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If you’re looking for a sure-fire investment tip, here are two words for you—energy efficiency.

In an economy where the stock market is down and prices are up, spending money on making your home more energy efficient is a winning strategy. Not only will it put more money in your pocket month after month, but it also makes your home more comfortable.

The National Community Action Foundation estimates that weatherization is one of the most energy-efficient ways we can reduce our country’s addiction to imported oil. Every $1 invested in weatherizing homes quickly translates into $1.67 in energy savings, according to David Bradley, executive director of NCAF.

Just ask Clay County’s Earl and Debbie Smith. Extra insulation and other weatherizing steps have made their Burning Springs brick ranch home much warmer this winter, and the benefits will continue this summer when the heat soars.Today, the Smith home is about 30% more energy efficient, according to something called a blower door test.

Before the extra insulation and other improvements, air leaks were sucking heat through the ceiling, through the floor, and also through leaks around doors and even an attic hatch.

Todd Claiborne, an energy advisor with Jackson Energy Cooperative, worked on the project. “During an initial home inspection, we did a blower door test that showed air leaks throughout the house and a score of around 3,400,” Claiborne explains.

“After adding insulation in the floor, the ceiling, and tightening up around doors and other areas, the final blower door test score was around 2,400, which will help the Smiths reduce their electric bills.”

A high-efficiency heat pump has also replaced baseboard and propane heaters, as well as a fireplace that burned wood.

“I was tickled to death that they could come and do what they did for us,” Smith says. “It’s so much warmer now.” She’s also more aware of how she and her family use electricity after the energy upgrades.

The Smith home now has compact fluorescent lamps (CLFs) in almost all of the light fixtures. “I’m going through the bedrooms when the kids have been in there and left lights on and turning them off after they leave,” she adds. “I’m looking for ways to save.”

Billions in energy-efficiency spending were also included in the economic stimulus package, according to the National Rural Electric Cooperative Association.

But in Kentucky, we often spend more time discussing University of Kentucky basketball than energy efficiency. Historically low electric rates (Kentucky used to have the lowest electric rates in the nation, and now they are the 4th lowest) resulted in homeowners being more concerned about kitchen cabinets than the efficiency rating of their heating system when they built their home.

Many Kentucky homes could use an energy makeover, according to the Kentucky Department for Energy Development and Independence, formerly the Office of Energy Policy. Electric use in Kentucky has grown close to 3% per year since 1990, and traditionally low electric rates have resulted in high electric bills.

For example, Kentucky’s electricity prices are 15% lower than Indiana’s rates, but the average electricity bill is only about 2% less. Rising energy prices, however, are leading more homeowners to look for ways to lower their bills.

Helping members use less electricity is nothing new for Kentucky’s electric cooperatives. Co-ops have been finding ways to lower electric bills for years, and in tough economic times, they are also working with local community action agencies and even using federal grant money to help families use less energy.

Jackson Energy Cooperative in McKee received a federal grant from the Rural Utilities Service to help weatherize homes and make them more energy efficient. Improvements to the Smith home were financed through the grant. It targets low-income homes in Clay and Owsley counties, which rank among the top 10 poorest counties in the nation.

Daniel Boone Community Action Agency in Manchester and Middle Kentucky Community Action Partnership are assisting with the project. They also work with the state’s weatherization program.

The Department of Community Based Services administers Kentucky’s weatherization program for low-income families, and according to their Web site, those households typically spend 14% of their total annual income on energy bills, compared to 3.5% for other households.

“This project will help add insulation and other energy upgrades to homes that will reduce electric bills, and also help the homeowners get rid of inefficient heating systems, like electric furnaces, and replace them with heat pumps,” says Jackson Energy Vice President of Customer Service Rodney Chrisman.

A major step to making a home more energy efficient and saving money is doing something called sealing the envelope. Energy advisor Claiborne says sealing the envelope, or reducing air leaks in the home, leads to using less electricity year-round.

“The key is to keep the conditioned air in the house,” Claiborne says. “If a lot of the heat is leaking out in the winter or the air-conditioned air is doing the same thing in the summer, then you’ll use more electricity.”

Leaking air in the winter, for example, will cause the heat pump or electric furnace to run more to try to keep conditioned air in the home. Claiborne adds that it costs about $2 an hour to operate an electric furnace, while a heat pump costs about 75¢ an hour.

Fleming-Mason Energy Cooperative is also working with community action agencies to help families with high electric usage weatherize their homes.

“A lot of the homes have no insulation whatsoever,” says Fleming-Mason Director of Member Services Mary Beth Nance.

Matt Fiscus co-owns Ideal Homebuilders and Ideal Energy Savers, two Lexington-based companies that specialize in energy-efficiency upgrades and construction. He is helping Fleming-Mason’s members seal the envelope, and he’s encountering problems that are found in many Kentucky homes, new and old alike.

“Every home has its own issues, but a lot of them have inadequate or improperly installed insulation,” Fiscus says. Another “big time” problematic area is leaky ductwork in the heating and cooling system.

Fiscus says he sees a lot of problems at the joints where the ductwork is sealed together. He uses something called HVAC foil tape (not duct tape, which ironically doesn’t work well for sealing ducts) and a compound called mastic to seal the air leaks.

And making major energy upgrades doesn’t have to blow the budget. “A good range for weatherizing a home is to spend about $2,000 to $3,000 to do things like seal air leaks and add insulation,” Fiscus says. That investment will give a quick payback to the homeowner by saving money on their electric bill.

“I can do much more justice in a home by sealing the envelope,” he adds, “than putting in a new heat pump or installing new windows.” He is quick to point out, however, that those are his next two choices, respectively, for improving a home’s energy efficiency.

Air leaks and inefficient heating systems are probably the two major contributors to high electric bills, but water heaters can also take a chunk out of your energy budget.

Space heating, air conditioning, and water heating account for about 60% of the electricity used in the average home, according to the U.S. Department of Energy, with water heating alone taking up 15% of your electric bill.

One way to decrease your water heating costs is to install a solar water heater, and a Berea-based community organization offers low-interest loans to pay for the system.

Mountain Association for Community Economic Development (MACED) offers both residential and commercial loans for solar water heating (www.MACED.org). There was already a 30% tax credit in place, and the federal stimulus package removes the previous $2,000 cap on residential systems.

MACED estimates that a solar water heater will save a typical family of four from $216 to $347 a year, a 50-80% savings of the cost of operating a conventional electric water heater.

MACED energy specialist Josh Bills says the organization has made 17 loans over the past three years for the systems, and while they typically cost between $4,500 and $6,000, they can be as low as $3,000 for a small home.

“We are a bit flexible with the loan terms, depending on the size and cost of the system,” Bills says. “We attempt to set it up so that the monthly financing expense is less than the energy savings for a positive cash flow to the customer.” A typical loan is at between 5-7% interest for five to seven years. Larger commercial systems can get loans of 10 years or longer.

Bills says the program is a joint project with Kentucky Solar Partnership, with state incentives also available to homeowners for going solar. The loan covers the cost of equipment and installation. For more information, go online to www.kysolar.org.

While water heaters can make a significant contribution to the monthly electric bill (about 12%), group all the other electric appliances and lighting together, and you’re approaching 34% percent of the final dollar amount.

Compact fluorescent lamps (CFLs) use about 75% less energy than a traditional incandescent light, according to the U.S. Energy Star program Web site, which is another way to use less energy.

And looking for the Energy Star label on major appliances can add to your savings. Replace one major home appliance with an Energy Star appliance, and you can save up to $75 on your energy bills during a year.

And $75 a year will buy a lot of CFLs for an even better return on your energy-efficiency investment.

That’s advice you can take to the bank.



QUICK START TO ENERGY SAVINGS

Typically these six improvements will give you the largest cost savings per dollar spent. Determine what areas of your home need work, then proceed on the problems that will give you the biggest return for your buck.

1. Sealing the envelope (weatherstripping exterior doors, sealing all air infiltrations, sealing attic access, sealing fireplace when not in use. (Very important, seal your HVAC ductwork)

2. Adding proper amount of insulation

3. Replacing old HVAC with heat pump

4. Replacing windows with high-quality, energy-efficient windows

5. Replacing old appliances with Energy Star appliances

6. Replacing lighting with compact fluorescent lamps



CLEAN ENERGY CORPS

Kentucky’s Clean Energy Corps will use federal stimulus money to help low-income Kentucky families and create jobs while doing it.

The Corps will use federal grants and loans, as well as contributions from corporations, individuals, and organizations, to ultimately improve 10,000 homes in Kentucky.

One idea behind the program is to train Kentucky workers to do the energy-efficiency work. The program is being administered through the office of the state Finance and Administration Cabinet Secretary Jonathan Miller.

The program will initially spend an average of $10,000 on 100 homes in a central Kentucky pilot program. East Kentucky Power Cooperative and central Kentucky electric cooperatives will be a part of the initiative.

Families who participate cannot make more than 200 percent of the federal poverty level, or $42,400 a year for a family of four.

Miller and Governor Steve Beshear also see the program as a way to create jobs. As the demand for energy auditors and people skilled in making energy-efficiency upgrades increases, Kentucky could become a leader in the field.



ENERGY REBATES

Your electric cooperative may offer rebates and other programs to help you make your home more energy efficient. Contact your local cooperative for more information. For easy energy saving ideas, how-to videos, online energy audits, and more information about energy efficiency, go to www.simplesavings.coop.



KEYWORD EXCLUSIVE: STIMULUS TAX CREDIT

To learn about the changes that the stimulus bill has made to energy-efficiency tax credits—from 10-30%—go to energy tax credits.

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