Delisted and Confused

Much like the star of the 1993 “retro” movie, Dazed and Confused, many HARDI distributors are uncertain to what and to whom they should commit because they can't trust who really cares about their best interests. Randall “Pink” Floyd (played by Jason London) is a Texas high school quarterback unsure whether he'll play his senior year because his coach is insisting all players sign a new code of conduct commitment before getting on the field. For now, let's ignore that the required commitment simply forbade a lot of already-illegal activities and turn to the larger metaphor. “Pink's” conflict lies in his general mistrust of the coaches' concern for him and that they just want to control him — to his perceived detriment — only to serve their own purposes.

HVACR distributors have many commitments already required of them; stocking requirements, product support and training requirements, minimum orders, freight liabilities and so on, and then came a wave of incentives for high-efficiency HVACR equipment. New market demands for higher tier equipment that had previously been modest at best caught many equipment manufacturers unprepared and gave rise to an explosion in AHRI Certified mix-matched HVACR systems using third-party coils. HARDI distributors were encouraged by their OEM in some instances and sometimes required to invest in third-party coils to remain competitive in their market; and they relied on the AHRI Certified Product Directory to identify which third-party coils in which to invest.

Without any advanced indication of a problem and at the very end of June, AHRI's Executive Committee voted to require the rerating of mix-matched systems to maintain their certification by July 15 and announced that they would no longer certify mix-match combinations that exceeded six percent of the OEM's rated efficiency as of that date. Citing concerns over the integrity of its certification and the need to catch up in its sampling testing, AHRI justified their decision in a letter responding to HARDI's criticism of the method, timing and implementation of their decision by stating they did so “with awareness of the short-term inconvenience that will be caused by what is intended to be a temporary measure, but also of the fact that action was needed to preserve the continued quality of the mix-match coil certification program.”

Many HARDI distributors responded with some understandable indignation that this “short-term inconvenience” could cost them tens of thousands of dollars in inventory that was seemingly devalued overnight by the wave of AHRI's Executive Committee's hand. While it was initially concerns over the federal tax credits for residential HVACR improvements that sparked panic, utility incentive programs proved to be the more pressing issue. This despite AHRI's assertion that “while widely used, AHRI certificates are not, and have never been intended to be, the only method that can be used to document equipment performance for tax credits and utility rebates. Each manufacturer independently rates the performance of their equipment and systems.” While that may have been the case, we've seen no indication that AHRI had done anything to deter utilities around the country from relying on their certification to provide verification for their HVACR energy-efficiency incentive programs.

AHRI's rash decision left utilities scrambling to deal with the administration of outstanding and future rebate claims on systems delisted after July 15, and questioning the integrity of the performance ratings of those systems previously and currently certified by AHRI. HARDI and many of our distributor members worked fast and hard to convince utilities to continue to accept systems that were delisted on July 15 through the rest of this cooling season, providing an opportunity for distributors and contractors to exhaust their inventories of third-party coils that had suddenly lost their value (without any quantified or substantiated performance degradations, by the way).

None of this is (or should be) news to any equipment distributor, but this story is worth retelling as a reminder of the dysfunction that continues to plague our industry. As HARDI stated to AHRI in our initial protest to their decision, “while we support the logic behind the need to make such a determination, we are extremely disturbed and concerned by how the decision was made and timelines were established without consultation with or consideration of your industry partners. Once again, those who will make the greatest sacrifice with respect to productivity, profitability and customer creditability are not given the opportunity for input on the potential long-term consequences to the channel and our industry.”

Like federal legislation to fund and drive energy efficiency through HVACR upgrades (generally useless commercial buildings tax deductions and ridiculously high qualifying levels for the residential HVACR tax credits), reasonable increases in performance standards (the 2006 increase in federal SEER standards), and the establishment of new equipment performance standards (commercial walk-ins repair versus new install confusion), our industry appears to be experts at turning good ideas into major disruptions due largely to its inability to work together.