Disclose energy costs to property buyers

Benefits

Community

: Protects property buyers and saves them money, avoids foreclosures or sales due to inability to afford energy costs

Environmental

Decreases energy dependence and reduces polluting emissions

Economic

Creates new jobs associated with energy efficiency audits and retrofits and helps residents and businesses plan their energy costs and identify needed energy efficiency upgrades

NGC 2010 Poll

86%
of Philadelphians favor increased public funding to help people and businesses reduce their energy use. This is an important goal when almost four in 10 Philadelphians had trouble paying their energy bills in the past year and 84 percent took action to reduce their energy use.

Peer Cities

New York City, Austin, TX, and Washington.
City Council should protect and inform property buyers by requiring sellers to provide energy cost information.

 Energy is one of the largest monthly expenses property owners face and has a significant impact on whether an owner can afford his or her home or building over the long term. Yet energy costs are rarely shared with buyers of homes or commercial buildings before the sales are complete. An ordinance that requires building owners to provide energy cost information to potential buyers will allow real estate buyers to make the same kinds of informed price comparisons as buyers of cars or appliances where energy efficiency information is routinely provided. Mandatory disclosure will also encourage sellers to increase the energy efficiency of their properties in order to increase the sale prices and chances of selling.[1]

The extent of the energy efficiency information a seller must disclose will vary based upon the type and size of the property. Residential home sellers and small commercial building sellers will be asked to provide a year’s worth of utility bills.[2] Copies of their electric, gas and/or heating oil bills for 12 months immediately prior to sale will allow the buyers to get a sense of the utility costs in more than one season. PECO and PGW can often make these records available to home sellers when they are unable to locate their records.

Sellers of commercial buildings with more than 10,000 square feet must provide the results of energy audits that will offer a more precise and easy-to-compare energy efficiency ratings. The most commonly used rating system is EPA’s ENERGY STAR® Portfolio Manager. Similar to the miles-per-gallon (MPG) standard for automobiles, Portfolio Manager combines basic information on building characteristics (size, type and use) with utility consumption data to generate an energy performance score on a scale of one – 100. This score is based on the building’s performance relative to similar buildings nationwide. Rating reports also provide recommendations on cost-effective energy efficiency measures, as well as links to utility or government grant, loan and rebate programs. The energy efficiency rating can then be included in the Multiple Listing Service (MLS) property description similar to other characteristics, such as the number of rooms. The benefit of this approach is it sets an objective standard; it also creates green local jobs for building inspectors, auditors and retrofitters.


A 2009 national study estimated that 9,000 new jobs related to energy efficiency will be created in Philadelphia by the year 2025, particularly if policy changes are made to encourage this industry. These jobs will provide approximately $364 million in wages.[3]


 

[1] Where the purchaser intends to significantly remodel or demolish a building, existing energy efficiency may not be relevant, and in these circumstances disclosure will not be required.

[2] Residential home sellers should also reveal how many household members there are and if they choose, could submit a Home Energy Scorecard rating and report created by a home energy rater that provides a standard measurement of a home’s energy efficiency.

[3] Potential For Energy Efficiency, Demand Response, And Onsite Solar Energy In Pennsylvania, American Council for an Energy-Efficient Economy (April 2009).