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Wanted: A Cure for the Wintertime Heating Blues

Governments, utilities can help cut energy bills for drafty homes

January 7, 2011 | By Glenn Puit
and Jim Dulzo
Great Lakes Bulletin News Service

  In the winter, Brian Mellberg’s heating bill consumes a huge portion of his unemployment checks.

Part Seven of a series

WEXFORD COUNTY—Brian Mellberg dreads the moment when his propane bill arrives in the mail.

The Wexford County dad was one of 1,200 people laid off from his job at a manufacturing facility in the county a little more than a year ago. Now Mr. Mellberg spends much of his meager unemployment benefit on staying warm during northern Michigan’s cold winter.

The bills are perhaps the biggest challenge to Mr. Mellberg’s ability to provide for his wife and 5-year-old daughter.

“It’s almost a small house payment—$500 to $600 a month just for 200 gallons of propane,” Mr. Mellberg says. “That’s a half a tank for me. It takes two of my unemployment checks.”

Mr. Mellberg fought back tears as he talked about the strain his energy bills put on his family.

“I can’t even go look for a job if I have to save up for my propane, my utility, my electric,” said Mr. Mellberg, who lives about 30 minutes from Cadillac, in Wexford County.

The Mellbergs’ plight is common in northern Michigan and across the country. The non-profit National Energy Assistance Directors Association estimated in 2005 that families qualifying for federal heating bill assistance spent 20 percent of their income on energy. That figure is likely higher in northern Michigan, with its cold winters and heavy dependence on propane, which is more expensive than oil or natural gas, and costs about 25 percent more today than in 2005, according to the U.S. Energy Information Agency.

One person who doesn’t need statistics to know there is a serious problem in northern Michigan is Gary Yankee, who directs the Traverse City-based Northwest Michigan Community Action Agency’s 10-county, energy- and dollar-saving home weatherization program. The non-profit works hard to help strapped families reduce their energy costs, but still has 851 low-income families on what is now a years-long waiting list.

“That number tells me there’s a huge need,” Mr. Yankee said. “These are folks getting $1,000 to $1,200 in income a month...and they’ve got a $400 or $500 a month energy bill? Anytime you can shave 50 or 100 dollars a month off a bill, that’s a couple bags of groceries.”

His agency’s project accelerated last year when it received $6.5 million in American Recovery and Reinvestment Act funds through a state-sponsored program, but that money is now rapidly running out. When it does, the weatherization project will return to its usual budget and pace, and thousands of families whose homes need weatherization will have to wait even longer for help.

Now a group known as the Grand Vision Energy Network—residents working to expedite some of the community values identified by The Grand Vision, a two-year study involving more than 15,000 residents of Antrim, Benzie, Grand Traverse, Kalkaska, Leelanau, and Wexford Counties—is getting involved. The network is investigating and promoting strong energy efficiency policies that local governments and utilities could use to help local businesses and families, including badly strapped ones like Mr. Mellberg’s, save money while staying warm.

New Ideas
One policy that’s encouraging efficiency in Ann Arbor, Mich.; Berkley, Calif.; Burlington, Vt., and other cities and states is a “residential energy conservation ordinance.” RECOs usually mandate minimum insulating standards for attics, exterior walls, and foundations for existing homes.

A RECO is particularly effective for rental units, because landlords have little incentive to weatherize their properties when their tenants pay the heating bills.

But the sticking point, even for most cost-conscious homeowners, is the up-front cost. That makes innovative financing schemes crucial. A favored approach is “pay as you save”—funding home and business efficiency projects with loans that are paid back month by month with part of the savings that show up on participants’ utility bills.

Last year the state launched Michigan SAVES, a version of that approach. It saw some success in a pilot program with Cherryland Electric Co-op, near Traverse City. The program allows private lenders to finance projects executed by qualified home improvement contractors, and to recoup their loans through the utility’s monthly bills. The program is now functioning in more than 30 counties in the south and central Lower Peninsula; officials say it will soon re-launch in northern Michigan, as well. 

Thanks to one of the last laws signed by outgoing Governor Jennifer Granholm, local governments can now issue bonds to finance revolving funds for energy efficiency programs, with loans paid back via special property tax assessments. Unfortunately, federal complications are currently preventing such arrangements—known as PACE (Property-Assessed Clean Energy) programs—for private homeowners. But shifting the repayments from property tax assessments to, say, municipal billing for garbage pickup, could avoid those complications. And interest rates would likely be lower than those charged by private lenders.

In combination with a RECO, then, a locally based PACE or SAVES program could greatly improve the energy efficiency of leaky, low-rent housing.

Some energy efficiency experts take a slightly different view, however, one that would also help families stuck in cold homes with electric heat. They argue that utilities, not their customers, should invest in home and business energy efficiency, and view it in the same way they view investments in new power plants—as a cost for maintaining an adequate energy supply.

Since efficiency measures are a much cheaper method of increasing energy supply than new power plants, this would actually help slow future rate increases. But the most dramatic change would be for struggling families who heat their drafty homes with electricity: They would be more comfortable while enjoying sizeable cuts in their energy bills.

Money Matters
In the meantime, families faced with huge energy costs must depend on programs like Mr. Yankee’s, which currently helps more than 120 families a year. He says the program reveals just how bad some families’ housing situations are.

“Huge, major air infiltrations is a big thing,” he said. “Holes in the wall, drywall missing, ceilings missing—we’ve been in homes where people are heating the house and there’s no ceiling. You can see the rafters! You don’t have to be a carpenter to know where that’s going.”

His agency examines each home for drafts and furnace condition. Then pre-approved, licensed contractors repair drywall, fix foundations, add insulation, and plug air leaks. Contractors also can replace old furnaces and hot water heaters, particularly when they affect indoor air quality. The entire project is paid for by public funds.

“We are tightening these houses up,” Mr. Yankee said. “It’s a big deal to these families.”

Clearly the program would be a big deal for Mr. Mellberg. He said he’d be “golden” for a complete weatherization program for his home, which he believes could save him hundreds of dollars a year.

“I’ve still got the original furnace, the original water heater in the house, and it’s drafty,” he said. “If there’s a nice breeze going, you can feel it right through the house.”

Just when Mr. Mellberg will be able to enjoy a draft-free, cozy home and stop the hemorrhaging of his propane bill is unclear.

What is clear, however, is that, as Mr. Yankee said, the key to an adequate, long-term weatherization program for low-income families is sustainable financing. Until local governments and utilities establish realistic ways to help families on the edge avoid throwing their precious dollars out into the cold winter air, however, his agency and other organizations providing similar services will only see their waiting lists grow.

“It really is funding,” he said. “It boils down to money.”

Glenn Puit is a policy specialist at the Michigan Land Use Institute; reach him at glenn@mlui.org. Jim Dulzo is the Institute’s managing editor; reach him at jimdulzo@mlui.org. Read more articles in the Institute’s Families on the Edge series here.

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