Big growing pains and potential for a $5 billion weatherization program

Next month, a new class of a dozen or more men and women will begin training in Long Island City, N.Y., to become home weatherization technicians. They are early recruits in a small army of workers being deployed in places around the country where there were only skeleton crews before.

A vastly accelerated version of the federal weatherization program -- begun in 1976 to cut heating oil bills for low-income homes -- is just getting under way. It is part of the American Recovery and Reinvestment Act stimulus legislation, passed eight months ago. The act allots $5 billion over three years to improve insulation and replace leaky windows and doors for lower-income homeowners and apartment residents.

Based now on the premise that more energy efficiency is the quickest, cheapest way to reduce greenhouse gas emissions, the campaign is a long reach for a federally funded weatherization program. Recently, it has been running at $225 million a year, the General Accounting Office notes. Just eight of 14 states surveyed by GAO had begun weatherizing programs using the Recovery Act as of the end of August.

"With such a huge influx of money, there have been some challenges in scaling up," said Matthew Mayrl, policy director with the Apollo Alliance, a San Francisco-based green energy advocacy group.

"There is a tension between spending the money fast and spending it well," said Elena Foshay, Mayrl's colleague at Apollo. "The administration now is contracting with community organizations to receive the money and do the work. That is going on right now."

"The money is just starting to hit the ground," agreed Dave Johnson, a regional official with the Laborers' International Union of North America. The union has formed a new unit, Local 10 in New York City, for unemployed and under-employed city residents who will be training as energy auditors and weatherization installers. The union runs the Long Island City training center, which graduated its first class in August, in anticipation of the program buildup, Johnson said.

The new program has had to work through elaborate hand-offs between federal, state and local governments and community-based organizations that recruit residents for weatherization services and disperse the crews.

Administration aims for jobs and savings


Wage rates have been an issue in many states, the GAO said. Workers in the new program must be paid at least the "prevailing" wage and benefits in each area for residential construction laborers and mechanics under the federal Davis-Bacon Act. But the Labor Department first had to establish those pay rates, and many states waited for that to happen. Full first-year funding won't go out until the Energy Department signs off on how well the states have handled the first round of grants, totaling $1.3 billion, the GAO said.

Already, the program has had at least one controversy. California state and local officials have moved to cut off funding for a San Francisco community organization that was due to receive $159,000 in stimulus weatherization funds. California Inspector General Laura Chick called the organization a "high risk" contractor, citing more than $540,000 in disallowed expenditures on past programs linked to alleged "co-mingling of funds and board of directors' retreats at a luxury casino." The organization did not respond to a request for comment.

Supporters of existing federal and state home weatherization programs say they have proved their worth. "The program itself has a long history of success [in] reducing energy costs at a fairly cost-efficient way. I'm not worried about the program itself," Mayrl said. In addition to federal dollars, many states and some utilities fund annual weatherization activities.

The town of Babylon on Long Island's south shore has run its own program for more than a year, using sanitation revenues to advance money to homeowners who undertake weatherization upgrades. The up-front investment becomes part of a home's assessment, paid back to the town from the household's energy savings.

So far, the town's contractors have completed 270 home energy audits and 150 retrofits, for an average project cost of $7,800. The program is cutting household's energy use by as much as $900 a year, providing a payback in eight years, said township spokesman Tim Ruggeri.

New jobs of any sort are urgently needed as the recession approaches the end of its second year, with 15 million Americans unemployed -- one-third of them out of work for six months or longer.

Will the additional jobs be sustainable?

Johnson says the weatherization workers trained by New York City's Local 10 will receive pay of $17 an hour, plus $5 toward a health benefits program that they can maintain between jobs. He called the pay and benefits package "extremely competitive," about half of what his union members are receiving in New York for commercial work.

"It's a living-wage rate. In New York, you're not going to starve on that or get rich. It can pay rent, put bread on the table, and put a little more back into the economy," he said.

Trainees must have 10th-grade reading and math skills or better, pass a drug test, and complete a three- to five-week program that includes weatherization and construction training and workplace safety, as well as basic workplace skills, if necessary, Johnson said.

John Hamilton, director of weatherization for the Community and Economic Development Association of Cook County, Ill., says a typical contracting team of two or three workers can complete a basic insulation retrofit in two or three days. (Window or boiler replacements take longer,)

With federal weatherization funding capped at $6,500 per household, the $5 billion in stimulus grants could fund up to 250,000 homes a year for three years.

Pennsylvania estimates that doing 9,000 additional homes a year would create 1,000 new jobs in the program, counting auditors who do initial home assessments, crew members, staff and inspectors. On that scale, the national program could create more than 25,000 jobs in each of the three years.

The new federal program will have a higher staffing level because of the increased focus on getting it right, says E. Craig Heim, executive director of Pennsylvania's Office of Energy Conservation and Weatherization. "We're spending so much time on, 'Don't make a mistake. Let's monitor this. We can't have a negative story,'" he said.

Homes built when energy was cheap need help

Behind this cautious rollout is the desire to have an infrastructure that can keep things going after the stimulus funding runs out in 2012, he said. "We're going to look to blow those numbers out, identifying people who can supervise these projects, and maintain standards as we produce numbers we've never done before," he said. His office has contracted with the Pennsylvania College of Technology in Williamsport to double enrollment of trainers for the program.

The potential job creation could grow exponentially, based on the need for better weatherization, advocates say. The Energy Programs Consortium reported in August that 31 percent of the nation's homes and apartments -- 36 million units -- were built before 1960, when energy prices were historically low and insulation was a low priority.

Nearly 60 percent of housing, or 66 million dwellings, were built before 1980, when energy efficiency first began to take hold. The average home built in the 1970s uses half again more energy per square foot as one of those built in 2000 or later, the report says.

Labor union leaders hope that fundamental changes in how weatherization is carried out will lead to a big increase in their membership. Home weatherization jobs in many communities are done by small contracting firms that often do not hire union workers.

'Mass-production retrofitting'

In some places, the union's role won't be welcomed. Jon Fisher, president of the Associated Builders and Contractors of Texas in Austin, told a construction industry publication in May, "We think projects should be open to the majority of construction workers who are not union."

"We're not trying to force commercial union rates down the throats of these small contractors," Johnson said. "We're trying to meet the market where it's at, but it needs to be a living wage."

Johnson's boss, Laborers' Union president Terry O'Sullivan, says that building a program that reaches full potential would require a fortyfold increase in contractors. "To fulfill the administration's goal is going to take larger contractors and larger packages. The program should aim at covering entire neighborhoods at a turn," he said.

The Energy Department is designing a pilot program to test just that approach, Energy Secretary Steven Chu said last month. "Can we enlist at a reasonable fraction -- half, a third, two-thirds of the people on this block -- to say, 'Let's all go in together'? And then a single certified contractor does an energy audit for each house, going from door to door. ... In comes another truck that blows in the insulation. There are people who do the ceiling," the secretary said.

Auditors would certify that the work was properly done, giving the homeowner a tangible increase in the home's value. Vice President Joe Biden is promoting a self-financing strategy in which up-front costs would be added to mortgages and paid off over a number of years, as Babylon has done on Long Island.

"So it's mass-production retrofitting," Chu said.

The program will be a grass-roots test of how far climate and energy agendas are penetrating with the public, says Pennsylvania's Heim. "We need to stimulate a change in behavior. We need 1 million Pennsylvanians to step forward and say, 'I understand the importance of saving energy.'"

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