There appears to be some concern about what is really going to happen when the new, residential unitary air conditioning efficiency regulations go into effect later this year so we put together a list of questions and answers to help HVAC contractors keep current on what they need to know about these new standards. I heard the new regulations were being challenged in court.  Will they get thrown out entirely? Although there are some legal challenges to the exact implementation date, the next round of efficiency standards for residential air conditioning is still expected to apply to air conditioners and heat pumps installed on or after January 1, 2015.  And, even if the challenges are successful in delaying the enforcement date by a few months, contractors should still try to become familiar with the structure of the new regulations because that is not likely to change.  For example, there will actually be three, new minimum efficiency levels with the new regulations because the standards for air conditioning are different for the three specified geographic regions.  

For more information about the actual regulation you can click on the following link: In 2005 there was a large build ahead of old, low efficiency systems.  Will there be a build ahead like this in 2014? In 2005, there was a build ahead of 10 SEER systems just prior to the 2006 implementation date.  used ac condensing unitIt is unlikely that there will be a build ahead of that magnitude since the move from 13 SEER to 14 SEER in 2015 will be less challenging than the 2006 move from 10 SEER to 13 SEER and the cost increases driven by the 2015 change will be much smaller.  a c recovery recycling unitAlso, since 13 SEER AC systems can still be sold into the northern region, there is less stress about having unsalable, low efficiency inventory around after the new regulations go into effect.solar powered window ac unit

What product changes can we expect from these new regulations? The most significant product change in 2015 will involve moving all split-system heat pumps in all regions to the new national heat pump efficiency minimum of 14 SEER and 8.2 HSPF.  Since most, if not all U.S. manufacturers already have 14 SEER heat pump systems today, many are probably just refreshing their 14 SEER designs to optimize their product offerings for high volume.  Depending on the outcome of the legal debate mentioned above, contractors can probably expect to see the planned elimination of 13 SEER heat pumps from OEM lines and an increased offering of new, low cost, 14 SEER heat pumps which should be available on time for 2015 stocking programs. Will the yellow “hang-tag” efficiency labels be changing with the new regulations?One consequence of the regional nature of AC standards is the change to the FTC energy guide label. This is the yellow label that is attached to the unit with SEER and HSPF rating of the unit shown in relation to the range of similar models.

One change to this label is that it will not show just one rating point for split-system air conditioners and head pumps (i.e. systems that consist of an outdoor condenser and an indoor coil).  Split-system air conditioners and heat pumps will now be shown as a range representing the lowest and highest SEER ratings for all of the condenser’s certified coil combinations Consider a unit with rated efficiency that can range from 13-14.5 SEER depending on the selection of the indoor system, blower and coil combinations.   It is possible that this outdoor unit might have a suitable Indoor match which would allow it to be installed in all three regions.  In this case, it would become important to track both the outdoor and indoor model numbers and check the rated system performance for each installation to ensure it is compliant with the new regulations. Are there any tools we can use to determine if the indoor and outdoor equipment is qualified?By entering a few parameters like the outdoor and indoor model numbers you can determine the expected performance of the combination. 

The ruling on enforcement method is still pending, but it would be prudent for contractors to prepare for the eventual regulation changes by becoming familiar with this directory since it is likely that contractors are going to be involved with the process of insuring that the equipment they are installing meets the minimum regulations. Do we know how the DOE is planning to enforce the new regulations? Although the specific roles and responsibilities of the contractor, distributor and manufacturer are not defined yet, it is likely that all parties will be involved with some aspect of enforcement.  In any case, contractors should be able to verify that the equipment being installed meets the minimum standards provided by the new regulations and also meets the expectations of the consumer.Increasing energy efficiency has long been the mission of the U.S. Department of Energy (DOE), and in 2015, two new regulations involving air conditioning equipment and water heaters will take effect to support this goal.

REALTORS® need to be familiar with the new regulations because the regulations will likely force homeowners, contractors and manufacturers to make difficult and costly decisions. New Regulations to Trigger Air Conditioning Equipment Replacements The first change involves raising efficiency standards for air conditioning equipment. Beginning January 1, 2015, new Seasonal Energy Efficiency Ratio (SEER) standards will increase from 13 to 14. For those not familiar with the term, SEER is calculated by dividing how much a unit cools by how much energy it uses during a typical cooling season. Therefore, the higher the SEER rating, the more energy efficient a unit is. “SEER 14 is different from past energy mandates because unlike past mandates, in almost all cases, a full system replacement (both the indoor and outdoor unit) will be necessary to make the system compatible,” says Jeff Powell, president of First American Home Buyers Protection Corporation. “It can get really costly when a new indoor coil unit doesn’t fit in the existing space and structural modifications to the house or building are needed to accommodate the larger unit.”

Some manufacturers estimate the average price increase associated with going from a SEER 13 to a SEER 14 condenser will range from 55 – 66 percent and total energy savings will differ based on geography, how often a unit runs, and what SEER rating the existing condenser has. “Once the unit is installed, energy cost savings will vary,” Powell says (see sidebar). “As far as what we recommend, these changes are mandatory, so unfortunately, the reality is homeowners don’t really have a choice in the matter.” The increase in the efficiency standards will significantly affect air conditioning replacements in southwest and southeast states. In the northern states, SEER 13 split system air conditioners are still acceptable, however heat pumps, packaged air conditioning units and gas packs will need to be SEER 14 or higher. According to the new requirements, SEER 13 air conditioners manufactured before January 1, 2015, may be installed in south and southwest regions during an 18-month grace period ending July 1, 2016—but it’s unknown whether the existing inventory will last through the grace period.

The south and southwest states include Alabama, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Kentucky, Louisiana, Maryland, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. Barry Miles, First American’s vice president of operations, notes that if a homeowner’s unit has to be replaced, their contractor must replace the unit according to the new standards for your state. “Contractors have to understand what’s going on, especially for those in the bordering states,” Miles says, “they need to understand where the lines are from that standpoint. For instance, in states north of Arizona, SEER 13 split system air conditioning units will still be acceptable. The same is true in states north of California.” On the positive side, those that make the change will have a more efficient unit. However, Miles believes that in some cases, the cost of the replacement unit could be double for the homeowner.

“From our perspective, replacements are going to be more costly,” Miles says. “Homeowners will be faced with tough choices pertaining to modifications. Contractors will be looking at cost increases for the transportation, warehousing and installation of the larger equipment footprint.” The second big change involves water heater replacements—an amendment to the National Appliance Energy Conservation Act known as the “2015 DOE Final Rule.” When the amendment takes effect on April 16, 2015, the DOE will require higher energy factor ratings on virtually all residential gas, electric, oil and tankless gas water heaters. This will impact how water heaters are designed, manufactured, tested, distributed and installed, affecting manufacturers, wholesalers, installers and homeowners alike. “The 2015 DOE Final Rule will affect homeowners needing a water heater replacement differently, depending on the fuel source and size of the existing water heater,” Powell says.

“These changes may be relatively minor in some cases, and more significant with larger-volume products. Similar to the change to more efficient and larger air conditioning units, there may not be the appropriate space to house a potentially taller, wider and heavier water heater. This may trigger higher costs due to structural modifications to the residence, as well as the higher equipment cost.” The Role of the REALTOR® Tracy Berger, First American’s senior vice president of real estate sales, notes regulations involving home systems are something REALTORS® need to understand. REALTORS® may need to answer questions from homebuyers and sellers on these new regulations, so it’s an opportunity to explain and deliver value to their clients. “Our sales team provides brokers a tremendous resource to educate their agents and set them apart among their clients,” says Berger. “Having this type of awareness reinforces their value at a much deeper level.” All REALTORS® should talk to their home warranty providers to find out more about how these new regulations could potentially affect their clients.