Contractors in the United States must abide by new HVACR regulations issued by the Department of Energy (DOE) that went into effect on January 1, 2023. Here are some practical details about how they will affect installations, conversations with clients, and more.

SEER Changes in Effect

The DOE changed the efficiency metrics under which all new, single-phase residential or commercial heat pumps and air conditioners must abide. Related – the standards vary by region and depending on where the equipment installation or service occurs.

The southeast and southwest regions of the country are being mandated by air conditioner standards superseded by federal guidelines affecting all other regions (see What’s New with SEER Ratings?). In those two regions, compliance depends on the date of installation. National standards apply to all other regions in other parts of the country. Conversely, heat pumps only have one standard – these must follow the federal guidelines which apply to all regions.

What’s New with SEER Ratings?

HVACR regulations affect the Seasonal Energy Efficiency Ratio (SEER). A higher SEER rating generally translates to better energy-saving potential in the equipment. More specifically, it’s the ratio of an air conditioner’s or heat pump’s cooling output over a typical cooling season divided by the energy consumed in watt-hours. However, the DOE now uses the Seasonal Energy Efficiency Ratio 2 (SEER2). It raises the total external static pressure testing conditions. DOE officials believe this change will more accurately reflect the real-world setting of a ducted residential system. People must now abide by an updated testing procedure called M1. It raises the system’s external static pressure by a factor of five.

The new testing procedure also affects the Energy Efficiency Ratio (EER) and Heat Seasonal Performance Factor (HSPF) for the respective newly manufactured products. Those measurements get reflected as EER2 and HSPF2 to indicate the M1 testing updates.

Now, residential HVACR equipment in the southeast and southwest regions of the United States must have a minimum SEER rating of 15, while those elsewhere need a minimum of SEER 14. That translates to 13.2 SEER2 in the north and 14.3 SEER2 in the southeast and southwest.

However, the SEER2 rating differs for units with certain British thermal units per hour (BTUH) ratings. Contractors should verify those specifics by comparing the regulatory details to the products they wish to install.

Similar changes affect commercial single-phase air conditioners and heat pumps in the 3–5-ton range. Sources familiar with the matter also indicate the DOE may release standards for equipment outside the 5-ton range, but they’re still under consideration.

Manufacturers Had to Redesign Products

Homeowners make numerous decisions when having HVACR equipment installed. Many of those decisions are due to higher consumer demand for energy efficiency. For example, spiral ductwork has exterior seals that can save energy by being less prone to leaks.

People researching new equipment before these HVACR regulations were applied may have noticed some models suddenly became unavailable or other signs of possible supply chain difficulties. These likely occurred because manufacturers had to change the designs of existing products to make them compliant.

An Expected Price Increase

Companies had to make the necessary changes by January 1, 2023, even if their products met former SEER requirements. People in the industry estimated that consumers would see prices for HVAC equipment increase by up to 30% as companies made the necessary design tweaks.

However, since the 2023 regulations only apply to new equipment, manufacturers will still supply replacement parts for existing systems. That will continue for approximately the next decade, which is the typical warranty coverage window for HVAC equipment.

Helping HVAC Customers with Cost-Related Jitters

If customers have concerns about the costs of their HVACR equipment, suggest various options that may make the expenses more manageable. These can include things like tax credits and financing, if available.

Additionally, HVACR companies in the northern part of the United States can deplete their stock of non-compliant equipment provided the manufacture date is before January 1, 2023. Remember – the rules differ in the southeast or southwest of the country, so check your region for specific guidelines.

Contractors should also explain the long-term benefits of cost savings and efficiency that may alleviate any cost-related concerns. Even if a new HVACR system has a higher-than-expected upfront cost, it can pay for itself over time through energy savings. This is worth noting if a customer has any trepidation about the price. The new, higher SEER2 numbers typically translate to reduced energy consumption. That should translate to lower bills, too.

It’s also important for contractors to take the time to learn about their client’s pain points. Many of today’s urban home designs reflect people’s increasing prioritization of their health, especially indoor toxins. From an HVACR perspective, that might mean more installation of models that remove toxins better than the competing options.

When speaking to commercial clients, point out that planned system upgrades often make unplanned downtime less likely. If a large apartment complex has had an HVACR system in service for the last nine years, now might be an excellent time to update it to comply with the 2023 HVACR regulations. Getting educated about all the current efficiency and other performance metrics will help a contractor identify the likely payoffs of going ahead with an upgrade and make it easier to leverage the benefits with clients.

How Can Contractors Stay in Compliance?

A federal Energy Labeling Rule requires that HVACR manufacturers attach yellow stickers to their products to inform people about estimated energy usage. These Energy Guides show consumers approximately how much it will cost to run the appliance per year. They also contain the results of applicable tests, such as M1 for HVACR products.

Broadly speaking, contractors risk penalties for installing HVACR equipment after January 1, 2023, if it does not abide by the new regulations. The same goes for manufacturers. Those entities are no longer legally allowed to sell their non-compliant products. Additionally, some local building officials have indicated that they will not issue occupancy certificates for buildings with non-compliant HVACR products.

What if a contractor purchased equipment manufactured before the deadline but can’t install it until after it passes? *

    •    The installation can occur if the SEER rating is at least 15, per the Energy Guide label.

    •    Contractors have another option for equipment with lower SEER ratings, they can modify it to meet the minimum SEER2 requirements. 

NOTE: If a contractor chooses to modify, they must get the altered equipment recertified by the manufacturer or a manufacturer-approved entity.

*When the Department of Energy previously changed energy efficiency ratings, the organization instituted a grace period to give contractors, manufacturers, and associated entities ample time to complete the transition. However, this time around, a grace period only applies in the parts of the country where HVAC companies can sell off their existing equipment made before the cutoff date.

Leverage the 2023 HVACR Regulations as a Selling Point

Many commercial or residential clients of HVACR companies in 2023 will need more knowledge of the regulations detailed above. You will be that source. So, if you use your in-depth understanding of what’s changed to stand out from competitors, you can leverage the regulatory changes and your readiness to adapt, as a selling point.

First, put the information in language customers can easily understand – that is crucial. Otherwise, people will quickly become overwhelmed by acronyms and rating details and not learn information that will make them lean into the purchase. Put yourself in the position of your target client and discuss the matter of utmost importance to that customer.

Clients may not immediately grasp the meaning of seemingly small changes and the impact of energy efficiency ratings. But if you explain the changes in a way that matters to consumers – not only energy efficient but money-saving – it will resonate with people.

The 2023 HVACR regulations may require you to make operational adjustments. However, since the DOE announced the changes well before they went into effect, many businesses in the industry have been preparing for a significant time. The content above will help you quickly understand how “what’s new” can impact your business and potentially influence discussions with current or potential clients in a profitable way.

1 EIA, (2019, July 30th)
Effi ciency requirements for residential central AC and heat pumps to rise in 2023
https://www.eia.gov/todayinenergy/detail.php?id=40232

2 Barker, H (2021, Oct.28.)
Advantages of Spiral Ductwork
https://hmfduct.com/2021/10/28/advantages-of-spiral-ductwork/

3 Wells, B (2022, Nov. 16th)
Inside Indiana Business: HVAC equipment cost increases mean it’s time to repair or replace heating and cooling systems
https://www.insideindianabusiness.com/articles/hvac-equipment-cost-increases-mean-its-time-torepair-or-replace-heating-and-cooling-systems

4 Sumberg, B, (2022, Dec. 8). Compliance with the
Department of Energy’s New SEER2 Requirements Before January 1, 2023, and What To Do if You Cannot Timely “Install”
https://www.jdsupra.com/legalnews/compliance-with-the-department-of-3046172/

Emily Newton is the Editor-in-Chief of Revolutionized (www.revolutionized.com), an online magazine discussing the latest industry innovations and trends.