The House Committee on Small Business recently held a hearing titled “Burdensome Regulations: Examining the Effects of Department of Energy Regulations on America’s Job Creators [1]” featuring testimony on housing affordability crisis from National Association of Home Builders (NAHB) Chairman Alicia Huey [2], a custom home builder and developer from Birmingham, Alabama.
The hearing took a deeper look at U.S. Department of Energy (DOE) regulations on America’s job creators, as Huey noted that the residential construction is one of the most heavily regulated industries in the U.S., and how some DOE regulations are exacerbating the housing affordability crisis, and impeding the ability of builders to increase the production of quality, affordable housing.
“Government policies and regulations are making it harder and harder for home builders and multifamily developers to build housing that is affordable,” said Huey.
In her testimony [3], Huey noted three examples of how excessive regulations originating from the DOE have impacted housing affordability nationwide:
- Transformer standards: Soaring costs and shortages of electrical distribution transformers are delaying housing projects across the nation at a time when the DOE is seeking to minimally increase the energy efficiency standards for these products by a mere one-tenth of a percentage point, even though the agency already mandates distribution transformers be manufactured to very high efficiency standards. The DOE proposal would force manufacturers to retool production lines to produce new transformers and worsen the historic 18-to-24-month backlog that is hampering development across the country and raising housing costs.
- Electrification and gas stoves: Electrification mandates can be costly and infeasible in some areas of the country and create challenges for builders, home owners and consumers. A study conducted by the Home Innovation Research Labs in 2021 found that the additional up-front cost to build an all-electric house (as compared to a house with natural gas equipment and appliances) ranged from $3,832-$15,100 depending on climate zone.
- Building energy codes: The Inflation Reduction Act [4] included $1 billion in grants to state and local governments to adopt updated energy codes that are more costly and restrictive, such as the 2021 International Energy Conservation Code (IECC) [5]. Adoption of the 2021 IECC can add as much as $31,000 to the price of a new home. NAHB understands the importance of energy-efficiency, but the savings from the 2021 IECC can take a homeowner as long as 90 years to see a payback.
“NAHB supports HR 4167, the Protecting America’s Distribution Transformer Supply Chain Act [6],” said Huey in the testimony. “The legislation would prohibit the Secretary of Energy from changing energy conservation standards for distribution transformers for a period five years, which will allow time for the market to stabilize so that manufacturers can catch up with demand.”
According to the National Renewable Energy Laboratory, upgrades to the existing housing stock could yield a projected reduction of 5.7% of the total annual U.S. electricity consumption in 2030. Given this potential, NAHB believes that upgrading the existing housing stock must be the primary focus if the nation is to make measurable progress.
“If we want to make a difference on energy efficiency, we must focus on existing housing, particularly older homes built before the introduction of modern energy codes,” said Huey. “Improving the nation’s housing supply and easing housing affordability challenges will take a coordinated and concerted effort all levels of government.”
Also delivering testimony at the hearing [3] were Ben Lieberman, Senior Fellow with the Competitive Enterprise Institute; Jeff Bauman, Manager of Regulatory Affairs for the National Refrigeration & Air Conditioning Products, Inc.; and Emily Hammond, Professor of Law at The George Washington University.