COLD CLIMATE HOUSING RESEARCH CENTER

CCHRC

Institute of Social and Economic Research

University of Alaska Anchorage

Snapshot: The Home Energy Rebate Program

May 2012

Alaska’s state government has spent an estimated $110 million 

since 2008 for better insulation, new furnaces, and other retrofits for 

roughly 16,500 homeowners—10% of all homeowners statewide.1

That spending was under the Home Energy Rebate Program, which

rebates homeowners part of what they spend to make their houses 

more energy-efficient and less expensive to heat.2

The state legislature established the current program in 2008, as 

energy prices were spiking. The Alaska Housing Finance Corporation 

(AHFC) administers it, and the Institute of Social and Economic Research and the Cold Climate Housing Research Center did this analysis for AHFC, assessing the broad program effects from April 2008 

through September 2011.

Changes in fuel use and heating costs reported here are estimates 

from AHFC’s energy-rating software; figures based on actual household heating bills aren’t currently available. The software uses house 

characteristics and location-specific information on weather and other 

factors to produce the estimates—but remember they are estimates.3

Jobs Generated and Returns on Investment

• Total spending for energy-efficiency improvements under the 

rebate program from 2008 to 2011 was about $185 million, with state 

rebates covering an estimated $110 million (60%) and homeowners 

$75 million (40%). It’s uncertain how much Alaskans would have spent 

without the program, but it’s reasonable to assume many wouldn’t have 

invested as much in energy-efficiency without state aid.

• State spending for rebates accounted for an estimated 1,332 jobs 

from April 2008 to September 2011. That total is based on a multiplier that estimates $1 million in new state spending for retrofits generates 12 jobs—7 direct retrofitting jobs and 5 indirect jobs (Figure 1).

• Spending by homeowners for retrofits didn’t generate additional 

jobs the way state spending did, since homeowners likely cut back 

on other kinds of spending to pay for the retrofits.

• Alaskans are saving an estimated $22 million annually on heating bills due to the rebate program—an average decline of 26% 

for homeowners who went through the program. 

• If homeowners spend the $22 million in savings locally, that 

spending generates about 240 jobs a year. The job figure is based 

on a multiplier that estimates $1 million of new household spending 

generates 11 jobs throughout the economy.4 These are permanent 

jobs—and there will be more, as more houses are retrofitted.

• Savings on heating bills also represent a return on investment—

a tangible measure of how long it takes to recoup that investment. 

Homeowners in the rebate program can on average recoup their 

expenses to date in about 3.5 years, and savings would cover combined public and private spending in about 8.5 years (Figure 15).

Savings on Fuel

• Annual fuel use has dropped an estimated 33% among homes 

retrofitted under the rebate program—for an annual energy 

savings of 1.6 trillion Btus. That’s the energy equivalent of about 

275,000 barrels of oil—and roughly 5% of the estimated energy 

used for all residential space heating statewide in 2008 (Figure 8).

• Nearly 70% of the energy saved is natural gas in Southcentral 

Alaska (Figure 7). That reduces demand on the region’s gas supply; 

in recent years analysts have worried about potential shortages. 

• But part of the drop in energy use may be a reaction to higher 

energy prices, according to a recent analysis by ENSTAR Natural Gas 

Company, which pipes Cook Inlet gas to Anchorage and other areas 

of Southcentral Alaska. The company analyzed bills of customers 

who had gone through the rebate program, and found their gas 

use dropped in the range of 30%—very similar to estimates from 

AHFC’s energy-rating software. But the analysis also found that use 

declined an average of 10% among all residential customers after 

prices spiked in 2007 (Figures 11 and 12). 

By Scott Goldsmith, Sohrab Pathan, and Nathan Wiltse

Figure 1. How Many Jobs has the Home Energy Rebate Program Generated?

Estimated 16,500 Houses Completed, April 2008 - September 2011 

1,332 jobs

a

ISER Input-Output model 

bAssumes households spend additional disposable income locally. Based on ISER estimate of jobs created by Permanent Fund dividend spending. 

242 jobs

Multiplier:

$1 million of public spending for retrots generate 12 jobs

(7 direct retrot jobs + 5 indirect jobs)a

Multiplier:

$1 million household spending generates 11 jobs

(Jobs in sectors throughout economy)b

Jobs from public spending ($110 million) Jobs from estimated annual savings on heating bills ($22 million)
2

Background: Higher Fuel Prices

The Home Energy Rebate Program is part of the state’s energy 

plan, which calls for using better technology and conservation to 

increase Alaska’s energy efficiency 15%—per person—by 2020.5 

From 2008 to 2011, the state legislature appropriated close to 

$200 million for the rebate program.6 

This publication reports only on the rebate program, but there is 

a second home-retrofit program, the Weatherization Program, which 

is structured much differently (as we describe briefly on the next 

page). That program has also received substantial state money in 

recent years—$264 million in appropriations from 2008 to 2011.7

The legislature put this money into the home-retrofit programs as 

prices for both natural gas and fuel oil were rising fast. Figure 2 

shows that the price of natural gas for customers in Anchorage and 

other areas of Southcentral increased 80% between 2004 and 2007 

and another 20% between 2007 and 2009. Since 2009 the price has 

declined, but it remains nearly double what it was in 2002.

Figure 3 tells an even more dramatic story for prices of fuel oil, 

using prices in the southwest hub of Bethel as an example. Unlike 

the price of natural gas—which is piped from Cook Inlet and is the 

same for all customers of ENSTAR Natural Gas Company—prices of 

fuel oil vary widely across Alaska. Those prices depend on how difficult it is to deliver fuel to a given community, whether deliveries are 

year-round or just seasonal, the amount of local storage capacity, 

and other factors.8

The price of a gallon of fuel oil in Bethel jumped more than 40% 

between 2004 and 2006, and another 50% from 2006 to 2008, 

before declining somewhat. Still, the price of home-heating fuel in 

Bethel in mid-2011 was more than twice what it had been in 2002. 

So prices of both natural gas and fuel oil increased sharply over 

the past decade—but as Figure 4 shows, if we consider the cost 

of equivalent amounts of energy, fuel oil is far more expensive. In 

2011, buying 100 gallons of fuel oil in Bethel would have cost about 

$476—but the same amount of energy in natural gas in Southcentral would have cost about $121.

Also, many places that depend on fuel oil stay 

colder longer, so residents spend even more of the 

household budget on heating fuel.

Figure 5 shows the two most commonly used 

sources of home-heating fuel in each region. (Map 

1 shows the regions). Only in Anchorage and some 

other areas of Southcentral do most households 

have access to gas—but outside Anchorage, a 

third of Southcentral households rely on fuel oil. 

In the remote Western and Southwestern regions, 

close to 90% of households use fuel oil.

In Fairbanks, the second largest city in Alaska, 

nearly 80% of households use fuel oil; only a few 

have access to natural gas trucked from the Southcentral region. In Juneau, the capital city, about 

70% of households use fuel oil. Electricity is the 

second largest source, at 20%. 

$4.44 $4.82

$6.71

$8.72

$10.46

$8.88 $8.60

2002 04 06 07 09 10 2012

Source: ENSTAR Natural Gas Company

Figure 2. Price of Natural Gas for Residential 

 Customers in Southcentral Alaska* 

(Per Thousand Cubic Feet)

First Quarter

*Includes both payment to gas producers and ENSTAR transportation charge

Figure 3. Price per Gallon of Fuel Oil, Bethel

(As of June of Each Year)

$2.26

2002 04 06 07 08 09 10 2011

$3.06

$4.42

$6.70

$5.67

$4.76

Source: University of Alaska Fairbanks, Cooperative Extension Service

$476

$121

Figure 4. Price of 100 Gallons Fuel Oil in Bethel and 

Equivalent Energy from Natural Gas, Anchorage, 2011*

*100 gallons fuel oil has 14 MMBtus energy, which equals the energy content of 14 Mcf of

 natural gas, priced in 2011 at $8.63/Mcf

Sources: ISER calculations, with data from UAF Cooperative Extension Service and

 ENSTAR Natural Gas

Fuel oil

Natural gas

Figure 5. Which Heating Fuels are Most Common Around Alaska? 

(Percentages of Households Using Two Most Common Fuel Types in Each Regiona)

Anchorage

Other

Southcentral

Fairbanksb

Other Interior

Juneau

Other Southeast

Northernb

Western

Southwestern

83% 13%

53% 31%

79% 5%

58% 35%

69% 20%

68% 15%

77% 15%

84% 12%

89% 6%

Source: American Community Survey, 5-Year Estimates, 2006-2010

a

Based on samples of the population. Small samples in rural areas make those estimates subject to more error. Figures do not 

total 100% because less common energy sources are not shown.

bSome Fairbanks households use natural gas trucked from Southcentral; the communities of Barrow and Nuiqsut have access

 to North Slope gas elds. 

Natural gas

Fuel oil

Wood

Electricity
3

Structure of Programs

The Home Energy Rebate Program and the Weatherization Program are both intended to make homes more 

energy-efficient, and in both programs auditors assess 

energy-efficiency before and after retrofits. But the programs also have significant differences.

• The rebate program is open only to homeowners, has 

no income limits, and requires homeowners to spend their 

own money first. Homeowners can hire private contractors or do the work themselves, and then apply for state 

rebates up to a maximum of $10,000, depending on how 

much they improve the energy-efficiency of their houses.9

Since 2008, the average spending per household for 

retrofits under the rebate program has been $10,963, 

with rebates covering 60% (Figure 15, page 7). That’s 

based on receipts homeowners submitted to AHFC to 

qualify for rebates (as well as reimbursements to homeowners for energy audits before and after the retrofits). But some 

homeowners likely didn’t submit receipts for everything they spent, 

beyond what could qualify for a rebate.

• The weatherization program is open to both renters and homeowners with incomes at or below the median household income in 

their region.10 In most areas, renters make up 75% or more of 

households that go through the program, and many live in multifamily units. Households don’t pay for the improvements—the federal and state governments share the costs, but since 2008 the 

state has paid more than 90% of the total.11

Unlike the rebate program, which uses private contractors to do 

the retrofits, the weatherization program is managed by regional 

non-profit organizations that employ teams of workers to assess 

the houses and make the improvements.12

The different regional distribution of houses that 

have been through the rebate and weatherization 

programs in recent years largely reflect the differences in the way the two progams work (Figure 6). 

Houses in the rebate program have been mostly 

in Anchorage and other areas of the railbelt, while 

nearly one-quarter of those in the weatherization 

program have been in remote rural areas.

Only larger communities can support private contractors who install furnaces, replace windows, and 

improve insulation in houses. Alaska’s population 

is concentrated in Southcentral, with two-thirds of 

households in Anchorage and surrounding areas. 

Another 15% are in or near Fairbanks. 

Small communities—especially remote places off 

the road system—have few private businesses of 

any type, and private contractors from urban areas 

are very unlikely to travel to remote places to do 

energy audits for individual homeowners. 

Managers of the weatherization program typically plan to retrofit 

a number of houses when they go into a rural community—but they 

have a limited number of people to do the work, which limits the 

number of communities they can reach in a given period. Getting 

necessary materials to remote places also takes time and money.

Income also shapes participation in the two programs. Average 

incomes in the larger urban areas are higher, so a smaller percentage of households qualify for the weatherization program. More 

can afford to spend money upfront for retrofits, and to cover the 

out-of-pocket costs after rebates. 

By contrast, not many households in small remote places have 

high enough incomes to pay for retrofits. A big percentage have 

lower incomes and qualify for the weatherization program.13

Fairbanks

Anchorage 

Juneau 

Interior

Southeast

Southcentral

Western

Southwest

Northern

Remote rural

Map 1. Regions in Rebate Program

1%

Anchorage

Remote Rural 

Fairbanks

Juneau

*

All housing, 2010 U.S. census; homes in rebate program and weatherization program, April 2008-September 2011. Regional 

percentages in rebate and weatherization programs approximated with data by legislative house district.

Percent of rebate households

Percent of weatherization households 

Figure 6. Regional Breakdown: All Alaska Houses, Houses 

In Rebate Program, and Houses in Weatherization Program*

Percent of all Alaska households

49%

24%

41.5%

24%

14%

15%

14%

6%

4%

4.5%

Other

Southeast

6.5%

3%

7%

Sources: U.S. Census Bureau; CCHRC and ISER calculations, with data from AHFC’s Alaska Retrot Information System and WX Manager

9%

Other

Southcentral 27%

24.5%

26%
4

FuelSavings and Reduced CO2 Emissions

Since 2008, one in ten Alaska homeowners—about 16,500 of 

the state’s roughly 162,800 homeowners—have been through 

the rebate program, adding more insulation, buying new furnaces, 

and making other changes that save energy.14 Fuel use overall 

among retrofitted houses is down an estimated 33%. Figure 7 

shows estimates of savings, by type of fuel. Figure 8 looks at the 

savings as a share of statewide residential energy use—and also 

estimates how reduced fuel use is lowering CO2 emissions. 

• About two-thirds of the estimated fuel being saved is natural 

gas—more than a billion cubic feet annually. That’s not surprising, given that so many of the houses retrofitted in the past few 

years are in Anchorage and other areas of Southcentral Alaska, 

where the majority of households use natural gas. To put the savings in context, that’s enough gas to meet the needs of about 

6,400 homes in Southcentral Alaska for a year at current average

use—mostly for home-heating but also for water heaters, dryers, 

or other appliances that run on gas.15

• Houses retrofitted under the rebate program are saving an estimated 2.5 million gallons of fuel oil annually. To help put that in 

context, the Russian tanker that made the much-publicized winter 

delivery of fuel to Nome earlier this year carried 1.3 million gallons of fuel.16 (Keep in mind, however, that the 2.5 million gallons 

saved is only for the rebate program, where most of the retrofitted houses use natural gas rather than fuel oil. Houses retrofitted 

under the Weatherization Program are much more likely to use fuel 

oil; savings under that program are not included here.) 

• Retrofitted houses using the less common heating fuels are saving an estimated 5,000 cords of wood, 100,000 gallons of propane, and 6 tons of coal. (Most of the coal produced in Alaska is 

either exported or used to generate electricity in the Interior; very 

few households use coal for space heating.)

• Use of electricity in retrofitted houses is down an estimated 13.3 

million kilowatt-hours per year. (For comparison, the total electricity generated in Alaska for all purposes in 2010 was 6.5 billion

kilowatt-hours.17) The majority of the savings are from houses that 

use electricity as a primary heat source, but some also comes from 

those that installed new, more efficient furnaces or boilers that turn 

on less frequently—and therefore need less electricity to fire them. 

It’s also likely many households in the rebate program—regardless 

of the type of primary heating fuel they use—rely less on auxiliary 

electric space heaters since they became more energy-efficient. 

•Overall, houses retrofitted under the rebate program are saving 

an estimated 1.6 trillion Btus of energy annually—or 5% of the 

estimated 30 trillion Btus of energy Alaskans 

used for residential space heating in 2008.18

• A related effect of reduced energy use is 

an estimated reduction of 92 thousand metric 

tons (about 204 million pounds) a year in CO2 

emissions in Alaska. In recent years analysts 

have been assigning a dollar value to the damage carbon emissions cause to human health 

and to the environment—the “social cost” of 

such emissions.

There are wide differences of opinion 

about how to measure that social cost. But 

one recent analysis by the National Bureau of 

Economic Research included a range of estimates of costs per ton of CO2 emissions.19 

Figure 8 shows that based on the 

mid-range estimate, reducing CO2 

emissions by 204 million pounds 

could avoid about $2.1 million in 

social costs in 2012. That amount 

would increase in later years, taking inflation into account.

Figure 7. Estimated Total Fuel Saved Annually, by Type, Houses in Rebate Program

(Estimated 16,500 Houses, April 2008 - September 2011)

Natural gas

Fuel oil (No. 1 and 2)

Propane

Wood (Spruce/Birch)

Coal

1.1 TBtus (1.1 Bcf)

350,135 MMBtus (2.5 million gallons)

114,315 MMBtus (5,102 cords)

9,205 MMBtus (101,000 gallons)

98 MMBtus (6 tons)

Source: CCHRC, with data from AHFC’s Alaska Retrot Information System

Electricity 44,327 MMBtus (13.3 GWh)

a

CCHRC estimates, based on data from AHFC’s Alaska Retrot Information System. A Btu (British thermal unit) is a measure of energy content, roughly the amount

needed to heat one pound of water one degree Fahrenheit. A trillion Btus is the energy content of about a billion cubic feet of natural gas.

bISER estimate for 2008 home-heating use, adjusted to exclude electricity and non-heating uses of fuel. 

c

Estimates of low, medium, and high social costs of carbon, in 2010 dollars, from National Bureau of Economic Research, Estimating the Social Cost of Carbon for Use 

in U.S. Federal Rulemaking: A Summary and Interpretation, by Michael Greenstone, Elizabeth Kopits, and Ann Wolverton. Working Paper 16913, March 2011.

30 TBtusb Estimated reduction in total Alaska 

residential home-heating demand 5% 70 60

80 D A N & Y I G H T

OL CO HOT OFF 

Estimated Annual Reduction in CO2 Emissions:

92 thousand metric tonsa

Estimated Energy Saved Annually

1.6 Trillion BTusa

Figure 8. Reduced Energy Use and CO2 Emissions Among Houses in Rebate Program

Estimated 16,500 Houses, April 2008 - September 2011 

If social cost

of emissions is:c $36.81

/ton 

Then savings in

2012 would be:

$5.26/

ton 

$22.09

 /ton

$0.5 

million

$2.1 

million

$3.5 

million
5

Savings per Household on Heating Costs

How does reduced energy use translate into savings on heating bills? On page 1 we reported that overall, households that 

went through the rebate program since 2008 are saving an 

estimated $22 million a year. Figures 9 and 10 estimate how 

much the average household is saving on heating bills, and how 

different kinds of improvements contribute to those savings.

• Households that went through the rebate program are saving an estimated $1,297 a year on their heating bills. That’s on 

average a 26% decline, taking savings on various kinds of fuel 

into account.

•Estimated reductions in CO2 emissions among houses in the 

rebate program are about 12,300 pounds a year—an estimated 29% decline. Keep in mind that the estimated change in CO2 

emissions is based on the mix of fuels households use—and 

various fuels have different levels of emissions. 

What kinds of improvements saved households money on heating bills? We don’t have information about how much households 

spent for specific kinds of improvements, but AHFC’s database 

on the rebate program does allow us to estimate how various 

kinds of improvements contributed to 

the average household savings on heating bills.

Figure 10 shows that for houses in 

the rebate program, the biggest money 

savers were more efficient furnaces or 

boilers, accounting for half the estimated savings on heating bills. Better 

insulation—in walls and doors, above 

the ceiling, and around the foundation 

or crawl space—contributed about 

a quarter of the savings, and sealing 

air leaks around the house accounted 

for nearly 15% of savings. Replacing 

windows and water heaters generated 

about 10% of savings.

Average Annual Household Heating Bills, Before and After

Average Annual Household Reduction in CO2 Emissions*

$1,297 (26%)

12,345 pounds (29%)

$4,988

$3,691

42,419 pounds

30,073

Figure 9. Savings per Household in Energy Rebate Program

(Estimated 16,500 Houses, April 2008 - September 2011) 

Source: CCHRC, with data from AHFC’s Alaska Retrot Information System

*The percentage change in CO2 emissions reects the fact that dierent types of fuel emit dierent

 levels of CO2. 

More ecient furnaces/boilers: 52%

More insulation 

in foundation/

crawl space: 5%

More insulation

above ceiling

5%

Replace/ x windows: 4%

More insulation

walls/doors: 14%

Seal air leaks

throughout house 14%

Replace water 

heaters: 6%

Source: ISER, with data from AHFC’s Alaska Retroit Information System, houses completed in rebate program 2009 -2010

Figure 10. How Did Retrots Save Households Money ?

(Percentages of Estimated Average Annual Savings, Houses in Rebate Program)
6

ENSTAR Analysis ofChanges in Use of Natural Gas

As we said earlier, there are currently no comprehensive assessments of changes in fuel use that are based on the actual heating 

bills of households that have been through the rebate program. 

So far we’ve reported effects of the program based on estimates 

generated by AHFC’s energy-rating software. 

But ENSTAR Natural Gas Company, which pipes gas from Cook Inlet 

to nearly 20,000 residential customers in Southcentral Alaska, has 

analyzed how use of natural gas changed from 2006 through mid2011—among all residential customers and a sample of customers 

who went through the rebate program from 2008 to early 2010. 

ENSTAR made that analysis available to us. Figure 11 summarizes

overall changes from 2006 to 2010. Figure 12 is complex, but 

it presents additional information—the pattern of decline in use 

among alll customers and those who completed the rebate program in different years. The black line line represents changes in 

use among all residential customers. The other lines represent 

changing use among customers who completed the rebate program in 2008, 2009, or 2010.

• Average annual use among customers who went through the 

rebate program was 25% to 30% lower after their houses were retrofitted. That drop is in the same range estimated by AHFC’s software.

• Annual use among all ENSTAR’s residential customers has 

dropped 10% since 2006, and reached its lowest level in 2009, 

when prices of natural gas peaked (see Figure 2, page 2). So 

it’s possible that the drop in use among those who went through 

the rebate program can be traced to a combination of efficiency 

improvements and higher prices.

• Customers who went through the rebate program started with 

higher use—on average using 15% to 20% more gas annually 

than other customers. But by 2011, their use had dropped to 

about 8% below that of other customers (Figures 11 and 12). 

Age and Size of Houses in Rebate Program

We don’t have data specifically on the characteristics of houses 

of the ENSTAR customers who went through the rebate program, 

but it’s reasonable to think that many knew they had less efficient 

houses, and the rebate program gave them an incentive to make 

improvements. Older houses—built before current design standards—are typically less efficient. Figure 13 compares the age of 

all Alaska houses with those that went through the rebate program. 

Figure 14 shows average age and size of houses that went through 

the rebate program, by region.

• Three quarters of the houses retrofitted in recent years had been 

built in the 1970s and 1980s, while only about half of all Alaska’s 

housing stock dates from that period. By contrast, only about 5% 

of the retrofitted houses had been built after 1990, while a quarter 

of all the state’s houses were built in the last 20 years (Figure 13).

• Houses in Southeast Alaska were the oldest to be retrofitted—on 

average 46 years old. The newest were in Southcentral (excluding 

Anchorage), but they still averaged over 30 years old. (Figure 14). 

• Houses in Juneau and other areas of Southeast were on average 

also the smallest to be retrofitted—which isn’t surprising, given that 

older houses tend to be smaller.

Figure 11. Annual Use of Natural Gas, 

All ENSTAR Residential Customers and 

Customers in Rebate Program, 2006 and 2010*

(In Mcf of Gas)

All customers

Customers completing 

rebate program in:

2008

2009

2010

172

156

205

148

204

142

197

144

Down 10%

Down 28%

Down 30%

Down 27%

Source: ENSTAR Natural Gas Company

*All residential customers 118,726. Samples of rebate program participants: 

2008, 71; fourth quarter 2009, 372; rst quarter 2010, 360.

2006

2010
7

Returns on Public and Private Investment

Public and private spending for home retrofits is an investment, 

intended to reduce residential energy use and home-heating 

bills—and in the bigger picture, to advance the state’s goal of 

reducing per capita energy use among Alaskans 15% by 2020.

But how can we measure the return on that investment—to 

households and the state? The answer is: in the savings on heating 

bills. Those savings indicate how quickly Alaskans and the state government will recoup the money they spent for retrofits—and that’s 

a more tangible measure of returns than exists for many other kinds 

of public investments. 

Figure 15 shows estimated returns on investment for rebate program spending from April 2008 through September 2011.

• On average, homeowners in the rebate program so far can expect 

to recoup their out-of-pocket costs in roughly 3.5 years. That’s $75 

million in spending not covered by rebates, divided by an estimated 

savings of $22 million a year in lower heating bills. That estimate 

assumes fuel prices stay the same—but if they increase, the savings would also increase and shorten the time needed to recoup 

the spending. 

• Combined state and private spending for the rebate program 

since 2008 will be returned in homeowner savings in less than 9 

years—$185 million in spending, divided by $22 million annual savings. Those savings benefit Alaska broadly—because they reflect 

reduced energy use and lower CO2 emissions, and help move the 

state toward its goal of reducing per capita energy use.

Before

1970

1970s

1980s

1990s

2000s

All Alaska 

Rebate program

20%

19%

38%

38%

4%

> 1%

26%

28%

15%

11%

Figure 13. Age of Houses Statewide 

and In Rebate Program*

Sources: U.S. Census Bureau; ISER calculations with data from AHFC’s Alaska 

Retrot Information System 

*2010 U.S. census; houses completed under rebate program 2009-2010

Average Age (In Years), by Regionb

32 35 36 40 46

Southcentral Fairbanks

Anchorage

Juneau Southeast

1,792 1,844 2,137 2,213 2,278

Juneau Southeast Southcentral Anchorage Fairbanks

Average Size (In Square Footage), by Regionb

Figure 14. Average Age and Size of Homes in Rebate Programa

Source: ISER estimates with data from AHFC’s Alaska Retrot Information System

a

Based on 7,075 houses that completed the rebate program in 2009-2010

bThe number of houses that went through the rebate program in remote rural areas is too small to allow a 

useful breakdown.

Figure 15. Investment in Energy Rebate Program

April 2008 - September 2011

AHFC rebatea Homeowner out-of-pocket

$6,516 $4,447 

How Long Will It Take Homeowners to Recoup Their Expenses?b

Average per Household

$75 million (Out-of-pocket expenses) ÷ $22 million (Annual savings) = 3.4 years 

$10, 963

$110 million 

AHFC rebates

$75 million 

Homeowner out-of-pocket

Total: $185 Million • Estimated 16,500 Homes

60% 40%

How Long Will It Take to Recoup Combined Public and Private Spending?b

$185 million ÷ $22 million (Annual savings) = 8.5 years

Sources: CCHRC and ISER, based on AHFC’s Alaska Retrofit Information System

a

Includes payments for energy audits before and after retrofits and final rebate to homeowner.

bAssumes prices at current level.
8

Conclusions

From spring 2008 through fall 2011, about 16,500 homeowners 

completed the rebate program. Another 3,000 homeowners were 

completing work in late 2011, and as of March 2012 about 1,332 

were on a waiting list to have their initial energy audits done.

The Alaska Legislature will decide how much more money to put 

into the rebate program in the coming years, but this publication 

has summarized a number of benefits from state spending so far.

We’ve put estimated values on some of those benefits—reduced heating bills, returns on investment, jobs created—but the 

increased state money going into home retrofits in the past several 

years has produced other benefits that we can’t quantify.

• Improving the value and quality of Alaska housing. Houses in 

the rebate program are ranked under a five-star system, with five 

the most energy-efficient. As homeowners make improvements of 

various kinds, they gain points that move them up in the star rating 

system—and qualify them for bigger rebates. 

Builders and realtors generally believe that the potential savings 

on heating bills from increased efficiency make these houses more 

valuable—and more marketable. But efficiency ratings are relatively 

new, in Alaska and across the country, and as of now there is no 

standard dollar value attached to different levels of improvement.20

• Giving Alaskans incentive to make their houses more energyefficient. We don’t have figures specifically for Alaska, but recent 

estimates put the time homeowners nationwide typically spend in 

the same houses at 6 to 9 years.21 If the state hadn’t covered a 

big share of the costs, many homeowners might have decided that 

the gains from retrofitting weren’t worth the costs, if they didn’t 

plan to spend many more years in the same house.

• Boosting activity in the residential sector at a time of economic 

slowdown. The rebate program and the weatherization program 

both got infusions of state money in 2008, just about the same 

time the national recession was starting. Alaska didn’t see the the 

housing market crash that was common in other states—but it did 

see a slowdown in residential construction,22 and the increased 

activity in retrofitting likely helped offset that slowdown.

• Reducing the need to store natural gas in Southcentral, which helps 

hold down delivery costs. In the summer ENSTAR pipes gas directly 

from Cook Inlet wells to consumers, but in the winter it has to ship 

stored gas to meet peak demand—which adds to costs. By reducing 

gas use, the rebate program can help reduce the need to store gas.

Endnotes

1. Based on 2010 U.S. census, Summary File 2, 162,765 owner-occupied units.

2. This summary reports only on the part of the rebate program that helps pay costs of retrofitting 

existing houses. There is another, smaller part of the program, 5 Star Plus, that pays rebates to Alaskans who build new very energy-efficient homes. From April 2008 to September 2011, an estimated 

1,154 new homes built in Alaska qualified as 5 Star Plus; most of those qualified for the $7,500 rebate.

3. The AkWarm program is similar to energy-rating software used nationwide but has been adapted 

for Alaska; see http://www.ahfc.us/reference/akwarm.cfm. Also, as of March 2012, CCHRC was investigating the feasibility of surveying a sample of homeowners in Anchorage and Fairbanks who had 

completed the rebate program, to get data about changes in actual heating-fuel bills. 

4. This estimate is conservative, based on the estimated effect of the Permanent Fund dividend, as 

reported in Alaska Citizen’s Guide to the Budget: http://citizensguide.uaa.alaska.edu/. Because these 

are monthly savings (rather than annual payments), households are more likely to spend the extra 

money. We also recognize that household savings from reduced fuel use are not entirely a bonus to 

the economy, because when households use less fuel, businesses that sell fuel lose income. But the 

estimates presented here are rough and intended just to provide a broad picture of economic effects.

5. 26th Alaska Legislature (2009-2010), House Bill 306.

6. Total appropriations, FY 2008-FY 2012. The FY 2013 capital budget approved by the legislature 

includes an additional $20 million for the rebate program.

7. Total state appropriations FY 2008-FY 2012. The FY 2013 capital budget approved by the legislature includes an additional $31.5 million for the weatherization program.

8. See Components of Delivered Fuel Prices in Alaska, by Meghan Wilson, Ben Saylor, Nick Szymoniak, Steve 

Colt, and Ginny Fay, Institute of Social and Economc Research, University of Alaska Anchorage, June 2008.

9. More detailed information about the home rebate program is available on AHFC’s website at http://

www.ahfc.us/energy/home_rebate.cfm.

10. An exception to the income limit is that households of any income can qualify, if a member of the 

household receives federal Supplemental Security Income (SSI).

11. Based on CCHRC analysis of the Weatherization Manager, AHFC’s database of information on the 

weatherization program.

12. More details about the weatherization program are available on AHFC’s website at http://www.ahfc.

us/grants/weatherization.cfm.

13. For example, the Bureau of Economic Analysis reports that per capita personal income in Anchorage in 2009 was $48,598, compared with $29,173 in the Bethel census area in Southwest Alaska.

14. See note 1.

15. At 156 Mcf annually, the average residential use reported by ENSTAR for 2010.

16. Associated Press, “Crews prepare to transfer fuel across sea ice to Nome,” by Mary Pemberton, 

January 15, 2012.

17. Alaska Energy Statistics 1960-2008, by Ginny Fay, Alejandra Villalobos Meléndez, Ben Saylor and Sarah Christine Gerd, Institute of Social and Economic Research, University of Alaska Anchorage, May 2011.

18. See note 17. Figure adjusted to exclude electricity and non-heating fuel uses.

19. National Bureau of Economic Research, Estimating the Social Cost of Carbon for Use in U.S. Federal 

Rulemaking: A Summary and Interpretation, by Michael Greenstone, Elizabeth Kopits, and Ann Wolverton. Working Paper 16913, March 2011.

20. As of March 2012, CCHRC was working with AHFC and the Alaska Craftsman Home Program to 

develop potential methods for estimating the value energy-efficiency adds to the overall value of homes.

21. See, for example, National Association of Realtors, “Tenure in the Home and Motivation for Selling,” by Jessica Lautz, January 25, 2012 (http://economistsoutlook.blogs.realtor.org); and National 

Association of Home Builders, “How Long Buyers Remain in Their Homes,” by Paul Emrath, February 

11, 2009 (www.nahb.org).

22. Alaska’s Construction Spending: 2011 Forecast, by Scott Goldsmith and Mary Killorin, Institute of 

Social and Economic Research, University of Alaska Anchorage, January 2011 (www.iser.uaa.alaska.

edu/Publications/2011constructionforecast.pdf)

About the Authors

Scott Goldsmith is a professor of economics with ISER; he has 

35 years of experience analyzing Alaska’s economy. Sohrab 

Pathan is a research associate at ISER.

Nathan Wiltse is a project manager and building-energy economist 

with the Cold Climate Housing Research Center.

Other contributors at ISER are Mary Killorin, research associ- ate; Ginny Fay, assistant professor of economics; and Stephanie 

Martin, assistant professor of economics and public policy.

About ISER: The Institute of Social and Economic Research is in the 

College of Business and Public Policy, University of Alaska Anchorage. It is 

Alaska’s oldest and largest public-policy research organization, established by the Alaska Legislature in 1961. For more about ISER, visit:

www.iser.uaa.alaska.edu

About theCold Climate Housing Research Center: Created by 

the Alaska State Home Builders Association in 1999, the Cold Climate 

Housing Research Center (CCHRC) is a non-profit corporation in Fairbanks. CCHRC helps develop and test energy-efficient and cost-effective 

building technologies and techniques for Alaska and other cold-climate 

regions. It also manages the Alaska Retrofit Information System 

(ARIS), which is AHFC’s database of information on the home rebate 

program. To learn more about CCHRC, visit:

Editor: Linda Leask • Graphics: ClemenciaMerrill www.cchrc.org