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Heat Exchangers Experts Seminar
What’s Your Plan for DOE’s 2023 Energy Efficiency Standards?
How contractors handle inventory for the rest of the year is crucial
Under the new standards, the minimum efficiency of residential equipment will increase approximately 7%, or the equivalent of 1 SEER point. There will also be new energy efficiency ratings used for 3- to 5-ton residential/light commercial, single-phase products that meet the new minimum efficiency standards. Due to a revised test procedure, the new metrics of SEER2, HSPF2, and EER2 will be used instead of SEER, HSPF, EER. The efficiency standards for single split central air conditioners will still be divided into three regions: North, Southeast, and Southwest, but the new SEER2 minimum will be 13.4 in the North (equivalent to 14 SEER) and 14.3 (15 SEER) in the Southern regions.
But what makes this transition more challenging for contractors is that there are separate installation requirements for residential central air conditioners sold in the northern and southern parts of the U.S. Residential air conditioning units built prior to January 1, 2023 can be installed in the North on or after that date, but newly manufactured SEER2, EER2 products must meet the 2023 minimum requirements.
In the Southeast and Southwest, air conditioners not meeting the new energy efficiency requirements must be completely installed by December 31, 2022; therefore, sell-through of air conditioners will not be allowed unless they meet the new 2023 SEER/EER minimums. Heat pumps of all types are excluded, as they are designated as “date of manufacture” products, which means that as long as they are built prior to January 1, 2023, they can be installed on or after that date.
If they haven’t already, contractors installing residential products in the Southeast and Southwest should be crafting a phase-in/phase-out plan, so they won’t be left with stranded air conditioner inventory that can’t be installed after January 1, 2023. In creating that plan, they should be talking regularly with their distributors and manufacturers’ representatives to find out when they should place their last-call orders, as well as when they are likely to receive those orders.
Southern contractors may be hoping for a last-minute reprieve, as some states such as Arizona are asking the DOE to delay the implementation of new efficiency standards to July 1, 2023. In a letter to DOE, Congresspeople from Arizona argued that due to supply chain issues and labor shortages, the deadline should be extended. In addition, they said that in new construction, the interior components of an HVAC system are typically installed first, with the outside equipment installed sometimes five or six months later, even in normal times. Homes being roughed in now, the letter said, require not-yet-available interior equipment that will work with the exterior components that will have to be installed beginning January 1.
Even in the unlikely event that DOE extends the deadline, contractors should still be making a plan now for how they will respond to the new energy efficiency standards, because they are coming. In the TV episode mentioned earlier, Phil can’t save his old car, which eventually rolls off a cliff while he stands by helplessly, watching it go. That’s not a metaphor you want to apply to your business, so what’s your plan for the rest of the year?
Joanna R. Turpin
Joanna Turpin has been a professional writer in the heating, air conditioning, and refrigeration industry since 1991. She is very familiar with the technical aspects of the equipment involved, as well as the business concerns of the major players in the industry, including contractors, engineers, manufacturers, and distributors. Her various jobs at BNP Media have required excellent written and verbal communication skills, as well as highly developed research and interviewing techniques.
The IRA’s 179D Deduction: What You Need to Know
By: Barton James
On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. This sweeping legislation invests in clean energy via various tax adjustments.
One significant change made in the bill was the 179D commercial buildings energy efficiency tax deduction. The deduction allows building owners to claim tax deductions for building upgrades that improve energy efficiency. Previously, the requirement to claim the deduction was to achieve 50% lower energy and power costs. Now, the deduction includes a sliding scale approach, with the HVAC savings requirement being 15%. This deduction can be taken every three years for a building project, expanding from the previous limit of once over the lifetime of the building. The deduction was also increased from $1.80 per square foot to a sliding scale rate of up to $5.00 per square foot. The exact amount of the deduction depends on the total energy and power cost savings from energy efficiency improvements, as well as fulfilling labor and prevailing wage requirements. The IRA also broadened the eligibility for building projects to now include non-profits and Tribal governments.
ACCA is hopeful this change will broaden the use of this incentive to a larger number of ACCA members. To read a full summary of the bill, click here.
When we revise a company policy, can we just send the updated policy to our employees, or should we also have employees sign some type of acknowledgement form? If the latter, what do we do if an employee refuses to sign the acknowledgement form?
As a best practice, employers should give employees an opportunity to review any revised policy and to ask questions about the policy's terms. Employees should sign and date a statement acknowledging receipt of the updated policy and agreeing to comply with it. The acknowledgement statement should make clear that the revised policy supersedes any prior ones. The employer should retain the signed acknowledgement form in each employee's respective personnel file so that there is a record of receipt and agreement to comply.
Depending on the circumstances, an employer may be able to condition continued employment upon each employee's agreement to comply with the updated policy. In general, any employee who, without justification, refuses to comply with the updated policy can be disciplined, up to and including dismissal, if employment is otherwise at-will and if consistent with the employer's policies and past practices.That said, an employee may have a legitimate reason for refusing to comply with a particular policy. For example, the employee’s sincerely-held religious belief might prevent compliance, or the employee might perceive the policy to compromise safety or violate public policy. The employer should evaluate the employee's individual concern and take responsive measures as the situation may warrant. Certainly, if there is merit to the employee's objection, the employer should take appropriate steps to remediate, depending upon the applicable facts. If, however, the employee lacks legitimate justification for refusing to comply with any revised policy statement, the employer may be able to take disciplinary action, as noted above.
Letter from the Executive Director
The Inflation Reduction Act of 2022