CECA Heating Fuels Report November 1, 2005

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For Immediate Release
Contact: Ellen Berman, 202 659-0404

CECA Advises on Best Ways to Reduce High Heating Costs:

Efficiency, Upgrading Old Equipment Leads List

WASHINGTON , D.C. , November 1, 2005 – With sky-high oil and gas prices this winter, residential consumers can reap significant returns on their money by investing in energy efficiency measures, according to a new report by the Consumer Energy Council of America (CECA).  Responding to consumer concerns about increasing heating fuel prices, the CECA report examines various home investments and calculates the best economic returns on each.

The CECA report, Smart Choices for Consumers: Analysis of the Best Ways to Reduce High Heating Costs, examines three categories of investment strategies available to residential consumers: (1) investing in energy efficiency measures, (2) investing in upgrading older equipment, and (3) investing in converting from one fuel to another fuel.  The report then details which measures produce the best returns for consumers.  “Residential consumers have a limited amount of money and want to spend it wisely,” said Ellen Berman, President of CECA.  “Given the cost of energy today, home heating is a critical part of most household budgets.  This report provides comparative rates of return on a wide variety of energy investments.”

CECA analyzed a variety of approaches to saving energy, from the simple “house doctoring” which includes plugging leaks around doors and electrical outlets, to full scale insulation of walls and ceilings, to installation of a flame retention burner in older oil heating equipment. The CECA report points out that with current fuel costs, low cost measures yield high returns.  Some examples of excellent low cost investments include:

·        Programmable thermostat – with a return of up to 124%, this is one of the cheapest measures, yet produces the biggest bang for the buck.

·        Ceiling insulation – since most of the heat rises through the attic, more insulation can provide a 41% return on investment.

·        Flame retention burner – changing the burners in older oil systems to new flame retention burners can provide a 34% return on investment.

In examining the different heating equipment, the CECA report determines that the age and the efficiency level of the consumer’s old equipment makes all the difference.  Many older oil and gas systems are significantly less efficient than modern systems, so upgrading a system more than 15 years old could produce excellent fuel savings and a positive return on the investment.  For example:

·        Furnaces – consumers with older gas and oil furnaces can achieve returns of up to 25% by upgrading to modern high efficiency equipment.

·        Boilers – consumers with older gas and oil boilers can achieve returns of up to 15% by upgrading to modern high efficiency equipment.

On the other hand, federal efficiency guidelines took effect roughly 15 years ago, mandating efficiency levels of at least 78-80%.  Consumers who have heating equipment less than 15 years old are advised to consider alternate investments, as upgrading would not be economic.

“Consumers who take steps to use less fuel through efficiency measures will start saving money immediately with no loss of comfort,” Berman advised.  “Even better, reducing the amount of energy we consume means increasing our nation’s energy independence, enhancing our safety and security, and reducing our environmental impacts.”

The CECA report also addresses whether residential consumers can save money on fuel costs by switching from one fuel to another.  “When it comes to fuel switching, the facts are clear: in the long run, there is no economic advantage to changing heating fuels,” said Berman.  “CECA’s analysis shows that various factors affect the day-to-day prices of oil and gas, but over the long run, the market brings prices back in line with each other.  This has been true over the past 25 years, and there is nothing we can see that would interrupt this trend.”

Smart Choices for Consumers is the sixth analysis of consumer heating options CECA has undertaken in the last 25 years.  “Twenty five years ago, the debate over switching fuels to save money was a hot issue,” Berman said.  “In 1980, CECA predicted price parity of fuels as soon as the deregulated gas and oil markets took shape, and that has been the case.  The pricing trends are clear, and now there are over two decades of data that support the fact that oil and natural gas prices have converged.”

Berman noted that some consumers are looking at the price spikes caused by Hurricanes Katrina and Rita and are asking whether the differences in fuel prices in some markets mean switching fuels would be a good choice.  Berman continued, “Since equipment lasts for 20 years, switching fuels is a costly and long-term gamble.  Investments in efficiency, on the other hand, save both money and energy for the residential consumer.”

The full CECA report, Smart Choices for Consumers: Analysis of the Best Ways to Reduce High Heating Costs, is available in electronic format on the CECA website, www.cecarf.org.  Inquiries should be directed to:  Ellen Berman CECA, 2000 L Street, NW, Suite 802 , Washington , D.C. 20036 ; (202) 659-0404; eberman@cecarf.org.

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Founded in 1973, CECA is a leading national resource for information, analysis, and technical expertise on a wide variety of public policy energy initiatives. CECA promotes sound public energy policy that is in the best interests of consumers, with particular emphasis on residential and small business consumers.