Wrongly Installed Units Don't Help Save Money

[Editor’s Note: This letter is in response to the article “HVAC Is Key to Saving Cash,” April 6.]

I read your headline story “HVAC is Key to Saving Cash” [April 6] with much interest. I’ve been screaming this from the rooftop of every house we’ve serviced for the last 10 years since I’ve become a performance-based contractor.

My excitement quickly died once I read the results from the survey performed by the Shelton Group. This is the problem with any survey you read about quoted in any press.

First, who is surveyed? I’m assuming from the article it’s the homeowner who purchased the equipment. Do the homeowners know what the “measured efficiency” (not rated, but measured) of their old system was, or their new system is? I’ll bet my business the installing contractor doesn’t even know.

Second, do the survey performers know their target is constantly moving? Was last year’s season colder or warmer than this year’s season and how do you correct for that? The price of energy is constantly changing during a season and how is that factored in?

Asking consumers if their bill went up or down, granted, is the consumers’ perception of whether they saved money. But this is far, far from the whole story.

The Shelton Group’s three theories for 32 percent not seeing a reduction in their utility bills was right from Comedy Central. Performance-based HVAC contractors all across the country are banging their heads on their properly designed duct systems.

The first theory of rising energy costs I’ve already discussed. This is the excuse I used to use before I knew better. It was easier to say it was the big bad utility company than to admit I didn’t know why the bill didn’t go down after installing high-efficient equipment.

The second theory is that consumers now have more devices to plug in. They didn’t have these devices last year? And how does that affect their gas bills? This just seems like another lazy excuse to blame the problem on something or someone else.

The third theory, that consumers set their thermostats lower now because they have higher-efficiency equipment, is a new low (pun intended). Blame the consumer! Of course! Blame the big bad utility, the manufacturers of electronic equipment, and blame the customer. Blame everyone but ourselves.

It wouldn’t, it couldn’t be us. The manufacturer’s label says the equipment is 90 plus.

A recent survey of over 100 homes in middle America showed that the average home furnace delivered only 59 percent of its rated capacity because of the way it was installed. Regardless of the rated efficiency.

This one fact, alone, calls into question the remaining 53.3 percent of consumers who said their bills went down. Did they go down as much as they could or should have?

Understand delivering 59 percent of rated capacity was the average of all the homes tested for “measured performance.” That means that 50 percent of the homes were less than a delivered capacity of 59 percent.

James Coleman
President
The Metro Group
Chicago

The Key to Enduring the Recession Is Innovation

[Editor’s Note: This letter is in response to the variety of articles on surviving in recessionary times.]

As a thinking innovator/entrepreneur, I honed my observation skills to notice that hotels in resort areas throw out a lot of heat through their air conditioning system. At the same time, there are fuel deliveries to the hotel twice weekly to feed boilers to generate heat for the guest room and kitchen hot water. Why not integrate the two, I thought; provide some beneficial cooling and use that heat to heat the hot water tanks instead of burning fuel! Hotels could save $5,000-$20,000 a month. We found a small manufacturer in Mexico that made a machine that could do this, but would it be accepted by the market?

It was not easy to sell an innovation but through persistence we gained the trust of eight hotels to accept and install the new system. We saved over a million dollars in fuel expense for the customers and avoided over 2,000 tons of carbon discharge for our environment.

We learned that the Mexican manufacturer did not have the quality or diligence that would be required for the international market participation. We applied for our own patent. We learned to be frugal.

Now we are back in the United States having earned a letter of intent from Marriott International to install our patented unit in their properties. The headwinds of a recession have slowed us down a bit with our final development. However, we are applying the same persistence and diligence that has gotten us this far.

Our suggestion is a radical change of business model from capital purchase to the technology cycle positive cash-flow lease. If your product can factually save a customer $10,000 per month over what he is doing, lease it to him turnkey installed with service for $8,000. He’ll be happy to put money into his pocket instead of taking money out. This forces you to build a robust product and the customers like stuff that doesn’t break.

If you lease for 60 months, 20 months should pay for the cost of materials, labor, service and capital expense, 20 months is profit to the stakeholders and 20 months goes to research and development for the new product offer in month 61. You’ll get most of your innovative ideas from your customers.

My advice to fellow innovators is to always keep a positive attitude. When the going gets tough, the tough get creative.

Ted Jagusztyn
Managing Director
CoTherm of America
Fort Lauderdale, Fla.

Send correspondence via e-mail to letters@achrnews.com.

Publication date:06/29/2009