by Jason James
Last May, the House of Representatives passed the Home Star Energy Retrofit Act of 2010, allocating $6 billion toward rebates for retrofits that increase a home’s energy efficiency under the authority of the Department of Energy (DOE). Though Home Star enjoyed the support of twelve Republicans in the House, the U.S. Chamber of Commerce, and the National Association of Home Builders, it languished in the Senate, like other energy legislation. However, the Senate’s “oil spill bill,” the Clean Energy Jobs and Oil Company Accountability Act of 2010, includes a Home Star title that largely parallels the House’s Home Star bill.
This blog post is the third in a series analyzing the few sections of the recently-introduced oil spill bills addressing clean energy and energy efficiency. CCCL previously analyzed Division B of the Senate oil spill bill addressing natural gas and electric plug-in vehicles here. This blog will examine the notable aspects of Division C of the bill – the Home Star title – and analyze the ways in which it differs from the already-passed House Home Star bill.
The Senate’s Home Star Retrofit Rebate Program
Division C of the Senate oil spill response bill – titled “Clean Energy Jobs and Consumer Savings – contains the provisions establishing the Home Star program. Division C first defines its terms and criteria for eligibility of contractors (entities that install home retrofit materials), rebate aggregators (entities that process and deliver the rebates), and quality assurance providers (entities that confirm contractors’ compliance). After these preliminary sections, the bill describes the rebate process in detail. Home Star consists of two sub-programs: Silver Star and Gold Star.
Under Silver Star, in § 3007, rebates are awarded for a set of prescriptive retrofit standards. These prescriptive energy or water saving retrofits, include caulking and adding insulation; replacing windows, doors, and skylights; and replacing major household appliances. The prescriptive standards are very specific and technical. For example, § 3007(b)(9)(A)(i) requires a heating system be replaced with a natural gas or propane furnace with an AFUE rating, a measure of thermal efficiency, of 95 or greater.
The value of the rebate for these retrofits is the lesser of (1) $3,000, (2) half of the total cost for all retrofits, or (3) the sum of specific values associated with each kind of retrofit listed in § 3007(d). For example, the furnace described above would qualify for a rebate of $1,500 under § 3007(d)(2)(c). If this was the only retrofit and its total cost was $5,000, then the rebate would be $1,500 under the third calculation method, because that is the lowest amount. However, if the total cost of the furnace was $2,000, then the rebate would be $1,000, under the second calculation method. If, in the course of a home retrofit, the homeowner decided to install a new furnace and several other components that totaled $10,000 in costs, and had a rebate value totaling $4,000 under the § 3007(d) list, then the actual rebate would be $3,000 under the first calculation method.
Upon installing or selling materials covered by Silver Star, contractors and vendors apply for a rebate to rebate aggregators. The rebate aggregators then apply to DOE for the rebate and then supply contractors and vendors with funds acquired from DOE. Silver Star’s section closes with quality assurance provisions meant to make sure the retrofits are legitimate and that consumers have an opportunity to complain if there are mistakes or wrongdoing in the retrofit or rebate process.
In contrast to Silver Star’s prescriptive approach, Gold Star’s performance-based approach, found in § 3008, offers rebates for retrofits that achieve whole home energy or water savings. There are no references to individual energy or water-saving measures. Instead, under Gold Star, a homeowner would receive rebates of $3,000 for a 20% reduction in home energy consumption and an additional $1,000 for each additional 5% reduction up to the lesser of (1) $8,000 or (2) half the total retrofit cost. Similarly, a homeowner would receive $500 for a 20% reduction in water consumption and $100 for each additional 5% reduction up to the lesser of (1) $1,200 or (2) half the total retrofit cost.
These percentage reductions are to be calculated using simulations of home energy and water consumption before and after the retrofit. Several acceptable simulation programs are stipulated, but the Secretary of Energy also has authority to establish an equivalent performance test. At a minimum, the test is to be capable of evaluating the impact of each prescriptive measure under Silver Star. The Gold Star section ends with language largely paralleling Silver Star’s rebate processing and quality assurance scheme.
Comparing the House’s version of Home Star
The version of Home Star passed by the House differs from the version passed by the Senate in some ways. The most important contrasting provisions follow. In general, a comparison of the two bills reveals that while more materials and appliances are eligible for rebates under the Senate bill, the House bill allocates more money toward rebates in total.
Differences between Senate and House Silver Star Programs
- The Senate bill covers skylights in § 3007(b)(8), automatic water temperature controllers in § 3007(b)(10), energy-saving roof replacement materials in § 3007(b)(14), and WaterSense products (an EPA program similar to EnergyStar) in § 3007(b)(16) while the House bill does not.
- The House bill covers electric tankless water heaters in § 103(b)(11)(F) while the Senate bill does not.
- The Senate bill in § 3007(b)(9) requires natural gas and propane furnaces to achieve 95 AFUE while the House bill only requires 92 AFUE.
- The Senate bill has an additional criteria for qualifying window films concerning U-factor reduction, a measure of the window’s ability to transfer heat, in § 3007(b)(15)(C).
- The Senate bill offers a larger rebate for § 3007(b)(9) heating and air conditioning systems than the House bill.
- The Senate offers $450 for a § 3007(b)(12)(C) natural gas or propane storage water heaters. The House bill offers only $250.
- The Senate bill offers $750 for a § 3007(b)(12)(B) natural gas or propane tankless water heaters. The House bill offers the default amount, $1000.
- The Senate offers $500 for a § 3007(b)(12)(G)(ii) desuperheater while the House bill offers the default amount, $1000.
Differences between Senate and House’s Gold Star Programs
- Under the Gold Star program, the Senate bill offers rebates for whole home water savings while the House bill does not.
Differences between funding allocation in Senate and House Bills
- The House bill appropriates $6 billion for use during fiscal years 2010 and 2011 but does not specify the source of funding. The Senate bill appropriates $5 billion for use until September 30, 2012 – the end of fiscal year 2011 – directly from the Treasury.
- In the House bill, not more than 9% of the funding shall go to state grants for administrative costs. In the Senate bill, $380 million or not more than 6%, whichever is less, of the funding shall go to this purpose. However, the House bill allocates money for Indian tribes from that 9% while the Senate bill allocates a separate 3% for grants to Indian tribes. The discrepancy is merely structural.
- In § 112(f) of the House bill, after subtracting amounts authorized in subsections (b), (d), and (e), two thirds of the remainder are used for rebates and incentives under Silver Star. By contrast, § 3016(g) of the Senate bill states that after subtracting amounts authorized in subsections (b) through (f), two thirds of the remaining funds are to be used for rebates and incentives under Silver Star. That is, the House bill does not subtract amounts authorized for quality assurance (§ 112(c)) costs before calculating the amount directed toward Silver Star. Nor does it subtract quality assurance costs before calculating the amount directed toward Gold Star, as the Senate bill does.
- In the House bill §§ 112(f)-(g), two thirds of the funds left over after administrative costs are allocated to the Silver Star program and one third of the funds left over after administrative costs are allocated to the Gold Star program (save for the quality assurance quirk noted above). By contrast, under § 3016(g) of the Senate bill, while two-thirds of post-administrative cost funds are allocated to Silver Star, one third of the funds left over after administrative costs and funds allocated to Silver Star are allocated to the Gold Star program. This is an apparent oddity because, as a result, some of the funds seem to be left unallocated. There does not appear to be a reason for the unallocated funds; it could be a typographical error.
Summary and Evaluation of Differences
With one exception, the Senate bill’s Silver Star system covers more materials and household appliances than the House bill. The Senate bill also implements slightly more strict criteria for some materials and household appliances than the House bill, but these instances are limited. The amount of money offered for rebates under Silver Star vary slightly between the two bills, but there are no major differences.
Under Gold Star, the House bill’s lack of rebates for water efficiency is substantially different from the Senate bill, where retrofits that make a home more water efficient are eligible for rebates.
With regards to funding, the House bill notably allocates $1 billion more to Home Star than the Senate bill. Other than this, the only major difference between allocation of funds in the two bills is the quirk noted in § 3016(g) of the Senate bill, which may leave some funds unallocated.
