We are currently dealing with a real conundrum. It is in the nation’s interest to reduce our energy use, reduce GHG and other emissions, reduce our need for more power plants and energy infrastructure, and be more energy independent. But people fear new regulations and standards to force this. So, how can we reduce energy usage without “government intrusion”? One idea is to mandate disclosure of a building’s energy use, but not require they meet a standard. Diverse new rules have been passed in cities from Seattle to Washington, DC and New York City (plus several states) mandating energy reporting. The thinking is that if comparative energy data is available for potential buyers or tenants, then building owners may be motivated to reduce, but not feel they have to.

Different Approaches in Different Areas

These rules differ between jurisdictions, but have the same approach: gather sufficient building-specific energy usage information to develop a score (usually through the USEPA’s Portfolio Manager) to rate the building. Some rules apply only to commercial buildings, some also apply to residences. Some jurisdictions require all subject buildings greater than a certain square footage to report (i.e., New York City, >50,000 sq. ft. – in some cities, the threshold is lower); others require disclosure of a subject building only when it is undergoing a transaction (i.e., California’s new rule, to go into effect in 2013, is only for a perspective buyer or new major tenant). The New York City rule (Local Law 84) exempts a commercial building which utilizes at least 10% of its floor space for energy-intensive operations, such as film studios, trading floors, and data centers. They still must submit data, but their scores will not be compared to standard office buildings.

How Public Will the Data Be

In many cities, data and ratings will be published in full. New York City just published a summary report of the first energy submittals in 2011 for 2010 energy usage (http://www.nyc.gov/html/gbee/downloads/pdf/nyc_ll84_benchmarking_report_2012.pdf). It plans to post building-specific data of tens of thousands of subject buildings in stages starting this fall, including energy intensity (kBtu/sq. ft), Energy Star score, and GHG emissions. It is unclear whether NYC will post “all” data or just summaries. In areas only for buildings in a transactional situation, data will be shared only with affected parties. But in this era of open information it is unclear how to keep such data private (FOIA or the buyer posting data). In this era of Facebook, Linkedin, and other social media, posted energy data and success can, in a short time, be shared with the general public or a specific segment, such as real estate brokers or potential renters and buyers.

How Will Energy Data Be Used and Perceived?

For most of the rules, use of USEPA’s Portfolio Manager is required. It is a respected, free program that allows entry of basic building and energy data (i.e., type, location, conditioned square footage, electricity and fuel usages, etc.) to develop an Energy Star “score”. It is a percentile from 0 to 100. A score of 50 means that the building fits in the median for similar building types and size. A score of 75 or greater enables the building to earn the Energy Star label from the USEPA.

Some are concerned that a simple score cannot accurately describe a building. Each building may have unique features holding it back from a better score. The USEPA is currently revising Portfolio Manager, and will release a new version in early 2013.

Data gathering also depends on tenant cooperation. In some places, such as California, the owner cannot “force” a tenant to share its utility bills, even for mandatory energy disclosure. Thus, agencies must address data quality issues (when values must be estimated) and readers (stakeholders) must understand not to take scores too literally.

In addition, another concern is the changing modes of business. Business must be flexible. How it operates now can change fairly quickly to respond to customer needs. This includes the need for equipment or changes in operation that may change energy usage. This may not be reflected in an energy intensity or Energy Star score released.

What Are The Future Benefits of Energy Disclosure?

There are likely to be many. As discussed above, it gives the consumer (potential renter or buyer) more valid information about the energy achievements of a building and for budgeting and bidding purposes. This could also give the owner/manager motivation to improve energy performance, reducing costs. Disclosure of actual energy performance emphasizes feats, rather than actions, which in some ways is a step up from programs like LEED, which, awards points for implementing practices even if results are unclear.

Energy disclosure will also likely impact real estate appraisals. Appraisers have historically not considered energy strongly when evaluating a building, mainly because of little comparative industry-wide data and appraisers’ lack of knowledge. Now with Energy Star scores and energy intensity better understood, energy performance will now likely influence building value, and those interested to be more efficient.

In summary, government agencies see energy disclosure as a way to plan for and improve the usage of energy resources, while not spending huge resources on enforcing energy standards. There is growing interest in this by many jurisdictions.

CCES experts can help you assess your site-specific energy usage, using Portfolio Manager and other tools. We can manage your compliance with an energy disclosure rule or just for you to have the information. We can perform simple or more complex energy evaluations in which we can also to develop reasonable strategies for you to reduce your energy usage and save you much costs with reasonable return on investment. Call or e-mail for a free, no-obligation discussion or more information now.