Mandatory Energy Audits - Good or Bad?

Ontario Minister of Energy and Infrastructure, George Smitherman introduced the Green Energy Act as Bill 150 in the Provincial Legislature this past Monday.

I am not in favour of this act at this time. At best, this is a good idea at the wrong time.

Under the heading, "Mandatory conservation and energy efficiency practices," the act reads as follows:

“2. (1) No person shall offer to sell or to lease, for a term in excess of the prescribed period, an interest in real property unless the person provides, at a cost as determined in the prescribed manner, such information, reports or ratings as are prescribed, (a) relating to energy consumption and efficiency with respect to a prescribed residence or other building on the property or a class of prescribed residences or other buildings on the property;”

In simple terms, home sellers will be required to have a home energy audit conducted at a cost of $300.00 and produce the audit report to a buyer in order to sell their home. This reminds me a bit of the "Clean Air" inspections required to keep our older cars on the road. It's not just the cost of the inspections, but the added costs of required repairs to our "beaters" following a failed inspection.

It's hard to argue with the importance of wise energy consumption, just as it is hard to argue in favour of pollutant belching automobiles, but introducing additional frictional costs into an already sluggish real estate market, may be a good idea at the wrong time.

Energy and resource efficiency is a good thing. Anything that moves us towards increasing energy efficiency is morally and ethically positive. A positive home energy audit may indeed increase a property's marketability and value.

However, a home energy audit will no doubt reveal energy inefficiencies that will require remediation at significant expense to the home owner. This is particularly true of older homes. The cost of the inspection and resulting retrofits and remedies could cause significant financial stress on many home owners. A negative home energy audit could in fact decrease your home's marketability and lower its market value. Again this would be particularly unfair and possibly prejudicial towards lower income owners of older homes.

I believe a better direction to go is with education campaigns like David Suzuki's PowerWise Ontario ads and incentive programs like the Ontario Home Energy Audit and Retrofit Program. The Ontario Government has created an incentive program that awards homeowners with rebates of up to $5,000 for home energy improvements. This program matches up to $5,000 available from the federal government — for a total of up to $10,000.

Continued education on energy conservation through ad campaigns and increased promotion of sensible incentive programs both benefits energy conservation efforts and facilitates economic activity. Win win!