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On The Border With Regional Standards

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As contractors we all should have concerns about the new regional standards for residential gas furnaces and central air conditioners that the Department of Energy (DOE) finalized last fall. The truth is, some of the new standards will go into effect as early as next year and instead of complaining about them, we have to look at how they are going to impact us and what we are going to do about it.

My business is located in southwest Ohio in the Cincinnati metropolitan area, so I am one of many contractors who fall into the “border state” quandary. Here in Ohio, we fall into the Northern Region where the minimum efficiency standard for gas furnaces will be 90% AFUE. While just across the Ohio River in Kentucky, a state in the Southern Region, the minimum AFUE for gas furnaces is 80%. These same concerns will be found in the area around Philadelphia where Pennsylvania and New Jersey are in the Northern region and Maryland and Delaware are Southern region states.

Now we all know there is a significant difference between the price and installation costs when replacing an older furnace with a 90% AFUE furnace instead of an 80% AFUE furnace, and that is where the trouble starts.

Law abiding contractors will educate their customers to the new rules, explain the benefits of the higher efficiency products, and do their best to keep the additional installation costs to a minimum. Unfortunately, we all know there are some unscrupulous contractors out there who will do anything, including installing “illegal,” but readily available furnaces, just to get the customer and make a buck.

When a customer talks to one of these contractors, they will not understand why us good contractors are quoting a much higher price, while the “other guy” is telling them there’s no need to move the furnace or install new ventilation or condensate drains. The unscrupulous installer will just head south of the border to get the cheaper product. We may even see installers from states with the lower standard come into the northern region and do the same thing.

This will hurt our businesses, because not only will we lose the customers, but we will also look dishonest. Why would a customer trust us, the ones telling them that they have to buy a more expensive unit, when another contractor says it’s not a problem?

So, you may be thinking, “Well, no problem here, I’m not in a border state situation.” But are you really safe from this problem? The internet has been a great asset for our industry, but it also hinders us. The sale of residential equipment over the internet to individual homeowners has been an issue for years, and now with regional standards, those issues are amplified. Equipment sales on the internet create a “no-borders” situation. A customer can go onto any website and order an AC or furnace that is below the standards set by the DOE in their state. When they come to you to install it, you have to make the decision of sticking to your guns, following the standards, and possibly losing the customer.

Of course, there are still a lot of questions out there about enforcement, because the government is still developing an enforcement scheme. Regional standards are unprecedented, so we don’t have a model that protects the law abiding contractors, while minimizing any record keeping or paperwork filing burdens. The DOE must release its enforcement plan by mid-January of 2013 at the latest. Until we have those answers, there are still a lot of questions about enforcement, including what’s going to happen along the border. But one thing is for sure, the federal government is going to have to step up its efforts to inform consumers about the new regulations before they go into effect. We need to be concerned about how these standards may negatively impact our businesses, because whether you are a border contractor like me, or not, regional standards pose some serious obstacles.

Posted In: ACCA Now, Government

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