Is It Conflict of Interest for BPI Energy Auditors To Sell Weatherization Products and Home Improvements?

I have been concerned about the potential conflict of interest of energy auditors selling weatherization products and home improvement services recommended by their audits.  I would like to get the group's opinion.  I have brought this to the attention of BPI and the NJ Home Performance with Energy Star program without much apparent interest or feedback.  In fact, the NJ Clean Energy program has basically institutionalized this practice into their contractor incentives.  As evidence, note that they require all companies entering the program to be state licensed Home Improvement Contractors.  Neither BPI nor NJ seem to have a place for independent auditors who don't have an interest in doing the contracting as well.

I see this conflict as being no different than a Home Inspector selling repair services after they find problems in a home.  In fact the American Society of Home Inspectors (ASHI) and many states prohibit home inspectors from doing this. I have run into many homeowners that have either had energy auditors install items that weren't necessary (in their opinions) or at the very least always recommending their particular product or service as part of the weatherization improvements.  I find this is most prevallent with heating and air conditioning contractors - NJ has essentially forced many HVAC contractors into the home performance market whether they like it or not in order for their customers to be eligible for state incentives and rebates.  Many could care less about the full scope of home performance beyond making the HVAC sale.

I think this conflict seriously devalues the integrity of all our recommendations.  It also creates conditions whereby consumers don't understand the true costs of the BPI home performance audit because it is buried into bundled weatherization work, which may in fact cost them more than if the audit were done by an independent auditor with no ulterior motive to make a sale.  I think this conflict will ultimately cause many very good and qualified independent home performance auditors to get out of auditing, leaving only the contractors who are making sales as a result of their audits.  I'd like to know what everyone thinks.

Tags: BPI, audits, conflict, energy, interest, of

Views: 412

Replies to This Discussion

A great big hurdle for my business is competing with the BPI contractor who offers a $50 audit or to 'reemburse' the audit fee when work is contracted.

I know for a fact that people are being 'sold' on a new heating system, windows and even a roof for one customer who recently called me as 'energy savings' products. Who controls what price the contractor is quoting; where is the competition once an audit is completed by the contractor?? In New York, NYSERDA is offering incentives to home owners who have an audit and work completed by a BPI certified contractor. How many of these contractors send out sales people that are motivated to sell the customer a marginal product?  I have been a contractor since 1972 and would never pull those antics.

What a total sham this entire program is appearing to become.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not sure why you call it a sham. The industry is rapidly growing, new opportunities are arising, and the business models are evolving to meet the demand and growth. I understand that the competition is tough, especially for sole proprietors/single offering businesses.

I've been a GC for 25 years, and have consistently had to respond to evolving/mutating/new markets, products, competition, tools, economies, and approaches. Yes, it sucks, and we either adapt or go out of business (been there a few times...), and that is all we can do. Unless,of course, you are among the lucky few who havea solid niche market that is impenetrable-- not too common these days.

One more thing: I have met a dozen auditors who have virtually zero knowledge of home science. The recommendations they can make are sometimes egregious, not cost effective, and can have negative impacts on the home's comfort and sales price. As such, I can see the value of having an experienced contractor recommend measures and offer services based not only on hard data, but on years of experience in home science.
Tom, I can't agree with you more. I currently have a client that is a customer of a local power company that is offering rebates for both energy audits and related energy efficient upgrades. There are 7 companies listed amid mine is one of them. I am one of 2 that offer both auditing and contracting.
The customer decided to go with one of the assessment only companies because they were a little cheap. He got a thorough inspection and with it he got a huge report about everything you could think of. It pointed out every little possible energy related issue and presented it in a way that only a person in our industry would understand. Many of the recommendations were for things that any practical person would not expect to deal with, let alone pay for. This client called me after the fact so I could quote him in work that actually NEEDEDto be done. When we finished the homeowner told Me that he regretted hiring the other company in the first place and that I was the first person that could actually explain to him what his home needed in laymens terms, with a perspective of the person paying for the improvements.
I am tired of everyone wanting to punish the majority for the transgressions of the minority. How about focusing on the positive for once instead of adding layer after layer that ultimately costs the consumer more in the long run.

All I ask for is a level playing field. If this program is going to be tailored toward install sales; so be it. That was not explained when I joined up. NYSERDA does offer a 'finders fee' if I contact a program contractor and give him the job;  a small percentage of his take.

As for those confusing audit reports:

Any auditor who is not professional will not last in business-no referrals.  Our reports are very user friendly and we define a scope of work so that the customer can get multiple quotes for work they need in order of pay back.

I can not compete with 'free' when a customer comes asking for an audit that takes 1/2 a day in time between travel and report. Perhaps I need to buy a $100,000 spray foam truck with equipment and material. I could also offer top of the line Energy Star window replacements that qualify the home owner for big incentives. Would my audits be unbaised?

Does RESNET have a different philosopy on raters also doing the work?

RESNET actually requires a disclosure statement that has to be signed by both parties. I think BPI should adopt something like that.
As far as the "finders fee" I am sure there are those that will have a problem with that too. It's interesting what the different programs around the country offer.

Jon, You nailed it: "It's interesting what the different programs around the country offer."

We work for two utilities on turf that is constantly changing, under rules and incentives that shift equally. I don't know how one-person auditors can hold up in these ever-shifting sands. I know it's tough on small shops like mine.

As for the disclosure statement, part of me wonders the extent to which signed papers create more liability for the utilities, hence a softer approach.

I think the utilities are primarily looking for duct and air sealing, more CFL installs, hoping the contractors will do the marketing and the customers will buy the spendier work without too much utility involvement.

 

Allen, You and I are pretty much in the same boat. We don't have the resources to gear up to do all of the work, nor the interest in tooling up for work that is high volume/low margin with widely varying demand. As such, the referral fees and %ages are all there is for us.

And, to your point, the majority will always be blamed for the bad behaviors of the few, whether it's an audit-only shop, or a contractor, or a combination. No different in the GC world. (Nor lawyers!)

 

 

Jon - I have to agree with you on that issue to some degree.  To avoid that, I always ask that the homeowner be there at the audit so I can explain the top priorities in person.  Surprisingly many people choose not to be present or really don't pay attention.  If they don't understand fully later, I think that's on them to ask questions of the auditor.  Its also good to have a knowledgeable contractor like yourself explain things again sometimes in practical terms.

My report may (and often does) have much more detail on other items that what were not discussed.  We try to give priorities (high to low) for each person so they know the things that are most important in terms of saving money and ease of installation.  But we really don't want to leave out things because the person MAY not understand or want them.  Whose to say that the limited scope that you offer after parsing out the recommendations is the "correct" scope?  None of us can say that.  We have to rely on the customer to make some judgments about what they want within their budget and objectives for comfort and cost savings.

I don't think we're trying to add layers to cost.  We're trying to avoid having them pay for unnecessary items because one auditor-contractor told them to do something that was more in the best interest of the contractor than the homeowner.  By avoid conflict of interest I think it saves money for most people in the long-run.  Or at least the homeowner can be confident that there are no ulterior motives on the part of the auditor for making the recommendations.

On the flip side of the coin, Bob, one could easily say that there are as many or MORE non-auditor contractors who will scam the customer. So the argument might be that the best judge for the best measures with the best ROI could in fact be the auditor, perhaps one who will provide the services.

Every report we do for one of the utility programs provides the same detail as a BPI audit-- the good news and the bad, the best opoprtunities, and options for Deep Retrofits, fo rthose that have the bucks to make the commitment.

For the other program, we do a short (<1hr.) "assessment," a brief peek at the crawl, the attic, appliance labels, the panel, the walls, and that's it-- all goes on a checklist, and we're additionally tasked with installing CFLs and promoting the program-- essentially upselling to a full audit.

So we ARE in ointeresting times, with all sorts of scenarios where the majority of ethical behavior by our industry can be undermined by unethical behavior of the few. And what should we do? Cry to BPI and have them become enforcers? I doubt they want that. Cry to the utilities who put bread on our table? No way--

BTW, if you haven't already done so, check out the EPS tools developed by Earth Advantage. I just completed a training with them-- excellent instructor, a very functional product with customer printouts that the average Joe can understand, along with a data engine behind the scenes that appears to do it right. The approach and reasoning for the data inputs and outputs makes a lot of sense. (I'm not a paid promoter, just sharing, is all)

This is a great thread.

Thanks Tom.  I'll take a look.  However, I just purchased a home inspection software, Home Gauge, which also has good reviews from a variety of places. I loaded with all my pre-written energy audit recommendations rather than using their stuff.  Report writing is my specialty because of all the sensitive environmental issues I get involved with.  I agree, it has to be written in easily understood language.  That is my work product rather than building something, and I take a lot of time developing the report accordingly.
I have to agree with your last comment the most. What we are doing is what more people in our industry SHOULD be doing. Simply talking.
We have the Home Performance w/ Energy Star program here through Georgia Power. The program has a specific protocol and the reports give an ABCD priority to the findings of the audit. The only problem with the program is that the homeowner must compete all of the A's & B's to receive the certificate. Some home owners just don't have the finances available to complete ALL of them.

I actually based my program on this, where I prioritize the needs based on the findings of the audit. The difference is that I make specific recommendations based on areas of the home (attics, knee walls areas, basement). I can then advise them on where to start if they can't afford to do all the work.

For example, I have a client with very little insulation in the attic and no air sealing. The duct system is a disaster and there is no insulation under the floors in the crawl spaces. Hot weather is coming here soon and she has bad allergies. So based in those issues and available funds, we are air sealing and insulating the attic and sealing all the ducts. In the fall we will focus on the crawl spaces. A decision based on science, common sense, and affordability.

The assessment only guys (and there are some really good ones here) would have given her a report on every tiny issue her home has, in a language that is hard to understand for the avg Joe, and in the end left the home owner with no idea where to start.

I can certainly understand your point, because I have contractors that I deal with that want to offer services that their business has nothing to do with just to make more money. I usually just tell them to stick with what they know.

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