CREJ - Property Management Quarterly - May 2015
By now you probably are aware of the new water heater regulations, but, as with anything new, it is good to have additional information and perspectives. As early as April 2, supply houses were running low or were out of older water heaters because the older heaters are being bought up in the typical supply-versus-demand economic theory. The new water heater regulations will drive up the cost of water heaters. Period. Early estimates are predicting the increase to be between 8 and 12 percent, according to the Plumbing, Heating and Cooling Contractors Association. Water heater manufacturers are forced to alter designs to improve the insulation to meet new energy-efficiency standards. This means most of the water heater diameters and sizes will increase or the heater’s capacity will decrease, potentially up to 10 percent, according to the association. The higher efficiency makes these units pricier to install and to repair. Additionally, due to the size changes, they could cause installation issues. New heaters will require at least 3 inches of extra space around the unit, which is particularly troublesome for areas with size restrictions. Choosing smaller units may cause capacity to drop, which is something most water heater users don’t want to give up. Efficiency standard increases in the past did cause manufacturers to reduce 40- and 50-gallon water heaters to 38- and 47-gallon heaters, respectively. This had a large impact on residential condominiums and apartment buildings. Residents likely will require a change in their hot water use due to the lowered capacity. These fears are causing people to snatch up the older models to avoid or delay the capacity and size downsides. Plumbers, contractors, builders, property managers and homeowners are capitalizing on that fact. The new water heater efficiency standards, effective April 16, 2015, state that all household appliances manufactured for sale in the U.S. must meet certain energy-efficiency levels. This new rule, however, does not preclude installation of noncompliant products manufactured before April 16. The updates will require nearly all residential electric, oil and tankless water heaters to carry higher energy-factor ratings. These new regulations will result in a few options for property managers to consider: Jump on the bandwagon. You still may be able to secure an older model water heater and “buy” yourself more time before needing to make the adjustment. However, before the useful time of the water heater has expired, you may be facing a problem with getting replacement or service parts because the parts will no longer be manufactured and will become obsolete. Be a trendsetter. You can get an early jump on the higher-efficiency water heaters before prices rise because of the demand. Once people start to require new water heaters due to water heater failure, they will have little option but to purchase the newer systems. If you are looking for a water heater that doesn’t increase in size or decrease in capacity, you have a few other options – gas water heater, tankless water heater or hybrid heat pump water heaters. • Gas water heaters are only an option if gas is already installed, because installing new fixtures can add up quickly. • Tankless water heaters are ideal for areas where lots of hot water for multiple users is important. The tankless heaters save space, are long lasting and are better for the environment. • With twice the efficiency of standard electric water heaters, hybrid heat pump water heaters can offer significant cost savings, including possible tax credits. It’s a good idea to take advantage of this newer technology that won’t reduce output capacity. Models already are being designed to address the space issues. “Based on the NAECA 2015 rules, all residential electric models over 55 gallons must be of the hybrid electric heat pump water heater type design,” said A.O. Smith Corp., a leader in water heater manufacturing. Cross your fingers and wait. Your current water heater may keep ticking right into the next round of regulations, model improvements or energy rating standards. The standard warranty for an electric water heater is six years, but we have heard of water heaters lasting 16 years. This is especially true of high-quality brands. The risks you run are the leaks and flooding that could come as a result of water heater failure, which can create costly water damage to property. To discuss the new water heater regulations or to get pricing for budget consideration, contact a local licensed plumber who specializes in a variety of water heater options. For property management of multiunit properties, consider an action plan that budgets replacement of all energyefficient appliances in phases.