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August 2015

Replacing water heaters may have surprising change-over costs for homeowners

New federal regulations requiring water heaters went into effect earlier this year. While ultimately a cost savings for homeowners, the replacement may cost more than just the price of the new heater if retrofitting is needed.

Under the new standards that became effective on April 16, units that hold at least 55 gallons (the size used in a typical home) need to shift to new technologies to achieve energy efficiency.

The upgrades include electric heat pump and gas condensing technology, and are expected to cut utility bills by 25 to 50 percent depending on the technology used. The new standards apply to gas (50 percent of U.S. households), electric (41 percent), and oil residential tank water heaters. Most tankless water heaters already meet efficiency standards.

Water heaters must now have 4"-to-6" of additional insulation and may also be taller, therefore needing more space. New gas water heaters will need an electric glow plug (instead of a gas pilot light) necessitating access to an electrical outlet, which may not always be adjacent to water heaters that are located in an alcove, closet or garage. All water heaters must comply with earthquake straps, which may differ from one municipality to another.

Water heating amounts to nearly 20 percent of a home's energy costs. The new Department of Energy rules are part of an ongoing series that dates to 1990. Standards mandatory in 2015 will save approximately 3.3 quads of energy and result in approximately $63 billion in energy bill savings for products shipped from 2015-2044. The standard will avoid about 172.5 million metric tons of carbon dioxide emissions, equivalent to the annual greenhouse gas emissions of about 33.8 million automobiles.

Some home warranty programs may cover the cost of construction modifications to accommodate space or electrical requirements. Old Republic Home Protection has produced a video explaining some of the coverages.

For more information about the new requirements, check the websites of the ACEEE and the DOE as well as the manufacturer of the water heater you are considering. And for more information on water heaters, check Consumer Reports' water heater buying guide.