New Furnace Efficiency Standards Withdrawn

The federal government has agreed to withdraw new rules that would require consumers in more than two dozen northern states to purchase high-efficiency furnaces beginning this spring.

The decision is the result of a legal settlement between the Department of Energy and the American Public Gas Association, which argued the new regulations would prove too costly for certain consumers and ultimately steer some of them to heat their homes with other, less-efficient fuels.

The parties last Friday asked the U.S. Appeals Court in the District of Columbia to vacate the new rule and restart the process of establishing new furnace efficiency standards.

The APGA, a group of public natural gas systems in 36 states, and utilities applauded the decision, which they said could have been burdensome for some consumers. Energy efficiency advocates said the government’s retreat is a huge setback for efforts to pare energy use and reduce greenhouse gas emissions.

The furnace standards would have required new units installed after May 1 in 30 northern states to have efficiency ratings of 90 percent or greater. Current standards require at least 80 percent efficiency.

The rules were finalized in June 2011 and were scheduled to take effect in May.

The APGA argued in its lawsuit that the added costs of installing high-efficiency furnaces, which require additional venting and other modifications, could drive some consumers to switch to electric heat or kerosene.

The association also argued that the fast-tracked procedure used to establish the new standards was flawed. Under the settlement, which requires court approval, the Energy Department will use a more traditional rulemaking process to develop furnace standards – one expected to take at least two years.

St. Louis-based Laclede Gas Co. isn’t a member of APGA and wasn’t party to the lawsuit. But the utility, too, shared the concerns expressed.

Jim Hearing, Laclede’s director of marketing, said the utility encourages the use of high efficiency furnaces, and offers rebate programs and financing to encourage consumers to buy the units. In fact, about half of the furnaces shipped to the northern section of the country are high efficiency. But the utility believes they shouldn’t be required.

“An 80 percent efficient furnace is already pretty efficient,” Hearing said. “Making it more efficient is a good thing, but it may not be a good thing for all customers.”

Most older furnaces are vented through a flue in the roof. Higher-efficiency furnaces require a sidewall vent that can be difficult to install in condos and other multifamily dwellings where space is limited, said Dave Harster, owner of Harster Heating & Air Conditioning in St. Louis.

“In some places, there’s just no way to do it,” he said.

Some two-story homes also pose problems because the second furnace is typically in the attic, and they produce condensate that can freeze in colder weather, Harster said.

In general, 90 percent efficient furnaces can cost $500 to $1,000 more than lower efficiency units. And more-challenging installation jobs can add hundreds of dollars more to the cost, meaning a longer payback period for consumers looking to cut utility bills.

That was the concern for Sharon Sanders, a retired financial planner, who was hurrying to replace her 18-year-old unit ahead of the May 1 cutoff.

Her furnace works fine today. But she figures she’ll have to replace it within a few years, and feared getting stuck paying a couple thousand dollars more to install a 90 percent efficient unit at her St. Louis-area home.

“When I thought about major holes being poked in my house and new ductwork, I knew it was going to cost me significantly more,” she said.

Supporters of the new standards, however, say the rules were long overdue. And they were not a government edict; they were also a product of compromise among efficiency advocates and furnace manufacturers. Some Northern gas utilities even supported the rules.

Kit Kennedy of the Natural Resources Defense Council wrote on the NRDC’s website that the standards would have saved Americans an estimated $10.7 billion in lower heating bills over the next 30 years and cut millions of metric tons of global warming emissions.

Given the stakes, she said, “DOE couldn’t have chosen a worse moment to turn the clock back on natural gas efficiency.”