By:Jen Anesi
Industry, Congress insist 92 percent AFUE furnace rule places ‘unnecessary burden’ on homeowners
On June 8, 121 members of the U.S. House of Representatives sent a letter to U.S. Department of Energy (DOE) Secretary Ernest Moniz urging the agency to reconsider its recently proposed 92 percent AFUE nationwide residential furnace standard. The current national standard for residential natural gas furnaces is 80 percent AFUE.
In the letter authored by U.S. Rep. Mo Brooks, R-Alabama, Brooks and 120 undersigned members of the House — including 116 Republicans and four Democrats — said they are “extremely concerned that requiring the elimination of the economical and efficient noncondensing furnace will place an unnecessary burden on already struggling homeowners in our states,” and that “by setting a nationwide energy-efficiency standard that precludes a consumer from choosing to install a noncondensing furnace, the DOE will be forcing many homeowners to either abandon the use of natural gas to heat their homes or pay substantially more for the installation of a furnace that meets the new standard.”
In the letter, Brooks, who serves on the House Subcommittee on Energy and Power, also strongly encouraged Moniz to “avoid such an ‘either-or’ approach to furnace efficiency by establishing separate product classes for condensing and non condensing furnaces, each with its own efficiency standard.”
According to Air-Conditioning, Heating, and Refrigeration Institute (AHRI), which took to Twitter to thank Brooks and others for asking the DOE to reconsider the proposed standard, the letter comes on the heels of a House Subcommittee on Energy and Power hearing held the first week of June, during which the deputy assistant secretary for energy efficiency, Kathleen Hogan, was questioned by members about the impact of the proposed rule.
The hearing also included a discussion on the financial impact of replacing a noncondensing furnace as well as concern over a high national AFUE standard for areas of the country that have warmer climates.
“It doesn’t seem like any stakeholders are comfortable with a rule that could saddle so many with a furnace that will never pay for itself through energy savings,” said Charlie McCrudden, senior vice president of government relations for ACCA. “DOE’s own analysis shows that 10 percent of installs in the North — and, remarkably, 31 percent of installs in the South — will not have a positive payback over the lifetime of these furnaces.… This letter highlights the fact that there are alternatives out there and supports the idea of giving stakeholders time to find that solution.”
DEMONSTRATING CONCERN
Brooks’ letter is being lauded by the HVACR industry, which has generally opposed the proposed 92 percent efficiency standard largely due to the significant impact it would have on the design, installation, and cost of nonweatherized residential natural gas furnaces.
There are also many questions left unanswered, said Jon Melchi, vice president of government affairs and business development for Heating, Air-conditioning, and Refrigeration Distributors International (HARDI), which is concerning to HARDI’s members and other stakeholders.
“While a jump to 92 percent is going to reduce the amount of product inventory some people have to carry, which is not a bad thing for distributors, the longterm question is, ‘Are you actually going to cannibalize energy savings and sales by making a standard so high that people opt not to replace their aging equipment?’” Melchi asked. “Unfortunately, heating is not a luxury item, and homeowners don’t have an option on this, which means they’re going to do whatever they can do to make their existing system work.
“That’s not even getting into the safety concerns of someone trying to install a condensing furnace on the cheap and not using an ACCA-; PHCC [Plumbing, Heating, Cooling Contractors Association]-; or NATE [North American Technician Excellence]-certified contractor who can install it and vent it properly,” Melchi continued.
ACCA, which has actively participated in the U.S. Department of Energy’s (DOE’s) notice-and-comment rulemaking procedures, is pleased with Rep. Brooks and his fellow representatives sending “such a broad-based bipartisan letter … outlining the problems associated with the proposed rule,” McCrudden said. “This letter demonstrates concern by many members of Congress with the proposed DOE standard, and it recommends the agency find an alternative by establishing separate product classes and standards to reflect the differences between noncondensing and condensing furnaces. It’s a positive sign that so many lawmakers recognize the problems associated with the proposed rule and calling for an alternative solution.”
Melchi said HARDI is “grateful that Congressman Brooks and his colleagues in the House have listened to their constituents and asked the DOE to find an alternative solution,” adding that it shows the DOE there is a broader interest in this topic.
“For 121 members of the House to sign onto a letter saying, ‘Hey, this proposal from DOE could have a negative impact on a large number of my constituents,’ it shows the industry’s done a good job of reaching our representatives and communicating what’s happening,” Melchi said. “I know a lot of those people signed on directly after HARDI’s Congressional Fly-In, during which we talked about this issue with a lot of different offices, both Republican and Democrat. When we talked with congressional officeholders and their staff, they seemed to grasp what was going on with the issue. I think they seem to understand the challenges it puts on the industry and consumers. It’s a complex issue, but they’re interested in learning about it.”
ALTERNATIVE SOLUTIONS
In his letter, Brooks suggests creating two separate product classes for condensing and noncondensing furnaces — a concept that is not new and has had support in the past.
“ACCA’s comments to the 2011 Direct Final Rule [DFR] setting regional standards for residential furnaces recommended a rule with separate product categories, as did other stakeholders,” McCrudden said. “It preserves the ability to install a noncondensing furnace where appropriate while maintaining higher standards on condensing furnaces that nearly half of Americans choose to install in their homes.”
Another option the DOE could consider is to utilize negotiated rulemaking to involve all stakeholders in the process, as it has done with regional standards enforcement and national efficiency standards for commercial warm air furnaces (CWAF) and commercial unitary air conditioners (CUAC).
A negotiated rulemaking could result in a better outcome for all involved, McCrudden said. “We hope they [DOE] recognize the flaws and problems with the proposed rule and pivot toward something better when they publish the final rule. However, a better outcome is likely to be found through negotiations with all stakeholders. This could be done under the ASRAC [Appliance Standards and Rulemaking Federal Advisory Committee] process in which most stakeholders have participated or through legislative text that directs the DOE to make the appropriate changes.”
HARDI would “certainly” be interested in a negotiated rulemaking, Melchi said. “The question is, would all the other parties be interested? And, would the DOE? I don’t know. If anything, over the last year and a few months, the HVAC industry has shown we’re interested in doing whatever it takes to find workable solutions to these problems. If that’s sitting in a negotiated rulemaking, that’s something we’re willing to do over and over again. I hope that shows the other stakeholders we’re serious about finding a good solution to this problem. It’s quite clear that a 92 percent national standard is a big problem for a lot of people.”
ASKING FOR MORE TIME
For now, the industry and other stakeholders are simply asking for more time to figure out what to do next. A Senate bill introduced by U.S. Sen. John Hoeven, R-North Dakota, in April — S 1029: “a bill to amend the Energy Policy and Conservation Act to prohibit the Secretary of Energy from prescribing a final rule amending the efficiency standards for residential nonweatherized gas furnaces or mobile home furnaces until an analysis has been completed and for other purposes” — would give stakeholders more time to find an alternative solution. The bill was assigned to the Senate Committee on Energy and Natural Resources, which will consider it before possibly sending it to the House or Senate.
“If passed, the legislation — as currently drafted — would prohibit the DOE from finalizing the rule until stakeholders have a chance to sit down and find an alternative option so that millions of homeowners don’t face the possibility of never seeing a positive payback from a new furnace,” McCrudden said.
HARDI supports the bill because it could allow stakeholders to find an alternative solution, Melchi said. “Maybe that’s separate standards for condensing and noncondensing furnaces, and maybe it’s not. The best guess I can venture is, if we don’t come to an agreement and the 92 percent furnace standard is finalized by the DOE, I think there will likely be litigation again, which will mark the third time in recent memory that a furnace standard has been litigated — the first time by the energy-efficiency advocates and the second time by APGA [American Public Gas Association], HARDI, and ACCA. I don’t think anybody wants to litigate this proposal in court. This path leads to a lot of uncertainty, and it’s not good for anybody. It’s taking time away from other things we’d like to be doing.”
The 92 percent proposed standard is just one of the DOE’s rulemakings to be challenged recently by stakeholders, and it’s unlikely to be the last. In the meantime, industry organizations are on alert and waiting to see what happens next.
“The DOE has the ability to propose an increase in efficiency standards for these products,” Melchi said. “But, you have to question sometimes that, just because they have that ability, it doesn’t mean it’s the right thing to do. And, when they do so, I think it’s important that everybody’s input is considered and the data used to justify such increases are able to be supported by facts.”
On June 8, 121 members of the U.S. House of Representatives sent a letter to U.S. Department of Energy (DOE) Secretary Ernest Moniz urging the agency to reconsider its recently proposed 92 percent AFUE nationwide residential furnace standard. The current national standard for residential natural gas furnaces is 80 percent AFUE.
In the letter authored by U.S. Rep. Mo Brooks, R-Alabama, Brooks and 120 undersigned members of the House — including 116 Republicans and four Democrats — said they are “extremely concerned that requiring the elimination of the economical and efficient noncondensing furnace will place an unnecessary burden on already struggling homeowners in our states,” and that “by setting a nationwide energy-efficiency standard that precludes a consumer from choosing to install a noncondensing furnace, the DOE will be forcing many homeowners to either abandon the use of natural gas to heat their homes or pay substantially more for the installation of a furnace that meets the new standard.”
In the letter, Brooks, who serves on the House Subcommittee on Energy and Power, also strongly encouraged Moniz to “avoid such an ‘either-or’ approach to furnace efficiency by establishing separate product classes for condensing and non condensing furnaces, each with its own efficiency standard.”
According to Air-Conditioning, Heating, and Refrigeration Institute (AHRI), which took to Twitter to thank Brooks and others for asking the DOE to reconsider the proposed standard, the letter comes on the heels of a House Subcommittee on Energy and Power hearing held the first week of June, during which the deputy assistant secretary for energy efficiency, Kathleen Hogan, was questioned by members about the impact of the proposed rule.
The hearing also included a discussion on the financial impact of replacing a noncondensing furnace as well as concern over a high national AFUE standard for areas of the country that have warmer climates.
“It doesn’t seem like any stakeholders are comfortable with a rule that could saddle so many with a furnace that will never pay for itself through energy savings,” said Charlie McCrudden, senior vice president of government relations for ACCA. “DOE’s own analysis shows that 10 percent of installs in the North — and, remarkably, 31 percent of installs in the South — will not have a positive payback over the lifetime of these furnaces.… This letter highlights the fact that there are alternatives out there and supports the idea of giving stakeholders time to find that solution.”
DEMONSTRATING CONCERN
Brooks’ letter is being lauded by the HVACR industry, which has generally opposed the proposed 92 percent efficiency standard largely due to the significant impact it would have on the design, installation, and cost of nonweatherized residential natural gas furnaces.
There are also many questions left unanswered, said Jon Melchi, vice president of government affairs and business development for Heating, Air-conditioning, and Refrigeration Distributors International (HARDI), which is concerning to HARDI’s members and other stakeholders.
“While a jump to 92 percent is going to reduce the amount of product inventory some people have to carry, which is not a bad thing for distributors, the longterm question is, ‘Are you actually going to cannibalize energy savings and sales by making a standard so high that people opt not to replace their aging equipment?’” Melchi asked. “Unfortunately, heating is not a luxury item, and homeowners don’t have an option on this, which means they’re going to do whatever they can do to make their existing system work.
“That’s not even getting into the safety concerns of someone trying to install a condensing furnace on the cheap and not using an ACCA-; PHCC [Plumbing, Heating, Cooling Contractors Association]-; or NATE [North American Technician Excellence]-certified contractor who can install it and vent it properly,” Melchi continued.
ACCA, which has actively participated in the U.S. Department of Energy’s (DOE’s) notice-and-comment rulemaking procedures, is pleased with Rep. Brooks and his fellow representatives sending “such a broad-based bipartisan letter … outlining the problems associated with the proposed rule,” McCrudden said. “This letter demonstrates concern by many members of Congress with the proposed DOE standard, and it recommends the agency find an alternative by establishing separate product classes and standards to reflect the differences between noncondensing and condensing furnaces. It’s a positive sign that so many lawmakers recognize the problems associated with the proposed rule and calling for an alternative solution.”
Melchi said HARDI is “grateful that Congressman Brooks and his colleagues in the House have listened to their constituents and asked the DOE to find an alternative solution,” adding that it shows the DOE there is a broader interest in this topic.
“For 121 members of the House to sign onto a letter saying, ‘Hey, this proposal from DOE could have a negative impact on a large number of my constituents,’ it shows the industry’s done a good job of reaching our representatives and communicating what’s happening,” Melchi said. “I know a lot of those people signed on directly after HARDI’s Congressional Fly-In, during which we talked about this issue with a lot of different offices, both Republican and Democrat. When we talked with congressional officeholders and their staff, they seemed to grasp what was going on with the issue. I think they seem to understand the challenges it puts on the industry and consumers. It’s a complex issue, but they’re interested in learning about it.”
ALTERNATIVE SOLUTIONS
In his letter, Brooks suggests creating two separate product classes for condensing and noncondensing furnaces — a concept that is not new and has had support in the past.
“ACCA’s comments to the 2011 Direct Final Rule [DFR] setting regional standards for residential furnaces recommended a rule with separate product categories, as did other stakeholders,” McCrudden said. “It preserves the ability to install a noncondensing furnace where appropriate while maintaining higher standards on condensing furnaces that nearly half of Americans choose to install in their homes.”
Another option the DOE could consider is to utilize negotiated rulemaking to involve all stakeholders in the process, as it has done with regional standards enforcement and national efficiency standards for commercial warm air furnaces (CWAF) and commercial unitary air conditioners (CUAC).
A negotiated rulemaking could result in a better outcome for all involved, McCrudden said. “We hope they [DOE] recognize the flaws and problems with the proposed rule and pivot toward something better when they publish the final rule. However, a better outcome is likely to be found through negotiations with all stakeholders. This could be done under the ASRAC [Appliance Standards and Rulemaking Federal Advisory Committee] process in which most stakeholders have participated or through legislative text that directs the DOE to make the appropriate changes.”
HARDI would “certainly” be interested in a negotiated rulemaking, Melchi said. “The question is, would all the other parties be interested? And, would the DOE? I don’t know. If anything, over the last year and a few months, the HVAC industry has shown we’re interested in doing whatever it takes to find workable solutions to these problems. If that’s sitting in a negotiated rulemaking, that’s something we’re willing to do over and over again. I hope that shows the other stakeholders we’re serious about finding a good solution to this problem. It’s quite clear that a 92 percent national standard is a big problem for a lot of people.”
ASKING FOR MORE TIME
For now, the industry and other stakeholders are simply asking for more time to figure out what to do next. A Senate bill introduced by U.S. Sen. John Hoeven, R-North Dakota, in April — S 1029: “a bill to amend the Energy Policy and Conservation Act to prohibit the Secretary of Energy from prescribing a final rule amending the efficiency standards for residential nonweatherized gas furnaces or mobile home furnaces until an analysis has been completed and for other purposes” — would give stakeholders more time to find an alternative solution. The bill was assigned to the Senate Committee on Energy and Natural Resources, which will consider it before possibly sending it to the House or Senate.
“If passed, the legislation — as currently drafted — would prohibit the DOE from finalizing the rule until stakeholders have a chance to sit down and find an alternative option so that millions of homeowners don’t face the possibility of never seeing a positive payback from a new furnace,” McCrudden said.
HARDI supports the bill because it could allow stakeholders to find an alternative solution, Melchi said. “Maybe that’s separate standards for condensing and noncondensing furnaces, and maybe it’s not. The best guess I can venture is, if we don’t come to an agreement and the 92 percent furnace standard is finalized by the DOE, I think there will likely be litigation again, which will mark the third time in recent memory that a furnace standard has been litigated — the first time by the energy-efficiency advocates and the second time by APGA [American Public Gas Association], HARDI, and ACCA. I don’t think anybody wants to litigate this proposal in court. This path leads to a lot of uncertainty, and it’s not good for anybody. It’s taking time away from other things we’d like to be doing.”
The 92 percent proposed standard is just one of the DOE’s rulemakings to be challenged recently by stakeholders, and it’s unlikely to be the last. In the meantime, industry organizations are on alert and waiting to see what happens next.
“The DOE has the ability to propose an increase in efficiency standards for these products,” Melchi said. “But, you have to question sometimes that, just because they have that ability, it doesn’t mean it’s the right thing to do. And, when they do so, I think it’s important that everybody’s input is considered and the data used to justify such increases are able to be supported by facts.”
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