New Government Regulations Increase Costs for HVAC Repairs and Replacements
On January 1, 2015, my former employer, the US Department of Energy (DOE), released new regulations regarding HVAC efficiency standards. These new laws increase the minimum efficiency ratings required on all new air conditioners and heat pumps. The DOE regulations also include a “matching” requirement for HVAC equipment that states when a system can no longer be repaired with “like-kind parts,” all existing and new components must be compatible with the same efficiency rating as a newly manufactured system.
These new government regulations may significantly increase the cost of heating, ventilating, and air conditioning (HVAC) repairs and replacements. These new rules will also complicate the process of deciding whether to repair or replace a system. You can protect yourself by knowing the new rules and regulations.
What Does This Mean?
As of January 1, 2015, the DOE increased the minimum SEER rating, heavily affecting contractors, builders, manufacturers, and ultimately, homeowners. The new regulations are intended to enhance energy efficiency and reduce energy costs.
SEER is the Seasonal Energy Efficiency Ratio. The Air Conditioning, Heating and Refrigeration Institute (AHRI) defines this metric by dividing the unit’s cooling output during a normal cooling season with the total electric energy input. Simply put, a higher SEER rating means that an air conditioner is more efficient. In 2006, the federal government mandated that 13 SEER equipment be the new minimum SEER rating for all new central air conditioners. Now, all new equipment in certain regions of the U.S. will be required to have a SEER rating of at least 14. In some parts of the country, heat pumps will be required to have a SEER rating of at least 14 and a HSPF rating of 8.2 (or 8, for packaged heat pumps.)
However, before any savings can be achieved, homeowners will have to bear the higher costs of repairing and replacing their HVAC equipment.
Simply put, this means that air conditioner and heat pump manufacturers are only building “new” higher efficiency models, and existing systems that require repair must be brought up to the latest standards when current stocks of replacement parts are depleted.
Experts currently estimate the cost to repair or replace an HVAC system could rise by more than 60%.
The U.S. Has Been Divided into Three Regions
To implement this new regulation, the DOE has divided the country into three regions, and each region will have unique requirements for air-conditioner and heat pump efficiency levels. This is the first time that efficiency standards for HVAC components will be determined on a regional basis.
The three regions are the North, Southeast, and Southwest. The regions were determined by analyzing
each region’s heating degree days (HDD) and weighted for population. In the North, air conditioners must be at least 13 SEER and furnaces must now have an efficiency of 80% or more (prior to the new regulations, the national standard was 78% efficiency). While it is acceptable in the North to install 13 SEER units, no 13 SEER units could be manufactured after January 1, 2015. As the SEER 13 inventory runs out, 14 SEER will become the de facto standard nationwide.
Maryland and Washington DC fall into the Southeast category. In the Southeast and Southwest, 14 SEER is the new requirement for air conditioners, and furnaces must be at least 80% efficient. The DOE has granted a grace period where 13 SEER equipment may be installed anywhere in the country up until June 30, 2016. However, the inventory of 13 SEER equipment may sell out long before that date. This will cause a shortage of equipment available for repair for most current systems that are rated SEER 13 or lower. These equipment shortages will result in more system replacements that in turn will cost more than repairing existing systems. The reasoning behind the regional differences is that residents of Northern states will use less energy to cool their homes and more energy to heat their homes than residents of states in the Southeast and Southwest.
Buyers, Protect Your Wallets
If a buyer doesn’t know that the older furnace or air conditioner in their new home might cause problems in the future, from the matching requirement or because it has a lower SEER rating, they could encounter an expensive surprise when a repair is needed.
Alternatively, a home buyer could be relocating from one region to another. Even if they are informed or well-educated about the home’s mechanical system, they might not be aware of the differences in regional standards that new equipment and repairs must meet.
Being current on regulations that have financial implications is not easy, but in this case, can save you significant amounts of money.
If you are planning on buying a home in the DC Metro area, such as Chevy Chase, MD, you should pay close attention to the inspector's review of the HVAC system. If the HVAC system is approaching the end of its useful life you may consider asking for a credit to replace the system, or at a minimum a home warranty which covers the cost of the replacement. Your realtor should be able to give you useful advice on a home warranty.