Cost to Consumers, Business Key to Delay of New Energy Regulations

By Brandon Houskeeper

For the moment, homeowners and prospective home buyers appear to have dodged major cost increases from new energy code regulations being imposed by the state Building Code Council, which is responsible for establishing minimum building standards in our state.

The new regulations, which were scheduled to take effect July 1, are part of the state's climate action agenda. Last year Gov. Chris Gregoire directed the building council to amend the energy code to improve energy efficiency by as much as 30 percent.

In an eleventh-hour plea, however, the governor asked the council to delay implementation of the new regulations. Why? The governor is now worried about the financial impact these rules will have on the economy and the added costs they would create for current and future homeowners.

In her June 8 letter to the building council, Gregoire says "it is clear that the recovery of the construction industry is central to the recovery of our states economy. While construction numbers are starting to level off & there are serious questions regarding whether conditions will get better or worse."

The governor is not alone in her concern. A review by the Joint Administrative Rules Review Committee (JARRC), a bipartisan panel of state lawmakers, found the building council's cost-benefit analysis was unreliable and did not meet statutory requirements.

In late 2009, prior to the adoption of the energy code updates, the JARRC wrote that the economic analysis "failed to comply with all requirements of law" and asked the council to provide more detail, including an estimate of the number of jobs that would be created or lost. The building council simply ignored these objections and moved forward to adopt the rules without any additional analysis.

The governor's request to delay implementation draws much-needed attention to the economic impact of these types of regulations. The council estimated that compliance with the regulations would add about $1 per square foot to new construction, so the buyer of a new 2,200-square-foot home would pay an additional $2,200, a number that construction experts say is much too low. In addition, the new regulations extend beyond new construction, adding additional costs for current homeowners.

For example, the rules require that existing home heating, ventilating and air conditioning (HVAC) systems meet stringent efficiency standards. If a homeowner's HVAC system is altered or replaced, a licensed contractor must conduct a costly duct test to ensure that the system meets the new standards. A trained professional must seal leaks in the system to enhance its overall efficiency. In some cases, this might require intrusive testing that includes providing full access to a residence while filling the home's system with smoke to detect leaks.

Experts say that there is no way to know what steps will be required, or how much it will cost, until they are on site. Such unknowns will certainly lead to higher costs for homeowners, and will act as a strong deterrent to taking even small steps to improve energy efficiency.

Due to the high costs of the regulations, some contractors already report they are planning layoffs due to a decline in demand for energy efficiency projects. Homeowners faced with an all-or-nothing choice between high costs to fix everything or continuing to live with an outdated system will likely choose the latter, costing jobs in the hard-hit construction sector.

Based on the questions raised by the JARRC, the governor is right to ask for the delay in implementing these costly new regulations. Hopefully the Building Code Council will use the delay - which will last until Oct. 29, with possible extension to April 1, 2011 - to re-evaluate the cost-benefit analysis and better understand how these regulations will impact homeowners. The council plans to hold hearings on the implementation date on Sept. 10 and 24.