Energy Policy Modernization Act includes fixes for furnace
rule, regional standards enforcement.
HVACR industry leaders are keeping a watchful eye on a large-scale
bipartisan energy bill that could, among many other things, give the
industry more time to develop a negotiated furnace efficiency standard and help
alleviate the issue of stranded inventory caused by the “installed-by” regional
standards enforcement scheme. The Energy
Policy Modernization Act of 2015, which includes provisions to promote
renewable energy, improve the energy efficiency of buildings, and cut some
planet-warming greenhouse gas pollution, passed the U.S. Senate on April 20 and
the U.S. House of Representatives on May 25 and is expected to begin
conferencing soon.
“We think this legislation provides more options,” said Jon
Melchi, vice president of government affairs and business development for
Heating, Air-conditioning & Refrigeration Distributors International (HARDI). “The furnace
amendment provides for a more open process that will provide a better outcome
than what’s been proposed by the DOE [U.S. Department of Energy], and the
change of installed-by date to manufactured-by date simplifies a complicated
process.”
CALLING FOR COOPERATION
While certain provisions within the House and/or Senate
versions of the bill have received support from industry and environmental
organizations, many differences exist between the House and Senate versions of
the bill that must be reconciled during conferencing. Stakeholders, including
HARDI; Air-Conditioning, Heating, and Refrigeration Institute (AHRI); ACCA; ASHRAE; National Electrical
Manufacturers Association (NEMA);
and the Alliance to Save Energy,
are calling for House and Senate leaders to work together to bridge the gaps
while recognizing the significance of the legislation.
“The passage of the Energy Policy Modernization Act
demonstrates the power of persistent bipartisan leadership by many leaders
throughout the Senate,” said David Underwood, president, ASHRAE.
“This
accomplishment is shared by hundreds of stakeholders who have connected with
members of Congress, helping them understand the complexities and likely
impacts of legislation on the building and many other industries. ASHRAE
congratulates the Senate on this accomplishment and stands ready to assist as
leaders in both chambers work to produce a final bill that the president can
sign, and which truly advances the arts and sciences of HVACR to serve humanity
and promote a sustainable world.”
Kevin Cosgriff, president and CEO, NEMA, also lauded the
legislation, which would increase the adoption of energy-efficient technologies
in homes, schools, commercial buildings, and federal facilities and catalyze
much-needed improvements to the U.S. electric infrastructure, including
transmission, distribution, and energy storage systems, according to a NEMA press release.
“Passage of this legislation shows that improving the energy
efficiency of our nation’s homes, schools, and other buildings, as well as
moving toward a more flexible, resilient, and secure electric grid, are citizen
issues that should — and, in this case, did — rise above partisan paralysis,”
Cosgriff said. “We thank Senate Energy and Natural Resources Committee Chairman
and U.S. Sen. Lisa Murkowski, R-Alaska, and ranking member and U.S. Sen. Maria
Cantwell, D-Washington, for their continued leadership as advocates for energy
efficiency, grid modernization, and the electrical manufacturing industry.”
“The impactful energy-efficiency provisions are the product
of more than four years of hard work and bipartisan leadership by U.S. Sen.
Jeanne Shaheen, D-New Hampshire; U.S. Sen. Rob Portman, R-Ohio; and Murkowski,
alliance honorary board member and Energy and Natural Resources Committee
chair, all of whom refused to give up the fight for American businesses and
consumers to benefit from lower energy bills, a cleaner environment, and a more
energy-secure nation,” said Kateri Callahan, president, Alliance to Save
Energy. “It’s been a long time coming, but Sens. Shaheen, Portman, and
Murkowski have won an important victory for all Americans.”
REGIONAL STANDARDS
Members of the HVACR industry, specifically industry
organizations, have been monitoring a handful of provisions that appear in one
or both versions of the legislation. One such provision in the House bill would
alter the 18-month sell-through period outlined in the regional standards
enforcement rule that currently cuts off installation of 13-SEER products in
the South and Southwest on July 1. Under the provision in the House version of
the Energy Policy Modernization Act, installers in the South and Southwest
would be allowed to continue to install equipment so long as it was
manufactured before July 1, potentially alleviating the issue of stranded
13-SEER inventory in the South and Southwest regions where 14 SEER is now the
law of the land.
“By changing it to date of manufacture, it’ll be easier to
explain to customers, and, therefore, compliance will be at an even higher
level,” Melchi said. “We had some pretty good discussions during the recent
HARDI Congressional Fly-In with both parties about the challenges that the
terms ‘date of installation’ vs. ‘date of manufacture’ impose.”
AHRI also supports the language in the House bill because it
provides more certainty than the current installed-by enforcement plan, said
Cade Clark, vice president of government affairs for AHRI.
“The sell-through period helps our members, from the
manufacturer’s perspective, figure out when they can basically turn off their
manufacturing process,” he said. “If you knew you could produce equipment up
until a certain date, it would provide more security for the manufacturing
process so you could better plan your supply chain and also your distribution
chain. When you have a manufactured-by date that’s soft, it’s harder to plan
around. Having a hard date provides more certainty and ability to plan.”
ACCA also supports the manufactured-by provision in the
House bill, said Bart James, ACCA’s senior vice president of government
relations.
“They use a new term for date of installation instead of date of manufacture —
that was one of the changes we’re interested in,” he said. “We’re all on the
same page in terms of what we’re looking for, and we’re frustrated.”
James added that ACCA is focusing on encouraging the DOE to
promote quality installation instead of only focusing on the equipment itself.
“The groundwork hasn’t been laid for this other than across the industries, and
we’re all in agreement that the DOE and Congress have too long focused on the
box, the equipment. The manufacturers have done a great job with that. But the
DOE is missing, and we the taxpayers are missing, a big opportunity to reduce
energy costs for consumers.”
FURNACE FIX
Both versions of the energy bill include amendments that
offer solutions to the DOE’s controversial 92 percent AFUE proposed rule for
nonweatherized natural gas furnaces, though the industry seems to prefer the
language in the Senate version of the bill.
“The House version, HR 8, gives the DOE the authority to
accept a consensus agreement between stakeholders, or at least a stakeholder
consensus recommendation, and it would prevent the DOE from issuing a final
rule before July 1 of this year but no later than July 21,” said Guido Zucconi,
assistant vice president of congressional affairs, AHRI. “We’re sort of
indifferent to the House language, but because it’s almost July and we’re at an
impasse as to where we think the Btu limits should be for condensing and
noncondensing furnaces, we’ve agreed to wait to see what the DOE comes out with
in the supplemental notice of proposed rulemaking [SNOPR].”
AHRI prefers the Senate language, though they are in
wait-and-see mode, Guido said. “The Senate language is more serious and much
more appealing to where the industry and gas utilities are. It would pause the
current furnace rulemaking, convene a group of stakeholders, and reanalyze the
data the DOE uses to justify 92 percent AFUE. It’d look at technical
challenges, economic justification, and payback periods, and it’d justify that
92 percent does not make sense in the South and that the rule is flawed.
“At that point, the recommendation from the group, if they
were to agree that the data are flawed, would be to vacate the rule and restart
the negotiated rulemaking,” Zucconi continued. “It’d force everybody back to
the table to hammer out an agreement.”
Melchi said HARDI also supports the language in the Senate
bill and is in favor of a negotiated rulemaking.
“Having been through some negotiated rulemakings, it’s not
something that any participants particularly enjoy, but, given the alternative
that the likelihood the standard as proposed will likely end up in litigation
for a third time, we think this is probably the best alternative to that
process,” he said. “The fear we have is that the DOE might go final with the
rule before a compromised energy bill is completed. We don’t believe the
original proposal from the DOE is adequate and feel it’s important that we find
an alternative that everyone can live with — including consumers, who are the
ones mostly impacted by this. Nobody seems to be speaking up for the large
number — one-third of Americans — who are going to lose out.”
Along the same lines of regulatory accountability, AHRI is
also monitoring a provision in the House bill that would make technical
corrections to the Energy Policy and Conservation Act (EPCA).
“One of those main points is clarifying that a test
procedure should come out before the actual NOPR [notice of proposed
rulemaking], so that is laid out in the technical corrections,” Clark said.
“There are a couple other provisions that involve making sure the stakeholder
process is more open, the data are shared, and that they look at the cumulative
burden of regulations.”
“That’s a big one for us, making sure the test procedure is
out first,” Zucconi agreed. “Frankly, it goes against the DOE’s own rules [not
completing the test procedure first].”
UPHILL BATTLE
Despite the bill having bipartisan support in both the House
and Senate, an abbreviated legislative calendar may prove problematic during
conferencing.
“Hopefully, they’ll start sometime in July, but we’re
looking at a very narrow window,” Melchi said. “Congress won’t be in session in
August, and we’re looking at political conventions in July, which will prevent
them from meeting. We have a very narrow window.”
The particularly volatile political climate across the
country may also affect the bill’s chances of passing. Still, industry leaders
are holding out hope it will eventually become law.
“From a macro perspective, it’s exciting to see Congress
take up an energy bill,” Clark said. “We hope the two sides can actually come
together and conference these bills.”
“If they don’t get anything done on this energy bill,
there’s really nothing else that this president is going to get to sign,”
Melchi said. “There may be a few tax extenders at the end of the year, but as
far as putting his thumbprint on something, this is it.”
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