Utility Programs Boost Heat Pump Sales
That’s where hvac contractors can play the role of the good guy in the big white cowboy hat — with a little help from the local electric utility. Getting involved with a utility-sponsored heat pump program is one way hvac contractors can add to their bottom lines while creating customer goodwill.
Helps Close SalesNews contractor consultant Scott Getzschman said that the utility in his area, outside of Omaha, NE, has been a good referral source and has helped his company create a nice revenue stream.
“Our rural area and Omaha are served by Omaha Public Power (OPPD),” he said. “They have been aggressively increasing heat pump installations in order to improve electrical efficiency through the winter months. The program is open to all dealers who want to be involved. After an OPPD representative certifies installations, an energy credit is paid.
“They pay $175 per ton on 10-SEER through 13.4-SEER units, and a higher rate for a more-efficient unit. They also pay a comfort advisor between $75 and $125 for filling out a survey on each job sold.”
Getzschman said that OPPD also offers a reduced energy rate from October through April (after 750 kW at normal rates). The savings can be as much as $100 per month.
He added that his company has a “great relationship” with the utility, which has marketing dollars to co-op and which helps support the local home shows.
“The utility crunch over the last six months has driven heat pump sales, which have been aided by OPPD’s marketing promotions,” Getzschman continued. “The heat pump allows us to differentiate ourselves from our competitors, so we present them as an option on all calls.
“We have sold very few a/c units in the first quarter, but our average ticket has increased approximately $600.”
Vince DiFilippo of DiFilippo’s Service Co. in Paoli, PA, said that although he doesn’t sell heat pumps, his brother-in-law does, and he participates in a heat pump program sponsored by Philadelphia Electric Co. (PECO).
“The utility offers a rebate for heat pumps in the fall,” DiFilippo said. “He gets some good jobs from it. [The program] helps him close deals.”
Working RelationshipAaron York of York’s Quality Air Conditioning, Indianapolis, IN, said that his company became involved with a heat pump program sponsored by Indianapolis Power & Light, which has helped to increase his company’s heat pump sales and the bottom-line profitability.
He added that it is important to maintain an amicable relationship with the local utilities because it can only benefit each party. “Establish open and candid relationships even if you don’t like what you see or hear,” he said. “We have not always agreed with our utilities. When they compete with us, we continue to keep open communication channels. So far it has worked well for the contractors and for the utilities.”
One Texas contractor spoke about a “former” heat pump program that paid off big time for his company. Steve Saunders of Tempo Mechanical, Carrolton, TX, said TXU Electric & Gas had a dual-fuel heat pump program for new construction from 1992 through 1998.
“TXU had an excellent program that made it a great deal for everyone to use a heat pump in conjunction with the gas furnace that the builder traditionally installed,” said Saunders. “It increased heat pump sales dramatically. We went from essentially no pumps sold to selling 2,000 heat pumps a year.
“Customers liked the option of choosing between both systems of heat delivery and really had no negative comments about the systems operating improperly. The big advantage of this program was more efficient air conditioning and a choice of heat with the temperature about 40Â°F.
“The bottom line for us was good; and I think that it really helped our total revenue and total gross margin dollars.”
Saleable Commodity Without the ProgramsLarry Taylor, president of the Air Conditioning Contractors of America (AACA) and owner of AirRite Air Conditioning Co., Fort Worth, TX, said that although his local utility does not have a heat pump program, it is still beneficial for contractors to promote heat pumps in their communities.
“We do sell a few heat pumps, and it is easy to show customers the energy savings,” Taylor said. “The biggest problem is the bad rep heat pumps have gotten over the years due to poor design and installation, resulting in cold air blowing on the customers.
“If the heat pumps are installed and set up properly, there shouldn’t be a problem. And we have to sell our own ability to solve and prevent that problem.”
Carrier Corp. recently released a comparison study of home heating costs based on the use of fuel oil, natural gas, propane, electric strip, and heat pumps in a typical Greenville, NC, residential application. The cost calculations were based on the Carrier Residential Operating Cost Program and ACCA Manual J.
Based on a 1,500-sq-ft home with heating equipment in maximum operation for 1,751 hrs at 40,000-Btu/hr design heat load for a normal winter, the average cost per heating season (182 days) was the following:
The Bottom LineSelling heat pumps through a utility-sponsored program has proven to be a smart choice for the contractors quoted in this article.
Although the results may vary across the United States, one can conclude that offering heat pumps in a product lineup — with or without the assistance of a utility program — can give customers one more option that can save them on energy costs and increase the contractor’s bottom line.
Getzschman summed it up. “I would tell other contractors that they need to get out of their comfort zone. The heat pump is a quality system and can provide years of trouble-free, efficient service if it’s installed properly.
“If you have a utility that is providing rebates, take advantage of them. They will help you sell.
“I know that one day that could change, but in our case this program has been available for at least eight years and is growing every year. At this point they [OPPD] have no interest in going into competition with us, nor would it be feasible for them.
“Go for it; heat pump sales build increased profits.”