Why We're Watching

Model Energy Code Adoption, Efficiency Kansas Revolving Loan Program, Community Grant Programs

Kansas Energy Code Status

Background

Kansas, known to residents as the Sunflower State, boasts a population of 2.8 million and is located in the central United States. Kansas is one of the most productive agricultural states in the nation, but its gently rolling mix of farmland, prairie, and forest is also home to well-known and livable cities, including Wichita, Kansas City, Topeka, and Lawrence. While the state was immortalized by the famous tornado in the 1939 film The Wizard of Oz, it was another, real-world twister that struck the town of Greensburg, Kansas in 2007 which has earned the state national attention in recent years. After a devastating tornado destroyed more than 95 percent of the town, Greensburg residents drew headlines when they made the decision to rebuild their small community – almost exclusively – with high-performance green buildings. The commitment to sustainable, energy efficient construction in Greensburg parallels work done at the state level  in recent years where the State Energy Office is working through both voluntary programs and common-sense regulations to ensure Kansans enjoy more energy efficient homes and workplaces.

Kansas' Track Record of Home Energy Efficiency Efforts

For advocates of home energy efficiency, adoption of the latest energy codes is only part of a larger strategy to achieve actual efficiency gains for homes. In recent years, the state has created a number of programs to help homes and businesses meet energy efficiency goals. One noteworthy program, the Energy Efficiency Disclosure Form, requires sellers of all new homes to provide homebuyers with a report on energy-efficiency specifications. A more-recent endeavor, Efficiency Kansas, is an innovative revolving loan program created by the State Energy Office which provides low-interest loans to homeowners and business owners to retrofit older homes and commercial buildings with cost-effective energy efficiency improvements.

Energy Efficiency Disclosure Form For New Homes

The Kansas Energy Efficiency Disclosure form is a one-page summary of a new home’s energy efficiency features. The state requires sellers to use the form to disclose information about the home’s envelope and mechanical systems and to prominently display the form within a home to be sold. The form is designed to allow the builder/seller to list envelope and mechanical systems specifications alongside the relevant 2006 IECC and federal standards. Analogous to the EPA mileage sticker on a new car’s window, the user-friendly form allows prospective buyers the chance to see what is “under the hood” of their new home. The form’s required entries include R values (insulation levels) for walls, attics, and foundations, as well as window “U” values (heat loss rating), and specifications for water heaters and HVAC equipment.
 
The disclosure form also allows progressive builders the opportunity to go even further, by demonstrating a new home’s actual building performance. By checking a box on the form, builders can indicate that the home has been assessed by a HERS rater or that it has qualified as an EPA Energy Star Home. HERS raters are trained and certified by RESNET (Residential Energy Services Network) to conduct inspections on homes to determine their energy efficiency. After inspecting the building plans and conducting on-site testing of the home, HERS raters use a computer program to generate a score between 1 and 100, with a lower score indicating a higher level of energy efficiency. While builders are not required to complete this section, this section signals to potential buyers that the builder has gone the extra mile to assure the home’s energy efficiency. In addition to single family homes, the law also applies multifamily residential units in buildings containing up to four total units.  
 
The form, incorporated in state statute (KSA 66-1228), was developed with input from the Kansas Homebuilders Association, the Association of Realtors, the Kansas Manufactured Housing Association, and the State Energy Office. Although the disclosure forms are required only on newly built homes, the State Energy Office plans to incorporate similar disclosure in its retrofit programs. 

Efficiency Kansas Loan Program

The Efficiency Kansas loan program (www.efficiencykansas.com) is a newly created low-interest loan fund that allows Kansas homeowners and small business owners to borrow up to $20,000 or $30,000, respectively, to make cost-effective energy efficiency improvements to their homes or businesses. Created with $34 million allotted to the state by the American Recovery and Reinvestment Act of 2009 (ARRA), the program was officially launched November 17th 2009 and is managed by the State Energy Office.
 
Efficiency Kansas is based on a “whole house” approach to energy efficiency, and all projects approved for financing are based on an energy audit of the home or small business. Designed as a public-private partnership, Efficiency Kansas gives customers two ways to access financing: through partner lenders or partner utilities.

To get started, prospective participants get prequalified by a partner lender or utility. Next, they contact one of the qualified auditors listed on the Efficiency Kansas web site to schedule an energy audit. While homeowners must pay for cost of the audit, the state is providing rebates of $350 to the first 1,000 participants who complete a project through Efficiency Kansas. The State Energy Office estimates that the audit will cost anywhere between $500 and $600 (this includes the cost of the required post-retrofit audit discussed below).

 After performing a thorough audit, auditors provide owners with a customized Energy Conservation Plan (ECP), which lists estimated energy and financial savings and prioritizes improvements based on how quickly they will pay for themselves through the energy savings. Improvements may include insulation, air sealing, and new heating and cooling equipment, among others. It all depends on what the energy audit shows to be cost-effective.

To be approved for Efficiency Kansas financing, all project costs must be covered by the estimated energy savings over the term of the loan. With the ECP and a contractor’s bid in hand, homeowners may apply for a loan from two sources: a partner lender or utility. For homeowners, the maximum loan amount is $20,000. Small businesses can receive a loan of up to $30,000. The maximum loan term is 15 years.
 
For loans originating from partner lenders, the state provides the funds to the lender at 0% interest, and the lender is allowed to charge up to 4% interest. The lender retains the 4% interest to defray the loan costs, and sends the principal in each loan payment to the state to replenish the revolving fund. To keep fees down for borrowers, the state provides each lender with a $250 per loan origination fee for each loan they originate. If an owner of a home with an outstanding loan chooses to sell it, the owner must pay the balance of the loan in full at closing (with no prepayment penalty).
 
At present, 17 lenders, totaling 106 branches across the state, have signed up to be Efficiency Kansas Partner Lenders.  For customers electing to finance through a utility, the program works the same way, except the loan is repaid through the monthly utility bill.

The program’s first partner utility is Midwest Energy, which now operates their How$mart program in partnership with Efficiency Kansas. Two large regulated electric utilities are expected to file applications in the near future to offer the program with the Kansas Corporation Commission (KCC), the state’s utility regulatory agency. Several non-regulated rural electric cooperatives will soon be offering Efficiency Kansas to their customers.

To be eligible for the utility track, customers must have 12 months of utility service history, be current on their payments, and not have had their service disconnected in the previous 12 months. These eligibility requirements should allow customers with bad credit to participate in the loan program; the utility track also allows for improvements to rental units, provided both the tenant and landlord are amenable.  If customers sell their home or small business before the loan is repaid, they must disclose the loan (meter-based obligation) to the buyer, who will continue the loan repayment through their monthly utility bill. To increase transparency, partner utilities are required to file a notice that will appear during a home title search, as well as requiring all customers to sign forms agreeing to disclosure.

After work on each project is completed, Efficiency Kansas requires the energy auditor to return to the building and conduct a post-retrofit audit to verify the measures have been installed per specifications and that there are no safety hazards (e.g., the structure is now too tight). The cost for the post-retrofit audit is included in the initial price quote.

Homeowners who finance a project through Efficiency Kansas remain eligible for the federal energy efficiency tax credits of up to $1,500 through the American Recovery and Reinvestment Act (Recovery Act). The tax credits are for specific improvements, including upgraded doors, roofs, windows, insulation, and HVAC equipment that meet specific federal standards. More information on energy efficiency tax credits is available from the Alliance to Save Energy.
 
The State Energy Office started Efficiency Kansas on a strong footing by hiring a marketing firm to develop a statewide advertising strategy, providing support for qualified energy auditor training institutions, as well as providing scholarships for prospective auditors to attend trainings. So far, 100 scholarships have been awarded. The state has estimated that residents who participate in the program will reduce their heating and cooling bills by 20%. For 10% of homes participating in the program, the state will conduct an on-site audit of the ECP to ensure that the initial energy audits were conducted correctly.
 
As of April 2010, this nascent program has approved 10 loans. The State Energy Office anticipates that the number of Kansans participating in the program will grow steadily over the coming year.

Energy Manager Grants

In recognition of the unique challenges faced by local governments, the State Energy Office has also developed an Energy Manager Grant program to help coalitions of local governments tackle energy issues. Funded by the Recovery Act, the $2.7 million program helps these coalitions hire an energy manager by providing an annual stipend of up to $65,000 for two years. Energy managers will help each of the coalition members develop both short-term and long-term plans to reduce energy consumption, improve energy efficiency in public buildings as well as in privately owned structures, and increase awareness of energy conservation and efficiency throughout the community. Cities and counties that receive funds through this program will also be required to participate in the state’s energy codes initiative (see below).

Energy Efficiency Building Codes Working Group

In addition to other recent efforts, in May 2009 Kansas established the Energy Efficiency Building Codes Working Group, to ensure that the state meets building code compliance requirements stipulated in the Recovery Act. To achieve compliance with the law, Kansas and other states must meet a compliance target of 90% by 2017. Because Kansas is a Home Rule state, the working group’s strategy is based on voluntary adoption by local jurisdictions and building on existing efforts, which include the Energy Efficiency Disclosure Form and the Efficiency Kansas Loan Program.

Program Contacts

For more information on the Kansas Energy Efficiency Disclosure form, please contact:

Liz Brosius
Outreach & Education Manager
State Energy Office
Kansas Corporation Commission
1300 Arrowhead Road, Suite 100
Topeka, KS 66604-4074
785-271-3264
l.brosius@kcc.ks.gov

For more information on Efficiency Kansas and other programs, please contact:

Ryan Freed
Energy Efficiency Programs Manager
State Energy Office
1300 SW Arrowhead
Suite 100
Topeka, KS 66604-4027
Ph: 785-271-3152
Fax: 785-271-3268
r.freed@kcc.ks.gov
 

More Information

State Energy Office

Efficiency Kansas

Kansas Energy Efficiency Disclosure Form

Kansas Energy Manager Grants

Kansas Energy Efficiency Building Codes Working Group