How to Get Paid for R22 Recovery
New models focus on paying contractors for dwindling refrigerant.
By H. Brad Kivlan, IV. Brad Kivlan is the President of Kivlan Group, a manufacturers’ representative and market-consulting firm. Brad has been involved in the sales and marketing of YELLOW JACKET® recovery equipment since 1999. He is a member of the marketing team tasked with developing the new Dynacycle recovery and reclamation program for Dynatemp International, Inc. Reprinted with permission.
Does it pay to recover refrigerant during an HVACR job? It is the law, and recovering fluorocarbons is recommended for environmental, climate, and human health. But can you make money doing it?
If you are like most contractors, you’ve paid for the EPA test and certification, bought a shiny new recovery machine, and have an empty recovery cylinder that is begging to be filled. (How much did these set you back, about $1,000?) You recover some R22 at a couple jobs and bring your filled recovery cylinder to your local supply house. Hopefully you’ve billed the property owner for your time, a portion of your recovery equipment, and reclamation costs. What happens next can mean the difference between profit and loss for your company’s reclamation services.
Why You Need to Recover R22
According to the EPA (www.epa.gov/ozone/title6/608/608fact.html), Section 608 of the Clean Air Act “prohibits individuals from intentionally venting ozone-depleting substances used as refrigerants (generally CFCs and HCFCs) into the atmosphere while maintaining, servicing, repairing, disposing of air-conditioning or refrigeration equipment.” If a contracting company doesn’t comply, it could be fined up to $37,500 per day, which applies to any violation of the Clean Air Act.
Production of R22 is being phased out slowly until 2020, when only reclaimed R22 will be available to service remaining equipment. Existing R22 equipment can be serviced in perpetuity, but unknown is whether or not the refrigerant will be available at a reasonable price. If the price of R22 increases as supplies decrease, it may eventually be cost prohibitive to repair and charge an existing R22 system. This is where the opportunity to actually make money off of R22 reclamation lies.
Current EPA regulations and interpretations have caused speculation that R22 will be in short supply, and prices will climb well above the prices of two years ago. That means refrigerant suppliers want the R22 and will pay for it. Most — if not all — reclamation facilities are paying wholesale distributors for R22 that meets a high purity standard.
Choosing a Recovery Model
Until recently, most service technicians and companies would bring their recovered refrigerant to their preferred wholesale distributor for processing, drop off the cylinder, pay a fee of around $50, and then take an empty, refurbished recovery cylinder for more collection. If they passed this fee on to the building owner(s) that were serviced, the contractor likely broke even.
But the model is changing to one in which the wholesaler is passing some of the payments they receive from reclaimers on to their contractor customers. Some reclamation companies – such as DynaCycle – are introducing programs that pay the wholesaler to make a payment to their contractor customers in the form of store credits.
Since payments are based on the market price of R22, with the DynaCycle model, pay rates will increase if the market price of R22 increases. DynaCycle’s program also allows contractors to use an existing recovery cylinder or apply recovered-refrigerant credits to purchase a 50-pound, lightweight, high-pressure DynaCycle cylinder. DynaCycle is not a cylinder-swap program. You own your cylinder and you get your cylinder back once the gas is removed from it.
When evaluating the recovery programs offered by your wholesale partners, ask these questions about attributes of the program that will impact your profitability:
- Which refrigerants can I be paid for?
- What is the per-pound pay rate for R22 and other refrigerants?
- Are pay rates fixed, or do they move in conjunction with market pricing?
- Is the pay rate based on the purity of the recovered refrigerant?
- Does my recovery machine have a purge feature that will prevent degradation in R-22 purity levels when moving between jobs utilizing dissimilar refrigerants?
- Can I use my existing recovery cylinders, or must I purchase a new cylinder to be a part of the program?
- Are there any fees associated with the program?
- Are there destruction fees for mixed gas?
- What is the turnaround time once I submit a filled recovery cylinder to the program?
- Can I use my credits on any purchase, or must it be on refrigerant purchases?
- Will I receive reports that will keep me in compliance with EPA record keeping requirements?
- Are you guaranteed a future supply of R22 that is equal to the amount of recovered R22 that you have recovered and submitted to a program?
I encourage you to take a look at how you are managing your refrigerant business and evaluate the recovery programs that are available. Refrigerant reclaimers and suppliers are depending on your recovery activities to ensure future availability of R22 and other HCFCs and HFCs. Make sure you get paid for your efforts.