Item 3a-Non-energy Benefits from the Weatherization Assistance Program_Lanetta Cooper — original pdf

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ORNL/CON-484NONENERGY BENEFITS FROM THE WEATHERIZATION ASSISTANCEPROGRAM: A SUMMARY OF FINDINGS FROM THE RECENTLITERATUREMartin SchweitzerBruce TonnOAK RIDGE NATIONAL LABORATORYDOCUMENT AVAILABILITYReports produced after January 1, 1996, are generally available free via the U.S. Departmentof Energy (DOE) Information Bridge.Web site http://www.osti.gov/bridge Reports produced before January 1, 1996, may be purchased by members of the public fromthe following source.National Technical Information Service5285 Port Royal RoadSpringfield, VA 22161Telephone 703-605-6000 (1-800-553-6847)TDD 703-487-4639Fax 703-605-6900E-mail info@ntis.fedworld.govWeb site http://www.ntis.gov/support/ordernowabout.htmReports are available to DOE employees, DOE contractors, Energy Technology DataExchange (ETDE) representatives, and International Nuclear Information System (INIS)representatives from the following source.Office of Scientific and Technical InformationP.O. Box 62Oak Ridge, TN 37831Telephone 865-576-8401Fax 865-576-5728E-mail reports@adonis.osti.govWeb site http://www.osti.gov/contact.htmlThis report was prepared as an account of work sponsoredby an agency of the United States Government. Neither theUnited States Government nor any agency thereof, nor any oftheir employees, makes any warranty, express or implied, orassumes any legal liability or responsibility for the accuracy,completeness, or usefulness of any information, apparatus,product, or process disclosed, or represents that its usewould not infringe privately owned rights. Reference herein toany specific commercial product, process, or service by tradename, trademark, manufacturer, or otherwise, does notnecessarily constitute or imply its endorsement,recommendation, or favoring by the United StatesGovernment or any agency thereof. The views and opinionsof authors expressed herein do not necessarily state orreflect those of the United States Government or any agencythereof.ORNL/CON-484NONENERGY BENEFITS FROM THE WEATHERIZATION ASSISTANCEPROGRAM: A SUMMARY OF FINDINGS FROM THE RECENT LITERATUREMartin Schweitzer, Bruce TonnOAK RIDGE NATIONAL LABORATORYDate Published: April 2002Prepared forU. S. Department of EnergyOffice of Building Technology AssistanceBudget Activity Number EC 17 01 00 0Prepared byOAK RIDGE NATIONAL LABORATORYOak Ridge, Tennessee 37831managed byUT-BATTELLE, LLCfor theU.S. DEPARTMENT OF ENERGYunder contract DE-AC05-00OR22725ivTABLE OF CONTENTSEXECUTIVE SUMMARY....................................................vii1. INTRODUCTION..........................................................11.1 BACKGROUND....................................................11.2 METHODS.........................................................11.3 SCOPE OF REPORT.................................................32. RATEPAYER BENEFITS....................................................52.1 PAYMENT-RELATED BENEFITS.....................................62.2 SERVICE PROVISION BENEFITS......................................93. BENEFITS TO HOUSEHOLDS..............................................113.1 AFFORDABLE HOUSING BENEFITS.................................123.2 SAFETY, HEALTH, AND COMFORT BENEFITS........................154. SOCIETAL BENEFITS.....................................................174.1 ENVIRONMENTAL BENEFITS......................................174.2 SOCIAL BENEFITS................................................204.3 ECONOMIC BENEFITS..............................................215. SUMMARY AND CONCLUSIONS...........................................236. ACKNOWLEDGMENTS...................................................277. REFERENCES............................................................29vvi1200110010009008007006005004003002001000Ratepayer Benefits: Payment-RelatedPoint Estimate (2001 $ per participating household: Net Present Value)Ratepayer Benefits: Service ProvisionHousehold Benefits: Affordable HousingHousehold Benefits: Safety,Health, and ComfortSocietal Benefits: EnvironmentalSocietal Benefits: SocialSocietal Benefits: Economic1811507831238691171123EXECUTIVE SUMMARYThe purpose of this project is to summarize findings reported in the recent literature onnonenergy benefits attributable to the weatherizing of low income homes. This study is a follow-up to the seminal research conducted on the nonenergy benefits attributable to theDepartment of Energy’s national Weatherization Assistance Program by Brown et al. (1993). For this review, nonenergy benefits were broken into three major categories: (1) ratepayerbenefits; (2) household benefits; and (3) societal benefits. The ratepayer benefits can be divided intotwo main subcategories: payment-related benefits and service provision benefits. Similarly, thereare two key types of household benefits: those associated with affordable housing and those relatedto safety, health, and comfort. Societal benefits can be classified as either environmental, social, oreconomic. Fig. E.S. 1 presents point estimates of the average lifetime monetary value per weatherizedhome resulting from low income weatherization programs for the key benefit types listed above.These benefits represent net present value estimates (i.e., estimates of the current Fig. E.S.1 Summary of Nonenergy Benefits by Category and Subcategoryviiworth of all benefits expected over the lifetime of the weatherization measures), assuminga 20-year lifetime for installed energy efficiency measures and a 3.2% discount rate. Overall,societal benefits are estimated to be substantially larger than ratepayer and household benefits.Ranges for the societal benefits are also much greater than for the other two categories of nonenergybenefits. The total monetized value for all nonenergy benefit categories associated withweatherizing a home is estimated to be $3346, in 2001 dollars. This represents a national averagewhich, like any point estimate, has considerable uncertainty associated with it. This figure issubstantially higher than the total value of nonenergy benefits presented a decade ago in the nationalweatherization evaluation (Brown et al. 1993) because the current study quantified a much broaderarray of benefits than did the earlier work. The net present value of $3346 for all nonenergy benefits is slightly greater than the averagenet present value of energy savings for houses heated by natural gas, which is $3174 in 2001 dollars.In comparison, the average total cost per weatherization is $1779, also in 2001 dollars. The“societal” benefit/cost ratio, which compares all benefits to all costs, is approximately 3.7. Low andhigh values for the societal benefit/cost ratio, using low and high nonenergy benefit estimates, are2.0 and 52.5, respectively. It should be noted that the total monetized nonenergy benefit estimateis lower than it could be because the estimate does not contain some benefits that have not beenexpressed in monetary terms.11. INTRODUCTION1.1 BACKGROUNDThe national Weatherization Assistance Program provides energy efficiency improvementsfor low-income residences throughout the country. The program is sponsored by the U.S.Department of Energy and is implemented by state and local agencies in all 50 states and the Districtof Columbia. Since its inception in 1976, the Weatherization Assistance Program has weatherizedapproximately five million dwelling units for their low-income occupants. Common weatherizationmeasures include: caulking and weather stripping around doors and windows and sealing otherunnecessary openings to reduce air infiltration; installing attic, wall, and floor insulation; andwrapping water heaters and pipes with insulating material. A national evaluation of the programconducted by Oak Ridge National Laboratory (ORNL) almost a decade ago (Brown et al. 1993)focused on energy and cost savings, but it also contained a detailed discussion of the nonenergybenefits associated with low-income weatherization activities. Since the time of the nationalevaluation, a substantial amount of research has been conducted to examine the nature andmagnitude of the nonenergy benefits that result from weatherization programs. The purpose of thisreport is to use the findings from the large body of post-1993 research to update ORNL’s previousestimates of the Weatherization Assistance Program’s nonenergy benefits.ORNL’s national weatherization evaluation (Brown et al. 1993) identified an extensive rangeof nonenergy benefits associated with the Weatherization Assistance Program. A total of fifteenbenefits were identified, but monetized values could be calculated for only about half of them. Asshown in Table 1, all the monetized values combined had a net present value, over the lifetime ofthe weatherization measures installed, of $976 (in 1989 $).1.2 METHODSThe primary research method used for this study was a comprehensive review of theliterature on nonenergy benefits written since the national weatherization evaluation was completedin 1993. Many different articles and reports have been written about the nonenergy benefits of low-income weatherization activities since that time. Some present the findings from primary researchconducted on the subject, usually focusing on a weatherization program operated by a given stateor utility company (e.g., Magouirk 1995; Blasnik 1997; Hill et al. 1998). Others take a meta-analysis approach and report the findings from a number of studies conducted in different locations(e.g., Riggert et al. 1999; Riggert et al. 2000; Howat and Oppenheim 1999). One set of articles thatwas especially useful for this study (Skumatz and Dickerson 1997; Skumatz and Dickerson 1998;Skumatz and Dickerson 1999) focused on two2Table 1. Nonenergy Benefits Monetized in National Weatherization Evaluation (1993)Nonenergy BenefitNet Present Value of Benefitper Dwelling (1989 $)Enhanced property value and extended lifetime of dwelling126Reduced fires3Reduced arrearages32Federal taxes generated from direct employment55Income generated from indirect employment506Avoided costs of unemployment benefits82Environmental externalities172Total of all nonenergy benefits$976low-income weatherization programs operated by Pacific Gas and Electric Company (PG&E), usingprimary data pertaining to those programs and also making use of important findings from acomprehensive review of studies performed by other researchers elsewhere in the country. Becausemuch of the information analyzed by Skumatz and Dickerson came from a variety of locations, andbecause the PG&E programs they studied are very similar to other full-scale weatherization effortsundertaken throughout the country, the findings from the Skumatz and Dickerson articles areconsidered broadly applicable to DOE’s Weatherization Assistance Program.From a thorough review of the literature, we identified a complete set of nonenergy benefitsand organized them into major categories and subcategories. Our approach was informed by thepost-1993 articles and reports reviewed as well as by the ideas presented in the nationalweatherization evaluation (Brown et al. 1993). Then, a range of monetary values was identified foreach nonenergy benefit, drawing from all recent studies that provided dollar values for nonenergybenefits and that employed methods that we considered reasonable and legitimate, even if thenumbers themselves appeared to be somewhat extreme. In fact, many of the value ranges presentedin this report are very broad.After a range of monetized values was identified from the literature for all nonenergybenefits, we used our professional judgment to select a reasonable point estimate for each one torepresent the average value of that benefit associated with weatherization efforts nationwide. Evenwhere the entire continuum of possible values was very large, it was common for most of thesuggested values to cluster around a fairly narrow range. In such cases, we tended to select apreferred point estimate that was close to the midpoint of the clustered values. Where one extremelyhigh value led to an extended range, it was often the case that the clustered values and our pointestimate fell toward the low end of that range. However, it is important to note the inherentuncertainty associated with any point estimate that is made. Clearly, a single point estimate for anygiven nonenergy benefit cannot represent the benefits associated with every weatherization effortin each separate locale because of the substantial variation that occurs among different programs and3geographic areas. Even where, as in this report, a point estimate is based on a number of differentstudies and is intended to represent a national average, there is still good reason to be cautious. Asthe name implies, a point estimate is only an estimate of a savings value and is based on variousassumptions about program operations and effectiveness rather than on systematic measurement,and subsequent weighting and averaging, of program outcomes throughout the country.Nearly all of the nonenergy benefits addressed in this report occur everywhere, but a coupleonly apply to certain types of households (i.e., those receiving low-income rate subsidies or thoseusing natural gas). In such cases, the magnitude of the benefits reported in the literature is adjusteddownward to make it an average value for the entire nation. Of course, even where benefits do applyuniversally, the actual magnitude will vary from place to place, as noted above. When pointestimates for all the benefits addressed in this report are aggregated, they represent the averagebenefit for a typical low-income U.S. household. However, that point estimate will not necessarilyapply to each individual household. In cases where a particular benefit does not apply, the totalvalue of all nonenergy benefits would tend to be lower than indicated in this report, provided thatall other conditions affecting the magnitude of benefits are typical.Monetary values for the various nonenergy benefits provided in the recent articles andreports that we reviewed are generally treated as if they are in 2001 dollars. We consider this to bea reasonable approach because (1) most of the works reviewed were written during the last two orthree years and inflation has been very modest during that period, and (2) the dollar values providedin the literature tend to be estimates and approximations and are not precise enough to warrantadjustment by a few percentage points. The principal exception to this is in the case of values thatare taken from the national weatherization evaluation (Brown et al. 1993). Because the data in thatstudy date from 1989, it was considered prudent to adjust the relevant numbers upward, using theinflation factors contained in the Consumer Price Index (Bureau of Labor Statistics 2001).Many of the monetized values presented in the literature are listed in terms of dollars perparticipating household per year. We converted those annual benefits into net present value (NPV)per household, assuming that: (1) the useful life of the installed weatherization measures is 20 years(which is consistent with past evaluations of the Weatherization Assistance Program); and (2) theappropriate discount rate is 3.2 % (the rate suggested by the Office of Management and Budget forprogram evaluation). Based on these assumptions, a benefit that has an annual value of $10 per yearwould have a NPV of $146. We are aware that different parties are likely to apply different discountrates when calculating the value of a given investment. However, the 3.2% discount rate is used inthis report for all categories of benefits to be consistent and to reflect the fact that this document iswritten from the perspective of the federal agency that sponsors the Weatherization AssistanceProgram.1.3 SCOPE OF REPORTThe subsequent chapters of this report present key findings from our study of the nonenergybenefits associated with low-income weatherization efforts. In order to present a complete pictureof the nonenergy benefits associated with weatherization programs, these benefits are described from4three distinct perspectives: that of utility ratepayers; that of participating households; and that ofsociety as a whole. It should be noted that a couple of the nonenergy benefits addressed in this reportare discussed under more than one major category, to reflect the fact that there are different groupsof beneficiaries. For example, “avoided shut-offs and reconnections” are discussed both from theratepayer and the household perspective. The value of the benefit received by each set of actors indifferent, and double-counting is avoided because ratepayers and participating households receivedifferent, and non-overlapping, values from the benefit in question.Chapter 2 discusses the benefits received by utility companies and passed on to theirratepayers. These fall under the broad headings of benefits related to the payments that utilitiesreceive from their customers and benefits related to the utilities’ provision of services. In thischapter, as in the following ones, each individual benefit is described, a range of possible monetizedvalues and a point estimate are given for each benefit, and a brief explanation is provided of themethods used to calculate the values. In Chapter 3, benefits experienced by the low-income households that receive weatherizationservices are described. Such benefits can be grouped into two categories: affordable housingbenefits and benefits related to the occupants’ safety, health, and comfort. Chapter 4 addresses societal benefits, which can be subdivided into environmental benefits,social benefits, and economic benefits. Finally, Chapter 5 summarizes the full set of nonenergy benefits and their monetary values,examines the relative magnitude of the different types of nonenergy benefits, and compares the sizeof these benefits with the energy benefits generated by the Weatherization Assistance Program.52001000Point Estimate (2001 $ per participating household: Net Present Value)Payment-Related BenefitsService Provision Benefits1811502. RATEPAYER BENEFITSUtility ratepayers receive two distinct types of nonenergy benefits as a result of low-income weatherization efforts. Point estimates of the average lifetime monetary valueassociated with each type of benefit are shown in Fig. 1. The first type of benefit is related to thepayments that utilities receive (or do not receive) from their customers and includes six differentitems: (1) avoided rate subsidies; (2) lower bad debt write-off; (3) reduced carrying cost onarrearages; (4) fewer notices and customer calls; (5) fewer shut-offs and reconnections fordelinquency; and (6) reduced collection costs. The second type of benefit is related to theprovision of services and has three components: (1) fewer emergency gas service calls; (2)transmission and distribution (T&D) loss reduction; and (3) insurance savings. While all of thebenefits listed above initially accrue to utility companies, they tend to be passed on to theutilities’ customers and are therefore classified in this report as ratepayer benefits. Each of thesebenefits is discussed in more detail below.Fig. 1. Average Lifetime Monetary Value of Ratepayer Benefits, by Type62.1 PAYMENT-RELATED BENEFITSRate Subsidies AvoidedMany utilities provide lower, subsidized rates for their low-income customers. Accordingly, each unit of energy consumed by low-income customers represents an expense forthe utility and for its other customers, whose payments help subsidize the discount rate. Whenthe amount of energy used by low-income customers is reduced as a result of a weatherizationprogram, the number of subsidized units of energy sold decreases and the utility and its otherratepayers save money. The literature reviewed for this study presented a number of different estimates of thedollar value of rate subsidies avoided as a result of low-income weatherization programs. Manyof these estimates were presented in terms of annual savings per household but, as explained inChapter 1, these were all converted to net present value over the lifetime of the measuresinstalled. The estimated lifetime savings range from a low of $38 to a high of $467. However,the estimates of benefits found in the literature typically describe only those instances in whichrate subsidies are available and used by low-income customers. In order to represent averagesavings across the nation as a whole, those savings numbers should be adjusted downward toreflect the proportion of low-income customers actually receiving such subsidies. Based oninformation compiled by the National Center for Appropriate Technology (2001), we know thatonly about 15% of low-income customers nationwide get rate subsidies. Accordingly, wemultiplied the range of benefits presented in the literature by 0.15, resulting in an adjusted rangeof $6 to $70 (Table 2). Our preferred point estimate for this benefit is $21 but, as explainedpreviously, any single estimate made for the entire low-income Weatherization AssistanceProgram is necessarily imprecise and the associated uncertainty must be recognized.Table 2. Ratepayer Benefits: Payment-RelatedNonenergy BenefitRange of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Rate subsidies avoided6 - 7021Lower bad debt write-off15-346289Reduced carrying cost onarrearages4-11057Fewer notices and customercalls0-236Fewer shut-offs andreconnections for delinquency2-158Reduced collection costsNot AvailableNot Available7The point estimate of $21 suggested above is derived from the midpoint of the range ofpossible dollar savings from avoided rate subsidies presented by Skumatz and Dickerson (1999)for the Low-Income Weatherization Program operated by PG&E. The savings estimate wascalculated by taking the average rate subsidy received by participating households andmultiplying it by the amount (in percentage terms) by which participants’ energy use is likely tobe reduced. We then adjusted this amount downward, as described above, to make it representthe average savings distributed over all low-income customers and not just those receiving ratediscounts.Lower Bad Debt Write-offWhen customers cannot pay all or part of their bills for an extended period of time, theutility might have to write off the unpaid portion as bad debt. When the occupants ofweatherized units experience reductions in their utility bills, they are better able to make theirpayments and the amount of bad debt written off is likely to decrease. Actually, there are twoparts to this reduction in bad debt: a decrease in the average size of bad debt written off and adecline in the number of such accounts. The range of possible dollar benefits presented in the literature for lower bad debt write-off was extremely broad, with a minimum NPV of $15 and a maximum of $3462 (Table 2). Although one very high value was noted, all the other benefit levels described in the literatureclustered at the lower end of the range. We suggest a point estimate of $89, based on thefindings from a well-designed study of the nonenergy benefits resulting from Public ServiceCompany of Colorado’s Energy $avings Partners Program (Magouirk 1995). That studymeasured the post-weatherization reduction in the amount of bad debt written off byparticipating households. In addition, the decrease in the number of accounts that were writtenoff was measured. The two factors combined yielded the $89 NPV reported above. That numberis near the high end of the range suggested by Skumatz and Dickerson (1999) for two Californialow-income programs but at the low end of the range suggested in an extensive study of thevalues of nonenergy benefits conducted for the state of California (TecMRKT Works et al.2001). Reduced Carrying Cost on Arrearages Weatherization programs lower energy consumption for participating customers, therebyreducing the size of their energy bills and making it possible for them to pay a larger portion ofthose bills. This in turn reduces the amount of customers’ bills that are in arrears. As thesearrearages decline, the carrying costs borne by utilities (i.e., the interest on the amount inarrears) are also reduced.According to the literature reviewed, the net present value of this benefit ranges from $4to $110 (Table 2). As a point estimate, we chose $57, which is the midpoint of the savingscalculated by Skumatz and Dickerson (1999) for two low-income programs in California.(PG&E’s Low-Income Weatherization Program and its Venture Partners Pilot Program). TheSkumatz and Dickerson study calculated savings based on likely program-induced reductions in8arrearage balances, the magnitude of pre-weatherization arrearages in eligible households, andprevailing interest rates.Fewer Notices and Customer CallsAs noted above, households that receive weatherization services tend to lower theirenergy consumption as a result, leading to lower energy bills, which are easier for them to pay. Consequently, utilities are required to send out fewer notices in response to late payments andwill receive fewer customer calls regarding these situations. All of this results in a savings toutilities for staff time and materials.As shown in Table 2, the NPV of this benefit reported in the literature ranges from $0 to$23. Our suggested point estimate is $6, which is at the high end of the range suggested bySkumatz and Dickerson (1999) but toward the lower end of the full range of benefits reportedwhen other studies are included. The monetized benefits reported here represent a combinationof the numbers calculated separately for late payment notices and for customer calls. An 18%reduction in the number of notices and calls was assumed, based on previous empirical findingson the incidence of reductions in the number of accounts written off for bad debt as a result ofweatherization efforts (Magouirk 1995). This was multiplied by the annual cost per householdof notices and customer calls to produce an estimate of savings per participant.Fewer Shut-offs and Reconnections for DelinquencyAs explained above, weatherized households are less likely to fall behind on their billpayments, meaning that they are less likely to have their utility service cut off for nonpayment. Because utilities incur costs to disconnect customers and to reconnect those households in thefuture, they experience a monetary savings as the result of customers being better able to paytheir bills and retain service.The net present value of this benefit ranges from $2 to $15 (Table 2). As a pointestimate, we chose $8, which is the midpoint of the range of potential savings calculated bySkumatz and Dickerson (1999) for two PG&E low-income programs. This value is also veryclose to the benefits reported in several other studies of low-income weatherization efforts. Thesavings reported here were estimated based on the weatherization-induced reduction in theincidence of disconnections and the estimated costs of service shutoff and the portion ofreconnection costs not covered by the customer.Reduced Collection CostsIf fewer customer payments are delinquent, utilities spend less time and resources tryingto collect what is owed them. However, it can be difficult to separate these reduced collectioncosts from the benefit associated with fewer late notices and customer calls, discussed above. Afew of the reports reviewed for this study estimated collection costs per incident but did not putthis in terms of the dollar value per all weatherized households. Because of the current lack ofreliable estimates for this benefit, we will not attempt to assign it a monetary value.92.2 SERVICE PROVISION BENEFITSFewer Emergency Gas Service CallsAs part of the home weatherization process, deteriorating or malfunctioning gasappliances can be serviced or replaced and new connectors can be installed. This proactiveservice reduces the subsequent need for utilities to make emergency service calls whenappliances or connectors break or malfunction. By avoiding these emergency calls, utilities savestaff time and resources, which constitutes a monetary benefit.The literature reports that the NPV of this benefit ranges from $77 to $394. However,because this benefit can only occur where houses are fueled by natural gas, the reported valuesmust be adjusted downward if they are to describe the nation as a whole. To reflect the fact that50.9% of U.S. households are heated by natural gas (U.S. Energy Information Administration2000), the numbers reported above were multiplied by 0.509, yielding an adjusted range of $39to $201 for this benefit, as shown in Table 3. We suggest $101 as a reasonable point estimate. This number is at the midpoint of the range of values reported by Skumatz and Dickerson (1999)for two PG&E low-income programs and near the midpoint reported in the TecMRKT Works(2001) study (after their adjustment to reflect natural gas usage). The range of numbers reportedin the Skumatz and Dickerson paper were calculated based on plausible ranges of service callcosts and weatherization-induced reductions in the incidence of such calls (which dropped from27% of households before weatherization to only 7% afterward, according to Magouirk, 1995).Table 3. Ratepayer Benefits: Service ProvisionNonenergy BenefitRange of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Fewer emergency gasservice calls39 - 201101T&D loss reduction33-8048Insurance savings0-21Transmission and Distribution Loss ReductionAs a natural consequence of transporting electric power along transmission anddistribution lines, a certain amount of energy is lost. These T&D losses are borne by theresponsible utility and its customers. Because weatherization programs cause reductions inhousehold electricity use, they likewise reduce the amount of electricity that must be transportedand this results in a decrease in the T&D losses that occur. These savings often occur even indwellings that are not electrically heated, because electricity usage for a number of purposes(e.g., furnace fans and pumps, air conditioning, lighting) can be affected by home weatherizationmeasures.10The net present value of T&D loss reductions reported in the literature range from $33 to$88 (Table 3). Our suggested point estimate is $48, the midpoint of the possible benefit valuesreported by Skumatz and Dickerson (1999) for PG&E’s Low Income Weatherization andVenture Partners Pilot Programs. The monetized value of the T&D losses reported here werecalculated by multiplying the percentage of power that is typically lost through transmission anddistribution (approximately 10%) by the avoided cost of power. Insurance SavingsTo the extent that the services performed by weatherization programs include the fixingof gas leaks and the repair or replacement of faulty appliances, the result is likely to be areduction in the risk of household explosions and fires. This, in turn, would tend to lower theutility’s insurance costs. Such cost savings are expected to occur whether the utility is self-insuring or buys coverage from another company.The net present value of this benefit ranges from $0 to $2 (Table 3). As a point estimate,we chose $1, which is the midpoint of this range of potential savings values. The savings ininsurance expenses reported here were estimated based on the magnitude of claims made in atypical year and the risk reduction associated with weatherization efforts. Skumatz andDickerson (1999) assumed that the reduction in claims would fall by roughly the same factor thatgas emergency calls would be reduced, as reported by Magouirk (1995).118007006005004003002001000Point Estimate (2001 $ per participating household: Net Present Value)Affordable Housing BenefitsSafety,Health, and Comfort Benefits7831233. BENEFITS TO HOUSEHOLDSLow-income households that participate in weatherization programs are the recipients oftwo different types of nonenergy benefits. Point estimates of the average lifetime value of eachare provided in Fig. 2. First, there are benefits that relate in some way to the affordability of low-income housing. These include: (1) water and sewer savings; (2) property value benefits; (3) avoided shut-offs and reconnections; (4) reduced mobility; and (5) reduced transaction costs. The other type of household benefit concerns the safety, health, and comfort of residents and hasthree components: (1) fewer fires; (2) fewer illnesses; and (3) improved comfort and relatedfactors. Each of these household benefits is discussed in its own section, below.Fig. 2. Average Lifetime Monetary Value of Household Benefits, by Type123.1 AFFORDABLE HOUSING BENEFITSWater and Sewer SavingsMany of the homes serviced by a weatherization program receive low-flow showerheadand faucet aerator retrofits as part of the package of energy-efficiency measures installed. Inaddition to saving energy, these measures result in reduced household water use. Accordingly,households receiving these services save money on their water bills and, because sewer chargesare generally based on the amount of water consumption, on their sewer bills as well.A number of different estimates of the magnitude of water and sewer savings waspresented in the literature reviewed for this study. Although most of those estimates werepresented in terms of annual savings per household, they are presented here in terms of their netpresent value over the lifetime of the measures installed. The NPV of these savings ranges from$62 to $1607 (Table 4). Our best current estimate for this benefit is $271 but, as explainedpreviously, there is substantial uncertainty associated with any point estimate made for the entirelow-income Weatherization Assistance Program.Table 4. Household Benefits: Affordable HousingNonenergy BenefitRange of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Water and sewer savings62-1607271Property value benefits†0-5413180Avoided shut-offs andreconnections0-5217Reduced mobility0-1460278Reduced transaction costs0-13137†occurs one time only in year weatherization is performedThe point estimate of $271 suggested above is based on information provided bySkumatz (2001) on average annual water savings per participating household resulting from theinstallation of faucet aerators and low-flow showerheads. This average household savingsnumber was multiplied by the mean cost per gallon of water nationwide (U.S. EnvironmentalProtection Agency 1997). The resulting number was updated to 2001 dollars using the multipliersuggested by the Consumer Price Index (Bureau of Labor Statistics 2001).Property Value BenefitsIn many cases, weatherization programs make some structural repairs and improvementsto the houses they service in addition to installing energy efficiency measures. The structuralimprovements that are provided typically increase the property value of the homes receiving13them. This represents a monetary benefit for the affected households that goes beyond the dollarsavings associated with the energy efficiency improvements that are made. In addition,structural repairs can extend the useful lifetime of the affected dwellings and preserve theexisting stock of affordable low-income housing.According to the literature reviewed, the property value increase associated with homeweatherization ranges from a minimum net present value of $0 to a maximum of $5413 (Table4). Although one document (Riggert et al. 1999) suggests using the high value shown at the topof the range, all the other articles and reports reviewed for this study present values that clusteraround the lower end of the scale. Those lower values are typically based on the assumption thatthe property value increase is equal to the cost of structural repairs made to the home in question. We suggest a point estimate of $180 for this benefit, based on the findings of the nationalweatherization evaluation (Brown et al. 1993). That study found that, in 1989, the averageamount spent on materials for structural repairs nationally was $126. By adjusting that figure to2001 dollars using the multiplier of 1.428 suggested by the Consumer Price Index (Bureau ofLabor Statistics 2001), we get the $180 noted above.Avoided Shut-offs and Reconnections As explained in Chapter 2, weatherization programs result in decreased energyconsumption for the homes serviced and this, in turn, means lower energy bills. Accordingly,weatherized households are less likely to fall behind on their bill payments and are less likely tohave their utility service shut off for nonpayment. By avoiding service terminations, low-incomecustomers experience a two-fold benefit. First, they get to retain the full use of their dwellingunit, the value of which is equivalent to the rent that would be “lost” if it were paid for a house(or portion of a house) that was unusable due to the lack of utility service. Also, the affectedcustomers avoid having to pay a subsequent restart fee. While some authors include theperceived “value of service” experienced by the customer (i.e, how much it is worth to thecustomer to avoid a service disruption) as an additional benefit, this measure is not included herebecause of the difficulty of objectively assigning a dollar value to it.The values for avoided shut-offs and reconnections presented in the literature range from$0 to $52 (Table 4). These numbers exclude the “value of service” benefit described in somestudies, as noted above. A reasonable point estimate for this benefit is $17, which represents theupper end of the range given by Skumatz and Dickerson (1999) for lost rental value and cost torestart in their study of PG&E’s Venture Partners Pilot Program. This value is consideredreasonable to use here because a newer study (TecMRKT works et al. 2001) suggests asomewhat higher value for this benefit, putting the $17 figure roughly in the middle of the fullrange. Skumatz and Dickerson calculated lost rental value based on the likely reduction intermination rates and the assumed rent for a housing unit over a limited shut-off period. The costto restart service was based on the projected reduction in termination rates and the restart costsper household, which include a reconnection fee and the value of lost work time.14Reduced MobilityWhen household energy costs are high, less money is available for other purposes,including paying rent or making mortgage payments. This can be especially difficult for low-income households, where funds are very limited. In some cases, high energy costs can leadoccupants to voluntarily move out of their current dwelling in favor of one with lower energybills. In other instances, households with insufficient funds to cover all their expenses can beevicted for a failure to make housing payments or can be forced to move after utility service isdiscontinued. While the freedom to choose to be mobile is generally considered desirable, themobility discussed here is associated with economic hardship and a lack of options. This kind ofmobility, which is characterized by frequent and unwanted moves, can have the side effect ofincreasing school drop-out rates in the affected households. In turn, this can lead to a lifetime oflower earnings for those who prematurely terminate their education. By lowering householdenergy bills, weatherization programs can reduce mobility, thereby preventing some youth fromdropping out of school and increasing their earning potential. That increase in earnings is amonetary benefit of weatherization that can be quantified.The values for reduced mobility presented in the literature range from $0 to $1,460(Table 4). Our suggested point estimate for this benefit is $278, which is the average of thepoint estimates presented by Skumatz (2001) for two different low-income weatherizationprograms. Skumatz calculated the value of reduced mobility based on: (1) the estimated effectof weatherization efforts on reducing the school drop-out rate; and (2) the estimated difference inlifetime earnings between high school graduates and drop-outs.Reduced Transaction CostsIf they were not served by a weatherization program, some low-income households mightchoose to install certain energy-efficiency measures on their own. However, to do so, theywould first have to become familiar with the needed retrofit measures and locate the necessarymaterials. The time and effort required for that represent a set of “transaction costs” for low-income households, and avoiding those transaction costs amounts to a benefit for thosereceiving weatherization services. By assigning a monetary value (approximating minimumwage) to the time saved by participants, the magnitude of transaction costs can be identified.As shown in Table 4, the net present value of reduced transaction costs reported in theliterature range from $0 to $131. Our suggested point estimate is $37, the midpoint of thepossible benefit values reported by Skumatz and Dickerson (1999) for PG&E’s Low IncomeWeatherization and Venture Partners Pilot Programs. The reduced transaction costs reportedhere were calculated based on the number of compact fluorescent lamps installed per householdunder the programs studied and the estimated reduced transaction costs per bulb. Thatmonetized benefit was then doubled to reflect the fact that weatherization programs includemany more measures than compact fluorescent bulbs alone. The resulting value seemsconservative in light of the fact that home weatherization involves the installation of a number ofdifferent products (e.g., insulation, sealants, low-flow showerheads, storm windows,15programmable thermostats) which consumers would have to locate and learn about if they wereto perform the work themselves.3.2 SAFETY, HEALTH, AND COMFORT BENEFITSFewer FiresMany low-income homes have old and poorly-maintained space and water heatingsystems. These present a risk of fire resulting from gas leaks. Also, low-income householdssometimes use dangerous supplemental heat sources like gas grills or electric space heaters, andthis is especially problematic in those instances where the primary heating source isdisconnected due to nonpayment. Weatherization programs can improve the operation of spaceand water heating systems and reduce the need for supplemental heating. As a result, fewer firesoccur in weatherized homes, and this represents a real benefit to the affected households.The net present value of fewer fires reported in the literature ranges from $0 to $555(Table 5). We suggest using $68 as a point estimate for this benefit. This value of fewer firesover the lifetime of the weatherization measures installed is based on the annual per householdvalue for this benefit presented by Brown et al. (1993) in the national weatherization evaluation,adjusted to 2001 dollars using the multiplier suggested by the Consumer Price Index (Bureau ofLabor Statistics 2001). The study by Brown et al. estimated the number of fires prevented bythe national Weatherization Assistance Program, using national statistics on the occurrence offires and fire death rates, and attributed a value to the associated property damage and deathsbased on residential fire-loss statistics and the projected value of future lifetime earnings.Table 5. Household Benefits: Safety, Health, and ComfortNonenergy BenefitRange of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net Present Value)Fewer fires0-55568Fewer illnesses0-219155Improved comfort andrelated factorsNot AvailableNot AvailableFewer IllnessesSome authors have suggested that people living in houses with sufficient and continuousheat during the colder months of the year are likely to get fewer colds. When adults get fewercolds, it means that they experience fewer lost days of work and the accompanying loss ofwages. In addition, when children are sick, a parent or guardian often has to miss work to carefor them, again at the cost of lost wages. Accordingly, weatherization improvements that resultin warmer and less drafty homes could lead to fewer illnesses and the monetary benefits that go16along with that. It should be noted that tightening up homes could lead to increases in indoor airpollution and associated illnesses. However, properly conducted energy audits allow foradequate air changes in the home to minimize this risk.The net present values reported in the literature for fewer illnesses range from a low of $0to a high of $2191. We suggest a point estimate of $55. This value was calculated using themethod described in Skumatz (2001). Skumatz developed a point estimate for the benefit offewer illnesses associated with low-income weatherization efforts, based on survey findingsregarding the number of lost workdays avoided and an assumed average wage earned by theaffected workers.Improved Comfort and Related FactorsBecause houses tend to become warmer and less drafty after they are weatherized, theiroccupants are likely to experience increased comfort levels. In addition, the improvementsmade to homes during the weatherization process often make them less noisy and can improvetheir appearance. All of these represent benefits that are real but are very difficult to measureobjectively. Some innovative work has been performed in this area, most notably in the form ofsurvey research that asks respondents to characterize the value of various nonenergy benefitsrelative to the energy savings that they have received as a result of program participation(Skumatz et al. 2000). However, it is not clear whether the values calculated by suchapproaches, which assign a dollar value to a given benefit based on its perceived importance tothe recipient, are either valid or reliable given the very hypothetical nature of the task set to therespondents. Accordingly, we will not attempt to assign a dollar value to comfort, noise, andaesthetic benefits at this time.Improved indoor air quality is another benefit associated with weatherization programs. Faulty furnaces can release carbon monoxide into houses, with very negative health effects. Improvements to heating equipment made during the weatherization process can prevent suchreleases, and the installation of carbon monoxide monitors can alert household occupants to thepresence of this dangerous gas. Despite its importance, we will not attempt to assign a monetaryvalue to the benefit of improved indoor air quality because of the current lack of reliableestimates.Weatherization providers are required to give a booklet on the hazards of lead-basedpaint (U.S. Environmental Protection Agency 2001) to households in which such paint could bepresent. This booklet presents information on the dangers of lead poisoning and how they can bereduced or eliminated. Because lead can have very adverse impacts on those exposed toit–especially children–educational efforts like the one described above can have the positiveeffect of protecting the health of household residents. Due to a lack of information on themonetary value of this benefit, we do not attempt to quantify its worth.171200110010009008007006005004003002001000Point Estimate (2001 $ per participating household: Net Present Value)Environmental Benefits†Social BenefitsEconomic Benefits8691171123†using natural gas estimates for air emissions4.0 SOCIETAL BENEFITSFollowing the literature, the societal nonenergy benefits attributable to weatherizing lowincome homes are broken into three categories: environmental, social and economic. Fig. 3 givespoint estimates of the average lifetime monetary value associated with each of the three benefittypes. The findings distilled from the literature are reported in sub-sections 4.1, 4.2, and 4.3,respectively. Fig. 3. Average Lifetime Monetary Value of Societal Benefits, by Type4.1 ENVIRONMENTAL BENEFITSEnvironmental benefits pertain to how the environment can be improved by weatherizinglow income homes. The most frequently studied environmental benefits arise from the reductionof air pollutants due to the reduction in the burning of fossil fuels, either in the home (e.g.,natural gas) or at central power stations to produce electricity. Other categories of environmentalbenefits quantified in the literature include less impingements upon fish around power plantwater sources, and reduced water use and, subsequently, less sewage. Table 6 provides rangesand point estimates for these environmental benefits. 18Table 6. Environmental BenefitsNonenergy BenefitRange of Benefits (in 2001 $per participatinghousehold: Net PresentValue)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net PresentValue)Air Emissions - Natural GasCarbon (CO2)40 - 32,189102Sulfur Oxides (SOx).02 - 601523Nitrogen Oxides (NOx).02 - 225448Carbon Monoxide (CO).21 - 75846Methane (CH4).07 - 26992Particulate Matter (PM).01 - 69839Subtotal40 - 49,176320Air Emissions - ElectricityCarbon (CO2)167 - 97,857305Sulfur Oxides (SOx)31 - 40,87292Nitrogen Oxides (NOx)11 - 17,290523Carbon Monoxide (CO)36 - 8139Methane (CH4).68 - 1.15.91Particulate Matter (PM).27 - 70414Subtotal246 - 156,805974Other BenefitsHeavy Metals (air emissions)1.39 - 17,205380Fish Impingement23.44 - 23.4423.44Waste Water and Sewage3.36 - 657146Subtotal28 - 17,885549Total†68 - 67,061869† uses natural gas estimates for air emissions 19With respect to air emissions, the literature contains a wide range of estimates for severalfactors that are needed to estimate benefits. These factors include (1) the number of pounds ofpollutants emitted per unit of energy service delivered (e.g., lbs/ mmbtu), (2) average energysavings per weatherized home, (3) reductions in pounds of pollutants emitted per weatherization,and (4) value in dollars associated with reducing units of air pollutants (e.g., $/ton of carbondioxide emissions reduced). The approach followed to estimate the range of benefits was to takethe lowest (highest) value for each factor to calculate the lower (upper) bound. The approachtaken to develop a point estimate varied by each type of air emission. In general, mid-range andfrequently mentioned estimates were used. Sources used for the environmental benefit reviewinclude: Brown et al. (1993), Berry (1997), Skumatz and Dickerson (1997, 1999), Skumatz(2000), Riggert et al. (1999), Riggert et al. (2000), Hill et al. (1999), Burtraw et al. (1997),Burtraw and Toman (1997), TecMRKT Works et al. (2001), Biewald et al. (1995), and NationalResearch Council (2001). The ranges in benefits associated with reducing air emissions are large and arise due to ahost of methodological issues. Two key problems are related to choice of benefit estimationmethod and where studies had been conducted. The former problem is particularly acute withrespect to valuing emission reductions. Generally, one of two methodological approaches istaken. One approach is to value emission reductions equal to the value of emission permits thatare being traded in an emissions market (or the expected value for such permits if the marketdoes not yet exist). This value approximates the cost faced by emitters for complying withemission reduction regulations. These values are attractive for benefit estimation exercisesbecause they can be documented, if the market exists, or closely estimated, if the market does notyet exist. The market valuation method tends to yield lower values for emission reductions than thesecond method, which calls for a comprehensive estimation of the benefits associated withemission reductions. In other words, a drawback to using the market values of emissions permitsis that these values do not directly encompass important benefits accruable to society from theemissions reductions. For example, the market values do not reflect improvements to humanhealth and ecosystems or decreasing rates of deterioration of the exterior of buildings and othermaterials exposed to the pollutants. Estimating all these benefits can lead to dramatically highervalues for reducing harmful emissions to the air. The large ranges in benefits shown in Table 6are mostly attributable to studies that adopted one or the other of the two methodologies. It mustbe noted that adopting a comprehensive benefits estimation methodology also increases theuncertainty in the valuation process because estimating health and ecosystem benefits isextraordinarily difficult. Because each method has significant strengths and weakness, neitherhas been universally accepted and wide ranges of benefits estimation can be expected to continue into the foreseeable future. In this study, we tended to favor the market valuation approach whengenerating point estimates of environmental benefits.Where studies have been done is a second source of variation in the numbers presented inTable 6. This is because spatial factors can greatly impact the reductions in emissions perweatherized home. It is well known that the number of heating degree days, which vary acrossthe country, is tightly correlated with energy savings and, ultimately, with air emission20reductions due to weatherization. Thus, findings by studies done in California will be differentfrom studies done in Vermont; both may not be generalizable to the entire country but a valuesomewhere in the range probably is. Cooling degree days also vary by climate zone but thesesavings are usually not included in energy savings estimates, and, conversely, not in air emissionreduction estimates. Fuel used for heating also varies across the country. Studies conducted in areasdominated by natural gas are different than studies done in areas more reliant on electricity.What types of fuels are used to generate electricity are also important, as coal types varyconsiderably and coal is considerably different from natural gas, for example. Generally,emission reduction estimates do not encompass homes that use multiple fuels for heating (e.g.,electricity and wood are common in the Pacific Northwest). Impacts upon other energy end uses,such as air conditioning, are also not incorporated in these analyses. Studies done in limitedmarket areas with unique fuel mixes and climate yield large ranges in results and this is alsoindicated in the ranges exhibited in Table 6. It should also be noted that the environmental benefits listed in Table 6 are notcomprehensive. Categories of environmental benefits not apparently quantified in the literatureinclude reductions in water pollution (e.g., from run-offs from power plant sites, leaching oftoxics into the groundwater from mining operations), land use changes (e.g., associated withextraction of natural resources), and solid waste (e.g., fly-ash from electric generation plants).The literature also does not include complete life cycle assessments that would encompass allpollutants associated with each phase of a home heating fuel (i.e., from extraction of rawmaterials to materials processing to consumption of the fuel to waste disposal issues) to allowcomparison with the environmental implications associated with materials used to weatherizehomes (e.g., assessing the life cycle emissions -- extraction, processing, manufacturing,transportation, use, and end-of-life disposal of insulation). For example, not included in thisanalysis are environmental costs associated with the production of fiber glass insulation, epoxy-based window caulking, double-pane windows, and other measures commonly installed inweatherized homes.4.2 SOCIAL BENEFITSSocial benefits represent a catch-all category of benefits attributable to weatherizationthat are clearly not environmental or economic. In this sub-section we will focus on one suchbenefit that is discussed in the literature and for which the effects have been monetized: avoidedunemployment benefits. This refers to the employment of people in the course of weatherizinghomes who would have been unemployed otherwise. Sources for these benefits include Brown etal. (1993), Skumatz and Dickerson (1999), and Riggert et al. (1999). Other social benefits whichhave not been monetized include: social equity (Berry et al. 1997, National Consumer LawCenter 1999), and improvement in community pride through improvement in the local housingstock.21The range for avoided unemployment benefits (Table 7) was developed by using the lowand high estimates found in the literature. To establish a point estimate, the value reported byBrown et al. (1993) was adjusted to 2001 dollars based on the Consumer Price Index (Bureau ofLabor Statistics 2001). Factors that impact the reliability of estimated benefits include theavailability of jobs in various areas of the country and over time. In areas having numerous jobopportunities, it is harder to argue that there are avoided unemployment benefits. However, sincelow income weatherizations are often conducted in economically distressed communities thattypically do not benefit from national or even regional upturns in the economy, it can be morestrongly argued that avoided unemployment benefits are valid.Table 7. Social BenefitsNonenergy BenefitRange of Benefits (in 2001 $per participatinghousehold: Net PresentValue)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net PresentValue)AvoidedUnemploymentBenefits†0 - 183117† occurs one time only in year weatherization is performed 4.3 ECONOMIC BENEFITSWeatherizing low income homes can yield a variety of economic benefits. One group ofbenefits is related to spending money on weatherization. These expenditures can directly resultin new jobs and increases in personal income which can translate into increases in federalincome tax collections. Additionally, weatherization expenditures can impact the local economyas a portion of every dollar prevented from leaving the community to import energy is spentwithin the community. This is known as the multiplier effect. Most studies only focus on theimpacts within economically distressed areas and do not address the broader economy, wherejobs and incomes may be lost, for example in energy production and distribution operations.Given the scale and scope of the energy production and distribution industries and the fact thatenergy consumption has continued to increase over time, it is highly unlikely that any job lossesin those industries can be attributed to weatherization activities.Of course, saving energy has national security implications, too, by reducing the need forenergy imports. Lastly, it has been hypothesized that owners of rental units may benefit from theweatherization of rental units if the low income households save enough money on energy billsto better be able to pay their monthly rents. Table 8 contains ranges and estimates for the economic-related factors listed above.Sources for these estimates include the Weatherization Network (1999), Nevin et al. (1998),Brown et al. (1993), TecMRKT Works et al. (2001), Riggert et al. (1999), Skumatz and22Dickerson (1997), Skumatz (2001 and 1998), Berry et al. (1997), Hill et al. (1998), RPMSystems (1995), Galvin (1999), National Research Council (2001), and Office of TransportationTechnology (2001). Table 8 indicates that the direct and indirect economic benefits of lowincome weatherization programs can be quite significant. Table 8. Economic BenefitsNonenergy BenefitRange of Benefits (in 2001 $per participatinghousehold: Net PresentValue)Point Estimate of Benefits(in 2001 $ per participatinghousehold: Net PresentValue)Direct and IndirectEmployment†115 - 4354801Lost Rental0 - 2.191.14National Security75 - 3286321Total190 - 76421123†occurs one time only in year weatherization is performedNumerous factors impact the validity of the estimates contained in Table 8. As discussedabove, the availability of jobs in an area impacts the job creation and increased federal benefits.The degree to which a local economy is sheltered from needing to import goods and services willimpact the local multiplier effect, and housing availability will impact the lost rental benefit. 235. SUMMARY AND CONCLUSIONSTable 9 summarizes the results of the literature review presented in the preceding threechapters. Overall, societal benefits are estimated to be substantially larger than ratepayer andhousehold benefits. Ranges for the societal benefits are also much greater than for the other twocategories of nonenergy benefits. The total point estimate for nonenergy benefits in all categoriesassociated with weatherizing a home is $3346, in 2001 dollars. As explained in Chapter 1, thisrepresents a national average figure which, like any point estimate, has substantial uncertainty Table 9. Summary of Benefits for Each Major Category and SubcategoryNonenergy BenefitCategory/SubcategoryRange of Benefits (in2001 $ per participatinghousehold: Net PresentValue)Point Estimate ofBenefits (in 2001 $ perparticipating household:Net Present Value)Ratepayer Benefits Payment-Related Benefits27-3680181 Service Provision Benefits72-283150Total for this Category 99-3963331Household Benefits Affordable Housing Benefits62-8663783 Safety, Health, and Comfort Benefits0-2746123Total for this Category62-11,409906Societal Benefits Environmental Benefits68-67,061869 Social Benefits0-183117 Economic Benefits190-76421123Total for this Category258-74,8862109Total for All Benefit Categories419-90,2583346associated with it. Actual benefits will be higher or lower in specific households and localesbased on what programs exist, what fuels are used, the magnitude of energy savings, and otherfactors. More important than the precise dollar figures is the indisputable fact that nonenergy24benefits represent a significant addition to the energy savings benefit achieved by theWeatherization Assistance Program.The point estimate for total nonenergy benefits given above is substantially higher thanthe total value presented a decade ago in ORNL’s national weatherization evaluation (Brown etal. 1993). The magnitude of all nonenergy benefits discussed in that study, when adjusted forinflation, is $1394 in 2001 dollars. The difference between that figure and the $3346 reported inthis document is due almost entirely to the fact that our study quantified a much broader array ofnonenergy benefits than was addressed in the earlier work. For instance, the only ratepayerbenefit discussed in the national evaluation was the reduced carrying cost on arrearages. Incontrast, our treatment of this topic also included avoided rate subsidies, lower bad debt write-off,fewer emergency gas service calls, transmission and distribution loss reduction, and several otherfactors. Similarly, our examination of household benefits included a number of factors—such aswater and sewer savings, reduced mobility, and fewer illnesses—that were not considered in theearlier work. In the realm of societal benefits, our values are very similar to those presented inthe earlier study for both social and economic factors. For environmental benefits, the valuesreported in this document are substantially higher than those presented in the earlier report but,once again, this is largely due to our treatment of additional factors. While Brown et al. onlyassessed the benefits of reductions in two types of air emissions, sulfur dioxide (SO2) and NOx,our study looked at a variety of other air emissions (e.g., CO2, CO, CH4) plus other environmentalfactors such as heavy metals and fish impingement. An additional explanation for the differencebetween the value of environmental benefits reported in the two documents is that our study wasbased on an updated, and substantially higher, amount of average household energy savings,which directly affects the magnitude of emissions reductions. In all nonenergy benefit categories,where our report dealt with the same specific benefits addressed by Brown et al., our valuestended to be very similar.The combined net present value of $3346 for all nonenergy benefit categories compares toan average net present value of energy savings of $3174 and an average total cost perweatherization of $1779, once again in 2001 dollars. The energy savings figure is based on thevalue of savings for houses heated by natural gas taken from a meta-evaluation of theWeatherization Assistance Program performed by ORNL (Berry et al. 1997) to update findingsfrom the national evaluation. The value of annual energy savings reported in that study wasinflated to account for future energy prices using long-term projections developed by the U.S.Energy Information Administration (2001) and discounted using the discount rate recommendedby the Office of Management and Budget. The figure used here for weatherization costsrepresents total costs (including labor and materials as well as program overhead andmanagement) for the average weatherized dwelling and was generated by taking the most recentavailable information from the Weatherization Assistance Program’s grants management datasystem and adjusting the average cost per weatherized unit to 2001 dollars using the ConsumerPrice Index multiplier.It is important to note that total estimated nonenergy benefits are slightly greater than thevalue of energy savings over the lifetime of the weatherization measures installed. Thebenefit/cost ratio for gas-heated houses, combining both energy and nonenergy benefits and25comparing that figure to total costs (labor, materials, and overhead) for the average weatherizedhome, is approximately 3.7, meaning that $3.70 in benefits are realized for every dollar spent. This comparison of all benefits to all costs is referred to as the “societal perspective.” Low andhigh values for the societal benefit/cost ratio, using low and high nonenergy benefit estimates, are2.0 and 52.5, respectively.Whatever assumptions are made, the total estimated value for all nonenergy benefitcategories combined is lower than it could be, because the estimate does not contain somebenefits that have not been monetized. It must also be noted that there are numerous uncertaintiesin the estimates reported above. The environmental benefit calculations in particular are subject towide ranges in assumptions about air emissions prevented per weatherized home and the dollarvalues associated with reducing each air pollutant. In addition, nonenergy benefits in manydifferent categories are likely to vary widely by climate, fuel type, and local economic conditions.In general, our point estimates are conservative and tend to be much closer to the lower than theupper end of the full range of values presented in the literature.Potentially important future research projects on the subject of nonenergy benefits includethe following: assessing subjective nonenergy benefits that participants receive fromweatherization (e.g., improved comfort); following a panel of weatherized homes over time toassess the benefits of weatherization provided to successive occupants; and conductingcomprehensive life cycle assessments to better understand all the environmental benefits andcosts associated with energy use reductions and installation of energy efficiency measures.26276. ACKNOWLEDGMENTSWe wish to acknowledge two major sources for this literature review. The first source isthe compendium of high quality work performed in this area over the last several years by LisaSkumatz and several of her collaborators. The second extremely helpful source is the meta-studyconducted by Jeff Riggert and his colleagues in 1999. In addition, we would like to thank LindaBerry and Joel Eisenberg for providing help and encouragement throughout the course of thisproject and for their valuable comments on this report.28297. REFERENCESBerry, L. 1997. State-Level Evaluations of the Weatherization Assistance Program in 1990-1996:A Metaevaluation That Estimates National Savings, ORNL/CON-435, Oak RidgeNational Laboratory, Oak Ridge, TN, January.Berry, L., Brown, M., and Kinney, L. 1997. Progress Report of the National WeatherizationAssistance Program, ORNL/CON-450, Oak Ridge National Laboratory, Oak Ridge, TN,September. Biewald, B. et al. 1995. Societal Benefits of Energy Efficiency in New England, Tellus Institute. 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Box 1487,Rainsville, AL 35986.36.Mr. Robert Adams, National Association for State Community Service Programs, 400 N.Capitol Street, NW, Suite 395, Washington, DC 20001.37.Mr. Eric Beaton, U.S. DOE Boston Regional Office, Weatherization Program Manager,JFK Federal Building, Room 675, Boston, MA 02203-0002.38.Ms. Beth M. Cahall, U.S. DOE Philadelphia Regional Office, Weatherization ProgramManager, 1880 John F. Kennedy Boulevard, Suite 501, Philadelphia, PA 19103-7483.39.Mr. James Childs, U.S. DOE, EE-42, Room: 5E-066, Office of Technology Assistance,1000 Independence Avenue, SW, Washington, DC 20585.40.Mr. Rob DeSoto, U.S. DOE Golden Regional Office, Weatherization Program Manager,1617 Cole Boulevard, Golden, CO 80401.41.Ms. Jean M. Diggs, U.S. DOE, EE-42, Room: 5E-080, Office of Technology Assistance,1000 Independence Avenue, SW, Washington, DC 20585.42.Mr. Jerome Dion, U.S. DOE, EE-40, Room: 5E-052, 1000 Independence Avenue, SW,Washington, DC 20585.43.Mr. Denis J. Feck, U.S. DOE, EE-42, Room: 5E-098, Office of Technology Assistance,1000 Independence Avenue, SW, Washington, DC 20585.44.Ms. Carole Gates, U.S. DOE Seattle Regional Office, Weatherization Program Manager,800 Fifth Avenue, Suite 3950, Seattle, WA 98104.45.Mr. John Howat, National Consumer Law Center, 77 Summer Street, 10th Floor, Boston,MA 02110-1006.46–55.Ms. Gail N. McKinley, U.S. DOE, EE-42, Room: 5E-080, Office of TechnologyAssistance, 1000 Independence Avenue, SW, Washington, DC 20585.56.Mr. Jerrold Oppenheim, 57 Middle Street, Gloucester, MA 01930.57.Mr. Michael Peterson, U.S. DOE Chicago Regional Office, Weatherization ProgramManager, One South Wacker Drive, Suite 2380, Chicago, IL 60606.58.Dr. Meg Power, Economic Opportunity Studies, 444 N. Capitol Street, Suite G-80,Washington, DC 20001.59.Mr. Gregory M. Reamy, U.S. DOE, EE-42, Room: 5E-066, Office of TechnologyAssistance, 1000 Independence Avenue, SW, Washington, DC 20585.60.Mr. Jeff Riggert, TecMRKT Works, 165 W. Netherwood, Oregon, WI 53575.61.Mr. P. Richard Rittelmann, FAIA, Executive Vice President, Burt Hill Kosar Associates,400 Morgan Center, Butler, PA 16001-5977.62.Ms. Bernadette Ruffin, U.S. DOE Atlanta Regional Office, Weatherization ProgramManager, 730 Peachtree Street, NE, Suite 876, Atlanta, GA 30308.63.Dr. Lisa A. Skumatz, Skumatz Economic Research Associates, Inc., 762 Eldorado Drive,Superior, CO 80027.64.Mr. David Terry, NASEO, 1414 Prince Street, Suite 200, Alexandria, VA 22314.65.Dr. Susan F. Tierney, The Economic Resource Group, Inc., One Mifflin Place,Cambridge, MA 02138.