New HVAC standards prompt controversy

Bob Eagle is a Southerner who lives through short winters and long, humid summers in Charlotte, N.C., which averages 1,200 hours of air-conditioning use per year.

Nearly 900 miles to the northwest, Angela Thundercloud enjoys mostly temperate Milwaukee summers but faces brutal winters, when temperatures can dip to 26 below.

Despite the distance and difference in climates, both Eagle and Thundercloud have something in common: They love their air conditioning.

Last fall, Eagle replaced his old A/C system with one of the most efficient and expensive units on the market, a 19 SEER, which costs about $9,000. SEER, or the Seasonal Energy Efficiency Ratio, is a federal rating that divides the machine's cooling output by the power input for an average U.S. climate. The higher the SEER rating, the more efficient the air conditioner - and generally the more expensive it is to buy. But Eagle is already seeing payback in the form of lower bills. "I'm definitely saving," he says.

In Milwaukee, which averages only 600 cooling hours per year, Thundercloud says A/C is a luxury that helps ease her allergy symptoms during the two-and- a-half months of the year she turns it on. Last year, she paid $2,100 to replace her broken-down 30-year-old central-air system, rated at less than 10 SEER, with an 11 SEER system. She considered spending $700 more for a 13 SEER unit but decided she wouldn't be able to recoup the upfront cost.

"If we could have fit it into our budget, I would have liked to have gotten a little more efficient model," says Thundercloud, who adds that even without a high-SEER unit, she's seen a 34-percent reduction in A/C energy use as compared to her old system. "But in Wisconsin, it wouldn't make sense because [the A/C isn't on long enough to] have that big of an impact on energy costs." 

North-South divide

Beginning Jan. 23, 2006, when a new federal mandate goes into effect and raises the minimum SEER standard for central air conditioners and heat pumps from 10 to 13, anyone looking to replace or buy A/C systems will have to make room in their budget for energy efficiency whether there's a payoff or not.

The new standard is creating a modern-day North-South divide, with supporters pointing out that because 13 SEER will increase efficiency by 30 percent, the result will be a cleaner environment and less demand on the nation's power grid, which will benefit the entire country.

"You'll save on your electricity bills because you will use less electricity, but you get another benefit: The price of electricity goes down," says Kit Kennedy of the National Resources Defense Council, which led the fight for 13 SEER. "That's because the lower the demand, the lower electricity prices are."

Meanwhile, critics say the rise in standards will place an unfair financial burden on Northerners, who will be forced to buy 13 SEER A/C units at a cost of 20 to 30 percent more than 10 SEER units. However, they won't recover the initial higher cost in energy savings because they don't run their units nearly as much as their Southern counterparts.

"It's a great thing for places like Las Vegas where they use air conditioning seven months out of the year," says Karl Northern, owner of Northern Heating and Cooling in Indianapolis. "But you go to a place like northern Michigan, and it's a terrible situation because it's going to increase the cost of air conditioning but they won't recoup their investment. It will probably take about 10 years to recover it in Indiana."

Cost concern

Northern points to Department of Energy estimates that new SEER units could cost as much as $700 more than a 10 SEER because of the need for extra copper and steel in the higher-efficiency units, which are generally larger. Consumers like Thundercloud worry that the cost might be prohibitive for other middle-income earners. "Generally, replacing your air conditioning isn't a planned event, and it's a big chunk of money," she says. "My concern is that it will make central air conditioning less affordable."

Rick Ebert of Harster Heating and Air Conditioning in St. Louis shares her worry. "There's a whole lot of people out there who are scratching the bottom to afford anything," he says. "I'll have to tell them, 'I know you don't need this, but it's the least [expensive] we can sell you.' They are going to be floored."

But Kennedy and others argue that the cost of a 13 SEER is likely to drop after it becomes the minimum standard. "History shows that the marketplace ultimately responds and prices do come down," says Mel Hall-Crawford, energy projects manager for the Consumer Federation of America, which sided with the NRDC in favor of 13 SEER.

Hall-Crawford, who admits she was concerned about the North-South disparity and originally argued for a two-tier system, says research from the American Council for an Energy Efficient Economy estimates that the cost difference between a 10 and 13 SEER unit will be less than $200 after the standard changes.

As Harvey Sachs of ACEEE notes, "Even if the DOE figures turn out to be true, the increase in utility prices expected over the 10- to 20-year life of this equipment will make it very cost-effective." And, he adds, in cases where a homeowner installs a heat pump, the savings are even greater because the equipment operates year-round.

Hard-fought win to 13

The 13 SEER fight was hard-won for groups like the NRDC, CFA, ACEEE and a handful of smaller A/C manufacturers already making 13 SEER technology. Their 13 SEER opponents like the Air-Conditioning and Refrigeration Institute, the DOE and most of the big names in the air-conditioning business, including Carrier and Trane, argued that the change would hurt the industry and consumers. The battle was vintage Beltway: political, protracted and passionate.

The United States first stepped in to regulate SEER standards in 1992 when the minimum SEER was set at 10. After seven years of study, in early 2001, in the waning days of his term in office, President Clinton signed an order to raise SEER standards to 13. Just three months later, the Bush administration proposed rolling back the increase to 12, and the DOE came out in support of the 12 rollback saying the industry would take too great a financial hit from a 13 standard.

Houston-based Goodman Manufacturing Company, one of the few A/C manufacturers to support the 13 SEER, disagreed with the DOE's conclusion. "We were in favor of 13 SEER because it was not a complicated number to hit," says Goodman product manager Al Knight. "People were pushing 12, but why not take the jump to 13? The technology was already there." In fact, Goodman was already selling it.

The Environmental Protection Agency weighed in, saying the DOE overstated the financial burden on the industry and a long legal fight began, with the NRDC coalition suing the Bush administration. In January 2004, a federal court ruled against the DOE saying it didn't have the right to roll back the 13 SEER. In April of that year, ARI and air- conditioning manufacturers, realizing time was short and that they needed to focus on developing new products, officially raised the white flag and dropped their challenge to 13 SEER.

"It sounds like, 'Oh, 12 and 13, what's the difference?'" says Kennedy. "The difference between 12 and 13 is 50 power plants in terms of avoided electricity demand. That's a lot of carbon emissions and a lot of smog emissions. That's why we cared about it so much."

Some in the industry applaud the change. "I think it is a great thing, and I welcome it," says Bob Clement, owner of Deljo Heating and Cooling in Chicago, who says he sees payback on the initial  investment even in his cooler-clime city. "I have some people who want to get the 10 SEERs while they still can, but I try to tell them not to for many reasons. For one, there is the efficiency level, and for two, there is resale. If they are going to sell their place, someone might come in and think, 'Why do they have a 10 SEER when 13 is the minimum?'"

Terry Walton of Clyde S. Walton Inc., in Lansdale, Pa., agrees, saying that the impact of the new ruling will affect builders more than homeowners. "New construction often puts in the cheapest appliances," he says. "The only time we sell something lower than a 13 now is in rental units where the property owner doesn't have to pay for the electricity. Given the cost of electricity, we try to recommend that people buy as efficient as they can afford."

Industry leaders, meanwhile, are dusting themselves off after the 13 SEER battle and shifting gears to focus on an issue they say is even more important than the SEER rating: ensuring proper installation. "Homeowners need to understand that to get the 13 SEER operation savings, they have to make sure they have a contractor who replaces not only the outdoor unit, but the indoor coil as well," says Stephen Yurek of ARI. Otherwise, he says, you could be hooking up a 13 SEER outdoor condenser to an 8 SEER indoor coil and losing every last SEER point of savings.

The trade group Air Conditioning Contractors of America warns homeowners with space constraints that the higher-efficiency units are bigger and that trying to squeeze a 13 SEER unit into tightly packed ductwork intended for a 10 SEER machine can affect efficiency as well. "I know that in my house, if I wanted to put a much bigger unit in, I have to tell my wife we're taking out the bathroom and that wouldn't fly," says Glenn Hourahan, vice president of ACCA. "It may be that with the space available, a 10 SEER from today, properly put in, will give them better performance than a 13 SEER squeezed in. It's an individual consideration and this is the time to decide."

Experts also warn homeowners to choose their installer wisely. Improper sizing, duct sealing and refrigerant levels can suck energy and dollars from a home. "Far more important than the equipment, brand or model for any homeowner is getting the right contractor," says Sachs. "Bad airflow rate, bad refrigerant charge level and duct leakage can easily add up to 25 to 50 percent loss of energy efficiency."

Equally important is carefully considering the load capacity of your equipment. "Everyone down the track from the manufacturer to the contractor plays to the consumer attitude that bigger has to be better," Sachs says. "But air conditioners are like shoes. You've got to get the one that fits or it's going to hurt you." In fact, too small is better than too big because an oversized unit cycles on and off too quickly to adequately remove moisture from the air and also uses up more energy.

Northern agrees that better installation can save on energy costs, but he still wonders why SEER standards were targeted for regulation. "It's sort of like they are pointing their finger just toward this industry," he says. "Why not make everyone go to high-efficiency gas furnaces?"

That fight's next. The NRDC is currently ramping up a campaign to change efficiency standards for residential furnaces, Kennedy says - a prospect that might mean another round of North versus South as Sun Belt dwellers ponder their need for energy-efficient heating systems while Northerners prepare to reap the energy savings.


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