HVAC Industry Public Forum Overview

The Public Forum was held to provide perspectives on ratepayer-funded HVAC programs and other HVAC efficiency issues to the California Public Utilities Commission's Energy Division (CPUC ED). The panel consisted of CPUC ED and IOU representatives as well as WHPA Executive Committee member organizations.

More than 100 people attended the event in person, many of whom were visiting the IHACI trade show at the same location. A conference line was held for remote participation.

Summary Notes

PDF Version of Notes

HVAC Industry Public Forum: November 14, 2012 1:30 to 3 p.m.

Call to Order

Jeremy Reefe, San Diego Gas and Electric, served as moderator of this forum. He called the meeting to order at 1:40 P.M. The meeting was introduced as a public forum for industry input to the utilities and to the Energy Division of the California Public Utility Commission on HVAC energy efficiency programs in California.

Note: X = panelist in attendance; * = panelist is a member of the Executive Committee of the Western HVAC Performance Alliance

CPUC and Utility Panelists
*Energy Division, CPUC	Hazlyn	Fortune	X phone
*Pacific Gas & Electric	James	Tuleya	X
*San Diego Gas & Electric	Jeremy	Reefe	X
*SoCalGas	Carlos	Ruiz	X
*Southern California Edison	Mugi	Lukito	X
Energy Division, CPUC	Simon	Baker	X
Energy Division, CPUC	Nils	Strindberg	X
Southern California Edison	Mel	Johnson	X
Industry Panelists
*ACCA	Don	Langston	X
*AHRI	Warren	Lupson	X
*ASHRAE	Robert (Bob)	Baker	X
*HARDI	Talbot	Gee	X
*IHACI	Bob	Wiseman	X
*United Association	Don	Tanaka	X

Agenda

Overview and introductions
Public Forum Discussion – Six Topics on Quality Installation and Quality Maintenance
Question 1: What specific changes do you think would make the IOU Res/Com HVAC Quality Maintenance programs more successful with contractors and customers?
Question 2: What specific changes do you think would make IOU Res/Com HVAC Quality Installation programs more successful with contractors and customers?
Question 3: What specific changes would make the IOU HVAC rebate Quality Assurance reporting requirements easier to complete? What changes are needed for submitting this data?
Question 4: What types of IOU support do you believe would help drive more customer participation in the HVAC rebate programs? What types of programmatic changes do you believe could help drive more customer participation in the IOU HVAC rebate programs?
Question 5: What technical, sales training and mentoring do you think you need to be more successful in your work?
Question 6: What changes do you think are needed to make rebate and incentive processing more efficient?
Adjourn

Overview, Introductions, Introductory Presentations (a PowerPoint presentation accompanied this section of the agenda)

Jeremy Reefe, San Diego Gas & Electric; moderator of this forum

Simon Baker, Energy Division, CPUC – The WHPA has been providing good advice to the IOUS and to Energy Division on HVAC programs for a number of years, including QI and QM programs. Audience questions will be directed to the IOUs and to the CPUC. The WHPA industry panelists will also be invited to add their comments, as will the audience.

Nils Strindberg, Energy Division, CPUC – Introduction to California Long Term Energy Efficiency Strategic Plan and Vision for HVAC.

James Tuleya, Pacific Gas & Electric; Chair of WHPA – Introduction to WHPA – There are 19 categories of HVAC industry stakeholders in order for the utilities to receive broad input. Encouraged the audience to go to the WHPA website, and to consider applying for membership.

Jeremy Reefe, Moderator; San Diego Gas & Electric – Overview of four IOU programs – quality installation and quality maintenance of HVAC in commercial and residential markets. There is a desire to incentivize quality work in California, some incentives paid to contractors and some to consumers.

Public Forum Discussion

Question 1 – What changes would make the IOU programs more attractive to contractors and customers?

HVAC CONTRACTOR 1: The paperwork for the Energy Upgrade program that had been required to be completed by the contractor was a 10-page Excel worksheet with 450 cells. That template is no longer in use; it has gone to a web-based form which is a great improvement. But the utilities should keep in mind, as you design your programs, that we contractors are better at building things than at doing paperwork.

HVAC CONTRACTOR 2: We are competing against contractors who do not pull permits. We need to make the public aware of the difference between contactors who do it the right way, and others who do not. It would be very helpful to us contractors (who do the right job) to have confirmation from a higher authority (the utilities) about the value of quality work; that would have a lot more credibility than our saying it ourselves, and would help consumers understand why we are charging a little bit more to do a lot more. Specifically, it would be helpful to have the utilities put inserts into their bills, more information on the utility websites, and list the advantages to the consumer to be involved in the utility programs and to choose the right contractor. Collateral with the utility logo carries a lot of weight. You are the higher authority as far as the consumer is concerned.

RESPONSE: James Tuleya, Pacific Gas & Electric – PG&E just launched a multi-media marketing campaign last month for commercial and residential quality maintenance programs. It includes email marketing and website content. As we get feedback from this pilot marketing campaign we can improve our campaigns and share this feedback with other California utilities. We are trying to address customer education because increasing customer demand for energy efficiency programs is critical.

HVAC CONTRACTOR 3: We have been in Energy Upgrade since the very beginning. The challenge for us is not the marketing; the problem is the energy modeling. The modeling software needs to be written to fit the program much better. For example, the model does not take into account the installation of energy-efficient pool pumps. How are you going to deal with the energy load in the house when the pool pump alone may use up ½ of the energy? That (omission) can reduce the rebate amount quite a lot.

Another problem is the municipalities; take Pasadena for example. You get a $100 rebate per ton of load on your HVAC system, while we are trying to reduce the load and the size of the equipment that we put in the house. The incentives in municipalities and jurisdictional areas are often at odds with what we are trying to do.

HVAC CONTRACTOR 4: We are in the residential QI program for SCE. Now that the rebate program has been reduced we are competing with “Bubba” out of his truck. We have not had any complaints from our customers about energy savings; most of our energy savings are $100 to $200 a month. But your (utility) models are showing pennies on the dollar. I can fill your box with customer testimonials; we have done more than 600 houses.

RESPONSE: Mugi Lukito, Southern California Edison – Recently SCE lowered the incentives based on the budget for the 2013/2014 program period. We had a forum with contractors on whether to cut the amount and have the budget run through the whole period, or keep the current amount and run out earlier. Based on our technical work paper we presented to the CPUC, we are only averaging $35 per installation on energy savings. If we could show higher savings that would be helpful, as we need to meet a certain amount of savings at the portfolio level.

HVAC TRAINER 1: Everyone believes the SCE program is the best Res QI program in the US. We have over 5,000 systems certified. Do you think in the near future you will start mining the data to show the actual energy savings?

RESPONSE: Mel Johnson, Southern California Edison – With these aggressive goals we need the most appropriate research, and there is a roadmap to get that research done. We are discussing the research roadmap with the WHPA. Energy Division has the budget to do research. 5,000 systems is a lot of data (to mine).

RESPONSE: James Tuleya, PG&E; WHPA Chair – The draft plan for 2013 and 2014 for that research budget includes determining what is the real baseline for installations. That research would start early next year.

HVAC CONTRACTOR 5: As someone who spends a lot of time in front of customers, over the last three years we have not sold any 13 SEER equipment and we rarely sell 14 SEER equipment. The majority of what we have sold is 16 and 18 SEER equipment using the rebates the utilities have provided. With the rebates we could sell a 16 SEER unit that cost the customer less than a 13 SEER unit. Now, the lower rebate amount has only been in effect for 14 days, but I expect that we won’t be able to upgrade our customers to higher efficiency systems because it will not pencil out when we are in the home.

MUNICIPAL UTILITY REPRESENTATIVE Ravi Patel (SMUD) by phone – Who polices permits and what are the fines and penalties?

RESPONSE: Jeremy Reefe, Moderator; San Diego Gas & Electric – Starting in 2013 we will require a permit number on the rebate application. Local jurisdictions and the California State License Board are responsible for policing.

RESPONSE: James Tuleya, PG&E; WHPA Chair – The local building departments are responsible for the permits and for policing permits.

RESPONSE: Bob Wiseman, IHACI – The WHPA has a committee specifically for compliance. I encourage anyone who wants to participate in the process to join the WHPA and participate in the WHPA compliance committee.

HVAC CONTRACTOR 6: For these programs to be successful you need to determine the true savings first. The software tool that establishes the model for Energy Upgrade California does not represent true energy usage in the house. Most homes use up to 50% of their energy on HVAC. You are not using accurate data going in, so you will not get accurate data coming back.

Second, if all the HVAC work were done legally there would be energy savings. If every utility told the consumers on every utility website and in every bill that they are breaking the law if their contractor does not pull a permit, it would have huge ramifications quickly. Look how fast QI took off.

Finally, what about the manufacturers? Are they incented to encourage quality installation? They want boxes moved. I don’t know what it would take, but I do know that it starts with the manufacturers. The major manufacturers could play a much larger role than they do now in energy efficiency, including training.

RESPONSE: Mugi Lukito, SCE – The rebates to equipment distributors are not visible to the consumers or the contractors. But they do help sell a lot of high efficiency equipment. Upstream is a different program from Quality Installation programs.

RESPONSE: Mel Johnson, SCE – Engineering design by the manufacturer is important also.

HVAC CONTRACTOR 7: We are part of the Energy Upgrade program. There is nothing on the California contractor’s license exam that requires them to know how to design a system. You have to know safety, you have to know OSHA, you have to know about the three-day right to accept. A lot of the contractors are glorified installers. The new guys coming into the Energy Upgrade program should need to prove to you (utilities) that they can do these calculations. And it starts at the beginning, with the license.

RESPONSE: James Tuleya, Pacific Gas & Electric – The software flaws have come up many times. The utilities and the CPUC are all working to improve that situation, including by creating new specifications and opening up the market to additional software.

RESPONSE: James Tuleya, Pacific Gas & Electric – Regarding the website, there is already prominent information on the PG&E website (www.pge.com) urging customers to follow the law. Take a look at the commercial and the residential sections of our website; if you have specific suggestions then let us know.

HVAC CONTRACTOR 8: Regarding commercial maintenance, if we are going to drive a culture change it has to take hold with the customers. Ultimately, if you do not demonstrate the value the customer will not pay for it and they will take the cheaper one. Thus far we have programs to deliver a better result and provide more energy efficiency, but we do not do as good a job in marketing.

We are making progress by simplifying paperwork for the technician, but this needs to be improved. When I estimate the time for a maintenance project, I estimate 1/3 more time to comply with the paper trail. It used to be half, so it’s getting better, but it needs to be down to the 20% range. The paper trail does show value and it’s worth something, but not another 1/3.

Another issue is enforcement. There are a lot of contractors have only sold one or two rebate projects, and maybe they priced it too cheap because they underestimated the requirements, and so they cut corners in the delivery. The enforcement of meeting the program requirements is critical.

My last comment. You (the utilities) ask how you can help commercial contractors. We need some guidance with a utility or CPUC stamp on it for the contractor to conduct a conversion with the customer. We need the utilities to tell the customer “Here is what to ask your contractor; here is what you want to get”. Include an excerpt of ASHRAE Standard 180 so they can see the extent of the requirement. This is an area where you, the utilities and the CPUC, could really be of service to the contractors who are doing the right job.

HVAC CONTRACTOR 9: I don’t think pulling a permit is practical. It takes a couple of days and when the weather is very hot I will lose a job if the customer has to wait that long. The contractors should do what the architects say to do (and not do design work on their own). The architects know what they are doing, and if the contractor makes changes it can mess up the job. Also, the SCE training in Downey is located too far away from us (based in San Bernardino).

HVAC CONTRACTOR 10: by phone – Manufacturers could help support QI and QM by indicating that the ER and SEER rating will not be achieved without QI and QM. Manufacturer rebates could be tied to proof of QI and QM. You could have a green label if the unit is installed with verified QI and QM, and a red label if the unit is installed without it. Manufacturer advertising could include information on the value of QI and QM so the customers understand the value of those programs.

RESPONSE: Mugi Lukito, SCE – This is a good comment with respect to the upstream program. We can do a better job of educating consumers on the benefits of doing a high quality level; we are working on that education over the next couple years. Also we are working on educating about having a permit, because that is the law.

HERS INSPECTOR 1: Only 10% of the contractors use permits. If we are only going to affect 10% we will not have a big impact. That is the 800 pound gorilla in the room. If you don’t get the permits pulled, and enforcement on that, then we are the minority.

HVAC CONTRACTOR 11: I was upset by the comments made about reductions in rebates. The reality of the situation is that Title 24 is not even a starting point for a baseline. (On my jobs) we are seeing savings in excess of 30% to 60%; my technicians test every system we do. We have hundreds of customers worth of documentation; those jobs are performing in the 30% to 50% range of delivered capacity to occupied space.

We need real data, not assumed data to justify the existence of this program. What I am hearing is that you (the utilities) have assumed data justifying the reduction in fees that are available for this program to succeed, artificial numbers that comes out of a book assuming that people do what the book says they do. We are seeing improvements of 60% to70% in the ones we test in to the ones we test out. Even for renovations we are getting more than 70% of that capacity into occupied space. Those are the numbers that need to be analyzed to justify the existence of this program and the success that we have had.

RESPONSE: James Tuleya, Pacific Gas & Electric – The importance of getting data and good research is critical to us. We think we have a good research plan moving forward once the budget is approved the end of this year. Also included in that research is to see if there is a true connection between permit pulling and energy saving, because there is no research that we know of that explicitly states there is energy saving that comes from permit pulling.

HVAC CONSULTANT 1: What the last contractor said is right. Permit pulling is absolutely necessary. However, pulling a permit without an inspection does not mean energy savings. These are two different things. The energy program is great, but (it is dependent) on the local inspectors doing their job right. I have been out on so many jobs that were passed and they were done wrong. That is the real big problem.

HVAC CONTRACTOR 12: The buyer drives the market. The city inspectors are never going to look for energy savings; they are looking to see if it is safe. So it all depends on educating the customer. The higher the incentive the more willing the customer is to listen to what I the contractor have to say. With some track record now of how much energy can be saved if you do the job right, there is a good story to tell.

HVAC CONTRACTOR 13: Is there a way for the utilities to remove contractors who signed up for the utility programs but do not participate, because they continue to get sales leads?

RESPONSE: Mel Johnson of SCE – We do look at information on who are the performers and who is just trying to get advertising. We have addressed this; there needs to be good activity, good inspections. There is contractor access to leads when a contactor enters the program; the customer does the contractor selection.

RESPONSE: Mugi Lukito of SCE – At SCE we assign different levels (gold, silver, etc.) to contractors based on their participation level. We would like to discuss this issue and others with the residential contractors in the upcoming session in 2013. We want to make communication between the contractors and SCE more frequent.

RESPONSE: James Tuleya, Pacific Gas & Electric – At P&E we are looking at how we purge non-performing contractors from the programs. A small number of contractors do the bulk of the work. Purging contactors who are not active will be important for us going forward.

HVAC CONTRACTOR 14: Until you (the utilities) get to the bottom of how you will give the proper credit to the proper program we won’t get anything done. You have gutted the Edison program; we had a big discussion about that a couple months ago. Out of the 5,000 systems that were spoken of earlier, (my company) has done 1,400 of them. If you look at our paperwork, 75% of the systems that we have put in have gone down in tonnage. They are giving nothing for that; they are not showing any benefit for that at all. Tell me that we are not taking power off of the grid that way. You guys have got to get to the bottom of how you are going to give the proper incentives. You gutted the program. Your numbers are not right; we have proven that ours are right.

HVAC CONTRACTOR 1 (second comment set): I would think that with 5,000 homes completed you could get an intern from the Cal Berkeley computer science program, give him four days and12 months of utility bills before, and 12 months after the work was done, and analyze the data. Or let us the contractors pull up that data online. If I can show 24 months of utility bills (12 months before and 12 months after) from jobs I have done, that will be a big incentive for someone to select my company over another contactor who does not do a quality job. Then the customer can fairly compare us to a guy who won’t pull a permit, won’t do a HERS test, and who doesn’t care about the grid, but only cares about the lowest cost.

RESPONSE: Simon Baker, Energy Division, CPUC – There is an initiative now for smart grid, so that customers can give a (privacy) waiver to release their data.

RESPONSE: Jeremy Reefe, Moderator; San Diego Gas & Electric – At SDG&E we have a pilot program where customers can compare their energy usage for a similar sized house against their (unnamed) neighbors, perhaps by ZIP code.

HVAC TRAINER 1 (second comment set): Regarding the research roadmap, does the industry have a chance to set parameters and metrics on how the diagnostics should be performed. Is that possible?

RESPONSE: James Tuleya, Pacific Gas & Electric – The detailed designs for the research have not been done; there is a way to give input. We will need to clarify how that will be done. The public input period for the research roadmap is almost over, but there is a limited ability to participate in that as well.

WHPA ACTION – Once it is a public document we will publish the research roadmap on the WHPA website.

WHPA ACTION – Post information on the WHPA website about how to provide feedback and input to the research roadmap and for research design.

HVAC CONTRACTOR 15: Why does SDG&E not have training in south (San Diego) county? It is hard to get seven people for three days in the city of San Diego. Also, why can’t we use the SCE logo (when we are authorized to do SCE programs)?

RESPONSE: Jeremy Reefe, Moderator; San Diego Gas & Electric – We don’t have a training center outside of the city of San Diego. However, we are working to potentially train at your facility. Also, the training programs are all standard now among all the utilities, so I will talk with the SDG&E training people to see if we can accept training by another utility, such as SCE.

REPONSE: Mugi Lukito, SCE – Corporate Southern California Edison’s brand guidelines does not allow use of the logo by contractors. I will be working on the marketing campaigns for 2013 and appreciate your comments. A lot of contractors mentioned that distance is a barrier to training, so we will be looking at how we can distribute the training better at a cost that is reasonable.

HVAC CONTRACTOR 16: We are in programs for QI, QM, and NCI performance-based testing. There is different testing for each. The new incentive programs have taken the residential to just the box. In my view, by removing the duct rebates completely from the residential side we are putting in a box that does not deliver efficiently to begin with. I think the ducting is the most important part of delivering energy efficiency for residential.

Mel Johnson, Southern California Edison – Delineating the differences between residential and commercial is huge. There are different standards. It is important to have the right standards applied to the right situation; there will always be a difference because of the different types of systems you are dealing with.

James Tuleya, Pacific Gas & Electric – There are HVAC incentives outside of the pure HVAC programs. The Energy Upgrade California program, which is under Whole House, includes some HVAC incentives including duct sealing.

Closing Comments and Adjourn

Meeting host Jeremy Reefe thanks the audience for their attendance and active participation. We have come a long ways from where we started, and look forward to continued industry participation and communication.

The meeting was adjourned at 3:08 P.M.