For immediate release
June 25, 2010
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The Air Conditioning Contractors of America (ACCA), the nation's largest association of professional environmental systems contractors, has communicated its concern to the U.S. Senate about home retrofit rebate legislation they are considering, popularly known as "Home Star."

A version of Home Star passed the U.S. House in May, and that legislation addressed some, but not all, of ACCA's issues. The companion Senate legislation has been stalled, its future uncertain; despite this, ACCA has been meeting with officials and staffers on Capitol Hill, expressing its concerns with the ability of the legislation as written to actually create sustainable jobs and improve energy efficiency.

"We are certainly supportive of the goals of this legislation, to make American homes more energy efficient, and provide much-needed jobs in the construction industry," said John Sedine, ACCA Chairman and president of Engineered Heating & Cooling in Michigan, as the association publicly released the text of a letter sent today to the chairmen and ranking members of the Senate Finance Committee and Energy & Natural Resources Committee. "Unfortunately, certain provisions in this legislation make the achievement of these goals actually less likely."

Specifically, the association is concerned about the structure of the rebate program in the Senate bill, which would require contractors to discount bills upfront and wait to receive payment from a rebate aggregator. "Requiring contractors to become bankers means that many small businesses -- the small business that are the driving force of our fragile economic growth! -- will not be able to participate in this program at all, even though they may be very well qualified to do so, simply because they can't afford to take the financial risk," Sedine says.

In the House version of Home Star, a last-minute amendment attempted to address ACCA's concern on this issue, requiring rebates be sent to the homeowners after sale. However, the Senate legislation, as written, would still require contractors to float loans on their customers' behalf.

ACCA is also concerned that one section of the legislation, known as "Gold Star," will turn what should be a "quick-hit" bill promoting jobs and energy efficiency for the entire country, into a jobs bill for just a few states. This part of the legislation offers larger rebates for work that enhances a home's entire energy performance, but requires that work be done by businesses "accredited" by a group called the Building Performance Institute (BPI).

In the association's letter to Senators Jeff Bingaman, Max Baucus, Lisa Murkowski, and Charles Grassley, ACCA President & CEO Paul Stalknecht wrote, "ACCA is concerned that the accreditation requirement will limit the choice for homeowners who may want to take advantage of the Gold Star rebates that are determined by whole home energy improvements. Currently, 29 states do not have a single contractor who could offer homeowners a pathway to Gold Star rebates. At the same time, New York and New Jersey, where more than 86% of all BPI accredited contractors are located, could absorb the bulk of rebate funds in the first year alone."

He continued, "Aside from the accreditation requirement, Gold Star rebates only require a contractor to determine the simulated energy consumption of the home before and after the energy saving retrofit. Many professional contractors who may not be accredited by BPI could otherwise meet the obligations under the Gold Star rebate program to use the approved modeling software, install the eligible energy saving measures properly, and provide the homeowner with documentation of the overall energy savings."

The full text of ACCA's letter to the Senate is below:

Dear Chairmen Bingaman and Baucus and Ranking Members Murkowski and Grassley:

On behalf of the more than four thousand members of the Air Conditioning Contractors of America, I am writing to voice the concerns of heating, ventilation, air conditioning, and refrigeration (HVACR) contractors regarding the format and structure of the Home Star Retrofit Rebate Program proposed in S. 3434, the Home Star Energy Retrofit Act of 2010. While ACCA supports the overall concept of the Home Star incentive program, we want to ensure the proposal capitalizes on its job creation and energy conservation potential.

As contractors who would install energy efficient appliances eligible for rebates under the proposed Home Star program, ACCA members are concerned that the Home Star Retrofit Rebate Program may discriminate against many of the small businesses that are otherwise very capable of meeting the program requirements. As a result, the Home Star Retrofit Rebate Program may result in limited consumer choices, which in turn will impact the bill’s job creation potential and effectiveness in helping homeowners make energy efficient retrofits.

Section 103 (a)(4) of S. 3434 requires contractors “to provide the owner of a home, through a discount, the full economic value of all rebates received.” This provision forces any contractor wishing to offer home owners retrofits eligible for Silver Star or Gold Star rebates to extend the value of the rebate on the invoice as a discount, then wait for reimbursement from the approved Rebate Aggregator.

Unlike the popular 25C tax credits which do not place any restrictions on which contractors can offer them, a homeowner’s only method of accessing a Home Star rebate would be through a contractor who has the financial resources to float the rebate amount to a homeowner as a short term loan.

Like most small businesses in the construction and home service industries, HVACR contractors struggle with cash flow issues in a tight economy. With potentially thousands of dollars in Silver Star and Gold Star rebates available on each project, small contractors will be limited in the number of projects they would be able to carry, if any. Meanwhile, large employers, with their stronger financial footing, would hold a competitive advantage over their competition.  

The small business owners of the HVACR industry got into business to create jobs and provide homeowners with indoor comfort and energy efficient solutions, not to act as banks for their customers. A “contractors rebate” would be an unbearable burden for many small business owners and few contractors are in the position to float such rebates.

The House passed version of the Home Star legislation (H.R. 5019) had it right by requiring rebates to be sent directly to the homeowner. A homeowner rebate does not require the contractor to float the rebate, creates better opportunities to create good paying jobs, while still granting the homeowners a substantial incentive to reach for higher efficiency improvements that will lead to lower utility costs. 

ACCA is also concerned that, under Section 103(b), only contractors who meet the definition of a qualified contractor and who are accredited by the Building Performance Institute (or who meet requirements not yet set by the Secretary of Energy and the Administrator of the EPA) may offer homeowners the more valuable Gold Star rebates.

ACCA is concerned that the accreditation requirement will limit the choice for homeowners who may want to take advantage of the Gold Star rebates that are determined by whole home energy improvements. Currently, twenty nine states do not have a single contractor who could offer homeowners a pathway to Gold Star rebates. At the same time, New York and New Jersey, where more than 86% of all BPI accredited contractors are located, could absorb the bulk of rebate funds in the first year.

Aside from the accreditation requirement, Gold Star rebates only require a contractor to determine the simulated energy consumption of the home before and after the energy saving retrofit. Many professional contractors who may not be accredited by BPI could otherwise meet the obligations under the Gold Star rebate program to use the approved modeling software, install the eligible energy saving measures properly, and provide the homeowner with documentation of the overall energy savings.

In order to remedy this situation, ACCA urges the Senate to expand the opportunities for homeowners to obtain the Gold Star rebates for energy saving retrofits in the legislation. Otherwise, the job creation benefits of the Home Star Retrofit Rebate Program may not materialize.

According to the U.S. Energy Information Administration, nearly 50% of a home’s overall energy use comes from space heating and cooling. In the 2005 Residential Energy Consumption Survey (the latest completed survey), 39% of the residential central air conditioners and 60% of residential heating equipment were found to be more than 10 years old. The good news is that in the last fifteen years, the performance and energy efficiencies for central air conditioners, heat pumps, and furnaces have increased tremendously through industry research and development.

Recognizing the potential gains in efficiency and comfort through these Home Star eligible HVAC improvements and the significant costs of investment, it’s imperative that home owners be able to take advantage of all possible options, including when choosing a contractor to provide them with access to Gold Star rebates.

ACCA has a long history of supporting federal incentives that encourage homeowners and building owners to make energy conservation retrofits. We hope that changes can be made to the Home Star proposal moving through the Senate to maximize the job creation and energy conservation benefits of the bill. Please do not hesitate to contact me should you have any questions.

Sincerely,

Paul T. Stalknecht
President & CEO
Air Conditioning Contractors of America

For more than forty years, the Air Conditioning Contractors of America has served the educational, policy and technical interests of the small businesses that design, install, and maintain indoor environmental systems. ACCA is a non-profit organization with members in all 50 states and over 20 countries. Learn more at www.acca.org.

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