caulking materials

that are easier to use have become available in

recent years. A foam plastic sealant that can

be squirted into a crack much like shaving

cream is now available; it expands slightly as it

cures to ensure a tight seal.8 Other devices and

configurations used to reduce infiltration include outside combustion air intakes for furnaces, water heaters, and fireplaces, and tightly sealable exhaust vents. Each of these

changes makes it easier to build a tight house

or retrofit an existing house. Further improvements of this nature are likely.

‘Three manufacturers of such gaskets are the Vision

Co In Texas, KGS Associates in Greenville, Ohio, and the

Armstrong Cork Co.

‘One manufacturer of such a foam is the Coplanar

Corp , Oakland, Cal if.

WINDOW TECHNOLOGY

Windows serve multiple functions. They

allow daylight to enter, provide a view of the

outside with its changing weather patterns, can

be opened to provide ventilation, and admit

heat in the form of sunlight. They also allow

heat to escape, both by infiltration around the

frame and by the normal radiative/conductive/convective heat transfer processes.

From the standpoint of energy-efficient

building operation, the ideal window would

allow all the sunlight to enter the building

whenever heating is needed, and would have

very low thermal losses. During the summer

when no heating is needed, it would admit only

visible light, and only in the quantities needed

for lighting and providing a view of the outside. All of the invisible infrared rays (over half

of normal sunlight) would be excluded.

The windows in most houses are quite efficient at admitting sunlight—80 to 90 percent

of the light striking them passes through. In the

summer, shade trees and shades and awnings

on the windows limit the heat admitted. But

windows have the poorest thermal loss behavior of any part of the building shell. Typically,

windows have an R-value of 0.9 to 2, while insulated walls have an R-value of 10 to 15 and

insulated attics have an R-value of 15 to 20.

There is clearly room for vast improvement.

Early windows were a simple hole in the wall

to admit sunlight and allow the occupants to

see out, or a translucent material that would

admit some light and exclude cold air was
232 ● Residential Energy Conservation

used. Glass was a great advance, since it simultaneously let in sunlight and prevented drafts.

Double-glazing and shutters have now been

used for many years to reduce the heat loss

from windows, and shades can prevent overheating in the summer. During the last few

decades, most of the development of glass for

architectural uses has concentrated on making

windows that would admit less sunlight and

heat while still providing an adequate view.

The early solar control glasses simply absorbed

part of the sunlight in the glass with the result

that part of the heat entered the building, but

much of it stayed outside. Then manufacturers

began to put very thin reflective coatings on

glass. These reflect most of the sunlight, and in

some cases actually cut down on the winter

heat loss through the glass because they also

reflect the infrared heat waves back into a

room. The vastly decreased amounts of sunlight admitted to the building are considered

satisfactory because they still permit a good

view and greatly reduce glare. These reflective

glasses are marketed on the basis of their

reduction of air-conditioning loads in the summer and their reduced heat loss in the winter,

ignoring the fact that the additional sunlight

kept out in the winter would in some cases be

helpful. They are generally used on large buildings that have large air-conditioning loads in

both summer and winter.

In the last 3 or 4 years, increasing attention

has been devoted to new window products

that will add to the flexibility of window use

and substantially improve their overall effect

on the energy requirements of houses. The successful commercialization of these products

should make it possible for windows to generally lower the overall energy requirements of a

house for space-conditioning.

Windows lose heat by all of the basic heat

loss mechanisms discussed earlier: radiation,

convection, and conduction. As the contribution of radiation and of convection/conduction is comparable in most windows, reduction

of the losses attributable to either of these

mechanisms can be important. One factor that

has very little effect on heat loss is the thickness of the glass. Doubling the glass thickness

has a barely perceptible effect, but the same

amount of glass added as a storm window will

cut the heat loss in half. The combination of an

additional dead air space and layer of glass

cuts both radiative and convective losses. It is

generally true that the heat loss through a window will be divided by the number of panes

(e. g., the heat loss through triple-glazing is onethird that through single-glazing).

In addition to multiple-glazing, the basic

methods of conduction and convection control have been various forms of blinds, shutters, and curtains. Some sunscreen devices

have the effect of baffling the outer air layer

and reducing surface convection. Relatively

little attention has been paid, in existing windows, to the control of convection between

glazing layers. One technique that has been

studied is that of filling the interglazing space

with heavier molecular weight gases. Use of

gases such as argon, sulfur hexafluoride, or

carbon dioxide can result in a significant

reduction of conduction. It is also possible to

make “heat mirror” coatings that allow most

of the sunlight to pass through but which

reflect heat back into the room.

Room temperature radiation is a major contributor to heat loss, but sunlight has an even

larger effect on the energy impact of many

windows. Solar radiation at the Earth’s surface

is approximately 3 percent ultraviolet, 44 percent visible, and 53 percent infrared. The primary intent of glazing is to admit daylight and

permit a view. Daylight is “free” lighting from

a renewable source and has a more desirable

“color” than most artificial light. As with artificial light sources, sunlight, both visible and

invisible, is converted to heat energy when absorbed by materials. One property of sunlight,

however, is that its lighting “efficiency” is

higher than that of artificial light. In other

words, for a given level of lighting, sunlight

produces one-sixth the heat of incandescent

light and slightly more than one-half the heat

of fIuorescent light.

The use of daylighting is particularly desirable in the summer because it can cut the use

of electricity for both lighting and cooling. In

winter, the heat from the lights is often useful,

but daylighting is still beneficial since it

reduces the use of nonrenewable sources.
Ch. Xl—Technical Options ● 233

In the typical design approach to small residential buildings, little attention is paid to the

use and rejection of solar radiation. Windows

are treated simply as sources of conductive

heat loss in winter and of cooling load in summer. I n reality, summer heat gain can be greatly reduced and winter heat gain can be significantly increased by appropriately specified

and properly oriented windows. It is likely that

the sizing and orientation of windows will be

more carefully specified in the future.

Shading to keep out heat from the Sun is accomplished most effectively by an exterior

shade or reflector. An outer reflective surface

is almost as effective, an interior refIector (e. g.,

a shade) is still quite effective, and absorbing

glass is generally less effective.

At night, when sunlight and view are not factors, movable insulation that cuts the heat loss

to that of an ordinary wall section can be extremely useful. A single-glass window combined with nighttime insulation can exceed the

overall performance of even a triple-glazed

window. 9

Many variations on these ideas are being developed and some products are already on the

market.

Improved Windows

Enormous improvements in the energy efficiency of windows could be achieved through

the proper use of conventional materials and

components. (Some of these approaches are

presented in the discussion of Passive Solar

Design at the end of this chapter.) In many

cases “new” technologies are simply a revival

of old ideas and practices. Several technologies and devices of recent origin that appear

to provide significantly improved window efficiency are illustrated and described in figures

23 through 36. These are:

● the double-sided blind,

● the triple blind,

● shades between glazing with heat recovery,

● 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 developed by industry while others have been

supported by the Department of the Energy

(DOE) through its energy-efficient windows

program managed by the Lawrence Berkeley

Laboratory. This program has provided support for work on shades between glazing with

heat recovery, between-glazing convection

and radiation control, multi layer insulating

shades, beam daylighting, selective solar control films, heat mirrors, and optical shutters.

Testing and evaluation of other concepts and

products has been performed.

Traditional blinds provide protection from

glare and overheating near the window. The

blinds illustrated in figures 23 through 26 all

provide this protection but also allow the heat

to be used elsewhere if desired, reduce the window heat losses, or both.

The devices shown in figures 27 through 37

all serve to reduce the heat losses from windows when the Sun is not shining, and generally do it quite effectively. They can also be used

as shades to exclude sunlight when it isn’t

wanted. The shades shown in figures 27

through 29 incorporate design features that attempt to eliminate air leakage around the

edges. The same convective processes that

enable the double-sided and triple blinds to

distribute heat into the room will effectively

cancel the insulating value of a shade if the

edges are not tightly sealed. Figure 32 illustrates one approach to increased utilization of

daylighting, while figures 33 through 36 illustrate the use of some highly innovative materials. The materials in figures 33 and 34 share the

property of transmitting some radiation and

reflecting others, but their uses are very different. The heat mirror primarily reduces cool-

‘D. Claridge, “Window Management and Energy !5avings,” Energy and Bui/dings 1, p. 57 (1977).

~ Registered trademark of Suntek Research A=OCiates, Inc., Coite, Madera, Cal if.
234 . Residential Energy Conservation

Figure 23.—The Double-Sided Blind

-:

.

Absorbing

side

Reflecting

side

Exterior

k

Interior

The double-sided blind is used on bright winter days when

shading is needed to prevent overheating or glare from

large windows. It absorbs and distributes to the room

heat that would be reflected outside by an ordinary shade. It

functions as an ordinary shade in the summer with the reflective

side out.

ing loads while maintaining daylight availability for lighting. The heat mirror wiII be marketed by a subsidiary of Suntek Research Associates next year. The optical shutter is a passive shading material also under development

by Suntek. It works well, but the economics

are not considered promising if the shutter material is enclosed in glass. Some work has been

done on developing a suitable method for

encapsulating it in less expensive plastics. The

Weather Panel® (figure 36) is a logical combination of heat mirror and optical shutter

technology that could be a major advance in

passive heating technology if it can be produced at low cost. A discussion of this system

was presented at the Second National Passive

Solar conference. ’” Weather Panel® combines

the advantages of high thermal resistance and

shading in a completely passive system. The

@ Registered trademark of Suntek Research Associates, Inc., Coite, Madera, Calif.

‘“Day Charoudi, “Buildings as Organisms,” Proceedings of the Second National Passive Solar Conference,

Mar. 16-18, 1978, p. 276 (Philadelphia, Pa.: Mid-Atlantic

Solar 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 the

house. At night, thermal resistance of R5 is achieved by pulling

all three shades, according to the manufacturer,

Ark-tic-seal Systems, Inc., Butler, Wis.

Cloud Gel® material can be made to turn reflective at any temperature in the range from

00 to 1000 C. (An essential requirement for systems like this is for all parts to last 15 years or

more or be readily replaceable.)

None of these new technologies is the single

“best” approach for all conditions. They differ

radically from each other in cost, effectiveness, and range of applicability. Table 75 summarizes the salient features of these new technologies. This table presents the performance

parameters, operating requirements, estimated

cost-effectiveness, applicability to retrofit,

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 Insulating

Window Shade

r. \

Figure 25.—Shades Between Glazing With

Heat Recovery

TO north side

or storage

l\ \

Cover with double head seals

Black side

7

7

7

7

7

(.~

& expand ~o form

dead air spaces

Reflective surfaces

:0 develop high

resistance to

heat transfer

Reflecting side

Spacers collapse

when rolled up

yet expand when

pulled down

r Cover with double

jamb seals

11- /

Thermally effective summer thru winter

at windows and sliding doors

This multilayer shade stores in a compact roll and utilizes flexible

spacers to separate the aluminized plastic layers and create a series

of dead air spaces when in use. The five-layer shade used with

double glazing offers thermal resistance of R8 according to

the manufacturer, Insulating Shade Co., Guilford, Corm.

Figure 26.—Between Glazing Convection and Radiation Control

Privacy Acceptance

(Exterior) ss (Exterior) ss

The horizontal slats between the glass suppress convective heat loss. In the “privacy mode,” light is excluded and heat loss is

reduced further. R3.5 has been achieved and R5 is believed possible with better design and construction.
236 ● Residential Energy Conservation

are qualitative and approximate. They are another. Important factors in their sale inbased only on the length of payback period. clude:

It must be remembered that windows are

generally installed primarily for esthetic reasons. While there are a host of window accessories and modifications, probably only storm

windows and double-glazing have historically

been marketed primarily on the basis of energy

savings. Many of these accessories and improvement solve one “problem” and introduce

Figure 28.— Insulating Window Shade

I I

2nd air space

Flexible /4

barrier

still air

Hollow )

b A

core

● The desire for privacy. Shades, drapes,

and blinds are sold primarily for the privacy they afford. Exterior shutters such as

the Rolladen, which are widely used in Europe, offer both privacy and increased

security.

 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 to

the inner cannister, and closes by the reverse process. It provides a thermal resistance of R3 when used with single-glazing according to the

manufacturer, Zomeworks, Inc., Albuquerque, N. Mex.
Ch. XI— Technical Options c 237

●

●

The need for improved comfort is a major

factor in the sale of “solar control”

glasses. While they also reduce the need

for air-conditioning, it is virtually impossible to provide comfort in the full glare of

the summer Sun. This is another important

consideration in the purchase of shades,

drapes, and blinds. The “solar control”

glasses also exclude useful winter sunlight.

The ultraviolet rays in sunlight shorten the

life of fabrics and home furnishings. The

opaque window covers and some coatings

reduce this problem.

Figure 31.—Beadwall

The beadwall uses automatic controls to pump small expanded

polyurethane beads between the two layers of glass to provide a

nighttime thermal resistance of R8. Beadwall is a registered

trademark of Zomeworks, Inc.

● Drapes, shades, blinds, and shutters are

opaque. By contrast, heat mirrors, selective solar control films, and between-glazing convection/radiation control devices

provide both daylighting and outlook

even when in operation.

Since reduced energy consumption is only

one factor in the choice of window improvements, it is entirely possible, and perhaps IikeIy, that some of the “less cost-effective” improvements that offer other advantages will

uItimately become most widely used.

Figure 32.—Beam Daylighting

This beam daylighting approach uses adjustable

reflective blinds to reflect light off the ceiling far

into a room to extend the area where daylight

levels are acceptably high.

Figure 33.—Selective Solar

. -

Control

Selective control

film

\

Visible sunlight

P

Infrared sunlight

u

The selective solar control film transmits most of the visible

sunlight while reflecting most of the infrared sunlight. This can

reduce cooling loads while utilizing available daylight.
238 ● Residential Energy Conservation

Figure 34.-Heat Mirror Figure 35.—Optical Shutter

Heat mirror on

Wall

inner surface

Room temperature

infrared

1

a

The heat mirror transmits almost all of the visible and invisible

infrared sunlight but reflects almost all of the thermal infrared

radiation back into the room. The overall effect can be similar to

adding another pane of glass.

Glazing contains

optical shutter Clear

\ /

glass

The optical shutter is a heat-activated sunshade made from a

temperature sensitive polymer material which is transparent below

a critical temperature (76°F in this example) and becomes a

milky-looking diffuse reflector of 80% of the sunlight above that

temperature.

Figure 36.—Weather Panel®

I I I~ Light reflected

if interior too hot
Ch. Xl—Technical Options . 239

Table 75.—Summary of New Fenestration Technologies

Winter Summer

Name of Radiative Heat loss Radiative Other

technology gain (all types) gain gains

= 90% Of Un -

1. Double-side d shaded; U.V. moderate moderate moderate

blind is controlled reduction reduction reduction

———.

= 90% Of un - moderate2. Triple blind shaded; U.V. high moderate moderate

is controlled reduction reduction reduction

3. Shades some loss

between but distribu- moderateglazing with tion/storage moderate high moderate

heat recovery capability; U.V. reduction reduction reduction

is controlled

4. Between = 90% of unglazing con- shaded; slats moderatevection and can direct high high high

radiation Sun away from reduction reduction reduction

control furnishings ——————

5. Insulating very high

shades and N/A very high high reduction

shutters reduction reduction if closed

6. Skylid® N/A high high hig h

reduction reduction reduction

if closed

high

7. Beadwall®

very high

N/A very high reduction reduction

reduction if filled if filled

8. Beam beneficial reduced

daylighting distribution N/A no effect lighting

effects and load

u.v. control — — .

9. Selective

solar control significantly moderatereflective reduced N/A high N/A

film reduction

low10. Heat mirror low moderate low some

reduction reduction reduction reduction

11. Optical

shutter low N/A high N/A

reduction reduction

low reduction

12. Weather unless very high high very high

panel® overheating reduction reduction reduction

occurs

13. Optimization significant high

of fenestra- optimization reduction

tion design over N/A through reduction

(size, ori- current proper shadentation) practice ing, etc.

Effect on

lighting/ Opera- Estimated Applicaoutlook when bility cost- bility to Current

operating effectiveness retrofit status —

manual; —

no outlook, seasonal very very ready for

very low reversal of high high commercial iIight blind required zation

no outlook: manual,

very low somewhat high high on market

light complex

some outlook;

lighting pos- ready

sible when manual high low commercialiI n operation zation

no outlook or

Iight: some

degradation none moderate- Iow early

of outlook at high R & D

all times —

manual;

no outlook, or low- low- products

no light automatic ——

moderate moderate marketed

no outlook, automatic low- Iow on market

no light moderate

no outlook, automatic low- Iow on market

no light moderate

Increased manual;

daylighting; only

affects up- seasonal low- Iow advanced

per part of adjustment moderate R & D

W indow only is essential

high in prenone none dom, cooling

climates

none none moderatehigh

— — no outlook

when automatic probably

translucent low —

very

high

very

high

probably

low

R & D

on market;

retrofit

package near

marketing

R & D

passive/

no outlook automatic R&D

N/A N/A very high very early

low R & D
240 . Residential Energy Conservation

HEATING AND COOLING EQUIPMENT

Direct Fossil-Fired Heating Equipment*

Most residential and commercial buildings

in the United States are heated with directfired gas and oil furnaces and boilers, as shown

in table 76. Considerable controversy arises

over the typical operating efficiencies of these

Table 76.—Heating Equipment and Fuels for

Occupied Units in 1976

(in thousands)

Number Percent

Total occupied units. . . . . . . . . . 79,316 100.0

Warm air furnace. . . . . . . . . . . . . . . 40,720 51.3

Steam or hot water. . . . . . . . . . . . . 14,554 18.3

Built-in electric units . . . . . . . . . . . 5,217 6.6

Floor, wall, or pipeless furnace. . . 6,849 8.6

Room heaters with/without flu . . . 8,861 11.2

Fireplaces, stoves, portable

heaters. . . . . . . . . . . . . . . . . . . . . 2,398 3.0

None. . . . . . . . . . . . . . . . . . . . . . . . . 716 .9

Total occupied housing unit . . . 74,005 100.0

House heating fuel:

Utility gas. . . . . . . . . . . . . . . . . . . 41,219 55.7

Fuel oil, kerosene. . . . . . . . . . . . 16,451 22.2

Electricity . . . . . . . . . . . . . . . . . . 10,151 13.7

Bottled gas or LP gas. . . . . . . . . 4,239 5.7

Coke or coal/wood/other . . . . . . 1,482 2.0

None. . . . . . . . . . . . . . . . . . . . . . . 463 .6

Cooking fuel:

Utility gas. . . . . . . . . . . . . . . . . . . 32,299 43.6

Electricity . . . . . . . . . . . . . . . . . . 35,669 48.2

Other . . . . . . . . . . . . . . . . . . . . . . 5,748 7.8

None. . . . . . . . . . . . . . . . . . . . . . . 287 .4

SOURCE: Bureau of Census, Construction Reports, “Estimates of Insulation

Requirements and Discussion of Regional Variation in Housing Inventory and Requirements,” August, September 1977.

systems. One reason is that remarkably little is

known about their performance in actual operating environments, and the literature in the

area is replete with inconsistent information.

(Figure 10 in chapter II illustrates the problem.)

Performance undoubtedly varies with the type

of unit, its age, size, installation, position in

the building, and a number of other variables.

Another reason for the controversy is the inconsistency in the definition of efficiency. Until recently, the most common value quoted

was the steady-state or full-load combustion

efficiency, which is defined as the ratio of

useful heat delivered to the furnace bonnet

*Some parts of this section are taken from “Applications of Solar Technology to Today’s Energy Needs,” Office of Technology, June 1978.

divided by the heating value of the fuel. ” Typical values for direct-combustion furnaces are

70 to 80 percent; heat loss principally results

from heated stack-gases lost during combustion. This definition does not give a complete

measure of the fuel required to heat a living

space over the heating season. A definition

that does, and one that is increasingly being

used, is the seasonal performance factor or

seasonal efficiency. This measure is defined as

the ratio of (a) the useful heat delivered to the

home to (b) the heating content of the fuel

used by the furnace over the entire heating

season. Typical gas furnaces have seasonal efficiencies in the range of 45 to 65 percent (see

figure 37) Seasonal efficiency accounts for all

factors affecting the heating system’s performance in its actual operating environment. In

addition to stack-gas losses these factors include loss of heated room air through the

chimney while the furnace is off (infiltration),

cycling losses, pilot light (gas furnaces only),

and heat losses through the air distribution

ducts when in unheated spaces. ” Cycling

losses are a result of operation at part loads,

which causes heat to be lost in raising the temperature of the furnace before useful heat can

be delivered to the living space. Most existing

homes have furnaces oversized by at least 50

percent, so they are always operating at relatively inefficient part-load conditions. ’ 3 T h e

oversizing is greater still in homes that have

had insulation, storm windows, or other thermal envelope improvements added since the

furnace was installed.

In addition to the fossil fuel required for the

burner, gas and oil furnaces and boilers require

electric energy to operate fans and pumps.

1

‘E. C. Hise and A. S. Holmn, “Heat Balance and Efficiency Measurements of Central Forced Air Residential

Gas Furnaces” (Oak Ridge National Laboratory).

1

*C. Samuels, et al., “MIUS Systems Analysis— Initial

Comparisons of Modular-Sized Integrated Utility Systems and Conventional Systems, ” ORNL/HUD/MIUS-5,

June 1976, p. 24.

‘‘H ise and Holman, op. cit.
Ch. Xl—Technical Options ● 241

Figure 37.—Typical Energy Flow for a Gas Furnace

System

Infiltration loss

(o-lo%)

loss

Oil and Gas Furnace Efficiency

Improvements

Furnaces with improved efficiency levels are

now available and new devices are being developed. Table 77 summarizes the approximate energy savings and costs of a number of

oil boiler improvements, most of which are

now available. Corresponding tables of measured improvements for oil furnaces and gas

furnaces and boilers are not available, but similar levels of improvement can be expected.

Several of these improvements reduce the

heat lost when the furnace cycles on and off

frequently. As most furnaces are now sized to

supply at least one and one-half times the maximum anticipated heating load, reducing the

furnace capacity, either by installing a smaller

nozzle or a smaller furnace, will also substantialIy cut off-cycle losses.

Periodic adjustment of oil burners will improve their combustion efficiency and lower

fIue-gas temperatures. This service is available

from heating oil distributors and furnace repair services.

Variable firing rate furnaces represent an attempt to provide reduced output for near continuous operation and thus cut off-cycle

losses; development of a reliable and affordable technology for accomplishing this goal

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

has proven difficult. Such furnaces are not expected to be commercially available until the

late-l 980’s.

Automatic fIue dampers close the flue after

the furnace shuts off to drastically reduce the

amount of heat that escapes up the chimney

while the furnace is not operating. Flue dampers have been used in Europe for many years,

but concern over safety questions delayed

their acceptance in this country. They are now

coming into use.

Flame-retention head burners improve combustion efficiency by causing turbulence in the

combustion air, enhancing air-fuel mixing.

These burners are on most oil furnaces sold

now, but improved versions are being developed.

Sealed combustion units reduce flue-gas

losses during both on and off cycles by using

outside air for combustion. This means that

the warm interior air is not exhausted up the

flue. These improvements can result in furnaces with seasonal efficiencies of 75 to 81

percent.

14 15

Advanced Fuel-Fired Equipment

Several types of equipment that should provide substantially higher seasonal efficiencies

are under development. These include condensing flue-gas furnaces, pulse combustion

burners, and several different fuel-fired heat

pumps.

Conventional furnaces maintain flue-gas

temperatures of 4000 to 7000 F to avoid condensation and attendant corrosion and to

maintain the nature draft.

The near-condensing flue-gas mechanism

would reduce this temperature to nearly 3000

F, and thus capture a great deal of the flue-gas

heat; the condensing version would place the

flue temperatures below 300° F and thus recapture the latent heat in the water vapor as

well. Problems with this approach relate to

“j. E. Batey, et al., “Direct Measurement of the Overall Efficiency and Annual Fuel Consumption of Residential Oil-Fired Boilers” (Brookhaven National Laboratory,

January 1978), BNL 50853.

“Department of Energy, “Final Energy Efficiency lmprovement Targets for Water Heaters, Home Heating

Equipment (Not Including Furnaces). Kitchen Ranges and

Ovens, Clothes Washers and Furnaces, ” Federal Register.

corrosive fIue-gas condensate and scaling on

the heat exchanger. Neither version is expected to appear on the market for several

years.

Pulse Combustion Furnaces and Boilers

The pulse combustion burner is a unique approach that uses mechanical energy from an

explosive combustion process to “power” the

burner and permit condensation of the flue

gases without the need for a fan-driven burner.

The operation of the pulse combustion

burner is illustrated in figure 38. Initially, a

smalI fan drives air into the combustion chamber through flapper valves along with a small

quantity of gas and the mixture is ignited by a

spark plug. The explosive force of ignition

closes the valves and drives the exhaust gases

out the tailpipe. The combustion chamber and

tailpipe are acoustically “tuned” so the exhaust process creates a partial vacuum that

opens the intake valves and sucks air and gas

into the combustion chamber without use of

the fan. Residual heat from the previous combustion ignites this mixture without need for

the spark plug. The exhaust gases are cooled to

about 120° F, recovering nearly all of their

heat including the latent heat in the water

vapor.

The pulse combustion principle has been

known for many years and some development

occurred in the 1950’s and 1960’s. The principal problems were related to muffling the intrinsically noisy combustion process and materials problems related to the extremely high

heat releases in small volumes. ” While these

problems were not insolvable, the promise of

higher efficiency was insufficient to offset

higher production costs. Further development

work has occurred and Hydrotherm, Inc., has

started an initial production run of 300 residential boilers with full production to begin after

mid-1979.

17 Hydrotherm has measured efficiencies of 91 to 94 percent for this boiler and

seasonal 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 Bulletin 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 blower

forces outside air into a sealed

chamber where it is mixed with gas.

n

2. A spark plug is used on the first

cycle only to ignite the mixture.

3. The pressure resulting from 4. As the hot gases are cooled below

the combustion process forces the hot

gases through tubes in the heat exchanger where surrounding water

absorbs the heat.

6. Residual heat from the initial combustion ignites the second and

subsequent air/gas mixtures without

the need for the spark plug or

blower...at a rate in excess of 25

cycles per second.

the dew point, condensation of the

water vapor in the flue gases takes

place, releasing the latent heat of

vaporization ...amounting to about

9010 of the fuel input.

a

7. Air is drawn into the combustion

chamber from outdoors by the vacuum caused by the velocity of the

exiting exhaust gases...both through

small diameter plastic pipe. No flue or

chimney is needed

5. Condensation collects in the base of

the boiler and is removed by a condensate drain.

8. Water is circulated through HydroPulseTM in much the same manner as in

a conventional boiler.

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

Iar since outdoor combustion air is used and

off-cycle flue losses are virtually eliminated. 18

Due to the low flue temperatures, the flue

gases are exhausted through a 11⁄2-inch PVC

plastic pipe and no chimney is needed to provide natural draft. The cost of this boiler will

be about twice that of conventional gas boilers. An oil-fired pulse combustion boiler is now

manufactured in Europe (“TurboPuls”) and the

manufacturer is apparently interested in marketing in the United States if certification can

be obtained.

Both the noise problem and the materials

problems are more severe for hot air furnaces,

but Lennox Industries is developing a pulse

combustion furnace in a joint project with the

Gas Research Institute. Laboratory efficiencies

above 95 percent have been achieved and a

preproduction prototype has been installed in

a home but additional work on noise reduction

and controls development is needed. ’9 Major

field testing will be conducted before the furnace is marketed, perhaps in the mid-1 980’s.

Fuel-Fired Heat Pumps

Heat pumps, as their name implies, pump

heat from a cooler space to a warmer space.

All refrigerators and air-conditioners are actually heat pumps, but the term “heat pump”

is generally reserved for a device that is designed to provide heating by pumping heat

from the outdoor air or a water supply. Most

heat pumps can also be reversed and used as

air-conditioners. The heat pumps now on the

market are electricalIy driven but development of gas-fired heat pumps is underway.

Most gas-fired designs could be modified and

produced as oil-fired units as well. The designs

being developed should provide seasonal performance factors of 1.1 to 1.5 for heating, or

use about half the fuel consumed by present

furnace installations. Three of these designs

are discussed in the Heat Pump section.

‘8Hydro-Pulse Boiler product literature, Hydro Therm,

I nc:.

197978 Annual Report (Chicago, I Il.: Gas Research Institute).

Electric Air-Conditioners and

Heat Pumps*

A typical residential air-conditioner/heatpump installation is illustrated in figure 39.

These systems usually cool and dehumidify

room air directly while the systems used in

large apartments and commercial buildings

typically produce chilled water, which is piped

to fan-coil units in various parts of the building. Cooling systems have three basic components: 1 ) a unit that permits a refrigerant to expand, vaporize, and absorb heat from the

room air (or water system); 2) a compressor

that compresses the heated vapor (increasing

its temperature); and 3) a condenser, located

outside the building that rejects the heat absorbed from the room air into the atmosphere

(condensing the compressed vapor to a liquid).

In “single-package” units, all three functions

are provided in the same unit and can be connected directly to the ductwork (or chilled

water system) of the buiIding. In “split-system”

devices, refrigerant is sent to an air-handling

unit inside the building. Another distinction involves the technique used to compress the refrigerant vapor. Smaller units typically use a

simple piston system for compression and are

called “reciprocating” units. Larger units may

use centrifugal pumps or screw compressors

for this purpose.

Heat pumps use the same three basic components as the air-conditioners described

above, but the cycle is reversed. In the heating

cycle, the indoor air absorbs heat from the refrigerant and heat is acquired by the refrigerant from the outdoor fan unit (the “condenser”

in the cooling model).

Heat pumps that can extract useful energy

from outdoor air temperatures as low as 00 F

are now on the market, although system performance is little better than electric furnaces

at low temperatures. The electricity used by

the system can be considerably reduced if a

source of heat with a temperature higher than

that of the outside air can be found. Lakes or

*Some parts of this section are taken from “Application of Solar Technology to Today’s Energy Needs,” Office of Technology Assessment, June 1978.
Figure 39.—A Typical “Split. System” Heat Pump Installation

I

SOURCE: Carrier Corporation.
246 ● Residential Energy Conservation

ground water, for example, are usually above

ambient air temperatures during the winter

and can be used to provide a source of input

heat if they are available. Solar energy can

also be used to provide a source of heated

water. Systems that extract heat from water

are 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 the

United States was equipped with room air-conditioners or central air-conditioning, up from

47 percent in 1973.2’ Housing units with central

air-conditioning increased from 16.8 to 21.5

percent from 1973 to 1976 while the fraction

with room air-conditioners showed very little

change, going from 30.1 to 29.6 percent. From

1973-77, the fraction of new homes with central air-conditioning has ranged from 46 percent in 1975 to 54 percent in 1977.22 Thus, it is

difficult to say whether growth in demand for

central air-conditioning in new housing was

merely slowed by the Arab embargo, or whether it is approaching saturation.

Less than 5 percent of U.S. homes currently

have heat pumps, but 20 to 25 percent of new

housing starts in 1978 used the system, The

growth of the market has been slowed by the

sensitivity of buyers and builders to the initial

cost of the equipment (which is higher than

conventional electric-resistance heat), and by

the fact that regulated gas prices and promotional electric prices have made the cost of

operating competitive heating systems artificially low. Concerns about reliability have also

been a problem. Some of the heat pumps marketed in the early 1960’s were extremely unreliable, and sales of the units fell steadily between 1965 and 1970. While most of the reliability problems have been resolved, a recent

study showed that the problem has not vanished.

20 Cordial Associates, Inc., “Evaluation of the Air-toAir That Pump for Residential Space Condition ing,” prepared for the Federal Energy Administration, Apr. 23,

1976, p. 114. Bureau of the Census, “1976 Annual Housing Survey. ”

‘

z Bureau of the Census, “Characteristics of New Housing: 1977, ” Construction Reports, C25-77-13, 1978, p. 12.

The performance of heat pumps and air-conditioners now on the market varies greatly.

Figure 40 indicates the performance of central

air-conditioners smalIer than 5 I/z tons now on

the market. The difference in performance

refIects both the quality of design and the cost

of the unit. High-performance units may also

result from a fortuitous combination of components. Manufacturers cannot afford to design condensers optimally suited for all compressors to which they may be attached, and

some combinations of these units may therefore result in a high-efficiency system. As a

result, while there are a few units on the market with very high efficiencies (figure 40, for

example, indicates that 5 percent of the units

on the market have a coefficient of performance (COP) greater than 2.5), this performance

is not available in all size ranges. (The definition of COP, energy efficiency ratio, and other

Figure 40.— Air-Conditioning COP of Heat Pumps

and 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 3.1-3.3

1.6

COP

SOURCE and Institute Includes only units of

u rider 135,000 Btuh Data has been converted from to COP and

values rounded to nearest tenth ranges were ‘‘5 4 and under

 6574 75.84 85.94, 95104, and 105.11 4
Ch. Xl—Technical Options . 247

efficiency measures are discussed in a technical note to chapter 1 I.) The 1976 industry average COP was 2.00.23

Heat pumps in the cooling mode were about

5-percent less efficient than the average airconditioner, for a variety of reasons. Heat

pumps cannot be optimized for maximum

cooling performance as somewhat more complexity is required in the coolant piping, and

the valve that switches the direction of the refrigerant when the system is changed from

heating to cooling introduces some inefficiencies.

The performance of electric-cooling and

heat-pump systems also varies as a function of

the temperature and humidity of both the inside and outside air. This is because the theoretical capacity of a unit varies as a function

of these parameters, and because most small

units must be either fully on or fully off. The

load control achieved by “cycling” the system

from full capacity to zero output requires

heating or cooling large parts of the system

before useful space conditioning can be performed. Using energy to heat or cool the units

decreases the system’s efficiency, The dependence of a typical residential heat-pump unit

COP on the outdoor temperature is shown in

figure 41. The fact that the heat pumps capacity to produce heat decreases as the outside

temperature decreases results in a highly

temperature-dependent heating mode. A system large enough to provide 100 percent of the

heating load at the lowest anticipated temperature would be prohibitively expensive in

most locations, and a common compromise is

to assist the heat pump with electric-resistance

heat whenever its capacity falls below the

heating demand. The average COP of a heatpump system during the winter season is called

the seasonal performance factor (SPF). This

parameter is shown in figure 42 as a function

of local climate. As expected, the average COP

of heat pumps is lower in northern parts of the

23 George D. Hudelson (Vice President-Engineering,

Carrier Corporation), testimony before the California

State Energy Resources Conservation and Development

Commission, Aug. 10,1976 (Docket No. 75; CON-3).

Figure 41.— Performance of the Carrier SplitSystem Heat Pump

Ambient Temperature

Model 38CQ020 ARI ratings:

Assumptions used in computing

system performance

Heating mode nominal capacity

21,000 Btu/hour. COP at high temperature is 2.9, COP at low temperature IS 1.7

Cooling mode nominal capacity is

19,000 Btu/hour. COP is 2.1,

Heating mode entering indoor air

IS 70° F (db) heating demand includes energy used for defrost

balance point at 30° F.

Cooling mode entering indoor air

is 80° F (db) and 67° F (wb). Fan

power iS 0.2 kW.

Energy use includes: compressor motor demands; resistance heat;

the demands of indoor and outdoor fans, and the energy used in

defrost cycles. The air-flow was assumed to be 700 cfm. Assumptions

made about decrease in efficiency due to part load conditions were

not explained in the literature.

SOURCE Career Heat Pump Outdoor Carrier Corporation 1976 Form 

country. As discussed in chapter 11, the performance of heat pump installations has generalIy been lower than predicted.

The performance of water-to-air heat-pump

systems can be significantly higher than air-toair systems if heated water is available. When

600 F water is available, most commercial

units have COPS in the range of 2.5 to 3.5, but

units with COPS as low as 2.0 and as high as 3.7

are on the market.

There are a number of straightforward

changes that can improve the performance of

air-conditioners without changing the basic

design. Legislative actions and rising fuel costs

have produced a number of higher perform-
248 ● Residential Energy Conservation

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

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

ance units. Some of the steps being taken to

improve performance include:

●

●

●

●

●

●

use of more efficient compressors,

use of two compressors or multiple-speed

compressors to improve part-load efficiency,

improved heat exchangers for both the

condensor and evaporator,

more efficient motors to drive the compressor and fan,

automatic cycling of the fan with the

compressor, and

improved airflow.

One estimate for the cost of these incremental improvements is shown in figure 43. California has legislated performance standards in a

two-step process; standards were first effective

during 1977 and become more stringent in

late-1979. These standards, which specify the

minimum performance of any unit that can be

sold in California, are shown in table 78.

The Energy Policy and Conservation Act

(EPCA–- Public Law 94-163) as amended by the

National Energy Conservation Policy Act

(NECPA–- Public Law 95-619) required DOE to

establish energy-efficiency improvement targets for appliances. These targets for air-conditioners, shown in tables 79 and 80, represent

targets for the production-weighted average

performance of all air-conditioners sold rather

than a minimum standard. The National Energy Act has mandated the setting of efficiency

standards that will be proposed in October

1979.

Looking further into the future, a number of

systems have been proposed that could increase the COP of air-conditioning systems

and heat pumps by as much as 50 percent. Researchers at General Electric believe that it

would be possible to achieve an approximate

50-percent increase in the average COP of both

heating and cooling for an increase in the initial cost of the unit of about 20 to 30 percent.

It should be noted that performance can be

improved by increasing low-temperature performance, high-temperature performance, or

both. The speed with which these new units appear on the market will depend strongly on the

company’s perception of whether the public is

willing to invest in equipment that can reduce

their annual operating expenses over the long
Ch. Xl—Technical Options ● 249

Figure 43.— Estimated Cost of Increasing the Performance of Air-Conditioners

From the Industry Average COP of 2.0 to the Performance Levels Indicated

(estimates assume production rates equivalent to current production rates)

100

2.0 2.1 2.2 2.3 2.4 2.5 2.6

System Coefficient of Performance

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

Table 79.—DOE Room Air. Conditioner EnergyEfficiency Improvement Target

Table 78.—California Standards for

Cooling Equipment

Standard Standard

as of after

System type 11/3/77* 11/3/79*

Central Air-Conditioners

Heat pumps (cooling mode) 1.96 2.2

Air-conditioners 2.05 2.34

Room Air-Conditioners

All systems with capacity greater

than 20,000 Btu’s 2.05 —

Other heat pumps 2.08 —

Other air-conditioners 2.20 —

All systems using voltages

greater than 200 v. — 2.40

Other heat-pump systems — 2.43

Other air-conditioners — 2.55

1972 energy- 1980 energyefficiency ratio 1972 efficiency ratio 1980

Btu/watt-hour COP Btu/watt-hour COP

6.2 1.82 7.94 2.33

SOURCE: Department of Energy, “Energy Efficiency Improvement Targets for

Nine 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 1980

SEERa

COPbSEERa

COPb

Central airconditioners

(aggregate). . . . . . . . 6.5 1.90 8.0 2.34

Single package . . . . . 6.2 1.82 7.2 2.11

Split 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 for

Nine Types of Appliances,” F.R. 43, No, 70, Apr. 11, 1978, p. 15145.
250 ● Residential Energy Conservation

term. These attitudes may be influenced by

legislative initiatives, such as the National

Energy Act.

Gas-Fired Heat Pumps and

Air-Conditioners

Absorption Air-Conditioners

The only systems now available that use

direct thermal input to operate a heat pump or

air-conditioner are the “absorption-cycle” airconditioners that have been used for decades.

The refrigeration cycle is very similar to cycles

used in other types of air-conditioning systems

(vapor-compression). A chilled liquid (usually

water instead of a refrigerant) is permitted to

expand and cool air. This water is then recompressed and the absorbed heat is rejected into

the atmosphere. The absorption cycle accomplishes this recompression by absorbing the

low-pressure water vapor in a concentrated

salt solution. This concentrated solution is

continuously produced in a distilling unit

driven by the heat from the fuel.

Absorption air-conditioners are inherently

more expensive than electric systems because

1 ) of the larger number of heat exchangers required, and 2) the unit’s cooling surface must

be large enough to reflect both heat from the

combustion process and heat removed from

the space that was cooled. (In electric systems,

the heat from generation is rejected at the

electric generator site.) Absorption units had a

lower operating cost than electric chillers in

the era of cheap gas, and are still competitive

in some areas, but their use was limited by first

cost.

A typical single-effect absorption chiller has

a COP of 0.52; double-effect units can have

COPS of 0.88. These COPS must, however, be

carefully qualified, as they do not include the

electricity used for fans and pumps. They cannot be directly compared with the COPS of

electric chillers since fuel costs are different

and the COP of electric units does not include

powerplant losses. It is reasonable to expect

that improvements in current designs could

lead to significant improvements in performance.

The Iron-Firemen double-effect chiller,

which was manufactured for a time, was able

to achieve a COP of 1.2 (not including boiler

losses and electric energy requirements). Some

engineers believe it would be possible to increase this COP for double-effect absorption

devices to the range of 1.35.

Absorption Heat Pumps

An absorption heat pump is being developed

for residential use by Allied Chemical Corporation and Phillips Engineering under sponsorship of the Gas Research Institute. The current

goals for operating COP of this unit are 1.2 for

heating and 0.5 for cooling.24 Further improvement in heating COP could be obtained by recovering the waste heat from the generator

section of the unit. It is believed that significant advances in fluids, fluid pumps, and heat

exchangers have overcome problems that hindered earlier efforts to develop an absorption

heat pump.

This unit has reached the preproduction prototype stage and negotiations are underway to

accelerate commercialization by involving

DOE and a major manufacturer in further development. After further development and extensive field testing, this system could be on

the market in about 5 years.25 Similar units are

being developed in Europe by the British Gas

Corporation and others.

26 This system is expected to cost about 15 percent more than a

gas furnace/electric air-conditioner combination and will probably be most competitive in

areas where heating is the major requirement.

Other Gas-Fired Heat Pumps

A different approach to the use of fossil

fuels to operate a heat pump has been under

investigation for some time. These designs

burn fuel to operate a small onsite heat engine,

which in turn drives the heat-pump compressor. A number of advanced, gas-fired, heat24 James Drewry, “Gas-Fired Heat Pumps,” G/?/ Digest,

September 1978, pp. 1-5.

*’James Drewry, Gas Research Institute, private communication, May 1979.

*’Gerald Leach, et al., A Low Energy Strategy for t he

United Kingdom (London: Science Reviews, Ltd., 1979), p.

25
Ch. XI—Technical Options ● 251

pump systems are being examined by the industry with the support of DOE and the Gas

Research Institute. These include:

● A concept that uses a subatmospheric gas

turbine is being developed by the Garrett

A i Research Corp.

● A free-piston Stirling engine is being developed by General EIectric.

● Systems based on diesel engines and

Rankine-cycle devices are also being

examined.

An interesting feature of the heat-fired, heatpump systems is that their performance does

not decrease with temperature as fast as the

performance of conventional heat pumps.

The gas turbine heat pump development emphasizes commercial or multifamily applications. A “breadboard” system has been operated and development of a commercial prototype is underway. Commercial production is

expected by the mid-1 980’s, with units expected to range from 7.5 to 25 tons in capacity.

The expected COP is 1.4 to 1.5 in the heating

mode and about 1.0 in the cooling mode.27 28

The installed cost is expected to be 15 to 20

percent higher than existing systems with payback in fuel savings in about 2 years.

The free-piston Stirling engine heat pump

seems to be at a similar stage of development,

but is thought to be more applicable to the

residential market. One prototype has been

built and another will be completed during

1979. The design goal for the prototype is a

heating COP of 1.4 to 1.5 and a cooling COP of

0.9. This requires an engine efficiency of 30

percent and the present prototype operates at

22 to 25 percent. This design is potentially very

reliable since there are only two moving parts

in the engine and one in the compressor. It is

expected to be on the market in the mid-1 980’s

z71 rwinStambler, “Working on New Gas Turbine Cycle

for 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 energy

savings in less than 3 years.29 30

Stirling and Ericsson cycle, free-piston devices may be able to achieve efficiencies on

the order of 60 to 90 percent of ideal Carnot efficiency. An engine operating between 1,400°

and 1000 F could therefore achieve a cycle efficiency of 40 to 63 percent.

ERG, Inc., has reported a measured indicated efficiency that represents 90 percent of

Carnot in a free-piston device operating in

roughly this temperature region. The Garrett

Corp. has reportedly achieved a cycle efficiency of 38 percent, using a small regenerated gas

turbine. 31

If it is assumed that seasonal performance

factors for heat pumps can be in the range of

2.5 to 3.0, the overall system COP (or ratio of

heat energy delivered to the living space to the

heating value of the fuel consumed) of a heat

pump combined with a heat engine that is 38-

to 60-percent efficient can be in the range of

0.95 to 1.8. If waste heat from the engine is

used, the effective COP can be as high as 2.2.

A 38- to 60-percent efficient engine combined with an air-conditioning cycle with COP

of 2.5 could achieve system COPS of 0.95 to

1.5. These coefficients cannot be compared

directly with COPS of electric heat pumps. In

order to obtain comparable “system efficiency” for an electric system, the electric COPS

must be reduced by the efficiency of converting primary fuels to electricity and transmitting this energy to a heat-pump system. The

average generating efficiency of U.S. utilities

is approximately 29 percent; the average transmission losses, approximately 9 percent. Under

these assumptions, an electric heat pump with

a heating COP of 3.0 and a cooling COP of 2.5

would have an effective “system” COP of 0.79

for heating and 0.66 for cooling. A number of

“L, L. Dutram, J r., and L. A. Sarkes, “Natural Gas Heat

Pump Implementation and Development,” presented at

Conference 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 communication, December 1976.
252 ● Residential Energy Conservation

questions remain about system performance

as an integrated unit: reliability, safety, noise,

ease of maintenance, etc.; these can be resolved only after more experience. The devices

do offer the prospect of a much more efficient

approach to converting fossil fuels to useful

space-conditioning.

INTEGRATED

Heating and water heating are the major

energy users in homes today. As discussed in

chapter 11, the use of “waste” heat from other

appliances already makes a significant contribution to heating and the relative contribution increases as the house is made tighter.

Several sources of “waste” are not presently

being used and others could be used more effectively by “integrated appliances.” Most of

these appliances would recover heat (that is

now completely wasted) for either heating or

water heating (e. g., air-conditioner/hot water

heaters), while others would heat water with

heat that now heats the house whether heating, cooling, or neither is needed (e. g., refrigerator/water heaters). WhiIe other applications

of waste heat in the home can be imagined,

cost of recovery and coincidence between

availability and demand are expected to result

in selected heating and hot water combinations.

Of the many possible combinations, this section discusses four systems identified in a

study

32 by Arthur D. Little, Inc., as particularly

promising, with brief mention of some other

possibilities. The four promising systems identified 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 of

a Promising Integrated Appliance, ” Arthur D. Little, Inc.,

performed by the Energy Research and Development A dministration under contract no. EY-76-C-03-1209, September 1977.

A major question concerning any onsite system requiring oil or gas is whether they will

continue to be less costly than electricity. The

heat-engine devices just discussed could, at

least in principle, be used in connection with a

coal-burning, fluidized-bed boiler or a solar

heat source, and thus might present a promising long-term alternative.

APPLIANCES

Costs and potential savings given in the following discussion are from the Arthur D. Little

study unless another source is given.

Air-Conditioner/Water Heater

This system heats water with the superheated refrigerant vapor whenever the air-conditioner operates. It consists of a vapor-towater heat exchanger inserted in the refrigerant loop just ahead of the condensor (the finned radiator-like part of the air-conditioner

located outside), The heat recovered is ordinarily rejected outdoors. This system can be

retrofit rather easily by qualified personnel,

and if added to an air-conditioner whose performance is limited by a small condensor, it

can actually improve the COP by a few percent.

This system can also be used with a heat

pump and when operated in the heating mode,

the heat used is not waste heat, but is provided

at the operating COP of the heat pump. This

still offers substantial savings compared to a

resistance heater.

This is the only integrated appliance that is

commercially available. It is made by at least

six manufacturers. The installed cost of these

units ranges from $200 to $500, and several airconditioner manufacturers allow installation

of one or more of these systems without voiding their warranty.

The estimated savings expected from use of

the Carrier Hot Shot® unit (about $400) with a

@ Registered trademark of the Carrier Air Conditioning Corporation.
Ch. Xl—Technical Options ● 253

3-ton air-conditioner in each of several cities is

shown in table 81. Dollar savings would be

greater for a larger family that used more hot

water. Most sales of these units have been in

areas with high air-conditioning loads such as

Florida and the deep South. Use of these units

on heat pumps would probably double the savings shown for more temperate climates.

Furnace/Water Heater Systems

Combining the furnace and hot water heater

offers several potential advantages. The most

compelling is that it should be possible to

build a high-efficiency unit that incorporates

features Iike intermittent ignition, vent

damper, and forced draft for less money than

would be possible for two separate units incorporating comparable features. Some oil furnaces have been equipped with hot water heaters, but they have a reputation for high fuel

use so many homes with oil heat use electric

hot water. A high-efficiency combined system

could provide significant savings over such systems. There is also the potential for reduced

standby losses from use of a smaller storage

tank (perhaps 10 to 20 gallons) since present

furnaces often have 100,000 Btu per hour

capacity or greater. This is more than twice the

capacity of typical water heaters. This advantage could disappear as tighter houses reduce

the necessary furnace sizes.

Refrigerator/Water Heater

The refrigerator generates heat that could

be recovered and used to heat water. During

the heating season, this helps heat the house

but only part of it reduces consumption for

space heating since it typically keeps the kitchen at a slightly higher temperature than the

rest of the house. The Arthur D. Little study

considered this fact and estimated that a hot

water recovery unit on the refrigerator could

save about 14 MMBtu of primary energy per

year if an electric hot water heater is used with

electric heat. The estimated cost of the heat recovery unit was $142 with a payback of 3 to 4

years (8 years with gas). These savings could be

reduced very substantially, perhaps by a factor

of two or more, by more efficient refrigerator

designs.

Drain Water Heat Recovery

Most of the heat added to hot water simply

runs down the drain. Existing homes mix drains

from showers, sinks, and washing machines

(gray water) with toilet drains (black water). It

appears that heat recovery will be more practical if the “gray” water is kept separate from

the “black” water since there is less difficulty

with sedimentation and the black water is

always cold water. One proposed system that

has been tried in a demonstration house in

Europe would run the gray water into a drain

tank (about 50 gallons) and use a water source

heat pump to extract heat. Such a system

could result in primary energy savings of 46

MMBtu per year for a first cost of $440. This

cost does not appear to include any additional

cost for separate drain systems.

Table 81.—Estimated Performance of Carrier Hot Shot® Heat Recovery Unit

With a 3-Ton Air-Conditioner and a Family of Four

Water heating

Electric rate* Annual electric cost with Hot

City (¢/kWh) water heating cost Shot® Savings Savings percent

Boston, Mass. . . . 5.0 $304 $264 $39 13%

Baltimore, Md. . . . 4.0 229 170 59 26

Atlanta, Ga.. . . . . . 3.0 172 115 57 33

Houston, Tex.. . . . 3.0 161 78 82 51

Chicago, Ill.. . . . . . 4.0 243 199 44 15

Sacramento, Cal if. 4.0 214 173 41 19

Boise, Idaho . . . . . 2.0 61 48 13 21

0 Registered trademark of the Carrier Corporation.

“The electric rate is not necessarily the rate charged in each city but is representative of the region.

SOURCE: Carrier Corporation
254 ● Residential Energy Conservation

Summary

Many other systems are possible. One of the

simplest would be a simple filter (for lint

removal) and damper that would permit use of

the clothes dryer output for heating during the

winter months. Frequent filter changing would

be required and considerable humidity would

be added to the house. Freezer/hot water heaters should be similar to refrigerator systems

and ingenuity may make other systems practical. All of these systems must compete with

other improvements in hot water and heating

as they reach the market, and it is unlikely that

more than one system to augment hot water

production would be practical in a single

house.

CONTROLS AND DISTRIBUTION SYSTEMS

Controls and distribution systems can play a

critical role in the efficiency and effectiveness

with which furnaces, air-conditioners, active or

passive solar systems, refrigerators, ranges,

etc., function individually and as a complete

system to maintain comfortable conditions

and provide other amenities in a house. For

purposes of this discussion, controls will be

considered in two categories: 1 ) those that control individual equipment, and 2) those that

control comfort conditions in the house.

Houses contain a surprising array of controls, some manual and some automatic. The

most frequently used manual control is probably the light switch, but all of the major appliances in the home contain automatic controls and/or manual controls. Refrigerators,

freezers, toasters, ovens, and water heaters all

contain thermostats. Furnaces contain a thermostat (in addition to the room thermostat)

that controls the blower shutoff. Furnaces and

gas water heaters have flame sensors and

valves to control the flow of fuel.

A number of the new or improved technologies being developed require additional control circuitry. Solar hot water heaters and active heating systems use controls of varied sophistication and several companies now manufacture these controls. Automatic flue dampers (considered under furnace improvements)

are themselves a control and require additional controls and sensors for operation. The

pulse combustion furnace is likely to require

more sophisticated controls for safe operation

since the combustion process is not continuous. Fuel-fired heat pumps can also be expected to have their own control requirements.

The discussion of indoor air quality in

chapter X indicated the need for several different sensors and controls. Powered ventilation that responds to odors and other indoor

pollutants is needed. Other equipment that

may be adapted for residential use provides

particulate control, and removes airborne

chemicals and odors by means of filters, precipitators, adsorption, absorption, and chemical reaction systems.

Instruments to provide rapid feedback on

the cost of consumption and to show the effect of changes initiated by the occupants are

not avaiIable now. They couId significantly improve occupant behavior as discussed in chapter IIl.

A number of the losses associated with furnaces are related to nonoptimal controls. The

fans (or pumps in hydronic systems) are shut

off while the furnace is well above room temperature. It is necessary to shut off fans before

the air reaches room temperature to avoid uncomfortable drafts, but this contribution to

off-cycle losses could be reduced. The savings

that could be realized without compromising

comfort by lowering these set points are apparently not known.

The only systems control found in most

homes is the thermostat, which controls the

heating (and possibly the cooling) system. The

registers in each room usually have a damper

so that the air flow in individual rooms can be

shut off manually if desired, but these dampers

are generally designed for infrequent use.

There are at least three potential changes in

thermostats. Instruments that allow one or
Ch. Xl—Technical Options ● 255

more temperature setbacks are increasingly

available; at least one of these can be set for a

different temperature each hour of the week.

Most thermostats contain an “anticipator”

that shuts the furnace off slightly before the

set temperature is reached. The heat remaining

in the furnace jacket then brings the house up

to the set temperature. Houses often overshoot the set temperature when the thermostat

setting is increased, resulting in added Iosses

from the house. The extent of these losses is

not really known, but improved “anticipators”

could reduce them. One of the sources of furnace inefficiency is the loss associated with

frequent cycling of the system on and off. The

frequency of this cycling is related to the temperature band within which the thermostat

keeps the house. The narrower this band, the

more frequent the cycling and the greater the

cycling losses. This is another problem that is

very prevalent, but the extent of the losses and

the practical potential for reduction by changing the thermostat band-width is not known.

Heating unoccupied rooms obviously wastes

energy. It may be possible to reduce this loss

either through the use of timed controls or

through active occupancy sensing. However,

the widely varying use patterns of different

rooms seem likely to limit the utility of this approach. As thermal envelopes are made tighter, the savings from such controls will also be

reduced.

The rapid development of integrated circuit

technology has led to sophisticated small computers that control energy use in some commercial buildings. Such systems could also be

adapted for use in homes. Excess heat could be

circulated from the kitchen when the range

was in use, outside ventilation could be

brought in through a heat exchanger as

needed, an economizer unit could cool with

outside air when practical, space conditioning

could 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 ications,” Proceedings of the Conference on Technica/ Opportunities for Energy Conservation in f3ui/dings Through

the iceberg” in the cost of such systems.33 T he

purchase and installation of the sensors, additional valves, and dampers that such a system

would require greatly exceeds the cost of the

logical unit. It seems likely that other improvements in houses will obviate the need for

some of these functions while making others

more acute, so it is difficult to predict the savings that couId be achieved or the potential for

the use of such systems.

Distribution systems transfer hot or cold air

from a central furnace or air-conditioner to the

rooms where heating or cooling is needed. The

principal losses from these systems occur

when they are run through unconditioned

space in the basement, attic, or exterior walls.

These losses can best be eliminated in new

construction by running ducts entirely within

the conditioned space. The design of such systems is facilitated if smaller ducting, designed

for use with high velocity air, is substituted for

standard ducting. Such ducting has been used

in large buiIdings for many years. SmalIer ducting can be readily used in tight, highly insulated houses since heating requirements are

greatly reduced.

Conflicting needs suggest larger distribution

systems in some cases. The heating mode efficiency of heat pumps could be improved by

lower distribution temperature. Similarly, the

efficiency of simple solar collectors is much

higher at low temperatures than at high temperatures. The same is true of passive solar systems, where very low-temperature heat must

be circulated from the rooms receiving sunlight to other rooms. Some homes are being

built with most of the rooms opening onto a

common area so that heating can be accomplished much as it was in homes heated only

with a central wood stove in the past. It is likely that several approaches to efficient distribution will evolve to satisfy the requirements of

different housing designs.

/rnprovecf Contro/s, Boston, Mass., May 10, 1976, DOE

publication CONF 7605138, p. 218.
256 ● Residential Energy Conservation

PASSIVE SOLAR DESIGN

The concept of using sunlight and winds to

help heat and cool houses is rapidly being “rediscovered” in the wake of today’s new consciousness about the use of energy. Features

that were standard construction practices

before the introduction of central heating and

cooling systems are making a comeback. New

refinements are being added so that some

houses now being built without collectors on

the roof get as much as 90 percent of their heat

from the Sun. As these houses generally do not

use the pumps, blowers, storage tanks, and

associated controls typical of solar houses,

they are generally referred to as “passive”

solar houses, or houses with “energy-conscious

design.”

These houses use natural phenomena to

minimize their use of conventional fuels for

heating and cooling. Overhangs are used to admit sunlight in the winter and provide shade in

the summer. Deciduous trees are another reliable method of ensuring summer shade and

winter sunshine. Windbreaks can be used to

temper the effect of winter winds. While these

techniques reduce the need for heating and

cooling, the key to the success of passive solar

design lies in the fact that over the course of a

winter, a good south-facing double-glazed window will admit more heat from the Sun than it

will lose both day and night. Thus south-facing

(or nearly south-facing) windows can be used

to supplement the heating requirements of

homes in virtually any climate in the continental United States. The most effective use of

this solar heat requires that massive components such as concrete or masonry floors or

walls be incorporated into the house. These

components absorb heat and thus reduce temperature swings inside the dwelling.

The benefits of proper orientation toward

the Sun have been recognized for centuries;

the forum Baths in Ostia (near Rome) were

built with large openings to capture winter

sunlight nearly 2,000 years ago.

The classic examples of ancient passive

solar design in North America are the cliff

dwellings of the Indians of the Southwest.

They are typically situated on the south face

of a rock cliff with an overhang to shade the

summer sun. The dwellings, built into the wall

of the cliff, use heavy adobe materials in conjunction with space hewn directly out of

rock — thus providing tremendous capacity for

moderating the huge swings in outdoor temperature occurring in this area.

In more recent times traditional southern architecture incorporated a variety of methods

to enhance the summer cooling of homes,

most prominently the use of huge porticoed

porches.

With the advent of inexpensive gas and oil

heating and electric cooling, these traditional

regional practices were quickly discarded, as

they limited design and were often less “effective” than the mechanical systems that replaced them. A few architects and engineers

experimented with passive solar design in the

1940’s and 1950’s, but encountered problems

with overheating on mild winter days. By the

time OPEC tripled the price of oil in 1974, most

engineers were not only unaware of passive design principles, but they believed that every

window was an energy loser and that any energy-efficient building should limit the window

area to the minimum level allowed by the esthetic demands of the occupants.

Following the OPEC embargo, new advocates of passive solar design appeared, many

after independently rediscovering that windows really could reduce the fuel consumption

of a house. These new advocates were largely

people from outside the mainstream of engineers and architects—typically solar energy

“nuts” with little formal training or scientists

with no design experience. As in any change of

technology, the early supporters received little

attention or Government funding. Another

complication was the “site specific” nature of

these designs; as each dwelling must be defined by its site, the technology was not

perceived as broadly applicable. Only very

recently has passive solar design begun to receive significant research and demonstration

money.
Ch. Xl—Technical Options . 257

There are just about as many approaches to

design of a passive solar house as there are designers; it may be as simple as planting a shade

tree or so complex that it stretches the concept

of “passive” design. This description makes no

attempt to provide exhaustive coverage of the

ideas that have been proposed or even built;

rather it attempts to provide some feel for the

breadth of ideas which lend excitement to the

field.

Direct Gain Systems

The simplest passive solar design simply

adds larger south-facing windows to a house.

The slightly modified saltbox design (figure 44)

is a good example of the “direct gain” approach to passive solar heating. This house

contains substantially larger windows on the

south wall than is typical for this style of house

in the New England area (Wiscasset, Maine,

near Brunswick) and does not contain any fans,

blowers, or heavy concrete walls to help store

and distribute the heat. It does incorporate

sliding insulating shutters that cover the windows at night to reduce the heat loss. The shutters also make the house more comfortable by

reducing the window chill. The upstairs bedrooms have skylights angled with the roof to

colIect more winter sunlight than a simiIar area

of vertical windows.

If most of the south wall were covered with

windows, the typical frame house would often

be too hot, even in cold weather, because of

the limited capacity to absorb and store heat.

As more windows are added it becomes necessary to add massive features to the construction of the house so more heat can be stored

with small increases in the interior temperature The house shown in figure 45 has windows covering the entire south wall, but it also

Figure 44.—Modified Saltbox Passive Solar Design Home

Photo credit Christopher Ayres, Pownal, Maine
Figure 45.—The Fitzgerald House Near Santa Fe, N. Mex., is 95 Percent Solar Heated by a Direct Gain System

at a 5,900 Degree Day Site

Reprinted with permission” William A Shurcliff, Brick House Co., 
Ch. XI—Technical Options ● 259

has lo-inch thick adobe walls with urethan insulation outside the adobe and a brick floor

resting on 16 inches of sand. The sand has a 1-

inch layer of styrofoam insulation beneath it

and the house has an overhang that limits the

amount of summer Sun which enters. This

house, in Santa Fe, N. Mex., receives about 95

percent of its heat from the Sun. This is not an

area of mild winters—the location is at an

elevation of 6,900 feet and the heating requirements are comparable to those of upstate New

York. Supplementary heat is provided by two

fireplaces and a small electric heater in the

bathroom.

Such direct-gain systems are the ultimate in

simplicity as they use no fans or dampers and

the heat “stays on” when the electricity goes

off. However, the large windows can produce

uncomfortable glare, and if the floor is to be

effectively used to store heat, it must not be

carpeted. If the house does not effectively incorporate massive components, the temperature swings resulting can be uncomfortably

large– as much as200 to 250 F in a day.

Indirect-Gain Passive Buildings

The problems with glare and the wide temperature fluctuations experienced in many

“direct-gain” buildings have led to the use of a

variety of simple approaches where the Sun

does not directly heat the living space.

One is illustrated in figure 46 where a

massive concrete or masonry wall is placed

directly behind a large glass surface. (This concept is called a thermal storage wall or a

Trombe wall after its French inventor.) The

sunlight is absorbed by the wall. Heat is transferred to air against the inside surface, this air

becomes buoyant and sets up circulation loops

that move hot air into the house through the

vents. Part of the heat is stored in the wall; the

interior surface of concrete walls will actually

reach its highest temperature well after the

Sun has set. The house in figure 47 illustrates

the use of this approach in combination with

direct gain. Behind the left awning is a brick

wall 8 inches thick; the windows on the righthand portion of the house have a concrete/

brick floor 4 inches thick behind them. The

house is 50- to 60-percent solar heated and on

sunny winter days, the occupants open windows when the interior temperature reaches

86° F. 3 4

Barrels of water may be substituted for the

brick wall; computer calculations have shown

that they will actually increase slightly the

amount of heat that can be gained by a storage

wall. The building shown in figure 48 is a combination off ice/warehouse used for editing and

storing books by the Benedictine monastery

near Pecos, N. Mex. This building combines

direct gain with the use of a “water wall.” The

windows on the first floor and the clerestories

on the second level provide direct gain. Below

the windows on the first level is a window-wall

with 55-gallon drums of water behind the windows. Reflective panels lying on the ground

below the water wall serve to increase the

amount of sunlight striking the wall. They can

be closed at night to reduce the heat losses

from the water barrels. This system has provided more than 90 percent of the heating

needs 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 sunspace and part of the heat for the rest of the

house. The sunspace is a large, live-in collector, and the storage wall is placed between the

sunspace and the living quarters. The storage

walI mass evens out the temperature variations

for the living quarters, while the temperature

in the sunspace undergoes wide swings. Such a

sunspace can be used as a greenhouse, a sunny

play area for children, an enclosed patio, or

any use compatible with substantial temperature shifts.

Figure 49 illustrates the use of a solarium in

a rather conventional appearing house specificalIy designed to be mass-produced in a standard California tract development. The house

incorporates direct gain through the windows

on the south wall and water tubes near these

windows to add storage. The skylight in the

roof lights a square solarium in the center of

~qAndrew M. Shapiro, “The Crosley’s House–With

Calculations 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 the

Trombe Wall and the Small Attached Greenhouse

footings of building and many

other details

Straight segment

Rounded

greenhouse

N
Ch. Xl— Technical Options ● 261 —

Figure 47. —The Crosley House in Royal Oak, Md., Combines a Trombe Wall System With Direct Gain and

a Massive Floor, to Provide 50 to 60 Percent of Its Heating-Needs

South elevation
262 Residential Energy Conservation —.-— —- — .

Figure 48.—The Benedictine Monastery Office/Warehouse Near Pecos, N. Mex., Uses Direct Gain From

the Office Windows and Warehouse Clerestories Combined With the Drumwall Below the Office Windows to

Provide About 95 Percent of Its Heating Needs

55 gallon

drums

Photo credit: Laboratories
Ch. Xl—Technical Options 263

Figure 49.—The PG&E Solarium Passive Solar Home in California Uses the Large Skylight to Heat Water-Filled

Tubes on Three Walls of the Solarium. The Tubes Then Radiate the Solar Heat to the Surrounding Areas

the house. Three walls of the solarium have

water-filled tubes. As this house was built in

Stockton, Calif., where summer day temperatures are frequently in the 90’s but night temperatures regularly drop to the 50’s or low 60’s,

it also incorporated a gravel bed 14 inches

deep under the entire house The rock bed is

cooled by the earth and by circulating cool

night air through it. (The use of fans to circulate the air would cause some to regard this

as a hybrid passive home ) Another feature of

the skylight is the use of insulating panels,

which are moved over the top of the solarium

at night to reduce the heat loss.

An attached sunspace or greenhouse can be

added to many existing homes. While most of

the commercial lean-to greenhouses now available are single glazed, an increasing number of

manufacturers offer double glazing. The Solar

Room Co. emphasizes the heating benefits and

muItipurpose nature of their inexpensive double-glazed rooms (see figure 50) in their marketing. These units, which are designed for simple installation, use ultraviolet inhibited

plastic coverings for extended life and can be

easily taken down during the summer if dePhoto credit: Pacific Gas arid Company

sired. The Solar Sustenance Project has conducted workshops at numerous locations in

the Southwest teaching simple greenhouse

construction and promoting the benefits of

both food and heat that can be derived from

retrofit greenhouses such as the one shown in

figure 51. The materials for the greenhouses

built in these workshops cost from $395 to

$652. Simple retrofits like those shown are

generally built over an existing door or window, which can be opened to circulate heat into the house. They use the mass of the house

for any storage and can supply 10 to 20

MMBtu of useful heat annually in most U.S.

locations.

Hybrid Passive Systems

The definition of passive systems is the object of some controversy; the term passive implies lack of machinery and controls, but some

such 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 (Marlboro, Vt.:

 College, Nov. 19-20, 1977), p. 16.
264 . Residential Energy Conservation

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

improve the system’s performance. Fans and

controls circulate heat to and from the storage

bed. Strictly speaking, the Pacific Gas and

Electric house in Stockton could be considered hybrid, as it utilizes, some controls and

motors.

The house shown in figure 52 successfully

combines a greenhouse with a rock storage

bed to provide additional heat storage. The

wall between the greenhouse and the living

quarters is a heavy adobe wall; blowers force

air through the rock storage bed whenever the

temperature in the greenhouse goes above a

certain point. This heat is used to warm the

house after the adobe has exhausted its heat.

This house is near Santa Fe, N. Mex., where

subzero winter temperatures occur; it required

Photo credit: Room 

less than 1,000 kWh of electricity for supplementary heating (the equivalent of 30 to 40

gallons of heating oil) during a 6,400 degreeday winter). 36

The house shown in figure 53 is an example

of a dwelling with a storage wall and a rock

storage bed.

Cost of Heat From Passive Solar

Heating Systems

It is clear that a variety of passive heating

systems are capable of providing substantial

heat to buildings, that these systems are simple

 Douglas Balcomb, “State of the Art in Passive

Solar Heating and Cooling,” proceeding of the Second

National Passive Solar Conference, March 1978, p. 5-12.
Ch. Xl—Technical Options 265

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

and that they can be built from rather ordinary

construction materials. The experience of

many people who have lived in passively

heated homes suggests that consumer acceptance can be enthusiastic, although present

owners are largely a self-selected group of

innovators. As with any other new energy system, the installation cost and the value of the

energy savings will be a major factor in general

consumer acceptance.

The cost of heat from passive solar heating

systems depends on the system and the costing

methodology used. As an example, consider

the role of windows in a residential building.

Most free-standing houses have windows on

their south wall that were installed purely for

the light and view they provide. If they are unshaded they will also reduce the heating bill

slightly, and it can be argued that this heat is

free since the windows were installed for other

reasons. Similarly, some of the windows that

would ordinarily be placed on the north wall of

a new house can be put in the south wall, reducing the heat needed, again at no additional

Photo credit: Sandia Laboratories

cost. Alternatively, the cost of this heat could

be computed based on the difference between

the cost of a blank wall and the cost of the wall

containing windows. Attached sunspaces can

be treated in the same manner in that the cost

of heat they provide depends on how the intrinsic value of the sunspace is treated.

Passive systems may change the appearance

of a house, and this further complicates the

costing. The addition of slightly larger windows to increase heat gain may be welcomed,

but if they are too large then glare becomes a

problem. Inclusion of a greenhouse in a home

can be a distinct plus if the owners enjoy

plants and indoor gardening, but would not be

a strong selling point for others. The use of

massive construction to provide heat storage

in the winter and retention of coolness in the

summer can be done in tasteful ways that

should add to the value of the home, but floors

that are used for thermal storage lose efficiency if carpeted. Thus, a passive solar heating

system may increase the value of a home as a

heating system and for other reasons if it is
266 ● Residential Energy Conservation—.— .-. -.. . — -.

Figure 52.—The Balcomb Home Near Sante Fe, N. Mex., Combines the Use of a Greenhouse With

a Rock Storage Bed to Provide 95 Percent of Its Heating Needs

Photo Laboratories

Photo New Mexico Energy 

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

268 “ Residential Energy Conservation

esthetically pleasing, but a poorly designed

system could decrease a home’s market value

while reducing heating costs.

These subjective reasons make it difficult to

estimate the total costs of the heat from

passive solar heating systems.

The most comprehensive survey of the cost

and performance of passive solar heating installations now available is that performed by

Buchanon of the Solar Energy Research lnstitute).

37 It presents information on the installation cost and useful heat delivered by 32 actual systems and 18 simulated installations.

The heat delivered by 20 of the systems was

determined from monitoring of the building

performance while engineering estimates have

been made of the heat delivered to the other

buildings. These estimates exclude heat that

must be vented outdoors during the heating

season because of insufficient thermal storage

in the building.

Table 82 presents the cost of delivered heat

for the systems surveyed. The cost of delivered

heat was calculated using an annual capital

charge rate of 0.094 and an annual maintenance estimate of 0.005 of the initial system

cost, based on the average maintenance cost

Table 82.—Cost of Heat From Passive Solar

Heating Installations

Cost of heat

Installation type ($/million Btu)

Direct gain:

Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $3.00-13.80

Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $3.30-12.60

Thermal storage wall:

Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $3.60-24.20

Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $8.80-15.40

Thermal storage roof:

Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $8.20

Greenhouse/attached sun space:

Unmonitored . . . . . . . . . . . . . . . . . . . . . . . . $1.20-11.90

Hybrid:

Monitored . . . . . . . . . . . . . . . . . . . . . . . . . . $2.60-16.60

Unmonitored ... , . . . . . . . . . . . . . . . . . . . . $11.90

SOURCE: Based on Deborah L. Buchanon, “A Review of the Economics of

Selected Passive and Hybrid Systems,” Solar Energy Research Institute publication SERI/TP-61-144, January 1979. The information on

combined cost and performance has been converted to a cost of

delivered heat using an annual capital charge rate of 0.094 and an annual maintenance cost of 0.005 of the initial cost.

jTDeborah L. Buchanon, “A Review of the Economics

of Selected Passive and Hybrid System s,” Solar Energy

Research Institute, SERl/TP161-144, January 1979.

in the survey. It is assumed that the systems

have no intrinsic value other than as heating

systems. (This probably overcharges for the

heat from attached sunspaces.) If a single entry is given instead of a range, only one system

of that type was included in the survey. Results

of monitored and unmonitored systems are

shown separately and there do not appear to

be major discrepancies. The ranges shown

refIect variation in both quality of construction and climate. The systems pictured earlier

in this section span most of the range of costs

shown in the table.

Cost of Heat From Fossil Fuels

and Electricity

The simplest comparison for the costs

shown in table 82 is against the cost of gas, oil,

and electricity to residential customers. However, it is also necessary to include the effects

of equipment efficiencies such as furnaces and

distribution systems to provide a meaningful

comparison. The policy maker may also wish to

compare the costs shown in table 79 with the

marginal cost of new supply such as liquefied

natural gas or electricity from new generating

and transmission faciIities.

Table 83 shows the cost of fuels and heat

supplied to houses from a variety of present

and future sources of fossil fuel and from electricity. The fuel prices shown were assembled

from a variety of sources as described below

and reflect ranges of present or expected costs

for fuel delivered to a residential customer.

The cost of heat delivered to the house is the

cost of a million Btu of heat delivered to the

interior of the house after considering the furnace losses and ownership costs. It is thus comparable to the cost shown in table 82. It is expected that for modest increases in initial cost,

the efficiency of conventional furnaces and

heat pumps will be improved in the future. The

third column of this table shows cost estimates

for this case. The fourth column shows cost

with improved equipment Ievelized over 30

years; fuel costs are assumed to increase at a

general inflation rate of 5.5 percent. The basis

for the energy prices shown and the equipment

efficiencies and costs used in preparing table
Ch. Xl—Technical Options ● 269

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

cost of Levelized cost of heat

heat to houses to houses using

1977 residential cost of using improved improved equipment

fuel prices heat to houses equipment (5.5% inflation)

($/MMBtu) ($/MMBtu) ($/MMBtu) ($/MMBtu)

Natural gas. . . . . . . . . . . . . . . . . $2.00-4.00 $4.80-8.10 $4.40-6.90 $6.60-11.30

Intrastate gas. . . . . . . . . . . . . . . 2.50-4.00 5.60-8.10 5.00-6.90 7.80-11.30

Synthetic gas. . . . . . . . . . . . . . . 4.00-8.00 8.10-14.80 6.90-12.00 11.30-21.00

LNG. . . . . . . . . . . . . . . . . . . . . . . 3.00-6.10 6.50-11.60 5.70-9.50 9.00-16.00

Gas from “exotic” sources*. . . 3.25-7.50 6.90-14.00 6.00-11.00 9.30-20.00

Oil at 500/gallon. . . . . . . . . . . . . 3.60 9.50 8.00 12.50

Electrical resistance heat

electricity at 3-5¢/kWh . . . 8.80-14.60 10.10-16.00 10.00-16.00 18.00-29.00

electricity at marginal

cost of 7¢/kWh . . . . . . . . . . 20.50 21.80 21.80 40.00

Heat pumps

electricity at 3-5¢/kWh . . . . . 8.80-14.60 8.30-12.00 7.00-9.90 11.00-16.00

electricity at marginal

cost of 7¢/kWh . . . . . . . . . . 20.50 15.80 12.90 22.00

“Gas from tight formations, Devonian shales, geopressurized aquifers, etc.

83 are discussed in a technical note at the end

of this chapter.

Comparison of tables 82 and 83 show similar

cost ranges that suggest that passive solar

heating is now competitive with conventional

heating fuels in at least some cases. It is interesting to note that the low end of the cost

ranges shown for passive solar heating are

lower than present cost of heat from gas. This

simple comparison of costs indicates that passive systems will often be competitive, but

gives no indication of the geographic range of

competitive behavior. Furthermore, the cost of

heat from the passive solar systems will not increase with inflation, leading to a substantial

cost advantage for the passive systems after

the first few years of operation. Lifecycle

costing can be used to provide a better measure of the competitive advantage or disadvantage of passive solar heating systems. Most of

the work in this area has been performed at the

Los Alamos Scientific Laboratory and the University of New Mexico. 38 Among the more in38 References on solar passive —

(a)

(b)

Scott A. Nell, “A Macroeconomic Approach to

Passive Solar Design: Performance, Cost, Comfort, and Optimal Sizing,” Systems Simulation

and Economic Analysis Workshop/Symposium,

San Diego, Cal if., June 1978.

Scott A. Nell, “Testimony Prepared for the U.S.

House of Representatives Subcommittee on

Oversight and Investigations, Committee on Interstate and Foreign Commerce, ” Aug. 11, 1978.

teresting of their results are those showing how

a Trombe wall system will compete with gas

and electricity in different parts of the country.

The group considered a double-glazed thermal storage wall with storage provided by 18

inches. of concrete. An engineering firm estimated that such a system would have an incremental installed cost of $12 per square foot.

For comparison, the thermal storage wall systems used in table 82 ranged from $5 to $21 per

square 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 Solar

Heating: A Preliminary Analysis,” AIAA/ASERC

Conference, Phoenix, Ariz., November 1978.

Fred Roach, Scott Nell, and Shaul Ben-David,

“Passive and Active Residential Solar Heating: A

Comparative Economic Analysis of Select Designs, ” submitted to Energy, the International

)ourna/, January 1979.

Scott A. Nell and Mark A. Thayer, “Trombe Wall

vs. Direct Gain: A Macroeconomic Analysis for Albuquerque and Madison,” The Third National

Passive Solar Energy Conference, San Jose, Cal if.,

January 1979.

Scott A. Nell, J. Fred Roach, and Shaul

Ben-David, “Trombe Walls and Direct Gain: Patterns of Nationwide Applicability,” The Third National Passive Solar Energy Conference, San Jose,

Cal if., January 1979.

Scott A. Nell, “Thermal Mass Storage and

Glazings Show Effectiveness in New Modeling,”

Solar Engineering, January 1979, pp. 29-31.
270 “ Residential Energy Conservation

on this system was considered that assumed

that the Trombe wall was equipped with movable insulation, which increases the R-value of

the collector surface to R-10, between 4 p.m.

and 9 a.m., at an added cost of $4 per square

foot. This insulation allows a smaller system to

meet the same fraction of the heating load and

is often found to be cost-effective.

Results of the State-by-State analysis are

shown in figure 54, maps 1 through 5 for five

different combinations of system, backup fuel,

and incentives. The first two maps show that

Trombe wall systems with night insulation are

now feasible in three States when natural gas is

the backup and would be expected to be economic in one more within the next 10 years if

no incentives are provided. The inclusion of

Trombe wall systems in the solar energy tax

credit contained in the National Energy Act of

1978 would make such systems economical in

29 of the 48 States shown by 1985, when natural gas is used for backup. It is interesting to

note that the system is not economic in several

Sun Belt States due to the relatively small

heating requirements.

The feasibility of Trombe wall systems using

electric-resistance heating as backup is examined in maps 3 through 5. Map 3 shows that

Trombe wall systems are now feasible in every

State except Washington, where electric rates

are extremely low and there is relatively little

sunshine. Systems that provide about half of

the heating are feasible in California, Arizona,

and South Carolina. The addition of night insulation to the system makes it feasible to increase the fraction of the heat provided by the

solar system as shown in map 4. (The night insulation is generally most effective in the colder States. ) The addition of the recent tax credit

incentives would increase the fraction of solar

heating that is feasible by 0.05 to 0.20 in about

two-thirds of the States as shown in map 5.

The importance of this analysis lies not in

the specific States and solar fractions shown to

be feasible, but rather in the trends. Passive

solar heating is shown to be marginally competitive on a Iifecycle cost basis with gas

heating in parts of the country. The large

number of States where the addition of the tax

credit incentives makes small systems competitive illustrates this. Systems that supply a

significant fraction of the total heating needs

are competitive with electric resistance heating in much of the country. Other passive designs such as attached sunspaces that offer

other benefits in addition to heating may be

more broadIy applicable.

Summary

“Passive solar” buildings, which obtain 20 to

95 percent of required heat from the Sun without active solar collectors, have been built and

are operating in many parts of the country.

While data are sketchy, it appears that such

housing is clearly competitive with electric-resistance heating in terms of cost, and is competitive with oil and gas in some parts of the

country. In addition to the heat provided,

many passive solar homes provide additional

space, good natural Iight, and a pleasing view;

these characteristics may be as important to

homeowners as the savings in fuel costs. An additional benefit is that the systems are simply

constructed and have few moving parts, so Iittle maintenance is required. In some such

homes, the daily swings in temperature are

greater than commonly acceptable in houses

using conventional heating/cooling systems.

Additional research and development is

needed in this area, including the collection of

field data on operation of homes now in place.

It is likely, however, that the principal barriers

to widespread use of these techniques (careful

siting, construction, and landscaping) are institutional rather than technical. (This is generally true for home energy conservation issues. )

First costs of such a system will be higher than

conventional systems. Code barriers may be a

problem in some areas; for instance, some

code changes implemented over the past 5

years in the name of energy conservation require extensive engineering justifications of

such homes on a case-by-case basis.

Passive heating systems are largely conventional building materials in an unconventional

combination rather than new products. Accordingly, industrial promotion of passive

solar has been slow to materialize. Glass and

plastics industries are potential proponents,
Ch. Xl—Technical Options ● 271

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

Map I

No incentives

Map 2 NEP tax credit incentive

I/o Night Insulation

(Resistance)

Map 3

No incentives

(30-year life cycle cost basis)

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

Map 4

No incentives

(30-year life cycle cost basis)

Map 5 NEP tax credit incentive

(30-year life cycle cost basis)

Source: Fred Roach, Scott Nell and Ben-David; Economic Performance Solar a AIAA/ASERC Conference,

November, 1978, Phoenix, Arizona
272 ● Residential Energy Conservation

but large industries such as these typically do

not become active in a new market area until it

has been established by small entrepreneurs.

Manufacturers of movable insulation are

natural marketers for passive solar construction. This area is characterized by a number of

small companies that have experienced difficulty in developing durable, reliable products

and have not had extensive marketing experience.

The Internal Revenue Service interpretation

of the solar energy tax credits (and conservation credits) recently authorized effectively excludes many passive systems. This places the

passive approach, which can drastically reduce heating requirements, at a strong disadvantage to conventional supply technologies.

Accelerating the use of passive solar techniques calls for a vigorous information and

demonstration effort, as the technology is not

widely understood and does not have strong

private sector support. Rapid and credible

demonstration of a variety of systems in all

regions of the country would help. These demonstrations could parallel the development

and distribution of a design catalog, showing

systems that have received adequate engineering analysis to meet local building code requirements. Such approaches could lead to the

acceptance of “rules of thumb” for use by

designers and builders in each part of the

country. The recently concluded Passive Solar

Design competition should provide a useful

start on this task.

A number of homes could be built in varying

climates and subjected to detailed and precise

performance monitoring. This work could be

coordinated with continued development and

verification of computer programs designed to

predict energy usage. Simple computer programs that are cheap and accessible are

needed for field use by designers and builders;

programs of greater precision and accuracy

are needed for research.

Some applied research areas, such as improved glazing methods and infiltration monitoring, will be useful to passive solar. Passive

cooling has received very Iimited attention and

needs work. Possibilities for combining passive

systems with active solar to further reduce dependence on conventional fuels have not been

widely explored.

TECHNICAL NOTES–FOSSIL FUEL PRICES

These assumptions were used for comparing

conventional fuel and solar passive heating

costs in this chapter.

In 1977, natural gas prices for residential

customers ranged from $2.00 per MMBtu in the

Southwest to $4.00 per MMBtu in New England, 39 where gas is piped over long distances

or derived from supplemental sources, such as

liquefied natural gas (LNG) or synthetic natural

gas (SNG) from naphtha. In comparison, the

average 1977 price for wellhead interstate gas

was $0.93 per MMBtu and $1.54 per MMBtu to

gas distributors. 40 Although comparable average prices for wellhead intrastate gas are not

known, typical new contracts ranged from

“American Gas Association, “Quarterly Report of Gas

Industry Operations– Fourth Quarter 1977 “

‘“Department of Energy, April 1978.

$1.50 to $2.00 per MMBtu. Synthetic gas prices

were compiled from a variety of sources used

in the OTA solar study,41 while LNG prices are

based on current and pending LNG projects.42

Prices for “exotic sources” are based on the

OTA Devonian shale study43 and a recent presentation by Henry Linden44 of the Gas Research Institute.

A substantial quantity of fuel oil is imported

and apparently is not affected by crude oil en-

“office of Technology Assessment, “Application of

Solar Technology to Today’s Energy Needs,” June 1978.

42 American Gas Association, “Gas Supply Review, ”

June 1978.

“(lffice of Technology Assessment, “Status Report on

the Gas Potential From Devonian Shales of the Appalachian Basin, ” November 1977.

“Henry Linden, presentation at the Second Aspen Energy Conference, July 1978.
Ch. Xl—Technical Options ● 273

titlements. Consequently, increasing the price

of U.S. crude oil to world levels would not

result 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 residential customers ranged from 3 to 5 cents/kWh.

Exceptions to this are the Northwest where

electricity costs are less than 3 cents/kWh and

the Northeast where it costs more than 5 cents/

kWh. The delivered price of electricity from

new capacity was calcuIated within a few mills

of 7 cents/kWh for each of the four cities

treated in the OTA solar report.

Different efficiency values were used for gas

and oil furnaces, baseboard heaters, and heat

pumps. Seasonal efficiency for gas furnaces is

60 percent; for oil furnaces, 50 percent; and

100 percent for baseboard electric heaters.

Gas furnace efficiency can be increased to 80

percent 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 furnace. Typical heat pumps have a seasonal performance factor of 1.55–an efficiency of 155

percent — in a 5,000 degree-day climate.45 A

heat pump with “improved” installation was

assumed to have a seasonal performance of

2.0 at no additional cost. The performance of

the heat pump with “improved” installation

corresponds to the performance of some heat

pumps manufactured today and suggests that

typical heat pump performance can be increased to the 2.0 level.

Conventional systems ownership costs,

which include capital costs, annual maintenance costs, and a pro-rated replacement cost

(for heat pumps that have a typical lifetime of

only 10 years), are based on the OTA solar

study.

4~Westinghouse Electric Corporation, “Load and Use

Characteristics of Electric Heat Pumps in Single-Family

Residences,” 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 set

as a national goal the insulation of 90 percent of existing homes in the United States by 1985.

Given spiraling energy costs and a new tax credit, Americans have been insulating their

homes in record numbers. According to the Department of Energy (DOE), 25 million to 47

million homes will be reinsulated by the end of 1985.

Nationwide increases in thermal insulation have, however, resulted in a number of actual and potential problems. For example, the absence of uniform safety standards and testing methods among various levels of government and the absence of Federal and State laws

on home insulation have contributed to the risks of consumer injury, illness, and death.

Although some basic laws do exist with respect to the manufacture and installation of insulation materials, their effectiveness remains questionable.

This appendix outlines and discusses some of the major problems associated with the increased use of insulation.

TYPES OF INSULATION

The principal applications and market

segments for insulation materials in the resiMATERIALS

Rock Wool and Slag Wool

dential sector are shown in tables A-1 and A-2.

A number of properties influence the thermal

performance of insulating materials. Thermal

performance is expressed in terms of thermal

resistance (R-value), which describes the abiIity

of a particular material to restrict heat flow. I n

addition to thermal performance, this section

includes a brief overview of other important

properties, such as corrosiveness and degradation. Tables A-3 through A-1 O provide a more

extensive Iist of properties.

Rock wool and slag wool are terms used to

denote glassy fibers that are produced by melting and fiberizing slags obtained from smelting

metal ores (“slag wool”) or by melting and

fiberizing naturally occurring rock (“rock

wool”). Rock and slag wool products appear in

the form of batts and loose-fill for blown or

poured application. The reported R-values for

rock wool batts are 3.2 to 3.7, and 2.9 per 1-

inch thickness for blowing wool. The thermal

performance of this product is reportedly

Table A-1.—Principal Residential Applications

——-

Rock Cellular Reflective

Locations Fiberglass wool Cellulose plastics Perlite Vermiculite surfaces

New construction

—

Roof/ceiling. . . . . . . . . x x x x

Walls . . . . . . . . . . . . . . x x x x

Floors/foundation. . . . x x x x

Retrofit

Roof/ceiling. . . . . . . . . x x x x x

Walls . . . . . . . . . . . . . . x x x x

Floors/foundation. . . . x x x x

SOURCE: U.S. Department of Energy, An Assessment of Therma/ /nsu/at/on Mater/a/s and Systems for /3u//ding App//cations, prepared by Brookhaven National

Laboratory, Publication No. BNL-50862, June 1978, p. 9

277
278 ● Residential Energy Conservation

Table A-2.—Market Segments and Product Usage

Location or Products used

building section New buildings

Residential buildings (wood. framed)

Ceilings . . . . . . . . . Fiberglass batt

Sidewalls . . . . . . .

Fiberglass loose

fill

Rock wool batt

Rock wool loose

fill

Cellulose loose

fill

Fiberglass batt

Rock wool batt

Cellular plastic

sheathings

Wood fiber

sheathings

Reflective

surfaces

Floors . . . . . . . . . . . Fiberglass batt

Rock wool batt

Reflective

surfaces

—Retrofit

Fiberglass Batt

Fiberglass loose

fill

Rock wool batt

Rock wool loose

fill

Cellulose loose

fill

Vermiculite

Fiberglass loose

fill

Rock wool loose

fill

Cellulose loose

fill

Fiberglass batt

Rock wool batt

Reflective

surfaces

SOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/ation

Materials and Systems for Building Appl/cat/ens, prepared by

Brookhaven National Laboratory, Publlcatlon No BNL-50862, June

1978, p.10

unaffected by age. Its thermal conductivity

can be affected by moisture content, although

the material, after drying, regains its original

properties. When dry, rock wool does not support fungal growth, bacteria, or vermin; exudes

no odor; and is noncorrosive. 1

Fiberglass

Fiberglass is manufactured in a high-technology process in which glass raw materials are

combined and melted in a furnace, then led

out through a forehearth to the fiberization

devices. Phenolic resin is a commonly used

binder that is applied to the fiber as it flows

through a collection chamber. The fiber with

resin is collected on a moving beIt and passed

through an oven to cure or set the resin, and

the finished product is removed from the end

‘An Assessment of Thermal /nsu/ation Materia/s and

Systems for Building A~~/ications, prepared by Brookhaven 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 at

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 to

temperature . . . . . . . . . . .

Cycling

Animal. . .

Moisture . . . . . . . . . . . . . .

Fungal/bacterial. . . . . . . .

Weathering. . . . . . . . . . . .

Corrosiveness . . . . . . . . . . .

Odor . . . . . . . . . . . . . . . . . . .

3.2-3.7 (batts)

2.9 (loose fill)

>100 perm-in

270 by weight

none

noncombustible

15

0

0

none

none (batt)

settling (loose-f ill)

none

none

none

none

none

transient

does not support growth

none

none

none

SOURCE U S Department of Energy, An Assessment of Thermal Insulation

Mater/a/s and Systems for Building Applications, prepared by

Brookhaven National Laboratory, Publication No BNL-50862, June

1978, p 81

of the line and packaged. Fiberglass is usually

sold in the form of batts and blankets (with or

without a vapor barrier) or shredded, lubricated, and packaged as blowing wool. The Rvalue for fiberglass batts or blankets is about

3.2; the R-value for loose-fill is 2.2 per inch. It

appears that fiberglass batt insulation does not

settle or shrink with age, but loose fill may settle. The thermal performance of this material

is reportedly unaffected by age. Fiberglass

does not promote bacterial or fungal growth

and provides no sustenance to vermin. Insulation materials made from fiberglass are noncorrosive and have no objectionable odor. 2

Cellulose

Cellulose insulation is manufactured by converting used newsprint, other paper feedstock,

or virgin wood to fiber form with the incorporation 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

Material property Value

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-in

Water absorption . . . . . . . . . <1 % by weight

Capillarity . . . . . . . . . . . . . . . none

Fire resistance. . . . . . . . . . . noncombustible

Flame spread . . . . . . . . . . 15-20

Fuel contributed . . . . . . . 5-15

Smoke developed. . . . . . . 0-20

Toxicity . . . . . . . . . . . . . . . . . Some toxic fumes could

develop due to combustion of

binder.

Effect of age

Dimensional stability. . . . none (batt)

settling (loose-fill)

Thermal performance . . . none

Fire resistance . . . . . . . . . none

Degradation due to

Temperature. . . . . . . . . . . none below 180 ‘F

Cycling . . . . . . . . . . . . . . . none

Animal. . . . . . . . . . . . . . . . none

Moisture . . . . . . . . . . . . . . none

Fungal/bacterial. . . . . . . . does not support growth

Weathering. . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . none

Odor. . . . . . . . . . . . . . . . . . . . none

SOURCE: U.S. Department of Energy, An Assessment of Thermal /rrsu/at/on

Materials and Systems for Building Applications, prepared by

Brookhaven National Laboratory, Publication No. BNL-50862, June

1978, p. 78.

retardancy. Cellulose products are usually

available as Ioose-filI or spray-on. The thermal

resistance values for celIulose insuIation are in

the range of 3.7 to 3.2. However, compaction

(caused by vibration and settling under its own

weight) can decrease its R-value in two ways:

loss in thickness and an increase in conductivity due to the increase in density. If cellulosic

material is properly treated, its weight gain

from water absorption will not exceed 15 percent. However, poor quality control and improper selection of flame-retardant chemicals

may increase the level of absorption. Some

chemicals added to cellulose to provide flame

retardancy are known to cause corrosion on

metals such as steel, aluminum, and copper.

Fungal and bacterial growth can be a problem,

unless chemicals are added to inhibit such

growth.

Cellular Plastics

A variety of different plastics, when produced as foams, are useful as insulation

Table A-5.—Cellulose

Material property Value

Density . . . . . . . . . . . . . . . . . 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 at

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 to

Temperature. . . . . . . . . . .

Cycling . . . . . . . . . . . . . . .

Animal. . . . . . . . . . . . . . . .

Moisture . . . . . . . . . . . . . .

Fungal/bacterial. . . . . . . .

Weathering. . . . . . . . . . . .

3.7 to 3.2

high

5-200/. by weight

not known

combustible

15-40

0-40

0-45

develops CO when burned

settIes 0-20%0

not known

inconsistent information

none

not known

not known

not severe

may support growth

not known

Corrosiveness . . . . . . . . . . . may corrode steel, aluminum,

copper

Odor. . . . . . . . . . . . . . . . . . . . none

SOURCE U.S. Department of Energy, An Assessment of Thermal /nsu/ation

Mater/a/s and Systems for Bu//d/ng App/icat/ens, prepared by

Brookhaven National Laboratory, Publication No. BNL-50862, June

1978, p. 83

materials. Foamed-in-place and board stock

foams exist. As differences exist in the

chemical composition of these materials, a

separate discussion is necessary for each

celIular plastic insulation.

Polystyrene Foam

Polystyrene is a thermoplastic material produced by the polymerization of styrene in the

presence of a catalyst. Polystyrene foam can

be produced by either intrusion or extrusion.3

Foam produced by extrusion has a more consistent density than foam produced by the

molding process, in which variations in density

average about 10 percent. The R-value for

molded polystyrene foam (3.85 to 4.35) is lower

than the R-value for extruded polystyrene (5.0)

as the former has air in the cells and the latter

has a mixture of air and fIuorocarbon.

Polystyrene foam must be protected from

direct exposure to ultraviolet (UV) light, which

can cause it to yellow and turn to dust. Its in-

‘Ibid , p 21
280 “ Residential Energy Conservation

Table A-6.— Expanded Polystyrene Foam

Material property Value

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/ft2

hr°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 extruded

1.2 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 . . . . . . . . . . . . . . . none

Fire resistance. . . . . . . . . . . combustible

Flame spread . . . . . . . . . . 5-25

Fuel contributed . . . . . . . 5-80

Smoke developed. . . . . . . 10-400

Toxicity. . . . . . . . . . . . . . . . . develops CO when burned

Effect of age

Dimensional stability. . . . none

Thermal performance . . . k increases to .20 after 5 yrs.

Fire resistance. . . . . . . . . /

extruded

none molded

( none

Degradation due to

Temperature. . . . . . . . . . . above 165° F

Cycling . . . . . . . . . . . . . . . none

Animal. . . . . . . . . . . . . . . . none

Moisture . . . . . . . . . . . . . . none

Fungal/bacterial. . . . . . . . does not support growth

Weathering. . . . . . . . . . . . direct exposure to UV light

degrades polystyrene

Corrosiveness . . . . . . . . . . . none

Odor. . . . . . . . . . . . . . . . . . . . none

SOURCE: U.S. Department of Energy, An Assessment of Thermal /nsu/ation

Materials and Systems for Building Appl/cat/ens, prepared by

Brookhaven National Laboratory, Publication No BNL-50862, June

1978, p. 86

sulating properties, however, are not affected

by short-term exposure to UV light. Polystyrene foam can tolerate temperatures up to

1650 F, but higher temperatures may cause it

to soften. Polystyrene does not promote fungal

or bacterial growth, and is odorless and noncorrosive. 4

Polyurethane

Polyurethanes are plastics produced

through the reaction of isocyanates and alcohols. Either rigid or flexible foam can be produced. For example, slab stock is produced by

mixing the necessary components and metering the mixture onto a moving conveyor. The

mixture forms a continuous foam that can be

cut to predetermined lengths. Foamed-in-place

‘I bid., p. 85

Table A-7.—Polyurethane/Polyisocyanurate Foams

Material property Value

Density . . . . . . . . . . . . . . 2.0 lbs/ft3

Closed cell content . . . . . . . 90%

Thermal conductivity 0.16-0.17 Btu-in/ft2

hr°F

(k factor) at 75° F. . . . . . . . (aged & unfaced or spray

applied)

0.13-0.14 Btu-in/ft2

hr° F

(impermeable skin faced)

Thermal resistance (R-value) 6.2-5.8

per 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 to

Temperature. . . . . . . . . . .

Cycling . . . . . . . . . . . . . .

Animal. . . . . . . . . . . . . . . .

Moisture . . . . . . . . . . . . . .

Fungal/bacterial. . . . . . . .

Weathering. . . . . . . . . . . .

Corrosiveness . . . . . . . . . . .

Odor. . . . . . . . . . . . . . . . . . .

7.7-7.1

(impermeable skin faced)

2-3 perm-in

Negligible

none

combustible

{

30-50 polyurethane

25 polyisocyanurate

{

10-25 polyurethane

5 polyisocyanurate

i

155-500 polyurethane

55-200 polyisocyanurate

produces CO when burned

0-120/. change

0.11 new

0.17 aged 300 days

none

above 250 ‘F

not known

none

limited information available

does not promote growth

none

none

none

SOURCE U S. Department of Energy, An Assessment of Thermal Insulation

Mater/a/s and Systems for Building Applications, prepared by

Brookhaven National Laboratory, Publication No. BNL-50862, June

1978 p 89

polyurethane are prepared by mixing or

metering the components and manually or

automatically dispensing them. Specially designed units are now available for spray-on applications .

The R-value for polyurethane is around 6.

Because of the closed cell structure of this

material, water absorption and permeability

are very low. I n curing and aging, polyurethane

foam is reported to demonstrate a dimensional

change. The degree to which this foam expands or shrinks is related to conditions of

temperature and humidity and the duration of

exposure to extreme conditions. 5 One American 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 and

Urea-Based Foams

Material property Value

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/ft2

hr°F

Thermal resistance (R-value)

per 1“ of thickness at

75° F. . . . . . . . . . . . . . . . . . 4.2

Water vapor permeability . . 4.5 to 100 perm-in

at 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

(2-42% volume) immersio n

Capillarity. . . . . . . . . . . . . . . slight

Fire resistance. . . . . . . . . . . combustible

Flame spread . . . . . . . . . . 0-25

Fuel contributed . . . . . . . 0-30

Smoke developed. . . . . . . 0-1o

Toxicity. . . . . . . . . . . . . . . . . no more toxic than burning

wood

Effect of age

Dimensional stability. . . . 1 to 4% shrinkage in 28 days

due to curing

4.6 to 10% shrinkage at 100” F

100% rh for 1 week

30 to 45% shrinkage and 158° F

90 to 100% rh-10 days

Thermal performance . . . No change

Fire resistance

Degradation due to

Temperature. . . . . . . . . . . decomposes at 415° F

Cycling . . . . . . . . . . . . . . . no damage after 25

freeze-thaw cycles

Animal. . . . . . . . . . . . . . . . not a feed for vermin

Moisture . . . . . . . . . . . . . . not established

Fungal/bacterial. . . . . . . . does not support growth

Weathering. . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . none

Odor. . . . . . . . . . . . . . . . . . . . may exude formaldehyde

until cured

SOURCE: U.S. Department of Energy, An Assessment of Therma/ Insulation

Materials and Systems for Building Applications, prepared by

Brookhaven National Laboratory, Publication No. BNL-50862, June

1978, p. 91.

of up to 12 percent after 14 days. This material

will begin to decompose at temperatures

above 2500 F. Polyurethane foam is resistant

to fungal and bacterial growth, and is odorless

and noncorrosive.

Urea-Formaldehyde Foam

Urea-formaldehyde foam is produced at the

site of application “by the combination of an

aqueous solution of a urea-formaldehyde

based resin, an aqueous solution foaming

agent 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 . . . . . . . . . . . . . . . . . 0.27-0.40

Thermal resistance (R-value)

per 1“ of thickness at 75° F. . . . 3.7-2.5

Water vapor permeability . . . . . . . high

Water absorption . . . . . . . . . . . . . . low

Capillarity. . . . . . . . . . . . . . . . . . . . none

Fire resistance. . . . . . . . . . . . . . . noncombustible

Flame spread . . . . . . . . . . . . . . . 0

Fuel contributed . . . . . . . . . . . . 0

Smoke developed . . . . . . . . . . . 0

Toxicity. . . . . . . . . . . . . . . . . . . . not toxic

Effect of age

Dimensional stability . . . . . . . . none

Thermal performance . . . . . . . . none

Fire resistance . . . . . . . . . . . . . . none

Degradation due to

Temperature. . . . . . . . . . . . . . . . none under

1,200” F

Cycling . . . . . . . . . . . . . . . . . . . . none

Animal. . . . . . . . . . . . . . . . . . . . . none

Moisture . . . . . . . . . . . . . . . . . . . none

Fungal/bacterial. . . . . . . . . . . . . does not promote growth

Weathering. . . . . . . . . . . . . . . . . none

Corrosiveness . . . . . . . . . . . . . . . . none

Odor. . . . . . . . . . . . . . . . . . . . . none

0.50-0.93

2.0-1.08

high

none

noncombustible

o

0

0

not toxic

none

none

none

none under

500” F

none

none

none

does not promote growth

none

none

none

SOURCE U.S. Department of Energy, An Assessment of Thermal Insulation

Materials and Systems for Building Applications, prepared by

Brookhaven National Laboratory, Publication No. BNL-50862, June

1978, p. 94.

catalyst (or hardening agent), and air. In the

mixing or foaming gun, compressed air is

mixed with the foaming agent to produce

small bubbles which are expanded and coated

with the urea-formaldehyde resin. The foam is

delivered at about 75 percent water by weight

and 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 high

temperature and humidity may be a problem.

The magnitude of the shrinkage and the time

period over which it occurs are subjects of debate. The study presented some data on material that had been installed in a wall of a test

house. Periodic inspections were made of the

insulated wall and in about 20 months the

foam had undergone an average linear shrinkage of 7.3 percent. 7 The NBS data are only preliminary; until more studies are concluded on

the inservice performance of this material, the

question 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.
282 “ Residential Energy Conservation

Table A-10.—Vermiculite

An odor of formaldehyde may occur during

the application of ureaformaldehyde-based

foam insulation. Under normal circumstances,

the odor should dissipate quickly and linger

for only a few days. According to one major

manufacturer, “formaldehyde gas is emitted

from the foam, in the part per million range,

during the drying and curing process, which

will be over in 2 weeks.”8

highly resistant to water and to moisture. The

R-value of perlite is between 3.7 and 2.5. As an

inorganic material it resists rot, vermin, and

termites. Perlite is noncorrosive and odorless.

It is primarily used as loose-fill insulation, or as

aggregate in insuIating concrete.

Vermiculite

Vermiculite is a generic name for micalike

minerals. When subjected to high temperatures it expands to a corklike consistency. The

R-value for this material is 3.0 to 2.4. Vermiculite is water repellant and noncombustible. As an inorganic material it is resistant to

vermin, rot, and termites and is not affected by

age, temperature, or humidity. Vermiculite is

noncorrosive and does not exude an odor. Like

perlite, it is primarily used as loose-fill insulation, or as aggregate in insuIating concretes.

Aluminum Multifoil

Aluminum multifoil insulation consists of

several sheets of aluminum foil separated by

air spaces. The outer layers of the foil sandwich are usually backed with kraft paper for

strength. The foil reflects infrared heat radiation, and the air spaces add to the insulation

value. The R-value of this material depends on

specific location. Three Iayers of foil with 4 air

spaces can have an R-value of 29 under the

floor, 14 in a wall, and 9.8 in the ceiling i n

winter. In summer, the same ceiling insulation

can have an R-value of 29 for keeping the airconditioned house cool .9 Foil insulation

weighs less and is less expensive than fiberglass

Perlite

Glass Foam

Perlite is a glossy volcanic rock mineral, indigenous to the western United States. It contains between 2 and 5 percent water by weight.

Perlite ore is composed primarily of aluminum

silicate. When heated to a suitable point

(1,000 0 C), the crushed ore particles expand to

between 4 and 20 times their original volume

and contain numerous cavities. It is then

treated with nonfIammable siIicone to become

‘I bid., p. 58.

Glass foam insulation is a rigid, closed-cell

foam that is entirely resistant to water, fire,

decay, vermin, and chemicals. [t can be made

from recycled glass. Its R-value is 2.6 per

inch. Present costs are about 20 times as high

‘J R Schwartz, President, Foil Pleat Inc., personal

communication, January 1979.

‘°Foarrrg/ass /risu/ation (Baltimore, Md.: Pittsburgh

Corning 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 noncompressibility, moisTherefore 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 present production capacity of the insulation industry, the Ieadtime for new insulation manufacturing facilities, and any roadblocks to

large increases in production capacity. Table

A-11 summarizes the data. Various projections

of future insulation production capacity are

not included here because they are so dependent on what manufacturers decide to do in the

future. Decisions will depend on their perceptions of the market at a given time, and those

perceptions will depend to a large extent on

Government actions to encourage energy conservation and other future events. As an alternative to existing projections, this section gives

Ieadtimes and constraints to capacity increases to illustrate just how fIexible the future

can be.

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

The “present capacity” figures presented

here must be regarded with some caution since

the references did not always distinguish between the amount of insulation produced in a

year and the amount that could be produced if

the factory were running at fuII capacity. Since

insulation has been in short supply recently,

factories have probably been operating close

to full capacity, and any differences are probably not very great. Production capacities

given include all the material produced, not

just that sold for residential use. This gives a

better idea of actual capacity for making the

material. In several cases, the references did

not make clear whether they were presenting

total production or just residential insulation,

so some figures in table A-11 may be less than

full production capacity. Finally, most of these

figures are for capacity in January 1977, and

capacity has been growing steadily since that

time

Fiberglass

Fiberglass insulation production is a hightechnology, capital-intensive industry. The

four manufacturers are Owens-Corning Fiber-

‘‘ Porter-Hayden Company, personal communication,

January 1979.
284 ● Residential Energy Conservation

glas Corporation, Johns-Manville Corporation,

Certain Teed Corporation, and Gebr. Knaut

Westdeutsche Gipswerke.

12 Owens-Corning

has about half of the fiberglass insulation market, and Johns-Manville has about a quarter.

Even for an established firm, an additional

fiberglass plant can cost about $25 million. ’3

“Industry estimates of the time required for

adding an additional line to an existing plant is

about 12 to 18 months. A new plant would require 24 to 36 months to become fully operational once ground breaking has occurred.’” 4

Cellulose

It is fairly easy to get into the cellulose insulation manufacturing business, and many

people are doing it. Between 70 and 100 new

manufacturing companies were started in

197 7

15 and by mid-1978 there were over 700

companies in business. Most of these are very

small businesses.

16 It is possible to get into

business for less than $10,000 with a small

machine on the back of a truck, but some

larger manufacturers claim that it takes at

least $300,000 to set up a factory capable of

producing cellulose that can meet safety

standards consistently.17

Concern is frequently expressed that short

supplies of borax and boric acid, used as fire

retardants, could constrain rapid growth in the

capacity of celIulose production. However, if

shortfalls are met with imports, capacity could

grow rapidly. Furthermore, “several chemical

companies . . . 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 Effects

of CPSC Regulations Upon Supply, Demand, and Utility

of Home I nsu]ation: Initial Speculation, ” Dec. 29, 1977,

p. 4.

“Report on Insulation: Supply, Demand, and Related

Issues, Office of Conservation and Solar Applications,

preliminary draft, prepared by the Task Force on Insulation (U.S. Department of Energy, May 1978), ch. 6, p. 6.

‘ “’Home Insulation Sales are Almost Too Hot, ” Business Week, September 1977, p. 88

“Report on Insulation, op. cit , p. 5

‘ ‘R. Kurtz memo on “Potential Effects of CPSC Regulations,” pp. 3-4.

ing different formulations requiring less boric

acid. ” 8

Urea-Formaldehyde Foam

Urea-formaldehyde foam is produced at the

house using a specially designed foam gun.

Considerable skill is required to apply the

foam properly. Poorly installed urea-formaldehyde foam can shrink and crack within a few

months, and can release formaldehyde fumes

for many months. The limited number of

trained installers could limit rapid expansion

of the near-term market. 19

Most of the chemicals are produced by four

companies, and one of them, RapperswilI Corporation, reportedly has 80 percent of the U.S.

market for urea-formaldehyde insulation .20

The other major producers are Borden Chemical, Brekke Enterprises, and C. P. Chemical

Company. 21 Based on a projected tenfold increase in production within 2 years, 22 it appears

rough

Boric

that the leadtime for new capacity “is

y a year.

Boric Acid and Borax

 acid and borax are used in the manufacture of both cellulose and fiberglass insulation. I n the manufacture of fiberglass, borax is

used to reduce the drawing temperature of the

fibers to less than 1,0000 C as well as to

strengthen the fibers. In the production of cellulose, borax improves the fire-retardant capabilities of boric acid and reduces its acidity.

Both chemicals have recently been reported to

be in short supply nationally. Therefore, prices

may go up as more is imported.

Total U.S. boric acid production capacity in

1978 was around 180,000 metric tons, of which

U.S. Borax and Chemical Corporation was responsible for about 65 percent. 23 Kerr-McGee

Chemical 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 Assessment of Therma/ /nsu/ation Materia/s, op.

cit., p 36

22 I bid

2

‘ I bid , p 34.
Appendix A— Insulation ● 2 8 5

Corporation share the remainder of the production. The major foreign producers are

France, U. S. S. R., Turkey, Chile, and Italy. In

1977, the United States exported 33,000 metric

tons and imported 13,000 metric tons. 24

Boric acid has been used as an important

fire retardent chemical in cellulose insulation.

Some cellulose manufacturers and chemical

companies are investigating fire-retardant formu [as that use less boric acid and borax.25

During 1977, U.S. production of boron

minerals and compounds was estimated to be

1.3 million metric tons. Exports were 241,000

tons and imports about 46,000 tons. The three

U.S. producers of borax are U.S. Borax and

Chemical Corporation, American Borate Corporation, and Kerr-McGee Chemical Corporation. 26

Since 1975 there has been a growth in demand for borax and other berates attributable

to increased demand for fiberglass, mineral

wool, and celIulosic insulation. Current data is

not avaiIable on how much borax is used in the

manufacture of these products. However, the

Bureau of Mines (BOM) estimates 35,000 tons

of borax and other berates were used to manufacture cellulosic insulation

The real and potential health

n 1976.27 CurrentHEALTH

hazards associated with various types of insulation materials

have attracted much attention. This section

addresses some of the major health-related

problems.

Fiberglass and Mineral Wool

It has been known for a long time that fiberglass can produce eye and skin irritation. It is

classified by the Occupational Health and

Safety Administration (OSHA) as a nuisance

dust. Furthermore, fiberglass workers sometimes experience respiratory tract irritation

Iy, BOM is surveying the three borax producers

to obtain specific end-use data on their sales to

manufacturers, Domestic shortages of borax

may occur in the future “if a producer alters its

process to consume borax and produce additional boric acid by using the borax it otherwise wouId have produced.”28

Concern over the possibility of a boric acid

shortage led to the formation of an Interagency Task Force which pointed out four obvious options for increasing supply. The

amount of minerals mined could be increased.

This would not necessarily solve the problem

as large amounts of berates are presently used

for other products. A second option would be

to increase refinery capacity and expand production of boric acid. This is seen as an unlikely response since long-term demand for

berates is uncertain and boric acid refineries

are not easily convertible to other uses. Some

of the berates now going elsewhere in the

market could be reallocated to boric acid production, or more boric acid could be imported .29 At present, market forces are responding adequately to meet boric acid demand, so Federal intervention does not appear

necessary.

HAZARDS

characterized by bronchitis, rhinitis, sinusitis,

pharyngitis, and/or laryngitis. These irritations

are caused by mechanical injury to the skin

and mucous membranes by small glass fibers

and are “considered to be transitory since

symptoms disappear without treatment when

exposure to fiberglass is ended.”30

As there is a fairly well-established link between asbestos and several types of cancer,31 a

number 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, Office of the Medical Directorr Consumer Product Safety

Commission, Dec. 2,1976, p. 1.

J I Nat iona [ Ca ricer Institute, Asbestos: A n Information

Resource, ed. by R, J. Levine, prepared by SRI international, Publication No. N I H 79-1681, May 1978, p, 1,
286 . Residential Energy Conservation

to determine if other inorganic fibers act like

asbestos fibers in contributing to cancer.

Studies of the relationship between fiberglass

or rock wool and cancer have produced mixed

results. Glass fibers surgically implanted in the

lungs of rats have produced cancers, but the

implantation process is artificial and does not

allow the natural cleansing actions of the lung

to remove the fibers. 32 Several early studies

found that workers in glass wool plants did not

have any higher cancer rates than similar persons who did not work with fiberglass. 33 T o

date there is no evidence that fiberglass as normally manufactured and used is related to the

occurrence of cancer in humans.

However, over the years, the average diameter of manufactured glass fibers has been decreasing. In the case of the implanted fibers, it

is the small diameter fibers (0.5 to 5 microns)

that have caused the most concern. 34 In the

1930’s, the average fiber diameter of insulating

rock and slag wool and fiberglass was 15 microns or more. Today, the average diameter is

6 microns with a fraction of the fibers falling

below 3.35 Over the years, manufacturers have

been changing the composition of the binders

and lubricants coating the fibers,36 so the fiberglass handled by workers 30 years ago was not

the same material that is manufactured today.

32M. F. Stanton, “Fiber Carcinogenesis: Is Asbestos the

Only Hazard?” )ourna/ of the Nationa/ Cancer /nstitute,

51 :633-636. Cited by J. Milne, “Are Glass Fibers Carcinogenic to Man? A Critical Appraisal, ” British )ourna/

of Industrial Medicine, 33:47,

‘Jcrjteria for a Recommended Standard . . OCCLJPationa/ Exposure to Fibrous Class, prepared by TabershawCooper 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 of

Fiber Carcinogenesis, ” Biological Effects of Asbestos,

Proceedings of a Working Conference, published by the

International Agency for Research on Cancer, Lyon,

France, IARC Scientific Publation No. 8, October 1972,

ed. by P. Bogovski, et al., pp. 289-294 Cited by J. T, Maddock, et al., Sma// Fiber /nha/ation, Publication No.

AA I-238 3I2384-1OO-TR-2 (U.S. Consumer Product Safety

Commission, December 1976), p, 9.

35J. W. Hill, “Health Aspects of Man-Made Mineral

Fibres, A Review,” Ann. Occup. F/yg., 20:1 61-162

361 bid., p. 162.

Because the latency period for cancer can

be 20 to 50 years, there has been in sufficient

time to assess fully the effects of exposure to

small glass fibers and the newer resin systems.

Several American studies are underway, but

the resuIts are not in. 37

Until more studies and tests are completed,

it seems prudent to minimize exposure to fiberglass, especialIy where smalI particles are

prevalent. Areas calling for special care include:

. factories where fiberglass and fiberglass

products are produced,

● handling during installation,

● a i r ducts that couId bring fiberglass particles into the house, and

s unwanted materials and debris from

demolition or renovation of buildings.

Cellulose

Cellulose fiber appears to present no significant health problems. However, the borate

salts that are used to impart flame retardancy

to the shredded paper can be toxic if ingested.

The estimated lethal dose is 15 to 20 grams for

adults and 5 to 6 grams for infants; young infants are particularly susceptible. Acute

borate exposure can affect the central nervous

system and cause persistent vomiting and diarrhea, followed by profound shock and coma.

Borate salts can be absorbed through the skin.

Investigators have so far determined cellulose dust to be a nuisance. That is, it does not

have the potential to produce pathologic

changes However, as the handling of celluIosic material can generate considerable

amounts of dust, the user is advised to wear

gloves, cover up, and wear a mask.

37M Sloan, personal communication, ) anuary 1979.
Appendix A—Insulation . 287

Cellulose Plastics

Polystyrene

According to the Consumer Product Safety

Commission (CPSC), finished foam resins such

as polystyrene generally do not produce adverse health effects.38 Although Sax classifies

polystyrene as a “suspected carcinogen” when

in the body,39 there appears to be no hazard

from normal use.

Polyurethane

Polyurethane foam is an isocyanate-polyolresin blend to which flame-retardant chemicals are usually added. As the isocyanates are

toxic, extreme caution must be exercised during application. Application must be performed by qualified persons using appropriate

safety equipment such as goggles, gloves, head

covers, and respirators.

It appears that the health hazards associated with polyurethane foam are in the handling, mixing, spraying, and other application

procedures encountered in occupational situations. Sax classifies polyurethane as a “suspected carcinogen.”40

Urea-Formaldehyde

Formaldehyde is a strong irritant. Exposure

to its vapors can cause irritation of the mucous

membranes of the eyes, nose, and upper respiratory tract. The level of irritation is a function of the formaldeyhde concentration and of

individual sensitivity. With increased concentrations, these irritations become more pronounced and tolerable for onIy a few minutes.

Repeated exposure may increase sensitivity

to formaldehyde. Skin problems have also

been reported after exposure to even small

amounts in the air.

After the curing process, odor normally disappears, but it has been known to recur— in

some cases persisting for 10 to 12 months.

Some consumers have complained of formaldehyde released from wallboard, particle

board, or fiberboard bonded with urea-formaldehyde resin. The continued odor has required

that the wallboards be removed from the interiors of homes in some cases.

The safe application of this material requires a qualified person who knows how to

handle, mix, and use the chemicals involved.

Perlite and Vermiculite

No potential health hazards have been associated with the use of perlite or vermiculite as

an insulation material. A DOE study indicates

that both are nontoxic and odorless. ”

FIRE HAZARDS

Data on the fire hazards associated with

various insulation materials are plentiful but

sketchy. Most fire data identify only the first

material ignited and do not indicate those instances where insulation may play a significant

role in the growth of a fire started by another

material.

qaMemorandum by Dr. Rita Orzel, P. 3.

39N. 1, Sax, Dangerous Properties of /ndustria/ Materia/s, fourth cd., Van Nostrand Reinhold Co,, 1975, pp.

1037-1038.

‘“I bid., p. 1038.

Fiberglass

Fiberglass itself is considered nonflammable

until subjected to very high temperatures. In

flammability test procedures, however, flammable backing or vapor barrier materials are

often not included. In the manufacturing of

fiberglass, flammable oils and resins are introduced to reduce dust and solidify the insulation material. But often the flammability

tests are performed on fiberglass that doesn’t

contain these organic materials. Additionally,

“An Assessment of Therma/ lrtsu/ation Materia/s, op .

cit., p 92.
. . 288 ● Residential Energy Conservation

the absence of appropriate practices in the

manufacture and installation of this material

can increase the risk of fire and resulting

smoke inhalation.

CPSC has discussed the potential flammability and organic burden of fiberglass insulation

with representatives of Owens-Corning, Johns

Manville, Certain Teed, and NBS and has concluded: 42

1.

2.

3.

4.

Most paperbacking (foil and kraft) on the

market today is fIammable.

Most paperbacking is situated underneath

batts or blankets of fiberglass insulation

and is unexposed to likely ignition

sources. But NBS has indicated that if

fiberglass is improperly instaIled (e.g.,

faceup in an attic space) or left exposed

(e.g., in a garage beneath the second story

of a house), it might be exposed to an ignition source.

There is currently no requirement to test

fiberglass insulation with paperbacking intact. Some manufacturers do test fiberglass insulation with paperbacking intact

and measure a higher flame spread than

fiberglass insulation alone.

Phenolic binder, although combustible,

does not promote flame spread in fiberglass insulation.

Cellulose

According to a petition filed by the Denver

District Attorney’s Consumer Office with

CPSC, several fires have been observed and related to cellulosic insulation. Factors believed

‘*Paul Lancer, U.S. Consumer Product Safety Commission, memorandum to Bernard Schwartz, CPSC, on

“Home Insulation,” Jan. 31,1977

by the petitioner to be related to the fires include: 43

1.

2.

. 3 .

4.

5.

6.

7.

Poor quality control, which contributes to

wide fluctuations in fire retardancy.

Inadequate knowledge about levels of fire

retardancy necessary for proper protection.

Uncertainty about the permanency of the

flame-retardant chemicals.

Certain fire retardants utilized and the extent to which sublimation and moisture

affect the permanency of these fire retardants as the insuIation ages.

Failure to add proper amounts of fire retardants at the manufacturing or installation stages, coupled with the absence of

onsite testing.

Variance of flame spread requirements

and, the lack of smoldering-resistance requirements.

Lack of uniform test methods, hence unsatisfactory flame spread and smoldering

read i rigs.

This petition was rejected by CPSC on March

5,1979.

Improper installation of cellulose insulation

on or near electrical wiring, recessed lighting

fixtures, attic furnaces, heating ducts, and

other heat-bearing and heat-producing elements can cause fires. The absence of regulations by industry or Government is to be noted.

There are no standard test methods used for

determining the toxicity of combustible products.

Other Materials

Polystyrene and polyurethane foams are

combustible; rock wool, vermiculite, and

perlite are not.

‘

] Petition filed by the Denver District Attorney’s Office of Consumer Affairs with the U.S. Consumer Product

Safety Commission, Oct. 8,1976, pp. 3-4
Appendix A— Insulation . 289

MATERIAL STANDARDS AND ENFORCEMENT

Testimony before Congress, the Federal

Trade Commission, and the CPSC has

demonstrated a great need for new and improved materials standards and test procedures to ensure the efficacy, durability, and

safety of residential insulation materials.

The General Services Administration (GSA)

and the ASTM are the principal bodies responsible for the testing of insulation materials and

the promulgation of materials standards. With

one exception, however, these standards are

not mandatory for residential insulation.

GSA Standards and Specifications

GSA sets standards and specifications for

goods purchased directly by the Federal Government. This program encompasses 4,500 Federal specifications and 1,500 standards. Included in this program are specifications for celluIosic or wood fiber loose-fill insulation (HH-l515C), mineral fiber loose-fill insulation

(H H-I-1030), and mineral fiber blankets and

batts (H H-I-521 ).

These specifications, however, do not have a

direct application to thermal insulation purchased by consumers. They apply only to Federal procurement of thermal insulation for

Government-owned buildings, etc. Nevertheless, it is the practice of many manufacturers of insulation for residential use to

claim that their products meet current GSA

specifications. There is no enforcemen t

mechanism to discourage false claims.

GSA began in 1976 to upgrade its insulation

specifications. In November 1977 it issued its

proposed new standards for insulation purchased by the Federal Government.

Some of the most important changes proposed by GSA were contained in its proposed

specifications for loose-filI cellulose insulation

(H H-I-515 D). For example, the new specifications include a requirement concerning fungal

growth, as it is now recognized “that this condition could cause the degrading of the thermal properties of the insulation by destroying

the structure of the fibers. It could provide a

source of fungal spores which might penetrate

the living area and cause health problems. It

could increase the corrosive action of the insulation material through the accumulation of

metabolic products.”44

Other changes include a requirement that

all “cellulose tests be conducted at the product’s settled density, i.e., the density of the

product that would be expected to be found in

the field sometime after installation.” 45 This

would eliminate the current practice of some

cellulose manufacturers of having their products tested at an arbitrary density to enhance

their chances of passing the corrosion test or

to obtain a better fire safety test result. The

new standard for cellulose also includes a

smoldering test that is not included in the HH1-515C specifications. This test is to determine

whether cellulose will continue to smolder

beyond the area of an initial heat source, such

as a hot electrical wire or a recessed lighting

fixture.

Further revisions to the existing HH-I-515C

specifications for cellulose insulation include

new tests for flammability. The GSA based its

decision to switch to a radiant panel flammabiIity test and to adopt a smoldering test on

a number of factors:

1. The poor relationship between the Steinen

2

3

4

tunnel flammability test and an actual

attic situation.

Failure of the Steinen tunnel test to address a small open flame or a smoldering

ignition source.

Unsuitability of the Steinen tunnel test for

low-density materials such as cellulose.

NBS fire data that demonstrate that

covered electrical or heating devices or

wiring hot spots may cause ignition of exposed insulation, factors which are not

simulated in the Steinen tunnel test.

“U.S. Congress, House Committee on Interstate and

Foreign Commerce, Subcommittee on Oversight and lnvestigations, Home /nsu/ation, 95th Cong., 2d sess., Apr.

26, 1978, p. 24.

“lb Id,
290 . Residential Energy Conservation

DOE estimates that while 80 percent of the

manufacturers can pass the existing GSA C

specifications, perhaps only 10 to 30 percent

can pass the new version. The president of the

Society for the International Cellulose Insulation Manufacturers (SICIM) disagrees. It was

reported that most of the SICIM member companies recently passed both the radiant panel

and smoldering tests performed by Certified

Laboratories of Dalton, Ga. However, these

tests appear to be silent on the manufacturers’

ability to meet the D standard if the fire-retardant formulae were changed.46

In June 1978, GSA issued the new HH-I-515D

specifications for Ioose-filI cellulose insulation. They reflect only slight alterations to the

originally proposed specifications. The proposed specifications for mineral wool, which

include similar testing requirements, have

been resubmitted for additional comments.

Enforcement of GSA Standard

HH-I-515C for Residential Application

As discussed earlier, there are almost no

mandatory performance standards for residential insulation. One exception, however, a pplies to the most recent enforcement of the

“C” standard for cellulose insulation.

The Interim Consumer Product Safety Rule

Act of 1978, which establishes an interim consumer product safety standard, went into effect September 8, 1978. Under this Act, CPSC

will adopt the requirements for flame resistance and corrosiveness as set forth in GSA’s

HH-I-515C specifications for cellulose insulation. The “C” standard is to be enforced in the

same manner as any other consumer product

safety standard.

Accordingly, any cellulose insulation

material that is produced or distributed for

sale to the consumer is to have a flame spread

rating of 1 to 25, as such rating is set forth in

GSA’s specification HH-I-515C. Each manufacturer or private labeler of cellulose insulation

is required to include on any container of cellulose insulation a statement indicating that

“Ibid., pp. 25-26

the material meets the applicable minimum

Federal flammability standard. The statement

must also indicate that the standard is based

on laboratory tests that do not reflect actual

conditions in the home.

Until a final consumer product safety standard takes effect, CPSC will incorporate into the

interim safety standard for cellulose insulation

each revision superseding the requirements for

flame resistance and corrosiveness as promulgated by GSA.

The adoption of the “C” standard by CPSC

thus marks the first federally supported initiative to protect the consumer against various

hazards associated with cellulose insulation.

At this writing, however, it is difficult to determine whether other thermal insulation materials will be covered by the Interim Consumer

Safety Rule Act of 1978.

Problem Areas in Materials Testing

and Standards

One of the major bodies responsible for the

development of materials testing and standards is ASTM Committee C16 on Thermal and

Cryogenic Insulation Materials. The committee was established by the American Manufacturing Industry about 40 years ago. The development of ASTM standards is based on “consensus” documents, which reflect the views of

the “manufacturer,” “user,” and “general interest members. ” After a standard is produced,

it is usually reviewed every 5 years and revised

as current technology and knowledge dictates.

One criticism of this process is that the gestation period for a standard is at times too long.

Many testing methods are currently being

revised or discarded in light of the critical

problems now appearing. Given the number

and variety of testing methods and standards,

only general comments will be offered in this

discussion.

Although a number of adequate testing

methods do exist for determining the mechanical, thermal, and physical performance characteristics of a material under laboratory conditions, there is an immediate need for the extension of this knowledge to real life condi-
Appendix A— Insulation . 291

tions and for complete systems. That is, the interrelationships between materials and overall

system performance must be investigated.

The development of new test methods

technical revisions to existing methods

lengthy and expensive and until recently has

or

is

been beyond the means of any organization

outside of the major manufacturers and Government bodies. Given the existence of new

testing needs, it is argued by some that increases in public funding will be necessary to

support the level of effort that is needed in a

short time (5 to 10 years), and to develop test

methods that can be used in actual field conditions.

Another problem has been the absence of a

general set of testing procedures that pertain

to all materials. As is often the case, materials

are compared with each other based on the

results of different test methods used to

evaluate their properties. It becomes important, therefore, that material standards contain

the correct and relevant test methods and

specifications.

Two of the immediate concerns about materials testing are the adequacy of organizations

currently available to undertake the volume of

testing and evaluation that will be required in

the future, and the reliability of

such organizations can obtain.

to be great dissatisfaction in

field over these factors.

the results that

There appears

the insulation

Widely divergent claims are made about

material properties, such as thermal performance. In some cases, it has been found that

such claims are made with no physical basis. In

general, however, the common view is that the

test methods are not at fault; rather, some

organizations make unsubstantiated performance claims. Moreover, equipment or apparatus for testing has been designed that does

not meet specified guidelines. I n other cases,

the testing technique employed is often not

the appropriate technique for the material. In

view of these concerns, the Cl 6 Committee in

mid-1 976 recommended to the Department of

Commerce that a voluntary laboratory accreditation program be established in order to

resolve some of the current problems of materials testing and standards.
Appendix B

Thermal Characteristics of Single-Family

Detached, Single-Family Attached, Low-Rise

Multifamily, and Mobile Homes—1975-76

by the National Association of Home Builders

Research Foundation, Inc., October 1977

This report contains information on thermal characteristics of single-family detached,

attached, and multifamily homes built in the last half of 1975 and the first half of 1976 and of

mobile home units built July 1976 through June 1977.

Scope and Method

In the last half of 1976, the National Association of Home Builders (NAHB) Research Foundation conducted a survey of the builder members of NAHB to determine construction practices for homes and apartments built in 1975

and 1976. Included in the survey were questions on general characteristics, thermal characteristics, and specific material use practices.

Data were summarized by nine (9) census regions. Responses by building type was as follows:

Building Type Number of Units

Single-family detached 112,942

Single-family attached 12,990

Low-rise multifamily 44,960

In addition, a survey of mobile home thermal and general characteristics was conducted

in the summer of 1977. Response was received

for almost 175,000 units, two-thirds of which

were “single-wide” units and one-third

“double-wide” units. This represented about

60 percent of all mobile home units built during that period.

1975-76 SINGLE-FAMILY DETACHED UNITS

This section contains characteristics of Included are tables which show national use

almost 113,000 single-family detached homes of insulation by house price and size.

built in 1975-76, summarized by nine census

regions.

292
Single-Farnily Detached Housing Units

1.

2 .

3.

4.

5.

New

Englan d

Number of Stories (% by region )

One stor y 35

Two story 31

Bi-level 30

Split level 4

Foundation Type (% by region)

Basement 67

Partial basement 29

Crawl space 2

Slab 2

East

Mid- North

Atlantic Centra l

34 41

37 29

21 14

8 16

68 53

16 21

8 11

8 15

Floor Area By Type (averages by region )

One stor y 1,28 0 1,42 0 1,500

Two story 2,010 2,100 2,110

BI-leve l 1,710 1,685 1,660

Split leve l 1,860 1,820 1,860

Overall average 1,658 1,760 1,757

Average Selling Price (averages by region)

(Including lot )

Wes t

Nort h

Centra l

46

12

28

14

81

15

2

2

1,49 0

2,110

1,680

1,850

1,667

41,300

60,500

45,500

52,200

46,3o6

Price Per Square Foot (averages by region)

One story 31.1 29.2 27,5 27.7

Two story 29.0 28.6 29.1 28.7

Bi-level 25.7 26.6 27,2 27.1

Split leve l 26.6 26.8 28.3 28.2

All house s 28.5 28.2 28.1 27.8

East

Sout h sout h

Atlantic Centra l Mountain Pacifi c

U.S.

Tota l
1975-76 HOUSlNG CHARACTERISTICS

Single-Family Detached Housing Units

6. Size In Increments

200 SF-% By Region

Less than 800

800 - 999

1000 - 1199

1200 - 1399

1400 - 1599

1600 - 1799

1800 - 1999

2000 - 2199

2200 - 2399

2400 - 2599

2600 - 2799

2800 and more

of

7. Insulation (% by region)

New

England

Exterior Wall

None o

Less than R - 7 o

R-7 0.4

R - n 58.2

R-13 35.6

R-19 4.5

Other 1.3

East

Mid- North

Atlantic Centra l

East West

South South South

Atlantic Central Central Mountain Pacific
1975-76 HOUSING CHARACTERISTICS

Single-FamiIy Detached Housing Units

East West East West

New Mid - Nort h Nort h South South South Us.

Englan d Atlantic Centra l Centra l Atlantic Centra l Centra l Mountain Pacifi c Tota l

7. (continued)

Ceiling

None

R-7

R-11

R-13

R-19

R-22

R-25

R-26

R-30

R-31

More than R-31

Other

Between Floor Joists (% of all houses )

63.1

1.9

18.5

6.5

8.9

1.3

0.6

0.4

65.7

1.1

14.3

7.7

11.2

.0

1.4

3.8

6.0

23.6

51.1

5.3

1.6

75.0

1.8

16.8

2.5

3.6

0.3

75.7 99.1

4.4 0.1

11.5 0.4

4.3 0.1

4.1 0.3

0 0

5.6 0.7

0.4 0.3

0.3 2.5

13.4 12.6

42.8 80.9

22.9 0.9

1.0 0

0.2 0

20.3 0.8

1.1 0.3

1.9 0.4

0.1 0.4

88.3 88.9 80.1

0.4 1.1 1.4

4.1 7.3 11.2

0.9 0.3 2.6

6.2 1.3 4.2

0.1 1.1 0.5
IIU

1975-76 HOUSING CHARACTERISTICS

Single-Family Detached Housing Unit s

Eas t

New Mid - Nort h

Englan d Atlantic Centra l

Eas t Wes t

South South

Central Central Mountain Pacifi c
1975-76 HOUSING CHARACTERISTICS 

Single-Family Detached Housing Unit s

8. Heating/Coolin g

% by Type

by Region

Heating Equipmen t

Gas warm air

Electric warm ai r

Oil warm ai r

Gas hot wate r

Oil hot wate r

Heat pump

Elec.baseboar d

or radian t

ceilin g

Sola r

Heating Fue l

Gas

Electri c

Oil

Sola r

Cooling Equipmen t

None

Centra l

Heat pump

Evaporative coole r

Window or wall

New

England

Eas t

Mid - Nort h

Atlantic Centra l

West

Nort h

Centra l

71

12

2

1

0

6

8

0

72

26

2

0

23.3

70.0

6.0

0.6

0.1

East

South South

Atlantic Centra l Mountain Pacifi c

59

15

o

2

0

15

9

0

61

39

0

0

47.2

24.4

15.0

13.4

o

64

21

o

i

o

2

12

o

65

35

0

0

65.5

28.9

2.0

3.3

0.3

U s .

Tota l

41

29

5

2

2

13

8

0

43

50

7

0

36.7

46.9

13.5

2.3

0.6
lfu

1975-76 HOUSING CHARACTERISTICS

Single-Family Detached Housing Units

New

Englan d

9. Window Glazing

% by Region

Single glaz e 37.6

Single w/stor m 25. 3

Insulating glas s 36.9

Insul. w/stor m 0.2

10. Window Square Feet

by Regio n

Single glaz e 81.7

Single w/storm 55.0

Insulating glass 80.3

Insul. w/storm 0.5

Totals 217.5

11. Sliding Glass Doors

Sliding glass doors

Number per unit 0.88

Square feet per unit 35.2

12. Exterior Doors (% by region )

(Entrance )

Not insulate d 41.0

Insulated 59.0

Eas t

Mid - Nort h

Atlantic Centra l

26.6

21.6

50.0

1.7

47.8

38.7

89.8

3.1

179.4

1.02

40.8

16.1

83.9

Wes t

Nort h

Centra l

14.3

40.6

42.2

2.9

23.4

66.9

71.0

4.9

166.2

0.93

37.2

46.1

53.9

Eas t Wes t

South South South

Atlantic Central Central Mountain Pacifi c

58.8

15.5

25.6

0.1

105.4

25.8

44.8

0

176.0

0.89

35.6

69.6

30.4

49.6

22.7

26.7

0

84.1

35.1

41.7

0

160.9

0.68

27.2

69.2

30.8

80.2

12.1

7.7

0

123.4

16.4

11.1

0

150.9

0.84

33.6

78.8

21.2

22. 6

22.7

53.9

0.8

49.7

55.1

92.7

1.2

198.7

1.00

40.0

56.5

43.5

U.S.

Total

44.0

20.0

35.0

1.0

82.0

32.6

56.9

2.1

175.6

0.95

38.0

57.9

42.1
13. Insulation By Price

and By Size

Exterior Wall Insulation

Price Range

Less than $30,000

$30,000- 34,999

35,000 - 399999

40,000 - 44,999

45,000- 49,999

50,000 - 54,999

55,000 - 59,999

60,000 - 64,999

$65,000 and over

Single-Family Detached Housing Unit s

Insulation Percen t

Les s

No. of Unit s None Than R 7 R7 R11 R13 R19

— —

7,25 2

17,12 6

20,722

18,837

14,265

11,512

7,072

5,063

9,282

0.8

0.1

0

0.1

0

0

0.4

0.2

0.2

0.9

0.9

3.3

1.3

1.0

1.3

0.6

0.9

0.6

71.8

76.2

67.0

69.7

70.0

73.3

67.4

72.4

65.8

Ceiling Insulatio n

More Than

Price Rang e None R7 R11 R13 R19 R22 R25 R26 R30 R31

Less than $30,00 0

$30,000- 34,999

35,000 - 39,999

40,000 - 44,999

45,000 - 49,999

50,000 - 54,999

55,000 - 59,999

60,000 - 64,999

$65,000 and over

0.5 0.7 2.5 21.1 52.5

1.1 0.3 6.o 18.8 52.3

0.7 0.7 6.9 14.7 47.9

1.6 0.5 4.3 20.1 55.8

1.0 1.4 2.3 16.1 54.7

1.1 3.4 2.2 25.9 38.4

1.0 0.2 2.8 25.2 37.6

1.0 0.3 3.6 22.9 53.2

1.4 1.2 2.2 19.9 51.4

R31

Othe r

0.6

0.6

2.4

0.9

0.7

1.0

0.5

0.7

0.5

Other

0.5

2.9

1.9

0.2

3.1

2.0

1.6

0.1

1.6
Single-Family Detached Housing Unit s

13. (continued)

Exterior Wall Insulation

Insulation Percen t

Size Range (SF)

Less than 100 0

1000 - 1199

1200 - 1399

1400 - 1599

1600 - 1799

1800 - 1999

2000 - 2199

2200 - 2399

2400 - 2599

2600 - 2799

2800 and over

Ceiling insulatio n

Size Range (SF )

Less than 100 0

1000 - 1199

1200 - 1399

1400 - 1599

1600 - 1799

1800 - 1999

2000 - 2199

2200 - 2399

2400 - 2599

2600 - 2799

2800 and over

. .

R 1 3

22. 1

18. 3

21. 4

18. 9

14. 1

20. 4

22. 7

22. 1

32. 9

12. 0

16. 0

R26

22.8

22.0

25.0

15.1

21.8

24.1

20.0

24.9

22.3

31.7

R 3 0

R-19 Other

2.2 0.5

R31

Mor e

Than

R31

23.1

17.0

13.9

12.9

9.8

13.5

13.1

6.8

10.0

10.7

12.3

0.2

1.3

2.6

1.9

1.2

2.8

1.8

2.2

3.1

1.6

2.3

0 . 2

0.8

0.4

0.6

0.5

0.1

0.2

0.3

0.9

0.2

2.4

2 . 4

3 . 8

6 . 0

2 . 3

2 . 6

2 . 9

0.7

0.8

0.5

0.6

0.1

0.7

1.2

1.1

0.9

1.7

0.1

0.7

2.6

2.0

3.6

3.1

2.9

1.8

3.1

4.0

1.9

6.4

1.7

1.9

1.9

2.1

1.2

1.9

2.5

1.9

0.9

0.4

0.1
Appendix B—Thermal Characteristics of Homes Built in 1975-76 ● 301

1975-76 SINGLE-FAMILY ATTACHED UNITS

This section contains data on almost 13,000 single-family attached

housing units.
New

England

1. Type of Unit - Percent

by Region

Town Houses

Two Family Unit s

Three Family Unit s

Four Family Unit s

2. Foundation Types -

% by Type by Region

Town Houses

Full Basemen t

Partial Basemen t

Crawl Spac e

Sla b

Two Family Unit s

Full Basemen t

Partial Basemen t

Crawl Spac e

Sla b

Three Family Unit s

Full Basemen t

Partial Basemen t

Crawl Spac e

Sla b

Four Family Unit s

Basement

Partial Basemen t

Crawl Spac e

Sla b

58. 2

15. 1

6 . 4

20. 3

29. 7

0

52. 4

17.9

100.0

0

0

0

11.1

0

88.;

7.0

0

2.3

90.7

Eas t

Mid - Nort h

Atlantic Centra l

61. 2

19.1

4.5

15.2

61.4

2.4

23.1

13.1

42.8

6.7

15.2

35.3

22.4

24.5

42.9

10.2

1.8

7.2

91.:

Eas t

South South

Atlantic Centra l

68.8

Wes t

Sout h

Centra l

76.6

20.8

0.9

1.7

0.9

4.4

13.1

81.6

0

0

0

100.0

0

0

0

100.0

0

0

0

100.0

Mountain Pacifi c

46.1 77.7

24.7 14.4

1.3 1.2

27.9 6.7

34.5

4.3

28.5

32.7

26.4

6.4

6.8

60.4

0

76.;

23.1

6.7

0.7

14.2

78.4

20. 6

0

20. 1

59.3

0

0

100.0

o

0

0.5

13.7

85.8
3. Number of Stories

% by Type by Region

Town Houses

One Stor y

Two Stor y

Three Stor y

More than 3

Two Family Units

One Story

Two Story

Three Story

More than 3

Three Family Units

One Story

Two Story

Three Story

More than 3

Four Family Units

One Story

Two Story

Three Story

Four Story

New

Englan d

10.8

59.5

29.7

0

4.7

80.5

14.8

0

29.6

70.4

0

0

25.6

72.1

2.3

0

Mid -

Atlanti c

15.6

83.2

1.2

0

6.0

71.2

22.8

0

0

0

0

0

14.3

85.7

0

0

Eas t

Nort h

Centra l

11.5

86.1

2.4

0

41.0

59.0

0

0

49.0

51.0

0

0

4.8

95.2

0

0

Wes t

Nort h

Centra l

32. 5

38.6

26.8

2.1

51.5

22.4

26.1

0

47.5

52.5

0

0

92.7

7.3

0

0

Eas t

South South

Atlantic Centra l

6.0

84.8

8.7

0.5

18.5

81.5

0

0

100.0

0

0

0

77.2

22.8

0

0

21.4

69.2

9.4

0

36.1

10.7

53.2

0

0

0

0

0

13.3

59.1

27.6

0

West

South

Centra l Mountain Pacifi c

17.3

72.9

9.8

0

75.7

24.3

0

0

85.7

14.3

0

0

61.5

38.5

0

0

44.5

55.5

0

0

38.8

57.2

4.0

0

76.9

23.1

0

0

36.o

59.0

5.0

0

25.0

72.8

2.2

0

72.5

23.4

1.2

2.9

27.3

72.7

0

0

34.2

65.8

0

0

U s .

Tota l

17. 6

74.6

7.6

0.2

48.0

39.5

11.9

0.6

47.5

52.5

0

0

38.4

57.7

3.9

0
4. Finished Floor Area 

-

% by Region

Square Footage

Less than 800

800 - 999

1000 - 1199

1200 - 1399

1400- 1599

1600 - 1799

1800 - 1999

2000 - 2199

More than 2200

5. Window Glazing -

% by Region

“Regular” Windows

Single Glaze

Single w/Storm

Insulated Glass

Insul. w/Storm

“Picture” Window s

Single Glaze

Single w/Storm

Insulated Glass

Insul . w/Stor

m

East

Mid- North

Atlantic Centra l

West

North

Centra l

1.4

21.3

47.1

10.0

11.4

3.3

1.2

1.9

2.3

22.1

27.8

48.4

1.7

25.3

30.6

44.10

East West

South South South

Atlantic Centra l Centra l Mountain Pacifi

c

o

1.0

21.9

56.1

1.5

5.2

12.9

0.9

0.5

40.6

45.9

13.50

36.0

48.1

15.90

0

17.8

27.1

27.1

11.0

5.8

4.8

6.40

28.6

2.6

68.80

12.8

5.6

81.60
6. Window Square Feet

by Region

Single gIaz e

Single with stor m

Insulated glas s

Insul. with stor m

Total s

7. Sliding Glass Door s

S.G.D. per uni t

Square feet pe r

uni t

8. Exterior Door s

- Percen t

by Type by Region

Not insulate d

insulate d

Storm door s

9. Exterior Wall

Structure

% by Region

First Floor

2x4, 16’’o.c.

2x4, 24’’o.c.

2x6, 24’’o.c.

Steel stud

Concrete block

Load-bearing

brick

Other

Eas t

Mid - Nort h

Atlantic Centra I

Wes t

Nort h

Centra l

18. 9

26. 5

56. 8

1 . 4

103. 6

0.9 7

38. 8

37. 8

62. 2

26. 8

90. 8

9 . 2

0

0

0

0

0

Eas t Wes t

South South South

Atlantic Centra l Centra l Mountain Pacifi c
9. (Continued)

Upper Floor s

2x4,16’’o.c .

2x4,24’’o.c .

2x6,24’’o.c .

Steel stu d

Concrete bloc k

Load bearin g

bric k

Othe r

Not applicabl e

10. Exterior Wal l

Sheathin g

None

1/2” fiberboar d

25/32 “

1/2” plywoo d

3/8” II

Alum. foil faced

1/2” gypsumboard

3/4” polystyrene 1" II

1“ urethan e

1 x board s

Othe r

Eas t

Mid - Nort h

Atlantic Centra l

South

Atlanti c

Eas t Wes t

South Sout h

Central Centra l Mountai n Pacifi c
11. Insulation-Percent

by Location

by Region

Ceiling

R7

R9

Rll

R13

R19

R22

R25

R26

R30

More than R30

Other

Exterior Walls

None

R7

R11

R 13

R 19

Between Floor

Joists

None

2-1/4’’batts R7 2 .

7

3-1/2” 

u R-1

1 7 .

6

3-5/811 

~ R-1

3 31.

8

6“

II R-19 13.7

Other

o

West

South

Central Mountain Pacifi

c
11. (Continued )

Basement Wall s

Non e

2-1/4” batts R- 7

3-1/2" II R-1 1

3-5/8" !1 R-1 3

6 “

tl R-1 9

Othe r

Crawl Spac e

Wall s

Non e

2- 1/4” batts R- 7

3-1/2" II R-1 1

3-5/8" II R-1 3

6 “

II R-1 9

Other

Slab Perimeter

None

One-inch

Twc-inch

Other

Change From 1975

No change

Increased

Decreased

East

Mid - Nort h

Atlantic Centra l

South

Atlanti c

83.2

7.1

9.7

0

0

0

94.5

2.4

1.5

0

1.1

0.5

14.3

76.2

0.6

8.9

38.7

61.3

0

Eas t Wes t

South South

Centra l Centra l Mountain Pacifi c

97.6

0

0

0

0

2.4

97.6

0

0

2.4

0

0

96.9

3.1

o

0

89.8

10.2

0

86.1

2.8

3.8

5.8

0

1.5

63.8

0

28.5

5.9

0

1.8

62.5

37.5

0

0

40.7

59.3

0

U.S.

Tota l
12. Heating/Coolin g

% by Type

by Region

Heating Equipmen t

None

Warm air furnac e

Hot water syste m

Heat pump

Elec. baseboard

or radiant

ceilin g

Heating Fuel

Gas

Electri c

o i l

Cooling Equipment

Non e

Port of heating

equipment

Separate from

heating

Heat pump

Evaporative

coole r

Cooling Fue l

Gas

Electri c

None

New

Englan d — .

o

24.1

27.5

5.2

43.2

2.6

69.7

27.7

59.0

26.0

9.8

5.2

0

41.:

59.0

Eas t

Mid - Nort h

Atlantic Centra l

o

57.1

2.8

10.2

29.9

35.9

46.4

17.7

26.6

50.5

12.7

10.2

0

3.6

69.8

26.6

i.2

74.5

0.1

22.0

2.2

43.0

56.7

0.3

10.4.

66.7

0.9

22.0

0

8.7

80.9

10.4

South

Atlanti c

Eas t

South

Central

0.6

82.7

0

11.5

5.2

37.5

62.5

0

1.0

78.1

9.4

11.5

0

0

99.0

1.0

——

Mountain Pacifi c

0.2

67.3

0.8

15.5

16.2

67.4

32.6

0

37.8

i4.9

30.1

15.5

1.7

0.6

61.6

37.8
310 ● Residential Energy Conservation

1975-76 LOW-RISE MULTIFAMILY UNITS

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

dwelling units.
1. Type Units - Percen t

by Region

Efficiencie s

One Bedroom

Two Bedroom

Three or more Bdrm.

2. Foundation Types -

Percent by Regio n

No Basement

Live-in Basemen t

Live-in/Utility Bsm t

Utility Basemen t

3. Finished Floor Area -

Percent by Regio n

Square Footag e

Less than 40 0

400 - 59 9

600 - 79 9

800 - 99 9

1000 -119 9

1200 and mor e

Eas t Wes t Eas t Wes t

New Mid - Nort h Nort h South South South

Englan d Atlantic Centra l Centra l Atlantic Central Central Mountain pacifi c

21. 2

35. 4

37. 5

5 . 9

73.1

12.2

4.3

10.4

0.9

21.9

23.1

32.7

14.9

6.5

77.6

5.1

1.0

16.3

0

15.5

26.8

30.4

19.6

7.7

4.6

38.2

50.5

6.7

75.9

6.4

1.0

16.7

5.4

24.7

64.7

5.2

52.7

30.2

0.4

16.7

2 . 5

4 . 6

1.0

1.8

25.5

34.8

20.2

16.7

2.9

25.0

61.0

11.1

95.0

3.7

1.1

0.2

8.3

44.0

39.0

8.7

98.2

1.8

2 . 2

37. 2

50.1

10.5

61.5

29.5

0.8

8.2

1.6

13.2

33.2

27. 3

16.6

8.1

11. 5

33. 8

48. 9

5 . 8

92.6

2.5

1.7

3.2

1.7

18.3

47.8

25.2

9.5

7.5

U s .

Tota l

6.0

38.1

47.0

8.9

82.8

7.7

2.1

7.4

0.8

10.0

33.7

31.1

16.8

7.6
4. Window Glazing -

Percent by Regio n

Single Glaz e

Single w/Stor m

Insulated Glas s

Insul. w/Storm s

5. Window Square Feet

by Region

Single Glaz e

Single w/Stor m

Insulated Glas s

Insul. with Storm s

New

Englan d

6.3

33.4

60.3

0

4.3

29.4

44.9

0

Eas t Wes t Eas t Wes t

Mid - Nort h Nort h South South Sout h

Atlantic Centra l Centra l Atlantic Centra l Centra l

4 . 2

50. 6

45. 2

0

4.9

51.1

44.0

0

6. Entrance Doors - Totals 78.6 100.0

Percent by Regio n

Unit Entranc e

Not Insulate d 50.1

Insulated 49.9

34. 1

65. 9

0.3

12. 5

66. 7

52. 0

48.0

19.5

35.0

33.4

12.1

53.7

46.3

43.6

48.2

8.2

0

30. 8

69. 2

86.5

0.6

12.9

0

51. 2

0.3

7.7

0

59.2

89.4

10.6

98.9

0.6

0.5

0

97. 2

2.8

Mountain Pacifi c

79.3

0

20.7

0

90.0

23.7

0

0

U.S.

Tota l
. .

New

Englan d

7. Exterior Wall Sheathing

% by Type by Region

None

1/2” fiberboar d

25/32” fiberboar d

1/2” plywoo d

3/8” plywoo d

Alum. foil-faced boar d

1/2” gypsumboard

3/4” polystyren e

i“ polystyren e

3/4” urethan e

l“ urethan e

Othe r

8. Insulation - Percent b y

Location by Regio n

Ceiling Insulatio n

2-1/4” batts R- 7

3-1/2” batts R-1 1

3-5/8” batts R-1 3

6" batts R-1 9

6-1/2” batts R-2 2

8-1/2” batts R-2 6

9-1/2” batts R-3 0

4" loosefill R- 9

5“ Ioosefill R-1 1

6“ loosefill R-1 3

8-3/ 4

H loosefill R-1 9

10” Ioosefill R-2 2

12” looseflll R-2 5

13-3/4” Ioosefill R-3 0

14” Ioosefill R-3 1

Othe r

Eas t

Nort h

Centra l

Wes t

Nort h

Centra l

Eas t Wes t

South South Sout h

Atlantic Central Central Mountai n Pacifi c

U.S.

Tota l

18.9

35.1

3.8

6.9

6.3

1.1

24.0

0.7

0.9

1.0

0.5

0.8

0.5

0.2
East

New Mid- North

Englan d Atlantic Centra l

8. Exterior Wall Insulation (continued)

None

2-1/4” batts, R- 7

3-1/2" batts, R-1 1

3-5/8” batts, R-1 3

6" batts, R-19

Pleated aluminum

Other

Insulation Between Joist s

None

2-1/4" batts R- 7

3-1/2" batts R- n

3-5/8" batts R-1 3

6" batts R-19

Othe r

Crawl Space Wall s

None

2-1/4” batts R- 7

3-1/2” batts R-1 1

3-5/8” R-1 3

6" batts R-1 9

Othe r

Insulation Basement Wall s

None

2-1/4” batts R- 7

3-1/2” batts R- n

3-5/8” batts R-1 3

6" batts R-1 9

Othe r

0

0

40.9

58.4

0

0

0.7

70.7

1.4

14.6

9.6

3.7

0

55.8

10.0

19.4

1.1

10.1

3.6

96.5

0.5

1.8

0.9

0.3

0

Eas t Wes t

Sout h South South

Atlantic Central Central Mountain Pacifi c — .

21. 1

15. 2

32. 3

9 . 2

8 . 9

0

13. 3

66. 5

2 . 6

30. 7

0 . 2

0

0

94. 5

0 . 9

4 . 4

0 . 2

0

0

87. 9

1 . 2

10. 2

0

0

0 . 7

0

2.7

93.3

1.2

2.4

0

0.4

59.6

0

29.5

1.4

9.5

0

96.6

0

2.5

0.9

0

0

94.2

0

5.8

0

0

0
8. (continued)

Practice Change

from ’75

No change

Increased

Perimeter Slab-ongrade

None

One Inch

Two Inch

Othe r

9 . Heating/Coolln g

% by Type by Region

Heating By Equipmen t

Central boile r

w/air handle r

Central boile r

w/fan coil s

Central boile r

w/hot wate r

baseboard

Ind. warm air

furnace

Ind. hot water

system

nd. heat pump

Ind. elec. baseboard or radiant

ceiling

Other

New

Englan d

89. 8

10. 2

18. 6

13. 9

67. 5

0

0

0

46.5

7.3

0

1.1

45.1

0

Eas t

Mid- North

Atlantic Central

80. 7

19. 3

25. 2

57. 2

17. 6

0

10. 8

0

4 . 7

52. 3

0

3 . 2

18. 9

10. 1

35.2

64.8

21.9

35.3

34.2

8.6

0

0

12.4

64.3

0.3

9.1

14.2

0

West

Nort h

Centra l

73. 0

27. 0

30. 3

32. 8

33. 1

3 . 8

8 . 3

0

5 . 1

45. 5

0

1 . 8

39. 3

0

East West

South South South

Atlantic Central Central Mountain Pacifi c — .— .

60. 3

39. 7

56. 8

43. 2

0

0

11. 0

0 . 7

0

54. 7

0

11. 6

0 . 9

21. !

95.2

4.8

64.9

35.1

o

0

0.2

0

2.6

78.8

0

2.9

15.5

0

U.S.

Total

69. 9

30.1

56.0

29. 7

12.8

1.5

6 . 2

1.5

7.1

57.2

5 . 4

18.0

4 . 6
9. (continued)

Heating Fuel

Gas

Electric

Oil

Cooling Equipment

None

Central systems

chiller/alr

handler

chiller/fan

coils

Ind.unit systems

Part of heating

equip.

Separate from

heat equip.

Heat pump

Evaporative

cooler

Room units

Cooling Fue l

None

Gas

Electric

West

South

Central Mountain Pacific
Appendix B—Thermal Characteristics of Homes Built in 1975-76 . 317

This section contains data on about 175,000 mobile home units.
New

England

1 . Average Size (SF)

Single wid e 935

Double wide 1249

2 . Insulatio n

(Percent of units )

Single wid e

Ceiling s

R11 to R12

R13 to R18

R19 to R21

R22 or more

Single wid e

Wall s

R7

R11

R 1 2

R13

R19

Single wide

Floors

R7

R9

R11

R13

R14

R15

R19

7.1

92.9

0

0

0

0

0

100.0

0

0

0

0

Eas t

Mid - Nort h

Atlantic Centra l

MOBILE HOME UNITS

Eas t Wes t

Sout h South South U s .

Atlantic Central Central Mountain Pacific Tota l — . . — —
1976-77 HOUSING CHARACTERISTICS

MOBILE HOME UNITS

Double Wid e

Ceiling s

R11 to R1 2

R13 to R18

R19 to R21

R22 or more

Double Wid e

Wall s

R7

R11

R12

R13

R19

Double Wide

Floors

R7

R9

R11

R13

R14

R15

R19

East

Mid- North

Atlantic Central

Eas t Wes t

South U s .

Central Mountain Pacific Tota l
MOBILE HOME UNITS

3. Windows & Doors

Single Wide

Average number

Average size (SF)

Double Wide

Average number

Average size (SF)

Glazing (percent)

Single no storm s

Single with storm s

Insul. no storm s

Insul. with storm s

Door s

(percent of units )

Insulate d

Not insulate d

New

England

11. 7

102.0

11.8

131.0

14.8

59.2

0

26.0

50.5

49.5

Eas t

Hid - Nort h

Atlantic Centra l

12.4

118.7

12.4

140.0

30.8

69.2

0

0

50.5

49.5

Wes t Eas t Wes t

Nort h South Sout h South

Centra l Atlantic Central Central Mountain Pacifi — 

c

.

11. 3

115. 9

12. 2

157. 7

21. 3

76.2

2.5

0

47.3

52.7

11. 5

113. 5

12.3

137.1

41.5

58.5

0

0

48.0

52.0

10.3

109.0

11.5

145.9

38.5

61.1

0.2

0.2

37.9

62.1

11.0

107.1

12.3

137.1

60.6

28.9

10.2

0.3

37.9

62.1

Us.

Tota l

11. 4

113. 4

11. 9

145. 6

37. 8

58. 1

2 . 3

1 . 8

46. 1

53. 9
New

Englan d

4. Heating/Coolin g

Heating fue l

sourc e

(percent )

Gas 27. 4

oil 53.9

Electric 18.7

1976-77 HOUSING CHARACTERISTICS

MOBILE HOME UNITS

East West East West

Mid - Nort h Nort h South South South Us.

Atlantic Centra l Centra l Atlantic Central Central Mountain Pacific Tota l — —

Cooling equipmen t

plant install -

ed (percent )
Appendix C

Thermal Characteristics of Homes Built

in 1974, 1973, and 1961

by the National Association of Home Builders

Research Foundation, Inc., July 1977

INTRODUCTION

This report contains information in thermal characteristics of homes built in 1973 and i n

1974, and thermal insulation data for 1961 homes. In addition, comments from 83 builders

regarding levels of insulation being installed in 1976-77 are included.

Scope and Method

In 1974, the Research Foundation conducted

a national survey of builder practices for the

National Association of Home Builders

(NAHB). The study covered a wide range of

home builder practices for homes built in 1973.

Results represented a composite of about

84,000 homes built by over 1,600 builders selected at random from NAHB membership

rolIs. Data were summarized for four (4) census

regions.

I n 1975, a survey of over 120,000 single family dwellings was completed for homes built in

1974. This survey was taken from the entire

membership of NAHB and was summarized by

nine (9) census regions. Housing characteristic

data were collected in sufficient detail for

thermal characteristics to be analyzed.

In 1961, F. W. Dodge Corporation conducted

a detailed material inventory of 1,000 randomly selected dwellings. Data from this inventory

are included in this report.

Another extensive survey is being conducted

by the Research Foundation for homes built in

1975 and 1976. Data from this survey are not

yet available but a review of several thousand

questionnaires revealed many builders are installing more insulation than the average and

some builders are installing less insulation

than the average. Eighty-three of these untypical builders were surveyed in an attempt to

discover what causes builders to make

changes related to energy conservation.

Results of that survey are included.

1974 HOUSING CHARACTERISTICS

This section contains characteristics of Region

about 120,000 single family detached homes New England (N. E.) .. .

built in 1974, summarized by nine census

Middle Atlantic (M.A.). .. .

regions. Following are the regions and the

East North Central (E. N. C.)

West North Central (W.N.C.).

percentage of the total number of home s South Atlantic (S. A. )

with in each region. East South Central (E.S.C.), .,

West South Central (W. S. C,) .,

Mountain (M ) ...

Pacific (P. )

Percent

of homes

3

10

15

7

20

6

15

9

15

3 2 2
1974 HOUSING CHARACTERISTICS

la. Finished Floor Area - Percent by Region

Square Footage N . E . M.A. E.N.C.

Under 800

800 - 999

1000 - 1199

1200 - 1399

1400 - 1599

1600 - 1799

1800 - 1999

2000 - 2199

2200 - 2399

2400 - 2799

Over 2800

Total 100 100 100

Average SF 1,51 8 1,57 0 1,50 7

W.N.C .

5

7

23

27

13

5

7

5

3

3

2

100

1,42 9

S.A . E.S.C .

1

2

14

2 4

17

11

12

10

4

3

2

100

1,584

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

Percent on

1st Floor 72.3 67.5 76.0 79.9 89.2

Sq. Footage 1,098 1,060 1,145 1,14 1 1,41 3

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

;’:

Less than 1%

W.S.C. M. P . Total U.S.

2

5

16

21

22

11

5

10

3

3

2

100

1,535

87.7

1,346

49

660

51

686

I

I

12

17

26

16

10

8

5

3

I

100

1,604

83.3

1,336

44

588

56

748

100

1,58 5

84. 2

1,33 4

5 2

6 9 4

4 8

6 4 0
2. Number of Stories - Percent by Region

Type House N.E. M.A. E.N.C.

One Story 36 35 48

Two Story 31 33 24

Bi-Level 26 25 12

Split Level — 7 ——7 16

Total 100 100 100

Average Stories/House* 1. 4 1.4 1,4

3. Square Footage of

Opaque Wall

Windows & Doors

Total SF

Exterior Wal l - by Regio n

1,19 0 1,22 1 1,18 8

— 

2 8 7 ——2 9 6 2 8 2

1,47 7 1,51 7 1,47 0

W.N.C.

53

12

20

15

100

1.3

1,087

282

1,369

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

77

13

4

6

100

1.2

1,134

297 -

1,431

69

11

12

8

100

1.2

1,201

294

1,495

87

12

1

1

73

6

10

11

100

1.1

1,193

324

1,517

100

1.2

1,091

297

1,388

100

1.3

1,194

298

1,1192

65

18

10

7

100

1.3

1,162

295

1,457

;:

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

Heating Equipment

Warm air furnace

Hot water system

Heat pump

Electric baseboard

Electric radiant

ceiling

None

Heating Fuel

Gas

Electric

Oil

Cooling Equipment

None

Combination heating

& cooling (cooling

part of heating

system)

Individual room

Split syste

m

(cooling separate

from heating)

Heat pump

Other

Cooling Fue l

Gas

Electric

N.E .

28.2

37.90

33.900

39.3

38.5

22.2

81.8

14.2

2.1

1.9000

18.2

E.S.C .

69.00

22.2

3.9

4.3

0.6

34.2

65.20

6.o

51.3

5.9

14.2

22.60

2.2

91.8

81.2

1.2

11.6

4.2

1.6

0.2

55.7

42.9

1.2

33.3

36.5

0.8

9.1

11.6

8.7

3.5

63.2

P. Total U.S.
5. Thermal Resistance (R) Values of Insulation - Percent

Exterior Wall s

R-VaIue s

None

R - 3

R-7

R- I 1

R-19

Other

Ceiling/Roo f

None

R - 9

R-1 1

R-1 3

R-1 8

R-1 9

R-2 2

R-2 6

Othe r

Floor Joist s

N.E . M.A . E.N.C. W.N.C .

0

2.8

0

20.7

6.9

32.7

29.1

4.8

3.0

1.6

0.7

11.4

9.3

3.6

46.0

27.2

0.2

0

1.9

0

0

90.5

5.7

1.9

2 . 3

8 . 9

S.A . E.S.C . w . s . c . M. P. Total U.S .

6 . 0

9 . 6

15, 1

69. 2

0

0. 1

4 . 8

4 . 5

16. 3

28. 2

4 . 4

41. 6

0 . 1

0

0 . 1

None

R-7

R-11

R-19

Other
6 . Average Number of Windows and Sliding Glass Doors Per Hous e

Windows by Glazing N.E . M.A . E.N.C .

Single glaze - no

s term 4 . 6 5 . 7 4.1

Double insulating

g I ass 1 .6 3 . 6 4.1

Single glaze wit h

storms 6.2 — 4.7 6.3

Total 12.4 14.0 14.5

Sliding Glass Doors 0. 6 0 . 8 0 . 5

Windows by Frame Typ e

Wood 11.9 10.5 9.4

Aluminum 0.3 2.5 5.1

Other 0.2 1.0 0

Total 12.4 14.0 14.5

7. Average Number of Exterior Doors Per House

Doors by Typ e

Wood 2.7 4 1.84 1.69

Steel (Insulated) 0.71 1.48 1.72

Other 0.03 — 0.06 0.04

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

10.2

3.5

0

13.7

2.94

0.53

0.10

3.57

2.70

S.A .

8.6

1.6

2.2

12.4

0.6

6.6

5.8

0

12.4

2.75

0.71

0.16

3.62

1 .50

3.66

1.70

11. 4

2.8 3

0.3 1

0.0 3

3.1 7

1.1 0

Total U.S.

6 . 4

2 . 9

3 . 0

12.3

0 . 7

5 . 6

6 . 7

0

12.3

2.57

0.7 9

0.0 5

3.41

1.50
. .

8. Weighted Average Thermal Resistance (R) Values of All Other Materials in Walls, Ceilings and Floors

Exterior Wall “R” Values N.E .

Outside surface fil m 0.17

Siding 0.71

Sheathing 0.68

Interior surface material

material 0.44

Interior surface film 0.68

Subtotal 2.68

Insulation 10.30

Total 12.98

Ceiling/Roof

Outside surface film 0.61

Interior surface

material 0.44

Interior surface film 0.61

Subtotal 1.66

Insulation 17.90

Total 19.56

Wood Floor

Inside surface film 0.92

Finished flooring 0.98

Underpayment &

sheathing 1.19

Underfloor surface

S.A .

0.17

0.6 7

0.6 9

0.4 4

0.6 8

2.6 5

7.2 0

9.8 5

0.6 1

0.4 4

0.6 1

1 .66

14.8 0

16.4 6

0.9 2

1.2 0

1.1 3

0.9 2

4.1 7

5.4 0

9.5 7

W.S.C .

0.17

0.51

0.82

0.45

0.68

2.63

10.30

12.9 3

0.61

0.45

0.61

1.67

15.1O

16.77

0.92

1.25

1.2 1

Tota l

—

M. P. Us. —

0.17 0.17 0.17

1.02 0.48 0.57

0.55 0.44 0.82

0.44 0.46 0.44

0.68 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 0.44

0.61 0.61 0.61 — —

1.66 1.68 1.66

— 

18.10 14.60 15.8 ——0

19.76 16.28 17.46

0.92 0.9 2 0.92

1.24 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

This section contains characteristics of about 84,000 homes buil t

in 1973, a pre oil embargo year. Data are summarized by fou r

census districts: Northeast, North Central , South and West .
1973 HOUSING CHARACTERISTICS

l a . Finished Floor Area By Region

Under 1,000 SF

1,000 - 1,199

1,200 - 1,399

1,400 - 1,599

1,600 - 1,799

1,800 - 1,999

2,000 - 2,199

2,200 - 2,399

2,400 - 2,799

Over 2,80 0

Tota l 1 0 0

Average S F 1,51 4

North

2 3

2 6

17

6

6

6

3

4

3

100

1,515

;:

Less than 1%
2. Number of Storie s

Type House

One Stor y

Two Stor y

B i - LeveI

Split Leve l

Tota l

Percent by Region

North

East

34.3

32.7

25.7

7.3

100.0

Average Stories/House 1.4

3. Square Footage of Exterior Wall, by Region

Opaque Wall 1,187

Windows and Doors 286

Total SF 1,473

North

Central

47.9

20.4

15.4

16.3

100. 0

1.4

1,178

287

1,465

South

76. 5

12. 2

5 . 8

5 . 5

100.0

1 . 2

1,186

312

1,498

Wes t

66. 2

17. 6

7 . 8

8 . 4

100. 0

1.3

1,133

291

Tota l

U s .

57. 8

18. 9

13. 8

9 . 5

10.0

1.3

1,171

298

1,469
4. Heating and Cooling

Heating Equipment

Warm air furnace

Hot water system

Heat pump

Electric baseboard

Equipment - Percent by Type

North

East

43.3

21.4

0.1

30.3

Electric radiant ceilin g

Othe r

Heating Fuel

Gas

Electri c

O i l

Cooling Equipment

None

Central system

Individual roo m

Heat pump

Cooling Fue l

C.4

4.5

38.7

42.2

19.1

59.2

36.2

4.5

0.1

North

Central

93.?

2.0

0.4

2.0

1.2

1.3

70.4

28.9

0.7

37.9

61.4

0.3

0.4

31. 6

67. 2

1 . 2

west

80.9

19.0

O.1

47.5

46.4

1.8

4.3

Gas

Electri c

1.0

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

North

East

North

Central

Total

South West U s .

Exterior Walls

R-Values

None

R-3

R-7

R - n

Other

o

0,6

27.0

70.6

1.7

0.1

0.3

26.7

71.4

1.5

3.5

2.3

6.6

81.9

5.7

2.5

0.5

20.9

70.4

5.7

2 . 1

1 . 2

17. 1

76. 1

4 , 5

Ceiling/Roof

None

R-7

R-9

R-11

R-13

R-18

R-19

Other

0.5

1.8

2.6

30.O

11.7

4.6

46.7

2.1

0.2

0.8

5.6

16.8

39.4

15.4

16.1

5.7

3.0

0.2

17.0

11,5

38.5

1.2

16.8

11.8

Wood Floo r

None

R-7

R - n

R-19

Other

53.9

6.2

35.1

3.7

1.2

70.5

3.6

18.5

6.3

1.1

44,9

28.2

16.0

6.5

4.4

82. 0

10. 2

6 . 9

0 . 2

0.7

61.4

14.1

17.6

4.8

2.1

5b. Weighted Average “R” Values

9.8

15.2

5.0

Walls

Ceiling

Floor

9.9

14.2

3.5

9.6

12.7

1.5

10.1

15. 2

5 . 2

10.0

14.4

4.0
Nort h

Centra l

Tota l

U.S .

4.0

7.8

2.4

8.7

1.7

9 . 2

1 . 5

0.5

7.5

3. 1

1.8 2.0

14. 2 12. 2 11. 2 12. 6

9.6

4.6

0

Wood

Aluminum

Other

Tota1

10.7

2.0

0.1

10.8

I .0 0.3

13.7

of Exterior Doors Per Hous e

1 . 8

12. 2 11. 2 12.6

7. Average Number

Doors by Type

Wood I .9

1.6

2 . 5

0.7

0

2.5

0.5

0.1

2.3

Steel (insulated) 1 . 6 “1 .0

Other 0.1

Tota l 3.5

Storm Door s 0.4

0.1 0.1

3.6 3 . 2 3.1 3.4

1 . 2 0.5 0 . 3 0.6
8. Weighted Average Thermal Resistance (R) Values of All Materials in Walls, Ceilings and Floor s

Exterior Wall Material s

lnsulatio n

Tota l

Ceiling/Roof Materials

Insulatio n

Tota l

Wood Floor Material s

Insulatio n

Tota l

Nort h Nort h

Eas t Centra l South wes t

2.5 2.9 2 . 7 2 . 5

9 . 8

9 . 9 10. 1 9 . 8

12. 3 12. 8 12. 8 12. 3

1.7 1.7 1.7 1.7

15.2 14.2 15.2 12.7

16.9 15.9 16.9 14.4

4.0 4.2 4.3 4.4

5.0 3.5 5.: 1.5

9.0 7.7 9.5 5*9

Tota l

U.S.

2.7

10.0

12. 7

16.1

8.3
336 . Residential Energy Conservation

1961 Housing Characteristics

This section contains a summary of housing characteristic data fo r

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

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

1.

2 .

3.

4.

1961 HOUSING CHARACTERISTICS

--

Two or Mor e

Crawl Spac e

Ceilinq/Roo f

9 2

100

85

70

92

Split-Leve l

Concrete Slab

Perimete r
338 “ Residential Energy Conservation

5. Heating Fuel Percent By Region

Region Gas Electri c O i l

49

17

14

5

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

Builder Survey

This section contains the results of a survey of eighty-three singl e

family home builders . An in-depth survey of all homes built in 197 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.
340 ● Residential Energy Conservation

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 ceiling with insulating glass windows.

May consider more insulation if fuel costs continue to increase.

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

Uses R-13 in walls, R-22 in ceiling and storm windows . Recentl y

improved insulation values in ceiling because of energy costs .

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

Uses R-n in walls , R-n in ceiling and single pane windows, al l

low values for New England . Builder does shade southerly facin g

windows with roof overhang . He offers R-19 insulation in ceilin g

as an option because h e “offers the buyer the choice, not simpl y

dictate what I or anyone else thinks best!”

Builder believes fuel costs in a free economy will require maximum

insulation levels without more regulations. “We have enough regulations al ready,” he said.

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

Uses R-13 in walls and R-19 in ceiling. Does not plan on changing

levels of insulation in the next year. Provides storm windows.

Energy costs may lead him to increase levels of insulation .

Montpelier, VT builder of $38,000 homes .

Uses R-19 in walls, R-38 in ceilings and insulated glass window s

with storm windows . Plants deciduous trees to provide shade i n

summer for south facing windows . Plans on retaining these level s

in the next year . If climate turns colder and energy costs ge t

higher, he will consider increased insulation levels .

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

Uses R-13 in walls and ceilings and single glazed windows. Plan s

on increasing to R-22 in ceilings next year because of energy savings .

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

Uses R-13 in walls, R-30 in ceilings and storm windows in his home s

which are low cost . He plans to improve levels by insulating base -

ment walls , using insulated doors , polystyrene behind electrica l

outlet boxes and more liberal use of caulking . He will do thes e

things because of customer demand and awareness .

He may increase insulation levels because of economic factors an d

because of a sense of national and local responsibility .
Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 341

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

Uses R-19 in walls , R-30 i n ceiling and storm windows. Does not

plan on making any changes in future because, “We feel we have

reached the cost/benefit ratio. ”

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

Uses R-19 in walls, R-30 in ceilings and insulating glass windows.

Plans on changing to R-38 in ceilings next year . Believes conser -

vation features to be a marketing point and has built to these hig h

insulation standards for past ten years .

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

Uses R-16 in walls, R-30 in ceilings and storm windows. Achieve s

R-16 with R-11 fiberglass batts and Dow R-5 Styrofoam sheathing .

Does not plan on making any changes because, “We are currentl y

building houses which exceed all insulation standards now in effect. ”

Rising fuel costs might cause him to increase insulation levels .

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

Uses R-15 walls, R-30 ceilings and storm windows. Polystyren e

sheathing is used to obtain R-15 . Has been using this method fo r

over a year . Plans on insulating basement walls next year becaus e

of Public Service Commission regulations . Public demand coul d

cause him to increase insulation levels and public refusal to pa y

for increased levels might cause him to lower insulation levels .

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

Uses R-11 in walls and either R-30 or R-38 in ceilings. Also use s

storm windows. Plans on increasing ceiling levels and insulatin g

basement next year because of increased heating costs .

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

Uses R-n walls, R-19 ceilings and storm windows . Plants trees t o

shade southern windows from summer sun. Plans on increasing ceilin g

to R-30 and insulating basement . Also plans to caulk around al l

doors and windows.

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

Uses R-n walls, R-19 ceilings and insulating glass windows. Ma y

increase levels in future if fuel costs increase or availabilit y

becomes a problem. Also may increase levels because of “sale s

appeal . “

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

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

1 6 .

1 7 .

1 8 .

1 9 .

2 0 .

21 .

2 2 .

wIndows . Does not pIan on making changes because ‘‘I feeI present

levels are adequate. ”

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

Uses R-n in walls , R-30 in ceilings and insulating glass windows .

Does not plan on changing levels in the future .

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

Uses R-13 in walls , R-30 in ceilings and storm windows . Plans o n

reducing air infiltration and improving wall sheathing for bette r

R values .

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

Uses R-12 in walls , R-22 in ceilings and single glazed windows .

Doesn’t plan on making any changes next year .

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

Uses R-13 in walls, R-36 in ceilings and storm windows. May go to

triple glazed windows and sliding glass door in near future.

Michigan energy code (effective 7/1/77) may influence builder to

make changes. Public awareness of insulation levels may cause some

increase in R-values.

Builder said "We will continue to look for new and better ways to

achieve best standards possible using the cost/benefit approach.”

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

Uses R-19 in walls, R-40 in ceiling and storm windows. Does no t

plan on changing insulation levels but does plan on improvin g

installation procedures . Builder says his customers are ver y

satisfied at present . Higher utility bills might make him increas e

insulation levels.

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

Uses R-13 in walls , R-37 in ceilings and triple glazed windows.

Does not plan on changing next year. Will retain present levels

because of fuel savings and because home buyer s

these levels .

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

Uses R-11 in walls and R-13 in ceiling. Some s

some insulating glass and some storms are inst a

Low level of ceiling insulation is “standard” w

offered as options to buyers . Believes in pro v

requests and can afford to spend .

are requestin g

ngle glazed ,

led as options .

th higher level s

ding what custome 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 influence

builder to increase insulation levels .

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

Uses R-n in walls, R-19 in ceilings and storm windows or insulating

glass windows. May increase insulation levels next year because of

public awareness, conservation and utility costs .

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

Uses R-13 in walls, R-24 in ceiling and insulating glass windows.

Does not plan on making changes next year. Believes he is at

optimum now.

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

Uses R-19 in walls, R-30 in ceiling and insulating glass windows .

Builder believes that people are quite conscious of the value o f

insulation in saving heating dollars and are willing to pa y

initially for increased insulation . He also believes buyers ten d

to associate better insulating practices with better all aroun d

building practices .

Would decrease levels only if competitive building tends to reduc e

price of homes to a point where minimum levels of insulation woul d

be acceptable .

Milwaukee, WI builder of 125 single family detached dwellings an d

75 single family attached dwellings with $53,000 average selling

price.

Uses R-13 wall and R-22 ceiling insulation and storm windows.

24” overhang shades windows from summer sun. Plans on retaining

present insulation levels because of fuel conservation . Lower cos t

insulation would prompt him to use more .

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

Uses R-19 in walls and R-52 in ceilings . Windows are all insulatin g

glass . Uses a 36” overhang to shade south facing windows from

summer sun. Believes he has already attained maximum insulatin g

levels .

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

Uses R-n in walls, R-13 in ceiling and storm windows. Will increas e

levels only if codes or competition require it .

Hutchinson, KS builder of $55,000 homes .

Uses R-19 in walls , R-38 in ceilings and insulating glass windows .

2’-6” overhangs shade south facing windows from summer sun. Plan s

on using 5/8” foil-faced foam plastic sheathing in the future.
344 ● Residential Energy Conservation

30.

31.

32.

33.

34.

35.

36.

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

Uses R-11 in walls, R-19 in ceilings and insulating glass windows .

Plans on increasing insulation levels next year because buyer s

are asking for it . Will definitely increase levels if required b y

governmental regulations .

Shakopee, MN builder of fifteen $55,000 homes .

Uses R-18 in walls, R-38 in ceiling and triple glazed windows. Does

not plan to add to present levels. Added polystyrene sheathin g

last year .

Sioux Falls, SD builder of twenty-five $79,000 homes .

Uses R-19 in walls, R-38 in ceiIing and triple glazed window s

in some homes. Next year will use more triple glazing .

Wichita, KS builder of twenty $44,000 homes .

Uses R-18 in walls and R-19 in ceiling. Als o

Does not plan on making any changes unless u t

him to increase insulation .

Lincoln, NE builder of eighteen $47,000 home s

Uses R-n in walls , R-19 in ceiling and stor m

uses storm windows.

lity costs forc e

windows. Plans o n

increasing insulation amounts and improving installation method s

next year because home buyers are requesting it and because o f

energy savings .

Topeka, KS builder of five $56,000 homes .

Uses R-17 in walls, R-30 in ceiling and double glazed windows .

He keeps glass area to a minimum and provides 24” overha ng t o

shade windows from summer sun. Is considering 2x6 walls fo r

electrically heated houses because of natural gas shortage .

Builder believes added insulation is a selling feature an d

considers workmanship of insulation installation more importan t

than hig h “R” values . Would prefer properly installed R-n t o

poorly installed R-19 with gaps, etc .

He believes we must encourage insulation of attached garage wall s

and ceilings , insulated basements or crawl spaces versus concret e

slabs , open living areas for better air circulation, natural o r

artificial shade around A.C. compressor, attic power ventilators ,

etc .

He believes we must discourage high vaulted ceilings, ducte d

range hoods, excessive glass , fireplace chimneys on outsid e

walls, etc .

Cedar Rapids , 1A builder of $51,000 homes .

Uses R-12 in walls and R-19 in ceiling . Plans on using mor e
Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 345

37.

38.

39.

40.

41

insulation in ceiling to save fueI. Installs storm windows .

Winter Haven, FL builder of fifty $21,000 homes .

Uses no insulation in concrete block walls and R-9 in ceiling i n

these very low cost homes . Uses single glazed windows . Plan s

on making no changes in the future .

Myrtle Beach, SC builder of from three to six $112,000 homes .

Varies insulation from R-16 to R-19 in walls and from R-30 t o

R-38 in ceilings . Uses insulating glass windows. Some of hi s

homes have large overhangs to shade windows from summer sun.

He offers good insulation package and sales pitch on what th e

low energy home should save in the long run. The final decisio n

is the buyer’s and his ability to pay.

Builder believes his customers are interested in low energy home s

and takes pride in his homes and in giving the buyers what the y

want .

He normally uses l-inch thick polystyrene sheathing to obtai n

an R-16 wall but is considering another sheathing product whic h

is more expensive but will increase the wall to R-19 .

Builder uses heat pumps and would like to use more water to ai r

heat pumps. Attics are ventilated by fan . Concrete slabs ar e

insulated with rigid foam plastic around the perimeter . In craw l

space hems, 6" batt insulation is installed between joists. H e

talks customers into using light shades of roofing.

Wilkesboro, NC builder of 120 $39,000 homes .

Uses R-17 in walls, R-30 in ceiling, R-19 in wood floors an d

insulating glass windows . Builder believes he has done all tha t

is possible but will conform to any code requirement in the future .

The change to higher levels of insulation were made to help th e

customer . Will decrease level only if power company rates ar e

lowered.

Ft. Lauderdale, FL builder of sixty $35,000 townhouses.

Uses R-19 in walls and R-19 in ceilings. Will increase insulation

levels if consumers require it . Builder believes a developin g

market shortage is causing material cos t increases to the poin t

where inexpensive alternatives for low to moderate housing ar e

not available .

Seminole, FL builder of fifteen $46,000 homes .

Uses R-5 in walls and R-19 in ceilings . Single glazed window s

are used . Does not plan on making any changes next year .
346 ● Residential Energy Conservation

4 2 .

43.

44.

45.

46.

47.

48.

49.

50.

51.

Pinellas County, Fl builder of fifty $62,000 homes .

Uses R-8 in walls , R-22 in ceiling and single glazed windows . Uses

overhangs and/or tinted glass to shade against summer sun on sout h

facing windows . Does not plan on making changes because he believe s

his levels are adequate for Florida .

Warrenton, VA builder of twelve $77,000 homes.

Uses R-28 in walls, R-40 in ceilings and insulating glass windows .

Builder believes he is at maximum insulation levels and therefor e

plans no changes . Uses 2x6 walls and 1" polystyrene sheathing.

Louisville, KY builder of twenty $40,000 homes.

Uses R-n in walls, R-19 in ceiling and storm windows. Plans o n

reducing air infiltration by using poly film vapor barrier i n

future . Plans on building 2x6 walls on a presold basis only .

Believes pay back will be in from 5 to 7 years.

Lexington, KY builder of twenty $52,000 homes.

Uses R-13 in walls and R-25 in ceiling. Installs insulatin g

glass windows .

Louisville, KY builder of twenty $60,000 homes .

Uses R-11 in walls, R-22 in ceiling and insulating glass windows .

Does not plan on changing insulation level. “Consumer paranoia ”

would be the only reason he would increase levels .

Louisville, KY builder of thirty-five $77,000 homes .

Uses R-16 in walls and R-22 in ceiling . Installs insulating glas s

windows with storm windows. May change to polystyrene sheathin g

to conserve energy and satisfy buyers.

Louisville, KY builder of ten $54,000 homes.

Uses R-n in walls, R-30 in ceiling and storm w

plan on making changes in next year because “ W e

we have the best insulation for the area and d o

ndows. Does no t

feel that presentl y

lar spent.” Migh t

increase in future if the cost of fuel increases .

Louisville, KY builder of twenty-three $65,000 homes .

Uses R-13 in walls and R-30 in ceiling. Will not increase becaus e

he believes levels are adequate for the climate .

Fort Thomas, KY builder of twelve $48,000 homes .

Uses R-19 in wall , R-30 in ceiling and storm windows . Plans on

increasing walls to R-24 next year because he believes it will be

cost-effective . Other increases may be made due to sales appeal.

Lexington, KY builder of seventy single family detached and 206
Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 347

single family attached dwellings .

Uses R-8 in walls, R-14 in ceilings and storm windows. Will increas e

levels if sales are increased or if electric bills become excessive .

5 2 . Birmingham, AL builder of twelve $66,000 homes .

Uses R-8 in walls, R-13 in ceiling and single glazed windows .

Plans on increasing ceiling to R-19 because of increased fue l

costs . Customer concern may also lead to increased insulatio n

levels .

53. Lexington, KY builder of six $65,000 homes.

Uses R-19 in walls, R-38 in ceiling and storm windows. Plans o n

making no changes.

54. Lubbock, TX builder of 120 $28,000 homes.

Uses R-22 in walls, R-30 in ceiling and triple glazed windows.

Uses roof overhang to shade south facing windows from summer sun.

Builder upped insulation program this past year and will continue

to update as new and better products come on the market. Is

presently testing how various plans sold over 12 month period and

is monitoring energy costs. Depending on results, insulation level s

may be changed.

55. Tulsa, OK builder of forty $36,000 homes.

Uses R-23 in walls, R-39 in ceiling and insulating glass windows.

Does not plan on making changes next year because he believes his

homes are insulated well enough. He would increase levels of

insulation if buyers showed enough interest .

56. Lewisville, TX builder of thirty $60,000 homes.

Uses R-16 walls, R-26 in ceiling and single glazed windows with

storm windows as an option . Builder claims his homes meet utilit y

company recommended levels so does not plan on making changes.

Builder will increase amounts when public demands it or whe n

energy costs require it .

57. Arlington, TX builder of twelve $54,000 homes.

Uses R-19 in walls, R-30 in ceiling and insulating glass windows.

Builder says he is dedicated to building energy efficient homes.

58. Tyler, TX builder of forty $28,000 homes,

Uses R-13 in walls, R-20 in ceiling and single glazed windows .

Will increase insulation levels if market demands and if utilit y

costs increase .
348 ● Residential Energy Conservation

59.

60.

61.

62.

63.

64.

65.

66.

67.

Dallas, TX builder

Uses R-11 in walIs

Builder does not p

the present levels

Marion, AK builde r

Uses R-19 in walls ,

of one thousand $34,000 homes .

R-22 in ceiling and insulating glass windows .

an on increasing levels because he believe s

are optimum for the climate .

of twenty-five $36,000 homes .

R-38 in ceiling and triple glazed windows.

Uses overhang to shade windows from summer sun. Builder does no t

plan on changing levels in the near future . This is the buiIde r

who developed the “Arkansas Story” method of building energy

efficient homes .

Fort Worth, TX builder of three hundred $34,000 homes.

Uses R-11 in walls, R-22 in ceiling and storm windows. plans o n

retaining present levels because of buyer interest and energ y

conservation .

Boulder, CO builder of thirty $44,000 homes .

Uses R-19 in walls, R-30 in ceiling and insulating glass windows.

Roof overhang shades south windows against summer sun. Plans on

increasing roof insulation to R-40 and changing to wood windows.

Builder believes it is very important to build much smaller homes ,

say 1,000 square feet . He says "We are totally going to run ou t

of fuel . We have to reduce the size of homes! !"

Salt Lake City, UT builder of seventy-two $41,000 homes .

Uses R-19 in walls, R-38 in ceiling and insulating glass windows .

Plans on no changes because present levels are considered sufficient.

Salt Lake City, UT builder of sixty $40,000 homes .

Uses R-n in walls, R-19 in ceiling and insulating glass windows .

Plans on increasing ceiling insulation in the next year to hel p

relieve the energy crisis and help sales .

Boise , ID builder of twenty $72,000 homes .

Uses R-13 in walls , R-30 in ceiling and insulating glass windows .

Builder is unsure if he will make changes next year .

If so, h e

will increase levels for energy savings .

Denver, CO builder of seventy five $77.000 homes .

Uses R-13 in walls, R-30 in ceiling and insulating glass windows.

Plans no changes in future. Comments, “We insulate from frost line

up. ”

Denver, CO builder of forty $57,000 homes .

Uses R-n in wall , R-19 in ceiling and insulating glass windows .
Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 349

68.

69.

70.

71.

7 2 .

73.

May possibly change insulation levels next year depending on marke t

conditions and cost .

Colorado Springs , CO builder of seventy $58,000 homes .

Uses R-13 in walls , R-38 in ceilings and insulating glass windows .

Plans overhangs to reduce summer sun effect on south windows . Plan s

no changes next year .

Mesa, AZ builder of twenty-five $35,000 homes .

Uses R-6 to R-13 in walls and R-30 in ceiling. Installs insulatin g

glass windows . Overhang shades south facing windows from summer sun.

Does not plan on any changes for next year. Will make changes base d

on customer demand.

Phoenix, AZ builder of fifteen $125,000 homes .

Uses R-6 or R-19 in walls , R-38 in ceilings and about one-hal f

single glazed and one-half double glazed windows . An overhang o f

2’ to 3’ helps shade south facing windows from the summer sun .

Plans on using more insulating glass windows next year because it i s

a good sales feature . Increasing electric rates may someday resul t

in increased insulation levels .

Mountain Home, ID builder of one hundred $35,000 homes .

Uses R-19 in walls, R-38 in ceiling and insulating glass windows .

Uses trees to shade south facing windows. Builder does no t

presently plan on any changes, but says, “If a better produc t

becomes available, we will make use of it. We have a very stron g

energy conservation program and will continue to use new energ y

saving concepts . It is our intent to give our customers th e

best deal possible for his housing dollar. ”

Denver, CO builder of two hundred $73,000 homes .

Uses R-13 in walls, R-22 in ceilings and insulating glass windows .

Shades south facing windows with overhangs, and porch and pati o

roofs . Does not plan on making any changes soon. “As long a s

natural gas is available at current rates, which are still low ,

there is no need to go further on insulation,” he said .

Will increase when there is a demand from buyers or an awarenes s

of future energy problems .

Phoenix, AZ builder of two hundred $36,000 homes.

Uses R-22 in walls, R-33 in ceiling and single glazed windows.

Uses overhang to shade south windows. Plans no changes because ,

“We have the highest in town. ”
350 . Residential Energy Conservation

74. Denver, CO builder of one thousand, four hundred $45,000 homes.

Uses R-n in walls, R-30 in ceilings and insulating glass windows .

Does not plan any changes because he believes it is not economica l

for homeowner or builder to increase R-values over above amounts .

Might consider increase from R-n to R-13 wall insulation becaus e

of the minor cost increase . Builder believes it would be impossibl e

for homeowner to recapture any additional costs passed on by th e

builder because of increased cost of insulation .

75. Fort Collins, CO builder of fourteen $69,000 homes.

Uses R-13 to R-21 in walls , R-35 in ceiling and insulating glas s

windows. Has 2’ overhang to shade south facing windows . Plan s

on 2x6 exterior walls or use of styrofoam sheathing on 2x4 wall s

because customers are becoming more aware. Energy costs and publi c

awareness of the value of well insulated homes will cause builde r

to consider increase in insulation .

76. Maui , HI builder of twenty $95,000 homes.

Uses no insulation in walls , no insulation in ceilings and singl e

glazed windows because , according to the builder, “They are no t

needed in Hawaii. "

77. Walnut Creek, CA builder of $110,000 homes.

Uses R-n in walls , R-19 in ceilings and single glazed windows .

Not planning on changes because considers present levels adequat e

for climate .

78. Fresno, CA builder of forty $55,000 homes.

Uses R-19 in walls and R-30 in ceilings. Attempts to get 4 8 ”

overhang to shade south windows in summer. Is considering usin g

l-inch styrofoam sheathing . Increased levels of insulation goo d

sales point .
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 ceiling and insulating glass windows.

Does not plan on changes in future. Says, “We have always insulated

this way”.

Tampa, FLA builder of 150 $59,000 homes.

Uses R-3 masonry walls, R-13 in wood frame walls, R-26 in ceiling s

and single glazed windows . Plans on no changes next year because ,

“We feel that, with our present levels, we are giving our buyer s

the best insulating envelope for their dollar . Increasing R value s

would spend our customer’s dollar without adequate return” .

Minneapolis, MN builder of twenty-four $97,500 homes .

Uses R-20 in walls, R-30 in ceilings and insulating glass windows.

Plans on increasing wall and ceiling insulation and triple glazin g

more windows to reduce energy costs and to upgrade homes.

Hutchinson, Kans. builder of thirty $47,000 homes .

Uses R-n in walls, R-19 in ceilings and storm windows . Shade s

south facing windows with wide overhangs and porches . Plans o n

increasing insulation amounts next year because of consumer deman d

and better sales . He also believes it to be in the public interest .

He said , “We think the industry needs to establish (insulation )

standards . All we are getting is slanted information fro m

manufacturers” .

Indianapolis , Ind. builder of thirty $63,000 homes .

Uses R-19 in walls, R-30 in ceiling and double glazing in windows .

Does not know whether he will change insulation levels but ma y

“To satisfy the buyer and conserve energy”. Is concerned abou t

increasing costs and buyer’s ability to afford new homes .
352 “ Residential Energy Conservation

The following three tables represent the homes built by the

eighty-three survey builders . The data have little, if any, statistica l

validity because the sample was not chosen at random and the response

distribution does not resemble the total population distribution .

The tables are presented only to give an indication of how th e

eighty-three respondents collectively insulate their homes and how muc h

those homes cost .
Appendix C—Thermal Characteristics of Homes Built in 1974, 1973, and 1961 ● 353

Weighted Average Insulation and Price By Regio n

Region

New England

Middle Atlanti c

East North Centra l

West North Centra l

South Atlanti c

East South Centra l

West South Centra l

Mountai n

Pacific (1 )

Pacific (2 )

Total U.S. (1)

House s

222

184

523

372

461

434

1567

2321

85

65

Ceiling R

21. 2

27. 8

25. 4

21. 6

24. 1

17. 7

23. 4

30. 0

22. 9

30. 0

Weighted Averages

Wall R

14.9

13.9

13.5

13.2

13.0

13.1

12.5

13.1

14.5

19.0

Glazin 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

$43,946

53,223

56,237

51,393

47,380

53,115

34,121

44,655

66,882

58,231

$44,532

(1) including Hawaii

(2) Excluding Hawaii
354 ● Residential Energy Conservation

P r ice Range

$25-35,000

36-45,000

46,55,000

56-65,000

66-75,000

76-125,000

Total s

House s

1675

1008

2373

497

316

230

6099

Weighted Average Insulation By Price Rang e

Averag e Averag e

Ceiling R Wall 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

Averag e

Glazin g

2 . 0

1 . 7

2 . 0

1 . 5

2 . 0

2 . 3

1 . 9

Note : Not included in above were (50) $21,000 Florida homes with R-9 in ceiling and O in wall s

with single glazed windows and (20) $95,000 Hawaii homes with O in ceiling and O in wall s

with single glazed windows .
Appendix C— Thermal Characteristics of Homes Built in 1974, 1973, and 1961 . 355

Average Price of Lot and House, By Regio n

Region

New England

Middle Atlanti c

East North Centra l

West North Centra l

South Atlanti c

East South Centra l

West South Centra l

Mountai n

Pacific (1 )

Pacific (2 )

National (1 )

Lot

$10,107

9,846

15,240

7,555

6,823

10,410

6,755

7,993

19,195

16,712

8,636

%

23.0

18.5

27.1

14.7

14.4

19.6

19.8

17.9

28.7

28.7

19.4

Hous e

$33,838

43,377

40,997

43,838

40,557

42,705

27,366

36,662

47,687

41,519

35,896

%

77.0

81.5

72.9

85.3

85.6

80.4

80.2

82.1

71.3

71.3

80.6

Tota l

Selling Price

$43,946

53,223

56,237

51,393

47,380

53,115

34,121

44,655

66,882

58,231

44,532

(1) Including Hawai i

(2) Excluding Hawai i

o