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City Seeks to Require Energy Cost Disclosure

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A sample energy disclosure. Courtesy Northeast Energy Efficiency Partnerships.

Montpelier residents would be required to disclose their home’s annual energy cost when selling their property under an ordinance proposed by the city council.

If approved, the measure would require home sellers to obtain a free Vermont Home Energy Profile (VHEP) and provide the results to realtors and prospective buyers. The profile includes an annual cost estimate for heating, cooling, and electricity use and applies an algorithm that scores the home on its energy consumption.

City officials say the profile is good for buyers and sellers by informing the owner of his or her current energy use and offers consumer protection for buyers by educating them on what improvements might be needed to lower energy costs.

“The most important aspect of this for me is that this is a way to encourage people to make energy improvements to their homes without mandating it,” Mayor Anne Watson said. “It turns out in worldwide studies that have been done about this type of ordinance is that it actually ends up increasing the amount of energy improvement, or I should say it increases the number of folks who end up making energy improvements to their home that they weren’t otherwise planning on making.”

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To obtain an energy profile, prospective sellers would go to a website maintained by ClearlyEnergy, which crunches the data according to its own algorithm and issues the energy profile in the form of a PDF to be shared with potential buyers and realtors. It takes about 10 to 20 minutes to fill out the form and there is no cost for the profile for Montpelier residents, but there would be a $15 per page filing fee due to the clerk’s office at closing. 

The Vermont Home Energy Profile concept stems from years of energy labeling work by Efficiency Vermont and other groups to create a standard for assessing a home’s comparative efficiency. The profile is not a substitute for an in-home energy audit.

When a property is listed for sale the ordinance calls for the document to be provided to real estate agents working on the seller’s behalf; to buyers who visit the home while it is listed publicly for sale; and to the buyer at closing.

The buyer and the seller would also be required to sign a statement at closing that acknowledges the presence of a profile. The profile and statement would then be filed with the City Clerk, Watson said.

The mayor said the ordinance is needed to incentivize more energy efficiency upgrades to Monpelier’s housing stock and to help the city meet its goal of being 100 percent net zero energy use by 2050.

Watson said the disclosure at the time of sale could give sellers an opportunity to highlight improvements they have made but more likely might encourage buyers to include the cost of efficiency upgrades into their mortgage loans.

“Data that I have seen is that buyers make improvements and that sort of makes sense because if you provide that information at the time of listing, then that is a powerful piece of information that the buyer can use in negotiating with their lender for a mortgage,” she said.

The ordinance also includes a $25-a-day fine for sellers who refuse to provide an energy profile after listing their property.

Reducing greenhouse gas emissions and preparing for the effects of climate change has been a key focus for the mayor in recent years.

The disclosure ordinance stems from the city council’s energy efficiency charter change that was narrowly approved by voters in 2019. That measure, which passed by 32 votes, would have given the council the authority to set energy efficiency standards for all residential and commercial property in the city. The state legislature, which is required to approve changes to a city charter, scaled back that power but allowed for the creation of a disclosure ordinance.

Many realtors were critical of the charter change proposal two years ago and argued that such decisions are better made on the state level. Longtime Montpelier realtor Tim Heney said that sentiment applies to the disclosure profile as well.

“I’m in favor of energy efficiency,” he said. “I spend a lot of money on it, I believe in it, and I invest in it. But I think this is kind of a punitive approach and kind of a bureaucratic approach and I don’t think it’s the best approach.”

He said he would prefer that resources be spent on assisting homeowners in performing energy efficiency improvements and that there are bills pending in the legislature to do that.

“There were roughly 88 single-family home sales last year in Montpelier, and if you’re really trying to make an impact on energy efficiency that’s a pretty small subset of the total housing stock to be penalizing those folks that are at a point in their housing process where they have all these other costs, all this other process, and overhead happening,” Heney said.

Watson said it makes sense for Montpelier to go it alone on certain issues if it helps to raise the level of the conversation. For example, shortly after Montpelier residents voted to ban the use of plastic grocery bags the state followed suit. 

“So in a sense we are leading here, and I think the community in general cares about climate change and wants to be a leader around climate issues, and so that, I think, is something that we can be really proud of,” she said.

The first public hearing on the proposed ordinance is scheduled for March 24 via Zoom.