Alphabet Energy Ratings: ‘A’ for Effort – But Needs Work

On January 8th, 1632-A, which amends the NYC administrative code, was signed into law by Mayor Bill de Blasio. The NYC press office release described 1632-A with a terse “relates to energy efficiency scores”. Were it that simple.

This law requires buildings over 25,000 square feet – those included in Local Law 84 which covers benchmarking – to conspicuously post their energy efficiency score as letter grades near public entrances. The scores will be based on Energy Star ratings.

In a few years, NYC buildings will be posting a rating of A-F, similar to food establishment health codes, for all to see and judge. But rather than cleanliness, freshness and vermin control, the building ratings will be based on energy usage. And therein lies the rub…..at least according to The New York Post’s smart and savvy real estate columnist Lois Weiss.

While many publications simply published a basic 1632-A description, Weiss reported that Energy Star ratings are based on 1 to 100 and NYC building scores will be based on the alphabet, resulting in imperfect groupings that fail to take into account energy usage by different buildings and occupants (such as data centers and trading floors that are hugely intensive energy users).

The New York Times published an Op-Ed last June opining that while Local Law 84 requires scoring buildings on their energy efficiency “no one sees the data” and that “ratings are posted on a government website that few people know about and are charted on a 100-point scale that is difficult to interpret.”

Thus, we have Weiss writing about flaws in the new legislation, while the executive director of the Guarini Center on Environmental, Energy and Land use at NYU Law School, Danielle Spiegel-Feld, is decidedly in favor of the simplified A-F rating system according to her Op-Ed.

Spiegel-Feld believes easier to understand and more transparent energy performance ratings will “increase demand for high scoring properties and encourage investments and upgrades in others”.

Weiss on the other hand, predicts that with the imperfect groupings in the letter rating system, “the energy-efficient retrofitted Empire State Building will score a B, while the LEED Platinum One Bryant Park, which uses lots of energy, will have a C.”

The New York Post, standing by its columnist, ran its own opinion editorial calling 1632-A the “dumb way to go green” and that “any building that uses less power does better, so a warehouse is guaranteed to score better than a residential or office building.”

The good news is that we have time to work out the details as letter energy ratings will not be required to be displayed until 2020.

As we said up front: 1632-A gets an “A” for effort but needs improvement.

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By Steven J. Schleider, MAI, LEED-AP BD + C President, Metropolitan Valuation Services