Volume 13, Issue 6 - July/August 2012

feature

Should You Enter the Energy Audit Business?
by Tara Taffera

When consumers are shopping for a new automobile one of the factors most consider is miles per gallon (MPG). Why? Because the answer to that question will directly affect their bottom line. It is a time tested way to gauge how much a consumer will spend on gas each time he drives up to the pump. In the home improvement industry, there is a similar way to gauge utility costs, though it is less well known than MPG.

A growing number of contractors are publicizing themselves as home energy auditors. Their services can range from providing four to six hours of tests in a home to a more moderate one to two hour visit in which they look for ways the homeowner can save energy. In all cases the goal is to save the consumer money over the long haul in energy costs. Often utility companies will also offer these services and other times the consumer will go through a contractor such as a home energy auditor.

As customers become concerned about energy and more utility companies try to decrease the amount of energy used, some window companies are beginning to provide home energy audits. But if you didn’t work for a window company and you were just a consumer who wanted a home energy audit and you were picking up the tab, would you choose a company that also offers window products? Does this create a conflict? If so, can it be overcome?

Who’s Doing It
Mark Sackerson is the head of Franzoso Energy Solutions, the energy audit division at Franzoso Contracting Inc. based in Croton-on-Hudson, N.Y. He describes the latter’s core business as exterior home improvement which includes, doors, windows, siding and roofing. The company also has a small construction division that builds decks and some light structural work.

How did this contracting company come to delve into energy audits? It all started from a sales rep with an idea.

“One of our top sales guys was interested in it and got the company involved peripherally,” says Sackerson. “So five years ago we dabbled in it.”

Two years ago that experimentation turned into the separate division and that’s when Sackerson came on board full time and became the company’s second Building Performance Institute (BPI) certified rep (see sidebar page 39). Also fueling the move was the mainstream interest in energy audits and federal funding to boot. And it doesn’t hurt that the company is based in New York which houses the New York State Energy Research and Development Authority (NYSERA). Several experts applaud the efforts and financing options available through this organization.

“The benefit of the NYSERDA program is that the homeowner incentive is a 10 percent rebate on improvements they choose to make,” says Sackerson.

The governor also signed On Bill Financing into law last year. The bill mandated that the large utilities in New York offer customers the ability to finance energy efficiency retrofits through loans paid back on customers’ utility bills. The legislation delegated much of the implementation to NYSERDA.

Additionally, Sackerson says the agency offers free audits and reimburses the contractor $250 for the cost of the audit though he adds that the costs are higher than that. He says this includes depressurizing the house using the blower test and quantifying the amount of air leakage.

Thousands of miles away in Rancho Cordova, Calif., Phil Isaacs, president of California Energy Consultant Service, says rebates, such as those offered by utility companies in his state, was the main driver prompting his company to branch out into audits recently. The company offers everything from doors and windows to siding to heating and air.

That doesn’t mean, however, that expanding into the energy audit arena has been easy.

“All of this is very challenging,” he says. “A lot of different government organizations have strings attached to their money … We have contracted with someone who would do the audits for us—they started at $700 and we got them down to $500.”

Isaacs says though that when the leads start coming in through the two California utility companies with whom he is working, it will be worth the effort.

“The paperwork was cumbersome but we are now all set up with our local utilities and are listed on their website. We are now in a very elite class of contractors as we only have to get registered with the utilities one time.”

The company also had to get various employees BPI trained and even had to upgrade its liability insurance.

“The utilities wanted more aggressive insurance than I had,” says Isaacs. “I had to switch insurance companies and that was very expensive as I was new with this new insurer. This is something to be careful about.”

Steve Rennekamp, president of Energy Swing Windows and Doors in Murrysville, Pa., is seriously considering offering energy audits in the future.

“Window companies resisted this change because it is a big change to our business model and it is a big commitment,” says Isaacs. “We are moving from being a replacement contractor to a general contractor.”

Rennekamp sees that same shift.

“We have looked at it but are not geared to do it yet,” he says. “It will be coming but you have to have quality people to do it right. The better companies will look at doing it.”

Is it a Conflict?
If that energy audit sale is made by a window company, experts disagree on whether or not that poses a conflict of interest. In a recent article on foxbusiness.com, Mark Cannella, founder of energy audit company Pro Energy, warns customers to be wary of firms that offer low-cost energy auditors.

“Window companies have tried to get into the energy audit business and I tell folks all the time, ‘if it’s a window company what do you think is the first thing they will tell you need to do?’” he says in the article.

Neal Humphrey, project manager of the Buildings and Utilities Team at the Alliance to Save Energy, says that’s not necessarily the case as an energy audit doesn’t often mean new windows.

“Lots of energy audits do not recommend windows mostly because when you look at the cost effectiveness it is not one of the higher priority upgrades in terms of cost of upgrades,” he says.

That’s not to say he doesn’t see the point made by Cannella but says, “it really comes down to how well-informed the auditor is and how fairly they assess the needs and evaluate how much the homeowner will get from doing any of these upgrades.”

“A comprehensive energy auditor will go beyond windows,” Humphrey adds.

David Lee, supervisor of Residential Deployment Program in the Office of Building Technologies at the Department of Energy (DOE), says there are safeguards in place in Home Performance with Energy Star programs as well as DOE’s Home Energy Score pilot program (see dwmmag.com), to help ensure that any company, window or otherwise, doesn’t mislead the consumer to purchase a product that is not necessary to reducing energy use.

And, what if a window company performed energy audits then also recommended new windows? Given that they are subject to quality assurance requirements, contractors are much less likely to recommend improvements that are not really necessary from an energy perspective, according to Lee.

“There has to be some type of third party that vouches the audit was done properly. There are audits of the audits as well as of the work done,” he says. “We have found that it is better to let the contractor do the audit and do the work and then have a quality assurance program come in later. If caught that contractor risks losing the ability to participate,” he says.

Sackerson says the conflict of interest scenario has not been an issue for his company.

“A homeowner wants someone to analyze the problem and propose a solution. In many cases the homeowner gets into other problems they are experiencing or issues they want to address, like doors and windows. A BPI certified home improvement contractor can handle those homeowner needs and do the job right.”

He says there isn’t a conflict because if a question arises that’s when you point to the data.

“That’s where the blower door test comes in,” he says. “That’s where the testing comes in, and when you tell the homeowner to check out the air leakage in the window.”

He adds that homeowners are welcome to “shop wherever they want” but at his company they spend a great deal of time explaining and showing the science behind the audit.

“We are there to tell them everything going on in their house,” he adds. “We will tell them their windows are from the 1940s, and are single-pane … People have done their homework, they read about us on Angies List, and they know what they are getting into.”

It’s Not Without Challenges
So is there truly a payback for those window companies who want to dabble in home energy auditing? Yes and no.

“The contractors who got into this a while back for the sole purpose of being auditors are now out of business,” says Sackerson. “They thought they would do eight audits a week and make some decent money.”

His company offers the audits at no charge and says if homeowners are serious about making improvements why would he charge them for an audit?

“It is part of doing business for us. If I tried to charge I would never see the homeowner,” he says.

But he tells window companies who are considering this venture that is vastly different from a window sale.

“It’s a multi-call business. The money is less, and it’s not the same margins,” he says. “But it does make sense.”

If you are going to do this you have to invest a lot of time, effort and energy, adds Isaacs.

“It’s not something you are going to tack at the end of a business card,” he says. “I have a lot of respect for the amount of time and energy it takes. I have been through quite a few false starts and am still trying to weave my way through getting some jobs.”

“To do a real energy audit you have to have certified people doing tests a specified way. You have to have quality people geared to do that,” says Rennekamp. “It also strings out the sale as you have to schedule it and most companies don’t want to invest that time and money.”

Sackerson agrees that it definitely adds time to a job and is very different than making a window sale. “It will be very difficult for some businesses to fit this in with their business model,” he says. “You are in the home several times and, at the very end, the sales rep goes back in and tests out, etc. It is more labor intensive so I think this doesn’t fit in with a lot of window companies who have the philosophy of a one-call close.”

“It’s a commitment to go to the classes and take the tests,” adds Isaacs. “We didn’t ask for this but it’s an opportunity I couldn’t’ afford to ignore.”

Sackerson adds that it is worthwhile despite the challenges.

“At this point we are continuing to grow the business and generate more leads,” he says. “Unless oil drops to nothing and solar becomes useless then there will be a place for it. Will it be as profitable as our core: probably not but it will be part of the overall growth of our company.”

Certification Choices
Window companies who are considering expanding into home energy audits will want to explore recognized certification programs such as those offered by the Residential Energy Services Network (RESNET) and the Building Performance Institute (BPI).

All home energy rater candidates must pass a national online test and perform five ratings under the supervision of certified RESNET home energy rater. “Only then can the home energy rater candidate be certified by a RESNET accredited rating provider,” according to its website.

The organization also says it has certain procedures in place that ensure quality standards are being maintained.

BPI tests and certifies individuals through both written and field examinations.

“Individuals that have been trained, tested and certified to BPI’s nationally recognized standards use the house-as-a-system approach to improving the performance of existing home,” according to its website. “That’s why BPI standards or equivalent are cited by the Home Performance with ENERGY STAR® program from the Department of Energy (DOE) and the Environmental Protection Agency (EPA), as well as several state Weatherization Assistance Programs.”

Tara Taffera is the editor/publisher of DWM/Shelter magazine. She can be reached at ttaffera@glass.com. Follow her on Twitter @dwmmag, read her blog at dwmmag.com and like DWM magazine on Facebook.


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