California Home Service Contract Association Reports: Value of Home Service Contracts Increases in Wake of EPA Proposal to Reduce Allowances of Freon(R)

VAN NUYS, Calif., May 17, 2012 (BUSINESS WIRE) -- As a steady increase in the price of a common air conditioning refrigerant prompts a spike in maintenance costs for homeowners across California and the nation, the California Home Service Contract Association (CHSCA) reports home service contracts are increasing in value.

On Jan. 1, 2010, the Environmental Protection Agency (EPA) placed a ban on the manufacture of new air conditioners using R-22, a refrigerant more commonly known as Freon(R), because of its ozone depleting effects. The use of R-22 was not banned, but allowances were dictated on its future manufacture and in order to service existing home air conditioners.

Then on Jan. 4 of this year, the EPA proposed a rule that, if adopted, would significantly reduce production and distribution of Freon(R) by as much as 50 percent. This has significantly increased, and in many cases, more than doubled the price of Freon(R) in recent weeks, according to the CHSCA.

"The majority of the time our industry repairs an existing air conditioning system, R-22 is involved in that repair," Jeff Powell, chairman of the CHSCA, said. "That means the cost of repairing air conditioners has gone up significantly. However, because home service contracts cover service and repair to existing systems, and providers have generally not increased the price of those contracts, the value to consumers has increased."

Home service contracts generally provide service, repair or replacement for items such as dishwashers, ovens, disposers, electrical and plumbing systems -- and most importantly, heating, ventilation and air conditioning systems. Many home service contract providers also offer a menu of optional items such as pool and spa equipment, well pumps, and free standing appliances such as refrigerators and clothing washers and dryers for an additional fee. Contracts do not cover pre-existing conditions, but provide service, repair or replacement for failures arising due to normal wear and tear during the contract period.

To learn more about home service contracts and providers in California, please visit http://www.homeservicecontract.org/california.htm .

About CHSCA
Members of the new CHSCA, which provide approximately 95 percent of all home service contracts in California, include 2-10 Home Buyers Warranty, American Home Shield Corporation, BPG Home Warranty, Fidelity National Home Warranty Company, First American Home Buyers Protection, HMS National/Cross Country Home Services, Inc., Home Security of America, Inc., Home Warranty of America, Inc. and Old Republic Home Protection Co., Inc.

About the National Home Service Contract Association
The NHSCA is a non-profit 501((C)) (6) industry trade organization of member companies serving home service contract providers and consumer interests throughout the United States. To learn more about the NHSCA and to find answers to the most common questions regarding the purchase of home service contracts, visit www.homeservicecontract.org .
SOURCE: California Home Service Contract Association

        
        For California Home Service Contract Association 
        Jeff Powell, 818-374-7477 
        Art Ansoorian, 805-653-1648

EPA freon policy raising prices, Lubbock A/C companies say

Consumers can reduce their costs by eventually replacing the old unit with a new one or keeping equipment repaired and leaky hoses fixed on older units.

Posted: May 3, 2012 - 5:52pm | Updated: May 4, 2012 - 12:30am

By Adam D. Younglubbockonline.com Copyright 2012 Lubbock Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. May 3, 2012 - 06:52pm

EPA freon policy raising prices, Lubbock A/C companies say

AVALANCHE-JOURNAL

A decades-old Environmental Protection Agency policy aimed at eventually phasing out R-22 freon in hopes of preventing damage to the planet’s ozone layer is making an impact on consumers’ pocketbooks this year.

But Lubbock air-conditioning technicians have tips for consumers to curb the costs as prices rise.
Yearly EPA benchmarks set to phase out all production of Hydrochlorofluorocarbon-22, also known as R-22 freon, in the United States by 2020 have hit supply and availability particularly hard in 2012, and Hub City air-conditioning companies say they’re having to pass the costs along to
consumers — sometimes raising the cost of a refill from $20- to $40-plus per pound.

With cooling systems requiring up to eight pounds and sometimes more, that could mean an extra $160 or more per service just for R-22, said Greg Welch, co-owner of Lellem Welch Plumbing Heating & AC.

“In the past, we had some customers’ units where it was cheaper for them to put a little bit of freon in to top it off, but that’s just not the case anymore,” Welch said.

Both Welch and his father, co-owner Richard Welch, said they and every air-conditioning service they know of have noticed R-22 wholesale prices jump by 200 percent or more.

“We absorb some of that, but we have to pass it along to the consumer,” Greg Welch said. The Welches said they’ve held their price down to twice last year’s cost for R-22.

Greg Skarda, owner of Master Tech Heating & Air Conditioning, estimated his cost for R-22 is up 230 percent over last year.

He blamed the price hike in part on the reduced production set by the EPA and partly on distributors selling 30-gallon barrels of R-22 in lesser quantities than in the past.

Skarda said distributors, once able to offer discounts by selling 30-gallon drums in pallets of 20 or more, now sell the drums two or four at a time.

Increased R-22 prices along with higher costs for commodities used in repairs, such as copper and silver in solder, also affect the price of air-conditioning repairs, Skarda said.

Since shortly after scientists in the 1980s discovered the Hydrochlorofluorocarbons of R-22 likely damage the planet’s ozone layer, the EPA has recommended substitutes such as R-410A, a blend of hydrofluorocarbons that does not contribute to depletion of the ozone layer, but, like R-22, potentially contribute to global warming as a greenhouse gas, according to the EPA.

Since 2005, R-22 consumption in the United States has fallen by more than half, from 107,258 metric tons in 2005 to 42,974 in 2010, according to a statement from EPA spokeswoman Catherine C. Milbourn.

Data for 2011 was not available.

Both the Welches and Skarda said they have not noticed a difference in effectiveness between R-22 and 410-A, but both said the price of the replacement has become considerably cheaper.

“The 410 used to be more expensive, but its price hasn’t increased where R-22 has,” Skarda said.
The Welches said consumers can reduce their long-term costs for air conditioning by selecting a cooling unit using a compound like 410-A, which costs about $25 per pound.

Since 2010, the EPA has banned the use of R-22 in new residential cooling units, though some new units still are available without the R-22 coolant in them at purchase.

The consumer is forced to pay the difference.

Along with eventually replacing a cooling unit, the EPA and service providers recommend consumers still operating older units using R-22 have leaky hoses fixed and equipment repaired, rather than topping off their tanks.

Both Richard Welch and Skarda recommended homeowners keep their units' compressors clean and change air filters once per month to improve efficiency and increase the cooling system’s lifespan.

To comment on this story:
adam.young@lubbockonline.com • 766-8725
leesha.faulkner@lubbockonline.com • 766-8706


Source: Amount of HCFC-22 consumption in the U.S. as reported to the United Nations between 2005-2010 provided by the EPA.

R-22 Refrigerant Shortage Anticipated

by Michael Garry
Apr. 9, 2012
 
MORRIS TOWNSHIP, N.J. — Because of a proposed revision late last year by the Environmental Protection Agency concerning the availability of R-22 refrigerant, “there’s a very good possibility the R-22 supply may not meet the demand,” said Ron Vogl, technical marketing manager for Honeywell Refrigerants here.

Vogl made those comments as the main presenter during a recent SN-hosted webinar, sponsored by Honeywell, on the R-22 phase-out and retrofitting refrigeration and air-conditioning systems.

As an ozone-depleting gas, R-22 has been subject to a federal phase-out that began in 2010 and will proceed through 2020. On Dec. 30, 2011, the EPA published a proposed rule that would remove an additional 30 million to 100 million pounds of R-22 from the marketplace between 2012 and 2014. The final EPA rule will be published later this year.

The EPA is projecting between 27 million and 43 million pounds of R-22 will be reclaimed by users in 2012 — not enough to meet demand, Vogl said. Supply concerns and price increases have “caused a little bit of angst” among retailers, he noted. “Supermarkets are aggressively looking to retrofit away from this refrigerant.”

In selecting a replacement refrigerant, Vogl pointed to several criteria: capacity, efficiency, mass flow, global warming potential, superheat and oil return. A new refrigerant must continue to be miscible with lubricant oil so that the oil can protect the compressor. “Lubricant selection is refrigerant/system/compressor specific and critical to a successful project,” he said.

Some supermarket chains going after efficiency are using the R-407 series refrigerants as a replacement, said Vogl. “If you reduce leaks and charge size in a conventional system using the 407 series, you get competitive from an environmental standpoint with some of the newer systems.”

R-22 Refrigerant Shortage Anticipated

Michael Garry

MORRIS TOWNSHIP, N.J. — Because of a proposed revision late last year by the Environmental Protection Agency concerning the availability of R-22 refrigerant, “there’s a very good possibility the R-22 supply may not meet the demand,” said Ron Vogl, technical marketing manager for Honeywell Refrigerants here.

Vogl made those comments as the main presenter today during an SN-hosted webinar, sponsored by Honeywell, on the R-22 phase-out and retrofitting refrigeration and air-conditioning systems.

As an ozone-depleting gas, R-22 has been subject to a federal phase-out that began in 2010 and will proceed through 2020. On Dec. 30, 2011, the EPA published a proposed rule that would remove an additional 30 million to 100 million pounds of R-22 from the marketplace between 2012 and 2014. The final EPA rule will be published later this year.

The EPA is projecting between 27 million and 43 million pounds of R-22 will be reclaimed by users in 2012 — not enough to meet demand, Vogl said. Supply concerns and price increases have “caused a little bit of angst” among retailers, he noted. “Supermarkets are aggressively looking to retrofit away from this refrigerant.”

In selecting a replacement refrigerant, Vogl pointed to several criteria: capacity, efficiency, mass flow, global warming potential, superheat and oil return.

Price for air-conditioning service has 'tripled to quadrupled' due to new EPA rules

As temperatures increase with the onset of spring, so, too, will the cost for repairing and refilling air conditioners with the coolant gas known as Freon.

Northeast Florida air-conditioning contractors have already started to warn customers seeking repairs to brace for a dramatic jump in adding the gas that provides the coolant in air conditioners. Compared to a year ago, the price for putting Freon in a residential or commercial air conditioner will be radically more expensive.

The price jump affects air conditioners that were mainly manufactured before 2010.

“What it means is they have tripled to quadrupled their price on Freon for a service call,” said Tom Karol, a service technician at Don’s Air Conditioning in Jacksonville. “That’s a hell of an expense.”

The jump in Freon costs is the result of a U.S. Environmental Protection Agency directive implemented this year. The EPA is phasing out production of the old Freon, known as R-22. That’s because the coolant contained hydrochlorofluorocarbons, which are the gases believed to be eroding the earth’s ozone layer. Instead, the EPA is requiring air conditioning manufacturers to use Freon R-410A, which is a cleaner gas.

That means the price of the old type of Freon has jumped from about $40 per pound to about $90 per pound. A refill of Freon in an air conditioning unit usually takes about 5 to 10 pounds of the gas.

“These are direct costs that we are paying to buy this refrigerant and we have no choice but to pass this along to the consumer” said Ed Miller, president of Snyder Heating and Air Conditioning in Jacksonville.

The bulk of the high cost in Freon to customers is almost entirely linked to repairs to existing air conditioning units in homes and businesses. Vehicles are not affected, Miller said, because the environmentally-threatening Freon was eliminated from use in vehicles long ago.

But since the new Freon was introduced and the old style of Freon’s production was ordered by the EPA to be reduced, old tactics for maintaining an air conditioner, such as simply refilling a leaky refrigerant gas chamber, are no longer financially feasible, Miller said.

Miller said a single repair cost has jumped from about $100 to $400.

“Sometimes they [air conditioning units] have small pin-hole leaks that cause them to leak out. … Making the repair and fixing the refrigerant leak is more necessary now because of the high price of the refrigerant,” Miller said.

A slow leak in the past was simply refilled by many owners of air conditioning units, Miller said. But refills are so expensive, it’s best to actually repair the device or replace it rather than just refilling it.

“Now, you’ve got to replace the whole thing or the compressor,” Karol said. “When we’re explaining it to people they’re kind of taken aback and they don’t know what to do. They’re trying to hold off on doing anything right now because it’s not that hot or that cold right now.”

The increased Freon costs come on top of a new Florida regulation that requires air conditioning contractors to complete an energy calculation survey of a structure before a system is installed. That went into effect March 15 and adds another cost of about $100 to $300 owed to contractors for the inspection work.

But as summer and hotter temperatures approach, Karol said there will be less R-22 Freon and anyone putting off air conditioning repairs will pay a stiff price.

“When it starts taking effect, the cutbacks of Freon R-22, it’s really going to hit people hard,” Karol said. “I look for Freon to probably go over $500 for a 28-pound tank.”

drew.dixon@jacksonville.com, (904) 359-4098

Cost: About $90 per pound
High pollution: Contains hydrochlorofluorocarbons, which erode ozone layer
Obsolete: Meant for air-conditioning units made before 2010
Production: Being phased out due to EPA mandate
Cost: About $80 to $100 per pound
Environmentally friendly: Contains no hydro-chlorofluorocarbons; no impact on the ozone layer
Contemporary: Can be used on new air-conditioning units as well as those manufactured before 2010
Production: It’s in high production and will replace the original Freon R-22 gas entirely

Refrigerant shortage driving AC repair costs up

Shortage of R-22 refrigerant driving costs up; could require new AC units for some

By Bruce Henderson
bhenderson@charlotteobserver.com 

The soaring cost of some refrigerants will mean sharply higher air-conditioner repair costs this spring, experts say, adding a bit of gloom to this week’s early bloom.

The refrigerant known as R-22 is being phased out because it eats Earth’s protective ozone layer. R-22 air conditioners were made until 2010, and millions still operate.

But owners who need to replace leaked refrigerant this year are in for a nasty surprise: R-22 prices have tripled since January. Homeowners who would have paid $100 to recharge an R-22 system last year can now expect to pay $300 to $350, says an industry group, the Air Conditioning Contractors of America.

It could get much worse, as Charlotte’s Tracy Lee found Friday.

An evaporator coil rusted in one of his home’s cooling units, installed in 2005, and leaked its refrigerant. The repair technician “said the most expensive part of the repair was the refrigerant,” Lee said.

He barely exaggerated. The $1,958 estimate included five pounds of R-22 at $188 a pound, nearly half the repair cost.

Industry officials expect the price spike to smooth out over time – but not before July, in the depths of hot weather.

“In the meantime, I’m going to be caught in the crosshairs,” said Lee, whose house has two other air conditioning units of the same vintage.

AC service companies are scrambling to make sure they can serve their customers.

“For customers, it means they’re going to pay a lot more than they did last year,” said Morris-Jenkins owner Dewey Jenkins, “and going into the summer no one knows, there might not be enough” R-22.

Jenkins’ company, sensing trouble, stockpiled enough R-22 to take care of its customers who are under maintenance contracts. Jenkins estimated that a typical service call might cost an extra $80 to $120 this year.

Replacing a unit’s full R-22 charge with the newer alternative called R-410A, he said, would cost $1,000 to $1,200.

Brothers’ Roger Costner said his company is still working on pricing, but estimates a typical service call might cost an extra $50 this spring. He does not expect suppliers to run out of R-22 because he anticipates it to be increasingly recycled.

But AC experts say some customers will be faced with hard choices about older R-22 units with serious problems such as leaking components.

“Our thinking is if they do have a major issue with their system, they really should consider paying for a new system,” Costner said. New units will cool more efficiently and are likely to have longer warranties than older ones, he said, helping recoup their costs.

Josh Franks learned Friday that he falls into that unfortunate group. Franks paid $289 to recharge the R-22 in his 12-year-old air-conditioning unit, for the second time in two years.

With a slow leak in the unit, Franks said, “it looks like I’ll have to spend a whole lot more to put in a whole new system.” The repairman quoted a new system at $5,500.

The industry has known for years that R-22 supplies would slowly shrink under terms of a 1987 international agreement on ozone-depleting chemicals. The Environmental Protection Agency sets new manufacturing limits about every five years.

But even a year ago, the refrigerant was plentiful and selling at record lows.

“Nobody really knows how much is out there, or how we got from a glut to uncertainty” about supplies, said Charlie McCrudden, vice president for government relations at the Air Conditioning Contractors of America.

Last August the EPA, prompted by a lawsuit, proposed reducing manufacturing volumes this year. In December, the agency proposed cutting manufacturing capacity by up to 47 percent for 2012 to 2014, in part to encourage reuse of existing stocks.

That created “a frenzy” that drove prices upward, McCrudden said. He predicts it will be July before the issue is settled.

“I think everybody got spooked,” he said. “I don’t think EPA intended to create this type of price spike and upheaval.”

Henderson: 704-358-5051

Read more here: http://www.charlotteobserver.com/2012/03/16/3104020/refrigerant-shortage-driving-ac.html#storylink=cpy

Read more here: http://www.charlotteobserver.com/2012/03/16/3104020/refrigerant-shortage-driving-ac.html#storylink=cpy

EPA Expected to Reduce R-22 Refrigerant Allocation

Maintenance Insider

While the EPA is not expected to issue a final allocation determination until later this summer, R-22 allocations will likely be reduced between 11 percent and 47 percent from the previous level.

Property managers have recently received information from their service providers informing them that the supply of R-22 refrigerant is uncertain and prices have escalated sharply as a consequence.

NMHC’s Eileen Lee says that it has been implied that the Environmental Protection Agency (EPA) has accelerated the phase out of this refrigerant, thus causing the supply disruption. While EPA has temporarily reduced the allocation (the amount of R-22 that is able to be produced or imported), this is an interim measure based in part on the oversupply of R-22 in the marketplace. The final allocation levels of R-22 will be issued later this year, and supplies are expected to be available to meet demand.

Background: R-22 is a member of a class of ozone-destroying chemicals (HCFCs) that is regulated under an international agreement. As of 2010, manufacturers were prohibited from importing R-22 for use in new equipment and, after 2020, R-22 will no longer be permitted to be manufactured or imported. Only R-22 that is recycled from other sources will be available for servicing existing equipment.

EPA sets an allocation level for the amount of R-22 that can be produced or imported. EPA and equipment manufacturers expect that the phase-out timetable for R-22 will enable the servicing of existing equipment throughout its useful lifetime. EPA is not accelerating the phase-out schedule of R-22, Lee says.

However, last year, EPA found that there was an oversupply of R-22 in the marketplace. A trade organization representing the manufacturers and importers of R-22 supported these claims, and advocated for a 20 percent reduction in allocations (the amount able to be produced or imported) for 2012-2014. Additional information on R-22 is available at www.epa.gov/ozone/title6/phaseout/22phaseout.html.

Current Situation: In January, EPA issued an interim proposal that reduced allocations for the current period by 45 percent. This reduction caused concern within the air conditioning/ refrigeration service industry. While EPA is not expected to issue a final allocation determination until later this summer, R-22 allocations will likely be reduced between 11 percent and 47 percent from the previous level, Lee says.

Air-conditioning service providers did not anticipate the current supply disruption. NAA/NMHC have consulted with colleagues at the Air Conditioning Contractors Association for an explanation of the current marketplace situation. They have provided a memorandum at www.naahq.org/governmentaffairs.

Best Practices: See www.epa.gov/ozone/title6/phaseout/22phaseout.html for the description of the preferred common-sense approach at a technician level. It will help to properly diagnose a problem with an air-conditioning system and repair the system to maintain the smallest amount of R-22 possible. “When it is time to replace the system, recover the R-22 in such a way as it can be reused onsite to reduce the amount of R-22 needed to be purchased. This type of response ensures the smallest financial impact on the community regardless of the supply and price of R-22 in the future,” says Paul Rhodes, National Safety & Maintenance Instructor, NAA Education Institute.