Richmond Times Dispatch: How renters can save money, and the planet

Richmond Times Dispatch
Posted: Tuesday, August 4, 2015 10:30 pm
By Bob Newman and Susan Hill

Despite Virginia’s low electricity and natural gas prices, the poor energy performance of our multifamily housing stock leads to energy costs that are significantly higher than they need to be for many low- to moderate-income renters. As a percentage of income, low-income households pay utility bills that are as much as 10 times greater than the bills of higher-income households. Additionally, many low-income families live in older apartments or homes that badly need repair and energy efficiency improvements.

About 30 percent of the U.S. population lives in multifamily housing, and many of these households are lower-income families. The American Council for an Energy Efficient Economy (ACEEE) has estimated that $3.4 billion in annual energy savings could be attained by making multifamily housing across the nation more energy efficient. A recently released study by Housing Virginia and the Center for Housing Research at Virginia Tech demonstrated that savings for residents of multifamily housing that received energy efficiency improvements significantly exceeded projections. Another recent study shows that with aggressive development of energy efficiency measures in multifamily buildings, Virginia could cut electricity usage by 28 percent and reduce gas usage by 19 percent in affordable multifamily housing. The benefits from these savings include fewer late payments, improvements in tenant health and safety and higher property values — leading to higher local tax revenues.

It’s clear that improving efficiency in multifamily buildings improves housing affordability for lower-income Virginians. Renters are spending a larger percentage of their income on rent than they have at any time in the past 30 years, because of rising rents and stagnant incomes. Many of today’s renters are also trying to save money to become tomorrow’s home buyers. So the entire housing market benefits from making multifamily rental housing more energy-efficient and affordable.

Why hasn’t this already happened? At least in part it is because in most cases the tenants are responsible for utility costs, meaning that owners have a less direct incentive to invest in energy efficiency. That’s why new efforts are needed. They will provide the resources to improve these apartments for current and future tenants. It’s a triple return for Virginia — tenants save, energy usage is reduced and our environment benefits from lower power plant emissions.

Virginia currently spends only about 2 percent of utility energy efficiency budgets on programs for low-income renters. We need to do better, and we now have the opportunity to move in the right direction on low-income energy efficiency due, in part, to legislation passed in the last General Assembly session that includes new pilot efforts by utilities. These programs should include the following elements:

  • Design that maximizes effectiveness by addressing all cost-effective energy efficiency measures;
  • Improved building owner access to energy usage information so that owners can make informed business decisions regarding investments in energy efficiency;
  • Financial incentives for tenants and building owners that are sufficient to stimulate participation; and
  • Partnerships with housing authorities and nonprofit housing providers that are already operating in the affordable housing and energy efficiency space.

Governor McAuliffe and Dominion Virginia Power have announced an initiative that is a big step in the right direction. Dominion’s new pilot will include substantial funding for multifamily energy efficiency improvements. The wider variety of measures included in this pilot ensure that homes can be weatherized more efficiently, resulting in greater savings for the residents.

Overall, Dominion is committing $57 million over five years, which will be distributed between an expanded “Energy Share” program and funding for single-family and multifamily weatherization improvements. That’s a big commitment and should have a real impact throughout their service area. Dominion also plans to engage with housing authorities and nonprofit affordable housing providers to find the right multifamily pilot projects for the program. This is a smart strategy, since utility programs have historically included primarily owner-occupied, single-family housing. Flexibility and learning from experience will be critical to refining an efficient and effective multifamily program.

Investments in energy efficiency for affordable multifamily housing will yield energy savings for building operators and tenants. Beyond that, a program for low-income energy efficiency means less pollution, more stable rents and improved health and safety for the tenants. Finally, we are positioned to address a long neglected need in our commonwealth: increasing the energy efficiency of our rental housing stock. By moving forward now, we can make Virginia a leader in utility driven, cost-effective energy efficiency programs for lower-income renters.

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