BGE ending energy plan EnergyWi$e offered builders rebates on efficient equipment

'Non cost-effective'

New program will shift financing from utility to homeowner

May 10, 1998|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

Baltimore Gas and Electric Co. has put area developers on notice that its highly successful EnergyWi$e program -- which generated thousands of dollars in rebates for builders -- will come to an end in July after a four-year run.

In its place, BGE has decided to implement a certification program that will allow consumers to apply for mortgages with higher debt-to-income ratios and receive 100 percent financing for energy-saving products and technology. In effect, the switch transfers the cost of financing energy-efficient homes from the utility to the homeowner.

The utility said it was discontinuing the program because it had become "non cost-effective," according to G. Robert Light Jr., a senior program administrator with BGE.

"What was happening was that we were refunding to the builder the full equipment cost to make the homes EnergyWi$e," Light said. "The builders discovered that an energy-efficient home was highly marketable and people were willing to pay an extra price for EnergyWi$e homes. So what they were doing was after collecting the rebate from us, which the customer knew nothing about, they would turn around and charge the customer a premium for an energy-efficient home."

BGE estimates it costs 10 percent to 15 percent less to run a home built under the program guidelines vs. one that is not.

The current program -- the result of a 1988 Public Service Commission order to implement energy conservation programs in an effort to avoid building expensive generating plants -- paid builders $2,000 for every single-family home and $1,500 for each townhouse that passed BGE's guidelines.

BGE said that by the time the program ends, 9,300 homes will have been built under its guidelines and an estimated $16 million paid to builders.

To get the rebates, builders were required to use -- among other items -- high-efficiency heating and cooling equipment, thicker insulation and high-performance double-paned windows that trap heat in the winter and reflect it in summer.

Christopher C. Walls, a senior program administrator who will be managing the new program, said the public has been successfully educated by the program. Thus, he said, "we can begin to remove those incentives and have the market take care of it. The market is definitely interested in this increased value and increased comfort."

But one builder who has been using the program for the last two years isn't so sure how its successor will play to the public.

"I would say that they [consumers] are going to be served worse to a degree that is yet to be determined," said Michael DeStefano, principal of Sturbridge Homes in Anne Arundel County. "There was a huge incentive for every builder in Maryland to do this program, and this incentive has just been removed."

DeStefano said his company has built approximately 120 EnergyWi$e homes. "You look at our bottom line and that's a big piece of our bottom line that's a quarter of a million dollars they've paid to us."

Consumers for the most part, DeStefano believed, have been unaware of the rebate program. "We were doing it because there was a financial incentive attached to it. At the time two years ago, people wouldn't pay $2,000 for an energy-efficient home. Buyers are fickle. Maybe they should think about it."

Now, he said, competition will force his firm to continue to build under the same standards and include the cost in the base price of the home.

"They [customers] have to pay for it. [But] I think that they are getting more than that in value. If I was telling somebody that they had to pay $2,000 for an energy-efficient home now, where six months ago they could have gotten it for nothing, I'd tell them to pay for it now, because it definitely pays for itself in the savings."

Likewise, Masonry Macks Homes, which operates primarily in Baltimore and Carroll counties, has had hundreds of homes built under the EnergyWi$e program and marketing director Maury Bass sees the customer as the one who will now bear the costs.

"In most cases, like any other business it's got to be passed on to you and me just like everything else gets passed on to the consumer. It has to," Bass said.

"I think the average buyer who has bought a new home in the last two years has been incredibly well-served because they haven't had to pay a premium for what they got," he added.

Bass, however, said the company won't retreat from building energy-efficient homes, but will rethink some aspects.

"What we are going to do to adjust is relatively minor. All that we are changing from EnergyWi$e is a few minor things that we feel are costly and are of little or no benefit or direct impact on the buyer."

Light agreed that the majority of builders who are in the program will continue to offer energy-efficient homes.

Light said the new program, which has yet to be officially named, will follow the "E Seal" energy conservation program devised by the Edison Electrical Institute, the trade association for electric utilities.

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