While much of President Bush's national energy policy already faces stiff opposition from environmentalists and conservationists, a number of provisions hold the potential for greater energy cost savings for both home owners and renters -- and perhaps an unexpected windfall.

Introduced last week, a report of the Bush's hand-picked National Energy Policy Development Group, "Reliable, Affordable, and Environmentally Sound Energy for America's Future", contains provisions that will require an act of Congress before consumers can benefit.

In addition to the immediate tangible benefits of cheaper energy costs, however, some home owners also may benefit indirectly from increased home values.

Perhaps most noteworthy provision in the administration's energy policy is a proposal for legislation that would provide a new 15 percent tax credit for residential solar energy property, up to a maximum credit of $2,000.

That's likely to be a popular credit that could add to similar, existing financial incentives for home owners who install renewable energy systems.

Newly installed photovoltaic systems generate 95 percent of the residential and commercial applications for rebates from California's Emerging Renewables Buy-Down Program, which rebates up to half the cost of installed renewable energy systems, including wind and fuel cells, as well as solar power.

Supply and demand, not energy costs, are much more relevant to rental costs, says Terry Feinberg, a multi-family housing consultant and president of Konnections, a Morgan Hill, CA-based consulting firm for the multi-family housing industry.

At its May 16, 2001 business meeting, the California Energy Commission approved an increase in rebates from $3,000 per kilowatt to $4,500 per kilowatt, or 50 percent off the system purchase price, whichever is less.

Energy boost to home value

Such incentives could compel more consumers to complete energy efficient home improvements and reap an unexpected benefit -- increased home values.

Appraisers say it's difficult to measure a home's increased value due to energy efficient home improvements because there are no standards to calculate such a return in value. Regional climatic differences also make the measurement difficult.

That doesn't mean such improvements don't add value to your home, according to little-known research conducted by Fairfax, VA-based ICF Consulting with funding from the U.S. Environmental Protection Agency and the U.S. Department of Housing and Urban Development.

ICF says for every $1 you save on your annual fuel bill, your home value will jump by $20 or more. You must actually reduce your home's fuel requirements, say, by completing energy-efficient home improvements, not by turning back your thermostat or otherwise not using energy.

"The implication for home buyers is that they can profit by investing in energy efficient homes even if they do not know how long they might stay in their homes. If their reduction in monthly fuel bills exceeds the after-tax mortgage interest paid to finance energy efficiency investments, then they will enjoy positive cash flow for as long as they live in their homes and can also expect to recover their investment in energy efficiency when they sell their homes," according to the 1998 "Evidence of Rational Market Evaluations For Home Energy Efficiency".

A second ICF research effort in 1999, "More Evidence of Rational Market Evaluations For Home Energy Efficiency", found that cost vs. value home improvement studies likely underestimate the added value of new energy efficient windows.

"Nobody was interested in the 1990s, but I'm certainly getting calls now. It should reassure people about making investments in energy efficiency and particularly the Energy Star program which is the nationwide Good Housekeeping-type stamp-of-approval for energy efficiency that people will recognize," said Rick Nevin, vice president of ICF Consulting.

Additional provisions

Bush's plan also includes recommendations for legislation to

• To increase funding by $300 million to 1.7 billion a year for the federal Low Income Home Energy Assistance Program, which helps eligible low-income households meet their home heating and/or cooling needs.

• To double or increase funding by $1.2 billion over 10 years for the Department of Energy's Weatherization Assistance Program which provides energy conservation services that reduce heating and cooling costs for low-income families, especially older people and people with disabilities.

Among other suggestions, the plan recommends that the Secretary of Energy promote greater energy efficiency by

• Expanding the Energy Star program beyond office buildings to include schools, retail buildings, health care facilities, and homes.

• Extending the Energy Star labeling program to additional products, appliances, and services.

• Strengthening Department of Energy public education programs relating to energy efficiency.

The plan also recommends that Bush direct the Secretary of Energy to improve the energy efficiency of appliances by

• Supporting the appliance standards program for covered products and by setting higher standards where technologically feasible and economically justified.

• Expanding the scope of the appliance standards program and by setting standards for additional appliances where technologically feasible and economically justified.

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