Help My House program a model on national level

The Rural Energy Savings Program takes inspiration from South Carolina's initiative to help with energy efficiency.

Medill News ServiceAugust 4, 2013 

WASHINGTON -- Hidden in the pages of the massive farm bill stalled in Congress is a popular provision for making homes more energy efficient -- the Rural Energy Savings Program, an initiative that would help Americans with skyrocketing energy costs.

The inspiration for RESP? A little known but surprisingly successful South Carolina program called Help My House that uses the state's network of electricity co-ops to provide small loans to homeowners to upgrade their homes and make them more energy efficient.

Help My House is popular among South Carolina homeowners because it relies on existing infrastructure and uses a microfinancing model to cut home energy costs: an innovative but cost-efficient model that has seen results.

In 2011, the U.S. Department of Agriculture loaned $740,000 interest-free to the program. Help My House identified electricity cooperatives and 125 homes within those co-ops that needed improvements and were worth the investment, then provided loans at only 2.5 percent interest rates, which helped cover the program's costs. The USDA raised its commitment to $1 million this year.

On average, loans have been under $7,700 per household. Most households opt to pay back the loans in small monthly installments through their electricity bills; repayment takes an average of six and a half years.

Work ranges from basic air sealing and duct leakage reduction to heat pump replacements and floor insulation.

"So they got low-interest loans, they had to put no money down and we went into their homes in advance and looked at what they needed from an energy efficiency standpoint to make their homes more comfortable," said Lindsey Smith of The Electric Cooperatives of South Carolina.

"The home qualified, not the individual."

Michael Smith (no relation to Lindsey Smith), manager of energy programs at Central Electric Power Cooperative listed the criteria for a qualifying home: "It had to have a good roof, it couldn't be falling down. We needed to feel that there had to be a number of years left for us to invest in the home."

This meant that homes that were renovated were mostly built after 1970, when building codes were standardized to make residential areas more consistent and safe.

The program was not limited to stand-alone homes, either.

"Doing some manufactured homes in this pilot was important to us because South Carolina has the highest percentage of (manufactured, mobile) homes in the country," Lindsey Smith said.

A computer model was used to determine not only which families and homes qualified for the loans but to create a cost-benefit analysis of how much money was being saved -- and whether the loan repayment was significantly lower than that amount.

A unique aspect of Help My House was that homeowners were qualified based on whether they had been regular in paying their electric bills rather than undergoing a credit check.

"This qualifies more people," Michael Smith, manager of Energy Programs at Central Electric Power Cooperative, said of the single qualifying metric.

"The security is that the loan is tied to the meter on the house," Smith said. This means that even if the original homeowner left the house, the new homeowner would assume repayment duties, therefore ensuring that the loan was paid in full.

And a 2010 law in South Carolina that gives local co-ops authority to disconnect electricity should repayments go unpaid is helping avoid the hazard of getting a valuable upgrade to a house done for free.

"(It) gives the co-ops the same authority that they do now if you don't pay your electric bill in the case of a loan," Smith said. "That risk management was very important."

Work length varied by amount of renovation required.

"The actual work by contractors only took one to three days in most cases," Lindsey Smith said. "However ... the whole process often took several weeks. That's OK for a research pilot like this one, but we'd need to streamline things in (a) scaled-up working version."

The Rural Energy Savings Program being proposed in the farm bill would stage this South Carolina success story on a national level. Formerly known as the Rural Energy Savings Program Act when it was introduced as a stand-alone bill last year, the plan is one of the rare pieces of legislation attracting bipartisan and bicameral support.

Although it was not voted on as a solo bill, it now is attracting a flurry of support nestled within the most current version of the farm bill, which has passed the Senate.

Led by Rep. Jim Clyburn, D-S.C., and Sen. Lindsey Graham, R-S.C., RESP's support is being used as a key tool in passing the farm bill in the House.

What makes RESP more attractive to both parties is its low-cost, organic ability to encourage job creation and green initiatives using the housing market.

"RESP is designed to run through co-ops," said John-Michael Cross, policy associate at the Environmental and Energy Study Institute, a nonprofit environmental policy think tank. "The idea of this is to maintain that relationship through our national setup."

Using co-ops will localize electricity usage, keep loan repayment operations manageable and reduce bureaucratic costs, he said.

For Clyburn, improving homes and the environment in one go helps stressed rural economies.

"This would make homes energy efficient and affordable," he said. Residents are "more apt to remain there rather than going off (to cities) for a way to get a better life."

Real estate agent Karl Sneed, with Charter One Realty on Hilton Head Island, said that upgrading a home for energy efficiency isn't just good for the environment and local economy.

"The more efficient you get, the less your bill will be at the end of the month," Sneed said. "It adds value as well as helps sell (the house). If you have two houses that are identical but one has energy efficient features, it adds value."

On average, Help My House participants saved an annual 10,809 kilowatt hours a year, translating to $1,157. Of that, $869 would be the annual loan repayment for the first several years, with $288 total net savings per year -- an amount that would jump to the total $1,157 after the loan was repaid.

Sneed said energy efficient homes don't automatically sell faster, but are more attractive in a recovering housing market.

"(Homebuyers) buy the house on location and price. Those are still the main things they are looking for in a house," Sneed emphasized. "Energy efficiency is secondary."

There isn't a clear answer as to exactly how much renovations add to a home's value.

"We know that the value of homes is improved by the retrofits, but ... I do not believe it's something we measured," Lindsey Smith said.

"We would like to know the answer to (this question) too," Michael Smith said. "The real estate industry does struggle to recognize homes with these hidden improvements."

Sneed agreed that the real estate market has difficulty putting a price tag on improvements.

"You're not going to get more money per se but you make it an easier sell," he said.

So far, the program is a win-win for both sides.

Teri and John Norsworthy of Summerton, S.C., who reside within the Santee Electric Co-op, had their 1979 three-bedroom home outfitted with a new heat pump, duct sealing, air sealing, and insulation in the attic for $6,540.

Teri Norsworthy notices a big difference in their monthly electricity bills -- "between $150 and $200 less a month."

Her husband said renovating their home was well worth the loan cost.

"You save enough to pay for the work," John Norsworthy said. "It doesn't make sense to me that anybody wouldn't do it."

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