Higher Utility Bills For Apartments Likely After Trump Sustainability Rollbacks

Significant changes to federal energy efficiency regulations and programs will likely cause multifamily real estate energy costs to rise in the coming months as the Trump administration pushes back previous efforts to boost sustainability at the nation’s apartment complexes.

The swath of changes includes well-known programs like Energy Star but also targets funds aimed at helping apartment tenants pay their utilities. The multifamily industry supports some of the changes but remains skeptical of others, citing uncertain outcomes and possibly higher costs.

“We're facing the potential of increasing utility bills by billions of dollars over time because consumers don't have these cost-effective, popular programs,” said Jim Chilsen, communications director for the Citizens Utility Board, an Illinois-based consumer advocacy group.

The Trump administration’s agenda, one of energy dominance, regulatory rollback and cutting social safety nets, includes changes to a variety of programs. The White House wants to wind down Energy Star, an energy efficiency program that rates appliances and helps property owners measure their energy usage, which has been credited with saving consumers $500B since being founded in 1992.  

There’s also a push to end the Low Income Home Energy Assistance Program, or LIHEAP, which helps consumers facing financial difficulty pay heating and cooling bills. The Trump administration fired the program’s entire staff in early April, which was in charge of distributing $4.1B to help 6.7 million households pay heating and cooling bills. 

Efforts are also in the works to reevaluate a series of Joe Biden-era appliance energy efficiency updates. This consideration is one part of a larger agenda around regulatory shifts that’s been supported by advocacy and lobbying from multifamily groups such as the National Multifamily Housing Council and the National Apartment Association. 

Taken together with the proposed end of Inflation Reduction Act funding for green retrofit programs, it’s a wholesale pushback against federal efforts to make rental housing more energy-efficient and sustainable. 

“The industry really has seen the business value in sustainability efforts and energy-efficiency programs,” NMHC Vice President for Construction, Development, Land Use and Counsel Paula Cino said. “Even without an Energy Star program, moving forward, I think the industry has other tools that it can use, and I don't think the energy efficiency drops out of the conversation.”

Some of the industry’s biggest concerns focus on the end of Energy Star, what Cino calls an excellent example of industry and government collaboration, as well as voluntary efficiency improvement. Run out of the Environmental Protection Agency, the program set voluntary guidelines for energy efficiency that the agency validates for appliance manufacturers and consumers. 

More important for the multifamily industry is the program’s use as a portfolio management tool as well as a standard to help qualify for other rebates and incentives, Cino said. There is an active lobbying effort by the industry, as well as manufacturers and others, to save the program, according to Cino.

“Without [Energy Star] being stabilized in this administration, it raises a real compliance consideration,” she said. “How do we continue to show that our buildings are really performing at a good level?”

Coming at a time when utility costs have been forecast to rise in coming months and years — prices are predicted to rise 2% this year, but estimates suggest repealing clean energy credits could spike bills 13% or more in some states — these rollbacks would have a considerable cost. 

But the NMHC, NAA and others argue that at least some of these standards create an onerous burden on their operation. 

As part of the industry’s larger lobbying blitz that began at the onset of the Trump administration, the apartment industry has pushed regulators to rescind Biden-era appliance efficiency standards. 

These periodic updates by the Department of Energy, including five rules for furnaces, water heaters, refrigerators, cooking products and clothes washers, would raise the floor and make any appliance sold or imported meet a baseline standard. In effect, any new building or retrofit must meet these standards.

This creates a substantial cost on developers and operators, Cino claims. New appliances would be more expensive and replacements might mandate costly changes to plumbing and building infrastructure. While she wasn’t able to provide any estimates on just how much such a change would cost the industry or how it would impact the construction of a new building, she did argue it added a cost that would deter the construction of some number of new affordable housing units. 

She claims the administration, and past administrations, “haven’t been doing the right math” when it comes to the impact these rules have on the multifamily industry, and the rollbacks and rescission the Trump administration has done thus far aren’t enough.

“Any increase in construction costs, to some extent, can drive down the new housing supply that we are bringing online,” Cino said. “We just need to balance priorities. We agree that energy efficiency is a critical goal. At the same time, housing affordability and building new supply, that's also a national priority.”

These changes that have been opposed by the apartment industry have wide support from the appliance industry.

Manufacturers Carrier, Trane and Daikin support the furnace rule, for instance. And consumer watchdogs and advocates argue it’s important to save consumers energy and reduce emissions and pollution. 

These standards have been “quietly saving people money,” according to Andrew deLaski, executive director of the Appliance Standards Awareness Project. A new refrigerator sold today uses 25% as much energy as one sold 50 years ago, he said. 

The Biden-era appliance standards, for instance, have been estimated to save consumers an average of $110, or one month of annual electricity payments, deLaski said. They’re law, but they have been challenged by the industry, and the Trump administration has proposed rescinding one standard and is considering rolling back the rest. deLaski expects decisions on all of them by the end of the summer.

“Let's face it, many landlords are looking for the cheaper product, which is often the least efficient product, right?” deLaski said. “And it's usually the tenant that ends up with the utility bill, not the landlord.”

Tenant advocates and energy-efficiency groups have long complained about what’s known as the split-incentive problem: Landlords and property owners get incentivized to pay for the cheapest appliances since they aren’t paying the monthly bill, sticking tenants with less energy-efficient homes that cost more to heat, cool and operate. Fixing these issues will only become harder if states have to advocate amid a less favorable federal policy environment, Chilsen said.

The impact of lower energy efficiency will be felt across the board, Chilsen said. Lower efficiency means higher energy usage and demand, which increases costs overall. Cutting LIHEAP support may mean lower energy payments and incentives for utilities to raise costs to cover this shortfall. Any increased energy burden means less spending for the wider economy, and tenants will be under more pressure to pay rent. 

“These types of shortsighted rules, it’s like they're shooting themselves in the foot, because it's going to have such a horrible ripple effect across the entire economy,” Chilsen said.