Energy Law Will Expose Contractors to Potential Liability

At first glance, it would not appear that p-h-c contractors will be impacted by The Energy Independence and Security Act of 2007; unfortunately, this is not the case.

Despite major setbacks and opposition from both parties, just before Christmas, Congress overcame all obstacles and passed The Energy Independence and Security Act of 2007, a massive piece of legislation meant to create and promote energy efficiency and independence across the nation. President Bush signed the legislation into law on Dec. 18, 2007.

At first glance, it would not appear that p-h-c contractors will be impacted by this new law; unfortunately, this is not the case.

Earlier in the year, the Plumbing-Heating-Cooling Contractors – National Association joined forces with the Air Conditioning Contractors of America and the Heating, Airconditioning & Refrigeration Distributors International to voice opposition to a seemingly non-controversial provision included in the legislation, which will create regional efficiency standards for heating and air conditioning systems. The provision, which was tucked away in the massive piece of legislation, will allow the Department of Energy to establish regional efficiency standards, but only for heating and cooling equipment.

Congress and environmental groups see the idea of regional standards as a way to promote a higher efficiency standard, while helping to conserve energy and save consumers money. PHCC and its industry partners, however, believe proponents of the provision lack any clear evidence to support their claim of increased efficiency or cost savings.

In fact, there has been total disregard for the inevitable increase in costs of heating and air conditioning systems and installation. Homeowners are already faced with increased costs for winter heating bills, due to spikes in oil and gas prices among other economic factors. Because of the new “regionalization” provision, some homeowners will be forced to simply repair and maintain older, less efficient systems rather than replacing them with high efficiency systems due to price constraints. This completely contradicts the whole premise for the new provision.

PHCC believes that the new regional standards provision, included in the energy bill, will be a detriment to its contractor members and their businesses. Unfortunately for both contractors and consumers, under the new law the northeast section of the country will be forced to operate under higher heating standards and consumers in the South will be forced to operate under higher cooling standards, creating both confusion and increased costs in the marketplace.

It is unclear why Congress felt compelled to implement new regulations. Under current law, heating and cooling equipment is already subject to national federal standards. It appears the sole reasoning behind the regionalization provision was simply to pacify environmental advocates who lobbied for a radical new strategy.

Under the new law, PHCC members, other contractors and distributors will be exposed to potential liability in the event the wrong equipment is sent to the wrong region. In addition, it is our feeling that this new standard could potentially create an underground market for systems that will no longer be legal once the regulation is implemented. Due to the increase in operating costs, service providers such as p-h-c contractors will be forced to pass on extra expenses to the consumer. PHCC, together with our industry partners, favor one national standard that applies to all states, which allows for products and services to move seamlessly from state to state, thereby creating a uniform standard around the country.

Despite good intentions, this provision will have major unintended consequences on not only the p-h-c contractor community, but on distributors as well. According to HARDI, the industry already supplies and installs high-efficiency systems throughout the country where there is a demand and means. There is a growing percentage of the market, however, that cannot justify the investment in high-efficiency heating or cooling systems because of their higher equipment and installation costs and the likelihood that owners of town and row houses, condominiums, apartments and duplexes will never see the payback from energy savings during their average time in the property. Under the new regionalization standards, nearly 20 million homeowners will more than likely lose access to affordable new heating or cooling systems.

The anticipated outcomes of this legislation will be increased equipment costs and limited consumer choice and product availability. It also will restrict our industry’s ability to promote high-efficiency products. However, the legislation has been passed and PHCC is determined to make its language is as contractor-friendly as possible. We will move forward and make sure our input is considered in the final standards.

Though the Energy Bill has been signed into law by the President, the time frame for implementation of the regional standards provision is uncertain. The Department of Energy will be required to begin a rule-making process which could take up to two years, during which a time period will be allotted for public comment. PHCC, along with our industry partners, will take the opportunity to be a part of the process. Due to the federal rule-making process, it is highly unlikely that we will see the regionalization standard mandated before the year 2012 and possibly much later.

In the meantime, we encourage p-h-c contractors to contact us with your thoughts on how this standard could be implemented most effectively for you. E-mail me at [email protected], or call 800/533-7694.

Jessica Johnson Bennett is the new director of government relations for Plumbing-Heating-Cooling Contractors – National Association. She came to PHCC from the Mason Contractors Association of America, where she was director of government affairs.