Death by a 1,000 Cuts A Home Performance Contractor's Perspective

 
Here at Efficiency First California, we hear from many of our members about how they are faring and what they are experiencing in the marketplace. This feedback is critical for us to be able to do our job representing what is best for the efficiency industry in California.

The following letter was sent to us by Beanstalk Energy, Inc. headquartered in the City of Sonoma, and lays out how they are feeling about Energy Upgrade California and its impacts on their business. We know that there are many different business models and experiences across California and wanted to share Beanstalk Energy’s take on the situation, and hear from our members more broadly about how things are on the ground.

A big thank you to John Craig at Beanstalk Energy for taking the time to share his experience to date.  

Whether John’s experience is similar to or different from your own, we need to hear from you, so we can represent our members. Efficiency First California is committed to fighting for what is best for the residential efficiency industry in California. It is time for a paradigm shift and we need your help to lead the way. Please give us your feedback and help us help you!

Death by a 1,000 Cuts — 
A Home Performance Contractor’s Perspective

By John Craig, Beanstalk Energy, Inc.

All the people I know who have attempted to become a viable Home Performance Contractor are passionate and knowledgeable building contractors. We recognized the need and the value of Home Performance and all entered into the arena in order to grow the industry and build a better building. We took the required BPI classes and tests to become accredited (three weeks of classes minimum plus continuing education), purchased our test equipment (about $10,000 worth) and signed up for the programs that were going to build the industry. We were told about rebates and the program people would be developing the marketing plan to drive customer to our doors. They did not tell us how hard it would be to make money and stay in business.

First off, Home Performance is hard enough. One must have the basic knowledge of all the building trades and an attention to detail to make all the parts work as a whole. We are trying to fix homes and buildings that have issues. Most of the work we do is in crawl spaces and attics (very difficult places to work in) and cannot be seen by the homeowner (not a granite counter top). Once we start on a project we are responsible for all the previous work as we pull permits and get inspections and measure our results at the completion of the job. But let’s start at the beginning.

Once we got into a rebate program we were at the mercy of the program implementers, well-intentioned people that did not understand time, money and profit. The implementers and program designers, under the guise of consumer protection, decided that rigorous verification was necessary to measure the results. Sounds good on paper; lots of paper and forms and computer models. As contractors we now had to make additional investments of time and money to learn the modeling software, how to submit for a rebate (on forms that had not been properly tested) to people that did not understand what we are good at: fixing buildings, not filling out multiple forms. Some of us even hired staff to help us manage paperwork.

Once we started testing houses and trying to sell jobs we quickly became aware of the many pitfalls of the programs:

The Sales cycle is brutally long:

  • The computer model had flaws in it, was clunky to use and did not reward high quality work (it was not designed for the Home Performance industry, but it was the only one approved by the program)
  • We had to adjust our proposals and work scopes to fit into the model and program (often several times as the client was price/rebate sensitive)
  • The education of the client was challenging and time consuming
  • The sales cycle was extended because of the modeling and submission time to get approval for the job took too long

The Consumer protection aspect of the programs was hugely expensive to the program and to the participating contractors.

  • The program people wanted all the forms filled out precisely and would send application back for minor adjustment
  • There were multiple forms and approvals throughout the process that need to be filled out, signed and submitted
  • We had to compete with HERS providers who did not view a project the same way as we did (they did not have to install their recommended measures and make money doing it). They often created confusion with a customer as who the expert was.

It is hard to compete when:

  • We were required to get permits (which we agree with) but our competition does not
  • It is more expensive and time consuming to do a comprehensive job then to do individual items
  • The current code makes it easier for the status quo (for example, duct leakage on a smaller system needs to be tighter than a larger system)

While starting a program in the middle of recession in order to put people back to work might have some political value, it did not work in the real world. The program wanted people to spend money on their homes. But the homes were worth one third to one half of what they were in 2007. People just did not have the available resources and confidence to spend money in order to get a rebate for something they did know they needed. It all sounded good and homeowners were interested until it came time to write a check. Home Performance contractors did not get paid to educate the market.

Other Issues:

  • Changing the program implementers and required forms three times in three years The burden and cost to relearn the rules and forms was forced on the Home Performance contractor
  • CAZ issues and confusion — there is enough discrepancy among the Home Performance community but then get some utility lawyers involved and watch out. In addition, the people making the rules do not have the real world experience to make the rules.
  • Selling a rebate as a product. The product is Home Performance; we make homes more comfortable, healthy and energy efficient. A rebate is just another reason to do a Home Performance project. The rebate should be a differentiator.

If I were King, I would:

  • Simplify the role of the program and the implementer
  • Let the contractors make money
  • Measure results based on actual utility bill information
  • Spend some marketing money on public awareness of the benefits of Home Performance through traditional print (magazine and newspaper) marketing
  • Make rebates bigger
  • Create a viable financing package

_________________________

Does this sound like your experience?  Do you want to help fix EUC? 

Efficiency First California (EF California) has brought the voice of the home performance contractor to stakeholder discussion about Energy Upgrade California since the program began, as a member of the EUC Statewide Working Group, and facilitator of the NorCal Forum and Los Angeles EFCA/EUC meetings where contractors and program implementers meeting monthly to discuss program and market challenges and seek solutions. EF California has consistently fought for market-building policy in the California Public Utility Commission and California Energy Commission policy and regulatory systems. There have been some significant wins, but many barriers remain that hold back the power of the private sector. (Seewww.efficiencyfirstca.org for information on EF California’s market-based solution initiative.)

Do you want to help fix EUC? If so, join the EF California Energy Efficiency Market Contractors’ Committee. To do so, email Chris Cone atchris@efficiencyfirstca.org  Lend your voice to our ongoing efforts to improve the EUC program, and build a robust and sustainable market for home performance services. Don’t forget to visit: www.efficiencyfirstca.org to view the EUC 2.0 Webinar video.
 

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About the Author:
John Craig has been in the construction industry for over 30 years. One of the North Bay’s first BPI-Certified Building Analyst and Envelope Professionals, John is a Professional LEED AP, Green Building Inspector, and one of the founding members of Efficiency First. A Licensed General Contractor since 1992, John has extensive construction management and supervision experience in high-end residential projects and light commercial projects. In 1997, John starting installing solar thermal and PV, which lead to a renewed, focused interest in energy efficiency first. John lives in the City of Sonoma with his wife, three children, a dog, and two cats. John likes to fish when he isn’t crawling under houses or running projects.

 
 


JavierSaucedo
7/21/2014 14:38:33
 

You are right on it 

Reply
 
2/4/2015 13:09:28
 

A big thank you to John Craig at Beanstalk Energy for taking the time to share his experience to date.

Reply
 
Larry Janesky
2/23/2015 11:02:54
 

John is on target but he stops short at the conclusion. A contractor can never be successful within programs. The answer is to eliminate programs and let the free market develop. Anything else is a recipe for bureaucracy, red tape, and people who don't have a personal stake or knowledge enough to make decisions spending the publics money unwisely. Further, private contractors should not have to compete with the govt or a false subsidized market. Instead of helping to create a market driven industry, programs kill it.

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8/27/2015 11:57:36
 

A general building contractor is a contractor whose principal contracting business is in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of at least two unrelated building trades or crafts, or to do or superintend the whole or any part thereof.

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