At the end of each year, I’m always asked to look at the coming 12 months and give my thoughts on what is going to happen. So, now that it is December 2013, I can say my predictions for the year weren’t too far off. As you know, I like to look back at the current year for clues to what will happen next year. 2013 was a very interesting year for our industry, and I’m willing to bet that 2014 is going to be just as interesting, if not more so.
Regional Standards Up in the Air
Since October 2011, the industry began preparing for regional standards for certain residential heating equipment that were set to go into effect on May 1, 2013. The standards required all non-weatherized natural gas furnaces installed in 30 northern states be at least 90% AFUE. Within two months of being finalized, the American Public Gas Association (APGA) challenged the standards in court. Several HVAC trade associations and energy efficiency advocates joined the lawsuit as intervenors, including ACCA on the side of APGA.
In early 2013, a proposed settlement agreement was reached that would potentially rescind the rule and direct the Department of Energy (DOE) to restart the standard setting process. However, the court has yet to accept or decline the proposed agreement, leaving the lawsuit unresolved.
The lack of a resolution created a lot of uncertainty as the deadline approached for contractors in the 30 states that were being affected by the increased standards. Fortunately, the Court ruled to stay the implementation of the rules until the case is settled. Unfortunately, there is no settlement in sight, and this could lead to more uncertainty as the new standards for air conditioners go into effect on January 1, 2015.
Tax Credits Extension
Congress extended the residential energy tax credits for 2012 and 2013. Unfortunately, the extension for 2012 was retroactive. While it is a nice benefit to homeowners, for contractors, the retroactive implementation has no value, because they are unable to offer them at the time of the sale to encourage the purchase of higher efficiency equipment.
Contractors Feeling Pretty Good
ACCA continues to track how contractors are feeling about short-term growth with its monthly Contractor Comfort Index (CCI). The CCI is now in its third full year of asking contractors how they feel about new business, existing business and employment numbers.
With an index above 50 indicating anticipated growth, 2013 showed that contractors were feeling very confident. Starting in April, the CCI was above 70 for four consecutive months, reaching an all time high of 77 in May and June. The CCI was also consistently higher in 2013, with the exception of March, when compared to 2012.
So, that was a quick look at 2013, but what does it mean for 2014?
There is no doubt that 2014 is going to be another fast-paced year that will keep us all on our toes.
Mid-Term Elections
If you thought all of the election excitement was done for a few years, you were wrong. While 2013 was not a national election year, 2014 is. Mid-term elections will take place in November 2014, and will set the stage for President Obama’s lame duck years, as well as the next presidential election. There is likely to be a lot of hype surrounding these elections, and the attack ads are going to be nastier, as control of the House and Senate are up for grabs.
I encourage all contractors to get involved where they can, because the outcome of these elections will affect which party controls the House and Senate, what bills become laws and may have an effect on the way you do business. At a bare minimum, we should all be marking our calendar for November 4, 2014 to go to the polls.
More Regional Standards Work
I hope that the lawsuit over the Regional Standards’ furnace rules will reach a settlement in 2014, but as we have all seen, this is a long process and can be drawn out.
Regardless of whether there is a resolution, all of us are looking forward to the next milestone date of January 1, 2015, when new regional standards for split system and package system central air conditioners will go into effect. Hopefully the DOE will conduct a rulemaking in 2014 to set an enforcement policy given that contractors will likely face compliance obligations. Again, it is important for contractors to get involved in this rulemaking when stakeholders are asked for comments. If regional standards are to work, they have to have an enforcement policy that is strong enough to protect the compliant contractor from those who shortcut the rules. However, these standards should not be so draconian that they become a paperwork or record keeping burden. The outcome of this rulemaking will have a lasting impact on our industry, so even if you are frustrated by Washington’s tactics, now is not the time to be silent.
R-22 … Again
The Environmental Protection Agency (EPA) released the long delayed production and import allocations for R-22 in April 2013, covering the period of 2011–2014. The delay in finalizing the rule caused a lot of uncertainty about supply and price. Hopefully avoiding another volatile pricing situation like the one that occurred in 2012 and 2013, in mid-December, the EPA released an allocation proposal for 2015–2019. Regardless of whether or not the allocations are finalized before 2015, contractors need to be preparing now for the decline in R-22 in the marketplace, because the next milestone in the phase-out is coming in 2020, when no virgin R-22 will be manufactured or imported.
What Can Contractors Do?
I’ve said it many times before, but the best thing contractors can do to ensure their business is successful is focus on the things they can control. That means focusing on strong business practices, providing education and training opportunities to their teams and getting involved.
ACCA is here to help contractors achieve those goals on all of those levels. We have increased the number of training opportunities available to contractors.
In March, we are heading to the Gaylord Opryland in Nashville, TN, for our annual conference. This year, we created a conference faculty, made up of some of the industry’s most talented and successful contractors and industry experts, to arrange a schedule of learning labs that only covers topics that contractors need to know about to gain the competitive edge in their markets and reach higher levels of success. We hope to see you March 17-20, 2014, for ACCA 2014 – the Business Solutions Conference for Indoor Environment Contractors and the IE3: Indoor Environment & Energy Expo, which is co-sponsored by the Indoor Air Quality Association.
We are also heading to Charlotte, NC, in October, for two of our most popular events; the Service Managers Forum and the Building Performance Forum. These focused training events give contractors and service personnel two days to learn and grow with their peers who are facing the same issues that they are. Mark your calendars now for October 7-8 for the Building Performance Forum and October 9-10 for the Service Managers Forum.
And for those who just can’t leave their businesses for a few days, we offer plenty of online training resources. In 2012, we launched our Residential Design for Quality Installation online certificate program. This online program mirrors the in-person class we hold at ACCA headquarters four times a year, but you can do it from your office or home, at your pace. And in 2014, we will be launching our Commercial Design for Quality Installation online certificate program. Just like the residential program, it will give you the opportunity to get a full grounding of proper commercial design in compliance with the HVAC Quality Installation Specification. So, keep your eyes open for that announcement.
Outside of training, ACCA has many ways that contractors can get involved. We have committees, task forces, councils, the ACCA-PAC and more. Volunteer leaders help make the industry stronger and when we work together for the common good, we all win. So, I would encourage everyone to get involved in 2014, because things aren’t going to slow down and we are likely to see even more regulations come from government agencies like the EPA and DOE.
As you can tell, ACCA has once again been busy developing programs to help contractors continue to be successful. 2014 will be no different; we will continue to listen to contractors and be their voice. While I may not have a crystal ball, I’m confident in saying that 2014 will be another busy, and interesting, year for the indoor environment industry.
Paul T. Stalknecht is president and chief executive officer of the Air Conditioning Contractors of America (ACCA). Contact Paul at 703/575-4477, [email protected] or visit www.acca.org.