Once your new home construction or existing home improvement has been qualified by a certified rater, almost any step taken which can lower the energy bill of your home can be used to project a lower energy bill for your home and RAISE your rebate, however, some kinds of improvements are treated differently than others.

Raising your projected energy saving is the key to raising your rebate, because ...

The rebate can be as high as, but cannot be greater than 20% of the Energy Efficiency Premium of the home, which is defined to be the Present Value of the projected Energy Savings.

However, to define that, the rater must know:
  1. The interest rate to be used,
  2. The annual energy savings generated by the set of improvements, and
  3. The Life of the improvements.
The interest rate is the easiest to choose since it depends upon the general rate at which banks lend money and can be easily looked up. While the prime lending rate is way below 5%, all energy ratings will use 5%. Thereafter, the rate may go up a bit.

The annual energy savings generated by the set of improvements is directly the job of specially designed and tested Energy Modelling Software. A rater's audit begins with the collection of data from either plans, when a new home is qualifying for the HERO program, or by an extensive visit to the home, when an existing home is qualifying for the HERO program. These data are then input into the software so it can calculate a projected annual energy bill. When two home models are compared, one before improvements are made and one after, the difference in the projected annual energy bill can also be calculated; this difference is called the annual energy savings.

The Life of the improvements is the weighted sum of all of the energy improvements which can contribute to a rating.

( Since the HERO program is a part of a national program of HOME ENERGY RATING SYSTEMs, it must conform to national guidelines. The authors of these guidelines have only found concensus for ways to treat and utilize a limited set of improvements that can affect an energy bill. Fortunately for homeowners, the set of improvements that can affect a rating contains most of the improvements that are commonly used around the country. However, notably absent are excellent energy savings measures like: fluorescent lighting, using ceiling fans, abandoning attic fans, properly installing exhaust fans, and dedicated year-round dehumidification equipment, etc. But as you'll see from the list below, what IS included is most of what is most commonly done to lower residential energy use. )

The calculation of the weighted sum of all of the energy improvements uses the actual (or differential for a new home) cost of the improvements and the following times:

Calculating Blended Weighted Life for Upgraded Equipment

When a single component is installed on an existing home (use these values)

  1. WINDOWS & DOORS = 20 years
  2. INSULATION = 30 years
  3. DUCT LEAKAGE = 30 years
  4. WHOLE HOUSE INFILTRATION = 30 years
  5. HEAT PUMP = 17 years
  6. CONVENTIONAL AC = 15 years
  7. FURNACE (GAS or ELECTRIC) = 15 years
  8. COMBINES AC & FURNACE UNIT = 15 years
  9. HOT WATER HEATER (GAS or ELECTRIC) = 15 years
For example:

Calculating Blended Weighted Life for Upgraded Equipment on an existing home

When more than one component is installed on an existing home, or if using the differential cost on equipment for a new home, use the

Weighted Useful Life Formula:

(Useful Life a X $a) + (Useful Life b X $b) + (Useful Life c X $c)
$a + $b + $c

EXAMPLE : a) INSULATION b) INFILTRATION c) HOT WATER HEATER (on an existing home)

(30 X $1200) + (30 X $300) + (15 X $500) =
$1200 + $300 + $500

36000 + 9000 + 7500 =
1200 + 300 + 500

52500 =
2000

26.25 years =

26 years

In the above example, if a homeowner also installed fluorescent lighting in the home, the annual energy bill would go down, but the weighted life of the set of improvements would not be affected. So such an improvement CAN affect the size of the rebate, but not as directly as one of the nine choices given above.

On a new home a 20 year life on equipment can be used in lieu of performing the Blended Weighted Life Calculation.