Dallas-Based Homebuilder Takes Aim at Energy Efficiency

Centex Corporation (NYSE:CTX) has recently announced the Centex Energy Advantage, a suite of energy-efficient features standard in all Centex homes built nationwide by January 2009. The initiative is expected to have positive, long-term benefits for the company’s homebuyers and the environment.

Centex commissioned the NAHB Research Center to conduct a study modeling the energy efficiency of Centex Energy Advantage-equipped homes. The NAHB Research Center concluded that Centex Energy Advantage homes in the study demonstrated an improvement in energy efficiency of up to 22 percent over comparable homes built to the most widely used energy efficiency code (the 2006 International Energy Conservation Code). When compared to the energy efficiency of a typical 10-year-old home (as defined by the U.S. Department of Energy’s Building America Program), the Centex Energy Advantage homes in the study were shown to be up to 40 percent more energy efficient.(1)

A special feature of the Centex Energy Advantage is an in-home energy monitor. Energy monitors provide real-time information about electricity usage and expense and show the effect of turning on and off various electrical components. Based upon the published studies reviewed by the NAHB Research Center, homeowners who use energy monitors to actively manage their consumption of electricity can reduce their electricity use by 4-15 percent. Centex is the first national homebuilder to announce the installation of an energy monitor in every home it builds.

Features of the Centex Energy Advantage standard package include:(2)
— Energy monitor
— Whirlpool or KitchenAid brand ENERGY STAR(R) qualified appliances
— Lennox high-efficiency HVAC system(3)
— Programmable thermostat(s)
— Low-emissivity windows
— Radiant-barrier roof decking(4)
— R-38, R-40 or R-60 attic insulation (varies by climate zone)
— Compact fluorescent lights in high-traffic areas
— Information for maximizing energy efficiency and minimizing the
impact of home operation on the environment

According to the NAHB Research Center, each Centex Energy Advantage home will produce 1.78 fewer metric tons of carbon per year than a comparable home built to 2006 IECC standards. If the same amount of carbon were released, it would be roughly equivalent to:(5)

— Greenhouse gas emissions from the family automobile for four months
— CO2 emissions from 183 gallons of gasoline consumed
— Annual carbon absorption by more than one-third acre of pine or
fir forest

The cumulative effects are significant. For every 10,000 homes Centex builds each year, 17,800 fewer metric tons of carbon could be released than from comparable homes built to 2006 IECC standards. If the same amount of carbon were released, it would be roughly equivalent to:(5)

— Greenhouse gas emissions from 2,957 passenger vehicles in one year
— CO2 emissions from 1.83 million gallons of gasoline consumed
— Annual carbon absorption by 3,670 acres of pine or fir forest

For its most recent fiscal year, the Company sold nearly 25,000 homes.

Dallas-based Centex, founded in 1950, is one of the nation’s leading home building companies. Its leading brands include Centex Homes, Fox & Jacobs Homes and CityHomes. In addition to its home building operations, Centex also offers mortgage, title and insurance services. Centex has ranked among the top three builders on FORTUNE magazine’s list of “America’s Most Admired Companies” for nine straight years and is a leader in quality and customer satisfaction.


Why did you decide to do this now?

We are in the process of a comprehensive redesign of our product line. One of the key principles of our new designs is energy efficiency. Our customers — many of them first-time homebuyers — are very conscious of the impact higher energy costs have on their costs of living. By making our homes more energy efficient and distinctive, we’ll satisfy our customers’ needs and help the environment.

Why did you choose this combination of components?

Centex chose the features included in the Centex Energy Advantage based on company and independent research indicating customer preference and each component’s proven results of efficiency savings.

Some states and localities have efficiency requirements that differ from those provided by this package. How will you implement this package in those areas?

The Centex Energy Advantage is our national standard. Centex will continue to provide additional materials and components as required by state and local regulations or laws.

How will this affect the price of your homes?

It would cost an individual homeowner thousands of dollars to add the Centex Energy Advantage features to an existing or recently purchased new home. We are able to greatly reduce that cost by making the Centex Energy Advantage standard in every home we build. We believe the Centex Energy Advantage will differentiate our homes from competitors. We intend to reinforce that value proposition by offering these features as standard and keeping our prices competitive.

(1) This study evaluated the energy efficiency gains attributable to the Centex Energy Advantage features in a variety of single-family floor plans typical of the Centex product line in the climate zones where the Company currently operates. Not all floor plans, building materials or construction techniques were evaluated in the study. Efficiency gains will vary for other plan types, building materials, construction techniques and change of climate zone.

(2) The Centex Energy Advantage will be supplemented or otherwise adjusted as required by state and local codes. In several markets, Centex is currently building homes with components that exceed the combined efficiencies provided the Centex Energy Advantage.

(3) 14-SEER air conditioning or 90-percent AFUE furnace, depending upon climate zone. SEER is “seasonal energy efficiency ratio,” a measure of seasonal or annual efficiency of a central air conditioner or air-conditioning heat pump that is the average BTUs of cooling delivered for every watt-hour of electricity used by the heat pump over a cooling season. AFUE is “annual fuel utilization efficiency,” a measure of average combustion efficiency in a furnace or heating unit.

(4) By climate zone, as indicated by ENERGY STAR requirements.

(5) Calculations are based on NAHB Research Center estimated efficiency of 1.78 metric tons of CO2 per home equipped with Centex Energy Advantage features, as determined by the U.S. Environmental Protection Agency’s “Greenhouse Gas Equivalencies Calculator” (see www.epa.gov).

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