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New government air conditioning standards cause significant increase in HVAC repair costs beginning Jan. 1st





 Image depicting inefficient HVAC units' wasting money and pushing power bills through the roof.

 


GDO Report - Printed with explicit permission from Carol Werner, Executive Director of EESI (obtained by phone 2/16/06 5:48pm)

 


 

ATLANTA - New government restrictions in the air conditioning industry known as "Seer 13*" went into effect on January 1st, forcing a dramatic in HVAC equipment and repairs. 

From 1990 to 2000, appliance efficiency standards reduced consumer energy bills by approximately 50 billion dollars.  As of 2000, the standards reduced U.S. carbon emissions from fossil fuel consumption by nearly two percent. While equipment prices have modestly risen under the standards, Lawrence Berkeley National Laboratory research indicates that the benefit energy savings are more than three times the cost on a net-present value basis.

In 2000, standards reduced the peak generating needs by approximately 21,000 megawatts (MW), which is the same as seventy 300 MW power plants. As old appliances are replaced by new ones the positive impact of the energy efficiency standards will continue to grow. From 1990 to 2030, it is estimated that consumers and businesses will save approximately $186 billion (1997 dollars) just from the existing standards that have been adopted.

Currently, the debate concerning appliance efficiency standards has revolved around the Bush Administration’s proposal to weaken the standard for air conditioners from the SEER 13 standard set by the Clinton Administration to a SEER 12.   

Air Conditioner Efficiency Standards: SEER 13 vs. SEER 12

What is SEER? How does it apply to the energy efficiency of air conditioners?

The efficiency of central air conditioning units is governed by U.S. law and regulated by the U.S. Department of Energy (DOE). Every air conditioning unit is assigned an efficiency rating known as its “seasonal energy efficiency ratio” (SEER). The SEER is defined as the total cooling output (in British thermal units or Btu) provided by the unit during its normal annual usage period divided by its total energy input (in watt-hours) during the same period.

Why is air conditioner efficiency currently an issue?

After finalizing a seven-year public review process, the Clinton Administration improved the air conditioner efficiency standard from SEER 10, which was established by Congress in 1987, to SEER 13. The change from SEER 10 to SEER 13 represented a 30 percent improvement in energy efficiency.  The Clinton Administration decision required all new air conditioning equipment sold in the United States to comply with the SEER 13 standard by January 2006. In April 2001, however, the Bush Administration addressed the possibility of weakening the standard to SEER 12, and in July, DOE formally proposed to roll back the standard.

Prior to the August recess, the House of Representatives passed H.R. 4, the “Securing America’s Future Energy (SAFE) Act of 2001.”  In H.R. 4, the House followed the Bush Administration and passed a weakened standard for air conditioners of SEER 12, instead of SEER 13.

In October 2001, the U.S. Environmental Protection Agency (EPA) officially commented on the DOE proposed roll back ruling.  EPA stated that DOE overstated the regulatory burden and the financial pressures on the air conditioning industry and understated the savings benefits of the SEER 13 standard.  The Deputy Administrator of EPA stated, “EPA believes there is a strong rationale to support a 13 SEER standard.”      

The issue of SEER 13 vs. SEER 12 now stands before the Senate to be addressed when the “Energy Policy Act of 2002” (S.517) is considered on the Senate floor.  S.517 contains a provision setting a SEER 13 air conditioner efficiency standard (Sec. 927), but a motion to strike or weaken Sec. 927 is expected.

What is gained in making a SEER 13 standard rather than a SEER 12?

According to EPA, a SEER 13 standard represents a 30 percent increase in minimum energy efficiency requirements for air conditioners, in contrast to a 20 percent increase with a SEER 12 standard.  According to DOE, 4.2 quadrillion Btu, or quads of energy, will be saved between 2006 and 2030 by a SEER 13 standard. 4.2 quads of energy is the equivalent to the annual energy use of 26 million U.S. households, which has a net savings of approximately $1 billion to the consumer by 2020. On the other hand, a SEER 12 standard will only save three quads of energy during the same time period. 

A SEER 13 standard will also accomplish more in reducing fossil fuel consumption and limiting air pollution. The construction of 39 400-megawatt power plants will be avoided by adopting the SEER 13 standard, which will reduce smog forming nitrous oxides (NOx) emissions by up to 85,000 metric tons and cutting greenhouse gas emissions (the gases responsible for global warming) by up to 33 million metric tons (Mt) of carbon. In contrast, a SEER 12 standard would only avoid the construction of 27 400-megawatts power plants, reducing 73,000 metric tons of NOx and 24 Mt of carbon. Power plants are major sources of greenhouse gases and the emissions that cause smog, acid rain and soot pollution. At a time when many areas throughout this nation are struggling to improve their air quality and public health the differences in avoided emissions between SEER 13 and SEER 12 are significant. Since air conditioners run most on hot days, the rollback would increase pollution precisely when air quality problems are at their worst.

What are the Myths about the SEER 13 standard…what are the FACTS?   

Myth #1: The SEER 13 standard hurts low-income families.

FACTS: 

·        The incremental cost of improved efficiency is three to eight percent of current equipment costs.  For most families, the extra cost will be made up through lower utility bills within three and a half years. Central air conditioners last about 18 years.

·        Most low-income families with central air conditioning rent their homes, so they benefit from the energy savings but do not bear equipment costs.

·        Relatively few low-income families actually ever purchase or own a central air conditioner, a product that costs between $2,000 and $5,000.  

·        Saving money on monthly utility bills is just as important for low-income families as for wealthier people, which is why consumer and low-income advocacy organizations like the Consumer Federation of America, the National Consumers League, the National Consumer Law Center and several state community action agencies support the SEER 13 standard.

                                                    

Myth #2: Utility bill savings will not cover the cost of going to a SEER 13 standard.

FACTS: 

·        The American Council for an Energy-Efficient Economy (ACEEE) estimates that the incremental cost of a SEER 13 unit relative to today’s minimum standard SEER 10 unit will be about $171.  With typical household savings of $48 per year based on current national average electricity prices, the higher standard pays for itself in about 3.5 years. Central air conditioners last about 18 years.

·        If prices for power go up (particularly in the summer), the consumer payback will be even quicker.

·        History shows that manufacturers’ predictions of huge price increases due to higher standards prove false.  In the 1980s, the air conditioner industry predicted that the 1992 standard would increase prices by more than $700.  U.S. Department of Commerce data show that prices did not go up at all.  Now, some manufacturers are again claiming a new standard will increase prices by more than $700.

·        The truth is that the market determines prices, not industry or government projections.  When faced with the need to compete for the business of price-conscious consumers, manufacturers have a very good track record of meeting standards with minimal price increases.

 

Myth #3:  The higher standard will prevent people from replacing their old air conditioners because of the extra cost.  As a result, people will stick with old, inefficient air conditioners causing the nation to use more energy.

FACT:  SEER 13 adds three to eight percent to the cost of a purchase relative to a SEER 10 unit.  When compared to the weaker SEER 12 standard that some in the industry and the Bush Administration support, the price difference is even smaller (about 2 to 4 percent).  It would seem unlikely that droves of consumers will decide to repair rather than replace an old broken-down energy-hog system over such a small price differential on a $2,000 to $5,000 purchase.

 

Myth #4: SEER 13 units are much bigger than SEER 10 or SEER 12 units, so major renovations will be required to fit them into existing homes.

FACT:  Some SEER 13 units are significantly bigger, but many are not.  For example, Goodman Manufacturing makes SEER 13 units using non-proprietary technology that are only about three inches larger than their basic units.  The size of the unit depends on the technologies that a manufacturer uses to improve efficiency; SEER 13 units of all sizes are made now and will be available in the future.

 

Myth #5: The higher standard is burdensome for small manufacturers.

FACTS:

·        Much of this claim is based on specialty products for markets like manufactured housing, where space constraints limit efficiency with conventional technology.  However, DOE said in the final rule that it was open to exemptions, which is a more appropriate way to deal with such situations than weakening the standard across the board.

·        Goettl Air Conditioning, a small manufacturer based in Arizona, supports the stronger standard.  Goettl notes that SEER 13 technology will have been made widely available for more than a decade to all manufacturers by 2006 when this standard becomes effective. 

 

Myth #6: Eighty-four percent of all models currently sold will be eliminated.

FACTS: 

·        While true, this should not be surprising.  95 percent of refrigerator models sold in 1997 were eliminated by the refrigerator standard that went into effect in July 2001, and the appliance manufacturers support that standard. 

·        Most units sold today just meet the current minimum standard.  In today’s market, SEER 13 units are premium products sold with high markups to less price conscious consumers.  Once the new standard goes into effect, the vast majority of units will just meet SEER 13, and manufacturers will reestablish new premium lines with higher SEERs and other premium features. 

·        There are hundreds of distinct models on the market today that meet or exceed SEER 13.  Some have SEER values as high as 16, 17 and 18.

·        Over the next five years, the majority of air conditioner models would probably need to be upgraded to remain competitive, even if the standard did not change at all.


The BIG Picture

The rollback to a SEER 12 standard from a SEER 13 would sacrifice about one-third of the energy savings that could be achieved by SEER 13. A SEER 13 standard will decrease national energy consumption, lower summertime utility bills for millions of households, reduce pollution from power plants and improve public health. 

Additional History for Energy Efficiency Standards:

Uniform national standards for energy efficiency on an array of products were first put into place in 1987 when President Regan signed the National Appliance Energy Conservation Act (NAECA). In 1988, efficiency standards for fluorescent lamp ballasts were added by Congress, and in 1992, President Bush signed the Energy Policy Act, which added new efficiency standards for certain types of lamps, electric motors and commercial heating and cooling equipment. The first Bush Administration continued to add efficiency standards laying the groundwork for the Clinton Administration to set new standards for refrigerators, air conditioners, ballasts, clothes washers, water heaters, and heat pumps.

Special thanks to the Appliance Standards Awareness Project (ASAP), the American Council for an Energy Efficiency Economy (ACEEE), and Goodman Manufacturing for information contained in this fact sheet. In addition, EESI would like to thank the Pew Charitable Trusts, Joyce Foundation, Turner Foundation, George Gund Foundation, and Ottinger Foundation.

For more information, please contact Carol Werner, Executive Director of EESI, at 202-662-1881 or cwerner@eesi.org .

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