Contractors thrive on weatherization business

KNOXVILLE, TENNESSEE - Last winter, John and Joey Letterman of Letterman & Sons Home Improvement Contractors spent several cold, slow weeks setting up their Web site and readying marketing materials for what they hoped would be a better building season to come.

These days, they can hardly keep up with demand.

The father-and-son crew, based in Knoxville, is reaping the benefits of a burst in weatherization business, courtesy of a new round of TVA incentives encouraging customers to tighten and tune up their homes. The Lettermans also are benefiting from the state's low- to middle-income weatherization program, which has expanded exponentially thanks to an influx of federal stimulus dollars.

"Last year this time we just had three weeks with nothing," said Joey Letterman, who joined his dad to start the business a couple of years ago. "We've had to reinvent ourselves."

That involved becoming an approved contractor through a TVA training program, which allows the two-man company to bid on TVA weatherization projects. Letterman & Sons also is an approved contractor for the Knoxville-Knox County Community Action Committee, which is administering the state weatherization program for Knox County.

"I've always been energy-conscious," said Joey Letterman, explaining that he would help customers make their homes more energy efficient as part of traditional renovation projects before the company became certified through TVA. "That's what the future's going to be."

The majority of projects the Lettermans have taken on have come through TVA's Energy Right program, which provides incentives to customers for myriad energy efficiency upgrades including sealing doorways, windows and other outside openings, tuning up heating and air conditioning units or buying new ones, beefing up insulation and replacing windows and doors. Through the program, customers obtain an audit and then contractors bid on recommended services, with up to 50 percent of the cost, within a prescribed limit, being reimbursed by TVA.

The state weatherization program also has made a big difference for many local contractors, some of whom have turned to weatherization as a way to stay busy during tough times in the residential construction business, said Sharon Daugherty, energy administrator for the East Tennessee Human Resource Agency, which serves 17 local counties.

ETHRA has processed more than 2,400 weatherization applications - many more than any other agency in the state - and has beefed up staff as well as contract auditors and builders to meet the demand.

"I have a couple guys who are doing (energy) audits... that are actually contractors who would normally be building half-a-million dollar houses that have absolutely no work," Daugherty said. The agency has added 15 contract auditors to its full-time staff of three and added about 15 building contractors to its previous list of four, she said.

Each project garners three to four bids, Daugherty said, and the increased number of contractors vying for work has one side benefit for the agencies.

"With it being competitive bidding for jobs and so many contractors competing for jobs, it's certainly kept the prices down compared to what I had last year," she said.

Not all contractors are thrilled with the state program, however.

Letterman & Sons typically avoids bidding on state weatherization projects because of the paperwork involved. They've completed three projects for Knoxville-Knox County CAC, said John Letterman, but as a small company without administrative staff, the time involved to fulfill the documentation requirements doesn't make it as economically viable as TVA work, which, he said, requires only a couple of forms.

"If we were set up to do 20 (projects) a month, it'd be profitable," he said.

Erik Daugherty, (no relation to Sharon Daugherty) is founder of Nashville-based E3 Innovate - what he terms a "comprehensive home performance" contractor - and has been doing home audits and energy efficiency improvements as part of TVA's pilot work in weatherization. The program began in Middle Tennessee as a pilot project before being rolled out to distributors statewide.

State agencies have been slow to "get their act together" when it comes to lining up weatherization projects, he said, adding that TVA's energy improvement program, subcontracted to a Massachusetts firm called Conservation Services Group or CSG, has developed a good system for processing and managing the federal power provider's weatherization work.

"Any time you implement a program you have to set standards, but there has to be a learning curve for everyone," he said. "TVA has been better at providing training and providing a clear demonstration of what's expected."

Daugherty said extra paperwork required by the federal funding also presents challenges, although the TVA jobs are starting to require more documentation as well, which can prove problematic for the very small businesses such funds are positioned to help.

"We just got an e-mail from CSG... and they sent us a whole list of requirements of what they want in their invoicing," he said. "These entities need to watch it. You can't afford to operate a business and have higher and higher overhead expenses."