[Senate Hearing 111-422]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-422
 
                  ENERGY EFFICIENT BUILDING RETROFITS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

REVIEW LEGISLATIVE PROPOSALS DESIGNED TO CREATE JOBS RELATED TO ENERGY 
   EFFICIENCY, INCLUDING A MAJORITY STAFF DRAFT ON ENERGY EFFICIENT 
                           BUILDING RETROFITS

                               __________

                             MARCH 11, 2010


                       Printed for the use of the
               Committee on Energy and Natural Resources



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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
DeBoer, Jeffrey D., President and Chief Executive Officer, The 
  Real Estate Roundtable.........................................    40
Epperson, Stacey, Executive Director, Frontier Housing, Morehead, 
  KY.............................................................    47
Giudice, Philip, Commissioner, Massachusetts Department of Energy 
  Resources, and Chair, National Association of State Energy 
  Officials, Boston, MA..........................................    51
Hanbury, Bob, President, House of Hanbury, and Board Member, 
  National Association of Home Builders, Newington, CT...........    60
Laseter, Larry, President of WellHome, on Behalf of the Home Star 
  Coalition, Atlanta, GA.........................................    32
Merkley, Hon. Jeff, U.S. Senator From Oregon.....................     6
Mierzwa, Terrence J., Executive Manager of Marketing, Energy 
  Efficiency, and Research, Consumers Energy Company, Jackson, MI    56
Parfomak, Paul W., Ph.D., Specialist, Energy and Infrastructure 
  Policy, Congressional Research Service.........................     7
Warner, Hon. Mark, U.S. Senator From Virginia....................     3
Zoi, Cathy, Assistant Secretary, Energy Efficiency and Renewable 
  Energy, Department of Energy...................................    13

                               APPENDIXES
                               Appendix I

Responses to additional questions................................    77

                              Appendix II

Additional material submitted for the record.....................   115


                  ENERGY EFFICIENT BUILDING RETROFITS

                              ----------                              


                        THURSDAY, MARCH 11, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m. in 
room SD-366, Dirksen Senate Office Building, Hon. Jeff 
Bingaman, chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. I'm told Senator Murkowski will be here very 
shortly. But we have today three legislative proposals that 
we're going to have a hearing on. They are designed to improve 
the energy efficiency in existing buildings, to reduce energy 
bills for residential and commercial buildings, to create jobs 
in building construction and building-related manufacturing 
sectors.
    Buildings are a large source of greenhouse gas emissions. 
They account for as much as 39 percent. That's figures for 
2006. Numerous studies have shown that energy efficiency 
improvements in buildings are among the most cost effective 
ways to reduce greenhouse gas emissions.
    I was very glad to work with Senator Murkowski last year 
and all members of the committee to report bipartisan energy 
legislation last summer. ACELA, which is the American Clean 
Energy Leadership Act, includes provisions to incentivize 
energy efficiency retrofits and the residential and commercial 
building sectors, as well as a rebate program for replacing 
extremely inefficient manufactured housing with Energy Star 
manufactured housing.
    Today, several months after that legislation was reported 
from the committee, the continued levels of unemployment in the 
building sector have made energy retrofit programs attractive 
for their job creation potential, as well as for their energy 
savings benefits. Over the past several weeks, I've been 
working along with a group of Senators on developing the Home 
Star program, with the administration of course very strongly 
in favor and the President advocating for this as well. A large 
coalition of leaders from the construction industry, energy 
efficiency, and clean energy advocate groups, as well as labor 
groups, have pursued this to expand the residential retrofit 
programs in the bill that we previously reported.
    Senator Warner, who's here, Senator Merkley, Senator 
Sanders, they've all made very important contributions to this 
effort and the effort has been to create a program that could 
be established to quickly have the detailed legislative 
language that would be needed for the program to get up and 
running. We hope we can finalize that legislation and have it 
introduced soon.
    I'm also very glad that the hearing today will include 
consideration of the Building Star coalition. This is 
legislation Senator Merkley introduced focused on commercial 
building retrofits. We'll receive testimony on Senator Tester's 
proposal for manufactured housing rebates to allow low-income 
residents to afford Energy Star-related manufactured homes as 
well.
    We've invited State and utility experts in efficiency 
programs and the National Association of Home Builders to give 
their views today, and of course the Secretary, Assistant 
Secretary for Energy is here, Catherine Zoi, and she will give 
the administration's perspective.
    [The prepared statement of Senator Corker follows:]

   Prepared Statement of Hon. Bob Corker, U.S. Senator From Tennessee

    Today's hearing on the proposed Home Star program brings to the 
forefront of our discussions the complexity of setting energy 
efficiency standards for windows, doors, and skylights. Since last 
year, I have supported a change in the criteria for the 25C tax credit 
to make it match the Energy Star 2010 criteria for windows, doors and 
skylights. And today, I am advocating for these Energy Star standards 
to be the criteria for the Home Star rebate program for these same 
products.
    As it stands today, there are some parts of the country where an 
Energy Star window would not be eligible for the 25C tax credit. This 
creates customer confusion, but more importantly does not achieve the 
goal of maximum energy efficiency. It is my understanding that the 
criteria under the 25C tax credit do not take regional climate 
differences into account. Therefore, windows that are more energy 
efficient in northern climates are not eligible for the tax credit, 
which means they would not be eligible under the Home Star legislation. 
The updated Energy Star criteria do, however, take these regional 
differences into account.
    If the goal of the Home Star legislation is to incentivize energy 
efficient products, it seems appropriate that we should coordinate the 
Energy Star criteria with the 25C tax credit and Home Star program. 
This will best serve customers by ensuring that windows that provide 
the greatest possible energy savings for a given climate are available 
for purchase and eligible for incentives.
    Senators Rockefeller and Grassley have introduced legislation that 
would accomplish this goal. I hope this commonsense approach will be 
passed into law, and I urge my colleagues to support it.

    Senator Murkowski, did you have comments before we turn to 
hear from our colleagues?
    Senator Murkowski. I do, Mr. Chairman. Thank you very much, 
I appreciate the hearing. We've got several interesting 
proposals that you have outlined for discussion this morning. I 
clearly recognize that the efficiency retrofits have been given 
an elevated profile due to some of the President's recent 
remarks. I'm eager to review the ideas that we have in front of 
us.
    It was about a year ago that we sat in this room and we 
talked about several proposals intended to improve building 
efficiency. The bill that we passed out of committee, the 
American Clean Energy Leadership Act, provides a myriad of 
incentives to encourage building owners to retrofit their 
buildings to make them more energy efficient, certainly, among 
other things.
    I continue to believe that the policies we put forward then 
make good sense. I'm also pleased that today we're moving the 
conversation forward, talking about the role of building 
efficiency through retrofit programs.
    Since the building efficiency hearing that we had last 
year, we have learned even more about the ever-important role 
that energy efficiency can play in reducing energy consumption, 
helping homeowners reduce their energy bills.
    We've also seen that sometimes, despite our best efforts, 
Federal initiatives don't always play out perhaps the way that 
we had intended.
    Just last week, we held a general oversight hearing on the 
stimulus funds that were awarded to the Department of Energy. 
DOE had received unprecedented levels of funding for measures 
to retrofit buildings and at the time indicated that the money 
would be spent and that hundreds of thousands of homes would be 
retrofitted in a timely and a targeted fashion. However, to 
date few homes have been weatherized with the stimulus money. 
Much of the money remains to be spent, even within the 
framework of the weatherization assistance program, which is 
more than 30 years old.
    So we've got to ask the question now, are we moving in that 
same direction? Are we falling into that same trap? To proceed 
with both a commercial and a residential retrofit plan 
estimated to cost more than $12 billion without accounting for 
lessons learned I think is a hazardous path.
    Now, it's my understanding when we talk about the Home Star 
this is intended to be a part of the package to create jobs, 
which is good. It's clearly also an efficiency measure, which 
is extremely important. I have some concerns that I will raise 
in my questions about the do-it-yourself provision or perhaps 
the lack of it in the draft.
    When I left home this morning, Mr. Chairman, my husband was 
just finishing the sheet rock in the little office that we've 
been building out, and did the insulation yesterday. He's 
restoring a historic home and doing a great job of it, does it 
day in and day out. So the question that I have to ask is does 
this meet the Vern standard? When we talk about the necessity 
to create jobs, that's very important. But I think we also want 
to do what we can to encourage individuals to on their own 
build these efficiencies into their home like we're doing in 
our house. So I'm going to be looking for that this morning.
    I look forward to hearing comments from my colleagues and 
to the testimony from the others. Thank you.
    The Chairman. Thank you very much.
    We'll start today hearing from Senator Warner, who's been a 
real champion for this Home Star proposal from the inception of 
the idea, and then from Senator Merkley, who has been 
championing that, but also the Building Star proposal. We're 
anxious to hear both of them. So Senator Warner, go right 
ahead.

          STATEMENT OF HON. MARK WARNER, U.S. SENATOR 
                         FROM VIRGINIA

    Senator Warner. Thank you, Mr. Chairman and Ranking Member 
Murkowski, Senator Burr. I appreciate the opportunity to appear 
before the committee and I want to echo what the chairman's 
already said and thank my colleague and friend Jeff Merkley for 
his work on this issue of Home Star as well. I'm not going to 
get into all of the specifics of the proposal. I know your 
later panel will. But a couple of just kind of data points.
    One, this is a proposal we've been working with your staff 
on and the administration on and colleagues for a number of 
months. I want to particularly thank the chairman and 
specifically members of his staff, like Deborah Estes and Bob 
Simon, for their hard work on this. I want to thank the Home 
Star Coalition, which has assembled a bipartisan group of 
business, labor, and environmental groups, retailers and 
manufacturers. I think they've done a tremendous job in kind of 
working through a proposal that I think really will have 2 
effects. One is to create jobs very quickly, but also help us 
move toward that national goal of more energy efficiency.
    I've got some comments I want to make, but I think it's 
really important that right at the outset that I--at least my 2 
cents in terms of Senator Murkowski's I think very appropriate 
question she asked. I, like probably most members and clearly 
as Senator Murkowski just mentioned, I'm just really concerned 
about the slow ramp-up on the weatherization program and how 
much DOE missed its numbers.
    Even at the most sympathetic view of their numbers, they're 
still 20, 30,000 homes short in terms of 2009.
    I do think--and I think the later panel will go into this, 
although I'd be happy to answer to the level of my knowledge 
questions. What were the lessons learned in terms of the long 
rulemaking process that took place to kind of expand the 
weatherization program, the fact that it was mostly run through 
government entities, whereas the Home Star initiative is going 
to be much more focused on using the private sector.
    I think there are a lot of lessons learned from 
weatherization that are not going to take place in the Home 
Star initiative. I commend the folks at DOE, the White House, 
and again all of the individuals from the Home Star Coalition 
who have been working on this to kind of get it right this 
time, because if we do move forward on this area and we then 
take 6, 9, 12 months to implement it, it makes no sense at all, 
number 1.
    No. 2, I didn't start here, but I have been convinced 
through this process that the do-it-yourself folks ought to be 
included in this proposal, and that it makes more sense. We've 
got to have an audit trail on that and an accountability 
function so that we're not using these potential valuable 
certificates in ways that work is not being done.
    But I think we have worked and are still working and would 
welcome all of my colleagues' input on how we get it right so 
that do-it-yourselfers can be included in this initiative.
    Just a couple other quick points. One, we've made enormous 
progress on gaining business support. I want to thank the 
Edison Electric Institute, which represents 75 percent of the 
ratepayers in this country. All 84 of their CEOs have signed on 
to the Home Star legislation and are advocates for this 
initiative.
    I've got some other good news that I shared a little bit 
with the chairman yesterday, but actually now can confirm. I 
had a good conversation with, Senator Stabinow, your former 
Governor, John Engler, last night and the National Association 
of Manufacturers have now endorsed the Home Star initiative as 
well. We look forward to working with them and I think we're 
going to have a number of other business groups working on 
this.
    This is a bipartisan effort as well. Senator Graham has 
been working with us in our office as we try to kind of get 
some of these very valid concerns right, how do we get this 
implemented quickly, how do we make sure there's an audit 
trail, how do we make sure the do-it-yourselfers are included. 
I look forward to continuing work with him. I know I've had 
conversations with Senator Burr and other colleagues on the 
Republican side of the aisle to really make this a business, 
job-creating, hopefully no-brainer proposal. At some point 
we've got to make sure it's paid for, but I think we're making 
great, great progress.
    Again, the statistics we all know. I think this is a 
wonderful area, not just in terms of short-term job creation, 
but long-term job creation as well. I was blessed to be 
involved in the wireless industry in the 1980s and the 
telecommunications revolution in the 1980s and then the 
Internet in the 1990s. So I'm a telcom and IT guy. But when I 
get a chance to talk to business folks these days, if I'm 
talking to a business school I would say the place to be in 
terms of job creation, of wealth creation over the next 25 
years, I think is going to be the energy sector more than any 
other sector globally.
    Right now we're not in the leadership role. China's eating 
our lunch. They may not be signing onto, although I guess they 
did sign on the other day to a variation on Copenhagen--they 
may not be signing onto all of the international accords, but 
they have made the policy choices, not only around retrofit, 
but around nuclear, around solar, wind, carbon sequestration, 
and they have made the business choice that this is where they 
are investing their policy choices and resources, and I think 
at our own peril if we don't act quickly.
    As a matter of fact, they're investing ten times more as a 
percentage of GDP on energy and energy R and D and next 
generation energy solutions than this country. That should be a 
stunning statistic to us.
    Home Star--and again, the next panel will go through the 
specific details on how the certificates will take place and 
the audit trails. But it will create jobs almost immediately. 
We estimate about 150,000 new jobs. I think we can retrofit 
about 3 million new homes. The construction industry, as we all 
know in our States, is probably the industry that has been most 
hard hit during this recession, 25 percent unemployment in the 
construction work force.
    Unlike the weatherization program, this does not push these 
resources and these channels through government programs. It 
uses the private sector, some of our large-box retailers and 
others, working with the folks in the contracting side to get 
this out in an efficient way.
    I think beyond the job creation fact, consumers will see 
long-term benefits as well. It's been estimated that over the 
next decade if we put this program in place it will actually 
save consumers about $9.5 billion off of their utility bills. 
My hope is that this will be kind of a jump-start. It will be 
targeted and timely. I don't envision this being a long-term 
program, but if we can use this initiative to jump-start this 
retrofit industry at the home level and, as Senator Merkley 
will outline, at the construction level, and then wean 
ourselves off the program, but as people see these benefits, 
this could have enormous long-term impact.
    While there is some risk involved, I think, as a former 
venture capitalist, this is a risk and the up side is so great 
that I believe it requires serious consideration. I hope we'll 
get the bipartisan support it needs. It will clearly create 
jobs in the hard-hit industry of construction. It will do a 
great job, I think, in terms of moving us toward more energy 
efficiency, and this is the area where we ought to be able to 
find that common ground and get it done and get it done 
quickly.
    So, Mr. Chairman, again I thank you and the members of your 
committee for your leadership on this issue, and look forward 
to working with you and making sure we get all the kinks worked 
out and seeing if we can move aggressively and quickly on this 
item.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Merkley, go right ahead.

         STATEMENT OF HON. JEFF MERKLEY, U.S. SENATOR 
                          FROM OREGON

    Senator Merkley. Thank you very much, Mr. Chair and members 
of the committee, for the chance to testify on Building Star, 
and I want to thank the Rebuilding America Coalition, now more 
than 60 manufacturers strong. I'll submit the list for the 
record if that would be suitable. But manufacturers, contractor 
groups, financial service companies, efficiency advocates, and 
so on and so forth.
    So many people are touched by seeking energy efficiency in 
our buildings. As the chair noted, buildings are approximately 
40 percent of our energy use. Half of that is in the 
residential side and half is on the building side. So these 
twin programs here are going forward to tackle and capitalize 
on the opportunities in both locations.
    The types of work that would be done are envelope 
insulation, mechanical insulation, windows, window films, 
doors, HVAC equipment, chillers, water heaters, boilers, 
variable speed drives for motors, which can very much enhance 
energy efficiency, energy audits, commissioning energy 
management and monitoring in larger buildings.
    So much can be done to be smart with energy, and being 
smart on energy is smart for our economy. The type of impact 
we're talking about is, in parallel, 150,000 jobs on the 
residential side, 150,000 jobs on the commercial side. We would 
leveraging on the commercial buildings an $18 billion private 
sector investment.
    The energy saved would equal 33, 300-megawatt power plants. 
I think that's a phenomenal number, 33, 300-megawatt power 
plants. The emissions saved would be equal to the emissions of 
4 million cars. That's on the commercial side, very parallel to 
the residential side.
    Some of the things I want to highlight: What is the impact 
on small business? More than 90 percent of the construction 
firms employ fewer than 20 people and more than 60 percent of 
the manufacturers that create the materials and equipment for 
retrofits employ fewer than 20 people. So these are key small 
businesses scattered throughout our communities across this 
Nation. Because commercial buildings are found everywhere, even 
in smaller towns, we are talking about something that impacts 
both urban and rural economies, which is I think something very 
valuable in this effort to take on the challenge to our current 
economy.
    I also want to note that the savings to small businesses 
really mount up. One modeling exercise estimates that if a 
restaurant cuts its energy costs by 20 percent its profits rise 
by 30 percent, because energy is a very significant factor in 
the pro forma for our small businesses.
    The structure is both rebates, up-front discounts, totaling 
up to 30 percent of the cost, and then low-cost financing. 
These 2 things work in parallel. The low-cost financing will 
stretch our tax dollars further, get more bang for the buck in 
terms of job creations and actual projects and energy savings.
    Then I'd like to touch on a piece of this, including the 
fact that the vision is to take advantage of structures that 
are already in place, community bank lending, State programs, 
city programs, county programs, take advantage of on-bill 
financing. One of those is the PACE program, which is the 
Property-Assessed Clean Energy program, so that people, or in 
this case businesses, can actually have the loan paid through 
their property bills, making it convenient. That convenience 
has come back to us as a key factor in helping people overcome 
that up-front hurdle.
    Two factors--one, the up-front costs and the rebates and 
the low-cost lending--address that up-front cost, and then the 
convenience factor. So I think both are important and very 
parallel to the residential side.
    So I just want to conclude by saying, one, thank you, 
Senator Stabenow, for being a co-sponsor to the bill, and I 
encourage other folks to get involved. I think this is very 
much the type of smart effort that should be, could be a 
bipartisan, bicameral effort to put people back to work, to 
save energy, and to be good stewards of our environment.
    Thank you, Mr. Chair.
    The Chairman. Thank both of you for your testimony. It's 
very helpful. Thanks for your advocacy of these 2 pieces of 
legislation. So we'll allow you to go on to your other 
obligations and start in with--I think our first witness will 
be the CRS representative, Paul Parfomak, who is a specialist 
in energy and infrastructure, and he's going to give us a short 
seminar on how this Home Star program in particular would work. 
Then we will go on to Catherine Zoi, who is the Assistant 
Secretary for Energy Efficiency and Renewable Energy, and then 
to our second panel.
    Dr. Parfomak, why don't you go right ahead. Is that the 
right pronunciation?

STATEMENT OF PAUL W. PARFOMAK, PH.D., SPECIALIST IN ENERGY AND 
     INFRASTRUCTURE POLICY, CONGRESSIONAL RESEARCH SERVICE

    Mr. Parfomak. It's ``PARR-fo-MACK.''
    The Chairman. ``PARR-fo-MACK.''
    Mr. Parfomak. We're the only ones in the world, so you 
wouldn't have heard it before.
    The Chairman. Yes, it's not a name I hear a lot in New 
Mexico. But go right ahead.
    Mr. Parfomak. Good morning, Chairman Bingaman, Ranking 
Member Murkowski, and members of the committee. My name is Paul 
Parfomak, Specialist in Energy and Infrastructure Policy at the 
Congressional Research Service. CRS appreciates the opportunity 
to testify here today about the proposed Home Star retrofit 
rebate program.
    The Home Star program may present a significant opportunity 
for both energy efficiency and employment. The program targets 
one of the largest sources of cost-effective energy savings in 
the United States. It also builds on prior experience with 
residential energy programs, offering operating models that may 
be replicated nationwide. However, the program also contains 
untested elements and has very aggressive goals.
    As Congress reviews Home Star, it may be useful to further 
consider 4 key aspects of the program: the 2-tiered rebate 
structure, rebate aggregation, technical standards, and 
expectations for program participation.
    Home Star would employ 2 tiers of efficiency rebates. Its 
Silver Star program would offer up to $3,000 per home in 
prescriptive rebates. The Gold Star program would offer higher 
rebates for more comprehensive energy retrofits, but would 
require simulation modeling and documentation of actual energy 
savings before rebates would be paid.
    Because Silver Star is simply, involves no simulation, no 
savings documentation nor performance risk, it may be more 
attractive to contractors than Gold Star. If homes participate 
only in Silver Star, some of their inefficiency might become 
locked in because more complex measures would become less cost 
effective once the low-hanging fruit of Silver Star measures 
were taken. Such cream-skimming behavior could affect the 
distribution of expenditures within Home Star and limit its 
impact on the energy efficiency of the Nation's housing stock.
    Home Star's rebate aggregation function aims to ensure 
timely processing and payment of rebates. For similar national-
scale programs, such functions typically are performed by 
professional fulfillment companies, which focus exclusively on 
rebate transactions, offering quick execution and economies of 
scale. The Home Star proposal differs from this approach by 
extending rebate aggregation to a range of providers and 
assigning to them responsibility for quality assurance.
    Given multiple providers with inherently different starting 
capabilities, the Home Star program may face challenges 
ensuring speedy development and consistent delivery of these 
services. Any limitation or inconsistency in Home Star's rebate 
fulfillment could reduce the program's effectiveness.
    Congress also may wish to examine how Home Star's technical 
standards may influence how quickly the program may be 
implemented. For example, Home Star's inclusion of multiple 
widely used home simulation software packages may facilitate 
contractor participation since many contractors may already be 
skilled in the use of one or more of these software programs, 
but it may also complicate efforts at quality control because 
differences in the format, content, or transferability of 
information across these software programs may become a 
problem.
    By comparison, Home Star's training requirements appear 
somewhat less inclusive since they do not explicitly authorize 
certain established weatherization training standards. If Home 
Star contractors believe they face redundant, time-consuming, 
or costly training requirements, they may forego training 
certification altogether, undermining the purpose of having 
training standards in the first place.
    Home Star also may face challenges achieving the high 
levels of homeowner participation implied by its funding. 
Assuming full expenditure of its appropriations in the first 2 
years, based on our estimates total participation would be 
nearly 2 million homes. By comparison, the Department of 
Energy's weatherization assistance program reached 2 million 
homes after 15 years. Over its first 9 years, New York's home 
performance with Energy Star program, which is similar to Gold 
Star, reached approximately three-quarters of a percent of 
targeted homes. Achieving this enrollment rate across the 
entire United States would yield approximately 728,000 
participants.
    These comparisons suggest that the level of homeowner 
participation implied by Home Star's rebate funding levels 
would far exceed that achieved by comparable programs in their 
initial years.
    In conclusion, the Home Star proposal may offer a 
significant opportunity to improve residential energy 
efficiency and increase related employment, but it may be 
difficult to implement quickly on a national scale. Achieving 
the program's high expectations for homeowner participation 
would be unprecedented. Its 2-tiered structure, rebate 
aggregation function, and technical standards may present 
unanticipated obstacles to speedy and consistent 
implementation.
    As Congress further examines the Home Star proposal, 
focusing on tradeoffs between rapid deployment, operational 
complexity, and energy savings may be important. Balancing the 
two goals of short-term job creation and long-term energy 
efficiency could be an ongoing challenge.
    Thank you for the opportunity to appear before the 
committee. I'll be happy to address any questions.
    [The prepared statement of Mr. Parfomak follows:]
Prepared Statement of Paul W. Parfomak, Ph.D., Specialist in Energy and 
         Infrastructure Policy, Congressional Research Service


    Good morning Chairman Bingaman, Ranking Member Murkowski, and 
Members of the Committee. My name is Paul Parfomak, Specialist in 
Energy and Infrastructure Policy at the Congressional Research Service 
(CRS). CRS appreciates the opportunity to testify here today about the 
proposed Home Star Retrofit Rebate program detailed in the Majority 
Staff Draft provided to the service on March 2, 2010. This testimony 
discusses CRS's initial perspectives on the Home Star proposal, 
focusing primarily on operational and energy-efficiency aspects of the 
program. In accordance with its enabling statutes, CRS takes no 
position on this or any other legislation.

                              INTRODUCTION

    The Home Star program is intended to achieve significant energy-
efficiency improvements in American homes while generating new 
employment opportunities in the home remodeling, energy services, and 
related manufacturing industries. The program targets the residential 
sector, which numerous studies have shown to be among the largest 
sources of cost-effective energy-efficiency opportunity in the United 
States.\1\ The program seeks to build on prior experience with both 
federal and state energy-efficiency programs to provide operating 
templates that may be replicated nationwide.
---------------------------------------------------------------------------
    \1\ See, for example: McKinsey & Company, Unlocking Energy 
Efficiency in the U.S. Economy, July 2009, p. 10; National Academy of 
Sciences, Real Prospects for Energy Efficiency in the United States, 
National Academies Press, 2010, pp. 31-84.
---------------------------------------------------------------------------
    While the proposed Home Star program may present a significant 
opportunity for both energy-efficiency and employment--it also contains 
untested operational elements and has set aggressive goals for 
homeowner participation. CRS has identified four key considerations 
which may warrant further attention as Congress reviews the Home Star 
program. They are the two-tiered rebate structure, rebate aggregation, 
technical standards, and overall expectations for program 
participation.

                      TWO-TIERED REBATE STRUCTURE

    Home Star's choice of direct consumer rebates over tax credits and 
other forms of incentive seeks to promote home efficiency retrofits as 
quickly as possible. The program would employ a two-tiered structure 
for energy-efficiency rebates. Its Silver Star program tier would 
provide up to $3,000 per home in prescriptive rebates for 
straightforward home upgrades, including insulation, efficient HVAC 
units, new windows and other measures. The Gold Star program tier would 
offer $3,000 rebates for more comprehensive energy retrofits achieving 
at least 20% energy savings, with rebates increasing up to $8,000 per 
home for retrofits achieving 45% energy savings. The Silver Star 
rebates would be paid automatically upon job completion and submission 
of a rebate request. In contrast, Gold Star rebates would require 
``testing out'' to document actual energy savings before rebates would 
be paid.
    While Home Star's two-tiered structure offers a mechanism to 
capture the highest levels of energy savings from very inefficient 
homes, Congress may examine whether this structure may unintentionally 
discourage energy-efficiency investments due to ``cream skimming.'' 
Cream skimming of energy-efficiency opportunities, ``in which 
relatively certain (but relatively shallow) energy savings 
opportunities are selected in favor of more promising but more complex 
and uncertain measures'' has long been documented as a challenge to 
efficiency retrofits in buildings.\2\ Because the Silver Star rebates 
are simple, require no simulation or testing capabilities, require no 
post-installation performance documentation, and involve no risk of 
underperformance, they may be substantially more attractive to general 
contractors than Gold Star rebates. Many contractors with no additional 
training could begin work under the Silver Star program immediately. 
Financially constrained homeowners might also prefer the Silver Star 
program because it would require less investment and less risk on their 
part. Consequently, Home Star may experience lower-than-anticipated 
participation in the Gold Star program.
---------------------------------------------------------------------------
    \2\ Evan Mills, Steve Kromer,Gary Weiss, and Paul A. Mathew, ``From 
Volatility To Value: Analysing And Managing Financial And Performance 
Risk In Energy Savings Projects,'' Energy Policy, Vol. 34, No. 2, 
January 2006, p.191.
---------------------------------------------------------------------------
    To the extent that homes are highly inefficient, but participate 
only in Silver Star rebates, some of their energy inefficiency might 
become locked in because the measures would become less cost-effective 
to address later, after the lower-hanging fruit of Silver Star measures 
have been implemented. Such behavior, if it materializes under the Home 
Star program, might not impact the overall number of jobs associated 
with the program as a whole, but it could have important implications 
for the distribution of expenditures within the program, the immediate 
capture of energy savings, and its ultimate impact on the long-term 
energy-efficiency of the nation's housing stock.

                      REBATE AGGREGATION PROVIDERS

    Rebate aggregation is a critical function of the Home Star program 
which aims to ensure the timely approval, processing, and payment of 
rebates to participating contractors. For similar national-scale rebate 
programs, such functions typically would be performed by professional 
rebate fulfillment companies using specialized Internet interfaces, 
administrative protocols, and data management systems to meet a range 
of operating requirements for various rebate program partners. Such 
fulfillment companies focus exclusively on rebate transactions and 
offer the advantages of quick execution, economies of scale, and the 
ability to adapt existing capabilities to accommodate new rebate 
programs. The Home Star program proposal differs from this approach by 
extending rebate aggregator eligibility to a much wider range of 
potential providers, including existing energy efficiency programs, 
utilities, and quality assurance provider networks. Furthermore, in 
addition to a purely transactional function, it appears that the 
program's rebate aggregators will be responsible for management and 
reporting of quality assurance inspections.
    Given the range of providers with inherently different starting 
capabilities potentially eligible to serve as rebate aggregators, the 
Home Star program may face challenges ensuring speedy development and 
consistent delivery of these services for all contractors who seek 
them. Congress may wish to ensure that the program's quality assurance 
obligations do not deter professional rebate fulfillment companies from 
applying to serve Home Star. Such obligations may lie outside the scope 
of services they provide and may raise concerns about quality-related 
liability. Home Star's rebate aggregation provisions may therefore have 
the unintended consequence of discouraging direct participation by 
professional providers. Such companies potentially could partner with 
quality assurance providers to provide aggregation services, but 
establishing such relationships might be time consuming and could 
result in complicated rebate and quality assurance processes. Any 
limitation or inconsistency in the administration of the program's 
rebate fulfillment functions could create transactional bottlenecks or 
confusion among contractors and thereby reduce Home Star's overall 
market effectiveness.

                          TECHNICAL STANDARDS

    Congress may wish to examine how the Home Star program's technical 
standards requirements may influence the speed and breadth with which 
the program might be implemented. For programs like Home Star, 
technical standards can help to ensure home services are provided at an 
appropriate level of quality and consistency across numerous 
contracting companies. The selection of particular standards for 
inclusion in the program also may determine which contractors initially 
will be eligible to participate in the program and what home energy 
information they will be able to provide for the purposes of program 
management and evaluation. Consequently, the choice of standards 
influences both the complexity of program deployment and its 
administrative needs.
    Home Star's requirements for whole home simulation software to be 
used by contractors include (explicitly or by reference) software 
packages authorized by the Department of Energy's Weatherization 
Assistance Program, the Internal Revenue Service, and equivalent 
programs certified by states. These programs include various versions 
of EnergyPro, MICROPAS, EnergyGauge, REM/Rate, and other software 
packages. By adopting these widely used home simulation software 
packages, Home Star intends to facilitate contractor participation, 
since many are already skilled in the use of one or more of these 
software programs. From an administrative perspective, however, 
approving multiple software programs and versions on a national scale 
may also complicate efforts at quality control because of differences 
in the format, content, or transferability of home simulation 
information. Such differences also may make comparisons of buildings 
and contractors participating in Home Star more difficult.
    Contractors who satisfy Home Star's training certification 
standards would face less frequent quality inspection than uncertified 
contractors. For certification, the program specifically authorizes 
existing skills standards established by the Building Performance 
Institute (BPI), North American Technician Excellence, and the 
Laborers' International Union of North America (LIUNA). Unlike the home 
simulation software requirements, however, there are other training 
standards in widespread use that are not initially approved for Home 
Star certification. One notable exclusion, for example, is training by 
the Home Builders Institute (HBI), the workforce development affiliate 
of the National Association of Home Builders (NAHB), which is one of 
eight National Training Contractors for the Department of Labor's Job 
Corps program. The Institute bases its home energy training curriculum 
on the National Green Building Standard, jointly developed by the NAHB 
and the International Code Council.
    It is beyond the capacity of CRS to evaluate or recommend any 
particular technical standard. Nonetheless, it is worth noting that the 
National Green Building Standard has been accredited by the American 
National Standards Institute (ANSI), while the BPI standard is still in 
the process of ANSI accreditation.\3\ It may be that the HBI curriculum 
could eventually be authorized for Home Star under provisions proposed 
for ``other standards'' if approved by the Secretary of Energy, in 
consultation with the Secretary of Labor and the Environmental 
Protection Agency (EPA) Administrator. However, the Home Star proposal 
offers no process or specific criteria for such approval. As a result, 
contractors with HBI training and seeking Home Star certification may 
need to undertake additional, potentially redundant, training or wait 
for the program to accept HBI standards. Retraining or certification 
delays may put them at a competitive disadvantage.
---------------------------------------------------------------------------
    \3\ The American National Standards Institute (ANSI) is a private, 
non-profit organization overseeing development of voluntary consensus 
standards for products, services, processes, systems, and personnel in 
the United States. ANSI also coordinates U.S. standards with 
international standards.
---------------------------------------------------------------------------
    Taken together, Home Star standards provisions for home simulation 
software and contractor certification illustrate the attempt to balance 
quick program execution against operational simplicity. If the proposal 
includes fewer standards, that might simplify program administration, 
but may put those contractors certified under an excluded program at a 
disadvantage; either additional training or more frequent inspections 
would be required. LIUNA's training curriculum for energy auditors, for 
example, requires seven weeks, and to date has been offered only in a 
few of the union's regional training centers.\4\ As the EPA's recent 
experience with residential contractor certification under its 2008 
lead rule demonstrates, such certification can be an unexpected 
bottleneck for program implementation. If contractors wishing to 
participate in Home Star believe they face time-consuming or costly 
training requirements, they may forgo certification altogether, 
accepting higher job inspection rates as an acceptable alternative. 
Such an outcome might undermine the intended purpose of the employee 
training standards--a more capable workforce, better contract work, and 
lower costs for quality control.
---------------------------------------------------------------------------
    \4\ Laborers' International Union of North America (LIUNA), 
``Weatherization Training Program,'' Brochure, 2010, 
www.liunabuildsamerica.org/files/
WeatherizationTrainingProgramBrochure.pdf; and LIUNA, ``Information for 
Prospective Trainees,'' Internet page, 2010, 
www.liunabuildsamerica.org/weatherize/trainees.
---------------------------------------------------------------------------
              HIGH EXPECTATIONS FOR PROGRAM PARTICIPATION

    In its first two years as a new federal energy-efficiency 
initiative, Home Star may face challenges achieving the high levels of 
homeowner participation implied by its level of appropriations. The 
Home Star proposal authorizes appropriations through FY2011 of $3.4 
billion for Silver Star rebates and $1.7 billion for Gold Star rebates. 
Assuming average Silver Star rebates of $2,000, this appropriation 
would fund 1.7 million Silver Star homes. Assuming average Gold Star 
rebates of $6,000, the appropriation would fund an additional 280,000 
Gold Star homes. Assuming full expenditure of the appropriated funds 
through 2010, and combining both Silver Star and Gold Star, total 
participation would be nearly 2 million homes in the first two years of 
the program or 1.6% of all U.S. residential housing units in 2008.
    Experience with programs similar to Home Star offers some 
perspective on the aggressiveness of these participation goals. For 
example, under the U.S. Department of Energy's Weatherization 
Assistance Program (WAP), home weatherization projects directly funded 
by the program reached approximately 2 million in 1992, 15 years after 
the program was initiated (Figure 1)*.\5\ The WAP program's peak year 
of annual participation was 1981, during which the program weatherized 
353,000 homes. The American Recovery and Reinvestment Act of 2009 
sharply increased funding for the WAP program and raised associated 
weatherization goals to 586,015 homes over the 3-year life of the act, 
but the program is not meeting these goals. Although weatherization 
rates under ARRA funding have accelerated in recent months, the 
Department of Energy's Inspector General reported last month that only 
30,297 of the planned 586,015 weatherization projects were completed by 
February 16, 2010.\6\
---------------------------------------------------------------------------
    * Figures 1 and 2 have been retained in committee files.
    \5\ The DOE estimates that approximately 2.8 million additional 
homes were weatherized through 2008 by state programs leveraging core 
weatherization funding from DOE.
    \6\ U.S. Department of Energy, Office of Inspector General, 
Progress in Implementing the Department of Energy's Weatherization 
Assistance Program Under the American Recovery and Reinvestment Act, 
OAS-RA-10-04, February 2010, Appendix II.
---------------------------------------------------------------------------
    New York's Home Performance with ENERGY STAR Program, which is 
similar in most respects to the Gold Star component of the Home Star 
program, served just under 30,000 homes over its first nine years of 
operation (Figure 2). This total represents 0.75% of the 4.0 million 
homes in New York potentially eligible for the program.\7\ Achieving 
this enrollment rate among the 97.1 million similar homes across the 
entire United States would yield approximately 728,000 program 
participants.
---------------------------------------------------------------------------
    \7\ U.S. Census Bureau, The 2010 Statistical Abstract, ``Table 
954--Housing Units by Units in Structure and State: 2007,'' 2010, 
http://www.census.gov/compendia/statab/2010/tables/10s0954.pdf. 
Potentially eligible homes are assumed to include 1-unit detached homes 
up to 4-unit attached homes. There are 5.2 million homes in these 
categories statewide in New York, but approximately 1.2 million homes 
are either ineligible for this program because they are in the service 
territory of the Long Island Power Authority, or are not targeted by 
the program for other reasons.
---------------------------------------------------------------------------
    Comparing participation rates expected for Home Star with those 
experienced by the WAP program or the Home Performance program in New 
York is only suggestive. There are significant differences in the 
structure of these programs as well as in their funding, target 
markets, and the time periods of their operation. In particular, it is 
possible that general economic conditions in the United States over the 
next few years may lead to comparatively higher or lower participation 
in Home Star than those realized by the WAP or New York programs. 
Nonetheless, these comparisons suggest that the level of homeowner 
participation implied by the rebate funding provisions in the Home Star 
proposal would far exceed that achieved by comparable programs in their 
initial years. Implementation experience and supporting infrastructure 
developed through the WAP program, Home Performance with ENERGY STAR, 
and similar state programs may help Home Star achieve higher market 
penetration more quickly than the earlier programs, but to what extent 
remains to be seen. Consequently, Congress may consider alternative 
options for Home Star program administration and funding if initial 
participation rates differ significantly from its initial goals.

                               CONCLUSION

    The proposed Home Star program may present a significant 
opportunity to improve residential energy-efficiency and increase 
related employment, but it contains a number of operational elements 
that have yet to be tested--and may be difficult to implement--on a 
national scale. Achieving the program's high expectation for homeowner 
participation also would be unprecedented. Taken together, Home Star's 
requirements for key operational elements such as its technical 
standards, two-tiered rebate structure, and rebate aggregation function 
may present unanticipated obstacles to speedy and consistent program 
implementation across the country. As Congress examines details of the 
Home Star proposal, focusing on tradeoffs between rapid implementation, 
operational complexity, and energy-efficiency impacts may be important. 
Balancing the twin goals of short term job creation and long-term 
investment in cost-effective energy savings could also be an ongoing 
challenge.
    Thank you for the opportunity to appear before the committee. I 
will be happy to address any questions you may have.

    The Chairman. Thank you very much for your testimony. I 
think it's very useful. I assume you can make yourself 
available to all committee members for expert advice on each of 
the points you've made, which would be very useful to us.
    But why don't--since we've got seven other witnesses, why 
don't we go ahead and ask the Assistant Secretary for the 
Department of Energy to come forward and give her testimony. 
Catherine Zoi is the Assistant Secretary for Energy Efficiency 
and Renewable Energy in the Department of Energy and we would 
like to hear her perspective on these proposals. Then we have a 
second panel with six additional witnesses after that.
    Go right ahead. Thank you for being here.

    STATEMENT OF CATHERINE ZOI, ASSISTANT SECRETARY, ENERGY 
     EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF ENERGY

    Ms. Zoi. Thank you for the invitation. Good morning, 
Chairman Bingaman, Ranking Member Murkowski, and distinguished 
members of the committee. Thanks for the opportunity to appear 
before you today. I will make my remarks brief this morning, 
and I have submitted a longer statement for the record, as you 
know.
    We have a tremendous opportunity right now to create jobs 
and save money for homeowners all across the country. There are 
approximately 130 million homes in the United States, very few 
of which are as efficient as they could be, although it sounds 
like Senator Murkowski's home might be becoming efficient right 
now. Almost all of these homes could benefit from additional 
insulation, caulking, upgraded HVAC systems, and other 
improvements. Just as critically, there's a work force standing 
by ready to make those improvements.
    The overall construction sector currently faces a 27 
percent unemployment rate. According to the Bureau of Labor 
Statistics, nearly 2 million construction jobs have been lost 
since December 2007. That's 2 million hardworking Americans who 
are ready and anxious to find ways to apply their skills to new 
jobs. With the home retrofit program, we can transform these 2 
challenges into an enormous opportunity, tapping worker skills 
and availability to help American families save money and 
energy.
    Americans are spending over $200 billion per year on 
energy, money that could pay for housing, tuition, or other 
basic necessities. As the President has said, if you saw $20 
bills flying out your window you would try to grab them. So 
let's try to make it easier for American families to prevent 
their hard-earned cash from flying out of leaky, inefficient 
homes while we create good-paying jobs for folks across the 
country.
    We can do just that through a home retrofit program like 
the one the President called for in his State of the Union. 
Last week the President outlined more details of what he has in 
mind for the Home Star program, including rebates delivered 
directly to consumers, $1,000 to $1,500 Silver Star rebates, 
$3,000 Gold Star rebates, oversight to ensure quality 
installations, and support for financing.
    Through this program, we can create tens of thousands of 
jobs while achieving substantial reductions in energy use. 
Consumers taking advantage of the program are likely to save 
between $200 and $500 per year in energy costs, while improving 
the comfort and the value of their homes.
    I want to thank the members of this committee and other 
Senators who have been working tirelessly on efforts to create 
legislative language that follows the President's vision. As 
the legislative process moves forward, we will continue to work 
with the committee on this bill until it is enacted. Today I'm 
glad the committee has convened a hearing and I'm happy to 
answer any questions regarding the Home Star proposal or how 
the Department would administer such a program were it to be 
signed into law.
    Additionally, I understand that we will also be discussing 
Senator Merkley's Building Star bill and Senator Tester's bill 
for homes built before 1976. While I plan to focus 
predominantly on the Home Star proposal, I'm happy to provide 
feedback on those other bills for the record.
    My goal as Assistant Secretary for Energy Efficiency and 
Renewable Energy is to harness the ingenuity and ability of the 
American work force to help families save energy and money. 
Retrofitting millions of American homes can truly transform 
energy consumption throughout the Nation while putting people 
to work. Last year Secretary Chu said that: ``In the next 
several decades, I believe that energy efficiency is our most 
powerful tool for reducing our carbon emissions and reducing 
our energy bills.'' Home energy retrofits could be critical to 
realizing both of those goals while supporting American job 
creation.
    Thanks again for the opportunity to testify and I will 
gladly answer your questions.
    [The prepared statement of Ms. Zoi follows:]

   Prepared Statement of Catherine Zoi, Assistant Secretary, Energy 
         Efficiency and Renewable Energy, Department of Energy

    Good morning Chairman Bingaman, Ranking Member Murkowski, and 
distinguished members of the Committee. Thank you for the opportunity 
to appear before you today. I consider it an honor to lead the 
Administration's efforts to advance and deploy energy efficiency and 
renewable energy solutions at this historic time. As this Committee 
knows, we are in a moment of time that poses great challenges and 
opportunities in the energy field. I am excited about the opportunity 
to harness ideas and innovation to ensure our economic security, 
national security, and environmental security. Despite challenges, I am 
optimistic about the future and in particular about the areas where the 
Administration and Congress can work together to meet the Nation's 
energy challenges.
    With tremendous support from Congress, both through the American 
Recovery and Reinvestment Act of 2009 (Recovery Act) and annual 
appropriations, we are transforming the clean energy landscape in the 
United States. In the Office of Energy Efficiency and Renewable Energy 
(EERE) alone, we are investing more than $16 billion in Recovery Act 
funding toward projects ranging from geothermal demonstrations in 
Alaska, New Mexico, and Utah to electric drive component manufacturing 
in Fargo, North Dakota, to large wind turbine blade testing in Boston, 
and the development of biorefineries in Ohio, Oregon, and elsewhere, 
and much more. These programs are creating jobs with investments in 56 
states and U.S. Territories to encourage deployment of a full range of 
renewable energy sources and energy savings measures. In addition, EERE 
has provided support to the Department of the Treasury for $2.3 billion 
of grants in lieu of tax credits for projects that are expected to 
deploy more than 4 gigawatts of renewable energy, and another $2.3 
billion in tax credits to domestic manufacturers of clean energy 
products.
    In addition to investing in renewable technologies, EERE is 
engaging in a full court press on energy efficiency. As Secretary Chu 
is fond of saying, energy efficiency isn't just low-hanging fruit; it's 
fruit lying on the ground. By reducing our energy consumption, we can 
create and support clean energy jobs, reduce our reliance on foreign 
sources of energy and reduce greenhouse gas (GHG) emissions while 
saving money on the energy bills of everyday Americans.

                         HOME ENERGY RETROFITS

    As you know, one of the best opportunities for energy efficiency is 
right in our own homes. Home energy retrofits can be a win-win-win. 
Consumers can win by cutting their utility bills and saving money, 
while getting a healthier, more comfortable living space for their 
families. Communities, employers, and employees can win by creating 
good jobs in the retrofit industry and at manufacturers that produce 
energy efficiency products, spurring the local economy and putting 
people back to work. The Nation can win by creating jobs, reducing our 
reliance on energy from foreign sources, reducing our carbon emissions, 
and slowing the effects of climate change.
    There are approximately 130 million homes in the United States. 
These homes account for about 33 percent of the Nation's total 
electricity demand\1\ and consume approximately 22 percent of the 
Nation's energy\2\ while generating 21 percent of the Nation's overall 
carbon footprint.\3\ Roughly half of these homes were built before 
1973, long before modern residential building codes came into 
effect.\4\ With so many older homes, and with advances in building 
technologies, there is a tremendous opportunity to upgrade home energy 
efficiency by insulating; caulking; improving heating, ventilation, and 
air conditioning equipment (HVAC); tightening the building envelope; 
and adding other energy efficiency improvements. Existing techniques 
and technologies can reduce energy use by up to 40 percent per home and 
reduce associated GHG emissions by up to 160 million metric tons by 
2020.\5\
---------------------------------------------------------------------------
    \1\ Percentage derived from figures in the Annual Energy Review. 
Energy Information Administration. http://www.eia.doe.gov/aer/txt/
ptb0201a.html. February 2010.
    \2\ Percentage derived from figures in the Annual Energy Review. 
Energy Information Administration. http://www.eia.doe.gov/aer/txt/
ptb0201a.html. February 2010.
    \3\ Pew Center on Global Climate Change. Climate Change 101: 
Technological Solutions. January 2009.
    \4\ Energy Information Administration. Residential Energy 
Consumption Survey 2005: Home Energy Uses and Costs. http://
www.eia.doe.gov/emeu/recs/
    \5\ President's Middle Class Task Force and Council on 
Environmental Quality. Recovery Through Retrofit report. October 2009.
---------------------------------------------------------------------------
    This vast potential for savings can be tapped only with a strong, 
well-trained American work force. The overall construction sector 
currently faces a 27.1 percent unemployment rate.\6\ Insulation-blowing 
trucks are standing idle, and many construction workers are anxious to 
find ways to apply their skills to new jobs. At the same time, 
Americans are paying over $200 billion per year in energy costs--money 
that could pay for housing, tuition, or other basic necessities.\7\ As 
the President has said, if you saw $20 bills flying out your window, 
you would try to grab them. So let's try to make it easier for American 
families to prevent their hard-earned cash from flying out the doors, 
windows, and ceilings of inefficient homes.
---------------------------------------------------------------------------
    \6\ United States Bureau of Labor Statistics. Industries at a 
Glance: Construction: NAICS23. March 5, 2010. http://www.bls.gov/iag/
tgs/iag23.htm
    \7\ Energy Information Administration. Residential Energy 
Consumption Survey 2005: Home Energy Uses and Costs. http://
www.eia.doe.gov/emeu/recs/recs2005/c&e/summary/pdf/tableus5.pdf
---------------------------------------------------------------------------
                               CHALLENGES

    To realize job creation, energy savings, and environmental 
benefits, making energy retrofits must be easier for homeowners. Three 
key barriers prevent Americans from taking advantage of cost-effective 
retrofits to their homes: difficulty finding information about which 
retrofit upgrades are best for their home; difficulty covering the up 
front cost of these investments; and difficulty finding knowledgeable, 
skilled workers.\8\
---------------------------------------------------------------------------
    \8\ McKinsey & Company. Unlocking Energy Efficiency in the U.S. 
Economy. July 2009.
---------------------------------------------------------------------------
    These three barriers were outlined in the Recovery Through Retrofit 
strategy document released by Vice President Biden's Middle Class Task 
Force. In close collaboration with other agencies, DOE is pursuing a 
comprehensive approach to address these three barriers, which includes:

   The creation of a home energy performance labeling system in 
        collaboration with the Recovery Through Retrofit to provide 
        consumers with building energy information;
   The expansion of rebate programs and appropriate financing 
        mechanisms to provide homeowners with access to affordable 
        mechanisms to cover the up front cost of energy efficiency 
        improvements; and
   The establishment of voluntary national standards for 
        retrofit workforce training and certification to help protect 
        consumers.

                     DEPARTMENTAL RETROFIT SUPPORT

    The inter-agency Recovery Through Retrofit initiative, coordinated 
by the President's Council on Environmental Quality, seeks to lay the 
groundwork for a self-sustaining home energy efficiency retrofit 
industry. Additionally, the Department actively supports home energy 
retrofits in other ways, including a new Retrofit Ramp-Up program and 
the ongoing Weatherization Assistance and State Energy Programs.
    The Retrofit Ramp-Up program, the competitive portion of the Energy 
Efficiency and Conservation Block Grant program funded through the 
Recovery Act, could deliver important energy and monetary savings to 
communities that win awards. However, its greatest impact may be in 
demonstrating sustainable, replicable business models that other 
communities across the Nation can copy so that they can also drive job 
creation and energy savings in their own areas. The lessons learned 
from these projects--both successes and challenges--could enable the 
rest of the Nation to ramp up its energy efficiency efforts, 
fundamentally transforming the way the U.S. consumes energy.
    DOE will soon award up to $390 million of Recovery Act funds for 
this program, targeting whole-neighborhood building retrofits. The 
Department's goal is to fund projects demonstrating models for 
providing cost-effective energy upgrades for a large percentage of the 
residential, commercial, and public buildings in communities. EERE 
received a large volume of excellent proposals, far more than we will 
be able to fund. There is no shortage of good ideas or enthusiasm, and 
we hope to leverage the Recovery through Retrofit experience into a 
long term model where communities can sustain the efforts to retrofit 
whole blocks at a time.
    The Weatherization Assistance Program is currently retrofitting 
thousands of homes each month, utilizing $5 billion of Recovery Act 
funds and $210 million from Fiscal Year 2010 appropriations. This 
program primarily reaches low-income families, the elderly and the 
disabled, helping those with significant financial need save money on 
their energy bills.
    Some states are using portions of the $3.1 billion in Recovery Act 
funds allocated to the State Energy Program to create revolving loans 
funds that finance the deployment of energy efficiency technologies and 
support long lasting job creation.

                           CURRENT PROPOSALS

    During the State of the Union, the President called on Congress to 
pass a program of incentives for homeowners who make energy efficiency 
investments in their homes. Last week, the President outlined more 
details of a new ``HOMESTAR'' program that would help create jobs by 
encouraging American families to invest in energy saving home 
improvements.
    Key components of the HOMESTAR Program include:

   Rebates delivered directly to consumers: Like the Cash for 
        Clunkers program, consumers would be eligible for direct 
        HOMESTAR rebates at the point of sale for a variety of energy-
        saving investments in their homes. A broad array of vendors, 
        from small independent building material dealers, large 
        national home improvement chains, energy efficiency 
        installation professionals and utilities (including rural 
        utilities) would market the rebates, provide them directly to 
        consumers and then be reimbursed by the Federal Government. The 
        rebates would also be marketed by the Environmental Protection 
        Agency and trade associations whose member contractors 
        participate in the program.
   $1,000--$1,500 Silver Star Rebates: Consumers looking to 
        have simple upgrades performed in their homes would be eligible 
        for 50% rebates up to $1,000--$1,500 for doing any of a 
        straightforward set of upgrades, including: insulation, duct 
        sealing, water heaters, HVAC units, windows and doors. Under 
        Silver Star, consumers can chose a combination of upgrades for 
        rebates up to a maximum of $3,000 per home. Rebates would be 
        limited to the most energy efficient categories of upgrades--
        focusing on products made primarily in the United States and 
        installed by certified contractors.
   $3000 Gold Star Rebates: Consumers interested in more 
        comprehensive energy retrofits would be eligible for a $3,000 
        rebate for a whole home energy audit and subsequent retrofit 
        tailored to achieve a 20% energy savings in their homes. 
        Consumers could receive additional rebate amounts up to $8,000 
        for energy savings in excess of 20%. Gold Star would build on 
        existing whole home retrofit programs, like the Environmental 
        Protection Agency's successful Home Performance with Energy 
        Star program.
   Oversight to Ensure Quality Installations: The program would 
        require that contractors be certified to perform efficiency 
        installations. Independent quality assurance providers would 
        conduct field inspections after work is completed to ensure 
        proper installation so consumers receive energy savings from 
        their upgrades.
   Support for financing: The program would include support to 
        State governments to provide financing options for consumers 
        seeking to make efficiency investments in their homes. This 
        will help ensure that consumers can afford to make these 
        investments.

    The program may result in the creation of tens of thousands of jobs 
while achieving substantial reductions in energy use--up to the 
equivalent of the entire output of three 500 megawatt coal-fired power 
plants each year. Consumers in the program are anticipated to save 
between $200--$500 per year in energy costs, while improving the 
comfort and value of their homes.
    I am sincerely grateful to the members of this Committee and other 
Senators who have been working tirelessly on efforts to create 
legislative language that is consistent with the President's vision. I 
believe they have done a tremendous job turning a concept into 
language, and I have the utmost admiration for them and their staffs. 
As the legislative process moves forward, we will continue to work with 
the Committee on this bill until it is enacted.
    I am happy to answer any questions members of this Committee may 
have regarding the proposal or how the Department would administer such 
a program were it to be signed into law.
    Additionally, I understand that a panel later today will also 
examine S. 3079, Senator Merkley's ``Building Star'' bill, and S. 1320, 
a bill introduced by Senator Tester for homes built before 1976. As I 
mentioned earlier in my testimony, both commercial buildings and older 
homes are major challenges in terms of energy efficiency, and I salute 
these Senators for their efforts to find solutions. While I plan to 
focus on the Home Star proposal today, I am happy to provide feedback 
on these additional proposals for the record.

                               CONCLUSION

    Retrofitting millions of American homes may truly transform energy 
consumption throughout the Nation. It may also put people to work in 
good, domestic jobs while saving Americans money and enabling 
significant contributions toward GHG emissions reduction targets. 
Public investments can lay the foundation for a vibrant private-sector 
led retrofit industry. Workers can get trained and certified, small 
contractors can grow their businesses, and millions can save money on 
their energy bills.
    On October 19, 2009, Secretary Chu stated, ``In the next several 
decades, I believe that energy efficiency is our most powerful tool for 
reducing our carbon emissions and reducing our energy bills.'' Home 
energy retrofits could be critical to realizing both of those goals, 
while supporting American job creation. I thank the Committee for its 
hard work on energy efficiency and specifically in crafting the 
legislative proposal being considered today. I sincerely hope I have 
the opportunity to implement this program soon with the aim of 
achieving our interconnected goals of creating good clean energy jobs, 
reducing our reliance on foreign sources of energy, and reducing our 
greenhouse gas emissions.
    Thank you again for the opportunity to testify on this topic. I 
will gladly answer your questions.

    The Chairman. Thank you for being here.
    Let me start with a couple of questions. One of the issues 
that I think we need to just be aware of, we've got in place a 
variety of tax incentives to encourage--we've got some to 
encourage alternative energy production in your home, if you 
want to put solar panels on or a geothermal heat pump, for 
example, and there are other examples. We have other, less 
generous tax incentives if you want to pursue energy efficiency 
in your home, or at least that's my general understanding of 
where things are.
    I think this proposal, this Home Star proposal, 
contemplates that a person, an individual homeowner, would have 
to choose: Do you want to take advantage of those tax 
incentives or do I instead want to participate in this rebate 
program under the Home Star? I'm just wondering how you think 
people would come down in making those judgments as you see it?
    Ms. Zoi. The way the program is structured or is 
contemplated is that the rebates are available for the eligible 
list of measures. Those are generous, point-of-sale rebates 
that would be taken advantage of. If those same measures are 
eligible under the 25 [c] tax code, you cannot double-count or 
double dip for the same technology.
    The Chairman. Right.
    Ms. Zoi. If, however, you take advantage of the rebate 
program for, say, a new efficient furnace, but decide to do a 
ground source heat pump or a set of solar panels under the tax 
code, that is allowable. So what we don't want is to have 
double dipping for the same technology, and the rebate program 
as proposed is structured to be generous enough so that you 
would actually bump up against the ceiling for that set of 
technologies.
    The Chairman. OK. How would something like a geothermal 
heat pump fit into that? if a person was thinking that would be 
a way to reduce my energy bill, how would they benefit either 
through the Home Star program or the tax credits in that 
regard?
    Ms. Zoi. I'm a geologist and I'm a big fan of ground source 
heat pumps. It's a fantastic technology. As you know, the 
ground source heat pumps are eligible under 25 [c] and they 
would be----
    The Chairman. I think they're eligible for an uncapped tax 
credit.
    Ms. Zoi. For the Silver Star program, they are a higher 
capital cost item than most of the eligible technologies that 
have been identified for the Silver Star program. But they 
would be a logical fit conceivably for the Gold Star program, 
which has a higher ceiling. But again, we'd probably want to 
make sure that if you reached your ceiling on the ground source 
heat pump in the Home Star rebate program that it would be 
counted against or offset with the tax program.
    The Chairman. Dr. Parfomak was making a point there about 
this 2-tiered rebate structure. I think he diplomatically 
suggested that the Silver Star part of this thing would detract 
from the overall impact of it some way or other because people 
would--that's the low-hanging fruit and people would choose 
that and not do some of the other things. Is that--what's your 
understanding of that concern and whether it's a valid one?
    Ms. Zoi. I'm really excited about the way we've structured 
this program, because I think it elegantly combines the things 
that are simple and straightforward, that consumers can 
immediately go and purchase without a home energy audit, that 
make good economic sense for them measure-by-measure, that will 
create jobs immediately, will put construction workers back to 
work immediately, that with the more sophisticated Gold Star 
program that involves a bigger capital investment and a more 
sophisticated modeling approach. It involves a bigger appetite 
for doing the whole home at once and will take more time and 
more money.
    I actually think that because this program is designed to 
be both a jobs program and an energy efficiency program, we're 
in a good spot.
    Second, in terms of the cream-skimming, I would say that 
the measures that have been chosen and identified for Silver 
Star in no way can be construed as cream-skimming. Eighty 
percent of American homes are either uninsulated or 
underinsulated. That's something that we need to take advantage 
of right now, and you could do that through the Silver Star 
program--furnace upgrades, the variety of measures that are on 
that list.
    So I would actually take issue with that. I don't think 
that's cream-skimming. I think those are measures that are 
going to create jobs and save American homeowners money 
immediately.
    The Chairman. Senator Murkowski.
    Senator Murkowski. So to meet my Vern standard, how can we 
with the proposal that we have in front of us, how do we deal 
with the do-it-yourself individual who's working to bring about 
those efficiencies within their home, but as I read through the 
proposal we really don't allow for that level of participation; 
am I correct?
    Ms. Zoi. The current proposal does not allow that.
    Senator Murkowski. Why the decision to go that direction?
    Ms. Zoi. Again, I think it's because the purpose of the 
bill is 2-fold. One is to create jobs immediately; and second 
is to make homes energy efficieny. Regarding job creation--
because the measures that are eligible have an installation 
component that's significant, you'll note that white goods, for 
example, that can just be plugged in are not part of the Home 
Star proposal because there is very little labor content.
    It wasn't what was originally contemplated. I think Senator 
Warner's suggestion is that he's open to thinking about that. 
The administration will be as well. But the original idea was 
to have this focus on the job creation that comes with the 
installation of the particular goods.
    Senator Murkowski. But that job creation is--that's kind of 
the immediate opportunity, if you will. I think if we're 
looking at this program and the value that we're really going 
to be gaining long-term, it is that we are creating greater 
efficiencies within our homes and commercial properties for a 
long, long time to come.
    So my question is how we can do more to help incent those 
to do right within their own home as they're working their 
remodeling projects?
    Ms. Zoi. It is an important issue. The other piece that we 
have been very mindful of is oversight and quality assurance. 
So to the extent that we add a DIY component to the 
legislation, what we need to be sure of is that the projects 
are actually getting installed in the homeowner's homes 
themselves, that it's not someone buying a whole bunch of 
insulation to store in a warehouse somewhere.
    We at the DOE are very, very mindful of waste, fraud, and 
abuse, not that DIYs would, but we need to set up a system to 
ensure----
    Senator Murkowski. There has to be some kind of----
    Ms. Zoi [continuing]. That the taxpayer money is getting 
invested appropriately.
    Senator Murkowski. I would agree with that and I think 
Senator Warner recognized that as well.
    I think one of the things that, as I looked through the 
legislation itself, I looked at it and I thought, boy, is this 
getting more complicated and more onerous just in terms of how 
the process would come together. I think when we put together 
programs such as what we're looking at with Home Star, you want 
it to be somewhat expedient, easy to use, the user-friendly 
type of an approach.
    I've heard from some that they're really quite concerned 
that we've got a creation of bureaucracy that's going to make 
this more complicated. I'd like you to address that.
    I'd also like you to address the comment from Dr. Parfomak 
about the high expectations that we clearly have within this 
program in terms of how many homes can actually be retrofitted. 
He seemed to suggest that we are overly, overly ambitious with 
this and that--he didn't say that we needed to narrow the 
expectations, but I think it was pretty clear he didn't think 
that it was achievable.
    Can you comment on both?
    Ms. Zoi. Sure. With respect to if we have concocted a 
structure that's overly complicated from a bureaucratic 
standpoint, what we've tried to do is the antithesis of that. 
This program is closer to the Cash for Clunkers, single point 
rebate processing system than it is to the other efficiency 
programs that the DOE currently administers through States and 
local governments and everything else.
    So what we envision is by establishing this notion of a 
rebate aggregator, there are thousands and thousands of 
contractors across the country who are working with or for 
utilities, big box retailers, independent sort of regionally 
based energy efficiency companies. Those contractors are 
certified, licensed, and bonded. Those entities will do the 
work when a customer asks for it. Once the work's done, that 
gets submitted to a rebate aggregator, who basically does the 
quality control for us.
    Senator Murkowski. Does DOE currently use a rebate 
aggregator for any of the other programs that you operate?
    Ms. Zoi. No, this is actually a brand new concept. Again, 
because we're standing up something from scratch, we have the 
capacity to design a system that we think will really work.
    Now, the rebate aggregators are network specialists. 
They're sector specialists. For example, Lowe's and Home Depot 
have vast arrays of contractors that work for them. They know 
them, they're used to this. So the idea of setting up sector 
specialists that can aggregate the rebates so that when a 
reimbursement request is submitted to the Department of Energy 
basically we have a business-to-business relationship with 
those folks. Rather than dealing with thousands and thousands 
of contractors across this country and cutting checks and 
making sure that the quality assurance is undertaken, we are 
dealing with a couple of hundred rebate aggregators who are 
sector specialists. We're actually really excited about that.
    Senator Murkowski. These already exist, the rebate 
aggregators?
    Ms. Zoi. We've invented this name for them. But sure.
    Senator Murkowski. But I mean, are these new jobs that 
we're creating? Is this a whole new program that we're 
creating? Or are there rebate aggregator systems that are in 
existence now?
    Ms. Zoi. There are functions that are undertaken by 
utilities that currently run rebate programs, by State 
governments that currently run Home Performance with Energy 
Star programs, by big box retailers, and by contractors who are 
operating regionally across the country. So those sorts of 
activities exist. Where they're supervising a variety of 
contractors, they subcontract out, they collect the data, they 
get reimbursed. So yes, that's a familiar function.
    What we're overlaying on top of it is an incentive for 
consumers to get active and invest in energy efficiency savings 
in their home. So we think that we've got a structure on the 
rebate aggregator side that is the antithesis of bureaucracy. 
It's actually streamlined, with experts who understand the 
field.
    The second part of it is standing up a quality assurance 
scheme, which is again very, very important to us. If we're 
investing the taxpayer money, we want to know that the 
investments are actually yielding the results that the statute 
prescribes. So we want to work with the States, who are closer 
to the building home inspection industry, to oversee the 
quality assurance piece of this.
    So again, we think that we've got a streamlined structure 
that is very, very different than the typical programs that 
have been administered out of the Department of Energy through 
the Recovery Act and otherwise.
    To your second question on the ambition on numbers, one of 
the things that we're most excited about is harnessing the 
marketing potential of the private sector players. The programs 
that the previous witness, Mr. Parfomak, talked about that had 
been going along at a particular level, we've never had the 
marketing machinery behind those programs. We have not had, 
historically, the amount of investment and the attention. We 
also obviously have leadership in Washington that's talking a 
lot about this.
    We have an appetite for energy efficiency, and I've been in 
the arena for 18 years. It's almost revolutionary, the amount 
of appetite that I've seen increase over the past couple of 
years.
    So I think that we may be ambitious on numbers, but they 
are ambitious and achievable. But as you'll note, the 
legislation also allows for if the money does not get invested 
the money goes back to the Treasury.
    The Chairman. Thank you, Mr. Chairman.
    The Chairman. Senator Stabenow.
    Senator Stabenow. Thank you very much. Thank you, Mr. 
Chairman, very much.
    Welcome. It's great to see us talking about something that 
will both create jobs and also focuses on some very important 
goals of energy efficiency, saving money. I'm a very strong 
supporter of both Home Star and Building Star and I want to see 
both of these go forward.
    I want to talk a little bit more in terms of administration 
because, as the Senate author of Cash for Clunkers, I was 
deeply, on a daily basis, involved after we passed it in terms 
of what was happening to reimburse our dealers and to make this 
work. So I guess I have a couple of questions.
    That is, when we talk about, particularly if we're talking 
about Home Star or Building Star, they have to have timely 
reimbursement to businesses, particularly when we're talking 
about small businesses. It's going to be important for 
widespread participation to know that this is something that is 
very timely back to the business. This will be--I will just--
that's my advice to you at this point. This is going to be 
very, very important.
    Secondly, we've got to make sure we're promoting the high 
quality of work so that we're instilling confidence in the 
potential of home retrofits to capture real energy savings and 
reduce homeowners' energy bills, so that they are seeing that 
actually happen, so again people will use that program.
    So I wonder if you might speak to that in terms of the 
current discussion draft. Do you think it adequately addresses 
both of those things, and particularly a system that will allow 
that timely reimbursement, which is going to be critical from a 
cash-flow standpoint for businesses to be able to participate?
    Ms. Zoi. Yes, absolutely. Thank you for the questions, 
Senator Stabenow. The administration shares your total 
commitment to timely reimbursement. What we have constructed is 
something that dovetails existing systems of how contractors 
work with the people to whom they contract. The rebate happens 
right at the point of sale for the consumer, so that's 
instantaneous.
    As soon as the work gets done, which is what we envision, 
the contractor submits the rebate form. We will have given them 
a template. We will say we need these fields of information 
filled out, and it will probably a dozen things: Is it an 
eligible technology? Where was the work done? Where was the 
customer, and the signature of the customer.
    That gets submitted to a rebate aggregator. These rebate 
aggregators will have systems to pull all this together. On a 
weekly basis, it will get submitted to the Department of 
Energy, where we will have a system that processes those 
rebates, and then the checks will be sent out.
    So we have a system that we think might even be faster than 
what contractors in the field, at the coal face, are actually 
used to. That's absolutely what we have in mind. These are 
going to be small contractors that are doing this work and it's 
very, very important that they're not hanging out there with 
month on month delays of getting the money back. So that's sort 
of the first thing.
    On the work quality, again we are completely committed to 
ensuring that there is a quality program. That's one of the 
reasons that we're excited about having this rebate aggregator 
concept. If you just had a professional rebate fulfillment 
house aggregating these things, and it was not aware of some of 
the ins and outs of what happens when you actually have a 
retrofit that gets done, what it is like to insulate a home, 
what certifications you need to have to connect a heat pump 
water heater, then we would be a little less comfortable. But 
by constructing a situation where there are a couple hundred 
rebate aggregators who are basically managing their networks, 
then we feel comfortable that--and having a list of criteria--
in order to perform Silver Star, you have to be licensed, 
bonded, and warranted. In order to do Gold Star, you have to 
have Building Performance Institute certification or some other 
certification that the Secretary deems is appropriate. We feel 
like we are going to have good quality work that gets done.
    Even so, as you know, the program includes a quality 
assurance scheme where 20 percent of the jobs that get done get 
field audited. Again, that's very, very important to us to 
create the comfort in the consumers that this is a good program 
that's going to be reliable and that's going to save them 
money.
    Senator Stabenow. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Burr.
    Senator Burr. Welcome, Secretary Zoi. Thank you for your 
insight on this.
    Let me ask very candidly, with the right structure does the 
Department of Energy support a DIY option?
    Ms. Zoi. I think that the answer for the moment would be 
for us to work with the committee on that, because, as I say, 
it would be less about the near-term jobs then.
    Senator Burr. I realize I asked a little more pointedly 
than Senator Murkowski asked. But let me assure you--and I'm 
only speaking for one member of the Senate--if DIY is not part 
of this program, then I don't see how I could support this 
program, even consider it. It's beyond any comprehension that 
I've got as to how we could leave that segment of the 
marketplace out of a program if in fact the intent is to make a 
program successful.
    Ms. Zoi. We would want to work with you on the provisions 
that we discussed a little earlier with Senator Murkowski, 
making sure that the quality control is there, that the 
oversight is appropriate.
    Senator Burr. Share with me, if you will, since we have an 
Energy Star program, why are some of the Energy Star products 
excluded from this Home Star program?
    Ms. Zoi. The Home Star program is designed to get efficient 
technologies into people's homes quickly. Some of the Energy 
Star standards, levels of what is eligible for Energy Star, are 
being reviewed right now and they probably need to be upgraded 
and updated. At the moment the industry got together, again a 
bipartisan group from industry and from the environmental 
community and energy efficiency advocates, and came up with a 
level for each of the technologies that, in some cases, is 
beyond what Energy Star is, just because Energy Star has a bit 
of catch-up to do.
    Senator Burr. Let me go back to your statement. You said 
repeatedly: We've got to make this simple and understandable. 
We now have over a decade, if not 2 decades, of driving Energy 
Star product into the American people, and now you're saying: 
Oh, I'm sorry, that Energy Star product is not going to be 
included because it doesn't meet the new standard that we've 
set to be included in this program.
    I think that just contributes to I think what CRS said, 
that we've got a grandiose goal that we're shooting for and a 
historical understanding that we're not going to get there. 
I've not sure that we've met the threshold of simple and 
understandable if in fact we use definitions that are common 
with the American people and we say, well, no, that's not the 
definition we're using any more, this is now a new standard 
that we've set, and you should feel OK because everybody's 
agreed to it. I just say that as a precautionary thing.
    The Home Star proposal authorizes $6 billion for the 
program. Of that $6 billion, how much is targeted for the 
administrative costs of the program?
    Ms. Zoi. I don't know that number off the top of my head. 
Do you know the answer?
    Senator Burr. I'm told it's $600 million.
    Ms. Zoi. OK.
    Senator Burr. I find that to be incredibly high.
    For the rebate aggregators, do you know what the average 
reimbursement would be for processing of a claim by a rebate 
aggregator?
    Ms. Zoi. I think the current proposed legislation has $25 
per transaction.
    Senator Burr. I'm told that in the marketplace that can be 
done for $1.50.
    Ms. Zoi. That's something that we can look at.
    Senator Burr. I'm trying to ask the appropriate questions 
that are going to be asked as this legislation moves through.
    Now, you're targeted in this to--and I want to get a 
clarification--create 168,000 jobs. Is that create or is that 
create or save?
    Ms. Zoi. The administration has not been terribly specific 
on the precise number of jobs created. We say tens of thousands 
of jobs will be created. The 168,000 figure I think has come 
from the Home Star Coalition.
    Senator Burr. From the Home care----
    Ms. Zoi. Yes. So I think maybe one of the future witnesses 
could talk about what the methodology they used to come up with 
that number.
    Senator Burr. OK. If I told you that that was $35,714 per 
job, would you think that that's probably high?
    Ms. Zoi. Interestingly, what we're finding in the 
weatherization assistance program that, at the moment, it's 
about $42,000 per job. The average----
    Senator Burr. Given the number of houses that we've 
weatherized, I could find that to be possible.
    Ms. Zoi. Actually, can I take a moment and talk about where 
we are on weatherization?
    Senator Burr. Sure. We went through a hearing the other day 
and I walked away from that just as confused as I was when I 
went in.
    Ms. Zoi. All right. I actually would love to take a moment 
with it because, while the program has been slow to get going, 
the Congress allocated 25 times the budget that the 
weatherization program had ever had in the past. So there were 
obviously going to be ramp-up and scale-up issues. In addition, 
there were the new Davis-Bacon provisions that had to be worked 
out.
    So the weatherization structure is that the Department of 
Energy allocates money on a formula basis to the States and the 
States then allocate the money to 900 community action agencies 
to do the weatherization work. During the summer and autumn 
months in 2009, essentially what most of those community action 
agencies did was that they staffed up, they trained new people, 
and they bought equipment.
    In the last quarter of 2009, we tripled the number of homes 
that were done during that quarter. Our target is to get 
between 20,000 and 30,000 homes a month to meet the President's 
objectives. In December we were up at about 7,000. In January 
we were up at between 15,000 and 17,000. This is not the 
official audited reports. This is why I have to be a little bit 
vague. So we actually had jumped. We were on the proverbial 
hockey stick to meet our targets.
    The community action agencies--and I just spoke to them at 
their gathering in Washington last week--they are quite certain 
that they will be able to meet their targets, their State-based 
production targets, some time in the March-April time frame.
    So it has been slow to start. Nobody is happy about that. 
But, it has turned a corner, and I think that we will, by March 
2012, meet the President's objective of weatherizing about 
600,000 low-income people's homes.
    Senator Burr. I appreciate that and I think, knowing the 
community action agencies like I do, I don't think that theirs 
was a hesitation to start the program. It was waiting for the 
Department of Energy to put the rules and the regulations 
together.
    I look at another program that lacks the clarity right now 
for me to be assured that we're going to go out and this is 
going to be a growth curve like this, even if the retailers 
believe it. I'm happy to support it if I think it will work. 
But they don't have any skin in the game, so they're going to 
be supportive of anything. I hope you will take to heart the 3 
things that I mentioned: the DIY----
    Ms. Zoi. Yes.
    Senator Burr [continuing]. The Energy Star inclusion, and 
the confusion that that will send; and what I think is an 
unacceptable 10 percent devoted to administrative costs in a 
program that, as CRS said, the more complicated you get it, the 
more difficult it is for a customer to understand it, the less 
participation you're going to have. Even if it was perfect, his 
estimate was that we fall woefully short of what the target is.
    I thank you.
    Ms. Zoi. If I could just qualify the $600 million, because 
I've just been passed a note which has the actual breakdown. 
That $600 million is not just the Federal Government 
administration. It also includes $200 million that goes to 
States for financing and the quality assurance functions and 
the marketing and education functions that happen. So part of 
it is administration and part of it is those other very 
important pots of money.
    The Chairman. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    Thank you to Assistant Secretary Zoi for being here today. 
Let me just reaffirm what you had to say about the impact that 
the weatherization program is having across the country. I 
visited a number of sites in New Hampshire. I've seen the 
savings that families are realizing and the benefits to the 
quality of their lives and their homes because they're more 
efficient, and have talked to some of the people who are 
working now because of that program. So it's been a big 
success, and obviously we have a lot more to do. Fortunately, 
the number of homes that are being retrofitted are going up 
every month.
    I would like to add a caution to follow up on Senator 
Stabenow because, as we've discussed, one of the concerns that 
we've heard from the CAP agencies has been around the clarity 
of rules governing the program. I think we all appreciate the 
need for accountability, but the rules of the road need to be 
very clear at the outset so that people know what they're 
getting into and know how they have to respond.
    So I would just urge as part of this program that that be 
very well thought out and clear, so that they're not changed in 
the middle of the program and there's no ambiguity about it.
    Let me also say that, because New Hampshire has a higher 
than national average share of individual homes and dwellings, 
that a program like this is particularly important to our 
State. I'm very happy that biomass and wood pellet appliances 
are included in the proposal. That's something that we care a 
lot about in New Hampshire.
    My question is that, I understand that EPA maintains a list 
of wood and pellet stoves that are based on emissions. One of 
the things that I think people are interested in as they're 
thinking about this program is how to be as efficient as 
possible. So the efficiency of those wood stoves and appliances 
are going to be very important to people. Are you envisioning 
that DOE will maintain some sort of rating on the efficiency on 
these kinds of appliances or has any thought been given to that 
and how can we accomplish that, so that people will have that 
information as they go to buy their wood stove or appliance?
    Ms. Zoi. I think our expectation is that the list of 
eligible appliances is written down in the statute and that we 
would formalize that in a rule with more specificity. But what 
we would really like is to give the Secretary the discretion 
over 6 months to adjust those if the market circumstances 
change, just to determine if there is an efficiency adjustment 
that needs to take place.
    Senator Shaheen. My concern is not so much that there be 
those adjustments, but that whatever is available is 
transparent to the public so they can get that list, so they 
know what they're buying, just as if they go out and buy a 
refrigerator they know what the efficiency is on that 
appliance.
    Ms. Zoi. Absolutely. I think what we need to do is make it 
easy for consumers to understand what's eligible under Home 
Star.
    Senator Shaheen. Thank you.
    Let me just also address another issue, because I know the 
hope is that Home Star can be part of the look at how we get 
this economy moving going forward and any kind of a jobs bill. 
One of the other areas that I think is very important is 
looking at how we address efficiency in public buildings, 
because that's a huge energy use. I know that the energy 
efficiency and conservation block grant program has been slow, 
relatively slow to get up and running. It's my understanding 
that now we've turned a corner and that we are getting money 
out the doors. Is that something that you would agree with?
    Ms. Zoi. Yes, absolutely. We've got 1,200 activities that 
are already under way and, hand on heart, we will clear out the 
backlog this quarter, because I share your commitment to 
getting the money out the door in EECBG.
    Senator Shaheen. You agree that this is another way that we 
can put people to work, that we can save on energy costs, and 
that we in most cases can help communities and school 
districts, because they're the big users of energy in those 
public buildings.
    Ms. Zoi. Absolutely. The list of projects that are under 
way already through EECBG and SEP covers schools, public 
libraries, a variety of public buildings. Again, it's going to 
create jobs, and it's going to reduce the burden of energy 
bills for local governments, which is incredibly important.
    Senator Shaheen. Absolutely. I'm hopeful that as we proceed 
with this effort that we can include public buildings also as 
part of those energy efficiency savings. I'm certainly willing 
to work with the Department as we figure out how to do that.
    Ms. Zoi. Great. Thank you.
    Senator Shaheen. Thank you.
    The Chairman. Senator Risch.
    Senator Risch. Thank you.
    Just briefly, I can tell you that the home weatherization 
program's well up and running in Idaho. It was slow getting 
going, like it was everywhere else. Apparently they were 
complaining about having to fight the Davis-Bacon battle, and 
once they got that behind them they're off and running.
    I was a little bit surprised that the average saving--and 
they told me what it was and it's in my mind right now, but I 
don't want to quote it because I'm not exactly certain. But I 
remember being a bit surprised that the average annual saving 
was as low as it was on a residence. Particularly with the kind 
of structures that they're working on, it would have seemed to 
me that the savings would have been a lot more, particularly 
with the amount of the investment.
    Go ahead.
    Ms. Zoi. If I may, the tricky part with the low-income is 
that sometimes the energy savings aren't as much as you might 
have thought because now--it's almost a lifeline comfort thing. 
People were not using energy and it was actually a health 
issue. So now when they have an efficient home, it's more 
efficient than it would have been otherwise, but it's a 
comfortable home.
    Senator Risch. That makes perfect sense. But anyway, that's 
something you might want to--if it was private industry doing 
it, I have no doubt that they would keep a very close eye on 
what that efficiency is.
    So thank you so much for what you're doing.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Sanders.
    Senator Sanders. Thank you very much, Mr. Chairman.
    Let me begin by just thanking you for working with our 
office to include financing support in the Home Star program. 
We appreciate that very much.
    Ms. Zoi, thanks very much for being with us. Let me begin 
by saying that, Mr. Chairman, I'm glad that we're focusing on 
energy efficiency because as we transform our energy system 
probably the most important thing that we can do is make this 
Nation a lot more energy efficient. I'm very proud to say--and 
I argue with Barbara Boxer about this a bit, but we think 
Vermont may in fact be leading the country in that direction.
    Having said that--and the results of that is that, with our 
economy not being any worse off than other economies in the 
recession, we are now--our major utilities now sell less 
electricity in Vermont than they used to. So the potential for 
energy efficiency is extraordinary, and I'm glad that we are 
focusing on it. I think we've got a long way to go.
    I would pick up from Senator Risch's point about what he's 
seeing in Idaho, we're seeing in Vermont, the weatherization 
program being very, very valuable. I don't remember the numbers 
as well, but I think they're higher in Vermont than what you 
were quoting. I was just in Berry, Vermont, where they've hired 
a number of people. They have a long waiting list. People are 
now getting their homes--and I think they're able now to put 
more money, do a more comprehensive weatherization approach 
than they used to. The results in my memory is 20 or 30 percent 
cuts in people's energy consumption.
    For every dollar we spend on that, I think in terms of job 
creation, in terms of cutting greenhouse gas emissions, in 
terms of saving fuel, I think it's a dollar very, very well 
spent. So I would hope, Mr. Chairman, that we can fight as hard 
as we can to put money in weatherization. That is clearly I 
think one of the most cost-effective Federal programs that 
exists.
    Ms. Zoi, could you talk a little bit about the potential of 
the Home Star concept and say a few words about how you see the 
Department of Energy working with us on that?
    Ms. Zoi. We think that there's a unique opportunity to 
quickly re-employ construction workers, contractors, idle 
folks, that know how to do these things, but have never focused 
on the energy efficiency sector per se, with a longstanding 
opportunity to make our homes in America more efficient.
    There are 130 million homes in America and, as I said at 
the beginning, few of them are actually as efficient as they 
could be. Almost every one of us has an energy efficiency 
opportunity. But it's been a little bit of a pain in the neck 
to take advantage of some of those things.
    What this program does is it makes it easy for consumers--
through point-of-sale rebates--to obtain technologies that are 
tried and tested, using skilled labor to get those things 
installed. It's just the beginning of a transformation that I 
think will take hold. This is a burst that will create a sector 
that will continue to do this after the program is gone. At 
least that's our hope.
    Senator Sanders. We agree with you, and thanks for your 
support. We're interested also in the PACE concept. Actually, 
my city in Burlington just in March Meeting Day a few weeks ago 
passed language to go forward on that, I think one of a dozen 
cities in America that's doing that.
    What I like about it, Mr. Chairman, is here you have a 
situation where many people want to improve their homes in 
terms of sustainable energy or energy efficiency. They don't 
have the up-front capital, they don't have the $10,000 or 
$15,000 that they need to make that transformation. If they did 
have it, they would save money over a period of years, just not 
having that initial amount of money.
    So if we can get that money to them and have that paid off 
over a period of years in property taxes or paid off in 
electric bills, they would be able to do the work.
    So all that I want to say is I am a very--I think we are at 
the cusp of transforming our energy system. Energy efficiency 
is at the heart of that. Sustainable energy is at the heart of 
that. I think, as the President has indicated many times, this 
can be an enormous step forward for our economy in creating 
millions of good-paying jobs, not importing oil from abroad, 
not wasting energy.
    So we look forward to working with you and we thank you for 
what you're doing.
    Ms. Zoi. Thank you.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman. I thank you and the 
ranking member for holding this important hearing.
    If I might, if hopefully I'm not going to transgress the 
committee rules, I'd like to acknowledge Tom Plant, who's in 
the audience, who heads Governor Ritter and the State of 
Colorado's Energy Office. Ms. Zoi, I think you know Mr. Plant 
and you know what a great advocate he's been of putting people 
to work in just the ways that you and Senator Sanders just 
discussed.
    I agree with all of the comments that have been made that 
this is such an opportunity for us, and of course the cheapest 
ton of coal, the cheapest barrel of oil, the cheapest megawatt, 
is the one you don't use. I think frugality and conservation 
have long been an America value, particularly in the great 
State of Vermont and the great State of New Hampshire--the 
Yankee spirit of doing more with less.
    Your efforts are very, very important, and we are waiting 
for further resources to enter the pipeline and take advantage 
of what I think is a pent-up demand, frankly. I hear it all the 
time from my constituents. There are a lot of small businesses 
that are poised to go to work.
    In that spirit, I want to ask a little bit about the Water 
Sense concept and the Water Sense label and certification 
process, which would save water, particularly in a place like 
the West, where water's the most precious commodity we have. 
Have you done any studies on what we could save as a country in 
terms of energy, water, even pollutants that are avoided, if we 
had a serious sustained effort to retrofit our buildings with 
water efficient products, such as Water Sense?
    Ms. Zoi. That's an excellent question, and the 
administration is obviously committed to not just energy 
conservation, but water conservation as well. I would have to 
get back to you on that. I don't know that the Department of 
Energy has done a study to link the energy savings with the 
water savings in any particular way. But that's an answerable 
question that I will find out and will get back to you.
    Senator Udall. I was just in a skyscraper in New York City 
last week. I won't mention the owner. But it had been remodeled 
significantly, a very tall building, and with some very 
interesting water collection systems, reusing the rain water as 
grey water, then eventually putting it into the city's waste 
water treatment systems. But they avoided a lot of runoff from 
storms, and we know the problems that are associated with that, 
and it was a net energy reduction. It was also a net cost 
reduction for this skyscraper. It was really exciting to see.
    Ms. Zoi. At the other end of the spectrum, not a Manhattan 
skyscraper but in a low-income weatherization program, water-
saving features are part and parcel to what we do. So shower 
heads that actually conserve water means conserving the heat 
that it takes to heat excess water, and then aerators for the 
faucets. Those are just standard measures that get installed in 
low-income people's homes during the weatherization program.
    Senator Udall. I even saw an almost science fiction-like 
technology the Japanese use where they actually capture the 
little bit of energy that results from water flowing through 
the toilet itself. So I think that that is perhaps science 
fiction at this point in time, but every bit of energy we can 
harvest after we capture it we understand is meaningful.
    Let me turn to the National Renewable Energy Lab as the 
clock continues to run. The gap between science and applied 
research needed to bring energy efficiency technology to the 
marketplace at speed and scale is really the focus of the work 
there. I know you see that as an important goal. Thank you for 
your support of NREL. Of course we're very proud to have it in 
Colorado. I hope you've had a chance to visit.
    Ms. Zoi. Of course I have.
    Senator Udall. I hope you'll come back.
    We also with the NREL model have in Colorado and I know 
other States, I know the State of Michigan--Senator Stabenow 
speaks powerfully and passionately about what they're doing in 
Michigan--have created these collaborative efforts between labs 
and universities and industry. What more can we do? What are 
you doing at DOE to create and promote that kind of an 
approach?
    Ms. Zoi. Under Secretary Chu's leadership we are pushing 
for collaborative research efforts. He often harkens back to 
his experience at Bell Labs, which was sort of an under one 
roof scientists coming together of multidisciplines. His notion 
of the hubs is very much about capitalizing on lab research, 
university research, and applications, and getting things into 
the marketplace more quickly.
    So we are very, very excited about that. All of the 
solicitations that I have been involved in since coming to the 
Department 7 months ago have basically tried to find the best 
and the brightest from labs and from universities, so we are no 
longer just focusing on one single sector to get the best 
outcomes.
    I think it's right from the top of the Department to say, 
let's get the best, let's get labs, let's get everybody working 
together. ARPA-E has some joint work between labs and 
businesses, which again should compress that time it takes 
normally to get from discovery to marketplace.
    Senator Udall. I don't know why I'm doing this because I 
have no voters in all these States I'm mentioning, but I also 
acknowledge that Senator Bingaman and Senator Murkowski have 
great efforts under way in their States, which thank God for 
federalism and hopefully the Federal Government will begin to 
lead again, too, in the near future as we look at a 
comprehensive energy bill, hopefully a price on carbon that 
will emerge from the Senate.
    Ms. Zoi. Absolutely.
    Senator Udall. Thank you.
    The Chairman. Let me just ask members. We have another 
panel of six witnesses here and I would go to those, unless 
someone has a burning question they need to ask the Secretary 
that we haven't.
    Senator Murkowski. Mr. Chairman.
    The Chairman. Yes, go ahead.
    Senator Murkowski. I have a whole series of questions, but 
in the interest of time and knowing that we do have a full 
panel, I'll just submit those to Ms. Zoi. Thank you.
    The Chairman. Thank you very much for being here and 
testifying and your advocacy for this set of proposals. We 
appreciate it.
    Ms. Zoi. Thank you.
    The Chairman. The second panel is--let me introduce the 
folks. It'll be: Larry Laseter, who is President of Masco Home 
Services in Atlanta, Georgia; Stacey Epperson, who is Executive 
Director of Frontier Housing in Morehead, Kentucky; Jeffrey 
DeBoer, who is President and Chief Executive Officer of the 
Real Estate Roundtable; Phil Giudice, who is the Commissioner 
of the Massachusetts Department of Energy Resources; Bob 
Hanbury, President of the House of Hanbury Builders, on behalf 
of the National Association of Home Builders.
    I was informed that Senator Stabenow wanted to introduce 
the witness we have here from Michigan. So why don't you go 
right ahead.
    Senator Stabenow. Thank you, Mr. Chairman. I just wanted to 
welcome Terry Mierzwa, who is the Executive Manager of 
Marketing, Energy Efficiency, and Research at Consumers Energy 
in Jackson, Michigan. We're very pleased. He has testified in 
the State legislature and a number of other forums, and very 
pleased that he's here as a part of this effort.
    I also want to say that Masco, Mr. Laseter, is connected 
with a great Michigan company as well. So welcome to all of 
you.
    The Chairman. All right. We will take the full written 
statement that each of you have prepared and include them in 
the record. But if you could take about 5 minutes each and sort 
of tell us what the main points are that you think we need to 
understand about these legislative proposals, that would be 
very useful.
    Why don't we start with you, Mr. Laseter, and just go right 
down the table there.

STATEMENT OF LARRY LASETER, PRESIDENT OF WELLHOME, ON BEHALF OF 
              THE HOME STAR COALTION, ATLANTA, GA

    Mr. Laseter. Thank you, Mr. Chairman, Ranking Member 
Murkowski, and members of the committee. I'm Larry Laseter. I'm 
President of Masco Home Services. We're also known as WellHome, 
and our company is a home performance contractor. We're an 
operating company of Masco Corporation, which is a Michigan-
based Fortune 500 company and one of America's largest 
manufacturers of products for the home. Masco is better known 
by our leading brand names, such as Behr Paint, Delta Faucets, 
Craftmade Cabinets, and many others, and we are the Nation's 
largest installer of insulation, focused on the new home 
industry.
    But I'm here today to speak on behalf of the Home Star 
Coalition. This is a broad group of industry, labor, energy, 
and environmental supporters, including more than 600 small 
businesses representing all 50 States. We stand together in 
support of the Home Star program, which would deliver a rare 
triple win for the American people in the form of jobs, savings 
for customers, and a positive impact on the environment.
    Let me begin with jobs. Make no mistake about it, the 
construction industry is in the midst of a one-industry 
depression. The unemployment rate in construction is 27 
percent, almost 3 times the overall jobless rate. This rate is 
higher than our Nation's unemployment rate at the height of the 
Great Depression. At Masco Corporation, our parent company, we 
have felt the pain of this industry downturn firsthand. We've 
lost over 27,000 jobs and over 40 percent of our work force.
    However, these construction workers have the know-how and 
experience for home energy retrofits and they're ready to get 
to work in jobs that cannot be outsourced overseas. Home Star 
will create jobs for these workers and drive increased demand 
for manufactured products and building materials that are 
almost universally made in the United States, supporting 
further job growth and economic impact and putting idle plants 
back to work.
    Now, for the American homeowner the benefit comes in the 
form of 10 to 40 percent annual energy savings. These savings 
are equivalent to a $500 stimulus check that a participating 
homeowner would receive every year for years to come.
    Of course, energy efficiency improvements will support 
energy independence and the environment. Home energy represents 
22 percent of our carbon output, twice that of automobiles, and 
more than two-thirds of America's over 100 million homes were 
built before modern energy codes. There's clearly a need, and 
Home Star will simplify and lower the cost of these home 
improvements, things like drafty windows, leaky ducts, 
installing insulation, high-efficiency heating, air 
conditioning, undertaking whole home energy efficiency 
retrofits.
    Home Star is also establishing up-front processes and 
systems to maximize the impact of the program and ensure its 
accessible to all. For example, we all know that many middle 
class Americans are squeezed by the economy and the credit 
crisis, which could prevent them from paying the homeowner's 
share of the efficiency improvements. That's why the Home Star 
proposed legislation allocates $200 million for State programs 
to facilitate home retrofit financing.
    Home Star also establishes a quality assurance system based 
on rigorous proven technical standards to deliver on the 
promise of energy savings. This system establishes industry 
performance standards, ensures that a portion of all jobs are 
inspected by credentialed professionals after project 
completion, and offers an additional incentive to contractors 
that invest in a properly trained and certified work force.
    Now, most importantly, this program can move quickly, with 
a minimum of red tape, and show immediate measurable results 
that will create a platform for a long-term sustainable home 
energy retrofit industry. Home performance improvements work. 
The building science and the energy savings are proven, and we 
have tremendous opportunity to make huge energy efficiency 
gains through this program.
    Now, while the current bill, draft bill, is excellent, we 
believe as the Home Star Coalition that there are 2 important 
changes that could be made to enhance the legislation. First is 
the addition of a targeted incentive for customer-installed 
measures, or the DIY measures, under the Silver Star program; 
and the second is the integration of the Home Star incentives 
with existing 25 [c] tax credits. These 2 changes will expand 
consumer awareness of the Home Star program and ensure its 
success while reaching more Americans.
    I would like to conclude by affirming that Home Star is a 
win-win-win for jobs, for the American consumer, and for the 
environment. It will put an estimated 168,000 skilled Americans 
back to work in the hardest hit part of our economy, the 
struggling construction and its related manufacturing sector. 
It will help more than 3 million American families retrofit 
their homes for energy efficiency, saving them as much as $9.4 
billion in energy costs over 10 years, a return greater than 
the cost of the program itself. It will positively impact the 
environment and America's energy independence.
    So on behalf of the current and future workers represented 
by the 600 businesses that make up the Home Star Coalition and 
the millions of households which will benefit in every 
community in America, I encourage you to move this bill forward 
without delay.
    Thank you for the opportunity to testify and for your 
important leadership on behalf of the American people.
    [The prepared statement of Mr. Laseter follows:]

 Prepared Statement of Larry Laseter, President of Wellhome, on Behalf 
                 of the Home Star Coaltion, Atlanta, GA

                                OVERVIEW

    HOME STAR is an incentive program that will deliver a rare triple-
win for the American people in the form of jobs, savings for consumers, 
and a positive impact on the environment.
    HOME STAR will create jobs that can be filled immediately using a 
skilled and ready construction workforce--workers idled by the 
recession who are now most in need of help. It will drive increased 
demand for manufactured products and building materials, supporting 
further job growth and economic impact. HOME STAR will result in energy 
savings for homeowners and higher home values. And longterm efficiency 
gains will support energy independence and the environment as we reduce 
our carbon output. Importantly, the program can move quickly, with a 
minimum of red tape, and show immediate, measurable results that will 
create a platform for long-term development of a high-quality and 
rapidly growing home energy retrofit industry.
    HOME STAR puts Americans back to work now and will create jobs in 
existing industries by providing short-term incentives for energy 
efficiency improvements in residential buildings. The program is 
designed to jump-start construction and manufacturing jobs by offering 
rebates to consumers who invest in home energy improvements and energy-
efficient products and services. Demand will rise for skilled 
construction labor and advanced building materials as homeowners make 
improvements to their homes. Manufacturing inventories will be 
restocked and assembly lines for advanced materials and U.S. technology 
will start rolling again. Investment and capital will begin to flow to 
millions of idled construction and manufacturing workers and create new 
demand to retrofit homes for energy performance--now and into the 
future.
    HOME STAR is a timely program that builds on existing policies and 
initiatives that have already demonstrated effectiveness. It has won 
widespread support from the HOME STAR Coalition, which is comprised of 
national retailers, building products manufacturers, labor advocates, 
environmental and energy efficiency groups, state agencies, contractors 
and more than 600 small businesses from every state. The Coalition 
views HOME STAR as a win-win-win. It will: 1) put an estimated 168,000 
skilled Americans back to work in the hardest-hit part of our economy--
the struggling construction and manufacturing sector; 2) help more than 
3 million American families retrofit their homes for energy efficiency, 
saving them as much at $9.4 billion in energy costs over 10 years; and 
3) positively impact the environment and create a healthier planet by 
removing the equivalent of 615,000 cars from the road. Now is the time 
for HOME STAR.

                           THE CRITICAL NEED

Construction: A One-Industry Depression
    A program that incentivizes energy improvements would rapidly 
create jobs within the construction sector and in the manufacturing and 
retail industries that support it. These are areas of the economy that 
need help the most.
    While the overall economy has begun a slow climb out of recession, 
the current state of the American construction and building materials 
industry remains depressed. Overall unemployment fell to 9.7% in 
January and February of this year, but unemployment in the construction 
industry has continued to rise, reaching 27.1% in February--meaning one 
in four American construction workers is currently out of work. This is 
a higher rate of unemployment than our country felt during the Great 
Depression.
    Construction-related unemployment is significantly higher in some 
states, with catastrophic results for local economies. Arizona, Nevada, 
Michigan and Florida, for example, have lost over 40% of their 
construction jobs since the peak of the housing market.
    As devastating as these numbers are, the unemployment figures for 
construction probably do not reflect the full magnitude of the problem, 
due to the large number of self-employed construction workers that do 
not show up in payroll statistics. Economic Census data shows that the 
self-employed share of workers is significantly higher in the 
construction industry than in other sectors (16.6% in 2008), so the 
jobs picture is even more dire than the statistics suggest.
    Further, more than 90% of contractors in the construction industry 
are small businesses--another hard-hit segment of the economy. Building 
materials manufacturing is off by at least 40% from its capacity. The 
result is hundreds of factories that have closed or are running only 
part-time lines. This shocking drop in construction industry jobs and 
its reverberating impact on building products manufacturers, retailers, 
and specialty trades demands attention and an urgent policy response. 
It is hard to foresee a robust economic recovery in communities when 
these depression-level conditions persist within local construction job 
markets.
    By the end of last year, 42 of the 44 states with available data 
had seen job losses in excess of 10% of total construction jobs since 
the last peak in construction employment; 31 states had lost more than 
20% of their construction jobs; 11 states had lost more than 30%; and 
four states had experienced a shocking decline in construction 
employment of more than 40%.
    Importantly, the vast majority of manufactured products and raw 
materials used in residential energy efficiency retrofits are produced 
domestically, so the dollars spent on HOME STAR improvements circulate 
primarily through the U.S. economy. In many categories of building 
materials, the rate of domestic production is over 92%.
    America has millions of skilled construction and manufacturing 
workers who are unemployed and need relatively little re-training to 
enter the retrofitting industry. HOME STAR is a targeted program that 
will create hundreds of thousands of new jobs, and impact thousands of 
local businesses in every community in America.

                           ENERGY EFFICIENCY

    Improving the energy efficiency and performance of existing homes 
could have a dramatic impact on the national consumption of energy. 
Two-thirds of the more than 100 million single-family homes in the 
United States were built before the adoption of modern energy codes.\1\ 
These existing homes consume 22% of the nation's energy overall--
approximately twice the carbon emissions produced by passenger cars.\2\ 
This stock of older homes provides a prime market for energy efficiency 
upgrades.
---------------------------------------------------------------------------
    \1\ U.S. Department of Energy
    \2\ Pew Center on Global Climate Change
---------------------------------------------------------------------------
    If homes built before 2000 used as little energy per square foot 
(adjusted by region) as those built since 2000, residential energy 
consumption would drop by 22.5%. While this calculation does not 
account for differences between older and newer homes related to 
layout, location, and household behavior, it does illustrate the 
potential energy savings from retrofitting the existing housing stock.
    Another important factor that reinforces the need to make our homes 
more efficient is the impact on affordability. The housing and mortgage 
crisis occurred at a time of skyrocketing energy prices that pushed 
many homeowners over the edge into default as they could not pay both 
their mortgages and high energy bills. HOME STAR can help to cushion 
working-and middle-class homeowners against future energy price surges. 
Further, energy savings translate directly into lower bills and 
therefore greater housing affordability, helping to keep hard-pressed 
families in the homes.
    The time for comprehensive home energy efficiency improvements is 
now, and HOME STAR offers Americans the opportunity to do their part in 
reducing energy consumption by improving the efficiency of their homes. 
HOME STAR offers significant and broad-based energy efficiency 
benefits. HOME STAR will help more than 3 million American families 
retrofit their homes for energy efficiency, saving them as much as $9.4 
billion in energy costs over 10 years. This is the equivalent of 
removing 615,000 cars from the road or the energy generated from four 
300-megawatt power plants. All supported technologies and improvement 
measures in HOME STAR are proven to provide the promised benefits.
    building on existing state and federal energy retrofit programs
    There are many opportunities for homeowners to improve efficiency 
throughout their homes. The most successful campaigns have included the 
Home Performance with ENERGY STAR program managed by the Department of 
Energy and the Environmental Protection Agency, and state or utility 
programs that have focused on replacing old equipment and retrofitting 
homes. The structure of the HOME STAR program pulls heavily from the 
Home Performance with ENERGY STAR program operating in 29 states. 
States as diverse as Oregon, New York, Tennessee, Rhode Island, 
Massachusetts, Missouri, Arizona, and California have programs that 
demonstrate the effectiveness of the HOME STAR approach and can help 
jump-start nationwide participation.

                              THE SOLUTION

    HOME STAR is the solution to the serious issues and challenges 
outlined above. HOME STAR is a fastacting, short-term job creation 
program that will drive private investment into the hard-hit 
construction and manufacturing sectors, while saving consumers money on 
their energy bills and reducing carbon emissions. It will build on 
current state programs and existing industry capacity for performing 
both retrofits and quality assurance, using federal standards and 
incentives as a common platform to lower program costs and increase 
consumer awareness. Strong consumer incentives to drive market demand, 
combined with meaningful standards and incentives for high-quality 
implementation of efficiency measures and verification of energy 
savings will ensure that the growing energy efficiency retrofit 
industry produces ongoing and measurable results while putting 
Americans back to work in long-term jobs.
    In light of the fact that two-thirds of the more than 100 million 
homes in America were built before modern energy codes, there is a 
pressing need for the energy efficiency improvements HOME STAR will 
make possible. HOME STAR will simplify and lower the cost of home 
improvements such as fixing drafty windows and leaking ducts, 
installing insulation and high-efficiency heating and air conditioning 
equipment, replacing inefficient hot water heaters, or undertaking 
whole-home efficiency retrofits that can cut energy bills by 20% or 
more.
    HOME STAR provides two types of consumer incentives:

   The SILVER STAR prescriptive path provides a near-term 
        incentive for specific energysaving investments. The incentive 
        is simple to administer and easily introduced into the existing 
        marketplace. Homeowners receive between $1,000 and $1,500 for 
        each measure installed in the home, with a benefit not 
        exceeding $3,000 or 50% of total project costs (whichever is 
        less). Covered measures include air sealing; attic, wall, and 
        crawl space insulation; duct sealing or replacement; and 
        replacement of existing windows and doors, furnaces, air 
        conditioners, heat pumps, and water heaters with high-
        efficiency models. The legislation will utilize existing 
        standards for qualifying products at a level sufficient to 
        significantly increase consumer demand for highly energy-
        efficient building materials and mechanical systems. SILVER 
        STAR improvements may be implemented by any appropriately 
        licensed and insured contractor, but all participating 
        contractors will receive information about opportunities for 
        accreditation and training programs.
   The GOLD STAR performance path offers an incentive to 
        households that choose to conduct a comprehensive energy audit 
        and then implement a variety of measures that are jointly 
        engineered to provide greater total returns in energy savings. 
        This performance path represents the future of home efficiency: 
        state-of-the-art building science is used to identify problems, 
        present solutions, and deliver verifiable energy savings, 
        generating confidence among homeowners and investors alike. 
        This technology-neutral approach is based on performance, not 
        specific products, so market forces will direct funds to 
        solutions that achieve the best results. A certified 
        professional with accreditation from the Building Performance 
        Institute (BPI), the Residential Energy Services Network 
        (RESNET) or an approved equivalent conducts an energy audit 
        before work begins, and a test-out when the performance 
        retrofit is complete. Consumers receive $3,000 for modeled 
        savings of 20%, plus an additional $1,000 incentive for each 
        additional 5% of modeled energy savings, with incentives not to 
        exceed 50% of project costs or $8,000 (whichever is less). 
        Contractors implementing the GOLD STAR performance path must be 
        BPI accredited.

    HOME STAR will require skilled, trained workers to complete the 
improvements cited above. With the depression of the construction 
market, there is a large workforce across the nation ready and eager to 
get back to work. HOME STAR will also create manufacturing jobs for the 
dramatically increased levels of insulation, windows, HVAC equipment, 
caulk, tools and other products needed for retrofitting America's 
housing stock. More than 92% of these products are produced in the 
United States by American workers. In addition, the retail distribution 
of products through home improvement stores and lumber yards will play 
an important role in increasing jobs in this sector. Retailers also 
will facilitate consumer education and access to energy improvement 
products. More than 90% of the jobs created through home retrofits are 
in small businesses, a powerful engine of economic growth and job 
creation.

Financing of Consumer Investments
    Many middle-class Americans are squeezed by a lack of access to 
capital, which would prevent them from paying the homeowner share of 
investment in efficiency improvements. The HOME STAR legislation 
addresses this challenge by allocating $200 million for state programs 
that facilitate home retrofit financing. This would be accomplished 
through a range of existing and new financing approaches that include 
specialized local and national bank programs, property tax and utility 
bill financing, as well as national specialty lenders through federal 
agencies such as Fannie Mae. In this way, working families will be able 
to participate in the HOME STAR program. In addition, financing 
measures will increase the number of jobs created through HOME STAR by 
bringing new private capital investments into building retrofits, 
expanding the leverage of federal investments, and increasing the level 
of energy and dollar savings per home. This allocation of financing 
subsidies will create up to $1.5 billion in low-interest consumer 
financing and support a wide variety of existing financial products, 
including (but not limited to):

   Property Assessed Clean Energy (PACE) Loans
   Fannie Mae loans
   Non-collateral loans
   Secured loan products
   On-bill financing

    In most instances, energy efficiency savings will exceed the 
monthly loan payments and allow American families to achieve cash-flow-
positive results on HOME STAR projects from day one.

Quality Assurance
    HOME STAR establishes a robust quality assurance system based on 
rigorous technical standards to protect against waste, fraud, and 
abuse. This system establishes industry performance standards, ensures 
that a portion of all jobs are inspected by credentialed professionals 
after project completion, and offers an additional incentive to 
contractors that invest in a properly trained and certified workforce.
    Contractors can enroll in the program by registering and presenting 
proof of licensing and insurance to a quality assurance provider. These 
quality assurance providers are already certified through the Building 
Performance Institute (BPI), the Residential Energy Services Network 
(RESNET) and other nongovernmental organizations. Homeowners may be 
contacted by a quality assurance provider for a field inspection after 
a job is completed to verify that work was done according to standards 
and as contracted. The program will guarantee minimum inspection rates 
sufficient to assure quality work and provide accountability for 
contractors.
    Quality assurance programs managed at the state level will maintain 
lists of qualified inspectors, facilitate access to training and 
certification programs (including outreach to low-income workers and 
minority contractors), coordinate with existing state and local 
efficiency programs, and develop systems for monitoring and 
enforcement. To provide for the long-term sustainability of this new 
and growing market, states will work with the Department of Energy to 
bring their quality assurance oversight up to a common national 
standard.
    For GOLD STAR projects, contractors must submit a job completion 
checklist and work scope for each project, along with testing data, 
before the incentive is disbursed. SILVER STAR contractors are only 
required to submit a job completion checklist. For both the GOLD STAR 
and SILVER STAR programs, field quality assurance is conducted within 
30 days on a sample of jobs to verify quality installation. Incentives 
will be paid to the contractors quickly so that their businesses will 
have adequate cash flow to operate efficiently and hire new workers.
    Quality assurance requirements in HOME STAR will involve a simple 
paperwork review in approving individual rebates, with a minimum 
baseline protocol for field inspection that is sufficiently rigorous to 
ensure high-quality installation and appropriate consumer protection. 
In all cases, reduced inspection rates will apply for contractors 
employing a trained and certified workforce.

                          MEASURABLE OUTCOMES

    One of the unique advantages of the HOME STAR program is that it 
will lead to measurable outcomes and the opportunity to quantify the 
benefits to job creation, consumer savings, energy efficiency, and 
environmental gains. HOME STAR will also help create a marketplace that 
is based on sound economics and that can stand on its own in the future 
without the need for permanent subsidies.

Jobs
    HOME STAR is expected to create 168,000 construction, 
manufacturing, and retail jobs in local communities in every state.
    These jobs will be quality, living-wage positions that cannot be 
outsourced overseas. Construction and manufacturing companies are 
poised to ramp up quickly to meet the increased level of demand for 
insulation, windows, HVAC equipment, caulking, tools, and other 
products needed for retrofitting America's housing stock.
    This work is by its very nature local and requires skilled 
construction workers who are ready and available to fill the need. The 
HOME STAR legislation will create incentives for investing in a skilled 
and certified workforce that can build a long-term industry and provide 
good wages for skilled workers. Furthermore, most of the manufactured 
goods used to retrofit homes are produced domestically, with more than 
92% of all the products incorporated into HOME STAR made in America.
    The multiplier effect on jobs--from certified home performance 
advisors to installers, retailers, manufacturers, quality assurance 
contractors--coupled with its reach to literally every state and every 
community in America, makes the HOME STAR program a unique opportunity 
to put hundreds of thousands of people back to work.

Home Energy Efficiency
    The HOME STAR program will help more than 3 million American 
families retrofit their homes for energy efficiency and save them as 
much as $9.4 billion over 10 years, while reducing their energy usage 
by 10-30%. This is the equivalent of an annual $500 stimulus per 
household that the homeowner will receive for years to come. Better use 
of energy in our homes could raise property resale values in a 
recovering real estate market, and offers an opportunity to confront 
climate change as it continues to threaten our environment and our 
national security.
    In addition, smart investments in energy efficiency made today will 
pay for themselves through long-term energy bill savings. In fact, home 
performance improvements implemented according to the standards set by 
the Building Performance Institute (BPI), a key part of the HOME STAR 
program, have already resulted in a less than three-to four-year 
payback on a homeowner's investment in thousands of homes.

Infrastructure
    HOME STAR will help to establish a national platform, with national 
standards, for an industry that has been in the making for nearly 30 
years. Over the past three decades, industry pioneers have built the 
foundation for the home performance industry. National standards and 
credentialing are in place through the Building Performance Institute 
(BPI), Residential Energy Services Network (RESNET), and other 
organizations. The EPA and DOE have increased public awareness and 
established rules for executing Home Performance with ENERGY STAR 
programs across the country. Private-sector individuals and companies, 
working with early champions such as the New York State Energy Research 
and Development Authority (NYSERDA), have produced energy modeling 
software, productivity and project management software, and powerful 
training programs for the army of installers that will be needed to 
meet future demand. In New York, more than 30,000 GOLD STAR-level 
retrofits have resulted in average annual energy savings of over 25% 
per household. They have also recorded and modeled the anticipated 
energy savings from retrofits and remodeling, proving that energy 
efficiency improvements are effective and have a tangible return on 
investment.

Environment
    Basic efficiency improvements can reduce energy waste and 
greenhouse gas emissions in most American homes, often by 10-30%. This 
is particularly true in the nearly 80 million homes built before modern 
energy codes.
    In total, household energy use accounts for more than one-fifth of 
U.S. carbon emissions--roughly twice the emissions produced by 
passenger cars. Spurred by HOME STAR rebates, home retrofits are 
projected to increase to 3 million a year from the current level of 
200,000 a year, which could result in carbon output reduction equal to 
taking 615,000 cars off the road or the energy generated by four 300-
megawatt power plants.

Energy Independence
    By further scaling back America's dependence on fossil fuels, we 
reduce our vulnerability to an energy marketplace with extreme price 
swings caused by those outside of our country, who may be hostile to 
our interests. Reducing this dependence will not only improve our 
national security, but also the economic security of American families.

                        PROCESS & ADMINISTRATION

    The fundamental success of HOME STAR relies on rapid deployment and 
ease of execution both for the consumers it intends to serve, as well 
as for the service providers and government administrators involved in 
delivery and oversight. The HOME STAR Coalition has brought together a 
diverse group to work through the many details required for rapid 
deployment to ensure this legislation can work quickly.

Administrative Process
    The HOME STAR program must meet several overarching goals. To be 
successful, HOME STAR must rapidly put construction workers back to 
work and create good, living-wage jobs for American workers; generate a 
minimum of new government bureaucracy; provide clear lines of 
authority; and offer a transparent process for all participants.
    HOME STAR is not dependent on whether authority rests with a 
particular federal agency; rather, authority could reside within a 
number of federal agencies without compromising the program goals. The 
federal government must, however, provide uniform guidance to establish 
consistent baseline resources and procedures for all states. States 
will take the lead in overseeing quality assurance programs, 
implementing financing plans, and coordinating with existing programs 
to avoid duplication. The ultimate implementation of this program will 
be driven by market transactions, and as such the program will set 
aside administrative funds to drive consumer awareness.
    HOME STAR will provide rebates to consumers, which will be assigned 
to the contractors who complete the work, thus providing an instant 
price reduction at the point of sale. Rebate checks will be issued by 
the federal government through rebate aggregators that assist 
contractors in processing payments and data to ensure smooth and timely 
payments. Existing state and utility programs will participate in this 
role along with large retailers or national organizations. In any case, 
administrative procedures are designed for speed and efficiency to roll 
the program out rapidly and effectively and to avoid payment delays.

                        LEGISLATIVE IMPROVEMENTS

    While the current draft bill is excellent, we believe that there 
are two important changes that could be made to enhance the 
legislation. First is the addition of a targeted incentive for 
customer-installed measures with educational materials for insulation. 
This helps to drive consumer awareness and consumer activity at the 
retail level that will translate into installed measures and program 
awareness. The second is the integration of the HOME STAR incentives 
with the existing 25C tax credits. Some incentives are currently 
available through tax credits, but many Americans cannot take advantage 
of these credits nor address the delays and uncertainties of their 
impact. These credits help but do not solve the goals of the HOME STAR 
program. It is paramount that consumers not be faced with uncertainty 
and confusion regarding energy efficiency tax credits and HOME STAR 
incentives. To avoid homeowner confusion, we recommend that the 
customer be able to take a 25C tax credit on the net amount of the work 
after incentives but staying within the overall 50% cap. This would 
simplify and ensure easy coordination and application of both credits. 
The HOME STAR incentives have been calculated based on the use of this 
approach.
    With these small improvements, we believe that the HOME STAR 
legislation will put Americans back to work in all 50 states and begin 
to address the depression in the construction and housing industries.
    Thank you for the opportunity to testify on behalf of the HOME STAR 
Coalition.

[Graphs have been retained in committee files.]

    The Chairman. Thank you very much.
    Mr. DeBoer.

 STATEMENT OF JEFFREY D. DEBOER, PRESIDENT AND CHIEF EXECUTIVE 
              OFFICER, THE REAL ESTATE ROUNDTABLE

    Mr. DeBoer. Good morning. Thank you, Chairman Bingaman and 
Senator Murkowski and members of the committee. My name is Jeff 
DeBoer and I'm President and CEO of the Real Estate Roundtable. 
The Roundtable is part of a broad-based coalition of labor, 
energy efficiency, environmental advocates, manufacturers, and 
we all enthusiastically support the bill that Senator Merkley 
introduced along with a half a dozen other Senators, including 
Senator Sanders and Senator Stabenow of this committee. We 
thank you very much for that focus.
    Building Star, as Senator Merkley talked about--and I may 
underscore some of his statistics here--it's a very powerful 
piece of legislation, we think. It would fit nicely in a 
comprehensive energy bill or a jobs bill. Building Star would 
establish a rebate and a financing program to help make our 
existing commercial and multifamily buildings more energy 
efficient.
    It would assist building owners by covering a portion of 
the cost to install state-of-the-art energy efficient equipment 
and materials, like insulation, boilers, chillers, HVAC 
systems, variable speed drivers, low slope roofing, other 
things, in existing buildings. The program also would encourage 
energy audits and worker training programs to ensure that peak 
operations for energy efficiency can go forward on an ongoing 
basis. This would help ensure that in the future our buildings 
are as energy efficient as possible.
    I want to bring to your attention a study by Lawrence 
Berkeley which indicates that by the end of 2011 approximately 
9 percent of all U.S. commercial buildings in America would 
receive some benefit from this program. This would yield about 
$3.3 billion in energy savings. These savings would go to 
business, tenants and hopefully families in multifamily 
structures.
    Building Star energy efficiency measures would result in 
greenhouse gas reductions, as Senator Merkley pointed out, the 
equivalent of taking about 4 million cars off the road, the 
equivalent of removing 33, 300-megawatt power plants from 
service.
    We estimate that it would create between 150,000 and 
200,000 jobs. As has been noted, these jobs would be in the 
construction industry, which is very hard-hit, about 25 percent 
to 27 percent unemployed right now, nearly 2 million Americans 
out of work. This would get these skilled laborers back to 
work, we think, quickly.
    By the way, it should be noted that 90 percent of the 
contractors that perform work in commercial buildings are 
themselves small businesses that have less than 20 workers, and 
the manufacturers who are manufacturing the insulation and the 
doors and so forth are likewise small businesses.
    It's also, obviously with me being here today, Building 
Star would help the commercial real estate sector, which today 
is struggling. I want to point out buildings--sometimes it's 
misunderstood--these are very dynamic assets. To maintain their 
competitive edge, owners must continually find capital to 
repair and replace obsolete equipment and systems. This is very 
difficult in today's business environment. Building Star will 
help address that problem. The resulting activity in commercial 
real estate we think will help stabilize values, spur 
transactions, create jobs, stabilize some tax bases where local 
communities need to raise money to provide services we all 
like.
    Building Star is a fast-acting rebate program. It's simple. 
There is a simple application, approval, and verification 
process that's envisioned in Senator Merkley's legislation. We 
think the building owners and contractors could easily 
structure an incentive plan to take advantage of this. They're 
used to doing it now in State rebate programs and they could do 
it here.
    In conclusion, Building Star we believe, our coalition--and 
in my written statement we have a list of all of the various 
industries and companies that support this--we believe this 
deserves the approval of this committee. Obviously you want to 
have a lot of input into it, but we think the concept is good 
and should be approved and put into law. We think it will help 
create jobs, assist small businesses, whether they're 
construction or manufacturing or whether they're simply tenants 
in these buildings.
    A couple of other points. Building Star we think will help 
contribute to overall energy independence and reduce our carbon 
footprint. As I said, it's important to note that this is 
designed to be up and running. In the draft legislation, it's 
called for to have the regs or the process out within 60 days. 
It would layer on existing programs. There is an aggregator 
type feature that's already in place out there, so that would 
help.
    So I would conclude by just thanking you for the 
opportunity to express our enthusiastic support for this. Happy 
to answer any questions you have. Thank you.
    [The prepared statement of Mr. DeBoer follows:]

Prepared Statement of Jeffrey D. Deboer, President and Chief Executive 
                  Officer, The Real Estate Roundtable

                              INTRODUCTION

    Thank you Chairman Bingaman, Ranking Member Murkowski, and Members 
of the Committee, for conducting today's hearing on legislative 
proposals designed to create jobs and enhance energy efficiency.
    I am Jeffrey D. DeBoer, the President and Chief Executive Officer 
of The Real Estate Roundtable, an organization that represents the 
leadership of the nation's top 130 privately-owned and publicly-held 
real estate ownership, development, lending and management firms, as 
well as the elected leaders of the 16 major national real estate 
industry trade associations. When I speak of the commercial real estate 
sector I am referring to six principal property types--apartments, 
offices, retail, industrial, health care and hotels.
    Collectively, Real Estate Roundtable members hold portfolios 
containing over 5 billion square feet of developed property valued at 
over $1 trillion, over 1.5 million apartment units, and in excess of 
1.3 million hotel rooms. Participating Roundtable trade associations 
represent more than 1.5 million people involved in virtually every 
aspect of the real estate business.
    I am pleased to testify on behalf of Building STAR, a program 
designed to modernize existing commercial and multi-family structures 
through energy efficiency retrofits. These building upgrades will help 
quickly generate jobs, conserve energy, and save money, all to fuel our 
nation's economic recovery. Building STAR serves as a complement to the 
Home STAR proposal, which is also a topic of this hearing and provides 
incentives for energy efficient upgrades for the single-family 
residential market.
    The Real Estate Roundtable is proud to be part of a broad-based 
coalition that supports Building STAR. We urge Congress to enact, 
authorize, and fund this program swiftly. As this statement will 
explain in greater detail, Building STAR will:

   Create jobs.--As a public-private incentive proposal, a $6 
        billion public investment in Building Star will yield $18--$24 
        billion in total program spending. This will create between 
        150,000--200,000 jobs between 2010 and 2011, especially in the 
        hard-hit construction industry.
   Benefit small businesses.--More than 90 percent of the 
        contractors who perform commercial and multi-family building 
        retrofits employ fewer than 20 workers. Even where large firms 
        hold the primary contract, much of the work is subcontracted to 
        smaller firms.
   Save energy and money.--Based on a study by the American 
        Council for an Energy Efficient Economy (ACEEE), a coalition 
        member, Building STAR would yield $3.3 billion in energy 
        savings annually between now and 2011.
   Reduce carbon emissions.--ACEEE projects that the full suite 
        of Building STAR's energy efficiency programs would result in 
        greenhouse gas reductions equivalent to taking nearly 4 million 
        cars off the road, and removing 33 300-Megawatt peaking power 
        plants from service.
   Help a capital-starved industry.--Credit markets remain 
        tight, dampening activity in the commercial real estate sector. 
        Moreover, as our country's building stock ages, the value of 
        those assets will continue to fall and their ability to produce 
        income will remain constrained. Building STAR will inject much 
        needed capital to modernize commercial properties, so that our 
        real estate market can regain its competitive edge and once 
        again realize a fuller potential to generate income.

    Building STAR grew out of the efforts of the Rebuilding America 
coalition. In 2009, Rebuilding America worked to develop a 
comprehensive national strategy to transform the energy efficiency 
market and mobilize a retrofit industry that could renovate 50 million 
commercial and residential buildings by 2020--accounting for 40% of the 
nation's building stock. This was based on a goal established by the 
City of Chicago, which would cut the renovated buildings' energy 
consumption by 30 percent.
    Rebuilding America's policy priorities were then adapted and 
expanded to include a near-term jobs package, which became the Building 
STAR program. Building STAR would provide the struggling commercial 
real estate sector with a lifeline that would take immediate effect. It 
would jump start manufacturing and get the building trades back to work 
by installing energy-saving equipment in commercial and multi-family 
buildings across the country. As I will explain in more detail below, 
through a quick survey of a sample of Roundtable members, we have 
learned that many building owners, managers, contractors, and other 
professionals can take advantage of the rebates offered in this program 
right away. This means a skilled labor force would be put to work 
immediately, to manufacture and install the equipment and materials for 
which Building STAR's rebates are offered, and conduct services to 
ensure that buildings perform to their optimal energy efficiency 
capacities. This program would also generate additional jobs for 
painting, drywall, and other laborers.
    Building STAR was introduced as a stand-alone bill--S. 3079, the 
``Building STAR Energy Efficiency Rebate Act of 2010''--last Thursday, 
March 4, by Senators Merkley, Pryor, Brown of Ohio, Stabenow, Sanders, 
and Cardin. S. 3079 consists of a number of rebates and a financing 
title for commercial and multi-family retrofit projects. I want to 
thank Senator Merkley for his leadership in introducing this important 
legislation and all of the original co-sponsors for sharing that 
vision. I especially want to thank Senators Stabenow and Sanders of 
this Committee for being original co-sponsors, and appreciating the 
immense importance of this legislation for job creation--in their 
states and across the nation--as reflected by all of the co-sponsors' 
geographic diversity.
    Public funding of $6 billion for Building STAR would leverage 
private capital and spur $18 to $24 billion in total program spending. 
This injection of stimulus will create 150,000--200,000 jobs, 
particularly in the hard-hit construction industry, as well as 
manufacturing and other sectors. The construction industry has suffered 
tremendously, resulting in high unemployment and leaving unused 
significant available manufacturing capacity. Today, an average of 1 in 
every 4 constructions workers (25 percent)--over 1.9 million people--is 
unemployed. Many of these are skilled members of the building trades 
who have worked on commercial, institutional, and large residential 
buildings. The manufacturing sector has also been hit hard by the 
recession: building materials manufacturing is down by 40 percent, and 
1.8 million manufacturing jobs have been lost since the downturn began. 
I will discuss how Building STAR can help redress these staggering 
unemployment numbers further below.
    An impressive, diverse group of stakeholders has rallied around 
Building STAR. It is the product of a wide consultation among members 
of Rebuilding America, a coalition of more than 80 business, real 
estate, financial, labor, consumer, environmental, and advocacy 
organizations. Furthermore, S. 3079's technical specifications are 
drawn from a spectrum of outside energy efficiency and construction 
experts, such as the Associated General Contractors (AGC) of America, 
the National Association of State Energy Officials (NASEO--also 
testifying here today), the Association of State Energy Research and 
Technology Transfer Institutions (ASERTTI), the American Council for an 
Energy-Efficient Economy (ACEEE), and the Alliance to Save Energy 
(ASE). Advocates for Building STAR also include labor and manufacturing 
representatives, such as the Sheet Metal and Air Conditioning 
Contractors' National Association (SMACNA), Sheet Metal Workers' 
International Association (SMWIA), the Polyisocyanurate Insulation 
Manufacturers Association (PIMA), and the Council of North American 
Insulation Manufacturers Association. Companies like GridPoint, Intel, 
and Johnson Controls, the National Association of Energy Service 
Companies (NAESCO), the U.S. Green Building Council, the American 
Institute of Architects, also rank among Building STAR's supporters. 
Representatives of end users such as the Consumer Federation of America 
and the National Restaurant Association endorse Building STAR as well. 
Appendix I* to this statement lists the members of the impressive and 
diverse coalition that has formed to urge Congress to enact Building 
STAR into legislation.
---------------------------------------------------------------------------
    * Appendixes 1-3 have been retained in committee files.
---------------------------------------------------------------------------
           COMMERCIAL REAL ESTATE AND THE RESIDENTIAL MARKET

    Building STAR could play a significant role in the economic 
recovery of the commercial real estate sector. My industry's vitality 
is critical to ensuring that our state, national and global economies 
function and thrive, especially considering the value, jobs and income 
produced by commercial real estate.

   Value.--Commercial real estate represents $6.7 trillion in 
        value, constitutes as much as 13% of GDP, and supports $3.5 
        trillion in debt.
   Jobs.--About 9 million jobs can be attributed to a healthy 
        real estate sector. A gamut of professionals depends on 
        prospering commercial developments, such as construction 
        workers, land use planners, investment brokers and lenders, 
        realtors, building owners and managers, architects and interior 
        designers, environmental and energy consultants, maintenance 
        and security contractors, engineers, landscapers, plumbers, 
        lawyers, and accountants.
   Income.--The distinguishing characteristic of commercial (as 
        opposed to residential) property is that it is designed to 
        generate income. As the Congressional Oversight Panel observed 
        last month:

          Commercial properties are generally income-producing assets, 
        generating rental or other income and having a potential for 
        capital appreciation. Unlike residential property, the value of 
        a commercial property depends largely on the amount of income 
        that can be expected from the property.

    Congressional Oversight Panel, February Oversight Report: 
``Commercial Real Estate Losses and the Risk to Financial Stability,'' 
Feb. 10, 2010, at 7. Moreover, commercial real estate is financed in a 
manner to primarily reflect that the sine qua non of such properties is 
income generation. Accordingly, commercial property owners use the 
income created from their holdings (that is, rents, leases, retail 
sales, hotel stays, etc.) to pay debt service, whereas homeowners 
generally use their personal income to pay off their mortgages.
    This brings us back to the first item bulleted above: value. The 
amount of income generated by a commercial property directly correlates 
to that asset's value. Lower real estate values result when a 
commercial property produces insufficient income to service any 
outstanding mortgage. In turn, default and foreclosure risks run 
higher, skittish banks are less inclined to extend favorable (or any) 
refinancing for a ``troubled asset,'' and a commercial property with 
greater debt compared to its worth will find itself ``under water.''
    This is precisely why Building STAR comes at a crucial time for my 
industry. The rebate and financing programs provided by S. 3079 will 
play a major role in improving the value, or income-producing 
qualities, of commercial properties. Buildings are dynamic assets. To 
maintain their competitive edge, building owners and managers must 
continually find means of financing and capital to repair and replace 
obsolete equipment and systems. While the seizure of credit markets is 
becoming slightly more relaxed, lending will remain tight as long as 
the value of underlying collateral deteriorates.
    Commercial properties need new means of reinvestment to attract 
office tenants, renters, shoppers, and travelers, who are more 
discerning than ever with their own spending. They demand state-of-the 
art buildings that use less energy. They want tangible benefits like 
savings on utility bills. And they seek intangible appeal in properties 
to accommodate their more socially conscious green aesthetic.
    On these points, Building STAR delivers. S. 3079's rebates will 
stimulate energy efficiency projects across all commercial building 
types. Upgrades will attract companies to lease retrofitted Class A 
offices, residents to purchase units in efficient multi-family high-
rises, and business travelers to stay in renovated hospitality space. 
All of this activity will improve property values and lubricate 
financing, which can lead to new developments and more jobs down the 
road.
    I do not mean to suggest that there is a silver bullet to erase all 
of commercial real estate's woes, or that Building STAR is the sole 
answer to our nation's economic crisis. But insofar as we are concerned 
with improving the underlying asset value of commercial properties, S. 
3079 is significant legislation. Furthermore, as I explain below, 
Building STAR will operate as a major job creation measure--especially 
for the hard-hit construction industry--and will support thousands of 
small business contractors who will install and perform those retrofit 
components contemplated by the bill. Because these rebates can be 
utilized immediately following enactment of this legislation, people 
can be put back to work in short order. Finally, Building STAR will 
present substantial energy savings and environmental benefits by 
encouraging commercial building modernization.
    Before I provide information on the jobs and environmental benefits 
of S. 3079, let me take this opportunity to explain the nuts-and-bolts 
of Building STAR--specifically, the types of rebates offered by the 
program, and a description of the application process to receive 
Building STAR rebates.

           BUILDING STAR PROGRAM--WHAT IT IS AND HOW IT WORKS

    Building STAR would authorize a rebate program for building owners 
and managers who install or implement nearly 20 different types of 
energy-efficient equipment, materials, and services during 2010 and 
2011. The Building STAR rebates would cover approximately 20-30 percent 
of the cost of installing energy efficient products and/or services 
(such as building performance audits) during 2010 and 2011. Rebates are 
capped at 50 percent of the total cost of the product or service for a 
given building. Moreover, they are largely based on proven, existing 
rebate programs offered by some states and utilities.
    The Building STAR rebate program would cover the following products 
and services:

   Building envelope insulation;
   Mechanical insulation;
   Windows and window films;
   Low-slope roofing insulation;
   HVAC equipment, chillers, water heaters, and boilers;
   Duct testing and sealing;
   Variable speed drives for motors;
   Interior and exterior lighting;
   Building energy audits, retro-commissioning plans, tune-ups 
        for heating and cooling, and building operator management 
        training and certification; and
   Energy management and monitoring systems.

    It is critical to understand that Building STAR's retrofit 
components are code-stretching measures. They are not geared to simply 
meet minimum building code requirements. Similarly, older, leaky roofs 
too often are patched using temporary repair methods rather than 
removed and properly retrofitted. As a result, potential energy savings 
are lost, the building environment continues to degrade, and the roofs 
are ill-equipped to handle new energy technologies such as solar 
panels. The specific equipment, materials and services within S. 3079's 
purview--including, for example, roofing retrofits--will push 
commercial buildings to the next level of energy efficiency, thereby 
generating greater savings on utility bills and more reductions in 
greenhouse gas emissions. However, because these state-of-the-art 
technologies come at a significant cost, it is not as though commercial 
real estate operators would install or pursue these extra measures in 
all cases. This is precisely why Building STAR's incentives will prove 
so valuable. The legislation's rebates and financing provisions will 
provide the means for building owners to go beyond current regulations 
and bring their assets to higher strata of energy performance.
    Once enacted into law, the Building STAR program could be up and 
running within 30 to 60 days, using public funding to leverage three to 
four times as much private investment. The service providers (e.g., 
contractors or energy service companies) will be the primary marketers 
of these commercial rebates, so Building STAR has natural 
``aggregators'' that reflect the existing means by which commercial 
property owners already contract with firms in the energy services 
arena to perform retrofit projects. Indeed, some Real Estate Roundtable 
members retain firms precisely for the purpose to navigate energy 
efficiency rebate programs. I fully expect these established 
relationships will be fully mobilized to capture any available 
incentives that S. 3079 offers.
    Building STAR will help drive demand for commercial building 
efficiency upgrades, because its rebates are based on, and can be 
claimed in addition to, successful incentive programs currently 
operated by states and utilities. I want to reiterate this latter 
point: S. 3079's rebates would not supersede existing programs but, 
rather, are designed to complement those successful utility and state 
rebate measures that are already in place.

Rebate Process
    S. 3079 directs the federal government to establish rules within 30 
days after enactment, to swiftly implement the Building STAR rebate 
program. A simple and straightforward process is in order and can be 
easily accomplished, to replicate existing procedures that building 
owners and their contractors already manage through state and local 
rebate measures. Commercial real estate professionals are already 
accustomed to seeking rebates for the complete array of products and 
services in S. 3079, such as lighting, energy audits, windows, 
insulation, and more. Moreover, many Roundtable members have senior 
sustainability managers whose very job is to ensure maximum energy 
savings, greenhouse gas emissions reductions, and overall environmental 
performance. They already navigate energy efficiency rebate programs 
with great sophistication and ease.
    S. 3079's implementing procedures should track the following simple 
steps:

          1. A building owner (or its designee contractor) will propose 
        energy-efficient upgrades using the list of products and 
        services set forth in S. 3079. Alternatively, the building 
        owner could find a licensed contractor, energy service company 
        (ESCO), or other provider to propose performance improvement 
        measures, using this same list. The rebate levels for these 
        products and services are already established in the Building 
        STAR legislation, after months of collaboration among engineers 
        and other experts who developed the bill's precise equipment 
        and services specifications. This up-front work was undertaken 
        to avoid the need for federal officials to determine 
        appropriate rebate and performance levels, and the time delays 
        that such a deliberation would entail.
          2. The building owner electronically submits an application 
        (as described in the legislation) to the federal government to 
        be placed in a ``pipeline'' for this rebate. Applications in 
        the pipeline are prioritized on a first-come, first-served 
        basis and enable the government to gauge the number of 
        applicants and determine how many projects the program will be 
        able to fund.
          3. The federal government then sends an electronic 
        confirmation to those building owners whose projects will, in 
        fact, be funded.
          4. A building owner then installs the equipment or undertakes 
        the services for which rebates are sought--except for that 
        portion covered by Building STAR's incentives.
          5. The building owner signs a confirmation certifying that 
        the work specified in the application has been completed 
        according to the requirements outlined in S. 3079. 
        Alternatively, the building owner has the option to have a 
        third-party verifier confirm that the work has been properly 
        completed. Either way, the confirmation is then sent 
        electronically to the government.
          6. An independent third-party verifier contracted by the 
        government reviews the confirmation to ensure its accuracy. If 
        the confirmation is accurate, the rebate money is then 
        disbursed to the building owner (or in a given case, where it 
        has been assigned to a contractor), within 30 days of receipt 
        of the confirmation.
          7. Following the completion of the retrofit, 10 percent of 
        the projects participating in this program will undergo an on-
        site evaluation by a certified independent entity to verify 
        that the project complied with the application submitted to the 
        government and the program's requirements. If the verification 
        process finds evidence of fraud or falsification in the 
        process, building owners are subject to legal penalties as 
        prescribed in S. 3079.

    Aside from the rebate components of S. 3079, the financing 
provisions of this bill are similar to those in the Home STAR program. 
The Building STAR legislation proposes to create mechanisms by which 
commercial real estate owners can obtain capital to cover, and re-pay, 
the costs of any retrofit project not covered by rebate dollars. While 
some commercial building owners might not need financing for the 
remaining non-rebate portion of an upgrade project, the synergies 
created by S. 3079's financing title and its proffered rebates will 
spur other real estate professionals to act on the full suite of 
retrofit measures under the Building STAR umbrella.
    building star's job creation, energy, and environmental benefits

Job Creation Potential
    Building STAR is a cost-effective way to create thousands of 
American jobs by helping make commercial buildings more energy 
efficient. As noted earlier, funding of $6 billion for Building STAR 
would spur $18 to $24 billion in total program spending, creating 
150,000-200,000 jobs. Appendix II (attached) shows the job creation 
potential, including for small businesses, in the states represented by 
every Member of this Committee.
    While the rest of the job market appears to be slowly stabilizing, 
construction unemployment is still on the rise. Unemployment within the 
industry rose from 18.7 percent in November to 27 percent today. In 
February, non-residential specialty contractors shed 1,500 jobs per 
day.
    Energy efficient retrofits provide a prime opportunity to provide 
jobs for high-skilled workers, and also to help property owners and 
low-income people in multi-family residential buildings save 
substantial amounts on their energy bills.

Expanding Opportunity for Small Businesses
    Small businesses are essential engines of job growth and economic 
recovery. So it comes as good news that Building STAR will directly 
benefit thousands of high-skilled sheet metal, electrical, mechanical, 
plumbing, painting, finishing and other contractors who perform the 
work of retrofitting commercial and multi-family buildings. Indeed, 
some 91 percent of these firms have fewer than 20 employees. On the 
very largest commercial retrofit projects, much of the work is normally 
sub-contracted to dozens of small firms. Moreover, approximately 63% of 
the manufacturers that would provide materials and equipment for 
retrofits are firms that employ less than 20 people making insulation, 
doors, windows, or parts for durable equipment.
    Finally, thousands of small businesses are likely to benefit from 
reduced energy bills and operating costs that result from an energy 
efficiency retrofit under Building STAR. For example, EPA experts 
estimate that if a restaurant cuts its energy costs by just 20 percent, 
profits could increase by 30 percent or more. Industry-wide, that is a 
savings of $1.6 billion a year. That is why the National Restaurant 
Association endorses Building STAR.

Ability to take advantage of Building Star's rebates now
    At the Real Estate Roundtable, we conducted an informal survey of a 
portion of our Sustainability Policy Advisory Committee members to get 
a sense of how they would greet Building STAR rebates, whether the 
incentives would truly be useful, and how long it would take to start 
building modernization projects and hire workers. The responses we 
received were highly enthusiastic. We found that the vast majority of 
respondents would be able to take advantage of these rebates 
immediately. That is, there are a substantial number of projects ready 
to be implemented that will utilize S. 3079's rebates and financing 
opportunities. The results of our informal survey are attached at 
Appendix III and show:

   Respondents identified 19 office and multifamily projects 
        that would seek rebates across all of Building STAR's various 
        energy efficiency components.
   These projects would modernize buildings that cover almost 
        4.2 million square feet in space.
   This universe of respondents would seek approximately $1.55 
        million in rebates for these projects, with total renovation 
        costs approaching $8 million.
   Building STAR rebate dollars for these projects can be 
        quantified at $0.37 per square foot, compared to total retrofit 
        project costs of $1.90 per square foot.

    Should Building STAR be enacted into law, building owners, 
contractors, ESCOs, manufacturers, and others would immediately begin 
implementing this program. Painters, drywallers, and related industries 
would benefit from such retrofits as well, boasting a ``multiplier 
effect'' due to Building Star upgrades. In addition, based on a study 
by Lawrence Berkeley National Laboratory, we believe that a $6 billion 
public investment in Building STAR would result in improvements in 
about 425,000 buildings by the end of 2011--or, 9 percent of U.S. 
commercial buildings.

Energy and environmental benefits
    Occupants and tenants in commercial buildings, and their 
electricity demands and usages, account for 46 percent of all building 
energy use in the United States. The American Council for an Energy-
Efficient Economy (ACEEE) estimates that Building STAR would yield $3.3 
billion annually in energy savings between now and 2011. Modernization 
projects undertaken as a result of S. 3079 would result in greenhouse 
gas reductions equal to taking 3.95 million cars off the road. This is 
also equivalent to avoiding the fossil fuels that would be burned from 
33 300-megawatt peaking power plants.
    The Air Conditioning, Heating, and Refrigeration Institute 
indicates that, with the Building STAR or similar provisions, we could 
retire--and replace--as many as 4,000 ozone-depleting CFC chillers 
across North America. This would achieve energy savings of 15 trillion 
BTUs per year and save the amount of energy equivalent to that consumed 
annually by approximately 151,000 average U.S. households. It also 
would reduce CO2 emissions by an amount equivalent to 
removing 18,864 passenger vehicles from the road (2007 data). It also 
would save building owners $430 million per year in energy costs.
    Another area where there is significant potential for energy 
savings is commercial roof replacements. The replacement of 6% of 
commercial roof space in the U.S. each year with high efficiency roof 
systems insulated at levels required under Building Star would result 
in a CO2 emissions savings equivalent to the annual 
emissions of roughly 27 coal fired power plants or 105 million metric 
tons of CO2. The 10-year cumulative energy cost savings in 
this country would be $12.2 billion. Energy savings would be 648 
trillion Btu (0.65 quads) for site energy or 1,464 trillion Btu (1.46 
quads) for source energy.
    Building STAR rebates would facilitate energy efficient retrofits 
that also would create better air quality, healthier workplaces, and 
other positive attributes. Because retrofits frequently replace failed 
building components that have degraded the interior environment, they 
can improve air quality and occupant health. In addition, the 
installation of new energy-saving technologies such as daylighting and 
advanced climate controls can increase worker productivity.

                               CONCLUSION

    The Building STAR program proposed by S. 3079 picks up where Home 
STAR leaves off. Building STAR provides significant incentives to 
modernize the vast and diverse commercial real estate stock in the 
United States, with high efficiency equipment, materials, and services. 
This Committee is right to consider legislation that furthers job 
creation, lowers energy costs, and curtails fossil fuel dependence. 
Building STAR would stimulate the economy, put people back to work, 
save energy and money, and reduce greenhouse gas emissions. Simply put, 
however, those critical objectives cannot be fully realized unless 
Congress authorizes energy efficiency incentive programs that address 
both the commercial and residential sectors.

    The Chairman. Thank you very much.
    Ms. Epperson.

  STATEMENT OF STACEY EPPERSON, EXECUTIVE DIRECTOR, FRONTIER 
                     HOUSING, MOREHEAD, KY

    Ms. Epperson. Thank you, Chairman Bingaman, Ranking Member 
Murkowski, and members of the committee, for the opportunity to 
provide testimony supporting efforts to replace old substandard 
mobile homes with new Energy Star manufactured housing. I 
represent Frontier Housing, part of a nonprofit network helping 
low-income families purchase quality affordable homes. Today I 
also speak for a larger group of nonprofit housing and asset 
agencies, energy efficiency advocates, and the manufactured 
housing industry.
    Nationwide, more than 2 million families live in old 
energy-inefficient mobile homes. Most are found in economically 
depressed rural areas and are home to families that are near or 
below the poverty line. These households often fall through the 
cracks of Federal programs. Yet they may be trapped in a cycle 
of very high energy bills with little or no resources to make 
efficient improvements.
    For many years housing nonprofits have struggled with how 
to solve this problem. Maybe in some parts of America this 
problem is less visible, but in Kentucky there are nearly 
90,000 old mobile homes. They are part of my landscape.
    Fortunately, Frontier Housing is able to help families like 
Phyllis Kelly. Mrs. Kelly was living in a small 1970 mobile 
home on her own land. Her income was only $889 a month. Her 
monthly energy bill was $326. That's 37 percent of her income. 
We needed a home that balanced housing affordability and energy 
efficiency. The only solution was a manufactured home that met 
the Energy Star qualified standard, and Mrs. Kelly said: 
``Dreams come true.''
    Mrs. Kelly's old home was passed its useful life. 
Weatherization was not an option. Mrs. Kelly's monthly kilowatt 
usage fell from 6,000 to 1,600 a month. In an unusual twist, 
the rural electric coop sent a staff person out to investigate 
as they thought her home was abandoned.
    We have dozens of these success stories, but funding to 
replace mobile homes with Energy Star homes is very limited. 
The solution is a targeted program championed by Senator 
Tester. It will provide the following assistance: First, $7,500 
to help low-income buyers qualify for financing to afford the 
monthly payments for an Energy Star home; second, $2,500 to 
cover the cost of decommissioning, removing, and recycling the 
old home; and third, access to ARRA weatherization funds to 
further close the gap between the cost of the new home and the 
homeowner's income limitations.
    The benefits of a national program are a compelling 
trifecta because it will create jobs, conserve energy, and 
provide quality affordable housing. An investment of $500 
million a year for 3 years will: No. 1, jobs--provide 51,000 
manufacturing, construction, and financing jobs all in the U.S. 
We estimate that there will be 1.1 new jobs per home built.
    In addition to the creation of much-needed manufacturing 
jobs, the down payment assistance will generate more than $8 
billion in construction-related spending. This in turn creates 
significant new tax revenue. Businesses build homes, sell those 
homes, and pay Federal corporate income tax. The businesses pay 
salaries to workers, who will pay income and payroll taxes. The 
banks pay corporate tax. We believe this program has the 
potential to generate tax revenue exceeding the cost.
    No. 2, energy savings. The program saves nationwide energy 
costs at more than $240 million a year. The average energy cost 
savings are about $1,800 per year or $150 a month for a family. 
We estimate a reduction of 1.4 million tons of greenhouse gas 
emissions.
    No. 3, quality affordable homes. The program will enable 
nearly 135,000 struggling families to live in attractive and 
affordable homes that enable them to achieve greater financial 
security.
    We appreciate the committee's commitment to finding 
solutions that address our Nation's economic and energy 
challenges and urge you to incorporate this initiative into the 
jobs bill. Thank you.
    [The prepared statement of Ms. Epperson follows:]

  Prepared Statement of Stacey Epperson, Executive Director, Frontier 
                         Housing, Morehead, KY

                              INTRODUCTION

    Thank you Chairman Bingaman, Ranking Member Murkowski and members 
of the Committee for the opportunity to provide testimony supporting 
efforts to replace old, substandard mobile homes with new ENERGY STAR 
manufactured homes.
    The organization I represent, Frontier Housing, is part of a 
network of non-profit housing organizations helping low-income families 
find quality, affordable homes that offer an opportunity to build 
equity while reducing homeownership costs. Today I also speak for a 
larger group of non-profits, including NeighborWorks Montana and 
Anchorage, the Environmental and Energy Study Institute and the 
Corporation for Enterprise Development. We have come together with 
representatives of the manufactured housing industry to support a 
mobile home replacement program. Our coalition includes the 
Manufactured Housing Institute (MHI) the national trade association 
representing all segments of the manufactured housing industry and the 
Systems Building Research Alliance. The Alliance is the research arm of 
the manufactured housing industry and US EPA's National Quality 
Assurance provider for ENERGY STAR qualified manufactured homes.

                              THE PROBLEM

    Nationwide, more than two million families live in old, and often 
dilapidated, mobile homes. These homes are among the nation's most 
energy inefficient. Most are found in economically depressed, rural 
areas and commonly are home to families that are near or below the 
poverty line. These households often fall through the cracks of federal 
government assistance programs yet they may be trapped in a cycle of 
very high energy bills with little or no resources to make efficiency 
improvements in their own homes.
    Additional taxpayer supported investments for energy improvements 
and weatherization is not a long-term solution: these homes can never 
be made energy efficient. Built prior to the federal code that 
regulates the construction of manufactured housing, they have degraded 
to the point where it is more prudent and less costly to simply replace 
the home than make the sizable investment in the insulation, windows, 
new equipment, and envelope repair that would be needed.
    Rarely are there opportunities for so dramatically reducing home 
energy use and home operating costs and, in the process, improving the 
quality of life for American families that have few other options.

                           LOCAL PERSPECTIVES

    This is not a fringe issue nor is it limited to one state or one 
region of the nation. For example:

   In the state of Montana, one out of every 12 homes (8%) is a 
        pre-code mobile home.
   Over half of the factory-built homes in Alaska, New Jersey, 
        Montana, Wyoming, Idaho, North Dakota, Colorado, Utah, New 
        Hampshire and ten other states were built prior to the 
        enactment of the HUD code.
   Nearly every state has thousands of mobile homes built prior 
        to the enactment of energy standards. A few states, like North 
        Carolina and Arizona, have more than 100,000 homes that fit 
        this criterion.
   Households who live in pre-1980 manufactured housing 
        generally have incomes well below the state median. In New 
        Hampshire and Utah, for example, nearly 90 percent of families 
        living in old mobile homes are below the state median income.
   In the states of Tennessee, Kentucky, Arkansas, West 
        Virginia, and Missouri more than 90 percent of mobile 
        homeowners have incomes below the national median.

                              THE SOLUTION

    The solution is a targeted program to help income-qualified 
homeowners that help them purchase a new and affordable ENERGY STAR 
manufactured home. We believe the program should provide the following 
assistance:

          1. To help the buyers qualify for financing and afford the 
        monthly payments, a direct incentive of $7,500 to be applied 
        against the purchase price of a new ENERGY STAR manufactured 
        home. Funds for home financing should be available at the time 
        of home purchase (that is, subject to advanced availability).
          2. To cover the additional cost of removing and recycling the 
        old home, a grant of up to $2,500 to be provided upon proof of 
        decommissioning.
          3. To further close the gap between the cost of the new home 
        and the homeowner's income limitations, we urge that the 
        replacement of substandard mobile homes be included as an 
        eligible use of ARRA weatherization funds.

    With limited funding, several non-profit housing agencies have 
already taken steps to implement programs modeled on this concept. For 
example,

   In 2007, NeighborWorks Montana received $350,000 to fund a 
        pilot program for the decommissioning and replacement of older 
        manufactured homes. The study identified nearly 30,000 pre-1976 
        manufactured homes in Montana, for which the cost of 
        weatherization improvements often exceeded the value of the 
        home.
   Maine's state housing authority operates a mobile home 
        replacement program that incorporates an ENERGY STAR mortgage 
        product. Maine's program will track energy savings created by 
        replacement efforts.
   Affordable Housing Alliance, New Jersey is replacing pre-
        1976 units in a community in Eatontown with ENERGY STAR units 
        as part of the state's affordable housing initiative.
   New York recently created a program that commits $5 million 
        to replace pre-HUD Code homes with ENERGY STAR rated 
        manufactured homes.

    These efforts provide valuable lessons for the proposed program.
    The benefits of a national program are compelling. It will provide: 
substantial and sustainable energy savings and reduction in greenhouse 
gases, a powerful engine of job creation in the United States, and, 
improved affordability and financial stability for families most in 
need.
    Specifically, we anticipate the following outcomes from the 
program:

                              THE BENEFITS

Energy and Environment
   Households participating in the program will save an average 
        of $1,800 per year in energy costs, savings that could be 
        better applied to offsetting the new home monthly mortgage 
        costs and therefore building equity.
   Nationwide savings of more than $240 million a year in 
        reduced energy costs. Within six years of roll out, the program 
        will have paid for itself and continue to pay dividends.
   Reduction in greenhouse emissions of about 1.4 million tons.
Jobs
    Adding demand for new manufactured homes at a time when 
construction is deeply depressed is a very effective mechanism for 
getting Americans back to work. Half of the new jobs created would be 
in factories as plants staff up to meet demand, and about half would be 
in construction support services. Each new affordable, manufactured 
home constructed adds more than one new job. At a program annual budget 
of $500 million per year, over the next three years more than 51,000 
new jobs will be created in home manufacturing and related construction 
in the US. One of the advantages of factory construction is the short 
time within which demand turns into production accelerating the pace of 
new domestic job creation.

Home Affordability and Quality of Life
   Replacement of old mobile homes with new ENERGY STAR units 
        substantially reduces energy use and improves home 
        affordability, easing the financial burden on families 
        struggling to meet monthly homeownership costs.
   The program will provide an opportunity for families to 
        build equity in their homes and increase their families' 
        wealth. The financial assistance will help families achieve 
        security of tenure, build wealth and achieve financial 
        stability
   Replacement will eliminate problems that chronically plague 
        old mobile homes that are detrimental to family health, such as 
        poor indoor air quality, leaking roofs, collapsing floors and 
        unvented appliances.

                          CONGRESSIONAL ACTION

    We thank Senator Tester and his staff for their commitment. We also 
appreciate the involvement of the staff of the Committee for working 
closely with us as the elements of this program were crafted. This 
program is part of an innovative recovery plan that will help revive 
the economy and put Americans to work in our new clean energy economy. 
Senator Tester's bill, the Energy Efficient Manufactured Housing Act of 
2009 (S. 1320) has received bipartisan support and we strongly request 
its inclusion in the Jobs bill.
    A replacement program was also included in '203 of the American 
Clean Energy and Security Act of 2009 (HR 2454) and passed by the House 
of Representatives.

                               CONCLUSION

    We recommend that Congress appropriate $1.5 billion over three 
years to the Department of Energy to provide assistance to eligible 
homeowners to replace substandard mobile homes with ENERGY STAR 
manufactured homes.
    We appreciate the Committee's commitment to finding solutions that 
address our nation's energy and economic challenges and urge you to 
incorporate this initiative into the Jobs bill to create jobs, save 
energy, reduce greenhouse gas emissions and enable low-income families 
to afford decent housing and achieve financial security. You may 
contact any of the coalition members at the contact information below. 
Thank you.

    The Chairman. Thank you very much.
    Mr. Giudice, go right ahead.

   STATEMENT OF PHILIP GIUDICE, COMMISSIONER, MASSACHUSETTS 
DEPARTMENT OF ENERGY RESOURCES, AND CHAIR, NATIONAL ASSOCIATION 
             OF STATE ENERGY OFFICIALS, BOSTON, MA

    Mr. Giudice. Thank you. Good morning, Chairman Bingaman, 
Ranking Member Murkowski, and committee colleagues. My name is 
Phil Giudice and I'm here today on behalf of NASEO. I am the 
chair of the board of the National Association of State Energy 
Officials. I'm also here on behalf of Governor Patrick. I am a 
Commissioner of the Massachusetts Department of Energy 
Resources. Under Governor Patrick's leadership, we're excited 
to be giving a race to Vermont and California to be the most 
energy efficient State in the Union.
    Last week my colleague Malcolm Woolf, NASEO's vice chair 
and Director of Maryland Energy Administration, testified on 
behalf of the stimulus money that we are putting to work, and 
things are going quite well there and I look forward to 
responding to any questions that may come up in that matter.
    But today we're here to discuss several proposals that 
really have very exciting opportunity for us. We see these as a 
further bridge to our cleaner energy future, creating jobs now, 
and with the success of both the energy stimulus investments 
and these jobs investments we will have a compelling basis for 
the important work into the future to leverage private 
financing and carry on this work to create a much better energy 
circumstance for us.
    NASEO fully supports the Home Star program and urges 
Congress to adopt the proposal, including the $6 billion 
funding level, which will quickly lead to creating jobs and 
serve as a step to implement the longer State-based energy 
efficient building programs that were included in both the 
energy bill passed by this committee in June last year, which I 
was thankful to have an opportunity to testify in support of, 
as well as the REAP provision which is included in the House-
passed energy and climate bill.
    But a couple of points. It is critical that the Home Star 
program be carefully coordinated in collaboration with the 
States that are already--and integrated with the comprehensive 
State energy programs. We're confident that there will be 
methods that we can make that happen.
    In addition, we suggest 3 changes. One, the Home Star 
program should be treated in the same manner as the 
weatherization program with respect to NEPA and Buy American. 
We have learned from some of the experiences of the stimulus 
and we know that in this program delay is simply not 
acceptable, so we encourage simply adopting parallel language 
to make sure that those issues do not become challenges to move 
forward on this program.
    Second, also to avoid delay, we include--we would request 
you to include a waiver position to be built into the statute 
in order to permit minor changes in State programs implemented 
under Home Star so that implementation can be speedy.
    Lastly, as a prior speaker indicated, it is critical that 
the Home Star program be coordinated with section 25 [c] of the 
residential energy--residential existing home energy efficiency 
tax credit, so that the Congress can ensure ongoing viability 
of the tax credit is accommodated in this program.
    Next program, Building Star. NASEO also strongly supports 
Senator Merkley's and colleagues' Building Star legislation, a 
program to offer rebates for owners of commercial and 
multifamily buildings for efficiency improvements. The 
delivering of rebates through that program structure is very 
straightforward and many buildings we expect will take the 
utilization of that. They are constrained now by lack of 
financing, by low value of these properties, and by challenges 
that they're facing in the commercial sector, and this Building 
Star program will have significant benefits for them.
    It will also leverage a significant amount of public 
financing to make this work. This means that each dollar of 
public investment in rebates will spur $2 to $3 of private 
investment in making these buildings more efficient.
    The third program, NASEO also supports Senator Tester's 
proposal to address the urgent need of our pre-1976 
manufactured housing and replacing it with Energy Star housing. 
We think that the programs that are laid out in that proposal 
are helpful in that degree to move us forward.
    Lastly, we encourage the committee to take up a proposal to 
look at the industrial energy efficiency programs. Investments 
made in industrial energy efficiency pays multiple dividends. 
It improves our manufacturers' global competitiveness, it 
improves our trade balance, stems the jobs loss in 
manufacturing, enables our economy to be somewhat less 
dependent on just consumer spending for its health, and both 
creates jobs in implementing the efficiency projects as well as 
reducing energy emissions.
    Under ARRA, my State and many States was gigantically 
oversubscribed in the programs and the funding that was 
available to help our industrial infrastructure become energy 
efficient. Only a small fraction of the opportunities, the 
submitted proposals, were able to be funded. So NASEO supports 
providing $4 billion for this program pursuant to Subtitle D of 
Title 4 of the Energy Independence and Security Act. This will 
make sense from both a global competitiveness perspective as 
well as an energy perspective as well as a jobs perspective.
    I look forward--I thank you for the opportunity to testify 
today and I look forward to taking your questions.
    [The prepared statement of Mr. Giudice follows:]

   Prepared Statement of Philip Giudice, Commissioner, Massachusetts 
  Department of Energy Resources, and Chair, National Association of 
                   State Energy Officials, Boston, MA

    Mr. Chairman, my name is Philip Giudice and I am appearing today on 
behalf of the National Association of State Energy Officials (NASEO). I 
am Chair of NASEO and the Commissioner of the Massachusetts Department 
of Energy Resources, so I am proud to be here representing 
Massachusetts Governor Deval Patrick. Today, I am testifying on behalf 
of a variety of legislative provisions to encourage creation of jobs.
    NASEO represents the energy offices in the states, territories and 
the District of Columbia. We provide an ability to shape policies and 
practices among all of the states to implement a balanced national 
energy policy. At the present time, the Association is proactively 
working with the states in ensuring that the energy portion of the 
stimulus funds directed to state activities is effectively put to work 
as quickly and productively as possible. We are also working to ensure 
that as we look to the future, we have established the basis for our 
transition to a clean energy economy.
    Last week, my colleague Malcolm Woolf, who serves as NASEO's Vice-
Chair and is Director of the Maryland Energy Administration, testified 
with respect to ARRA implementation. As Malcolm testified, the states 
have energetically committed, obligated and are spending the $3.1 
billion in ARRA funds under the State Energy Program (SEP). Over one-
half of those funds are already committed, despite the delays caused by 
NEPA reviews, Davis-Bacon, Buy-American concerns and procurement 
issues. The $5 billion provided to the Weatherization Assistance 
Program is projected to hit the target of projected homes consistent 
with the state goals. The $3.2 billion in funds under the Energy 
Efficiency and Conservation Block Grant (EECBG) is moving forward for 
the 2,300 direct recipients, and the states are allocating their funds 
rapidly. The $300 million Energy Star Appliance Rebate Program is 
planning to spend most of the funds by the end of the first quarter of 
this year. ARRA funds are having a direct impact on the economy and are 
producing real jobs. I am proud to say that, thanks to the leadership 
of Governor Patrick and his entire recovery team, my own state of 
Massachusetts is hard at work deploying stimulus funds to create jobs 
and deliver energy benefits. We are on track to have 97% of our SEP 
funds and the state portion of the EECBG funds under contract with 
recipients or in negotiations by the end of this month.
    The proposals we are discussing today will help serve as an 
important bridge to a cleaner energy future and will create jobs very 
quickly. We know that our economy today wastes enormous amounts of 
energy. We are in the process of building a substantial track record of 
success with the stimulus funds to demonstrate how prudent investments 
in efficiency pay dividends for the economy in reducing energy waste. 
These jobs proposals will broaden and deepen our track record for 
success and will both raise awareness, as well as develop the delivery 
models to provide for increased energy efficiency. With the success of 
the energy stimulus investments and these jobs investments we will have 
a compelling basis for continuing this important work far into the 
future by leveraging private financing.

                               HOME STAR

    NASEO supports the Home Star program and urges Congress to adopt 
the proposal, including the $6 billion funding level. This initiative 
will put people to work and will move aggressively to improve the 
energy efficiency of our existing homes. The ``prescriptive'' (Silver 
Star) proposal and the ``performance-based'' (Gold Star) proposal 
together constitute a short-term, first step to be implemented over a 
two-year period. This ``first step'' is significant as we prepare to 
hopefully implement a longer-term, state-based energy efficient 
buildings program included in both the energy bill passed by this 
Committee in June 2009 (S. 1462) and the ``REEP'' provision included in 
the House-passed energy and climate bill (H.R. 2454).
    The state role in Home Star includes managing the necessary quality 
assurance activities, promoting use of financing programs to expand the 
reach of Home Star and finally to serve as Rebate Aggregators in 
certain jurisdictions. Language is also contained in the legislative 
draft that strives to ensure that existing state-based energy efficient 
building retrofit programs are not compromised and will move forward 
toward their already-established goals without delay, interruption, or 
complication. Under ARRA, approximately $800 million in new residential 
energy efficiency retrofit programs are being implemented under SEP and 
EECBG. These programs are expanding existing, established programs, 
that are already being deployed in states like Massachusetts, New York, 
Oregon, California, Wisconsin, and elsewhere. It is important that any 
final legislation in this area maintain the highest energy efficiency 
levels possible--of the type contained in the present draft of the 
bill.
    In my own state of Massachusetts we have been running comprehensive 
home retrofit programs for three decades, and are at this very moment 
in the process of expanding them three-fold. After a comprehensive 
stakeholder planning process led by my office over the last 18 months, 
our efficiency program administrators (primarily the investor-owned 
utilities) developed three-year, statewide energy efficiency programs 
that have received the endorsement of key stakeholders, including the 
Associated Industries of Massachusetts, our state Attorney General's 
ratepayer advocate office, environmental organizations and others. The 
plan will deliver nearly $6 billion in benefits to all energy customer 
classes, save more than 30,000 GWh and nearly 900 million therms of 
natural gas and reduce GHGs by about 15 million tons. These programs 
reflect the combined efforts of thirteen different efficiency program 
administrators who have agreed to integrate efficiency delivery across 
service territories and across fuel sources (combining electric and gas 
savings wherever appropriate) in order to deliver comprehensive and 
coordinated building improvements that are targeted to meet customer 
needs. Approximately 40% of the funding is focused on residential 
efficiency, and the bulk of that is in building retrofits.
    In addition we are aggressively pursuing adoption of strong energy 
codes including an optional ``stretch'' code that cities and towns can 
adopt; a funded training program for local code inspectors to enhance 
code compliance; a robust zero net energy building program in state 
government and for the private sector; a GHG review requirement for 
major development projects which is improving the quality of buildings 
at the design stage; and many other steps to promote building energy 
performance improvements.
    It is critical that the Home Star program be carefully tailored to 
ensure that it maximizes benefits to taxpayers and energy customers by 
requiring integration and coordination with existing comprehensive 
state programs. Anything less risks disrupting the progress that states 
are already making to achieve the employment, energy and climate goals 
we all share. DOE and the rebate aggregators must coordinate with these 
comprehensive state programs. We certainly do not want consumers facing 
confusing offerings.
    In addition, three changes are necessary to this legislative draft. 
First of all, we feel strongly that for purposes of NEPA and Buy-
American, the Home Star program should be treated in the same manner as 
the Weatherization Assistance Program. As Malcolm Woolf testified last 
week, the federal and state governments have learned a great deal 
through the implementation of ARRA. One thing we learned is that 
further delay is not acceptable. Home Star is a residential energy 
efficiency retrofit programs: Weatherization is a residential energy 
efficiency retrofit program. Home Star should be treated in the same 
manner for purposes of these important statutes.
    Second, again in order to avoid delay, a waiver provision should be 
built into the statute in order to permit minor changes in state 
programs implemented under Home Star to be implemented quickly.
    Third, it is critical that the Home Star program be coordinated 
with the Section 25C residential existing homes energy efficiency tax 
credit, so that Congress can ensure the ongoing viability of this tax 
credit while advancing this new rebate which will benefit many more 
homeowners and provide immediate job growth. The rebate levels in the 
draft bill need to be increased in light of the treatment of the 25C 
tax credit under this legislation.

           BUILDING STAR ENERGY EFFICIENCY REBATE ACT OF 2010

    NASEO also strongly supports Senator Merkley's (along with 
Senators' Brown (OH), Cardin, Pryor, Sanders and Stabenow) Building 
STAR legislation; a program to offer rebates to the owners of 
commercial and multi-family buildings for efficiency improvements. The 
Building STAR rebates are modeled on successful programs that states, 
such as Massachusetts, have created to offer energy efficiency rebates 
to commercial building owners. This gives me confidence that Building 
STAR would work and immediately spur new projects and new jobs. 
Delivering the rebates will be simple and straightforward, because many 
commercial building owners and contractors are already very familiar 
with how to select and implement such efficiency measures and apply 
such rebates.
    The economic opportunity in the commercial building sector is 
great. Nearly 2 million people have lost high-skilled, non-residential 
construction jobs since the beginning of the economic downturn--an 
unemployment rate of 24.7%, or nearly 2.5 times the national average. 
Nationally, commercial buildings consume 46% of energy, and, as recent 
job data indicate, unemployment is high in the construction industry.
    But commercial building owners, most of whom understand the great 
benefits of energy efficiency to their buildings, often are unable to 
conduct energy efficiency retrofits or upgrades, due to a variety of 
market barriers, including tight credit markets, low property values, 
and confusing landlord-tenant issues on energy bills.
    If Building STAR is fully funded at $6 billion, consumers would 
save $3.3 billion per year on their energy bills, more than 190,000 new 
jobs would be created, and the equivalent of nearly 4 million cars 
worth of carbon dioxide emission would be avoided by the end of 2011. 
Building STAR will put highly-skilled people in the badly-hit 
construction industry back to work conducting energy efficiency 
retrofits and help turn the economic tide. It would help the small 
construction businesses--91% of construction firms have fewer than 20 
employees. Building STAR would help create manufacturing jobs (e.g., 
for windows, lighting, and so on), construction jobs and more in every 
state across the nation.
    Building STAR is a package of rebates for energy efficient 
equipment, materials and building services designed to meet the unique 
needs of the commercial and multi-family residential building sector. 
It is the product of a broad coalition of more than 80 unions, 
contractor groups, manufacturers, financial services companies, 
consumer groups, distributors, technical experts and efficiency 
advocates that would hit the ground running to deliver new work, new 
jobs and significant energy savings in the short run.
    Rebates are offered for twenty different activities, including 
improving the building envelope, installing more efficient lighting, 
high efficiency HVAC and other equipment as well as performing audits, 
commissioning, and training. In general, the rebates are designed to 
cover 20% to 33% of the installed cost of each measure. That means that 
each dollar of public investment in rebates spurs $2 to $3 of private 
sector investment.
    The need is great. In January alone, a worker from the specialty 
trades sector filed an initial unemployment claim every four minutes. 
An overwhelming majority; 91%, of the commercial contractors that 
employed this workforce are small businesses that are now severely 
under-utilized and in trouble. The story is the same in the 
manufacturing sector, which has also lost about 2 million jobs over the 
last two years.

      ENERGY-EFFICIENT MANUFACTURED HOUSING ACT OF 2009 (S. 1320)

    NASEO also supports Senator Tester's proposal to address the urgent 
need to replace pre-1976 manufactured housing with Energy Star 
manufactured housing. There are over 2 million of these pre-1976 
manufactured housing units in use in the United States today. Prior to 
1976 there were no effective energy efficiency standards for these 
homes. In many areas, low-income and elderly Americans (especially in 
rural areas) live in these manufactured housing units. They tend to use 
far more energy than the average home because of little insulation or 
other energy savings measures. Targeting homeowners with a minimum of 
$7,500 per home in the form of a rebate or down payment assistance will 
help move this critical effort forward. This program should be 
especially helpful in rural areas.

                 INDUSTRIAL ENERGY EFFICIENCY PROGRAMS

    Investments to improve industrial energy efficiency pays multiple 
dividends. It improves our manufacturers' global competitiveness which 
helps to improve our trade balance, slows jobs lost in manufacturing, 
enables our economy to be somewhat less dependent on just consumer 
spending for its health and both creates jobs in implementing these 
efficiency projects as well as reducing emissions. Under ARRA, my state 
like virtually all others was widely over-subscribed when we issued 
RFPs for certain kinds of projects, including industrial energy 
efficiency projects. In addition, at the federal level, funds were 
provided at DOE's discretion for industrial energy efficiency 
activities such as plant retrofits and modernization to promote 
industrial energy efficiency. This protects these manufacturers from 
fuel price volatility and increases competitiveness. These federal 
funds were also sufficient to fund only a small fraction of submitted 
proposals. We have project plans on the shelf from industrial 
facilities across Massachusetts who tell us they are ready to move 
forward in the next few months with efficiency investments if they 
could get access to additional support. We think that $4 billion should 
be allocated for this program, pursuant to subtitle D of title IV of 
the Energy Independence and Security Act of 2007 (EISA)(42 U.S.C. 17111 
et. seq.). Over ten states utilized ARRA funds directly for 
manufacturing retooling to promote energy efficiency. This makes sense 
from an energy perspective as well as a global competitiveness 
perspective.
    Thank you for the opportunity to testify today.

    The Chairman. Thank you very much.
    Mr. Mierzwa.

    STATEMENT OF TERRENCE J. MIERZWA, EXECUTIVE MANAGER OF 
 MARKETING, ENERGY EFFICIENCY, AND RESEARCH, CONSUMERS ENERGY 
                      COMPANY, JACKSON, MI

    Mr. Mierzwa. Good morning, Mr. Chairman. Thank you, and 
Senator Murkowski, members of the committee. Thank you, Senator 
Stabenow, for the introduction. As Senator Stabenow noted, my 
name is Terry Mierzwa, Executive Manager of Marketing, Energy 
Efficiency, and Research at Consumers Energy, headquartered in 
Jackson, Michigan. Consumers Energy provides service to 1.8 
million electric customers and 1.7 million gas customers in 
Michigan.
    I thank you for this opportunity to testify today on the 
proposal to implement a Home Star program. Consumers Energy is 
a strong supporter of energy efficiency. Recently we worked 
with our State legislature and many interested parties to help 
craft and pass legislation that requires Michigan energy 
utilities to achieve annual energy savings targets through 
programs we offer to our customers. With strong bipartisan 
support, Governor Granholm signed Public Act 295 into law in 
October 2008.
    After approval from the Michigan Public Service Commission, 
we launched a portfolio of new programs in late July and, 
despite having only 5 months to do so, I'm proud to say we 
exceeded our 2009 energy savings targets by about 25 percent. 
We're off to a great start in 2010 as well.
    Clearly, our customers appreciate these programs and are 
taking advantage of them. We estimate that more than 170,000 
residential customers participated in at least one program last 
year and about 9,500 commercial industrial customers did so as 
well, including a number of public customers. We heard earlier 
about schools. We have many of those participating in our 
programs. Our customers look to us as a trusted resource for 
expert energy advice and the measures they have installed will 
help them save money on their energy bills for many years to 
come.
    I might add that the other major energy utility in 
Michigan, DTE, has followed a similar path, as have all the 
smaller utilities. This is truly a statewide effort.
    Michigan is certainly not the only State in which energy 
efficiency investment has been growing. A new report by the 
Consortium of Energy Efficiency shows that since 2006 the 
combined budgets for electric and gas energy efficiency 
programs in the United States have more than doubled, growing 
from $2.6 billion to $5.3 billion.
    It is clear that energy utilities are well positioned to 
play a critical long-term role in delivering energy efficiency. 
In a recent Edison Electric Institute power poll, a national 
sample of residential consumers was asked what groups or 
organizations would they look to for more information on how to 
use electricity more efficiently. Almost 60 percent said they 
would look to their electric utility, which was 2 and a half 
times as many who mentioned the second most popular choice, 
which was retailers.
    Successful implementation of energy efficiency programs by 
utilities has required development of the infrastructure 
necessary to bring them to market. We have hired implementation 
contractors, developed detailed policies and procedures, built 
web sites, established call centers, built tracking systems, 
established rebate processing capability, and recruited and 
trained thousands of trade allies. These trade allies include 
big box retail stores, architectural and engineering firms, 
energy auditors, and electrical home improvement and heating 
and cooling contractors across our State. Our programs are 
operated in an open and transparent manner, with independent 
third party evaluation of the results.
    We believe this Michigan model for operating energy 
efficiency programs is working quite well, given the energy 
savings results achieved thus far, and it will continue to get 
even better with more experience. But this model is far from 
unique. More than 20 other States have legislated energy 
savings targets that are being achieved through similar 
programs and infrastructure.
    The new legislation being proposed to this committee can 
offer enhanced opportunities for our customers to become more 
energy efficient and we believe that is a worthy goal. 
Improvements in energy efficiency are good for the economy as 
well as the environment. We appreciate the changes that have 
been made since the original draft and note that many align 
with our priorities. To that end, we have 2 key requests, as 
follows.
    No. 1, we want to ensure that the infrastructure we already 
have in place is not duplicated in the Home Star program. We 
believe it is important that energy efficiency be achieved in a 
cost-effective manner in that States in which utilities are 
operating successful energy efficiency programs are especially 
well positioned to ensure that outcome. Home Star could and 
should supplement and augment what we already have in place.
    No. 2, it is critical that Federal legislation be 
harmonized with existing State legislation that has already set 
energy efficiency requirements for utilities. This can be done 
by making it very clear that utilities are allowed to 
participate in and coordinate their programs with Home Star. 
That clarity will help us to implement quickly and therefore 
promote quicker job creation, while also demonstrating to our 
commission that we have a role to play and should receive 
appropriate credit toward our State energy saving goals.
    It's my understanding that the House version of this bill 
has some clarifying language around utility participation and 
credit that I think is helpful in that matter.
    We very much appreciate that the drafters of this 
legislation have incorporated many of our suggestions and 
incorporated language that would give States such as Michigan 
the option the flow much of this activity through the existing 
infrastructure that has already been created by the utilities 
and has enabled each of us to operate successful cost-effective 
energy efficiency programs. We hope that as this proposed 
legislation undergoes debate within this committee and later in 
the full Senate this option to take advantage of existing 
utility program infrastructure is preserved.
    Thank you for your attention.
    [The prepared statement of Mr. Mierzwa follows:]
    Prepared Statement of Terrence J. Mierzwa, Executive Manager of 
 Marketing, Energy Efficiency, and Research, Consumers Energy Company, 
                              Jackson, MI

    Good morning. My name is Terry Mierzwa, Executive Manager of 
Marketing, Energy Efficiency, and Research at Consumers Energy Company, 
headquartered in Jackson, Michigan. Consumers Energy provides service 
to 1.8 million electric customers and 1.7 million natural gas customers 
in Michigan's Lower Peninsula.
    Thank you for this opportunity to testify on the draft text of a 
legislative proposal to implement the Home Star program.

                               BACKGROUND

    Consumers Energy is a strong supporter of energy efficiency. It is 
a key component of our Balanced Energy Initiative for meeting our 
customers' energy demands. In 2007 and 2008, we worked with our 
legislature and many interested parties to help craft and pass 
legislation that requires Michigan energy utilities to achieve annual 
energy savings targets through programs we offer to our customers. With 
strong bipartisan support, Governor Granholm signed Public Act 295 into 
law in October 2008.
    We subsequently developed a comprehensive six-year plan for 
investing $508 million in electric and gas energy efficiency programs 
for our residential, commercial, and industrial customers. The Michigan 
Public Service Commission approved our plan as filed in late May 2009. 
We launched our portfolio of new programs in late July and, despite 
having only five months to do so, I am proud to say we exceeded our 
2009 energy savings targets of 108,000 MWh of electricity and 300,000 
Mcf of natural gas each by about 25%. We are off to a great start in 
2010 as well.
    Clearly, our customers appreciate these programs and are taking 
advantage of them. We estimate that more than 170,000 residential 
customers participated in at least one program last year, whether it 
was buying and installing compact fluorescent light bulbs, purchasing a 
high-efficiency furnace, or letting us pick up and recycle an old 
second refrigerator from their basement or garage. Similarly, about 
9,500 commercial and industrial customers took advantage of our 
programs. They ranged from an elementary school in Swartz Creek that is 
saving $2,300 annually after installing 22 occupancy sensors in 16 
classrooms to a General Motors plant in Flint that is saving $125,000 
annually after replacing nearly 1,200 light fixtures with higher 
efficiency units. Just this month, we launched a new program called 
Think! Energy targeted at 4th through 6th graders throughout our 
service territory. We fully subscribed this program within a month and 
are now in the process of visiting 121 schools and making energy 
efficiency presentations to 13,000 students. In addition, each child 
will receive a Take Action! Kit to take home to review with their 
family. The kit contains two compact fluorescent light bulbs, a high-
efficiency showerhead, a faucet aerator, and other easy-to-install 
measures. Our customers look to us as a natural resource for expert 
energy advice, and the measures that all of these customers installed 
will help them save money on their energy bills for many years to come.
    I might add that the other major energy utility in Michigan, DTE, 
has followed a similar path as have the smaller investor-owned 
utilities, municipal utilities, and electric cooperatives. It is truly 
a statewide effort.
    Michigan is certainly not the only state in which energy efficiency 
investment has been growing. A new report by the Consortium for Energy 
Efficiency shows that, since 2006, the combined budgets for electric 
and gas energy efficiency programs in the United States have more than 
doubled, growing from $2.6 billion to $5.3 billion.
    It is clear that energy utilities are well-positioned to play a 
critical long-term role in delivering energy efficiency. In a recent 
EEI Power Poll, a national sample of residential consumers was asked 
what groups or organizations they would look to for more information on 
how to use electricity more efficiently. Almost 60 percent said they 
would look to their electric utility, which was two-and-a-half times as 
many (23%) who mentioned the second most popular source, retailers.

                         PROGRAM INFRASTRUCTURE

    Successful implementation of energy efficiency programs by all of 
these utilities required development of the infrastructure necessary to 
bring them to market. We have hired implementation contractors, 
developed detailed policies and procedures, built Web sites, 
established call centers, built tracking systems, established rebate 
processing capability, and recruited and trained thousands of trade 
allies. The trade allies include ``big box'' retail stores, 
architectural and engineering firms, energy auditors, electrical 
contractors, home improvement contractors, and heating and cooling 
contractors across the state. Our programs are operated in an open and 
transparent manner with independent, third-party evaluation of the 
results. All of this activity is conducted under the oversight of the 
Michigan Public Service Commission, which has responsibility for 
ensuring the prudency and cost-effectiveness of our energy efficiency 
investments. The Commission also plays an important role by its 
operation of various energy efficiency collaboratives through which 
utilities can better coordinate their program offerings and the public 
can provide its input.
    We believe this Michigan model for operating energy efficiency 
programs is working quite well given the energy savings results 
achieved thus far, and it will continue to get even better with 
additional experience and collaboration. This model is not unique. More 
than twenty other states have legislated energy savings targets that 
are being achieved through similar programs, infrastructure, and 
collaboration.

                 COORDINATION WITH FEDERAL LEGISLATION

    The new legislation being proposed to this Committee can offer 
enhanced opportunities for our customers to become more energy 
efficient, and we believe that is a worthy goal. Improvements in energy 
efficiency are good for the economy as well as the environment. We 
appreciate the changes that have been made since the original draft and 
note that many align with our priorities. To that end, we have two key 
requests, as follows:

          1. We want to ensure that the infrastructure we already have 
        in place is not duplicated in the Home Star program. We believe 
        it is important that energy efficiency be achieved in a cost-
        effective manner, and that states in which utilities are 
        operating successful energy efficiency programs are especially 
        well-positioned to ensure that outcome. By taking advantage of 
        the infrastructure the utilities already have in place, we can 
        avoid the creation of redundant infrastructure and 
        administration, which means more of the money appropriated for 
        this effort will flow directly to the consumers who want to 
        improve the energy efficiency of their homes. It also means 
        that the jobs created by these federal programs can be brought 
        to market more quickly. Home Star will supplement and augment 
        what we already have in place.
          2. It is critical that federal legislation be harmonized with 
        existing state legislation that has already set energy 
        efficiency requirements for utilities. This can be done by 
        making it very clear that utilities are allowed to participate 
        and coordinate their programs with Home Star. That clarity will 
        help to enable us to implement quickly and promote job 
        creation, while showing our Commission that we have a role and 
        should receive appropriate credit toward our energy savings 
        goals. Otherwise, the federal dollars will be competing with 
        our programs, making them less cost-effective, and potentially 
        causing us to suspend them while federal incentives are in 
        place. This would serve neither our customers nor trade allies 
        well because they seek assurance of a sustained effort rather 
        than a boom and bust cycle.

    We very much appreciate that the drafters of this legislation have 
incorporated many of our suggestions and incorporated language that 
would give states such as Michigan the option to flow much of this 
activity through the existing infrastructure that has already been 
created by the utilities and has enabled each of us to operate 
successful, cost-effective energy efficiency programs. We hope that, as 
this proposed legislation undergoes debate within this Committee and 
later in the full Senate, this option to take advantage of existing 
utility program infrastructure is preserved.
    Thank you for your attention.

    The Chairman. Thank you very much.
    Mr. Hanbury, you're the final witness here. Go right ahead.

  STATEMENT OF BOB HANBURY, PRESIDENT, HOUSE OF HANBURY, AND 
BOARD MEMBER, NATIONAL ASSOCIATION OF HOME BUILDERS, NEWINGTON, 
                               CT

    Mr. Hanbury. Great, thank you. Good morning, Mr. Chairman 
and members of the committee. My name is Bob Hanbury. I'm a 
custom design remodeler from Newington, Connecticut with over 
34 years experience and I'm a board member of the National 
Association of Home Builders, NAHB, and I'm pleased to testify 
today on the Home Star Act of 2010.
    NAHB supports incentives for retrofitting older homes.
    We believe that this approach is the best way to achieve 
meaningful energy savings in the residential sector. 
Professional remodelers like me have been retrofitting homes 
for years and our expertise is an asset to a national retrofit 
program.
    We have demonstrated success managing federally funded 
retrofit programs. For example, the Builders Association of 
Minnesota administered a retrofit program called Project Re-
Energize in late 2009 with a grant from the stimulus bill. In 
just a few short months, the builders retrofitted over 1,400 
homes, employed 800 contractors, and returned nearly $3 million 
in consumer rebates for energy efficiency upgrades. This is a 
model of efficiency and success that we believe is a perfect 
part for the Home Star program.
    Despite our hope for Home Star, I can tell you that there 
are barriers to its potential success. As an EPA-certified lead 
firm, I am fully ready to comply with the new EPA rule covering 
renovation, weatherization, and retrofit work in pre-1978 
houses beginning in 42 days on April 22, 2010. Unfortunately, 
EPA does not have enough certified renovators that can legally 
work to retrofit and weatherize older housing stock that the 
Home Star program hopes to incentivize. Contractors that cannot 
meet EPA's certification requirements for the lead renovation, 
repair, and painting rule by April 22 will be breaking Federal 
law if they work in pre-1978 homes.
    Even without a multi-billion dollars retrofit program like 
Home Star, EPA is far from meeting its stated compliance needs 
of more than 200,000 certified renovators by the deadline. As 
of February 19, EPA reports only that about 14,000 certified 
individuals--there are about 14,000, with some States still 
having no accredited training providers. As you can see, a 
substantial retrofit program like Home Star only magnifies 
these compliance issues.
    Without a delay in the effective date of the rule, I 
believe it will derail the success of Home Star or, vice versa, 
these incentives may lead contractors to potentially violate 
the law by working in older homes without proper certification 
to take advantage of Home Star. NAHB supports lead-safe work 
practices as well as retrofit incentives, but unless the 
compliance issues with the lead rule are addressed I believe it 
will cripple Home Star before it really has a chance to work.
    In addition to the issues with the EPA's lead rule, NAHB 
also hopes to ensure that the Home Star program is equally 
accessible by all qualified highly trained contractors that 
have undertaken legitimate work force training and possess 
appropriate skills, job skills, in weatherization. We're 
concerned that there are limitations on both the certification 
requirements as well as the labor pool in the current draft 
legislation. The amount of energy lost on older homes is 
significant, as are the job losses in construction, and 
Congress should not limit in any way the ability of qualified 
highly skilled and eligible workers to execute a comprehensive 
home retrofit program.
    Specifically, NAHB requests the inclusion of the Home 
Builders Institute, or HBI, in addition to the named training 
programs as a qualified work force development program. HBI is 
the largest Job Corps partner with the U.S. Department of Labor 
and has developed a robust weatherization curriculum that 
creates a clear path for professionals doing retrofit work well 
into the future. HBI is a legitimate work force training 
program that deserves equal consideration with the others.
    NAHB is also concerned that minimum prequalification 
requirements under section 8 for work after January 1, 2011, 
precludes participation by certain eligible contractors. 
Specifically mandating accreditation and only properly 
classified employees seems to preclude contractors based on 
certification credential and employment status. NAHB has sought 
clarification on the reason behind qualifying contractors based 
on employment status, but has not received justification for 
this inclusion. Unless there is an objective reason for 
limiting the pool of available workers in this regard, it seems 
fair and appropriate to remove such mandates provided 
contractors can demonstrate sufficient job skills and work 
force training that otherwise would qualify them to do the 
work.
    NAHB fully supports retrofitting older homes and we are 
truly experts in this field. We support the benefits both in 
job creation and energy savings that a program like Home Star 
could deliver. But we are wary of the pitfalls. The chief 
obstacle to Home Star's success is the effective date of EPA's 
lead rule and the lack of certified renovators. This rule must 
be delayed until a sufficient number of contractors have the 
opportunity to be certified by EPA.
    I appreciate the opportunity to be here to present our 
thoughts on this legislation and we look forward to working 
with you. I'd be happy to answer any questions.
    [The prepared statement of Mr. Hanbury follows:]

  Prepared Statement of Bob Hanbury, President, House of Hanbury, and 
   Board Member, National Association of Home Builders, Newington, CT

    Chairman Bingaman, Ranking Member Murkowski, and members of the 
Committee, my name is Bob Hanbury. I am President of House of Hanbury, 
a third generation contractor based company in Newington, Connecticut. 
I have over 34 years experience specializing in design-build remodeling 
and I am a board member of the National Association of Home Builders 
(NAHB). I am pleased to have the opportunity to testify today, on 
behalf of the 175,000 members of NAHB in regards to the Home Star Act 
of 2010 and to express our support for incentives to retrofit older 
homes and buildings to improve energy efficiency and performance. 
Through my experience in the housing industry, I am intimately familiar 
with the struggles facing residential construction and I am eager to 
have meaningful job creation take place in our industry. NAHB members, 
like me, are already experts on the type of jobs that the Home Star 
proposal seeks to promote. I believe we can be both assets and allies 
for creating a robust national retrofit program like the one envisioned 
in the draft Home Star legislation.
    In addition to the great promise I see in the Home Star proposal, I 
also see potential barriers to its success. For example, there are 
potential conflicts between Home Star and an environmental rule--e.g., 
the EPA's Lead: Renovation, Repair and Painting Rule (LRRP)--that may 
create a serious compliance problem whereby it becomes illegal to work 
on any pre-1978 without certification by EPA in Lead Safe Work 
Practices (LSWP) as of April 22, 2010. Further, precluding access to 
the program by qualified contractors that receive appropriate job 
skills training via ``other'' workforce training programs is 
problematic. Similarly, requiring all contractors after the initial 
implementation period to be on a restrictive ``pre-qualification'' list 
will also limit the impact of the program.
    This statement details our concerns about the implementation of the 
EPA's LRRP that I believe will cripple the success of a Home Star 
retrofit program before it really has a chance to begin. Additionally, 
I have provided specific comments on the draft Home Star legislation 
outlining areas of concern and recommendations for improving the 
proposal. In both areas, NAHB looks forward to working with you to 
create a successful retrofit program that provides equal access for all 
qualified and properly-trained contractors and a true incentive to 
renovate the oldest, least-efficient housing stock.

         SUPPORT FOR RETROFIT INCENTIVES AND PROJECT REENERGIZE

    NAHB has consistently supported incentives for improving the energy 
efficiency of existing homes as part of a balanced energy efficiency 
policy for the building sector. In collaboration with several 
environmental and efficiency leaders, NAHB jointly advocated for the 
extension and expansion of tax credits under Section 25C and Section 
25D of the Internal Revenue Code that support both efficiency upgrades 
and the installation of advanced renewable energy systems in homes. 
These two incentives were used by more than 4 million taxpayers in 2007 
alone. Incentives for efficiency upgrades in existing homes are 
particularly meaningful because those projects are not normally as 
visually appealing as a state-of-the-art-kitchen.
    Remodelers and renovators have been undertaking retrofit projects 
for years and have established networks to deliver large-scale 
projects, like Home Star, already in place. Despite the dramatic 
downturn in housing, our industry is poised to implement a retrofit 
program that employs the skills and expertise already mastered by 
builders and remodelers who rely upon the delivery system and supply-
chain that runs between renovation contractors and product 
manufacturers. NAHB members have a proven track record of success in 
programs like this, primarily because we have been doing this work for 
years.
    An example of a retrofit success that is particularly relevant to 
the draft Home Star legislation is Project Reenergize--
www.projectreenergize.org. This successful retrofit program was 
administered and managed by the Builders Association of Minnesota (BAM) 
under a grant from the American Reinvestment and Recovery Act (ARRA). 
This program leveraged just $3 million dollars of ARRA funding into a 
consumer rebate retrofit program that not only provided high-quality 
efficiency upgrades to consumers in Minnesota, but also delivered 
additional remodeling work to contractors that exceeded the promotional 
items as well. In a few short months at the end 2009, Project 
Reenergize completed 800 retrofit projects on over 1,400 homes with an 
average rebate to the consumer of $2,300.
    The success of Project Reenergize is not only that it moved rapidly 
with remarkable results, but also that it was managed efficiently and 
did not suffer the same bureaucratic issues that plagued other ARRA 
weatherization-type projects. First, as a consumer rebate program, 
Project Reenergize was not subject to Davis-Bacon wage requirements, as 
every other weatherization project faced, because it was awarded an 
exemption by the Department of Labor. Secondly, because the State of 
Minnesota did not have the network available to deliver the funding 
quickly, it allowed the BAM to administer the rebate program, similar 
to the proposed Rebate Aggregator role in the draft Home Star 
legislation. BAM verified that the contractors were appropriately 
trained and qualified to do the work, as well as reviewed all quality 
control paperwork and any field inspections prior to issuing the 
rebates. BAM was uniquely positioned to be the link between the 
manufacturers, distributors, retailers, contractors, and trainers in 
this regard. Thus, NAHB believes that the success of Project Reenergize 
should be a model for how a larger, national rebate program should 
function and that there is a key role for the other 800+ state and 
local home builder associations across the U.S.
 implementation of the epa's lead: renovation, repair and painting rule
    I am concerned with the implementation of the EPA's Lead: 
Renovation, Repair and Painting Rule (LRRP) and the potential conflict 
with the roll out of a multi-billion dollar retrofit program like Home 
Star. As a professional remodeler and an EPA ``certified renovator'' in 
Lead Safe Work Practices (LSWP), I am trained and ready to continue 
working in pre-1978 homes, in compliance with the LRRP rule, after 
April 22, 2010. Despite attempts to get EPA to act quickly and train 
enough professionals in time to meet the deadline, I believe thousands 
of contractors may be accused of doing illegal work on older homes as 
they assist homeowners in taking advantage of retrofit incentives, or 
that the LRRP rule, and the liability that accompanies it, will deter 
work in pre-1978 homes after April 22, 2010.
    EPA finalized the LRRP rule in August 2008 covering all renovation 
work in homes built before 1978 to ``minimize exposure to lead-based 
paint hazards created during renovation, repair, and painting 
activities in all housing and other buildings frequented by children 
under age 6.'' NAHB, along with several others, participated as a 
stakeholder in the development of the LRRP rule and supported its 
intent, as originally proposed. NAHB believes in the benefits of 
training contractors in LSWP. Therefore, NAHB has been consistently 
disappointed with the amount of time it has taken EPA to begin 
training, approve and accredit training programs and training 
providers, and approve online training courses for the portion of the 
certification protocol that does not require ``hands-on'' observation. 
This lack of attention has led to serious deficits in providing enough 
``certified renovators'' to meet the compliance demands of the LRRP 
rule, and worse yet, it could now derail the success of a retrofit 
program to create jobs, like Home Star.
    Obviously, the homes in the most desperate need of retrofit are 
those built prior to the introduction of energy codes in the late 
1970s. This substantial segment of the housing stock--about 68% of all 
existing homes--numbers roughly 79 million. In order to address these 
millions of older homes, EPA estimated that it would need 212,000 
certified firms and 236,000 certified contractors prior to the April 
22, 2010\1\. Additionally, EPA proposed adding an amendment to the LRRP 
rule in October 2009, which substantially increases the number of homes 
subject to the rule, thereby increasing the need for additional trained 
firms and contractors by 110,000 and 115,000, respectively, all prior 
to the April 22, 2010 deadline\2\. As of February 19, 2010, EPA 
reported that is has certified 13,669 renovators in LSWP [See Appendix 
I].
---------------------------------------------------------------------------
    \1\ U.S. Environmental Protection Agency, Economic Analysis for the 
TSCA Lead Renovation, Repair, and Painting Program Final Rule for 
Target Housing and Child-Occupied Facilities, (March 2008). table ES-4.
    \2\ U.S. EPA, Economic Analysis for the TSCA Lead, Renovation, 
Repair, and Painting Program Opt-Out and Recordkeeping Proposed Rule 
for Target Housing and Child-Occupied Facilities, ES-2 (October 2009).
---------------------------------------------------------------------------
    Furthermore, EPA reports that some States still do not have any 
accredited training providers to offer the EPA training, including the 
States of Arizona, Louisiana, Oklahoma, Rhode Island, South Dakota, 
West Virginia, and Wyoming\3\.
---------------------------------------------------------------------------
    \3\ U.S. EPA, http://www.epa.gov/lead/pubs/trainingproviders.htm 
[accessed 9 March 2010].
---------------------------------------------------------------------------
    EPA has not given contractors the adequate means to comply with the 
LRRP rule, a problem which will be magnified if the Home Star program 
is enacted into law. EPA did not begin accrediting training providers 
until July 2009 and since that time has only accredited approximately 
135 firms and 13,669 individuals, far below the 236,000 threshold it 
set for itself in March 2008. Additionally, EPA has generally been 
deficient in its efforts to inform the regulated community about the 
LRRP rule, only starting its advertising campaign for compliance at the 
end of February 2010. Thankfully, NAHB and the remodeler members of our 
state and local home builder associations began working to try to have 
as many contractors as possible trained prior to EPA's ad campaign and 
have already held 231 training courses with another 500 planned.
    With little effort to effectively train and inform the regulated 
community, EPA has done virtually nothing to inform the public about 
the LRRP rule. Consumer awareness of this regulation is negligible, at 
best, and with the heavy media campaign that will undoubtedly accompany 
Home Star, homeowners will rush to call contractors to perform 
efficiency upgrades in older housing, not realizing that many of those 
contractors could be doing the work illegally if they are not EPA 
certified. While the consumer would not bear the liability for 
violations, contractors that violate the statute are subject to fines 
and civil penalties (under Toxic Substances Control Act, $37,500 per 
violation, per day\4\), which will provide a disincentive for working 
on pre-1978 homes.
---------------------------------------------------------------------------
    \4\ 40 C.F.R. Sec. 745.220(b)
---------------------------------------------------------------------------
    Regardless of the certification, pre-qualification and training 
requirements as prescribed for contractors working on Home Star 
projects, all contractors must comply with the LRRP rule. In order to 
comply, contractors must belong to a ``certified firm,'' which requires 
paying a fee to EPA or delegated State program, and ``certified firms'' 
must have at least one trained ``certified renovator'' that must be 
present at the outset and completion of renovation work in housing 
subject to the rule\5\. Since EPA has publicized a plan showing that it 
expects only a portion of the regulated community to be able to comply 
with the LRRP rule by the effective date under normal market 
conditions, NAHB doubts that it could accommodate the influx of new 
renovation contractors in the context of a multi-billion retrofit 
program that is specifically designed to create jobs working on the 
same housing stock covered by the LRRP rule.
---------------------------------------------------------------------------
    \5\ 40 C.F.R. Sec. 745.85
---------------------------------------------------------------------------
    NAHB believes that intervention to delay the effective date of the 
implementation of the LRRP is warranted and justified, especially in 
the context of promoting a retrofit program. Not only has EPA 
demonstrated a lack of capacity to provide adequate compliance 
pathways, but there are liabilities that accompany this program that 
could stymie the success of a planned retrofit program. Because of the 
implications of the compliance problems and potential liabilities, both 
in federal fines and lawsuits, NAHB believes the Committee should weigh 
in with the administration and the Office of Information and Regulatory 
Affairs at OMB to request a delay in the effective date of the LRRP 
rule.
    A delay in the effective date of the LRRP rule is also critical 
because the statute under which the rule is promulgated allows for 
citizens to sue a regulated contractor after providing notice to EPA if 
the EPA declines to pursue an enforcement action or civil action 
against that contractor. Thus, even if EPA exercised its discretion and 
chose not to actively pursue enforcement actions against remodelers and 
other contractors alleged to be in violation of any part of the LRRP 
rule, an individual could file a lawsuit against the contractor. For 
example, if a contractor were unable to attend certified renovator 
training by April 22, on April 23, anyone meeting the Toxic Substances 
Control Act's specifications can file notice of their intent to 
initiate a lawsuit to ``restrain a violation,'' which would likely 
prohibit the contractor from working on any home built before 1978\6\.
---------------------------------------------------------------------------
    \6\ The Toxic Substances Control Act (TSCA) allows citizens 
satisfying Constitutional article III requirements to pursue civil 
actions against persons alleged to be in violation of the act or a 
regulation or order promulgated pursuant to the act. TSCA Sec.  20; 15 
U.S.C. Sec.  2619(a). Section 20 provides that ``any person may 
commence a civil action (1) against any person. . .who is alleged to be 
in violation of this chapter or any rule promulgated under. . 
.subchapter. . .IV [Lead Exposure Reduction] of this chapter to 
restrain such violation.'' See id. In order to pursue litigation 
against an alleged violator, the citizen plaintiff must first notify 
both EPA and the alleged violator 60 days before filing a complaint. 
TSCA Sec.  20(b)(1)(A); 15 U.S.C. Sec.  2619(b)(1)(A). If EPA has 
already commenced ``and is diligently prosecuting'' an enforcement or 
civil action against the alleged violator, then the citizen plaintiff 
cannot bring suit. TSCA Sec.  20(b)(1)(B); 15 U.S.C. Sec.  
2619(b)(1)(B). If EPA initiates action after receiving notice of the 
citizen plaintiff's intent to sue, then the plaintiff may intervene in 
the proceeding.
---------------------------------------------------------------------------
    NAHB believes that delaying the effective date of the LRRP rule is 
appropriate and that there is sufficient precedent for taking such 
action. In 2000, the Department of Housing and Urban Development (HUD) 
faced a similar problem implementing a lead rule that covered 
federally-owned housing due to lack of trained (certified) personnel. 
The rule was finalized on September 11, 2000, but due to the lack of 
certified professionals to implement it, an extension, of sorts, was 
granted whereby program participants that had properties built after 
1960 were granted a ``transition assistance period'' and could file a 
``statement of inadequate capacity'' that essentially indicated their 
intent to comply with the rule once enough certified professional were 
available to do the work. As the need dictated, these transitional 
periods continued to be available until January 10, 2002, when it was 
determined that there was finally enough capacity to comply with the 
rule. If this process was appropriate to establish compliance for 
federally-owned housing stock, it seems justifiable for use in this 
case where substantially more homes are affected.

                COMMENTS ON DRAFT HOME STAR LEGISLATION

    NAHB fully supports retrofit efforts like Home Star and has 
experience successfully implementing federally-funded retrofit 
projects, but we believe the current draft Home Star legislation may 
not provide equal access to all trained contractors and could 
potentially limit the eligible labor pool. As drafted, only certain 
organizations qualify by name under the workforce development training 
section of the draft legislation. Furthermore, by 2011, no contractors 
working on any ``federally assisted residential retrofit work'' will be 
authorized to participate unless those contractors are pre-qualified 
and the pre-qualification minimums are needlessly exclusionary. In 
order to be truly successful, both in the number of jobs that can be 
created, as well as the amount of energy that can be saved, the Home 
Star program should be accessible to every contractor that has been 
trained in a legitimate workforce training program, or that has the 
appropriate job skills to perform the work. Whether or not he or she is 
affiliated with a specific credentialed organization, as listed in the 
draft, should be irrelevant.

Home Builders Institute (HBI)
    One specific omission in the draft Home Star legislation is the 
exclusion of the Home Builders Institute (HBI) from the definition of a 
``certified workforce'' in Section 2(4). HBI is the largest Job Corps 
partner with the U.S. Department of Labor and is currently structured 
to serve workers from youth to adults; providing a career path for the 
residential construction (and home weatherization) industry. Because 
HBI is already a recognized partner with the federal government, it is 
a legitimate workforce program that provides the same skills training 
and job preparation that the draft Home Star legislation seeks to 
promote.
    Beginning in 2001, HBI developed a craft trade specific training 
program focusing exclusively on the residential construction industry. 
The Residential Construction Academy Series published by Delmar 
Learning, a leading trade textbook publisher, features textbooks and 
electronic teaching materials in the subjects of Carpentry, House 
Wiring, Plumbing, HVAC, Masonry and Facilities Maintenance. ``Basic 
Principles for Construction'' serves as an introduction to the 
curriculum. Weatherization and retrofit strategies and practices are 
imbedded throughout the RCA Series' trade titles, many of which are in 
their 2nd editions. The training is based on national skill standards 
identified by residential builders, remodelers and educators. RCA 
Series materials are used in high schools, two-year colleges and 
workforce preparedness programs, including Job Corps, throughout the 
U.S.--(www.residentialacademy.com)
    HBI provides certification for both instructors and students who 
utilize its materials through the National Occupational Competency 
Testing Institute (NOCTI). NOCTI is a leading provider of high-quality 
occupational competency assessment products and services to secondary 
and post-secondary educational institutions in the U.S. and worldwide. 
In 2009, HBI correlated all of its training materials used in Job Corps 
training, as well as its Pre-Apprenticeship Certificate Training (PACT) 
used to train disadvantaged audiences, to the ANSI approved ICC-700-
2008 National Green Building StandardTM. These materials 
present entry-level, pre-apprenticeship training on craft trades 
involved in the weatherization of existing homes. Furthermore, HBI also 
created a 40-hour training certification on weatherization and 
retrofitting for industry practitioners, which includes includes 
classroom and hands-on training and an associated certification. This 
training can be administered through home builder associations or 
community colleges throughout the U.S. In the last 28 years, HBI has 
trained well over 150,000 professionals--youth to adults--in the 
residential construction industry.
    NAHB recommends including the Home Builders Institute (HBI) 
workforce development training program in addition to Building 
Performance Institute (BPI), North American Technician Excellence, and 
Laborers International Union of North America, as a qualifying program 
for a ``certified workforce.'' This is particularly important, as the 
ongoing Quality Assurance Framework, under Section 8 of the draft Home 
Star legislation, demands the use of a ``certified workforce'' as a 
minimum component of pre-qualification. NAHB does not believe that 
relegating the inclusion of HBI to a decision by the Secretary to use 
``other standards'' is sufficient to guarantee meaningful consideration 
because of the length of time that a deliberative agency consultation 
and/or rulemaking process might take. NAHB respectfully requests that 
HBI be listed by name along with the other named training programs 
under Section 2(4)(A).

Certified Workforce
    In addition to limitations on the types of workforce training that 
could be considered qualified under a ``certified workforce,'' NAHB 
notes that there are limitations on the types of contractors that can 
be used in any longer-term retrofit projects under Section 8. This 
provision requires that by January 1, 2011, all States must submit 
plans to implement a ``Quality Assurance Framework'' for any 
``federally assisted residential retrofit work''--both Silver Star and 
Gold Star--that is ``administered, supervised, or sponsored by [the] 
State.'' This mandatory requirement establishes pre-qualification 
minimums for all contractors and are exclusionary and restrictive.
    Under Section 8(3) of the draft legislation, minimum pre-
qualification requirements for authorized contractors include 
``accreditation'' and ``proper employee classification,'' among others. 
NAHB believes that the accreditation requirement, as defined under 
Section 2(1)(B) of the draft, limits consideration to those that are 
accredited by ``BPI'' or ``other.'' NAHB has concerns that restricting 
access to only ``BPI'' contractors could limit the program reach, as 
there may be instances where BPI-accredited contractors are not serving 
every residential retrofit market in the U.S.
    More importantly, NAHB is extremely concerned with language in 
Section (8)(3)(C) that mandates ``proper classification of employees.'' 
Despite repeated attempts to clarify the intent of this language, NAHB 
has not been able to determine the objective of mandating a ``proper'' 
way to classify an employee's status for participation in this program. 
Unless an objective reason for including this language exists, it 
should be removed so that the intent is clear and that every properly-
trained and qualified contractor can participate, despite 
classification status, as should be the parameters of a program like 
Home Star. Included with this Written Statement is a compilation of 
NAHB's specific comments on the legislation and the corresponding 
sections with recommendations for changes [See Appendix II].

                               CONCLUSION

    NAHB fully supports the approach that the Committee is considering 
with providing incentives for consumers in older, existing homes to be 
able to improve energy efficiency and performance. NAHB has 
consistently advocated for these types of incentives and will continue 
to push for expansions and extensions of such incentives. By far, the 
housing and residential construction industry has experienced the worst 
of the economic downturn and job creation is critical for 
professionals, like me, who have worked for years to retrofit and 
remodel homes. We look forward to working with the Committee, Congress, 
and the administration as they put the finishing touches on a retrofit 
program.
    Furthermore, in order to ensure that the Home Star program does not 
magnify the compliance issues that renovators are already facing with 
the EPA's LRRP rule, NAHB respectfully requests that the Committee and 
Congress ask for a delay in the effective date of the LRRP rule--
currently April 22, 2010. NAHB supports the use of contractors trained 
in LSWP and similarly supports retrofitting existing homes for improved 
energy efficiency, however, without intervention and a delay, these two 
initiatives may cripple one another. NAHB believes that without a 
delay, compliance with the LRRP rule will effectively limit the reach 
and potential success of Home Star, or rather Home Star will create 
incentives for contractors to perform illegal work on older housing by 
not receiving appropriate certification from EPA in time.
    NAHB believes that crafting a retrofit program, modeled after the 
success of the Builder Association of Minnesota's Project Reenergize 
program, is the right way to include equal access to highly-qualified, 
trained contractors and builders. Limiting the program to certain 
groups of people with explicit certifications, employment status, or 
specific credentials is short-sighted and would reduce the impact on 
jobs and energy savings. We look forward to working with the Committee 
and Congress on this issue. Thank you.

                               APPENDIX I

                   EPA LEAD: RENOVATION, REPAIR AND PAINTING (LRRP)  RULE STATS, AS OF 2/19/10
                                              (Data from U.S. EPA)
----------------------------------------------------------------------------------------------------------------
                            State                               Certified  Renovators       Courses  by State
----------------------------------------------------------------------------------------------------------------
AK                                                                                 97                        10
----------------------------------------------------------------------------------------------------------------
AL                                                                                163                        10
----------------------------------------------------------------------------------------------------------------
AR                                                                                 40                         2
----------------------------------------------------------------------------------------------------------------
AZ                                                                                 55                         3
----------------------------------------------------------------------------------------------------------------
CA                                                                                742                        60
----------------------------------------------------------------------------------------------------------------
CO                                                                                378                        41
----------------------------------------------------------------------------------------------------------------
CT                                                                                239                        22
----------------------------------------------------------------------------------------------------------------
DC                                                                                 35                         2
----------------------------------------------------------------------------------------------------------------
DE                                                                                 56                        12
----------------------------------------------------------------------------------------------------------------
FL                                                                                468                        48
----------------------------------------------------------------------------------------------------------------
GA                                                                                289                        16
----------------------------------------------------------------------------------------------------------------
HI                                                                                 21                         3
----------------------------------------------------------------------------------------------------------------
IA                                                                                 75                         1
----------------------------------------------------------------------------------------------------------------
ID                                                                                204                        20
----------------------------------------------------------------------------------------------------------------
IL                                                                                356                        27
----------------------------------------------------------------------------------------------------------------
IN                                                                                343                        28
----------------------------------------------------------------------------------------------------------------
KS                                                                                 62                         4
----------------------------------------------------------------------------------------------------------------
KY                                                                                149                         9
----------------------------------------------------------------------------------------------------------------
LA                                                                                103                         7
----------------------------------------------------------------------------------------------------------------
MA                                                                                389                        39
----------------------------------------------------------------------------------------------------------------
MD                                                                                461                        39
----------------------------------------------------------------------------------------------------------------
ME                                                                                188                        11
----------------------------------------------------------------------------------------------------------------
MI                                                                                588                        57
----------------------------------------------------------------------------------------------------------------
MN                                                                                569                        42
----------------------------------------------------------------------------------------------------------------
MO                                                                                187                        12
----------------------------------------------------------------------------------------------------------------
MS                                                                                 76                         6
----------------------------------------------------------------------------------------------------------------
MT                                                                                  6                         0
----------------------------------------------------------------------------------------------------------------
NC                                                                                542                        45
----------------------------------------------------------------------------------------------------------------
ND                                                                                 70                         5
----------------------------------------------------------------------------------------------------------------
NE                                                                                515                        37
----------------------------------------------------------------------------------------------------------------
NH                                                                                124                         7
----------------------------------------------------------------------------------------------------------------
NJ                                                                                259                        21
----------------------------------------------------------------------------------------------------------------
NM                                                                                 91                         6
----------------------------------------------------------------------------------------------------------------
NV                                                                                 17                         2
----------------------------------------------------------------------------------------------------------------
NY                                                                                976                        84
----------------------------------------------------------------------------------------------------------------
OH                                                                               1004                        71
----------------------------------------------------------------------------------------------------------------
OK                                                                                119                         2
----------------------------------------------------------------------------------------------------------------
OR                                                                                289                        26
----------------------------------------------------------------------------------------------------------------
PA                                                                                407                        32
----------------------------------------------------------------------------------------------------------------
RI                                                                                 12                         0
----------------------------------------------------------------------------------------------------------------
SC                                                                                166                        19
----------------------------------------------------------------------------------------------------------------
SD                                                                                147                         7
----------------------------------------------------------------------------------------------------------------
TN                                                                                 94                        13
----------------------------------------------------------------------------------------------------------------
TX                                                                                670                        61
----------------------------------------------------------------------------------------------------------------
UT                                                                                  6                         0
----------------------------------------------------------------------------------------------------------------
VA                                                                                323                        23
----------------------------------------------------------------------------------------------------------------
VT                                                                                 44                         4
----------------------------------------------------------------------------------------------------------------
WA                                                                                245                        27
----------------------------------------------------------------------------------------------------------------
WI                                                                               1170                        59
----------------------------------------------------------------------------------------------------------------
WV                                                                                 21                         1
----------------------------------------------------------------------------------------------------------------
WY                                                                                  6                         0
----------------------------------------------------------------------------------------------------------------
Canada                                                                              1                         0
----------------------------------------------------------------------------------------------------------------
Null                                                                               12                         4
----------------------------------------------------------------------------------------------------------------
TOTAL.......................................................                    13669                      1087
----------------------------------------------------------------------------------------------------------------


        appendix ii.--nahb comments on the home star act of 2010

General Comments
   NAHB supports making program rebates non-taxable income to 
        consumers and also supports allowing consumers to continue to 
        utilize credits under Section 25C of the IRS Code of 1986, 
        supplementary to the rebate program.
   NAHB also supports efforts to increase the universe of 
        Quality Assurance Providers (QAPs), but shares concerns related 
        to the interplay between QAPs, Rebate Aggregators, and 
        Contractors, as defined in the draft.
   NAHB insists that the Home Builders Institute (HBI) should 
        qualify by name under the definition of a ``Certified 
        Workforce'' in Section 2(4)(A) of the draft, as it is an 
        existing workforce development and training partner with the 
        U.S. Department of Labor and has an existing weatherization and 
        retrofit curriculum.
   NAHB asserts that the mandatory minimum requirements for 
        prequalification of contractors under Section 8(c)(3) for use 
        in any State ``administered, supervised, or sponsored'' quality 
        assurance programs covering ``all federally assisted 
        residential retrofit work'' (both Silver Star and Gold Star) 
        prohibitively limits the labor pool and precludes equal 
        participation by qualified and highly-trained contractors.

Section 2. Definitions
   Subsection (4)(A)--page 2, lines 19-25. The definition of a 
        ``certified workforce'' rests upon certification in job skills 
        training that is offered by three named programs--(BPI, NATE, 
        and LiUNA)--and relegates all other legitimate programs to an 
        ``other'' category under 4(B). The process by which DOE and DOL 
        would have to consult and approve ``another standard'' would be 
        lengthy and likely fall outside of the design of the program 
        for quick implementation. NAHB insists that in cases where the 
        DOL or DOE have already partnered with, and work with, a 
        legitimate workforce development program (training and job 
        skills program; retrofitting/weatherization), that those 
        programs also be listed by name in order to speed the 
        implementation and availability of additional trained 
        contractors for eligibility under the certification program 
        requirements. In this regard, NAHB requests the addition of 
        ``(iv) the Home Builders Institute'' after line 25, page 2 of 
        this subsection.
   Subsection (10)--page 3, line 10-page 4, line 2. NAHB 
        believes the definition of ``home'' in this subsection is very 
        broad and in order to focus the government's limited resources 
        on the least-efficient stock, there could be an additional 
        qualification that limits eligibility to older housing stock. 
        As drafted, any home built before the enactment of the bill--
        including green homes and advanced energy-code compliant homes, 
        would qualify. This is not a major sticking point, but it 
        should be noted that other successful home retrofit programs 
        have successfully limited participation by house size and/or 
        year of construction to older stock as a means of delivering a 
        larger return on investment in terms of energy savings. NAHB 
        suggests additional qualification requirements to target 
        resources to the older, least-efficient housing stock by 
        deleting the words ``the date of enactment of this Act'' on 
        page 4, line 2 and inserting a year of construction that 
        predates enactment by at least five or ten years.

Section 5. Silver Star Home Energy Retrofit Program
   Subsection (b)(6)--page 16, lines 4-12. It should be noted 
        that the window and skylight specifications for qualification 
        under this subsection are both inconsistent with existing 
        federal incentive programs and geographically inappropriate for 
        some climate zones. For example, the specifications require 
        compliance with criteria in Section 25C of the IRS Code and 
        skylights do not qualify at all under Section 25C, therefore it 
        is impossible to qualify skylights under this subsection. 
        Furthermore, Section 25C criteria requires windows with a 0.30 
        U-factor and a 0.30 solar heat gain coefficient. Unfortunately, 
        these window specifications are generally too dark for northern 
        climate zones where radiant heating in the winter is both 
        warranted and beneficial. In order to improve access for 
        consumers to affordable and available products, while still 
        retaining the inclusion of a bona fide energy-efficient 
        upgrade, NAHB requests a deletion of lines 8-12 on page 16 and 
        insertion of the following: ``(A) meets the criteria for such 
        components established by the 2010 Energy Star Program 
        Requirements for Residential Windows, Doors, and Skylights, 
        Version 5.0 (or any subsequent version of such requirements 
        which is in effect after January 4, 2010).''

Section 8. Quality Assurance Framework
   Subsection (a)--page-35, lines 17-20. This provision 
        establishes an ongoing requirement that all State participation 
        in any ``federally assisted residential efficiency retrofit 
        work'' is incumbent upon States' submission of a list of pre-
        qualified contractors as part of a quality assurance program. 
        Within 6 months, States must submit a plan for implementation 
        by January 1, 2011--under subsection (b)(2). Because this 
        provision says ``all'' work (page 71, line 6) and does not 
        differentiate between Silver Star or Gold Star, it becomes a 
        mandatory requirement for participation in any program that is 
        ``administered, supervised, or sponsored'' by a State. NAHB 
        requests clarification that any and all retrofit work that 
        utilizes money from Home Star must comply with the framework 
        and mandatory minimums for pre-qualification of contractors 
        under this subsection as implied.
   Subsection (b)--page 35, lines 21
   page 36, line 4. This subsection mandates States comply with 
        the implementation of an ongoing program via the word 
        ``shall''--page 35, line 21--by January 1, 2011. NAHB questions 
        how quickly and effectively a State can elicit the required 
        consultation for a mandatory program with the many stakeholder 
        groups specified on pages 55-56, and still meet this deadline. 
        NAHB requests removal of the January 1, 2011 deadline in order 
        to give States additional time to consult the various 
        stakeholders, including those not directly specified in this 
        subsection--e.g., remodelers.
   Subsection (c)(3)--page 36, lines 13--20. The list of 
        ``minimum standards'' to be a pre-qualified contractor is 
        problematic. Because these are mandatory minimums--per the word 
        ``shall'' on page 36, line 6--the type of contractor that can 
        be prequalified becomes extremely important. Subsection (c)(3) 
        lists those minimums as: ``(A) accreditation; (B) legal 
        compliance procedures; (C) proper classification of employees; 
        . . .'' NAHB believes that items (A) and (C) are exclusionary 
        to the universe of contractors, possibly independent 
        contractors, who perhaps are not ``properly classified 
        employees,'' as well as those not accredited by BPI (per 
        Section 2(1)(B). If the intent of Subsection (c)(3)(C) ``proper 
        employee classification'' is to provide reporting information 
        about a contractor's status, NAHB suggests including that item 
        as a reportable instance under Section 9. Otherwise, including 
        this language implies that there is an ``improper'' way to be 
        classified that could exclude access or participation in the 
        program. NAHB requests deleting Subsection (c)(3)(A) 
        ``accreditation'' and Subsection (c)(3)(C) ``proper employee 
        classification''--page 36, lines 15-17--in order to prohibit 
        any exclusions of qualified contractors who are ``improperly'' 
        classified as a circumstance of status (e.g., independent 
        contractors) and to prevent limiting the available contractor 
        pool to only BPI-accredited contractors, which may not be 
        sufficient to serve the capacity of demand.

    The Chairman. Thank you all. Thank you for the excellent 
testimony. Thank you all for your testimony.
    Let me ask a few questions here. Mr. Laseter, I'll start 
with you. You made reference--one of the suggestions you have 
is that--and I think Mr. Giudice also made this same 
suggestion--that we be sure to make provision for the 
integration of this rebate program into the 25 [c] tax credit 
provisions. You say in your testimony: ``We recommend that the 
customer be able to take a 25 [c] tax credit on the net amount 
of the work after incentives, but staying within the overall 50 
percent cap.''
    Could you just describe a little more precisely what the 
problem is here and how you believe we need to address it?
    Mr. Laseter. Yes, sir. Senator, we in the Home Star 
Coalition, we've worked hard to make sure that this is a 
program that can be deployed quickly. One of the things to make 
sure it can be deployed quickly is that there's not confusion 
with the American consumer in mind. So given that the 25 [c] 
tax credit is an existing credit, if we're well integrated 
within that credit then the consumers don't have to worry about 
the either-or tradeoffs that they would make.
    From an affordability standpoint of the program, if the tax 
credit applies to the net amount then that's the way the 2 
programs can coexist seamless from the viewpoint of the 
American consumer.
    The Chairman. So your thought is that a person would be 
able to go ahead and take the tax credit, claim the tax credit, 
and then to the extent that they had additional costs above 
that they would get the rebate, or vice versa?
    Mr. Laseter. Vice versa.
    The Chairman. Vice versa. First they would get the rebate; 
to the extent that the rebate didn't cover all their costs, 
they would be able to claim the credit for anything that still 
needed to be paid for. Is that it?
    Mr. Laseter. Yes, sir.
    The Chairman. Mr. Giudice, that was your point as well?
    Mr. Giudice. Yes, it was. Thank you.
    The Chairman. Let me ask another question, Mr. Laseter. 
What's your reaction to the point Mr. Hanbury was making about 
this lead rule and the lack of certified renovators? How is 
that going to impact on this program if we were to enact this 
program?
    Mr. Laseter. Senator, we support NAHB's position on the 
lead rule. A delay in implementation of the lead rule would 
enhance the Home Star's opportunity for success. So we would 
support their position there.
    The Chairman. Mr. Hanbury, your suggestion is that it be 
delayed for the full term of this program? Is that the idea, or 
what's your suggestion?
    Mr. Hanbury. The thought is we need at least time to create 
enough certified--have opportunity to have providers present 
the classes, so enough certified renovators are available to do 
the work. How long that takes is hard to predict. But if you 
wanted your program to be as successful as possible, it would 
go the length of your program.
    The Chairman. Ms. Epperson, let me ask about one of the 
suggestions you've got here. You say: ``To further close the 
gap between the cost of the new home and the homeowner's''--
this is with regard to mobile homes--``and the homeowner's 
income limitations, we urge that the replacement of substandard 
mobile homes be included as an eligible use of ARRA 
weatherization funds.''
    Now, at the current time what is the limitation on the use 
of weatherization funds on mobile homes?
    Ms. Epperson. Chairman Bingaman, currently it is prohibited 
to use weatherization funds in a replacement of a pre-1976 
home. You can do some weatherization if it's a prudent 
investment, but we find that to be very rare. Weatherization 
providers are frustrated with this prohibition right now.
    The Chairman. So that you can--I mean, at least in theory 
you can use weatherization funds to weatherize mobile homes, 
regardless of the age of the mobile home, but you can't use 
weatherization funds to replace a home? Is that what you're 
saying?
    Ms. Epperson. That's correct. But what they find is that 
the homes are in such a state of deterioration that it's almost 
impossible to really make an impact in the home.
    The Chairman. So how much--refresh my memory as to how much 
additional money that would be? Senator Tester's proposal is 
that we provide $7,500, right?
    Ms. Epperson. Correct.
    The Chairman. So how much additional would you suggest 
should be available from the weatherization funding sources to 
assist with replacement?
    Ms. Epperson. Chairman, we recommend that up to $6,500 of 
the ARRA weatherization be available in addition to the $7,500 
down payment assistance in Senator Tester's bill. The reason 
why is that most of the families or so many of the families 
living in these homes are at the poverty line, and they need 
additional what I would call gap assistance to close that 
affordability gap, because they're going to be borrowing money 
to pay for the home. The cost of the home is going to be about 
$60,000.
    The Chairman. So you're essentially saying that we should, 
the taxpayers, should foot the cost of $14,000 worth of the 
cost of that new mobile home?
    Ms. Epperson. Only if the family could not afford to borrow 
the money. The amount of $7,500 is a straight grant and then up 
to $6,500. So yes, it could be as much as $14,000 toward a 
$60,000 home.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    I'm thinking about the little guys today. In my questions 
to Ms. Zoi it was what are we doing about the do-it-yourself 
guys. Explain to me--and I don't know--Mr. Laseter on behalf of 
the coalition, maybe this is directed to you. But explain to me 
how this Home Star program is going to work in a community like 
Ketchikan, Alaska, on an island, not connected to anywhere 
else. You don't have any of the big box stores. You've got 
Madison Hardware that's the local hardware store there. It's 
pretty small, a small town, less than 20,000 people. 
Contractors are--we talk about the training that these 
contractors will be required to have, the auditors.
    We've learned with our own State weatherization program in 
Alaska, we dumped a lot of money toward weatherization and, 
whoops, forgot to make sure that we had more than six auditors 
for the whole State.
    So explain to me how I would take advantage of this Home 
Star program in a community like a Ketchikan, with Madison 
Hardware, or Rangell, where you've got little True Value 
Hardware down on the corner and just a few contractors in town? 
How does it work?
    Mr. Laseter. Yes, Senator. The path for a contractor to 
participate under the Silver Star program is clearly and easy. 
If they're a licensed contractor with insurance, then they're 
going to qualify under the Silver Star program. So to address 
your question, the Home Star program was written for exactly 
that need. Step one, have a clear path, immediately accessible 
to all the many small businesses that make up the bulk of these 
home improvements. Then, second, have a longer path in terms of 
Gold Star where, for those contractors who want to go back and 
take their knowledge up to the next level, still can do so and 
have an opportunity to participate.
    Senator Murkowski. OK, but it's not just about the 
contractor. It's going to the little local hardware store. Are 
they able to take advantage of the rebate aggregator? Are they 
part of the point of sale rebate? How does that all work for 
the little guys?
    Mr. Laseter. If the local hardware store has a contractor 
network that it uses, refers customers to, or does work on 
behalf of customers----
    Senator Murkowski. No, no, no. I mean like a little 
hardware store that sells the building materials for the whole 
community, but they don't do any of the work.
    Mr. Laseter. If they don't do any of the work, the Home 
Star Coalition sees the opportunity to add the do-it-yourself 
component into the bill. In my remarks, both in the prepared 
remarks and the oral remarks, we do think that would be an 
improvement to the bill, to improve the access to more 
Americans.
    Senator Murkowski. Just so I'm clear, though, currently as 
it's set up that smaller hardware store would not have the 
ability to be a participant in the program?
    Mr. Laseter. I think they would benefit from the 
perspective of their local--let me use an example, Senator. So 
the local contractor does an additional insulation job that 
qualifies under the Silver Star program, that gives the 
immediate rebate. Many times in that kind of scenario that 
local contractor is shopping at those local hardware stores, 
buying the insulation, the caulk, and the materials they need 
to do the attic, the sealing, and the insulation to get the 
rebate.
    So that's how the retailer would benefit, and it moves all 
the way up the supply chain with American jobs.
    Senator Murkowski. I'm thinking about my Ketchikan hardware 
store. Does the Ketchikan hardware store--are they looped into 
this whole rebate program? Will they be able to share in the 
Home Star program itself if they're not part of the bigger 
supply chain out there?
    Mr. Laseter. Yes, ma'am, they could participate--they have 
multiple options they could participate in. One is again 
selling directly to the local contractors in the market the 
materials that will be installed. Second, they can participate 
as a rebate aggregator if they chose to do that as well.
    Senator Murkowski. That's where I'm trying to go. How 
difficult is it for this little guy, this little independent 
guy, to be a participant as a rebate aggregator? You don't have 
a lot of options in Ketchikan. You can either get on a plane 
and go down to Seattle or you can spend another $1,000 and go 
up to Anchorage and then fly your materials out of Anchorage. 
We don't have any other options.
    So how easy is it for an independent to be a participant in 
the rebate aggregator process?
    Mr. Laseter. Again, the Home Star Coalition wrote this so 
it would be market-based and there would be options that 
market-based businesses could choose how they participate. So I 
really couldn't speak for that particular local retailer. 
Again, absolutely they would benefit from selling materials to 
local contractors. That business would have the opportunity to 
participate even further, to become a licensed contractor and-
or to become a rebate aggregator. So there's multiple paths 
that small businesses----
    Senator Murkowski. I'm still not sure, if you shop at your 
little Frager's down here, if you're going to be able to enjoy 
the benefits of the Home Star program. That's where I'm trying 
to get to. I don't know if I've gotten the answer. If any of 
the rest of you have anything that you can help me out with, 
I'd appreciate it.
    Mr. Mierzwa. I might add that where there are utility 
programs in existence we do work with those local hardware 
stores. So we're in effect what's being called here a rebate 
aggregator. Those folks sell--they might sell water heaters. 
They sell programmable thermostats, compact fluorescent 
lightbulbs, those types of things. So they participate in our 
rebate programs.
    Senator Murkowski. Mr. Giudice.
    Mr. Giudice. Yes. Scott Waterman from the Alaska Housing 
and Finance Corporation actually, using stimulus money, has 
dealt with this problem as it relates to stimulus money. 
There's a new master energy service contract for all Alaska 
communities, and for the very small Alaska communities that 
won't be able to necessarily participate in that master energy 
contract they're actually providing weatherization crews that 
are out there working on residential weatherization, to go into 
those small, more rural Alaska communities and do work in those 
buildings.
    I think that this is an opportunity for States to partner 
with the DOE in terms of tailoring these programs, the Home 
Star program, to very much parallel that kind of approach, so 
that we can work together and make sure that it's coordinated 
so that all communities have access to this and it's tailored 
to those specific, somewhat unique needs at some of the smaller 
communities in the country.
    Senator Murkowski. I don't need to remind you--I know, Ms. 
Epperson, in your testimony you speak of Kentucky. But it is in 
so many of our rural and more remote places where, if you 
really are talking about ways that you can make dramatic 
differences by weatherization and energy efficiency, it's out 
in some of these homes that have been cobbled together over the 
years.
    So I would hate to think that we would inadvertently be 
putting these more remote communities, these smaller 
communities that really don't have access to what we have here 
in the city, that we're putting them out of the loop.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman.
    I'm not sure who this question should go to, but I guess, 
Mr. Giudice, I just want to point out that New Hampshire 
intends to challenge Massachusetts and Vermont for energy 
efficiency.
    Mr. Giudice. I look forward to the competition.
    Senator Shaheen. As you all heard, because of our unique 
situation in New Hampshire, we have a lot of individual 
dwellings. So this kind of legislation is very important to us. 
Whatever we can do to help owners and builders with making 
their properties more efficient, energy efficient, is going to 
be helpful.
    But as I look at the Building Star proposal, there's one 
area of efficiency that I think has been overlooked and I just 
wondered if someone could speak to why and whether it should be 
added. That is in the electricity distribution transformers. 
Was there a reason why that was not included, and should that 
not also be included?
    Mr. DeBoer. Senator, I would be happy, on behalf of the 
coalition, to get back with you on that. Obviously, our goal 
here is energy efficiency and creating jobs, and the list that 
was created was created over many months with the coalition, 
with engineers that looked at this. I don't have an answer for 
you on that, but we'd be happy to get back to you certainly, 
because if it would improve energy efficiency in a cost-
effective way we want to participate in that.
    Senator Shaheen. Thank you. I've got some business folks in 
New Hampshire who are very concerned about that because they 
manufacture those transformers and feel like that would be a 
huge benefit to builders in improving energy efficiency in 
buildings.
    Ms. Epperson, in New Hampshire there is strong support for 
the manufactured housing legislation because 6 percent of our 
total housing stock is manufactured housing. It's one of the 
few ways that many people in New Hampshire get affordable 
housing, as you've pointed out. We have more than 35,000 units 
that are manufactured homes and 52 percent of them were built 
before 1980. So this is an issue for us.
    I'm very proud that in New Hampshire about 20 percent of 
those manufactured housing communities are resident-owned. But 
one of the things that I'm concerned about with respect to this 
legislation is what assurance we can write in so that 
homeowners who are receiving funds either own the land that 
their homes are on or have long-term leases, so that we can 
make sure that we don't have a situation where the homes are 
sold out from under people or they're evicted once these 
improvements are made?
    Ms. Epperson. Senator Shaheen, I'll be happy to answer that 
question. Some of the homes will be on land owned by the 
families, but some will be on leased land. With the coalition 
that I represent today, we believe that land tenure is very 
important. We are recommending a land lease at a minimum of 3 
years. That is consistent with the FHA Title 1 lending program. 
I will admit within our own coalition this is something that we 
struggled with. Some would like to see longer than 3 years, but 
that's where we are as a coalition.
    Senator Shaheen. I would argue for longer than 3 years. I 
think that it's very important. As I said, we have done a very 
good job in New Hampshire, thanks to an organization called the 
Community Loan Fund that's received a national award for 
helping tenants take ownership of their mobile home parks. I 
would hate to see us invest money in manufactured housing that 
then the tenants would lose because the parks are sold out from 
under them. So I think that's a provision we ought to look very 
closely at.
    Ms. Epperson. We'll be happy to look at that.
    Senator Shaheen. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Murkowski, did you have additional 
questions?
    Senator Murkowski. I'm fine. Thank you, Mr. Chairman.
    The Chairman. Thank you all. It's been very useful 
testimony. We appreciate it and we will do our best to move 
ahead with this legislation. Thank you.
    [Whereupon, at 12:10 p.m., the hearing was adjourned.]

                               APPENDIXES

                              ----------                              


                               Appendix I

                   Responses to Additional Questions

                              ----------                              

       Responses of Cathy Zoi to Questions From Senator Bingaman

                                S. 1320

    Question 1. What is the Department's position on this legislation? 
Please include your position on amending the weatherization statute to 
allow ARRA weatherization funds or annual weatherization funds to be 
used to support the replacement of substandard mobile homes with Energy 
Star homes or Energy Star manufactured homes? Please provide the 
Committee with technical comments on S.1320.
    Answer. The Committee has already submitted a request for technical 
comments on S. 1320 through the Department's Office of Congressional 
and Intergovernmental Affairs. The Department is currently working on 
technical comments on S. 1320.

                                S. 3079

    Question 2. What is the Department's position on this legislation? 
Please provide technical comments on S. 3079, the introduced bill.
    Answer. For technical comments on S. 3079, the Committee should 
submit a formal request through the Department's Office of 
Congressional and Intergovernmental Affairs.
    Question 3. Senator Tester's Energy Efficient Manufactured Housing 
Bill addresses a portion of the housing stock that cannot be 
efficiently weatherized. The lowest income families often inhabit these 
homes and high energy bills keep them in a cycle of perpetual poverty.
    Knowing that S. 1320, after its proposed amendments, results in the 
creation of over one job for every EnergyStar manufactured home built 
and installed, does the Administration see this bill as achieving the 
twin goals of job creation and energy efficiency, just like Home Star 
and Building Star?
    Answer. The Administration supports policies that achieve both job 
creation and energy efficiency, like the Home Star program. For 
technical comments on S. 1320, the Committee should submit a formal 
request through the Department's Office of Congressional and 
Intergovernmental Affairs.
(Added)
    Question 1. The Committee would like the Department to clarify 
whether any residential energy efficiency activities carried out 
pursuant to the Home Star Retrofit Rebate Program, as currently 
proposed in the Senate, would be subject to NEPA requirements, and in 
particular the committee would like to know whether the Department 
would be prepared to issue a categorical exclusion for the program 
shortly after enactment of the program.
    Answer. Assuming enactment of the Senate draft legislation (as of 
March 11, 2010) authorizing the Home Star program, administration of 
the program would not present a discretionary activity for which 
National Environmental Policy Act analysis would be required. However, 
the Department would, in an abundance of caution, issue a programmatic 
categorical exclusion.
       Responses of Cathy Zoi to Questions From Senator Murkowski
    Question 1. Since the mid-90s the DOE and EPA has worked to create 
a brand known as Energy Star, for products that meet certain standards 
for energy efficiency. Please describe whether new programs, with 
similar names, will cause confusion within the general public.
    Answer. The Department of Energy (DOE) and the Environmental 
Protection Agency (EPA) would work closely to minimize public confusion 
between ENERGY STAR and Home Star during the two year period when Home 
Star rebates are available. DOE and EPA would conduct marketing 
campaigns to inform the public that the temporary Home Star Retrofit 
Rebate Program provides up to 50 percent discounts to house holders who 
wish to install energy-efficient products in their homes, if they hire 
a participating contractor to perform the work. This marketing would 
clearly explain that the program expires at a fixed time, thus 
encouraging householders to take advantage of the opportunity while it 
exists. It is not DOE's or EPA's intention to establish a competing 
brand.
    Question 2. Please describe programs that the DOE has implemented 
that have provided rebates to contractors, such as the one proposed in 
the Home Star bill.
    Answer. As I mentioned during the hearing, one of the key 
advantages of the Home Star program is that it would pursue a business-
to-business partnership with rebate aggregators. Other rebate programs 
that the Department of Energy (DOE) has administered are somewhat 
different. For example, the Appliance Rebate program provides money for 
states to administer rebate programs for their residents. In the case 
of the Home Star program, individuals would be able to receive rebates 
for energy efficiency at the point of sale, and DOE would partner with 
an experienced network of rebate aggregators in order to distribute 
funds and provide accountability. Further, DOE is familiar with and 
would implement the lessons learned from the Cash for Clunkers program.
    Question 3. Can you describe the average energy savings of 
commercial retrofits versus residential retrofits? Does one offer a 
bigger `bang for the buck' over the other, on average?
    Answer. Energy savings in both the commercial and residential 
sectors are critical to making the Nation's homes and businesses more 
energy efficient. As I mentioned in my written testimony, there are 
approximately 130 million homes in the U.S. that account for about 33 
percent of the Nation's total electricity demand while consuming 
approximately 22 percent of the Nation's energy. Americans spend 
approximately $200 billion per year in residential energy costs. 
Weatherizing a single house can save 10 to 20 percent of energy 
consumption on average, using basic technology (weather-stripping, 
insulation, etc). Commercial buildings are much more diverse than 
homes, since the category `commercial building' includes large 
hospitals, small corner bakeries, and the Dirksen Senate Office 
Building. Consequently, DOE does not have comparable information that 
is useful for comparing 'average' commercial building energy savings. 
However, both types of retrofits are very important and save energy and 
money. One distinct advantage of weatherizing homes is the impact on 
American families who can spend their hard earned income on school, 
health care, and other priorities instead of on wasted energy.
    Question 4. Please describe the process undertaken to determine 
what efficiency retrofits would be eligible to receive rebates. Under 
the Silver Star component, is there a process to determine which 
retrofit makes sense from a financial and energy savings perspective?
    Answer. The rebate values in the draft legislation (as of March 11, 
2010) were established by an industry consensus process conducted by 
the Home Star coalition. The Department of Energy (DOE) monitored that 
process but did not directly participate in it. The rebate amounts 
reflect a balance between energy efficiency and highly labor-intensive 
installations. Which products or services a particular house holder 
would purchase under Silver Star would be up to the consumer, and the 
Department would be committed to providing consumers with the best 
information to make those decisions. Additionally, DOE strongly 
supports giving the Secretary discretion to modify the rebate amounts 
six months into the program, in order to optimize the energy savings 
being achieved per dollar spent by the program. This would be similar 
to the state appliance rebate programs, which have the opportunity to 
adjust the rebate amounts offered in order to increase the program 
uptake and improve its overall energy savings.
    Question 5. Please describe the different groups who currently 
provide training for retrofit programs. How are these trainings 
developed? For example, if a particular type of training or curriculum 
is pursued in the legislation, what is the role of the general public 
in participating in the process, or in the development of referenced 
training standards?
    Answer. Many different organizations--such as the Building 
Performance Institute, North American Technician Excellence, and the 
Residential Energy Services Network--develop their own specific 
curricula to train retrofit workers. These organizations have 
benefitted from a collaborative, consensus based approach to the 
development of their training programs and standards. The Department 
provides training and technical assistance through its Weatherization 
and Intergovernmental Programs and through its cooperative efforts with 
the whole house retrofit program called Home Performance with ENERGY 
STAR. The draft legislation (as of March 11, 2010) also includes 
consultation with the Secretary of Labor on matters related to a 
certified workforce.
    Question 6. The Discussion Draft calls for DOE to establish a 
nationwide network of rebate aggregators who are required to distribute 
rebates within 30 days after receiving applications. Please describe 
what companies could create such a network in this timeframe. In 
addition, has there been discussion with professional rebate 
fulfillment companies who have experience processing rebates to the 
extent envisioned in the draft legislation? If other companies, or 
programs, offering energy efficiency products, are allowed to process 
rebates, are there any potential conflicts of interest that may arise?
    Answer. As discussed at the hearing, the rebate aggregators are 
vital to the success of this program. The Department of Energy (DOE) 
anticipates that rebate aggregators would be many different kinds of 
organizations involved in the retrofit industry, such as Home 
Performance with ENERGY STAR partners, regional lumber stores, large 
efficiency contractor companies, hardware stores, and big box 
retailers.
    An entity would be eligible to be a rebate aggregator if it is:

   A Home Performance with ENERGY STAR partner;
   Administering a residential energy efficiency retrofit 
        program established or approved by a State;
   A Federal Power Marketing Administration, an electric 
        utility, or a natural gas utility with an approved residential 
        energy efficiency retrofit program and an established quality 
        assurance provider network; or
   An entity the Secretary deems able to perform the functions 
        of a rebate aggregator, without disrupting existing residential 
        retrofits in the States incorporating the Home Star program.

    The rebate aggregators would serve as a manageable number--an 
estimated 200 to 500--of ``touch points'' for DOE. The aggregators 
would provide an important service in educating contractors about the 
program, reviewing their rebate claims for completeness, and working as 
partners with the Department in ensuring the program operates smoothly.
    Many of the aggregators could offer energy efficiency products, but 
through quality assurance testing and verification, the program is 
structured to mitigate waste, fraud and abuse. Additionally, any 
organization, contractor or house holder that falsely claims a rebate 
would be subject to tax fraud penalties.
    While Home Star would deliver job growth and energy efficiency 
through a system of rebates to consumers, the program would use a more 
effective structure than standard mail-in rebate coupons. DOE would 
work through the network of rebate aggregators to allow contractors to 
offer house holders immediate, point-of-sale discounts on the 
installation of energy-efficient products. This structure involves some 
aspects of the traditional mail-in coupon rebate program, but is more 
similar in structure to the Cash for Clunkers program operated by the 
Department of Transportation in 2009.
    Question 7. Within the legislation, you exempt the Home Star 
program from several laws, including the Paperwork Reduction Act. 
Please describe the process undertaken to determine why the Home Star 
program should be exempt from these laws, and any legal opinions you 
may have for the exemption.
    Answer. The Home Star program would be a short-term program that 
would need to be stood up quickly to have the highest possible impact. 
Given the large unemployment numbers in construction and the scale of 
the energy challenges, speed would be essential in moving this program 
forward. As a result, the Home Star program structure is designed for 
speed while still placing a premium on transparency and accountability. 
This Home Star program draft legislation, as introduced by Congress, 
would establish many of the basic data items the program would need to 
process rebates and is designed to streamline reporting requirements. 
With respect to the draft legislation's proposed Paperwork Reduction 
Act exemption, the Department is still reviewing and may have 
additional analysis in the future.
    Question 8. Please describe if there has been any discussion within 
the DOE to limit program eligibility to homes based on the year of 
construction, or by their square footage. In addition, would the DOE 
support a program that targeted homes most in need for energy 
improvements, such as home owners on waiting lists to have their homes 
weatherized?
    Answer. There are approximately 130 million homes in the U.S. These 
homes account for about 33 percent of the Nation's total electricity 
demand and consume approximately 22 percent of the Nation's energy. 
Roughly half of these homes were built before 1973, long before modern 
residential building codes came into effect. With so many older homes, 
and with advances in building technologies, there is a tremendous 
opportunity to upgrade home energy efficiency throughout the Nation. 
Existing techniques and technologies can reduce energy use by up to 40 
percent per home.\1\ As an optional program, the Home Star program 
would enable house holders to decide if, when, and how to pursue taking 
advantage of the new program enabling energy efficiency upgrades. 
Access to the program would be open to all house holders. DOE is not 
considering limiting the program eligibility to homes based on the year 
of construction or size.
---------------------------------------------------------------------------
    \1\ Case study in West Concord, MA: http://www.buildingscience.com/
documents/case-studies/cs-0016-concord-four-square-retrofit/?topic=/
resources/energy-retrofits. Case study in Pittsburgh, PA: http://
apps1.eere.energy.gov/buildings/publications/pdfs/building_america/
ba_cs_retrofit_asdal_builders.pdf
---------------------------------------------------------------------------
    Question 9. Since 1977, the DOE weatherization assistance program 
has weatherized around 3.5 million homes. Is it feasible for a program, 
like Home Star, to retrofit an estimated 2 million homes in a year?
    Answer. The Home Star program is streamlined to leverage the speed 
of the private sector while taking advantage of structures that are 
already in place. The Silver Star portion of Home Star would enable 
house holders to make a few off-the-shelf efficiency upgrades, enabling 
homes to be made more efficient at speed and scale. Additionally, for 
house holders who want a whole-home retrofit to achieve even greater 
energy savings, the Gold Star program would be available to retrofit 
the entire house. The Gold Star upgrades could account for hundreds of 
thousands of homes in addition to the homes retrofit under Silver Star.
    Question 10. Several groups have expressed interest in having 
additional products eligible to receive rebates within the Home Star 
Program. The products include, but are not limited to, geothermal heat 
pumps, electric tankless water heaters, and window film products. 
Recognizing that there are a myriad of products that can create jobs, 
and improve the overall efficiency of a home, please describe the 
Administrations perspective of only including the projects developed by 
the Home Star Coalition. Do you agree or disagree with their 
determination of the projects included in the Majority Staff Draft, 
that only a few products should be included in the Home Star Proposal. 
Does the Administration agree with the process undertaken by the 
Coalition to develop this eligibility?
    Answer. Including a list of eligible products in the legislation 
could help create clarity and certainty for potential rebate 
aggregators, which may enhance the simplicity and speed in 
administering the Home Star program. The product list included in the 
draft legislation (as of March 11, 2010) was developed by an industry 
consensus process with the intent of including proven, energy efficient 
products that require significant labor to install and have high 
domestic content.
    Question 10a. Please describe what criteria the DOE would undertake 
to determine which products should be included within a Home Star 
Program. Should Energy Star Products, that improve the efficiency of a 
home, be eligible for rebates?
    Answer. Including a list of eligible products in the legislation 
could help create clarity and certainty for potential rebate 
aggregators, which may enhance the simplicity and speed in 
administering the Home Star program. The product list included in the 
draft legislation (as of March 11, 2010) was developed by an industry 
consensus process with the intent of including proven, energy efficient 
products that require significant labor to install and have high 
domestic content.
    Utilizing $296 million of Recovery Act funds, the Department 
currently supports the ENERGY STAR rebate program for all 50 states, 
five territories and the District of Columbia. The specific rebate 
amount allowed for specified appliances varies by State. The Department 
recommended that States use the following qualified appliances for the 
program:

   Boilers;
   Central air conditioners;
   Clothes washers;
   Dishwashers;
   Freezers;
   Furnaces (oil and gas);
   Heat pumps (air source and geothermal);
   Refrigerators;
   Room air conditioners; and
   Water heaters.

    Question 11. Recently the DOE strengthened and modified Energy Star 
criteria for several products, including windows, doors and skylights. 
Do you believe that these products should be eligible for Home Star 
rebates? If not, please describe how you intend to pursue the Energy 
Star label to encourage retailers, consumers and contractors to pursue 
them, if they are not offered within the Home Star Program?
    Answer. As the Committee knows, I am recused from working on 
certain matters and issues. The question you raise relates to issues 
from which I am recused; and thus I cannot respond.
    Question 11a. Are the rebates only offered to owner-occupied units? 
If so, how many non owner-occurred units would be ineligible for the 
rebate?
    Answer. The Department would be comfortable administering a program 
open to all residents assuming they can legally make upgrades within 
the context of their individual situations.
    Question 11b. Are the rebates available to landlords?
    Answer. Yes.
    Question 11c. How can a do-it-yourself provision be effectively 
offered by the federal government?
    Answer. The Department is open to exploring how best to incorporate 
a do-it-yourself provision into the proposed program while ensuring 
health, safety, and accountability.
    Question 12. Does it make more sense to incorporate DIY under 
another existing program or an altogether separate DIY rebate program? 
What are the options for this? How has the Energy Star Appliance Rebate 
Program addressed this issue?
    Answer. The Department is open to exploring how best to incorporate 
a do-it-yourself provision into the proposed program while ensuring 
health, safety, and accountability.
    The ENERGY STAR appliance rebate program provides funds to all 50 
states, five territories and the District of Columbia, and then the 
States make those funds available to individuals, with do-it-
yourselfers welcome to take advantage of this rebate.
    Question 13. Please explain, step by step, how the DOE will 
structure a rebate aggregation function for the Program. What kind of 
infrastructure needs to be in place for this to function properly?
    Answer. The Home Star program is designed for speed and ease of 
implementation. Therefore, it takes advantage of structures that are 
already in place so that the program could be stood up quickly. The 
eligibility qualifications for rebate aggregators are in the draft 
legislation (as of March 11, 2010).
    Question 13a. Does the program stand to cost jobs, not create them, 
until the rebates are up and running? For example, will homeowners or 
contractors wait to have work done, with the expectation that a program 
will likely be authorized?
    Answer. The Department estimates that the Home Star program may 
create tens of thousands of jobs.
    Question 13b. What kind of contractual relationships will exist 
between rebate aggregators and quality assurance providers?
    Answer. The Department's preferred approach to quality assurance is 
to work with States, by providing them technical assistance to 
establish quality assurance oversight programs. Upon receipt of rebate 
reimbursement claims from rebate aggregators, the Department would 
review the claims, issue payments to the rebate aggregators, and notify 
States of retrofits made in their jurisdictions.
    Question 13c. What kind of infrastructure will need to be in place, 
including IT systems, etc. to implement a Quality Assurance and Rebate 
program? Does this infrastructure already exist?
    Answer. Information technology (IT) is critical, and the Department 
of Energy (DOE) is committed to learning from the Cash for Clunkers 
experience at the Department of Transportation and Recovery Act 
experiences. DOE is currently working through technology configurations 
used to streamline quality assurance and rebate distribution. To make 
sure the Home Star program can be stood up quickly, the Department is 
also working with the existing infrastructure of Home Performance with 
ENERGY STAR.
    Question 13d. How long will the quality assurance program take to 
complete, once a job is finished?
    Answer. All homes that receive a rebate for an installation under 
the Silver Star or Gold Star program would undergo an initial 
information review and quality check by the rebate aggregator that 
submits the claim to the Department of Energy (DOE). This check would 
include confirmation that the work was done by an eligible contractor, 
and that eligible measures were installed. A randomly selected fraction 
of homes would undergo field inspection of the installed measures to 
ensure compliance with all program requirements, which would generally 
be conducted under standard industry construction and renovation 
quality assurance procedures.
    Question 13e. What process will be in place to review these jobs, 
and who has the authority to do it? What kind of information will be 
required?
    Answer. The Department's preferred approach to quality assurance is 
to work with States, by providing them technical assistance to 
establish quality assurance oversight programs. Upon receipt of rebate 
reimbursement claims from rebate aggregators, the Department would 
review the claims, issue payments to the rebate aggregators, and notify 
State of retrofits in their jurisdiction.
    Question 13f. Are there already systems in place to do this? If so, 
will the systems need to be integrated? How long will that take?
    Answer. States and local municipalities have thorough quality 
assurance inspections and reviews for building projects and repairs. 
These reviews are in place now to insure that the health and safety of 
the public are not at risk. Additionally, there are national third 
party companies operating in every state, that work with state and 
local officials to inspect homes for the insurance and property 
casualty business. Both of these groups would be leveraged to protect 
consumers taking advantage of Home Star rebates.
    Question 13g. Does DOE have a chart to lay out exactly what the 
process will look like?
    Answer. The process, from work performed to quality assurance 
inspection, could roughly follow these basic steps:

   Work is performed by the contractor for 50 percent of the 
        normal cost;
   The contractor submits a rebate request to a rebate 
        aggregator;
   The rebate aggregator collects a batch of rebate requests, 
        reviews them for accuracy, and submits the batch to the 
        Department;
   The Department immediately reviews the rebate requests 
        electronically, releases funds to the rebate aggregator, and 
        notifies the relevant quality assurance providers;
   The rebate aggregator reimburses the contractor within 30 
        days; and
   In a parallel to rebate processing, the quality assurance 
        provider coordinates inspections of retrofits and relays 
        results to the Department.

    Question 14. Is it your plan to run Home Star's transactions and 
information through software programs and management information 
systems developed for existing programs? If so, what are your 
assumptions about the cost and modifications it might take to do that? 
How long will it take?
    Answer. The Department intends to marry existing information 
technology systems for rebate programs with specific transparency and 
accountability elements associated with the Home Star program. The 
Department is currently working through technology configurations used 
to streamline quality assurance and rebate distribution.
    Question 14a. Are there security issues with this course of action? 
Is cybersecurity an issue?
    Answer. The Department takes cybersecurity very seriously, and 
would ensure that interactions with companies and individuals are kept 
confidential. Any program run by the Department would be subject to 
existing cybersecurity standards and requirements.
    Question 14b. Have you tried to do this ever before?
    Answer. The Home Star program would build upon public-private 
partnerships, taking advantage of consumer rebate processing. The Home 
Star program would be a new type of program that takes into account 
lessons from the Department's past and current programs, the Department 
of Transportation's 2009 Cash for Clunkers program, and Recovery Act 
implementation.
    Question 14c. What provisions will be in place to make QA 
transparent for the benefit of oversight?
    Answer. The Department would work with States on oversight of 
quality assurance (QA). It would also set standards for QA procedures. 
In order to respect individual privacy, the Department would not 
publicly disclose any individual home information.
    Question 14d. How will you decide which jobs are inspected? Will it 
be random? What criteria will these jobs be evaluated on?
    Answer. As established in the draft legislation (as of March 11, 
2010), between 10 and 20 percent of homes retrofitted would be subject 
to field inspection of installed measures on a random basis. As 
contractors establish good track records for installing retrofits, they 
would be subject to a lower rate of inspections; similarly contractors 
with a record of poor performance would be inspected more frequently 
allowing the Department to maximize the effectiveness of the quality 
assurance field inspection program.
    Question 14e. Will DOE maintain a master list of contractors and 
inspectors that participate in Home Star?
    Answer. Yes.
    Question 15. The Home Star program wants rebates to be paid within 
30 days and inspections also done within 30 days. So potentially, a 
homeowner or contractor could be waiting up to 60 days to get the 
rebate paid out. Is 60 days too long to be waiting for a rebate? Is 
there a faster way to get this done? Let's say it takes three months to 
stand up the infrastructure of the program and another 60 days for 
rebates to be paid out. That is almost half a year of waiting for the 
first rebates after the legislation becomes law. Is that too long?
    Answer. The Home Star program would be a point-of-sale rebate 
program. Working with rebate aggregators would enable house holders to 
buy efficiency products at an immediate 50 percent discount. House 
holders would not submit rebate requests, but would be immediately 
discounted at the point of sale.
    Question 16. Is there sufficient incentive for contractors to 
obtain a higher certification? Is there compelling motivation for them 
to achieve a higher certification, or do you think they would rather 
just be subject to more inspections?
    Answer. Any licensed and insured contractor would be able to 
participate in Silver Star, which would last the first year of the Home 
Star program. The Gold Star component of the program would continue 
into a second year after the Silver Star program ends. The Department 
anticipates that contractors that participate in Silver Star would 
pursue additional certifications in order to participate in Gold Star 
during the second year of the program.
    Question 17. Please describe how the process of requiring proper 
classification of employees will be implemented. Will it require the 
IRS to make a determination? If so, are there ways to improve the 
efficiency of how the IRS determines the proper classification of 
employees? Are there any alternatives, or mechanisms to ensure that the 
legislation does not discourage independent contractors from complying 
or competing for projects within the Home Star Program?
    Answer. The draft legislation (as of March 11, 2010) specifies that 
any contractor meeting minimum state licensing requirements and other 
minimum requirements would be eligible to participate in the Silver 
Star program. To participate in the Gold Star program, which involves 
more sophisticated efficiency technologies, contractors would have to 
additionally hold certain specific third-party certifications. Rebate 
aggregators would be responsible for ensuring that contractors meet 
requirements and hold appropriate certifications.
    Question 18. Please describe the timeframe to develop an employee 
certification program, within each state, and the Administrative costs 
associated with the directive to create such a program.
    Answer. The draft legislation (as of March 11, 2010) specifies that 
any contractor meeting minimum state licensing requirements and other 
minimum requirements would be eligible to participate in the Silver 
Star program. To participate in the Gold Star program, which involves 
more sophisticated efficiency technologies, contractors would have to 
additionally hold certain specific third-party certifications from 
organizations--like the Building Performance Institute, North American 
Technician Excellence, and the Laborers' International Union of America 
and others determined in consultation with the Secretary of Labor--in 
addition to meeting existing state requirements. Rebate aggregators 
would be responsible for ensuring that contractors meet requirements 
and hold appropriate certifications. By partnering with rebate 
aggregators, the Department does not expect this timeframe to be very 
long. Additionally, the costs would be minimal.
    Question 19. Is there a streamlined process for determining 
employee certification for this type of work across the country?
    Answer. The Home Star program is designed to take advantage of 
already licensed and certified contractors across the Nation. The 
Department would rely on existing State lists of licensed contractors 
and lists provided by third party accreditors, such as the Building 
Performance Institute, North American Technician Excellence, and the 
Laborers' International Union of America and others determined in 
consultation with the Secretary of Labor to help streamline 
certification. Rebate aggregators would be responsible for verifying 
that their contractors hold the appropriate certifications.
    Question 20. Will the DOE need to provide a federal contractor 
certification provision within the Home Star Program? If not, why does 
the DOE have the opportunity to require additional standards? What 
might these additional standards look like?
    Answer. No, the Department would take advantage of existing 
contractor certifications as established by the States and third 
parties.
    Question 21. How would a state certify to the DOE, that their 
classification program is viable, and would not be subject to 
additional requirements by the DOE? Are there alternatives?
    Answer. The Department would rely on existing State licensing 
requirements for contractors and would allow those who meet those 
requirements participate in Silver Star.
    Question 22. If the DOE decides to provide employee certification 
standards under the program, what would these standards look like? 
Would the IRS and Labor Department take the lead in determining 
employee certification? Will the Energy Department consult with IRS and 
Labor to carry out the employee certification directive? How long will 
this process take? Will the IRS and Labor need to come out with new 
regulations to carry out this provision? What will be the relationship 
between the DOE and IRS/Labor be in administering this provision?
    Answer. The Department of Energy would rely on existing State 
licensing requirements for contractors and would allow those that meet 
those requirements to participate in Silver Star. The draft legislation 
(as of March 11, 2010) also includes consultation with the Secretary of 
Labor on matters related to a skilled and certified workforce.
    Question 23. What are your assumptions for the cost of conserved 
energy? Are the budgeted amounts really indicative of what it's going 
to take to accomplish the projected savings? It seems that there are 
many parts of the program that would demand overhead. What is the cost 
per unit of energy saved?
    Answer. Retrofitting a single house can save 10 to 20 percent of 
energy consumption on average, using basic technologies (weather-
stripping, insulation, etc), like those available in Silver Star. Gold 
Star rebates upgrade a home's efficiency by at least 20 percent and as 
much as 50 percent, saving money on energy for the remaining lifetime 
of the home. Associated savings depend on the retrofits made and price 
of energy used by and individual house holder.
    Question 23a. If you look at this strictly as an efficiency 
program, how do the costs line up?
    Answer. The Home Star program would provide a 50 percent point of 
sale rebate to house holders.
    Question 23b. What are the specific costs of the rebate function, 
marketing, quality assurance, and program management? What are these 
costs for Gold Star vs. for Silver Star?
    Answer. The draft legislation (as of March 11, 2010) authorizes $6 
billion of total appropriations for the program, broken down as 
follows:

   $3.417 billion for Silver Star;
   $1.683 billion for Gold Star;
   $380 million for States to run quality assurance programs;
   $200 million for State retrofit loan programs;
   $300 million for rebate aggregator transaction costs and 
        quality assurance provider field inspections;
   $150 million for Department of Energy administrative costs; 
        and
   $10 million for the Environmental Protection Agency to 
        conduct public education campaign.

    Question 24. At the hearing the NASEO witness expressed concern 
that Home Star would overlap with existing state efficiency programs. 
What do you think this means, exactly?
    Answer. I cannot speak for another witness and would defer to the 
National Association of State Energy Officers for elaboration of their 
concern.
    Question 25. If utilities are offering rebates for similar or 
identical measures, must they be coordinated in some way? Should they 
be in harmony? What factors will need to be coordinated? How would you 
do that? Would you coordinate the marketing, incentives, or processing?
    Answer. The Department of Energy (DOE) anticipates that many 
utilities would apply to serve as rebate aggregators, and the 
Department would welcome their participation. To the extent that 
utilities are operating separate rebate programs under the guidance of 
state law, they can address coordination of these programs. Indeed, 
under the proposed legislation DOE would work to ensure the Home Star 
program is coordinated with existing or planned state energy efficiency 
programs.
    Question 25a. Would such coordination make Home Star even more 
difficult to implement?
    Answer. The Department of Energy (DOE) anticipates that many 
utilities would apply to serve as rebate aggregators, and the 
Department would welcome their participation. To the extent that 
utilities are operating separate rebate programs under the guidance of 
state law, they can address coordination of these programs. Indeed, 
under the proposed legislation DOE would work to ensure the Home Star 
program is coordinated with existing or planned state energy efficiency 
programs.
    Question 25b. Home Star will take advantage of the knowledge 
already established in a variety of market players, including 
retailers, utilities, rebate processors, States, and retrofit training 
and certification entities. Is the rebate aggregator function and the 
quality assurance function merged together, according to your 
understanding of the Majority Staff Draft?
    Answer. The Department's preferred approach to quality assurance is 
to work with States, by providing them technical assistance to 
establish quality assurance oversight programs. Upon receipt of rebate 
reimbursement claims from rebate aggregators, the Department would 
review the claims, issue payments to the rebate aggregators, and notify 
State of retrofits in their jurisdiction.
    Question 25c. If merged together, how will you ensure that there 
are no conflicts of interests between the two?
    Answer. The Department's preferred approach to quality assurance is 
to work with States, by providing them technical assistance to 
establish quality assurance oversight programs. Upon receipt of rebate 
reimbursement claims from rebate aggregators, the Department would 
review the claims, issue payments to the rebate aggregators, and notify 
State of retrofits in their jurisdiction.
    Question 26. Please describe the process DOE will undertake to 
ensure that small building material dealers and independent contactors 
will have access to rebate aggregators. If the legislation does not 
envision the use of these contractors, please describe why not. If the 
intent is to have them participate, please describe the mechanisms in 
place to ensure that they will not pay more for their administrative 
costs, to operate within the program, as well as provide a descriptive 
overview of how the process would work.
    Answer. The Department of Energy (DOE) understands numerous trade 
groups are interested in participating in the Home Star program. DOE 
intends to work with these groups by providing technical support in 
order to enable them to participate. All rebate aggregators would be 
eligible for a per transaction fee to support their administrative 
costs. Rebate aggregators would provide mechanisms for rebate payouts 
to contractors and administrative costs.
    Question 26a. How does the program envision doing random site 
inspections? Will DOE maintain a list of all job sites? Will the 
inspections be based on a random sample? How will they be done?
    Answer. The Home Star program is structured to be streamlined while 
maintaining ease of implementation and transparency to be accountable 
to the taxpayers. DOE would maintain a list of all job sites, since all 
rebate reimbursement claims that are filed by rebate aggregators would 
be required to include the address of the home in which the rebated 
measures were installed. DOE would conduct cross-checks to ensure that 
no rebate aggregator files claims multiple claims for the same measure 
installation in the same house. DOE anticipates making the list of 
these addresses and lists of installed measures available to the 
appropriate quality assurance providers, with instructions that the 
quality assurance providers are to randomly select certain percentages 
of home to be subject to site inspections. However, this list of 
individual addresses would not be publicly available. Quality assurance 
providers would then be required to report the findings of these 
inspections to DOE.
         Responses of Cathy Zoi to Questions From Senator Wyden
    Question 1. The HomeStar program advocated by the Administration 
appears to expect that the consumer rebates will be provided in 
addition to existing 25C tax credits. The Majority Draft of this 
legislation would reduce the amount of the tax credit by the amount of 
any rebate, allowing consumers to continue to get the credit only to 
the extent that it exceeds the HomeStar rebate. Does the Administration 
support this program structure?
    Answer. Yes.
    Question 2. Under the existing section 25C tax credit program, 
labor costs are not included in the allowable costs associated with any 
of the building envelope investments--windows, doors, insulation, and 
roofing. I have introduced legislation--S. 2819--that would allow labor 
costs associated with envelope investments to be included in 
calculating the credit since these improvements tend to be labor 
intensive and the current credit does not capture true cost of such 
improvements. Would the Administration support such an expansion of the 
credit?
    Answer. As the Committee knows, I am recused from working on 
certain matters and issues. The question you raise relates to issues 
from which I am recused; and thus I cannot respond.
    Question 3. It is not clear to me that the lists of products 
included under the Silver Star program, nor the performance standards 
included in the Gold Star program, are written in such a way as to 
recognize the value of energy costs associated with construction 
materials actually used in the retrofits. For example, the standards do 
not appear to take into account the lifecycle energy impacts of 
construction materials, such as the use of locally grown lumber 
products which have been demonstrated to be environmentally preferable 
through government-recognized Lifecycle Assessments. These wood 
products such as flooring, doors, windows, shutters, offer valuable 
insulating qualities in building projects and are derived from locally 
sourced, renewable US timber. Please let me know what we need to do to 
improve this legislation to assure that wood products are not 
disadvantaged through this legislation.
    Answer. As a short-term, streamlined program, the Home Star program 
must rely on existing standards and specifications for energy 
efficiency savings. All products were screened for high domestic 
content in addition to their energy savings potential.
       Responses of Cathy Zoi to Questions From Senator Sessions
    Question 1. While I understand the need to not make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films.
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    When considering the cost of installing window films is 
significantly lower than completing many of other home retrofit 
upgrades (including the installation of new windows), providing window 
films with the $1,000 Silver Star subsidy would not only ensure more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by very small, family-
owned businesses.
    Given the cost-effective energy savings that window films can 
provide to homeowners, should they be included as part of the Silver 
Star rebate section of the Home Star bill?
    While I can appreciate there are a variety of reasons one would 
want to limit the number of products eligible for the Silver Star 
rebates, the bottom line is that the Silver Star rebate program will 
likely be the first list that consumers look at when considering home 
energy efficiency improvements. Shouldn't we avoid picking ``winners 
and losers'' in the marketplace when it comes to energy efficiency 
upgrades?
    Answer. As the Committee knows, I am recused from working on 
certain matters and issues. The question you raise relates to issues 
from which I am recused; and thus I cannot respond.
    Question 2. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. Specifying some qualified certifications in the draft 
legislation (as of March 11, 2010), may help the Home Star program 
launch more rapidly. The Department strongly supports the provision in 
the draft legislation that gives the Secretary authority to approve 
additional training standards not explicitly included in the 
legislation, which could include those of the Home Builders Institute 
(HBI), in order to provide flexibility to the program.
    Question 3. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. As the Committee knows, I am recused from working on 
certain matters and issues. The question you raise relates to issues 
from which I am recused; and thus I cannot respond.
        Responses of Cathy Zoi to Questions From Senator McCain
    Question 1. In the draft language before the committee, the new 
Home Star legislation would provide a $250 rebate for purchasing 
certain energy efficient water heaters: (A) a natural gas or propane 
water heater with a storage water heater with an energy factor of 0.80 
or more or a thermal efficiency of 90 percent or more; (B) a tankless 
natural gas or propane water heater with an energy factor of at least 
0.82; (C) a natural gas or propane storage water heater with an energy 
factor of at least 0.67;
    It has been reported, however, that tankless electric water heaters 
have an energy factor of at least 0.96, much higher than the other 
types of water heaters listed in the draft bill. Based on the draft 
bill language, are tankless electric water heaters with an energy 
factor of at least 0.96 eligible for the rebate? Why or why not?
    Answer. No. The specific technologies included in the draft bill 
language were developed by an industry consensus process, which the 
Department monitored but in which it did not participate.
    Question 2. Is an energy factor of 0.96 more efficient than the 
standards associated with the other types of tankless water heaters 
already included in the draft bill?
    Answer. The specific technologies included in the draft bill 
language were developed by an industry consensus process, which the 
Department monitored but in which it did not participate.
    Question 3. If tankless electric water heaters are 0.96 efficient, 
why are they not included in the bill?
    Answer. The specific technologies included in the draft bill 
language were developed by an industry consensus process, which the 
Department monitored but in which it did not participate.
    Question 4. Would you recommend and/or support including the 
tankless electric water heater in the Energy Star program. Why or why 
not?
    Answer. Electric tankless water heaters require additional 
examination due to their large electricity needs.
                                 ______
                                 
   Responses of Jeffrey D. DeBoer to Questions From Senator Murkowski

    Question 1. Please describe how you intend to leverage private 
sector investment with the federal dollars of the Building Star 
program.
    Answer. Building STAR is designed to provide federal rebate 
incentive dollars that cover only a portion of the costs for a retrofit 
project in a commercial or large multifamily building. Private 
investment will pay for the remaining costs incurred from the retrofit 
project.
    The precise rebate amounts set forth in the Building STAR bill are 
intended to cover, as a general matter, about \1/4\ to ? of the costs 
of the total retrofit project. Thus, private capital will be leveraged 
to pay the remaining fraction of a given building upgrade. This means 
that $1 of Building STAR rebate dollars will leverage at least $2-$3 of 
private investment. And, if $6 billion of federal dollars are 
authorized for the program (as requested in Sec.  6 of S. 3079), total 
program dollars would amount to $18-$24 billion, after factoring for 
private capital.
    A small portion of Real Estate Roundtable member firms were 
informally surveyed to obtain a sense of how they would use Building 
STAR rebate dollars. They identified retrofit projects that would cover 
the full suite of equipment, materials and services components offered 
by S. 3079. These firms identified 19 buildings that would seek 
Building STAR rebates of $1.57 million, with total project work 
estimated to cost $8 million. Thus, a $1.57 million public investment 
under Building STAR would translate into an $8 million total program 
expenditure, for these contemplated retrofit projects.
    Question 2. Would there be any overlap between the jobs created for 
the Home Star program and the Building Star program?
    Answer. We anticipate that Building STAR would create jobs separate 
and apart from Home STAR.
    The American Council for an Energy Efficient Economy (ACEEE) has 
undertaken a study to estimate the jobs impact generated by both 
Building STAR and Home STAR. See http://www.aceee.org/energy/national/
potential_leg.htm. ACEEE's estimates show that in 2010, Building STAR 
would create 130,000 jobs; and in 2011, it would create 57,000 jobs. 
Thus, through 2011, the jobs that would be solely and uniquely 
attributable to Building STAR would be 187,000 jobs. In contrast, ACEEE 
estimates that Home STAR would be responsible for creating 162,000 
total jobs through 2011.
    Question 3. What type of quality assurance programs does the 
commercial industry have for retrofits that may be different from the 
residential sector?
    Answer. The commercial contracting market is very different from 
the contractors serving the residential sector. Most, if not all, 
specialty trades workers have completed an extensive, years-long 
apprenticeship program that immerses them in the details and specifics 
of their trade. National certifications in the commercial space are the 
result of comprehensive consensus based standards used by technical 
experts to ensure that each practitioner has the requisite skills, 
training, and sophistication for commercial building work. These 
certifications often have continuing educational and recertification 
requirements, so that commercial contractors and skilled workers are 
up-to-date on new energy efficiency technologies, methods, and 
materials. Contractors are highly motivated to maintain their 
certifications and good reputation; without them they would be unable 
to compete in the commercial construction marketplace, and they would 
not be hired by commercial building owners and managers.
    There are a number of ways to assure quality through the existing 
system. Industry standards, such as those established by the American 
Society of Heating, Refrigeration, and Air Conditioning Engineers 
(ASHRAE), the Sheet Metal and Air Conditioning Contractors National 
Association (SMACNA), the National Fenestration Rating Council, and the 
International Code Council (ICC), which form the basis of most of the 
rebates in Building STAR, can be enforced through building codes at the 
state and local level. Contractors must obtain permits to undertake 
projects in commercial buildings, so inspection of the work by code 
authorities is nearly guaranteed. Outside of the building code realm, 
building owners and general contractors maintain high standards. 
Building owners count on energy savings to help pay for retrofit 
investments and improve the value of their assets. They are thus 
motivated to ensure the work was done correctly so that those savings 
can be achieved and building values improved, and they will not 
countenance sub-par work on their assets. General contractors, who bear 
the ultimate responsibility to deliver quality work, actively oversee 
subcontractors to assure the work is done right.
    Question 4. Please describe the square foot energy savings per 
dollar invested for commercial retrofit programs.
    Answer. An investment of $6 billion in public funding for Building 
STAR would create a total public/private program worth at least $18 
billion that would retrofit approximately 5.7 billion square feet of 
commercial building space. This public spend of approximately $0.95 per 
square foot, after accounting for the private capital leveraged into 
the program, would result in total electricity savings of 31.6 Terawatt 
hours and total fuel savings of 48.8 trillion BTU per year. Building 
STAR thus generates 5.6 kilowatt hours of electricity savings and 8,600 
BTUs of fuel savings per square foot per year.
    We use a conservative assumption that the retrofit generates 
savings for 10 years. An analysis of a variety of programs indicates an 
average life of 13 years, with a discount rate for later savings of 
about 5%. This is also in line with the lifetime of building systems 
covered by Building STAR, which often last 15 to 20 years or more.
    Over the 10 year life of the retrofit, the $0.95 per square foot of 
public investment in Building STAR yields electricity savings of 56 
kilowatt hours and fuel savings of 86,000 BTUs per square foot. Based 
on average 2009 prices for electricity and natural gas of $0.1021 per 
kilowatt hour and $9.47 per thousand cubic feet, as reported by the 
Department of Energy's Energy Information Administration, Building STAR 
saves nearly $6.50 worth of energy as a result of the $0.95 public 
investment.
                                 ______
                                 
                                                    March 30, 2010.
Hon. Jeff Bingaman,
Chairman, Senate Committee on Energy and Natural Resources, 304 Dirksen 
        Senate Office Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Senate Committee on Energy and Natural Resources, 304 
        Dirksen Senate Office Building, Washington, DC.
    Dear Chairman Bingaman, Ranking member Murkowski and members of the 
Committee: On behalf of the broad coalition working to include funds to 
replace substandard mobile homes with ENERGY STAR manufactured homes in 
the pending Jobs Bill, I appreciate the opportunity to testify and 
respond to your questions.
    Nationwide, more than two million families live in old, and often 
dilapidated, mobile homes. These homes are among the nation's most 
energy inefficient. Most are found in economically depressed, rural 
areas and commonly are home to families that are near or below the 
poverty line. These households often fall through the cracks of federal 
government assistance programs yet they may be trapped in a cycle of 
very high energy bills with little or no resources to make efficiency 
improvements in their own homes.
    As a nation, we subsidize homeownership at more than $100 billion a 
year. The vast majority of these subsidies are received as tax benefits 
for the mortgage interest deduction and the property tax deduction. 
However, these housing subsidies are skewed to higher income 
households. Only 55% of people who pay mortgage interest, actually 
deduct it from their taxes. The other 45% take the standard deduction 
or have an income too low to pay federal income tax. In general, low-
income owners of mobile homes do not benefit from the mortgage interest 
deduction.
    Other targeted homeownership deductions do not reach mobile home 
buyers either. Because of regulations, these homeowners do not benefit 
from other subsidies available to low-income families. Since they own 
their own homes, they do not benefit from first-time housing subsidies: 
for example, the $8,000 first time homebuyer subsidy was not available 
to them nor is other sources of HUD or USDA down payment assistance. In 
addition, weatherization funds are impractical as these homes should 
not be repaired, they must be replaced but replacement is forbidden by 
law.
    Even the small move up housing subsidy, $6,500 was too small to 
enable mobile homeowners to use it. Most programs that assist low-
income home buyers, bundle subsidies including HOME funds, Federal Home 
Loan Bank Affordable Housing Program funds, Individual Development 
account funds and individual's savings. These options do not exist for 
the mobile home replacement buyer.
    Mr. Tester's approach seeks to fill the gap to enable these 
homeowners to improve their quality of life with targeted assistance. 
These families do not earn enough to replace their homes on their own. 
They need greater subsidy to make the monthly payments affordable.
    As requested, below are our responses to the questions submitted by 
Committee members.

              Response to Question From Senator Murkowski

    Question 1. Please describe the average cost of heating a pre-1976 
manufactured home? Are these homes also eligible for weatherization 
dollars or LIHEAP money?
    Answer. Unfortunately, actual consumption data collected by the US 
EIA and other agencies does not separate out from the general 
population of manufactured homes those homes built prior to 1976. For 
estimates of energy use, particularly end use data (such as heating 
costs), the engineering community relies on software analysis using 
tools that have been benchmarked against actual home consumption.
    In such a study performed by Systems Building Research Alliance, 
heating energy use for pre-1976 homes was estimated to range from $220 
to $380 per month with the value depending mainly on climate and local 
electric and gas costs. There are homes in very mild and very harsh 
climates that are higher and lower than these values, of course, but 
this range of typical costs suggests the enormous potential for energy 
savings that will result from replacing an old home with a new one that 
qualifies for the ENERGY STAR label.
    Families with very low income or in areas with high energy costs 
often make comfort sacrifices to keep their utility payments under 
control. Typically these households supplement their central heating 
system with free standing and generally unvented kerosene heaters or 
wood stoves. Fuel for these devices is an additional cost generally not 
captured by utility bill studies. They also may contribute to indoor 
air quality problems and cause health problems, particularly for 
children and the elderly.
    Old mobile homes are likely to have highly inefficient and costly 
electric resistance heating and poor air distribution, exacerbating 
performance issues. As a result, the heating system may not be capable 
of delivering sufficient heat to keep the home warm, encouraging owners 
to use these supplementary heating devices and/or tolerate colder 
temperatures. Both have a deleterious impact on comfort and the quality 
of life.
    While anecdotal, the utilities (particularly rural cooperatives 
that have the largest share of mobile homes on their service lines) 
report that older mobile homes are the major source of high bill 
complaints, late or delinquent payments and related service issues. 
These households will be a primary source of candidates for home 
replacement assuring that those families with the greatest need benefit 
from the replacement program.
    Manufactured homes are definitely eligible for the weatherization 
program. However, state weatherization agencies are often reluctant to 
spend money weatherizing a home that is so energy wasteful and 
structurally unsound. Their view is these homes represent a poor 
investment and should be replaced.
    Although reliable estimates do not exist, we suspect many mobile 
home households are eligible for receiving LIHEAP funds.
    The program would be nearly revenue neutral, creating more than 
51,000 new U.S. jobs. Every dollar invested by the government in the 
replacement program would result in about three to four dollars of new 
lending, magnifying the benefits. Over the next decade, this program 
will save more than $1.8 billion in reduced energy costs and improve 
the living conditions of more than 130,000 low-income families.

              Responses to Questions From Senator Sessions

    Question 1. While I understand the need to not make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films.
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    When considering the cost of installing window films is 
significantly lower than completing many of other home retrofit 
upgrades (including the installation of new windows), providing window 
films with the $1,000 Silver Star subsidy would not only ensure more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by very small, family-
owned businesses.

   Given the cost-effective energy savings that window films 
        can provide to homeowners, should they be included as part of 
        the Silver Star rebate section of the Home Star bill?
   While I can appreciate there are a variety of reasons one 
        would want to limit the number of products eligible for the 
        Silver Star rebates, the bottom line is that the Silver Star 
        rebate program will likely be the first list that consumers 
        look at when considering home energy efficiency improvements. 
        Shouldn't we avoid picking ``winners and losers'' in the 
        marketplace when it comes to energy efficiency upgrades?

    Answer. The Silver Star rebate program and/or the inclusion of 
window films is not applicable to manufactured homes.
    Question 2. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. The Home Builders Institute program rebate program and/or 
the inclusion of window films is not applicable to manufactured homes.
    Question 3. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. The certified workforce requirement is not applicable to 
manufactured homes.
                                 ______
                                 
    Responses of Philip Giudice to Questions From Senator Murkowski

    Question 1. Are there any large scale federal or state energy 
efficiency programs that could provide a template for this type of 
program, that have envisioned as many as 2 to 3 million homes over the 
next couple of years? Is it realistic to assume that this many homes 
can be retrofitted?
    Answer. The states have learned a great deal over the past 35 years 
of conducting energy efficiency programs. The variety of successful 
energy efficiency programs include state-based models from across the 
country, including programs in Alaska. Successful programs initiated 
under ARRA were provided to both the Minority and Majority staffs at 
the March 4th and March 11th hearings. Under the State Energy Program 
(SEP) and the Energy Efficiency and Conservation Block Grant (EECBG), 
over $800 million has been allocated by states and local governments 
for residential energy efficiency retrofits. Programs operated by 
states, local governments, utilities and other public benefits programs 
are useful models as Congress and the Administration consider the Home 
Star initiative. Massachusetts has extensive programs that are models. 
We are adding to that with our SEP and EECBG funding, including our 
community-based efforts. California has recently approved a $2.5 
billion residential energy efficiency program.
    Question 2. Within the draft legislation, there is reference to the 
use of the Building Performance Institute (BPI) for both training and 
quality assurance. Within the timeframe anticipated for the program to 
begin to operate, can BPI provide the necessary capacity to undertake 
such a large endeavor, with appropriate safeguards in place? How does 
the state of Massachusetts handle training and certification within 
their weatherization program?
    Answer. The Building Performance Institute, Inc. (BPI) has been 
expanding dramatically in the past few years. That expansion is 
accelerating. They are operating in an effective manner. Massachusetts 
efficiency programs for residential customers are operated by two 
entities. For low income residents, ratepayer-supported efficiency 
programs are coordinated with the U.S. Department of Energy's (DOE) 
Weatherization Assistance Program (WAP) and coordinated by the 
Massachusetts Department of Housing and Community Development, in 
cooperation with local Community Action Agencies. Other residential 
customers receive efficiency programs and services from the investor 
owned the utilities, who for the most part work through contractors and 
vendors. Those parties have been responsible for training, 
certification and quality assurance.
    Because of recent policy changes in Massachusetts that make energy 
efficiency our ``first fuel'' and require investor owned utilities to 
tap all cost effective energy efficiency resources that are cheaper 
than supply, Massachusetts has developed three year energy efficiency 
plans that require significant expansion of the service delivery 
infrastructure.
    Private sector contractors who participate in the U.S. Department 
of Energy's (DOE) Weatherization Assistance Program (WAP) are required 
to complete a 4 day ``Weatherization Boot Camp'' and demonstrate the 
ability to meet DOE and Massachusetts Department of Housing & Community 
Development (DHCD) Installation Standards. DHCD is about to enter into 
an ISA with the Springfield Technical Community College (STCC) and the 
MassGREEN Initiative of the Massachusetts Clean Energy Center to 
implement a comprehensive weatherization contractor training program. 
Energy Auditors are trained and certified by DHCD prior to performing 
energy audits and quality assurance tasks.
    For the market rate programs, we are in the process of moving 
toward a clear statewide certification requirement. Conversations 
continue about what the standard should be but it will most likely be a 
BPI standard or consistent with BPI, with an additional requirement to 
pass an air sealing skills test.
    Question 3a. The Discussion Draft refers to BPI and the RESNET as 
``standard setting organizations.'' Are these two groups similar to the 
International Code Council, as it relates to being a standard setting 
organization? Are either of these organizations approved by an 
international Standards Developing Organization oversight body, like 
the American National Standards Institute (ANSI)? Please describe the 
process undertaken by BPI and RESNET to become a ``standard setting 
organization?''
    Answer 3(a). BPI

                 ESSENTIAL DISTINCTIONS OF BPI AND ICC

    The Building Performance Institute, Inc. (BPI) is a national 
standards development and credentialing organization for residential 
energy efficiency retrofit work--providing training through a network 
of training affiliate organizations, individual certifications, company 
accreditations and quality assurance programs.
    The International Code Council (ICC) is much broader in its 
domains, and is dedicated to building safety and fire prevention 
through the provision of codes, standards, products and services 
concerned with safety and performance of the built environment, 
primarily focused on the design of new buildings, with emphasis in the 
following domains:

   Buildings
   Residential
   Fire
   Mechanical
   Plumbing
   Electrical
   Fuel Gas
   Sewage

    BPI's focus is narrow: existing residential building energy 
retrofits. ICC's focus is broad and mostly focused on advanced design.
    In the March 12, 2010 ICC announcements of the combined 
International Green Construction Code (jointly with AIA, ASTM, ASHRAE, 
USGBC and IES), the standard exempts ``Low-Rise Residential Buildings'' 
implicitly recognizing these buildings (and their related standards) 
are properly in the domains of other initiatives.

                     BPI STANDARDS SETTING PROCESS

    BPI's standards domain includes personnel certifications, 
contractor accreditations, and national technical standards that 
support building systems. Since 1996 BPI has used its consensus 
development processes to garner wide support of all potentially 
affected stakeholders. These procedures exceed those required by the 
American National Standards Institute (ANSI). In fact, BPI has applied 
to ANSI for accreditation as a developer of American National Standards 
and approval is expected shortly. To the best of our knowledge and 
belief, BPI's standards development processes already comport with all 
of the tenets of OMB Circular A-119, particularly those of openness, 
due process, balance, consensus, and lack of dominance. Thus, BPI is 
appropriately poised for this legislation and its reliance on private-
sector, objective, fair, open and consensus based standards. To the 
best of our knowledge and belief, it fully meets the requirements of 
OMB Circular A-119.
    The National Technology Transfer and Advancement Act (NTTAA) 
follows the basic tenets of OMB Circular A-119 to use standards 
developed by voluntary consensus standards bodies, as well as 
encouraging federal agencies in their deliberations. BPI programs and 
standards activities have enjoyed extensive cooperation with and 
participation by numerous federal and state agencies. These standards 
are referred to by both DOE and EPA in their program activities and 
BPI's national expansion was funded through a grant provided by DOE, 
EPA and HUD. DOE holds one of five positions on BPI's Standards 
Management Board, while EPA currently is sponsoring a Home Performance 
with ENERGY STAR (HPwES) pilot in northern Virginia that requires the 
contractors to become accredited by BPI and follow the BPI Standards in 
their home energy retrofit work. Other state and utility programs 
(Energy Trust of Oregon, Austin Energy, NYSERDA, and NJ Board of Public 
Utilities) use BPI Standards and credentialing as the basis of their 
programs. The NYSERDA HPwES program, for example, requires contractors 
to follow BPI Standards in their work. To date over 35,000 ``whole 
house'' energy retrofit projects have been completed in the state by 
contractors accredited by BPI.
    BPI also maintains a series of personnel certifications based on 
these standards. In the single family realm of the HOME STAR 
legislation, BPI maintains certifications in the areas of Building 
Analyst, Shell/Envelope, Heating, and Air Conditioning/Heat Pump. These 
certifications are based on 100 question (timed and secured) written 
tests as well as a two-hour field test with diagnostic equipment 
administered by a field examiner approved by BPI. BPI certifications 
must be renewed every three years. If the renewing candidate has 30 
Continuing Education Units (CEUs), then only a repeat of the field test 
is administered. Renewing candidates with less than 30 but greater than 
10 CEUs need only re-take the 50 question specialty exam for their 
specialty along with the field test. Others must take both full tests. 
BPI is currently in the process of applying to ANSI for an 
accreditation for its personnel certifications under ANSI/IEC/ISO 
17024.
    More information may be obtained directly from BPI.
    Answer 3(b). In its standard development process RESNET includes a 
consensus process that involves review and approval of a new standard 
or amendments by a formal standing RESNET committee, posting of the 
drafts on the internet for a minimum 30-day public comment review, 
documentation of the consideration of public comments and review by the 
RESNET Standards Committee and the RESNET Board of Directors prior to 
the adoption of a standard or amendment. This consensus process is 
modeled on the American National Standards Institute's (ANSI) process. 
RESNET standards are recognized by the U.S. Department of Treasury for 
the federal tax credit for energy efficient homes, the Environmental 
Protection Agency for the labeling of ENERGY STAR Homes and the U.S. 
Department of Energy for the National Builders Challenge.
    More information may be obtained directly from RESNET.
    Question 4. Congress has authorized several approaches to encourage 
both residential and commercial building owners to invest in energy 
efficiency improvements. Please describe the programs that have led to 
the greatest reduction in energy use. Does either the tax code or 
federal grants to building owners provide any inherent advantage over 
the other--for example is one more efficient, or cheaper to administer?
    Answer. The State Energy Program (SEP) has historically been highly 
successful in energy savings. According to a Oak Ridge National 
Laboratory study, based upon 2003 data, for every federal dollar 
invested over $7 in energy savings was achieved. A combination of tax 
provisions and rebate programs hold great promise. For example, the 
$1.80/sq.ft. commercial buildings deduction for energy efficiency 
should be expanded to $3.00/sq.ft., in accordance with the Building 
Star proposal. The 25C residential tax provision has been helpful, but 
should not be seen as exclusive. The Home Star program would add a 
critical short-term measure that should be followed up by the enactment 
and funding of the REEP proposal contained in slightly different forms 
in S. 1462 and H.R. 2454. In short, both direct funding and tax 
provisions can be (and are) effective. SEP has been relatively easy to 
administer at the state level.

     Responses of Philip Giudice to Questions From Senator Sessions

    Question 1. While I understand the need to not make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films.
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    When considering the cost of installing window films is 
significantly lower than completing many of other home retrofit 
upgrades (including the installation of new windows), providing window 
films with the $1,000 Silver Star subsidy would not only ensure more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by very small, family-
owned businesses.

   Given the cost-effective energy savings that window films 
        can provide to homeowners, should they be included as part of 
        the Silver Star rebate section of the Home Star bill?
   While I can appreciate there are a variety of reasons one 
        would want to limit the number of products eligible for the 
        Silver Star rebates, the bottom line is that the Silver Star 
        rebate program will likely be the first list that consumers 
        look at when considering home energy efficiency improvements. 
        Shouldn't we avoid picking ``winners and losers'' in the 
        marketplace when it comes to energy efficiency upgrades?

    Answer. We look forward to working with Senator Sessions and both 
the minority and majority members to determine the appropriate 
treatment of window films, taking into account cost, energy savings, 
cost-effectiveness and persistence of savings.
    Question 2. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. We are not familiar with HBI, but we remain open to working 
with organizations that can work effectively and in collaboration with 
other key stakeholders to achieve the goals of the Home Star 
legislation.
    Question 3. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. We look forward to working with Senator Sessions, as well 
as the majority and minority members to ensure that small business 
employees are not prevented from working in the Home Star program.
                                 ______
                                 
      Responses of Bob Hanbury to Questions From Senator Murkowski

    Question 1. Please describe the different groups who currently 
provide training for retrofit programs. How are these trainings 
developed? For example, if a particular type of training, or curriculum 
is pursued in the legislation, what is the role of the general public 
in participating in the process, or in the development of referenced 
training standards?
    Answer. Until recently, most of the training for weatherization-
related work has been under the domain of the Department of Energy's 
(DOE) Weatherization Assistance Program (WAP). The curriculum used for 
the WAP program is developed and approved by DOE. As of February 2009, 
there were twelve recognized Weatherization Training Centers\1\ that 
provide a full array of weatherization training and hands-on 
opportunities. Many states also have other training requirements and 
opportunities tied to their State Energy Programs (SEPs).
---------------------------------------------------------------------------
    \1\ Weatherization Assistance Program Technical Assistance Center 
(WAPTAC) website, accessed at http://www.waptac.org/
sp.asp?mc=training_facilities on 3/25/10.
---------------------------------------------------------------------------
    There is also a vast array of private entities and organizations 
that provide energy efficiency training, including Southface, the 
Institute of Environmental Management and Technology, Inc. (CT), 
Institute of Envelope Science (FL), Quality Built (CA), Affordable 
Comfort, Inc. (PA), among many others. Most of these programs have been 
developed in response to the WAP program and SEPs by private entities 
looking for business opportunities. Because there are currently no 
standards to which any training program must adhere, these programs 
have typically been developed by the company and its team of experts 
with little or no input from the public.
    Finally, there are a number of initiatives underway to improve 
national weatherization training--efforts that will be equally 
applicable for retrofit work. First, DOE's Office of Weatherization and 
Intergovernmental Program for the WAP issued its National 
Weatherization Training & Technical Assistance Plan in December 2009. 
The plan is designed to ``[b]uild the training capacity to support the 
weatherization network Recovery Act ramp up and lay the foundation for 
a sustainable national retrofit industry with ready access to a well-
trained workforce and opportunities for worker mobility and career 
pathways.'' Second, the Weatherization Trainers Consortium of DOE is 
developing a ``Core Competencies for the Weatherization Assistance 
Program.'' This is the first step in standardizing core competencies 
for various weatherization workers. While neither of these efforts will 
result in short-term solutions, any legislative action should be 
designed to facilitate and complement these initiatives.
    Last year, the Home Builders Institute (HBI) began developing a 
weatherization and retrofit curriculum designed to create job skills 
and workforce development in the residential construction industry. The 
curriculum was developed via a thorough skills assessment, task 
analysis, and DACUM (Developing a Curriculum) process, an 
internationally-recognized and legally-defensible job analysis method. 
In this process, experts in the field, i.e., job practitioners, are 
used to help develop curriculum instead of having curriculum developed 
by instructors, college professors, interest groups, or other outside 
parties. The task analyses are structured to accommodate all standards 
in use, so it is flexible enough to work everywhere and is not limited 
geographically. The program is also designed to be widely available 
with at least two testing locations per state--total of 1382--and can 
be used in home builder associations (over 800 nationwide), as well as 
community colleges throughout the U.S. Currently, the weatherization 
curriculum is being delivered through partnerships with the Greater 
Houston Builders Association, NAHB, Goodwill Industries International, 
Inc., United Brotherhood of Carpenters and Joiners of America, Adult 
Reading Center, Inc., Ferris State University, Michigan Association of 
Home Builders, and Detroit Environmental Justice.
    The HBI program includes a 40-hour course that provides hands-on 
training for four levels of job skills: apprentice, weatherization 
worker, weatherization specialist, and energy analyst. Each level of 
training requires different skills proficiency and different levels of 
coursework and training. The coursework uses adult learning techniques 
and covers the status of energy consumption, forms of energy, basic 
theory, thermal envelope, vapor barriers, air barriers, anatomy of a 
home terminology, and calculating heat loss. The practicum includes 
actual hands-on disposable home components so workers can learn how to 
install 80 different weatherization products and perform 45 activities. 
The program is designed for workforce skill development and is intended 
for professionals to use in a full-time career. NAHB understands that 
the North American Technician Excellence (NATE) and Laborers 
International Union of North America also have a retrofit training and/
or certification program. NAHB does not, however, have enough 
information about the development of these training programs in order 
to adequately comment on the nature of their development.
    NAHB understands the Building Performance Institute (BPI) has a 
certification program for retrofit work that includes class offerings 
for contractors that can sign up with a BPI affiliate and then pass a 
test to be certified. NAHB believes that there is no corresponding 
workforce development component to the BPI certification credential, 
and that it relies upon an individual's ability to master BPI 
prescribed skills standards and successful completion of testing and 
certification. The BPI program and its published ``standards'' are not 
approved by a third-party standards organization, like the American 
National Standards Institute (ANSI), and therefore do not have a 
guaranteed public participation component.
    Question 2. Please elaborate further on how the Lead Paint Rule 
will impact the retrofit industry.
    Answer. The Lead: Renovation, Repair and Painting (LRRP) rule 
``applies to all renovations performed for compensation in target 
housing and child-occupied facilities.'' (40 CFR Sec. 745.80) on or 
after April 22, 2010, no firm may perform, offer, or claim to perform 
renovations without certification from EPA unless the renovation 
qualifies for one of the exceptions, which includes no children under 6 
or pregnant women living in or visiting the home on a regular basis. 
Considering that the most effective retrofits will occur in ``target 
housing''--roughly defined as any housing constructed prior to 1978--
contractors will need a certification from the EPA before they can 
legally work in older homes. As of March 15, 2010, EPA is reporting 
that it has certified 50,000 renovators, but given that EPA estimated 
236,000 certified renovators are needed in the first year of the rule 
for good compliance, the 50,000 figure represents less than \1/4\ of 
the workforce predicted. NAHB notes that the LRRP certification 
supersedes any workforce or other contractor certification requirements 
under Home Star and its impact on the proposal and the retrofit 
industry is significant.
    The Obama Administration wants to improve the energy efficiency of 
millions of older homes, most of them built prior to 1978, which means 
they are subject to the LRRP rule. To date, EPA has not certified 
enough trainers or firms to enable widespread or sufficient compliance. 
As a result, the federal government is poised to distribute millions of 
dollars to retrofit older homes through the DOE, meanwhile the EPA is 
erecting a chokehold on training and certification for contractors 
working on this least efficient stock.
    Question 3. Please describe the training and curriculum that is 
provided to insure that retrofit work is performed to the highest 
standard.
    Answer. The majority of States have State or local contractor 
licensing requirements that apply to all residential construction 
activities, including retrofit work. Most require applicants to 
demonstrate sufficient work experience and pass one or more tests to 
demonstrate the requisite knowledge. In Nevada, for example, applicants 
must provide four notarized references verifying that they have had 
four years of work experience to apply for a license. All applicants 
must then take the Contractors Management Survey Exam (CMS), which 
covers Nevada State Contractor licensing laws and regulations; state 
laws; construction project management; and business and financial 
management; and a classification-specific exam that covers reading and 
interpreting construction codes and regulations; Nevada Health 
Department regulations; building codes; trade materials, tools, 
equipment, and methods; and Nevada Occupational Safety and Health 
rules. Most of the other states' requirements are similarly rigorous. 
Clearly, contractors who have earned licensure must demonstrate full 
knowledge of the issues in order to become licensed. In addition, 
several states also require all licensed contractors to meet continuing 
education requirements. In Minnesota, where contractors must earn seven 
hours of continuing education credits per year, at least one hour of 
that education must be related to the implementation of energy codes 
for buildings and other building codes designed to conserve energy.
    Further, most States have training, certification and/or licensing 
requirements for conducting certain activities, thereby ensuring that 
the activities performed are done so competently and professionally. 
Finally, in addition to the skills and expertise that will be 
demonstrated through the work, every time a contractor completes a job, 
his or her credibility and business is on the line. All contractors 
want to secure new jobs, so in addition to doing a job well, they seek 
to get new referrals from their clients--both of which compel them to 
ensure their work complies with the highest standards.
    Question 4. The Home Star program wants rebates to be paid within 
30 days and inspections also one within 30 days. So potentially, a 
homeowner or contractor could be waiting up to 60 days to get the 
rebate paid out.

          a. Is 60 days too long to be waiting for a rebate? Is there a 
        faster way to get this done?

    Answer. Compared to the ``Cash-For-Clunkers'' program, which 
provided the rebate to the consumer upon purchase, 60 days is a 
relatively long time. However, 60 days is relatively short compared to 
the length of time consumers typically must wait for benefits from tax 
credits, which are claimed on a homeowner's tax return that may not be 
filed for months. If the 60 day waiting period could be reduced, all 
else equal, it would make the program more effective.
    In the retrofit program managed by the Builders Association of 
Minnesota (BAM)--Project Reenergize--rebates to consumers were 
processed in about 12 days (avg.). The BAM would verify the pre-rebate 
notification and post-renovation verification information--i.e., 
perform necessary quality assurance--and then submit the rebate request 
to the State's Department of Commerce (which has jurisdiction over 
energy programs) and then the Department of Commerce would send the 
money to BAM and BAM would issue a check to the consumer. The average 
rebate to the consumer was about $2,300 and took about 12 days.

          b. Let's say it takes three months to stand up the 
        infrastructure of the program and another 60 days for rebates 
        to be paid out.
          c. That is almost half a year of waiting for the first 
        rebates after the legislation becomes law. Is this too long?

    Answer. Compared to waiting until the next filing date for an 
income tax rebate, or some of the delays occurring in the WAP program 
authorized by ARRA, five months is not excessive, provided that 
deadline can be met. NAHB is concerned that it could take considerably 
longer than three months to establish the necessary infrastructure for 
the program, as currently proposed, to the point where it is running 
efficiently across the entire country. It may be worth considering that 
expanding existing tax credits for energy efficiency measures could be 
done without requiring an elaborate new infrastructure. Restrictions on 
the number of contractors considered eligible to perform retrofits also 
limits the speed with which a retrofitting program can be rolled out.
    Question 5. What is our understanding of the work force that will 
be participating in the Home Star program? What are the expectations 
for what fraction of this workforce will ultimately stay in the 
industry?
    Answer. The pool of potential participants for an energy retrofit 
program come from employees of a relatively large number of small firms 
with a few employees each, as well as a number of contractors and 
subcontractors who are self-employed. According to NAHB's 2009 Member 
Census, 2-percent of members who characterize themselves as residential 
remodelers had no employees, 17-percent had just one employee, only 11-
percent had more than 10 employees, and none had more than 50. Among 
these residential remodeling businesses, the median number of employees 
in 2009 was 4 and the median volume of business done in 2009 was 
$506,562.
    Subcontracting is also a relatively common practice in the 
industry. Remodelers responding to NAHB's fourth quarter 2009 
``Remodeling Market Index'' Survey reported employing, on average, 18 
different subcontractors during the course of a year. Subcontracting 
businesses also tend to be relatively small. Among the NAHB members who 
characterized themselves as subcontractors in our 2009 Member Census, 
the median number of employees was 8, and the median volume of business 
done in 2009 was $866,226. Most (41.8%) of these businesses are pure 
subcontractors, in the sense that they do no other type of work. About 
9% also do residential remodeling, the most of any secondary businesses 
activity reported by subcontractors in our member Census.
    However, there is large number of very small firms without 
employees in the construction industry in general, and many of these 
are unlikely to be members of NAHB and therefore would not be captured 
in our Member Census statistics. The Census Bureau's 2007 non-employer 
statistics show 592,988 firms without employees in residential 
construction and 1,921,680 specialty contracting firms without 
employees in the construction industry in general. They had average 
annual receipts of $85,871 (for residential remodelers) and $50,344 
(specialty trade contractors). NAHB does not know exactly how many of 
these small construction businesses without a payroll specialize in 
residential remodeling, but given the relatively small nature of many 
residential remodeling projects, it seems likely that residential 
remodeling would have at least a proportional share of these small mom-
and-pop operations.
    The smallest of these businesses are less likely to be Home Star 
participants. Many such small businesses have limited capacity to 
process paperwork or send staff great distances to participate in 
training and certification programs. The more restrictive the 
certification requirements, and the more complex the reporting and 
record-keeping requirements, the greater will be the tendency to 
exclude businesses at the small end of the spectrum.
    While NAHB believes that there will be strong ongoing demand for 
energy-efficiency retrofits in older buildings, providing an 
opportunity in future years for Home Star participants to apply skills 
learned while participating in the program, NAHB does not necessarily 
believe the relatively modest Home Star proposal will lure away 
builders from new construction jobs into permanent retrofit work once 
the demand returns and gains for new home construction.
    Question 6. Please describe the different industry options to 
certify contractors. Does Home Star provide these certification 
options?
    Answer. Like training, there are currently many different 
certification programs available for builders and contractors--most of 
which have been developed by private-sector entities and none of which 
have been developed pursuant to a consensus process. As a result, these 
programs do not necessarily follow the same criteria, require the same 
competencies, or promote the same results. As above, however, due to 
the lack of any standard or basic national criteria for what an 
acceptable certification program might look like, coupled with the 
variety of factors, expertise, and competencies needed for retrofit 
activities across the country, allowing for and facilitating the 
existence of a variety of different certification programs makes sense.
    First, this provides the ability to tailor the program to the 
immediate needs of the targeted sector. The State of Oregon, for 
example, requires an Oregon DOE Tax Credit Certified Technician to 
perform any heat pump, air conditioning installation and diagnostics, 
and duct sealing and testing if the homeowner seeks to obtain state tax 
credits for a portion of the work. This approach ensures that the 
activities are performed correctly, without requiring unnecessary 
certifications for activities that will not be performed, or that are 
already well-understood. Second, supporting a variety of certification 
programs helps to ensure that there are a sufficient number of entities 
are available to do the work. Sole reliance on a handful of 
certification programs, as prescribed in the Home Star Act draft, could 
result in a bottleneck that will impair and slow progress.
    Question 7. Please describe the timeframe to develop an employee 
certification program, within each state, and the Administrative costs 
associated with the directive. Is there a streamlined process for 
determining employee certification for this type of work across the 
country?

          a. Will the DOE need to provide a federal contractor 
        certification provision within the Home Star program?

    Answer. In the context of Home Star, it will be extremely important 
that DOE or other regulatory authorities not preclude contractors from 
an ``employee certification program'' associated with the program based 
on a contractor's taxpaying status. Most contractors in the residential 
construction industry are organized as independent contractors and, 
therefore, may be the only, or one of very few ``employees.'' The 
independent contractor status is protected under existing tax rules and 
regulations and any effort to layer on additional ``employee 
certification'' requirements for work on Home Star-funded projects 
should similarly protect that designation status.

          b. If not, why does the DOE have the opportunity to require 
        additional standards?

    Answer. The federal government should avoid referencing a single or 
limited number of privately-developed standards by name in federal 
legislation to avoid creating monopolies for government-subsidized 
projects. In the absence of consensus-based standards that have 
undergone third party approval by an unaffiliated standards 
organization--e.g., American National Standards Institute (ANSI) or 
American Society for Testing Materials (ASTM), Congress should be 
careful not to limit the administration and outcome of public programs 
to the discretion of a few privately-developed technical benchmarks.
    The National Technology Transfer Act of 1996 (P.L. 104-113) 
prescribes that the federal government should reference and use 
voluntary industry consensus standards that have undergone approval and 
scrutiny by third-party organizations (like ANSI) as preferred 
benchmarks for federal agencies when they are available in the 
marketplace, rather than relying upon privately-developed standards. 
This gives greater weight to those consensus standards that have 
undergone thorough public scrutiny and can demonstrate a development 
process that is balanced among interests and stakeholders and that the 
development panel is not over (or under) represented in key interest 
groups. None of the groups listed by name in the definitions section in 
the current draft under ``certified workforce'' are ANSI-approved 
standards, i.e., they are all privately-developed.

          c. What might these additional standards look like?

    Answer. Additional standards should include the ICC-700 2008 
National Green Building StandardTM (NGBS). Not only has the 
standard already undergone the rigors of public scrutiny and received 
approval from ANSI, it has a remodeling component that is in concert 
with the proposed structure of the Gold Star level of the HomeStar 
program. As with the Gold Star level in the current draft, homes older 
than 1980 rated according to the Green Remodel path of the NGBS must 
demonstrate at least 20% improvement in energy performance in tests 
performed by an accredited third party verifier. Similar reductions in 
water use are also required. The NGBS provides the only approved public 
standard for remodeling to improve energy and environmental performance 
in older homes that complies with the federal government's NTTA law and 
achieves the dictated performance outcomes prescribed in the draft 
legislation. Furthermore, certification to the NGBS is already 
available to the market and over 300 verifiers have already been 
trained and are available to check compliance, thus providing a ready-
made certification infrastructure should certification to the NGBS be 
recognized as an approved means to satisfy the Gold Star program 
requirements.
    With regard to alternative training standards, to date, over 5000 
individuals have already completed NAHB's certified green professional 
(CGP) curriculum and are available to implement the work needed to 
achieve the performance improvements sought by the Home Star program. 
These individuals have all undergone three days of classroom training, 
including two days devoted to green building training, which 
incorporates a focus on energy-efficient construction.

          d. Furthermore, how would a state certify to the DOE, that 
        their classification program is viable, and would not be 
        subject to additional requirements by the DOE?

    Answer. States using national standards--like the NGBS, for 
example--would not necessarily have to prove to DOE that their 
classification is viable because it would provide a consistent 
benchmark across the country. States that are using other privately-
developed benchmarks, without consistent training or implementation 
requirements, would have limited ability to ensure reliable training 
and work practices nationally. This could create problems if trying to 
implement 50-different certification protocols.

          e. Are there alternatives?

    Answer. An alternative mechanism would be to require program 
participants, both contractors and homeowners, to retain manufacturer 
certifications of installed products' energy efficiency ratings and/or 
energy performance ratings results. This is similar to the current 
existing homes tax credit program (Section 25C of the Internal Revenue 
Code of 1986). In this instance, the plethora of certification 
credentials and contractor requirements becomes irrelevant and the 
burden of proof is on the consumer, who is making the investment and 
efficiency decisions for the home anyway. This would potentially 
eliminate a lot of the ``red tape'' that the program could face and 
would allow the government to expend the resources devoted to approving 
various certification credentials and classifications for contractors 
on greater rebates to consumers.
      Responses of Bob Hanbury to Questions From Senator Sessions
    Question 1. While I understand the need not to make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films.
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    When considering the cost of installing window films is 
significantly lower than completing many of other home retrofit 
upgrades (including the installation of new windows), providing window 
films with the $1,000 Silver Star subsidy would not only ensure more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by small, family-owned 
businesses.

   Given the cost-effective energy savings that window films 
        can provide to homeowners, should they be included as part of 
        the Silver Star rebate section of the Home Star bill?

    Answer. NAHB fully supports the inclusion of all energy-efficient 
technologies that have measurable results to be included in the Home 
Star program, as each component works to improve overall energy 
performance and provides savings to consumers. NAHB supports efforts to 
add and expand the products and services available for consumer rebates 
because it will both increase the potential for job creation and energy 
savings. NAHB would support the inclusion of window films as part of 
the Silver Star rebate section of the Home Star bill.

   While I can appreciate there are a variety of reasons one 
        would want to limit the number of products eligible for the 
        Silver Star rebates, the bottom line is that the Silver Star 
        rebate program will likely be the first list that consumers 
        look at when considering home energy efficiency improvements. 
        Shouldn't we avoid picking ``winners and losers'' in the 
        marketplace when it comes to energy efficiency upgrades?

    Answer. NAHB agrees that the legislation should not pick ``winners 
and losers'' in the marketplace for energy efficiency upgrades. Not 
only does NAHB agree that the bill should not pick and choose preferred 
technologies that are eligible for rebates under the program, but also 
does not agree that Congress should pick and choose preferred 
certification and workforce programs. NAHB would support efforts to 
remove all named references to specific certification programs and 
allow the Secretaries of DOE and DOL to choose legitimate workforce and 
energy efficiency programs that would qualify for weatherization work 
as part of a ``certified workforce.'' NAHB would also support including 
additional products with demonstrated energy efficiency performance--
e.g., Energy Star-rated windows--that can achieve desired performance 
outcomes and, in many cases, are a more affordable option for 
consumers.
    Question 2. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. NAHB believes that the HBI program has been excluded from 
recognition in the legislation because it was developed through a 
network of residential construction, engineering, and academic experts 
that do not normally purchase certification credentials and/or 
participate with the certification and training programs belonging to 
those companies and organizations already referenced by name in the 
legislation. Because many of the organizations that currently support 
the legislation have not often worked closely with the residential 
construction industry, and/or do not fully appreciate the nature and 
breadth of the workforce training that the industry has been offering 
and undertaking for decades, NAHB believes there has been reluctance 
for some groups to support the inclusion of an industry-based training 
and workforce program.
    Despite its legitimacy and partnership with DOL, and its rigorous 
and legally-defensible development, the current draft provides that the 
HBI program is relegated to a position upon where the DOE Secretary 
would have to separately approve it before it could be equally 
considered alongside those programs already named. NAHB understands the 
considerable delays that DOE had in issuing code determinations (10 
years behind) and previously appliance standards. For example, we 
assert that not being included for consideration at the outset in the 
draft is equivalent to being permanently excluded from the program, 
particularly in a program like Home Star that is designed to implement 
rapidly and conclude within 2 years.
    Question 3. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. NAHB would agree that Congress must ensure that the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficient products that are typically 
employed by small businesses. As the great majority of NAHB members are 
small contractors, employers, and businesses, NAHB would support any 
measures to ensure that independent contractors, small businesses, and 
installers participating in bona fide training programs--including 
window film installation--could be eligible to participate in the Home 
Star program.
    According to the Energy Information Administration (EIA), the 
energy consumed by older homes (built prior to 1991), comprises 17.1% 
of all energy consumed in the United States. Further, 74.1% of the 
existing housing stock--130 million--was built before 1991 when modern 
energy codes largely did not exist. Needless to say, there is enough 
work to go around and Congress should not, in any way, limit the 
ability of highly-trained and skilled contractors to perform 
critically-necessary upgrades in these older homes. Requiring 
contractors to purchase specific certification credentials and/or 
limiting the training options to only a few preferred groups for 
participation in this incentive program is very short-sighted. NAHB 
hopes to expand the number of qualified training programs that can be 
recognized and officially endorsed by the legislation, so that it will 
increase the number of available workers who can return to work, 
improve property values for millions of consumers, and save energy and 
resources for our country.
                                 ______
                                 
    Larry Laseter, President of Masco Home Services, represented the 
HOME STAR Coalition at the March 11, 2010 Hearing before the Senate 
Energy and Natural Resources Committee. The HOME STAR Coalition 
(referred to in these questions as ``the Coalition'') is made up of 
organizations and businesses that endorse the HOME STAR program 
including construction contractors, building products and mechanical 
manufacturers, retail sales businesses, environmental and energy 
efficiency groups and labor advocates. A complete list of the Coalition 
members is attached.*
---------------------------------------------------------------------------
    * Document has been retained in committee files.
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             Responses to Questions From Senator Murkowski

    Question 1. Please describe your assertion within your written 
statement that this program will result in higher home values. Are 
there any case studies that have shown a direct correlation between 
home energy efficiency retrofits and property values--excluding the 
sale of new ENERGY STAR homes?
    Answer. The study most quoted in this area is a report by Rick 
Nevin and Gregory Watson published in The Appraisal Journal of the 
Appraisal Institute in October 1998, entitled ``Evidence of Rational 
Market Valuations for Home Energy Efficiency''. The study prominently 
notes:

          According to this study, residential real estate markets 
        assign to energy-efficient homes an incremental value that 
        reflects the discounted value of annual fuel savings. The 
        capitalization rate used by homeowners was expected to be 4%-
        10%, reflecting the range of after-tax mortgage interest rates 
        during the 1990s and resulting in an incremental home value of 
        $10 to around $25 for every $1 reduction in annual fuel bills. 
        Regression analysis of American Housing Survey data confirms 
        this hypothesis for national and metropolitan area samples, 
        attached and detached housing, and detached housing subsamples 
        using a specific fuel type as the main heating fuel.

    There have been numerous other studies as well, mostly focused on 
new construction, where energy efficiency differences in houses sorted 
by ENERGY STAR or other state or utility certification may easily 
differentiate those from a baseline. These studies all reach similar 
conclusions about the fact that energy efficiency is valued by 
consumers if they can identify it as an attribute. A very recent study 
conducted in the Pacific Northwest entitled Certified Home Performance: 
Assessing the Market Impacts of Third Party Certification on 
Residential Properties (by Ann Griffin, Earth Advantage Institute, with 
Ben Kaufman, GreenWorks Realty, and Sterling Hamilton, Hamilton 
Investments, LLC, May 29, 2009) notes the value of energy efficiency to 
the consumer.
    Having noted these studies as requested, the HOME STAR Coalition 
views increased home valuation as an incremental benefit to the broader 
legislative objectives of job creation and energy savings.
    Question 2. Is the intent of the bill to move towards national 
building codes for retrofits?
    Answer. No. There are no requirements for new building codes in 
this legislation in any way whatsoever. The only requirement is that 
measures installed meet all existing local building codes.
    Question 3. Please describe the process undertaken to determine 
what efficiency retrofits would be eligible to receive rebates. Under 
the SILVER STAR component, is there a process to determine which 
retrofit makes sense from a financial and energy savings perspective?
    Answer. The HOME STAR Coalition is made up of a broad range of 
industry representatives, environmental groups, energy efficiency 
experts and organizations. The Coalition developed recommendations for 
a simple and manageable program involving about 8-10 efficiency 
measures that would drive consumer demand to create jobs. The 
Coalition's recommendations were developed to meet the following 
objectives:

   To look for measures that typically achieve measurable 
        savings in home energy use (heating, cooling and water 
        heating).
   To look for measures that make sense on a national level  
        this was for simplicity and fast rollout. Measures that make 
        sense only in a specific region might be not be appropriate (or 
        could even be counterproductive) in other regions.
   To consider the market availability of technologies, 
        recognizing the need for rapid penetration rather than a multi-
        year ramp-up.
   To look for measures that would generally not be adopted at 
        significant penetration levels without incentives.

    Question 4. The Discussion Draft calls for DOE to establish a 
nationwide network of rebate aggregators who are required to distribute 
rebates within 30 days after receiving applications. Please describe 
what companies could create such a network in this time frame. In 
addition, has there been discussion with professional rebate 
fulfillment companies who have experience processing rebates to the 
extent envisioned in the draft legislation? If other companies, or 
programs, offering energy efficiency products, are allowed to process 
rebates, are there any potential conflicts of interest that may arise?
    Answer. While final administrative procedures will be put in place 
by DOE relating to the specific qualifications of the rebate 
aggregators, it has always been the intent of the Coalition to promote 
a rebate structure that could be implemented quickly; be available to 
all contractors and retailers, large and small; and take advantage of 
existing program structures at the state and utility level that are 
already processing rebates.
    The infrastructure for rebate aggregation already exists in all 50 
states. Many of the companies that currently act as state and utility 
program implementers have existing systems that quickly move rebate 
requests upstream and rebates back down to contractors. Because such 
programs don't already exist everywhere in the country, it was 
important to envision an alternate private-sector mechanism to channel 
rebate requests to the federal processing center and issue the rebates 
in a timely manner. It is logical to project that large retailers, 
manufacturers and/or distributors of home improvement products would 
take responsibility for the bulk processing of rebate requests and 
dispersal of rebates back to the contractor level.
    As you noted in your question, it is also logical to expect 
professional rebate fulfillment companies to be solicited by DOE to 
service all other contractors not captured by the other mechanisms 
mentioned above. It has been suggested, and the Coalition agrees, that 
one or more ``National Default Rebate Aggregators'' should be a 
component of the rebate processing system.
    As for potential conflict of interest, the Coalition believes the 
structure of a completely separate Quality Assurance infrastructure and 
process that is independent from the contractor will avoid the most 
apparent conflicts by never allowing a contractor to be a QA provider. 
The Rebate Aggregator will also have specific responsibilities for the 
completeness and accuracy of the rebate request through a compliance 
review of each request. It is our understanding that DOE will institute 
a redundant review upstream on a sampling of requests to quality-check 
the Rebate Aggregator.
    Question 5. Please describe the anticipated participation levels in 
both the SILVER and GOLD STAR components of the HOME STAR Program.
    Answer. The Coalition expects the program to be fully subscribed. 
The combination of SILVER STAR and GOLD STAR paths was conceived as an 
effective way to address the need for immediate rollout in today's 
market while laying the foundation for a future performance-based 
market for home energy retrofits. The product-based incentives provided 
by the SILVER STAR path are already familiar to consumers, contractors 
and retailers, and can be deployed quickly and easily by an existing 
workforce. The GOLD STAR path represents the future of the efficiency 
retrofit industry, with highly trained contractors implementing cost-
effective, multi-measure retrofits based on scientific modeling of a 
home's potential energy performance.
    For SILVER STAR work, contractors must simply be licensed (where 
applicable) and insured, and they must guarantee their work. We expect 
that the existing building trades, such as insulation, HVAC, window and 
door contractors, are prepared to market and deliver these projects by 
working through established retailers and other existing channels. 
SILVER STAR will assure extremely rapid uptake and immediate job 
growth.
    The GOLD STAR track requires contractors to undergo a higher degree 
of training, yet they will benefit from significantly higher incentive 
levels. Currently there are contractors across the country that are 
either fully qualified for GOLD STAR or are on track to earn the 
necessary qualifications. The GOLD STAR track will create a long-term 
sustainable marketplace based on the combined energy-saving performance 
of various building systems (insulation, heating and cooling, water 
heating, lighting, etc.) rather than on specific products or 
technologies. This approach gives homeowners and contractors the 
freedom to develop the most cost-effective solutions for a given home.
    Question 6. Within the legislation, you exempt the HOME STAR 
Program from several laws, including the Paperwork Reduction Act. 
Please describe the process undertaken to determine why the HOME STAR 
Program should be exempt from these laws, and any legal opinions you 
may have for the exemption.
    Answer. The HOME STAR Coalition does not have direct knowledge of 
the specific administrative process portions of this legislation as 
they were drafted directly by legislative staff who are familiar with 
these administrative process acts and laws. It is our understanding, 
which we strongly support in principle, that there is a critical need 
to move quickly to implement the HOME STAR Program and create immediate 
job opportunities for American workers. Most of the critical components 
of the HOME STAR Program are embodied in the legislation so that the 
need for detailed rule-making is less substantial.
    Question 7. Please describe whether there is any overlap in the 
labor field between residential and commercial retrofit construction 
workers?
    Answer. Residential and commercial construction work has 
traditionally been done by different firms using different pools of 
workers. Although a number of larger construction companies work in 
both the residential and commercial markets, these firms often 
structure their work through separate residential and commercial 
divisions. With regard to energy efficiency retrofits, single-family 
homes, multifamily residential buildings and commercial buildings 
present separate challenges that require different skill sets and 
technology. As a result, these markets remain largely distinct.
    It is important to note, however, that many skills are transferable 
between residential and commercial retrofit work. Many workers who 
begin their careers in home construction move to work in commercial 
construction. Further, many manufacturing and retail companies serve 
both of these markets, so the same retailers and manufacturers that 
stand to benefit from HOME STAR also would benefit from increased 
investment in efficiency retrofits of commercial buildings.
    Question 8. Within the draft bill there is a program to provide 
seed money to states to help finance loan programs. Have you received 
feedback from Fannie Mae and Freddie Mac about their capacity, intent, 
and/or ability to securitize loans made under the financing provisions 
in the Discussion Draft?
    Answer. Specific outreach has been made by Coalition members to 
Fannie Mae, and the Coalition believes they are prepared to participate 
as necessary.
    Question 9. How do you address the personal financial risk of 
consumers accepting financing under these programs versus the assumed 
energy savings that may or may not accrue to them for undertaking the 
types of efficiency projects outlined in HOME STAR?
    Answer. As is the case with all consumer lending, there will be 
some risk. Because loans tied specifically to energy efficiency work 
have the benefit of cash flow created by energy savings resulting from 
retrofit work, they should perform very well as compared with other 
loan mechanisms for general home improvement work. As rebates for up to 
50% of the work are layered into this equation, the real cash flow 
against the loan value increases by up to double, and can, depending on 
the length of loan term, assure positive cash outlay from loan onset. 
That is, over the loan term, the monthly energy savings exceed the 
monthly loan payment.
    Anecdotal evidence has been presented to Coalition members 
confirming this dynamic as it relates to Fannie Mae Energy Loans. 
However, because no official study using actuarial standards has 
documented this, there is a provision within the HOME STAR Energy 
Efficiency Loan section that requires evaluation of all loans issued 
under the program.
    Question 10. Do you believe the time frame for the EPA's Lead 
Ruling needs to be extended? If so, what is a reasonable time frame to 
ensure that contractors can meet the stipulations on the rule, as it 
pertains to the HOME STAR Program.
    Answer. The HOME STAR Coalition does not have a position on the 
EPA's Lead Ruling. It is our expectation that the installation of 
measures identified in the legislation will be installed in a manner 
that meets all state, local and national laws and regulations. The 
implementation of the EPA Lead Ruling is under the responsibility of 
the EPA and is not addressed in this legislation.
    Question 11. Several groups have expressed interest in having 
additional products eligible to receive rebates within the HOME STAR 
Program. The products include, but are not limited to, geothermal heat 
pumps, electric tankless water heaters, and window film products. 
Recognizing that there are a myriad of products that can create jobs, 
and improve the overall efficiency of a home, please describe how the 
Coalition made the determination that only a few products would be 
included in their proposal. Please describe the criteria that was 
undertaken to both include and exclude products. In addition, please 
describe whether ENERGY STAR Products should be eligible for rebates.
    Answer. The process for the Coalition to make recommendations on 
specific measures for Silver Star is described above in our response to 
Question 3. It is important to note that GOLD STAR is 100% technology 
neutral, and any verified energy-saving product or measure can be used 
to meet the performance targets.
    In terms of the specific measures you list:

   Geothermal heat pumps: The Coalition has recommended that 
        these be included, both on the heating side (similar to air-
        source heat pumps) and on the water heating side (similar to 
        storage tanks and controls connected to boilers). Geothermal 
        heat pumps are now included in S. 3177 and the companion House 
        bill.
   Electric tankless water heaters: The Coalition reviewed this 
        measure and essentially decided that when properly used, they 
        can save some energy, but in some applications, energy savings 
        will be very limited. This measure has recently been added to 
        the House bill.
   Window films: Window films are most effective in the South 
        and Southwest, so different requirements would be needed in the 
        northern states. The Coalition recommends that DOE evaluate the 
        inclusion of window films.

    ENERGY STAR is discussed below in our answer to Question 12.

    Question 12. Please describe whether this decision, to not rely on 
ENERGY STAR products, may impact the perception of retailers, 
consumers, and contractors towards the ENERGY STAR Label.
    Answer. The Coalition recommends and supports select measures and 
eligibility levels to keep the current market share of qualifying 
products to 25% or less. We did this so that federal incentives go 
mostly to measures that would not be installed without the incentives 
(so-called ``free riders''). ENERGY STAR, on the other hand, sets 
criteria initially to qualify 25% of products on the market, and as 
shown recently by several Inspector General reports, the market share 
for some ENERGY STAR products is 50% or more. This is why we could 
generally not use ENERGY STAR, except for some cases where ENERGY STAR 
has recently been revised. For example, about 43% of current gas 
furnace sales are 90% AFUE or more. The Coalition believes that this 
high market share violated the principle of trying to minimize 
incentives for sales that would have happened without the incentives. 
Based on current sales of 90% AFUE furnaces, about $1 billion of the 
HOME STAR budget would be used by ``free riders'' at the 90% efficiency 
level.\1\ Instead, the Coalition recommends the setting of the 
qualifying level at 92% AFUE--a level commonly used by utility 
incentive programs--and a level with a current market share 
significantly below 20%.
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    \1\ The $1 billion cost is based on 2009 residential furnace sales 
of 2,174,528 (from the AHRI Web site), an ENERGY STAR market share of 
43% in 2008 (from EPA; the ENERGY STAR qualification level is 90% 
AFUE), a $1,000 rebate, plus 10% for other program costs (amount set 
aside in legislation).
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    If the intent is to also use ENERGY STAR for incentives, then the 
EPA and DOE would need to set stricter ENERGY STAR criteria so that 
fewer products would qualify. ENERGY STAR does promote products with 
above-average energy performance, but to maximize energy savings from 
limited incentive funds, incentives must be provided only for products 
with even better energy performance. The agencies have recently 
announced that they are developing a higher tier to accompany ENERGY 
STAR (sometimes called ``Energy Superstar''). When this tier is 
developed and operating, it may be a very good tier to use for 
incentive programs.
    Question 13. Are the rebates only offered to owner-occupied units? 
If so, how many non owner-occupied units would be ineligible for the 
rebate? Are there rebates available to landlords?
    Answer. It is our understanding that the legislation covers all 
owner-occupied dwelling units in buildings of four or fewer units. We 
have not done research to determine how many non owner-occupied units 
would be ineligible for the rebate. Units that are not occupied by the 
owner as a primary place of residence would not be eligible for 
rebates, nor would landlords be eligible for rebates.
    Question 14. How can a do-it-yourself provision be effectively 
offered by the federal government? Does it make more sense to 
incorporate DIY under another existing program or an altogether 
separate DIY rebate program? What are the options for this? How has the 
ENERGY STAR Appliance Rebate Program addressed this issue?
    Answer. DIY rebates should not be incorporated into other programs, 
as co-marketing DIY rebates within SILVER STAR actually enhances the 
HOME STAR Program. Retailers can use the DIY rebates to incentivize 
customers who either can't afford installation costs or just prefer to 
install insulation on their own. At the same time, retailers will have 
additional opportunities to educate their customers about the value of 
installed SILVER STAR incentives. The DIY rebates can be implemented 
using the same aggregator system as the other SILVER STAR incentives.
    Regarding appliance rebates, the ENERGY STAR appliance rebate 
program does not address the same issues as HOME STAR. The existing 
appliance rebate program focuses on different products and is a state-
based program. HOME STAR is a national program, and its DIY component 
is solely focused on insulation.
    Question 15. Do you think that people right now are waiting for the 
federal government to act upon HOME STAR, and are not currently 
completing efficiency improvements because they are waiting to see if 
there will be a rebate program? Does the program stand to cost jobs, 
not create them, until the rebates are up and running? For example, 
will homeowners or contractors wait to have work done, with the 
expectation that a program will likely be authorized?
    Answer. The Coalition urges Congress to move forward with all 
deliberate haste. Not only will more jobs be lost every month in the 
construction and building materials manufacturing sectors, but as 
homeowners are becoming more aware of the potential of HOME STAR, some 
who may have undertaken work are putting their projects on hold in 
anticipation.
    However, given historically high unemployment in construction 
trades, the potential long-term benefits of the HOME STAR Program far 
outweigh the costs associated with near-term loss of business due to 
work that is being delayed.
    The legislation has been crafted to include all eligible projects 
from the date of enactment. It has also been designed to roll out 
quickly, by clearly defining the criteria for eligible projects and 
participation in the program.
    Question 16. What kind of contractual relationships will exist 
between rebate aggregators and quality assurance providers? What kind 
of infrastructure will need to be in place, including IT systems, etc.? 
Does this infrastructure already exist?
    Answer. The final details of the rules associated with rebate 
aggregators and quality assurance providers will be established by DOE. 
It is our understanding that there would not be a required contractual 
relationship between rebate aggregators and quality assurance 
providers. In some cases, they might be the same organization or 
company, but the key separation would be between quality assurance 
providers and contractors performing the work.
    The infrastructure for both quality assurance and rebate 
aggregation already exists in all 50 states. These organizations 
include existing state and utility residential retrofit programs; 
RESNET and BPI quality assurance providers; and existing state-
established rebate processing organizations established to administer 
the ARRA appliance rebates. There are already over 8,000 certified 
workers who are capable of serving as quality assurance inspectors, 
which is eight times the projected number needed. These have IT systems 
for the current purposes and the ability to connect to the federal 
rebate processing center. Existing national contractors and retailers 
will be acting as rebate aggregators and have these IT systems already 
in place.
    Question 17. What process will be in place to review jobs for 
quality assurance, and who has the authority to do it? How long will 
the quality assurance program take to complete, once a job is finished? 
What kind of information will be required? Are there already systems in 
place to do this? If so, will the systems need to be integrated? How 
long will that take?
    Answer. The quality assurance system of independent quality 
assurance providers will review a minimum percentage of each 
contractor's jobs. Although the final administrative procedures will be 
established by the DOE, the HOME STAR Coalition's expectation is that 
the jobs completed by the contractor and submitted for a rebate will be 
transmitted from the federal database to the identified QA provider to 
select homes to visit for QA inspections and review of the contractor's 
requirements such as insurance.
    QA information requirements, including administrative forms and 
procedures, will be established by DOE. The standard forms for existing 
retrofit rebate programs include basic information on location of the 
work, the name of the contractor and QA provider, measures performed, 
prices and verification of discounts, and appropriate warranties 
provided.
    The systems for performing QA exist throughout the country as a 
result of the QA requirements for existing residential retrofit 
programs operated by states and utilities, as well as the QA program 
required as part of the ENERGY STAR New Homes program that has been 
operated by EPA for over a decade.
    Question 18. Was it the intent of the HOME STAR Coalition to run 
HOME STAR's transactions and information through software programs and 
management information systems developed for existing program? If so, 
what are your assumptions about the cost and modifications it might 
take to do that? How long will it take? Are there security issues with 
this course of action? Is cybersecurity an issue? Are you aware of any 
similar program, in size and scope that has tried to do this before?
    Answer. The Home Star Coalition is an ad hoc coalition created to 
promote job creation through home energy efficiency. The Home Star 
legislation as currently written directs the Department of Energy to 
implement the Home Star program. The Home Star legislation requires two 
types of software programs. First is the National Rebate Processing 
System that will be created by DOE for the purpose of receiving 
information from rebate aggregators and processing data to send funds 
back to the rebate aggregators and QA providers. Second will be the 
software used to calculate savings for the GOLD STAR path. In this 
case, the software programs are existing systems approved for use by 
current programs such as Home Performance with ENERGY STAR, 
Weatherization Assistance Program and others approved by the DOE.
    The budget for establishing the data system and administering the 
program, including all federal oversight activities, is approximately 
$150 million or less than 2.5% of program costs.
    Regarding cybersecurity, this topic fall outside of our area of 
expertise, but we understand from experience with large federal data 
systems that cybersecurity measures can be easily incorporated into a 
database of this type.
    As for similar programs, the development and deployment of large 
data systems has become commonplace in our society. For example, 
national firms manage rebate processing systems for corporations and 
national retailers have world-wide data systems that link all of their 
stores. For the home retrofit and energy efficiency industry in 
particular, there are existing firms handling utility data, 
transactions and rebates in excess of $500 million and millions of 
transactions per year.
    Question 19. What provisions will be in place to make QA 
transparent for the benefit of oversight? How will the program decide 
which jobs are inspected? Will it be random? What criteria will these 
jobs be evaluated on? Who will maintain a master list of contractors 
and inspectors that participate in HOME STAR?
    Answer. While final administrative procedures will be put in place 
by the DOE, the Coalition is aware of companies which have experience 
in both managing this type of system internally and working with third-
party providers of QA. Current residential quality assurance providers 
working in state and utility programs have been doing QA for decades, 
and most states have such a system in place. In the case of national 
retailers, they have QA systems to track the quality of installed 
measures that they use for work installed under their network. The 
federal data system used to manage the rebate processing will handle 
the information flow into the system from Rebate Aggregators and out 
again to the QA providers. All data will be regularly monitored by the 
DOE in addition to the RAs and QA results will be maintained in the 
database.
    As a standard rule, QA industry practice involves inspecting one of 
the first few jobs of every contractor to insure that the basic 
capabilities and requirements of the program are being followed. After 
those initial inspections, then QA providers will select through a 
combination or random selection or through identifying electronically 
any abnormalities or patterns in the jobs. The standard criteria used 
has been developed for state approved programs and is in place with a 
combination of standards that rank the type and severity of deficient 
work and a standard for call back requirements for contractors to 
correct defective work. While DOE and the State QA oversight role will 
monitor implementation of the QA role, the industry standards are in 
place across the country.
    It is the understanding of the HOME STAR Coalition that the program 
will work in the following manner based on legislative language. In the 
case of the SILVER STAR program, contractors will complete work, submit 
work to the RA, which is submitted to the DOE rebate processing center. 
Each state will maintain voluntary lists of participating contractors 
who wish to sign up, or they can just market their services as they 
currently do in the private marketplace. In the case of GOLD STAR, BPI 
maintains a list of accredited contractors on their Web site that can 
be linked to federal and state web sites.
    In the case of QA Providers, this list will be maintained on a 
state-by-state level and submitted to DOE for posting on a dedicated 
Web site. National organizations such as BPI and RESNET will also 
maintain electronic lists of QA providers on their Web sites.
    Question 20. The HOME STAR Program wants rebates to be paid within 
30 days and inspections also done within 30 days. So potentially, a 
homeowner or contractor could be waiting up to 60 days to get the 
rebate paid out. Is 60 days too long to be waiting for a rebate? Is 
there a faster way to get this done? Let's say it takes three months to 
stand up the infrastructure of the program and another 60 days for 
rebates to be paid out. That is almost half a year of waiting for the 
first rebates after the legislation becomes law. Is that too long?
    Answer. As designed, the rebate processing is independent of the 
robust QA process, so unless there is a QA finding serious enough to 
halt payments to a contractor, rebates will flow independently of that 
system. The HOME STAR bill (section 3(b)(1)) requires the DOE to stand 
up its rebate processing system within 30 days. While contractors would 
want to market the rebates soon after enactment, because rebates are 
credited to customers at payment, that time frame would normally be 
several weeks longer. In all cases, contractors would be wise to 
understand the forms or electronic formats of rebate requests, so even 
as they credit their first customers, most will wait to submit their 
first batch until the system is ready.
    Your point about 60 days being too long to wait prompted us to 
review the exact timelines related to rebate processing, and we 
identified an omission related to specific required timelines for the 
rebate processing steps. The Coalition is grateful for your diligence 
in pointing this out, and we recommend that section 3(b)(1) of the 
legislation be amended to reflect the following:

          1. Rebate aggregator uploads bundled rebate requests to the 
        federal rebate system within 14 days of receipt of a request 
        from a contractor.
          2. Rebate reviewed and paid from federal rebate system to the 
        rebate aggregator within 14 days or receipt of the bundled 
        request from the rebate aggregator.
          3. Rebate aggregator provides rebate to contractor within 14 
        days of receipt of bundled rebates from the federal rebate 
        system.

    This timeline represents under a net 45 days from rebate aggregator 
receipt of a rebate request from a contractor to the date the 
contractor receives the rebate. This is fully consistent with net 
payment requirements in many programs.

    Question 21. What is your understanding of the workforce that will 
be participating in the HOME STAR Program? What are the expectations 
for what fraction of this workforce will ultimately stay in the 
industry?
    Answer. There are more than 100 million homes in America that could 
benefit from an energy efficiency retrofit. HOME STAR is a shot in the 
arm that will help produce a tipping point that will create a 
sustainable market-based industry. The combination of financing and 
incentives will enable homeowners to save money by retrofitting their 
homes.
    The HOME STAR Program will spur an industry that can continue to 
grow to meet the unique challenge of fixing our existing residential 
infrastructure. This industry will continue to expand beyond HOME STAR 
to employ hundreds of thousands in direct contracting jobs, as well as 
significant manufacturing and industry jobs in our local communities.
    While a recovery in the new construction industry remains 
uncertain, there is a great opportunity for the retrofitting industry 
to flourish. Retrofitting is a perfect bridge until other parts of the 
construction industry begin to recover. However, companies that are 
refocusing on existing buildings will likely continue to grow as new 
construction comes back on line, but this does not mean they will stop 
servicing the retrofitting market.
    Question 22. Is there sufficient incentive for contractors to 
obtain a higher certification? Is there compelling motivation for them 
to achieve higher certification, or do you think they would rather just 
be subject to more inspections?
    Answer. HOME STAR is designed to encourage investment on several 
levels.
    First, while certification is not required under SILVER STAR, some 
level of worker certification and contractor accreditation is required 
under the GOLD STAR path. This tiered approach allows for an immediate 
invigoration under SILVER STAR with a signal to contractors to begin 
preparing to deliver under GOLD STAR. Recognizing the greater longevity 
of GOLD STAR, contractors will move toward certification.
    Second, HOME STAR does not exist in isolation. The trend in state, 
local and utility programs, such as home performance with ENERGY STAR, 
is toward requiring the certifications currently listed in HOME STAR. 
HOME STAR helps to highlight this trend for contractors, and it helps 
to reduce administrate costs in states and regions were independent 
efforts are already investing in and encouraging certification.
    Third, the market, including contractors, increasingly recognizes 
the importance of certification of workers and accreditation of 
contractors. Funders and sponsors value contractor accreditation which 
sets qualification standards for contractor access to incentives. 
Homeowners value certified workers in their homes, and contractors 
pursue certification accordingly. Contractors further value worker 
certification recognizing that quality not only supports a better 
business reputation, but also that it reduces defects and callbacks and 
thus provides real cost savings. HOME STAR doesn't initiate this trend, 
and it certainly doesn't run counter to market. Rather, it simply 
builds on existing market trends and accelerates what would otherwise 
be a decades-long process.
    Question 23. Please describe how the process of requiring proper 
classification of employees will be implemented. Will it require the 
IRS to develop rules and protocols?
    Answer. S. 3177 would not require states to create new systems of 
worker classification, nor would the draft require the Internal Revenue 
Service to develop new rules and protocols. The draft only addresses 
worker classification inasmuch as it requires each state to incorporate 
into its ongoing quality assurance framework for home energy retrofits 
a requirement that participating contractors comply with federal and 
state law and regulation governing the proper classification of workers 
as employees or independent contractors.

          a. Are there any alternatives, or mechanisms to ensure that 
        the legislation does not discourage independent contractors 
        from complying or competing for projects within the Home Star 
        Program?

    Answer. Nothing in proposed HOME STAR legislation would limit the 
ability of independent contractors to participate in the HOME STAR 
program as long as they possess proper licenses and insurance and 
comply with federal and state laws and regulations.

          b. Please describe how you perceive each state, and the DOE 
        will execute the employee certification directive. Will each 
        state require contractors to again prove their status, as a 
        certified contractor under the bill, if the state or local 
        government already recognizes them as a certified contractor? 
        Will additional paperwork be needed? Will this certification 
        require states to do additional audits?

    Answer. Contractors that possess the proper licenses and insurance 
will be able to participate in the HOME STAR program as soon as they 
register with a rebate aggregator and a quality assurance provider. No 
contractor will be required to employ a certified workforce to begin 
work under the HOME STAR program. Contractors that choose to employ a 
certified workforce will benefit from lower inspection rates reflecting 
the lower risk that such contractors will fail to correctly install 
efficiency measures.

          c. Please describe the time frame to develop an employee 
        certification program, within each state, and the 
        administrative costs associated with the directive.

    Answer. The simplest way to implement the employee certification 
provision would be for the contractor's workforce to be certified under 
a national certification program that 1) has been recognized in HOME 
STAR legislation or by DOE for home energy retrofits; and 2) maintains 
a database of certified individuals. This would allow employers, 
quality assurance providers and program administrators to quickly and 
easily verify workers' credentials.

          d. Is there a streamlined process for determining employee 
        certification for this type of work across the country?

    Answer. See above.

          e. Will the DOE need to provide a federal contractor 
        certification provision within the HOME STAR Program? If not, 
        why does the DOE have the opportunity to require additional 
        standards? What might these additional standards look like?

    Answer. See above. There is no provision in the draft HOME STAR 
legislation for DOE to add contractor standards beyond those specified 
in the legislation.

          f. How would a state certify to the DOE that their 
        classification program is viable, and would not be subject to 
        additional requirements by the DOE? Are there alternatives?

    Answer. See above. States are not required to establish a new 
classification system, only to ensure that contractors that violate 
existing rules do not receive federal subsidy while they cheat the 
system.
    Question 24. What are your assumptions for the cost of conserved 
energy? Are the budgeted amounts really indicative of what it's going 
to take? It seems that there are many parts of the program that would 
demand overhead. What is the cost per unit of energy saved?
    Answer. The cost of conserved energy is a regulatory calculation 
comparing the cost of efficiency improvements to the net present value 
of the energy saved. The HOME STAR Program was designed first and 
foremost as a job creation program and secondly as an energy saving 
investment program. For that reason, some of the standard regulatory 
approaches were streamlined to meet the needs of job creation. The 
proposed measures were reviewed for average savings impacts and average 
costs to create a menu of measures that on average are cost-effective 
both for consumers and for the nation's energy budget. Consumers will 
have the freedom to make their own decisions with respect to investing 
in energy efficiency improvements. Because the legislation is primarily 
focused on job creation, the Coalition did not specifically calculate a 
cost per unit of energy saved. In spite of this, the national energy 
efficiency experts who are part of the Coalition, including the 
American Council for and Energy-Efficient Economy, the Alliance to Save 
Energy, and the Conservation Services Group, have reviewed the eligible 
measures and feel that all of the measures in the HOME STAR Program are 
generally cost-effective. In most cases, the measures have significant 
non-energy benefits as well, such as improved home value, enhanced 
comfort of the interior environment, and reduced home maintenance 
costs.
    All of the costs associated with program delivery, contractor 
overhead and costs have been incorporated into the program costs. The 
Coalition believes that the budgeted amounts at both the total and the 
individual measure level are realistic to move markets, produce jobs 
and spur energy savings.
    Question 25. If you look at this strictly as an efficiency program, 
how do the costs line up?
    Answer. According to the American Council for and Energy-Efficient 
Economy, the GOLD STAR program has good performance as an energy 
efficiency program, with costs to the federal government per unit of 
energy saved similar to the average cost to a utility for utility-
operated programs. They noted that SILVER STAR is somewhat more 
expensive, although still cost-effective. This is to be expected since 
SILVER STAR is designed primarily as a jobs program, but with enough 
attention to details that it is also cost-effective as an energy-
efficiency program.
    Question 26. What are the specific costs of the rebate function, 
marketing, quality assurance, and program management?
    Answer. The costs for rebate aggregation and quality assurance will 
be covered through incentives for GOLD and SILVER rebates processed and 
for GOLD and SILVER quality assurance field inspections. In this way, 
there is a streamlined market-based approach to securing these services 
without the need for a time-consuming procurement process. The rebate 
function will require data processing, financial accounting and 
reporting both to the federal system and to each participating 
contractor and for each completed job. The QA functions include review 
of work performed, communication on quality of work performed, review 
of contractor participation requirements, and working with the state QA 
oversight groups. The incentives for these functions have been 
established based on average real-world costs for these program 
functions carried out in competitively bid state programs. Total costs 
for these functions have been calculated at less than 5% of program 
costs.
    Question 27. At the hearing the NASEO witness expressed concern 
that HOME STAR would overlap with existing state efficiency programs. 
What do you think this means, exactly?
    Answer. The National Association of State Energy Officials supports 
the HOME STAR initiative and wants to ensure that the existing 
residential energy efficiency rebate programs operated by states, 
utilities, public benefit funds and others complement the new HOME STAR 
effort. HOME STAR can be a vehicle to effectively expand these existing 
programs. For example, the Home Performance with ENERGY STAR initiative 
operated by the New York State Energy Research and Development 
Authority can be expanded quickly with HOME STAR. Current legislative 
language fully accommodates this objective by requiring Rebate 
Aggregators to coordinate with the appropriate State entity in those 
states in which they are operating.
    Question 28. If utilities are offering rebates for similar or 
identical measures, must they be coordinated in some way? Should they 
be in harmony? What factors will need to be coordinated? How would you 
do that? Would you coordinate the marketing, incentives, or processing?
    Answer. State utility commissions and state energy offices work to 
coordinate rebate programs now. The current Home Star legislative 
language requires such coordination by the State with the Home Star 
program, and is funded appropriately to do so. State and local 
governments are presently expanding residential energy efficiency 
programs by utilizing ARRA funding under the State Energy Program and 
the Energy Efficiency and Conservation Block Grant. These residential 
energy efficiency building retrofit programs should work to be in 
harmony with HOME STAR, as well as the Section 25C tax credit. The 
state energy offices will continue to work with the state utility 
commissions and the utilities to ensure coordination. Marketing, 
incentives (rebates, tax, non-tax and technical assistance), rebate 
aggregator communications, and cross-walking state activities under 
SEP/EECBG, Home Performance with ENERGY STAR with HOME STAR will be 
critical. We also intend to continue that coordination with the 
National Home Performance Council.
    Question 29. Would such coordination make HOME STAR even more 
difficult to implement?
    Answer. The coordination discussed in response to questions #27 and 
#28 will actually make HOME STAR easier to implement, rather than more 
complicated.
    Question 30. Is the rebate aggregator function and the quality 
assurance function merged together, according to your understanding of 
the draft? If merged together, how will you ensure that there are no 
conflicts of interests between the two?
    Answer. The final rules for this will be established by the DOE, 
but the HOME STAR Coalition believes that the RA and QA functions can 
be merged only if there is no conflict with the contractor installation 
services. The most important separation of functions is between the QA 
and contractor roles. In most existing residential retrofit programs in 
the country that are overseen by the states and utility regulators, the 
RA and QA functions are merged into one implementation role for both 
efficiency and consistency purposes. Since these will be overseen by 
the state QA oversight role, any conflict of interest will be avoided. 
The only conflict would be the case where the RA is also the 
contractor, which would therefore mean that there would need to be a 
separate and independent QA provider. QA providers, whether they serve 
an RA role or not, are also professionally trained and certified to 
meet industry standards similar to a financial auditor. As we 
understand it, the legislation does not require QA and RA functions to 
be merged, and in fact this would be prohibited in the case of an RA 
that serves as a contractor.
    Question 31. Please describe the process DOE will undertake to 
ensure that small building material dealers and independent contactors 
will have access to rebate aggregators. If the legislation does not 
envision the use of these contractors, please describe why not. If the 
intent is to have them participate, please describe the mechanisms in 
place to ensure that they will not pay more for their administrative 
costs, to operate within the program, as well as provide a descriptive 
overview of how the process would work.
    Answer. The rebate aggregator approach is designed specifically to 
facilitate the participation of small retailers and independent 
contractors in every state, in regions of the country with urban and 
rural populations alike. It does so by shifting the more complicated 
administration and overhead burden away from the smaller participant 
and to the rebate aggregator.
    While the specific process DOE will undertake is probably best 
answered by DOE, the Coalition believes that as drafted in HOME STAR, 
access to rebate aggregators will be simple and universal, with 
multiple options available to small and large firms alike. Rebate 
aggregators will take the form of a variety of retail, contracting, 
state and utility program operators, trade associations, and others 
with existing infrastructure and capacity. It is further anticipated 
that several regional and national providers will be able to provide 
access and further market choice. As such there will be a minimum of 
several options in every state and different choices available to the 
smaller dealers.
    As designed, there is no direct cost for a small contractor or 
building material supplier to participate. The administrative cost at 
the contractor or supplier level is low, with simple forms and 
submission requirements.
    Our understanding of how the process would work is described below, 
with some recommendations for refinement. The description illustrates 
that the process would be largely invisible to the homeowner and simple 
for the small dealer, merely providing the required information, 
physically or electronically, to the rebate aggregator of choice.
    Recommendations for Step-by-Step Rebate Processing:

          1. On completion of project or purchase of consumer-installed 
        material, the contractor or retailer uploads/faxes/delivers 
        standard forms and required documentation to the RA.
          2. RA checks documents to ensure eligibility and amounts.
          3. RA uploads bundled request to the federal rebate system 
        within 14 days of receipt. (We do not believe this time frame 
        is currently reflected in the bill, and we recommend amending 
        the language accordingly.)
          4. Rebate is paid from federal rebate system to the RA within 
        14 days. (We do not believe this time frame is currently 
        reflected in the bill, and we recommend amending the language 
        accordingly.)
          5. RA provides rebate to contractor within 14 days of 
        receipt. (Currently the bill allows 30 days for this step; we 
        believe this is unnecessarily long, and we recommend amending 
        the language accordingly.)
          6. Federal rebate system notifies QA Provider of contractor 
        job data (in parallel, on receipt of information in Step 3, 
        above).
          7. QA Provider contacts contractor/homeowner when applicable 
        and completes QA inspection.
          8. QA Provider reports inspection results back into federal 
        rebate system.

    Question 32. How does the program envision doing random site 
inspections? Will DOE maintain a list of all job sites? Will the 
inspections be based on a random sample? How will they be done?
    Answer. While final administrative procedures will be put in place 
by the DOE relating to QA procedures, our understanding is that all 
relevant job data to conduct a site visit will flow upstream as data 
connected to rebate requests. That way the DOE will have information on 
all job sites. It is also our understanding that a random sample of 
each contractor's jobs will be identified and be issued downstream to a 
QA provider for the appropriate inspection visit under either SILVER 
STAR or GOLD STAR protocols. The results of that visit will be 
communicated back upstream to the state (as the statutory overseer of 
QA), the DOE and the RA. If a deficiency exists, there is a protocol 
for its remedy.
    Question 33. Please describe how the Quality Assurance inspection 
process will work regarding products, or improvements that are not 
visible, such as door installation or wall installation.
    Answer. There are numerous existing QA protocols to check program 
compliance against all measures included in the HOME STAR Program. As 
noted in answers above, while the exact nature of specific QA protocols 
will be issued by the DOE, there is an existing infrastructure of QA 
providers who will have a variety of tools and instruments at their 
disposal to judge compliance. For example, infrared cameras are 
regularly used to assure that all side-wall cavities have been 
completely insulated. Air sealing of the attic plane can be checked 
against the required documentation required under SILVER STAR, and 
under GOLD STAR, air tightening claims will be checked by a blower door 
analysis against claimed performance numbers.

              Responses to Questions From Senator Sessions

    Question 1. While I understand the need to not make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films. Given the cost-effective 
energy savings that window films can provide to homeowners, should they 
be included as part of the SILVER STAR rebate section of the HOME STAR 
bill?
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    Given that the cost of installing window films is significantly 
lower than the costs associated with many other home retrofit upgrades 
(including the installation of new windows), incentivizing window films 
with the $1,000 SILVER STAR subsidy would not only ensure that more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by very small, family-
owned businesses.
    Answer. Window films are most effective in the South and Southwest, 
so different requirements would be needed in the northern states. The 
Coalition recommends that DOE evaluate the inclusion of window films.
    Question 2. While I can appreciate there are a variety of reasons 
one would want to limit the number of products eligible for the Silver 
Star rebates, the bottom line is that the Silver Star rebate program 
will likely be the first list that consumers look at when considering 
home energy efficiency improvements. Shouldn't we avoid picking 
``winners and losers'' in the marketplace when it comes to energy 
efficiency upgrades?
    Answer. The SILVER STAR program is designed to be easily understood 
and quickly implemented. The Coalition recommends the listing of 
specific measures that qualify. Alternatives would be to not mention 
any measures and just have a GOLD STAR program, or to list any measure 
that someone proposes. The former would be much slower to implement, 
reducing the number of short-term jobs produced. The latter would be 
hard for many consumers to understand and would result in inclusion of 
many measures that are not widely available or that are appropriate for 
some regions but not others, either leading to further confusion or to 
misapplication of some measures. Also, this latter approach will still 
require developing estimates of energy savings for each measure so as 
to determine the appropriate incentive level. If dozens of measures are 
added, this could be a time-consuming and contentious process. For all 
of these reasons, we believe having a somewhat shorter list of easy to 
understand measures is appropriate for a short-term program such as 
SILVER STAR. SILVER STAR is designed to only last a year, and in the 
longer term all energy-saving measures can qualify under GOLD STAR.
    Question 3. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. There are longstanding certification programs that exist in 
the market and have been recognized and recommended by the Coalition. 
The Coalition recognizes that additional training and certification 
programs might be also be suitable and supports the provision for the 
Secretary to review those additional programs.
    Question 4. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. The Home Star Coalition supports a home energy retrofit 
program with high standards. One component of that commitment is an 
incentive for contractors to employ a workforce in which installers 
have been certified under a credible third-party skill standard that 
covers the relevant components of retrofit work. Current drafts of 
proposed Home Star legislation enumerate three nationally-recognized, 
market-tested, skill standards and give the Secretary of Energy the 
authority to add new standards in consultation with the Secretary of 
Labor and the Administrator of the Environmental Protection Agency. The 
listed certification programs are all used by small businesses.
    As noted above, the Coalition recognizes that additional training 
and certification programs might be also be suitable and supports the 
provision for the Secretary to review those additional programs.
                                 ______
                                 
  Responses of Terrence J. Mierzwa to Questions From Senator Murkowski

    Question 1. Are you aware of any type of retrofit program, 
excluding Weatherization, that has pursued so many homes in such a 
limited time?
    Answer. No, I am not.
    Question 2. What is the largest utility-based retrofit program you 
are aware of?
    Answer. I really don't have a strong awareness of what other 
utilities are doing re retrofit programs.
    Question 3. What challenges have occurred in the processing of 
rebates or payment for work within these programs?
    Answer. The biggest challenge Consumers Energy has faced with 
processing its rebates has been incompleteness of or errors on customer 
applications. To mitigate this challenge, we are now asking our trade 
allies (e.g., heating and cooling contractors, etc.) who sell 
qualifying high-efficiency measures to our customers to work more 
closely with the customers at the point of sale to ensure rebate 
applications are filled out completely and accurately.
   Response of Terrence J. Mierzwa to Question From Senator Stabenow
    Question 1. Consumers Energy has been a leader in the area of 
energy efficiency and your programs are an excellent example of what we 
are trying to do nationwide.
    Can you describe what the impact would be to these programs if the 
federal dollars flowing into the state for energy efficiency were NOT 
coordinated with the utility programs?
    Answer. This is my greatest fear regarding the proposed 
legislation. We have legislatively mandated energy savings targets that 
we must hit each year, and we are only allowed to take credit for 
energy savings for which we can demonstrate our influence. The rebates 
we give to our customers are the most tangible sign of that influence. 
Even then, there are those who will argue that we should not be allowed 
to take full credit for the savings. For instance, we expected to give 
out 2,200 rebates for high-efficiency furnaces last fall, but we gave 
out more than 7,000. Part of the reason this program was so popular is 
that, in addition to our rebate, customers were also able to receive a 
substantial federal tax credit. Some will argue, therefore, that the 
tax credits drove much of this activity, so we shouldn't get full 
credit for the savings. In fact, perhaps we should only get half credit 
or less. If our Commission were to agree with that assertion, that 
program would no longer be cost-effective; we would shut it down until 
federal tax incentives expired; and we would have great difficulty in 
meeting our state-mandated gas savings goals in the meantime. Customers 
and trade allies would be dissatisfied because they want to see us 
operating ongoing, sustainable programs, not jumping in and out of the 
market,
    By the way, we do think we deserve something close to full credit, 
and we will make that argument to our Commission. We have had many 
heating contractors tell us that even though federal tax credits were 
available for many months before we launched our program, it was only 
after we launched that their sales of high-efficiency models really 
took off. Our strong educational and marketing effort plus our rebates 
were the tipping point.
    However, if federal dollars flowed into this space that weren't 
coordinated with our programs and, indeed, competed with our programs 
for energy savings, we would have no argument to make with our 
Commission re getting credit for any of the energy savings. Again, in 
the worst case, we would have to shut down our programs that faced 
federal competition until the federal dollars dried up. That would be a 
shame because less cost-effective programs operated with a redundant 
infrastructure would be pushing out current programs that are operating 
successfully.

  Responses of Terrence J. Mierzwa to Questions From Senator Sessions

    Question 1. While I understand the need to not make the Silver Star 
program completely open-ended to any energy efficient technology 
regardless of its effectiveness, I am nevertheless concerned that at 
least one very energy efficient and cost-effective product category has 
been excluded: high-performing window films.
    Window films are a proven, affordable means of achieving 
significant energy savings in homes. Specifically, by blocking a 
significant portion of the Sun's heat that penetrates a window, window 
films ensure there is less strain on air conditioners that heat a 
home--which, in turn, lowers overall energy costs for homeowners. 
Similarly, ``low-E'' window films can actually help retain a building's 
heat in colder climates, and thereby reduce heating costs in the 
winter.
    When considering the cost of installing window films is 
significantly lower than completing many of other home retrofit 
upgrades (including the installation of new windows), providing window 
films with the $1,000 Silver Star subsidy would not only ensure more 
homeowners complete energy-saving improvements, but also support the 
thousands of jobs tied to the window film industry--including hundreds 
of U.S. manufacturing jobs and an estimated 7,000 to 8,000 window film 
installer jobs that are overwhelming employed by very small, family-
owned businesses.

   Given the cost-effective energy savings that window films 
        can provide to homeowners, should they be included as part of 
        the Silver Star rebate section of the Home Star bill?

    Answer. I would not be opposed to cost-effective window films being 
included. I note that some window films currently qualify for federal 
tax credits.

   While I can appreciate there are a variety of reasons one 
        would want to limit the number of products eligible for the 
        Silver Star rebates, the bottom line is that the Silver Star 
        rebate program will likely be the first list that consumers 
        look at when considering home energy efficiency improvements. 
        Shouldn't we avoid picking ``winners and losers'' in the 
        marketplace when it comes to energy efficiency upgrades?

    Answer. The benefit/cost ratio of various energy efficiency 
measures varies quite widely. As a matter of public policy, I think it 
makes sense to encourage adoption of the most cost-effective measures 
over less cost-effective ones. That way, we get a lot more ``bang for 
our buck.''
    Question 2. In your opinion, why does the legislation exclude 
recognition of qualified training and certification by the Home 
Builders Institute, an existing certification program run in 
conjunction with the Department of Labor that provides training for 
weatherization and energy efficiency upgrades?
    Answer. I do not know why the legislation excludes recognition of 
this certification program.
    Question 3. Would you agree that we should work to ensure the 
``certified workforce'' requirement in the bill does not discriminate 
against installers of energy efficiency products that are typically 
employed by small businesses? If so, would you be willing to work with 
us to ensure that nationally-recognized training programs--such as the 
training provided by the IWFA will be recognized?
    Answer. I think that any certification requirements should be 
focused on ensuring that installers of energy efficiency measures have 
sufficient knowledge of building science to install them properly. 
Improper installation of fossil fuel burning equipment (e.g., furnaces, 
water heaters) and/or building shell improvements (e.g., insulation) 
can create significant health risks to homeowners from resulting 
problems such as mold and carbon monoxide.

                              Appendix II

              Additional Material Submitted for the Record

                              ----------                              

          Statement of Sharla Riead, Owner/Manager, Hathmore 
                  Technologies, LLC, Independence, MO

    I am Sharla Riead, Owner of Hathmore Technologies, LLC, a third-
party energy and environmental QA and testing firm, and the Accurate 
Rater Network, a HERS Rating Providership, LEED for Homes Providership, 
BPI Affiliate, and BPI and HERS Training Provider Organization. We have 
been in business in this industry for over 30 years and have a large 
network of HERS Raters, BPI Building Analysts, builders, developers, 
and contractors.
    We have been leading discussions around the Home Star program and 
the bill as it is written and we have gathered the following concerns 
and observations for your discussion:

   Discomfort with States running the program

    --One only needs to look at the performance record of Louisiana's 
            state run Road Home Program following Hurricane Katrina, or 
            just about every State's Stimulus funded Weatherization 
            Assistance Program, to see that a competitive alternative 
            needs to be in place that will give market forces the 
            opportunity to expedite the process. Furthermore, mandating 
            that the program be administered through the States, most 
            of which have proven to be totally incapable of managing a 
            program like this with any speed or scale (Think WAP). The 
            program should be administered along the same as lines as 
            the Builders' Energy Efficient Tax Credit, using HERS 
            raters that carry the appropriate PROFESSIONAL LIABILITY 
            INSURANCE (E & O).

   Definition of QA and qualification

    --Note that under the proposed Home Star legislation, there is no 
            requirement for contractors, auditors, or QA providers to 
            carry any form of E & O insurance. Also, take notice that 
            the QA providership is defined as ensuring contractors are 
            qualified with no reference to the actual WORKMANSHIP or 
            ROI.

   RESNET Rating Providers as Aggregators and RESNET QA 
        Designees as 3rd party QA Alternatives

    --The existing RESNET providership network has a nationwide 
            infrastructure that could immediately take action. That's a 
            free market alternative which would mean to me, as a 
            businessman, the option of paying for FASTER service from 
            industry professionals that are already federally 
            recognized. Allowing the builder tax credit model to be 
            included, would allow me to jump start my market rate 
            program IMMEDIATELY rather than having to wait around on 
            the state to get it's systems in place before I could 
            actually start creating jobs.

    It sure would be nice to have a competitive alternative for 
processing. I have a very strong interest in the free market 
opportunity that is being diminished with the way the oversight and 
rebate aggregation is being written. For those that chose to go through 
the state programs rather than invest in 3rd party QA's that would also 
be recognized by the mortgage industry (EEMs provide immediate access 
to more capital as opposed to waiting on the states to pass PACE 
legislation), then that would be a business decision that they would 
make.
    I'm looking for a faster way to scale the opportunity with complete 
transparency, accountability, and oversight; using an existing QA 
infrastructure that is federally recognized. No market cornering here 
but rather open competition, Free Market -vs-State Control!
    This isn't about BPI or RESNET, it should be about the 1.8 million 
laid-off construction workers and the scalability of an industry with 
tremendous environmental impacts as a bonus.
    Rating Providerships as aggregators makes a lot of sense. They are 
already maintaining and processing the required information. As a 
contractor who is ready to 'go-to-market' immediately and having spent 
the last year in the hurry-up-and-wait WAP program with little or 
nothing to show for it, I'd like to see a free market alternative to 
the program's scaling.
    I understand that many states already have an aggressive program in 
place, the states I work in don't. The Missouri and Kansas programs 
have gone nowhere. Especially since the local non-profit energy agency 
just spent the last year training every auditor to a local EETC 
certification rather than BPI standard and Kansas doesn't even 
recognize BPI or HERS or even BPI and HERS certified auditors as being 
qualified for their program.

   Cost of BPI Accreditation

    --Many states and programs successfully utilize a consultant model 
            of energy upgrades. An energy expert (BPI certified) 
            consultant performs the test-in and creates the scope of 
            work. The contractor completes the work. The BPI certified 
            consultant performs the QA and test-out. With this option 
            in place, there is no justifiable reason for mandating that 
            a contractor be BPI accredited.
    --Requisites for BPI accreditation include:

             $1500 for application
             Certification as an auditor and at least one more 
        specialty (Probably Envelope)
             $2850 tuition (based on closest classes available)
             Two weeks salary to attend training
             Travel, lodging for 9 nights minimum
             Recommended $7000 worth of equipment, minimum
             A pledge to do ALL work to BPI standards within 2 
        years of joining

    I haven't found a single contractor who is willing to invest this 
much time or money in a program that does not yet officially exist. And 
no one will turn down a job just because the customer doesn't want the 
home built to BPI specs, not in today's market. So, Florida contractors 
will likely miss out on the money and jobs, other than the one 
nationally based company in Orlando.
    Whatever the out come, I'm still going to have my retrofit company 
become BPI accredited as a competitive advantage in the marketplace. I 
just don't want to be mandated to do it. Mandating the accreditation 
dilutes the Brand value of the organization. I agree 100% that every 
home needs to be audited by a BPI certified Building Analyst and that 
an auditable ROI be calculated by a 3rd party HERS rater. But requiring 
every member of my field staff be BPI certified with not 1, but 2 
certifications is unrealistic.
    For the record, I think BPI analysts should be performing the 
audits and be responsible for certifying the workforce, but RESNET QA 
providers should be available to provide financial oversight and 3rd 
party QA alternatives. I don't think RESNET should be concentrating on 
competing with BPI, instead the RESNET and BPI leaderships should focus 
on the strengths and weaknesses that each organization's members 
possess and use that to scale the market quickly.
    We appreciate your review and discussion of the above comments and 
observations. I am personally available to answer any questions or 
provide further information as may be requested.
                                 ______
                                 
           Statement of the National Association of Realtors

                              INTRODUCTION

    The National Association of REALTORS appreciates the opportunity 
to submit a written statement to the Senate Energy and Natural 
Resources Committee on the critical subject of the creation of jobs 
related to energy efficiency, and especially on proposals that address 
job creation in the area of energy-efficient building retrofits.
    The National Association of REALTORS (NAR) is America's largest 
trade association, representing more than 1.2 million members involved 
in all aspects of the residential and commercial real estate 
industries. NAR is the leading advocate for homeownership, affordable 
housing and private property rights.

                       NAR AND GREEN JOB CREATION

    In addition to building a certified green building, NAR has taken a 
number of other important steps to raise public awareness about green 
buildings and their benefits in the marketplace. For example, NAR has:

   Developed the GREEN Designation program to offer advanced 
        training and certification for real estate professionals. Like 
        many professionals, continuing education classes and 
        professional designations are a regular part of Realtors' on-
        going training. The GREEN designation helps Realtors gain the 
        expertise needed to advise their clients on what to look for 
        and consider when interested in making more eco-friendly 
        building purchases.
   Partnered with Federal agencies and others to promote green 
        buildings. For example, NAR and the Department of Energy 
        collaborated to provide consumers with an ``Energy Savers'' 
        brochure with the facts about reducing energy use and saving 
        money.

    These are all examples of voluntary, incentive-based approaches 
that will create jobs while improving energy efficiency and are 
consistent with NAR policy.

         NAR PERSPECTIVES ON THE PROPOSED HOME STAR LEGISLATION

    NAR strongly supports providing property owners with the education, 
incentives and resources they need to voluntarily improve their homes 
and save energy and applauds the Committee's efforts to develop 
legislation to achieve just that. Providing owners with voluntary, 
incentive-based programs to make energy efficiency improvements to 
their homes will add value to residential property, reduce electricity 
use and save money on utility bills, and help stimulate a job market in 
remodeling and renovation activities. We thank Chairman Bingaman for 
his efforts in this area and support the goals of the discussion draft 
which is the subject of today's hearing.
    As drafted, the Home Star Act of 2010 proposes to offer homeowners 
the resources to accomplish residential energy efficiency savings 
through rebates and other financial credits. The Silver Star tier would 
offer rebates of up to $3,000 for upgrades such as adding insulation, 
duct sealing, and installing energy-efficient water heaters. The Gold 
Star tier would offer larger rebates for whole-home energy audits and 
make subsequent retrofits that achieve 20 percent energy savings, with 
additional incentives for energy savings that exceed 20 percent.
    NAR supports offering homeowners rebates for conducting energy 
efficiency improvements. We look forward to working with the Committee 
on the discussion draft to:

          1. Recognize the job-creation potential of the multi-family 
        and commercial sectors by extending rebates to those kinds of 
        properties;
          2. Preserve state flexibility, and limit regulatory authority 
        and the sole discretion provided to the Secretary regarding 
        home energy performance ratings and documentation; and
          3. Minimize unnecessary bureaucracy and red tape while 
        diligently protecting consumers and private information.

 NAR'S PERSPECTIVE ON THE PROPOSED RECOVERY THROUGH RETROFIT INITIATIVE

    While the Home Star legislation appears to be an effective approach 
to incentivize home owners to conduct energy efficiency improvements to 
a home, NAR is very concerned about Administration initiatives that 
take a much different approach and seem to use the home buying process 
as the vehicle to implement a system of home energy use labels, while 
also mandating energy efficiency improvements.
    On October 19, 2009, Vice-President Biden announced the development 
of a major federal government initiative, the Recovery Through Retrofit 
program. This program seeks to create a national home energy retrofit 
market by providing: (1) access to home energy retrofit information; 
(2) access to home energy retrofit financing methods; and (3) access to 
a trained home energy retrofit workforce.
    If the goal is energy efficient homes and buildings, the most 
effective approach would be to provide the financial resources and 
incentives that educate and empower property owners to make needed 
energy improvements, such as the proposed Home Star program.
    Mandating an unreliable home rating system will not lead to home 
energy use reductions. When buyers hold all the cards at the closing 
table and too many homeowners have no equity or savings to finance 
energy improvements, transaction-based triggers only serve to send 
conflicting market signals--without any assurances that needed energy 
improvements will be made. As a result, NAR strongly opposes this 
approach.
  nar perspectives on the energy performance label for existing homes
    Labeling every structure in America will not, in and of itself, 
improve the energy efficiency of homes or buildings. Owners must act on 
the information by taking the next steps and making energy-related 
improvements such as replacing aging heating and cooling systems, 
appliances and windows.
    Today, however, many homeowners have seen their financial well-
being undermined. Jobs have been lost, savings have eroded and property 
values have plummeted. Without the savings or equity, many lack the 
financial resources to make the energy improvements they already know 
they need to make. Energy labels will stigmatize older properties and 
make it harder for these individuals to build savings or equity. Labels 
also will reduce property values when existing owners sell and are 
forced to negotiate price reductions in order to compete in today's 
buyer's market.
    According to data collected by the American Housing Survey (AHS) 
and analyzed by NAR, labeling real estate will create disproportional 
impacts on older property owners. More than 60% of U.S. homes were 
built prior to 1980 when the first building energy codes were 
established, and face relatively larger losses in property value due to 
building labels. These properties will require more improvements than 
the newer properties in order to match labeling scores and maintain 
their value.
    According to the AHS data, a large share of these older properties 
are owned and occupied by populations which tend to live on modest or 
fixed incomes, and are least able to afford these improvements without 
significant financial assistance. These populations include 73% of 
elderly, 69% of impoverished and 64% of Hispanic and black owners. 
Labels will not only stigmatize older homes but the community where 
they are located, and which are struggling to maintain and attract 
investment. There will also be regional disparities: The Northeastern 
United States, where older homes are concentrated, could fare worse 
than the other structures located in the south and west. Rural 
communities could be especially hard hit, as a substantial proportion 
of homes in those areas were built prior to 1980.
    Before branding homes and buildings with labels, consumers require 
a better understanding of energy efficiency and the tools to turn 
information into action. For this reason, NAR supports:

          A. Raising public awareness about energy efficiency programs 
        and information.
          B. Encouraging the federal government and the states to 
        provide financial incentives to consumers to improve homes and 
        buildings.

    By developing the infrastructure and education, and providing the 
right incentives, property owners will make the energy improvements 
that will achieve real energy savings.

    NAR PERSPECTIVES REGARDING CERTIFICATION AND TRAINING STANDARDS

    In both the Home Start and the Recovery Through Retrofit proposals, 
there are provisions that address training and certification of workers 
to ensure that quality work is performed. The federal government should 
proceed carefully when developing a national set of guidelines and 
standards that address uniform certification and training for workers 
entering this new green jobs market. While NAR recognizes the need to 
ensure reliability for this work, too many standards and training 
criteria will stifle entrepreneurial job creation and hinder the 
ability of small businesses to respond to rising retrofit demand. If 
one cliche bears repeating, it is the well-worn trope that ``one size'' 
guidelines coming from inside the Beltway generally do not fit all the 
varying markets across the country. The federal government must strike 
a careful balance between creating a consistent set of guidelines that 
will increase consumer confidence and promote a stable and reliable 
national home retrofit workplace on one hand, while on the other ensure 
that local businesses are not hindered in their ability to respond to 
demand for this work
    In addition, while NAR appreciates Congress' efforts to encourage 
homeowners to make voluntary, incentive-based energy efficiency 
improvements, the planned implementation of an EPA rule threatens to 
derail these activities. The Lead Renovation, Repair and Painting 
program applies to all residential and child-occupied facilities built 
before 1978 where a child under the age of six or a pregnant woman 
resides. Contractors disturbing a painted surface, six square feet or 
greater inside the home or 20 square feet on the exterior must follow 
new lead safe regulatory requirements, including training, 
certification, work practices, notification, clean-up and record 
keeping. As a result, a wide array of home retrofit projects envisioned 
by Congress, such as new windows, weatherization, insulation and other 
activities will trigger this rule. The renovators who conduct this type 
of work will be required to be trained in all of the new lead-safe work 
practices.
    Unfortunately, the EPA has been slow in getting the required 
training and certification programs in place to train a sufficient 
number of workers to be available to conduct both the normal renovation 
activities and the expanded energy efficiency retrofit projects 
anticipated by the report. As a result, while the Act envisions massive 
retrofits across the country, in reality there will be few workers 
qualified to perform the work, thus hindering the very market the Act 
claims to want to jumpstart. EPA should extend the compliance date for 
lead paint training and certification until there are a sufficient 
number of workers available.

                CONCLUSION--NAR SEEKS A WIN-WIN SCENARIO

    As Realtors respond to growing consumer demand for green housing, 
NAR policy supports a voluntary, incentive-based approach to energy 
efficiency retrofits of existing housing. Such an approach would 
sustain the current green trends, and make them a more permanent 
feature in the marketplace. This, in the view of Realtors, provides a 
``win-win'' scenario by allowing for vigorous economic growth while 
improving the environment.
    The green building market is already responding to consumer demand. 
For example, consider this recent headline in the Miami Herald: 
``Increasing demand for energy efficient, environmentally friendly 
buildings is bringing business to architects during the construction 
downturn.'' McGraw-Hill Construction is forecasting that the combined 
annual commercial and residential green building markets will total $62 
billion by 2010. Architects, homebuilders, remodelers, real estate 
agents and all the industries that rely on housing and homebuilding are 
responding to consumer interest in green issues. They are responding by 
building and providing products that the consumer wants. And this is 
happening all without significant assistance (or interference) from the 
public sector.
    The Federal government does provide important public research, 
capital and economic incentives, such as the current tax credit for 
energy efficient home improvements which spurs demand and interest. 
However, NAR believes that government should be limited to this role: 
By leading the way with green Federal buildings, providing for research 
that spurs innovation and most importantly, keeping the market fluid 
and free of mandates, and encouraging robust consumer education 
programs, the Federal government can do more to promote the public good 
than with mandates that will only hinder the market at a time of 
economic recovery.
    NAR members have shown that green buildings are both proactive and 
profitable, primarily because current programs have been allowed the 
market to respond specific conservation needs in a geographic and 
market area. NAR supports a national green building and home energy 
efficiency retrofit program that is flexible and market-driven, 
encourages continued growth in green construction that protects options 
for consumers in all markets, as well as preserves, protects, and 
promotes the health of our environment.
                                 ______
                                 
   Statement of The National Multi Housing Council and the National 
                         Apartment Association

    The National Multi Housing Council (NMHC) and National Apartment 
Association (NAA) are committed to providing safe, affordable and 
sustainable apartment homes for 16.7 million American households. NMHC 
and NAA represent the nation's leading firms participating in the 
multifamily rental housing industry. Our combined memberships are 
engaged in all aspects of the apartment industry, including ownership, 
development, management and finance. We commend ongoing congressional 
efforts to bolster the economy and create jobs while improving the 
energy performance of the nation's built environment. We support 
legislation to expand incentives for improving energy efficiency in 
homes and commercial buildings and encourage Congress to implement 
programs such as the Home STAR and Building STAR programs. NMHC/NAA 
welcome the opportunity to provide our views on S. 3079, the Building 
STAR Energy Efficiency Rebate Act of 2010.
    The apartment industry is committed to improving the energy 
efficiency of our buildings. The current extremely challenging economic 
environment combined with long standing financial barriers, like high 
upfront, capital costs, prolonged payback periods and split incentive 
problems, pose a significant obstacle to the speedy adoption of more 
energy efficient building systems and products. Currently available 
incentives, including the Energy Efficient Commercial Buildings 
Deduction, Energy Efficient Home Credit and Energy Investment Credits 
provide a good framework to overcome these hurdles however, they have 
not proved to be sufficiently accessible for many property owners in 
part due to the relatively short time frames for which these credits 
have been authorized as well as the relatively high levels of energy 
efficiency that are required to be achieved.
    Overlaid on this is that property owners are experiencing decreased 
revenues associated with declining occupancy rates and increased 
financial pressures associated with the refinancing of properties. The 
continued financial downturn has put increased pressure on the 
operating expenses of multifamily properties. Property owners and 
managers have to do more with less; vacancy rates in many areas of the 
country have increased as local economies constrict and shed jobs. 
Building STAR has the capacity to jump start the much-needed flow of 
capital towards energy efficiency upgrades in building systems and 
components, while playing a significant role in creating jobs for the 
workers involved in the manufacture, retail and installation of energy-
conserving products.
    Importantly, Building STAR is designed to promote good stewardship 
of federal funds by leveraging public funding to improve the operating 
efficiency of the existing building stock. The Rebuilding America 
Coalition has estimated that for every federal dollar expended under 
the Building STAR program, it will be matched by 2 to 3 dollars of 
private sector funds. By way of example, one of our members has 
indicated that to complete an upgrade of a boiler and water heating 
system in a 26-year old apartment property using the appliances 
specified in the Building STAR legislation would cost approximately 
$280,000 in addition to the $37,000 appliance rebate for a total 
project cost of $317,000. In this case the federal investment attracts 
over a seven-fold investment of capital by the property owner.
    In addition to strengthening the economy by facilitating 
rehabilitation projects on older buildings and creating jobs, an 
investment under the Building STAR program will reduce the energy cost 
burden of apartment residents. This will have an immediate impact for 
the roughly 70% of residents of multifamily properties who pay all or 
part of the cost of their utilities in addition to their cost of rent.
    The Building STAR program is designed for a quick start. We believe 
that the rebate system will facilitate the use of this program. The 
fact that many of the current-law incentives for owner investments in 
qualifying energy projects have been enacted in the form of tax credits 
has worked against the utilization of these incentives by commercial 
real estate that is owned by real estate investment trusts. The direct 
rebate system found in the Building STAR approach will enable 
commercial real estate which includes apartment buildings with 5 or 
more units to participate in the energy efficiency upgrades and job 
creation inherent in the program.
    Moreover, the direct rebate structure of the proposed program is 
advantageous in light of recent findings concerning the Weatherization 
Assistance Program (WAP). Industry experience in utilizing the WAP for 
eligible properties that provide homes for low income residents has 
been mixed. Despite the significant influx of funding to this program 
through the American Recovery and Reinvestment Act, the funds have been 
slow to move out to qualified properties to finance energy 
improvements. The state weatherization offices responsible for 
administering the funds have pointed to a variety of administrative 
reasons for the delays.
    The opportunities for low income residents to save money on their 
utility bills and the opportunities for job creation among the 
decimated construction trades that provide weatherization services have 
been limited by the slow to roll out of funds through the WAP. We would 
therefore urge that Congress give careful consideration to the process 
for providing the rebate and financing mechanisms under the Building 
STAR program. It is essential to the success of the program that these 
funds be deployed quickly in order to create jobs. We believe that the 
Department of Treasury is well positioned to approve qualifying 
projects and thus maximize the opportunity to jump start the economy. 
As one multifamily property owner stated, ``Building STAR's greatest 
benefit is that the owners can go straight to the Department of 
Treasury on-line, they can execute the work themselves and they get the 
funds in cash within 30 days. . . Finally, somebody is listening! It is 
all about HOW you get the work done.''
    While we share concerns about increased deficit spending we believe 
that the funds deployed in service of increasing energy efficiency and 
creating jobs will build greater national security. Thank you for your 
consideration and we look forward to working with you in your efforts 
to improve energy efficiency and conservation in multifamily housing.
                                 ______
                                 
    Statement of Paul T. Mendelsohn, Vice President, Government and 
       Community Relations, the American Institute of Architects

    On behalf of the American Institute of Architects (AIA) and its 
more than 83,000 members, I write in strong support of the Committee's 
efforts to promote energy efficiency and create jobs for the design and 
construction industry. Your Committee has long understood the critical 
role that energy efficiency plays in fostering energy independence as 
well as the positive role that federal green incentives play in 
reinvigorating our economy.
    The design and construction industry is the linchpin of our 
economy, accounting for one in ten dollars of gross domestic product 
and millions of well-paying jobs. However, as you are aware, this 
industry has been decimated by the ongoing recession. Unemployment 
rates in the construction sector are near 25 percent; according to the 
U.S. Department of Labor, employment in the architectural industry has 
fallen by 18 percent since 2008. Because every $1 million invested in 
design and construction creates 28 full-time jobs, any jobs legislation 
that Congress develops must address the historic challenges this 
industry faces.
    As such, the AIA strongly supports the Committee's efforts to 
consider energy efficiency rebate programs as a part of comprehensive 
jobs legislation. The AIA supports both the Home STAR and Building STAR 
proposals. In particular, we strongly support S. 3079, The Building 
Star Energy Efficiency Act of 2010. We commend Senators Jeff Merkley 
(D-OR), Mark Pryor (D-AR), Debbie Stabenow (D-MI), Sherrod Brown (D-
OH), Bernie Sanders (I-VT), and Ben Cardin (D-MD) for their leadership 
in sponsoring this bill.
    S.3079 will provide financial incentives for energy-efficient 
renovations in commercial buildings, achieving the duel goals of 
stimulating the design and construction industry and promoting energy 
efficiency. The Building STAR program would provide rebates and tax 
incentives to building owners for qualified renovations that would 
result in improved energy efficiency of existing buildings. This 
program would create well-paying jobs in every state across the 
country, save building owners money on energy costs, and would reduce 
our nation's energy use, advancing our energy security and reducing our 
demands on foreign sources of energy.
    The AIA and its members believe that S.3079 should be a central 
component of any jobs legislation that the Senate considers. We also 
support efforts to include a provision in the legislation to provide 
for a rebate for the preparation of construction documents. Especially 
for larger commercial buildings, the types of retrofits that would be 
allowed under the plan often require complex changes to building 
systems and potential structural changes as well (replacing an HVAC 
system, for example, will impact mechanical, structural, electrical and 
plumbing systems). These changes require the preparation of detailed 
construction documents, specifications and scopes of work to ensure 
that the changes can be made in ways that meet building codes and do 
not unduly impact other building systems.
    This intermediate ``phase 2'' document preparation can be 
expensive; an owner typically has to front the cost of the preparation 
of the specification and the administration and evaluation of the bids. 
These costs can be as much as 10 percent of the total project cost, and 
can pose a major barrier to project implementation. However, it is 
vital to ensure that the projects are performed to code and done in 
correct ways that protect the health, safety and welfare of the public.
    Therefore we propose adding the following language to Section 3(d) 
of S.3079:

          (7) Preparation of Plans.--For the preparation of plans for 
        the installation of equipment described in 3(b) and 3(c), 
        including construction documents, specifications, blueprints, 
        and scopes-of-work, prepared by individuals licensed in the 
        state to prepare such plans, a rebate equal to the lesser of:

                  (i) $0.05 per square foot of building space, or
                  (ii) 50 percent of the cost of the preparation of 
                documents.

    With Building STAR, Congress can promote significant increases in 
energy efficiency while ensuring that projects are completed in ways 
that protect the health, safety, and welfare of the general public by 
allowing the preparation of plans and other construction documents to 
be eligible for the rebates. In addition to the AIA, this proposal has 
been endorsed by the Real Estate Roundtable, the U.S. Green Building 
Council, the International Council of Shopping Centers, Building Owners 
and Managers Association International and the American Council of 
Engineering Companies.
    As the Committee works to advance jobs legislation, the AIA 
strongly urges the Committee to advance S. 3079 with the above 
additional language. We look forward to working with the Committee as 
you advance legislation designed to promote energy efficiency, energy 
independence, and job creation across our economy.
                                 ______
                                 
     Statement of Katherine Hamilton, President, GridWise Alliance

    Chairman Bingaman, Ranking Member Murkowski, members of the 
Committee, thank you for inviting me to submit written testimony on 
smart grid provisions proposed by the Energy and Natural Resources 
Committee. The GridWise Alliance has testified before this committee on 
several occasions and sustains a positive working relationship with 
both majority and minority staff by providing unbiased information 
about smart grid.
    The GridWise Alliance is a coalition of about 125 organizations 
advocating for a smarter grid for the public good. Our members broadly 
represent the nation's interest in smart grid, including leading 
utilities, independent system operators, large IT and communications 
companies, small technology companies, manufacturers, consultants, 
universities, and research organizations. We operate on a consensus 
basis and remain technology neutral, focusing on the policy issues 
surrounding the deployment of a smarter grid. We believe the market 
should determine which technologies prevail.
    The passage of the American Recovery and Reinvestment Act serves as 
a watershed event in the history of the nation's electric grid. By 
providing over $4 billion in grants for smart grid projects, Congress 
effectively elevated the smart grid to a national priority. Utilities 
and state regulators have been quick to respond, submitting hundreds of 
projects for potential funding. Over 100 projects representing nearly 
every state were awarded federal grants. As a result, the transition to 
a smarter grid is well underway.
    Now we need to turn our attention to the ultimate beneficiary of 
the smart grid--the consumer. The smart grid offers greater visibility 
into, and control over, electricity consumption, thereby enabling 
consumers to better manage their energy bills. To realize these 
benefits, however, consumers must have access to two critical suites of 
technologies--Home Area Networks (HAN) and smart appliances. Whereas 
Home Area Networks process communications between the grid and the 
home, smart appliances actually respond to consumer preferences and 
signals from the HAN or utility, system operator, aggregator, internet 
provider, or even microgrid. For example, consumers with variable rate 
plans can program smart appliances to operate when electricity prices 
are low, while utilities or other service providers can signal smart 
appliances to discretely alter operations during periods of peak 
demand. Smart appliances will be the next evolution of demand response.
    To be sure, consumer participation in the smart grid is an 
evolutionary process. We at the GridWise Alliance believe that the pace 
of consumer participation will be determined by three underpinning 
efforts: (1) consumer education; (2) support for the smart appliance 
market; and (3) adoption of variable rate structures and financial 
incentives. Our members are collaborating with consumer advocates, 
utilities, and other service providers on the development of consumer 
outreach programs; I have spoken with many state utility commissioners 
on the need for rate structures that allow consumers to benefit from 
their choices. However, the nascent smart appliance market is in urgent 
need of support, particularly as consumer spending remains at record 
lows and unemployment hovers just below 10%. For these reasons, 
Congress can play a crucial role in providing early support for the 
market and spurring successive rounds of investment in new 
technologies. Not all homes will purchase smart appliances right away, 
but support for this market will be a critical step toward encouraging 
consumer participation in the smart grid.
    Smart appliances will be capable of interacting seamlessly within 
home systems to provide energy savings for consumers without 
inconveniencing household operations. For example, a smart refrigerator 
can cycle off its freezer defrost during peak periods of demand, 
thereby allowing the utilities to better manage overall load and 
providing consumers with opportunities to reduce their electric bill, 
depending on the available incentive programs. We believe that state 
rate structures and incentives should complement this technology to 
allow consumers to maximize their energy and bill savings. In a weak 
economy, a consumer's ability to understand and react to electric 
prices will be critical. Smart appliances will offer consumers the 
ability to simply and conveniently reduce demand without negatively 
impacting their lifestyles.
    Smart appliances will also play an important function in 
maintaining grid stability. Appliance and chip manufacturers are 
developing technologies that can automatically react to conditions (or 
``perturbations'') on the grid, even in the absence of signals from 
utilities. For example, if a substation transformer fails, a smart 
appliance could detect voltage sag and shut down in order to shed load 
from the system. With a multitude of such appliances interacting with 
the grid, the system becomes much more stable and reliable. The 
appliance then becomes important not only to the consumer, but to the 
community.
    Beyond the grid, the smart appliance market will create new 
opportunities for a range of manufacturers. Put simply, these 
opportunities can translate into economic growth and improved 
competitiveness within our domestic manufacturing base. We believe that 
traditional appliance manufacturers as well as innovative start-up 
companies should be able to participate in this new market. Although 
Congress has voiced its intent to place our country on a pathway to 
leadership in the global smart grid market, we must ensure the correct 
incentives are in place to realize this vision. For this reason, we 
strongly support the provisions in this bill.
    Given the importance of smart appliances to consumer choice, grid 
stability and manufacturing competitiveness, the GridWise Alliance 
strongly supports the Committee's decision to include smart appliance 
language into the draft under discussion at this hearing. In 
conclusion, the GridWise Alliance supports smart appliance language in 
this bill as a means to prepare the market for consumer choice, reduce 
disruptions on our electric utility grid, and stimulate innovation and 
manufacturing in the US, providing economic stimulus and job growth.
                                 ______
                                 
 Statement of Bill Minahan, Founder and President, Building Committee, 
                          Inc., Milwaukee, WI

    Chairman Bingaman and Ranking Senator Murkowski, thank you for 
allowing me to offer the following remarks for the hearing record. On 
behalf of Building Committee Inc. (www.bcihq.com), a private for-profit 
company that offers domestic commercial building planning, design, 
build, branding and energy efficiency services, I greatly appreciate 
the opportunity to present my views on the proposed Building STAR 
legislation, which was recently introduced as S.3079 by Senators Jeff 
Merkley, Sherrod Brown, Benjamin Cardin, Mark Pryor, Bernie Sanders, 
and Debbie Stabenow. BCI urges Congress to advance this legislation, 
which we believe will leverage private capital investments through 
federal rebates to improve building energy efficiency, reduce energy 
consumption, and create jobs.
    If I can leave one message with you today, it is this:

          PUBLIC-PRIVATE PARTNERSHIPS ARE ESSENTIAL TO REDUCING ENERGY 
        CONSUMPTION IN LARGE COLLECTIONS OF SMALL-TO MEDIUM-SIZED 
        EXISTING BUILDINGS. WE ARE NOT CONVINCED, HOWEVER, THAT 
        BUILDING MANAGERS WILL INVEST IN ENERGY CONSERVING TECHNOLOGIES 
        UNLESS THEY ARE OFFERED A FREE OR VERY LOW-COST ENERGY 
        ASSESSMENT AS WELL AS FINANCING OPTIONS TO IMPLEMENT THE 
        ASSESSMENT RECOMMENDATIONS. FOR THIS REASON, WE BELIEVE THAT 
        GRANTS, RATHER THAN REBATES FOR ENERGY ASSESSMENTS SHOULD BE AN 
        ESSENTIAL COMPONENT OF THE BUILDING STAR LEGISLATION.

    A building assessment report details the architectural and 
engineering modifications in buildings that, when implemented, will 
create reductions in energy usage. These reports can be expensive and 
because building owners and managers have no way of knowing how much 
energy savings will be identified and at what cost, they have 
historically rejected paying for these studies.
    And without an assessment report there is no project and therefore 
no reduction in energy consumption.
    There are some programs in various regions of the U.S. available to 
owners of large buildings (over 100,000 Sq. Ft.) that share in the cost 
of assessments or rebate all or some of the cost. However, only 
buildings that have a high potential for energy savings are selectively 
targeted by these programs. The problem with this approach is that most 
buildings are therefore not selected, and only a small amount of energy 
savings nationally, compared to the high potential, are ultimately 
realized.
    Ninety-eight percent of the commercial buildings in the country are 
under 100,000 Sq. Ft. This segment of the market has been generally 
overlooked by energy savings programs. In order to create large 
reductions of energy consumption this market segment must be developed 
and the only way to significantly increase participation is to offer 
free assessments through a grant program.
    However, just blanketing this market segment with free assessments 
will not work. Assessment offers should be targeted and contain some 
conditions in order to significantly increase participation rates. 
These offers must also contain financing options to fund the energy 
saving projects identified in the assessment reports. These can range 
from owner financed options to third party shared savings programs, but 
without financing options even free assessments will not produce 
projects.
    However, without free assessments we believe there will be few or 
no projects created by this bill.
    A market segment of building type such as libraries, medical 
offices, small office buildings or financial buildings should be 
identified. Energy service companies that have special relationships 
with those market segments should be used to actively promote energy 
reduction projects. Grants should be made available to those companies 
on a competitive basis so that they can implement an active program of 
pre-screening the market in order to selectively offer free and 
conditional assessment studies.
    Projects identified through the assessment exercise will be 
implemented and paid for by selecting a financing option.
    Programs that develop selected market segments, that pre-screen 
that markets' buildings, that offer targeted free assessments with 
conditions and that include various project financing options will 
create unprecedented levels of participation. These programs will also 
realize, for the first time in this industry, meaningful amounts of 
energy savings for our country.
    There have been similar target market approaches using a business 
driven sales approach to provide the building owners with a single 
source of responsibility to identify the project, provide guidance in 
securing rebates and funding and navigating the contracting, 
implementation and verification phases. These have been effective 
nationally in PACE programs (Property Assessed Clean Energy programs) 
for residential projects and various market driven pilot programs that 
make it easier for small business owners to participate, including a 
Colorado program realizing participation rates as high as 85% in 
commercial building energy efficiency projects.
    BCI is confident that energy assessment companies nationally are 
confronting the same reluctance of building owners and managers to 
invest in energy assessments. We firmly believe that companies like BCI 
that have the capacity to assess large market segments can make the 
biggest impact on reducing energy consumption in the commercial 
building market. However, we do not foresee large-scale investments 
under Building Star if building owners will not pay for an assessment 
to determine their potential energy savings, as well as the return 
period for this investment. Most building owners require demonstrated 
cost savings through energy conserving technologies within a 3-5 year 
period, and sometimes shorter. An energy assessment can help owners 
achieve these savings, but only if the owner is convinced that the up 
front cost of the assessment will result in this return.

                               ABOUT BCI

    In addition to designing and building facilities, BCI also provides 
strategic planning, market analysis and all aspects of branding and 
market penetration. In the past year BCI has been working on a program 
to address the energy consumption of credit union financial 
institutions, from developing a LEED certified program to energy 
efficiency programs through its partnership with Michaels Engineering.
    Michaels Engineering brings 25 years of technical and mechanical 
engineering expertise in auditing, energy assessment and retro-
commissioning of existing facilities. They provide the technical 
experience and methodology to enable us to provide quick assessments 
and practical real world actionable recommendations to reduce the 
buildings energy use. Michaels staff includes experts with extensive 
engineering and utility management backgrounds, including experience 
creating and developing successful energy implementation shared savings 
programs around the country.
    BCI and Michael's Engineering have developed a cost effective 
program to deliver energy efficiency programs to owners of small to 
medium sized buildings, identifying financial institutions in the 
initial program as a transformative target market that will, in turn, 
will provide not only significant energy savings.
    I again appreciate the committee's review of my concerns related to 
how the Building Star bill is currently drafted. I fully support the 
concept of offering rebates for the use of proven energy conserving 
technologies, but I hope that the committee will consider the 
importance of grants versus rebates related to energy assessments.
    Thank you.
                                 ______
                                 
                                The Real Estate Roundtable,
                                                     April 8, 2010.
Hon. Jeanne Shaheen,
U.S. Senate, 520 Hart Senate Office Building, Washington, DC.
    Dear Senator Shaheen: At the March 11, 2010 hearing of the Energy 
and Natural Resources Committee on legislative proposals to enhance 
energy efficiency and create jobs, you asked me whether electric 
transformers might be included in the suite of rebate provisions 
offered in S. 3079, the Building STAR Energy Efficiency Act. In the 
intervening month I understand that some of our fellow Building STAR 
supporters with expertise in this area, specifically the National 
Electrical Manufacturers Association (NEMA) and the American Council 
for an Energy Efficient Economy (ACEEE), have developed a proposal for 
a transformer rebate and have shared it with your staff. I am attaching 
the proposal to this letter.
    We think your suggestion for a transformer rebate fits perfectly 
with the rest of Building STAR's provisions. We would welcome the 
opportunity to work with you and Senator Merkley to have it included in 
the bill. The attached transformer proposal is very similar to a 
suggestion from Warner Power, and contains some updated specifications 
and incentive amounts.
    As you know, the Building STAR program, endorsed by a broad range 
of nearly 80 stakeholders including real estate, manufacturing, labor, 
energy efficiency, and environmental interests, will create a 
significant number of jobs, save money on utility bills, and reduce 
greenhouse gas emissions. Of course, we encourage other Members of 
Congress to add their ideas as this legislation continues to move.
    We hope you will co-sponsor S. 3079. Additionally, thank you for 
agreeing to attend the Real Estate Roundtable's Policymaker Reception 
and Dinner on April 21. I look forward to seeing you there, and 
discussing Building STAR and other significant issues affecting the 
real estate sector.
            Sincerely,
                                         Jeffrey D. DeBoer,
                                                 President and CEO.
ATTACHMENT.--PROPOSAL FOR TRANSFORMER REBATE FOR INCLUSION IN S. 3079, 
                  BUILDING STAR ENERGY EFFICIENCY ACT

    Building STAR should include an incentive for transformers that are 
30% more efficient than TP1. It would be preferable that that the 
industry use a ``complete'' specification like NEMA Premium rather than 
CSL-3 because:

   CSL-3 exists only in draft form published by DOE in 2004 (69 
        FR 45397) and was immediately superseded by EPAct 2005
   CSL-3 was set at the midpoint (not necessarily 30% fewer 
        losses) between NEMA TP-1 and CSL-5, the max efficiency in 
        production
   For LVDT, CSL-3 was only specified for three representative 
        models (25 kVA, 75 kVA, 300 kVA)
   The 75 kVA model happened to have 30% fewer losses, which is 
        not necessarily the case for other design lines
   For example, DL6 (25 kVA single phase) has efficiencies of 
        98.0% for CSL-1 and 98.4% for CSL-3, an improvement of less 
        than 30%
   There is wide confusion on how to interpolate CSL-3 for 
        other models

    In most cases, there are only minimal differences between NEMA 
Premium and the varying interpretations of CSL-3. The table below 
compares TP1 and the NEMA Premium efficiencies. 



                           INCENTIVE AMOUNTS

    NEMA supports a sliding scale rebate amount based on the capacity 
of the transformer. The scale would range from $15/kVA for three-phase 
transformers smaller than 10 kVA to $5/kVA for transformers larger than 
100 kVA. Rebates for single-phase transformers would be 75% of the 
three-phase amount.
    Sample calculations for a small transformer:

   Standard low voltage dry-type (LVDT) transformers sized 1 
        kVA to 5 kVA cost approx. $175/kVA
   The NEMA Premium standard for transformers specifies 30% 
        fewer losses than TP1 (about the range of TSL4, if it were 
        extended to low voltage)
   DOE estimate for the average increase in consumer equipment 
        cost for TSL4 transformers was 20.4% to 39.6% (Oct 2007 FR)
   Using 30% as the midpoint from the DOE estimate, the cost 
        differential for a NEMA Premium transformer is about $53/kVA
    25%-33% of the incremental equipment cost is $13.13 to 
        $17.33/kVA, respectively

    Similar calculations exist for larger transformers. The proposed 
rebate is calculated as follows and is shown in Table 2:



    Finally, some rebate proposals have been based on a 2002 document. 
Commodity prices have increase considerably since that date. According 
to the USGS, between 2002 and 2008 copper prices rose 422% while steel 
rose 210%. Since materials can account for as much as 70% of 
transformer costs, any rebate program should take into account current 
market conditions.

[Figure 1 has been retained in committee files.]

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