By Robert Thomason
Washington Post Staff Writer
Sunday, June 25, 2006; F01
I was no energy expert two years ago when I began looking for ways to improve the efficiency of our condominium building. I learned a lot -- fast.
Rapidly rising energy costs are forcing all homeowners to closely examine energy use, and for a place such as ours -- with 271 units -- the issues are sharply magnified. The task of boosting efficiency fell to me as treasurer of Boston House, an eight-story building in Dupont Circle.
It has been a roller-coaster ride -- just like the energy prices themselves. I have had to reckon with not only the politics of Iran but also those of D.C. historic preservation. I've had to monitor billion-dollar markets to get good prices on natural gas as well as remind residents to close their windows on cold winter days. Over the past two years, we've undertaken a $3.5 million building upgrade that includes a series of measures aimed at energy efficiency. Among our efforts, we've replaced windows and have now begun considering solar panels for heating our water.
It also falls to me to lock in our annual contracts for natural gas from Washington Gas. Keeping a close eye on fluctuations in the markets has been an especially harrowing experience in recent years.
Late last year, waiting for the right time to lock in, I watched as prices fell for months after the sharp run-ups in the wake of Hurricane Katrina. I began to believe that the time to act was near. Then in March, I got encouragement from Steve Pritchett, our condominium's broker for its natural gas contracts. He said I shouldn't hesitate to lock in a contract for this year's winter. But even though prices were down considerably, I felt that holding out for lower prices seemed worth the risk. So I balked.
Within days, energy prices were creeping up. Rhetoric over Iran's nuclear fuel program was escalating, making all energy markets nervous. I didn't like what I was seeing, so I called Pritchett back. I was ready to lock in, I told him. He got me a price of $1.05 per therm, the unit of heat content in which natural gas is traded. If I'd taken his advice when he first called, we would be facing a bill 2 cents lower per therm. For the amount of natural gas our residents use, that translates into an additional $1,000 a year in costs.
My failed attempt to catch a market bottom on gas contracts did not break our budget, but it showed that managing energy costs challenges a condo on many fronts. Boston House is more than 50 years old. The original, single-paned windows in uninsulated steel frames were drafty in many units and boosted our energy costs. Not only that, they looked shabby, and sometimes glass even fell out of the frames.
The windows had to go. Replacing them became the centerpiece of the building upgrade plan, which was funded from a special assessment of the owners.
In 2004, we decided on a design that would better insulate the building. We also thought our plan would meet the requirements of the D.C. Historic Preservation Office. We chose windows that would be compatible with the modernist architecture of the building and in keeping with our historic neighborhood's character.
But our best intentions fell afoul of the preservation office. As the winter of 2004 approached, the office would not approve the necessary permit for our design. Among its concerns were that the windows looked too heavy and that parts of the frame were a fraction of an inch wider than guidelines allowed. We never expected to butt up against such a bureaucratic maze when trying to take positive action on improving energy efficiency. Some buildings in the District have backed away from upgrading their windows in fear of running into the twists and turns thrown in the path by the Historic Preservation Office.
But we were pressed for time, so we didn't appeal. We had to complete our upgrade in a reasonable period because the money had been raised as a special owners' assessment. Plus, we needed to finish the window project before replacing a leaking roof. In any case, an appeal didn't offer any guarantee of redress.
So we bought a different window -- one that addressed our concerns, including approval by the Historic Preservation Office. And the change cost us an extra $350,000 over the rejected design. We also incurred at least $17,000 in higher heating bills because of the delay.
But at least we had our new windows, and use of heating fuel has decreased about 21 percent. In the winter of 2004 -- before the new windows went in -- we used 61,791 therms for room and water heating; after the installation in spring 2005, our winter therm count dropped to 49,054. Thanks to the new windows, I estimate -- taking into account the variable costs of gas and carrying charges and tax charges based on usage -- that we saved about $17,000 last year.
Although we did reduce our fuel use, higher fuel prices still caused our bill to rise. No sooner were the windows in place than the price of natural gas began to soar. The main culprit was the devastating Hurricane Katrina. We were somewhat insulated because we had already locked in our natural gas rate for that winter at $0.945, which was up sharply from the previous year's contract at $0.728 per therm.
A lock-in price is based on the average of future contracts for 12 months. The taxes and carrying charges add more to the final bill. (The lock-in price is different from the spot price quoted in daily news accounts.)
Then I watched as the futures average price spiked to $1.25 in late September. I knew I had to lock in for the winter, but I decided to wait for prices to retreat.
By December, the worst of the scare was over, and prices began falling rather steadily until March. That's when Washington Gas's broker Pritchett called. Pritchett's job is to help customers like me make informed decisions on setting out gas contracts. His call recommending a lock-in at $1.03 per therm told me the ride down was slowing, but I stuck to my strategy, though I intensified my scrutiny of blips in the market. When I finally decided to act at $1.05, I had only a few hours of trading opportunity to jump on it before the price rose again.
We're not finished searching for new avenues of energy efficiency. I have little doubt that energy costs will continue to rise, so we must find alternative sources in addition to reducing consumption.
After repairing our leaky roof, it will be time to consider solar panels. We've begun working with Stella Group Ltd., an energy consulting and financing company, on the most cost-efficient strategy. President Scott Sklar, who is also the former president of the Solar Energy Industries Association, has recommended leasing the panels instead of buying them. He advises that with a leasing arrangement, we could take advantage of tax credits and accelerated depreciation and that we would not have to come up with the full price of the equipment immediately. A leasing program would knock our monthly water-heating payments below what they would be if we used gas. Of course, we'd still need natural gas for room heating and for the water when the panels don't produce enough energy.
In researching the solar alternative, I've plunged into the world of environmentally friendly energy sources. In September, I went to the D.C. Green Festival, a convention of alternative-energy and fair-trade vendors and advocacy groups, where I chatted with companies that supply the panels. We hope our solar strategy works out and that we can profitably install the panels after the roof is replaced.
Pursuing the solar option will pose challenges. The panels must fit in well with our new roof and with planned improvements to the boiler room. And, of course, we must meet all D.C. regulations. But given the inevitable rise in energy costs, even these difficulties are worth the effort.
