The Journal Gazette
Thursday, December 03, 2015 6:19 am

Water heater prices bubbling up

Rosa Salter Rodriguez | The Journal Gazette

Quick – when was the last time you thought about your water heater?

We thought so.

Now might be a good time to start thinking, say manufacturers and installers of the appliance in every home that helps make laundry clean and showers comfortable.

New federal rules that require household water heaters, whether powered by natural gas, electric or oil, to be more energy efficient went into effect April 16.

And, while that sounds like a good thing, it may be not so good for homeowners who generally don’t give their heaters a second thought.

That’s because the rules forced manufacturers to stop making old-style water heaters, meaning homeowners likely won’t be able to replace their current water heater with an identical, or similar, unit.

And, when they do go shopping for a new heater, they’re likely to suffer sticker shock.

The U.S. Department of Energy calculates that the new standards will save consumers about $63 billion on their energy bills over the next 30 years – while avoiding 172.5 million metric tons of carbon dioxide, a greenhouse gas linked to global warming, being released into the air. That’s equivalent to the emissions of about 33.8 million automobiles, federal officials say.

But the experts also say the savings for individual homeowners are likely to be modest, in the realm of a 4 percent efficiency gain for the typical heater holding 55 gallons of water or less. Heaters holding more than 55 gallons will save more.

Ray Abbott, service manager for Korte Does It All in Fort Wayne, says the new units gain their energy benefits in two ways. The smaller units simply have added insulation, he says, while the larger ones added a heat pump system that takes heat from the air to heat the water and then expels the cooled air.

That change means that typical heaters are now a smidge taller or wider than the old-style units, Abbott says. And that means trouble for homeowners who’ve squeezed existing units into tight spaces and find the new models don’t fit. 

"A lot of people are dealing with that right now," he says. "A lot of times they have to go down from a 50-gallon heater to a 40-gallon" because finding an alternative spot for the heater is not always easy, or possible, in smaller, older homes.

The over-55-gallon heaters are substantially bigger, because of the compressor or evaporator coil, he says, and costs are substantially higher. Including installation, some of the larger models cost twice as much as their conventional cousins, he says.

Regardless of size, the newer models cost more, area installers say, because manufacturers had to retool their plants to build the new heaters, and costs are being passed on to consumers.

Tim Carter, author of the popular "Ask the Builder" email newsletter and blog, says the larger water heater models have more moving parts that can fail over time. That may cost consumers in the long run, he says.

"My hope is that these new government regulations don’t take us down the same pathway as the first-generation low-flush toilets that didn’t work (very well)," he says.

He recommends that consumers with newer models of old-style water heaters consider buying extra anode rods to extend the appliance’s life.

Water heaters fail, he explains, because the rods disappear with use, and the electric current in the water starts to attack the tank, eventually causing a hole. If the rods are replaced every five years or so, the life of the heater can be substantially extended, he says.

Generally heaters last about 10 years.

A sign that your water heater may be about to fail is cloudy or rusty colored hot water, Abbott says, adding the new rules have shaken up the market for several months.

Because the new standards’ April 16 deadline applies only to the manufacture of old-style units and not to sales of them, some sellers were advertising that people should buy a water heater right away and avoid price increases, he says.

That led to less inventory of older models at a time when manufacturers were still ramping up production of newer ones, he says. Some customers faced waiting lists for heaters, and some manufacturers put retailers on quotas for traditional heaters.

Meanwhile, some buyers who wanted to replace a unit larger than 55 gallons started switching to two smaller units because of the additional cost, Abbott says.

Also, he says, the new large units expel a lot of cold air and some people found basements got uncomfortably chilly.

Still other customers, Abbott says, are giving "tankless" or "on-demand" water heaters a second look. Tankless models are efficient, heating only the water needed at a particular time, but they typically cost more up front, he says.

Now, the cost differential is less, he says, and customers "are finding them more attractive."

Because installers had several years between the proposal of the new rules and their effective date, many sellers and installers were prepared, Abbott says.

Still, "I think a lot of people, customers, were surprised by it," he says of the new rule. "But … it is what it is. … This a mandate, and there’s nothing we could do about it."

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