The Trouble With Home Star

Home Star, passed by the House and stalled in the Senate, is a proposed federal program that would offer rebates for certain residential energy efficiency improvements and equipment upgrades.

The Air Conditioning Contractors of America (ACCA) and several other major contracting organizations have raised concerns with some aspects of this program. We don’t disagree with its stated goals - to improve energy efficiency and stimulate construction jobs. We support those goals wholeheartedly.

But just because legislation has lofty goals doesn’t mean it’s headed in the right direction. Unfortunately, there are a few aspects of the Home Star legislation that may undermine its best intentions.

Under the Senate version, contractors would be required to offer rebates at the point of sale, and then wait for payment from a “rebate aggregator.” The bill says the aggregator must pay within 30 days, but there is no penalty if they don’t. Even if there was a penalty, that’s small consolation to a contractor left holding the bag.

Our members work in the real world. They’ve had plenty of experience with rebate programs at the state and local level, and it’s rare to get paid on time. One member told us an aggregator took 17 months to “catch up” on payments - owing more than $53,000 in rebates that averaged at around $350 per customer. This is a common story.

Small, community-based contractors - the majority of our industry - can’t afford to front loans for customers of up to $8,000 per job. This requirement offers a competitive advantage to large companies, including the national chains and franchise operations that have been funding the Home Star campaign.

Also, the Gold Star part of the program, which focuses on whole-home energy improvements, requires that contractors be accredited by the Building Performance Institute (BPI).

We think it is very worthwhile to promote whole home performance. But this accreditation requirement is short-sighted in a number of ways.

First, it sets a bad precedent by establishing a monopoly over participation in federal incentive programs. We do not think that any particular organization - or two, or three - should maintain control over federal incentive programs.

Second, while we are sure that BPI has good intentions, it requires the use of proprietary standards that were not developed in accordance with ANSI guidelines for openness and transparency.

Third, and most important, Gold Star allows contractors, accredited by a single organization, to verify their own work as qualifying for substantial rebates. Only a small percentage of jobs performed by each contractor will be subject to third-party verification under the current proposal. We think this system is ripe for abuse at taxpayer expense.

If the Gold Star program is to have any credibility, we believe it must require that contractors have their work verified by independent, third-party auditors. Without true third-party verification, there is no evidence that the desired home improvements have been achieved.

If contractor accreditation has any objective value, then contractors would pursue it to ensure that their work would pass muster with a third party. If it doesn’t have any marketplace value - and is only being pursued to comply with a federal mandate and pursue taxpayer-funded rebates - then it is an unproductive burden, and we can’t support requiring it.

Many of ACCA’s leading members have embraced the whole-home performance concept. Discussions of whole home performance contracting have been a mainstay of ACCA conferences and publications for many years.

Yet many of Home Star’s champions have trumpeted it as, “the birth of a new industry.” I’m afraid that some companies, whose experience is primarily in low-cost, low-skilled “weatherization,” see this as a chance for them to take control of the professional home energy services industry.

It is time for our industry to decide how we want to move forward. Do we believe in an energy efficient infrastructure driven primarily by the marketplace, with occasional incentives, when needed? Or do we want to become sub-contractors to a “new industry” that has no natural marketplace, no experience in selling energy efficiency on its own, and may be lining up for government subsidies for years to come?

Our contractor leaders think the choice is clear.

For the alternative view, see “Home Star Is a Workable Solution.”

Publication date: 08/23/2010