Why Do I Need a Home Energy Rating?

Six facts to consider:

Fact #1: The standards of the Florida Energy Efficiency Code for Building Construction represent the worst buildings allowed by law to be built in Florida.

Fact #2: The majority of Florida homes are built to the State's bare minimum energy-efficiency standards. A 1995 field research study conducted by FSEC and published as a Report to the Florida Public Service Commission by Florida Power and Light Company showed the average efficiency of new Florida homes to be right at Florida's minimum Code requirement. This same study also showed that Code compliance is not uniformly enforced, with many of the 423 field-study homes failing to conform to the standards submitted by the builder to the Code official for permitting purposes.

Fact #3: The Florida Energy Code has not changed substantively since 1985. The result is that homes built today can draw from 14 years of technology improvements and must be significantly more efficient than Florida Energy Code requirements if their cost effectiveness is to be optimized. (Want to see how much a typical Florida home can be improved -- click here.)

Fact #4: The price of a home considers only what you must pay to purchase the home (the mortgage costs). Home owners, however, must consider the total cost of ownership, which includes both the "price" as well as what must be paid to live in the home (the operating costs). Most people don't realize it but, on average, a typical Florida home owner will pay more than $50,000 to provide the energy for a small, code-compliant Florida home over the course of the mortgage.

Fact #5: The only reasonable means of accurately determining the relative energy efficiency and the total costs for a home is through an Energy Rating using the Florida Energy Gauge Program -- remember, Florida's Energy Code is a pass/fail minimum standard.

Fact #6: Quality is not free but a small investment in a Home Energy Rating can save you thousands of dollars in costs for your home. Note also that only those persons who are certified by the State are authorized to conduct energy ratings in Florida (click here for a listing of Certified Florida Raters).

Most homes, new or existing, can be substantially improved and return money to their owner from day one!

The chart below illustrates how these savings occur, even in proposed new, "code-compliant" homes.

Chart of Increasing Energy-Efficiency. As you improve the efficiency of a new home, the present value of its "price" (mortgage cost) increases - more and more rapidly as you approach the best available technology. Simultaneously, however, the operating cost (energy cost) decreases. There is a point, which is much more energy efficient than Minimum Code, at which the sum of the mortgage and energy cost (total cost) is minimized. This point is labeled on the horizontal axis of chart as Minimum Cost with an arrow pointing to the lowest point on the total cost curve. It is worth noting that the cost of owning the minimum code home is greater than the cost of owning a more energy efficient home until the point indicated by the large triangle on the right side of the total cost curve is reached. Thus, substantial improvements in efficiency (and quality and comfort) are typically very cost-effective.

This example illustrates the operating principal of ENERGYGAUGE Pro's optimization feature, whereby the present values of the mortgage costs are balanced against the present value of the energy savings and only the most cost-effective improvements are incorporated into the home. Now, for the first time in Florida, there is a uniform, "expert system" in place that can measure and report on the economic and financial impacts of home energy technology decisions. Certified Florida Raters are equipped with these energy analysis and evaluation tools, and for an investment of only a few hundred dollars, you can save thousands of dollars on your home purchase, new or existing.

And you can take it to the bank!

There are increasing numbers of mortgage bankers offering Energy Efficient Mortgages (EEMs) and utility and government programs that are "honoring" the energy savings projected by certified home energy rating systems. Tools like ENERGYGAUGE in the hands of Certified Raters now make this a feasible alternative for Florida home owners and buyers. And to ensure mortgage industry accreditation, misrepresentation of the ENERGYGAUGE results has been made purposely difficult through a policy of full disclosure. Each of the user-selected economic and financial assumptions and each improvement along with its cost, its cost basis (source), its lifetime and any other associated costs or benefits are clearly printed on the output reports. This is done to ensure that financial results are properly interpreted and, if necessary, can be fully replicated.

In summary, Florida's Building Energy Efficiency Rating System represents a significant economic opportunity from which everyone can benefit. The economic and market value of energy Ratings to each of the impacted parties can be summarized as follows:

Home buyers can literally get more home for less money by taking advantage of the operating cost savings of improved energy efficiency. They also will get a higher-quality, more comfortable home.
Home owners can increase their equity and cash flow positions and achieve a greater market value for their property at the time of sale.
Home builders can achieve greater profitability through the sale of higher quality buildings, reductions in "call backs" and improved customer satisfaction.
Realtors can close more sales, more quickly by using the expanded market and qualifying power of Energy Efficient Mortgage underwriting and financial institution incentive programs.
Lenders can increase their share of the mortgage market and simultaneously lower their default risk as a result of the improved cash flow position of borrowers.
Florida (and the Nation) can achieve positive economic impacts through increased jobs and attain greater economic and environmental sustainability through reductions in energy use and air pollution.