What’s On Contractors’ Minds?

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I just returned from Las Vegas where I attended the 44th Annual ACCA Annual Conference and Indoor Air  Expo. As usual it was an outstanding opportunity for contractors, distributors, and OEMs to get together and discuss all the issues affecting our industry. There’s always a lot of “what are you hearing?” That goes on and this year the buzz was about several topics that were the focus of the two of my favorite conference events, the Contractor Town Hall Meeting and the CEO Forum. Because they are designed to be open forums, you really get a sense of what’s on the mind of everyone in the industry.

So what is on everyone’s mind these days? Attendees at both events probably noticed a few common themes: uncertainty about the economic recovery, uncertainty about pending regulations, and uncertainty about incentives, and how the upcoming elections might play out.

From my own conversations with attendees, contractors seem cautiously optimistic about the economy.

There may not be as much optimism about the future of the federal residential energy tax credits, also known as the 25C tax credits. As of early April they had yet to be extended for 2012. Based on comments from the Contractor Town Hall meeting, the reduced value of the tax credits in 2011, coupled with concerns about what they cost the federal government in lost revenues; it seems the tax credits aren’t missed.

Lately, anytime you get a bunch of contractors together someone is going to ask about the price of R-22 or the availability of “dry charged” units.

As everyone knows in January the price that R-22 refrigerant manufacturers charge to distributors and contractors dramatically increased in response to actions by the U.S. Environmental Protection Agency (EPA). In most areas the price for a 30 gallon jug or cylinder of R-22 tripled and rumors abounded about the availability of R-22 in the future.

Now that the dust has settled, it’s important to note why the price of R-22 spiked. Last year, a judge forced the EPA to reconsider the allocations it grants to refrigerant manufacturers and importers because the agency failed to recognize a legal 2008 allocation trade between two manufacturers. Faced with a low demand for R-22, the EPA decided it would also consider cutting the allocations enough to manipulate the price to encourage more recycling and reclamation. But the agency’s efforts were delayed by the regulatory process and by the end of 2011 the EPA still hadn’t told the manufacturers how much R-22 they could produce in 2012 and beyond. By mid-January the EPA alerted the industry it could expect allocation reductions to be curtailed between 11-47%. At this point, most manufacturers changed their policies to reflect increased prices and small purchase allotments. Unfortunately, no one knows what the final allocation amount will be and we likely won’t find out until July.

But, probably the single most controversial topic was the continued manufacture and sale of dry charged R-22 condensing units. A lot of contractors are still pretty steamed that these units are on the market and extending the lifespan of older, less efficient systems. But nearly an equal number support their availability, because it helps their customers who cannot afford an entire new system and keeps them from going to window air conditioners.

While the EPA does not seem interested in stopping the sale of dry charged units, the Department of Energy (DOE) may step in to slow it down. The DOE has jurisdiction over appliance energy use and in their view, dry charged units that could not be certified (matched) to the indoor coil violate current energy conservation standards if they do not result in a system that achieves 13 SEER.

According to contractors and the CEOs, dry charged units are a considerable portion of the condensing units sold in 2011 and without regulatory action by the EPA or the DOE, that trend may not be changing anytime soon.

Finally everyone wants to know about the impact of the enforcement of regional standard on the entire supply chain, from contractors to distributors to OEMs. I wrote about the new regional standards in the last issue, but now the focus is how the DOE will enforce these new rules. Right now we don’t know what the enforcement scheme will look like, because it’s too early to tell. But we should know soon, because the DOE has to do something by January of next year. And the new rules for furnaces start to go into effect in May of 2013.

So, the common thread in all these issues is the federal government and the role it plays in our industry. And, I think the question in the back of everyone’s mind is how will this year’s election affect any of this?

Online Extras

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[tabs names=”Webinars,ComforTools,Hot Air! Blog”]
[t]ACCA members can check out a special Hot Topics webinar on Regional Standards on-demand.[/t]
[t]Download ACCA’s ComforTool on R-22. [/t]
[t]Check out Charlie’s Hot Air! blog about what’s going on with R-22.[/t]
[/tabs]
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Posted In: ACCA Now, Government