DOE Furnace Standard 

Stakeholder Workshop 

October 9, 2014

Melissa E. Adams, Division Head, Sustainability & Economic Development

Washington Gas

Chair, AGA Sustainable Growth Committee

Rick Murphy, Managing Director

American Gas Association 
Natural Gas LDC’s: Delivering Energy Productivity

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The loss of usable energy associated with electricity equals about half of the total 

energy consumed in the residential and commercial sectors. Natural Gas LDCs 

provide efficient, affordable direct natural gas service to over 67 million homes.
Natural Gas Utility Business Models Promote 

Energy Efficiency

• Washington Gas is Unbundled

• Gas distribution and gas supply charges are separate

• Gas distribution charges are regulated by PUCs

• Customers may choose a competitive gas supplier

• Utility receives no profit on gas commodity

• Washington Gas is Decoupled

• Distribution rates support energy efficiency

• Revenue is not based on volumetric rates

• Benefits customers and the environment 

3
CO2 Pounds/Year

+ 10,075

+ 2,761

... and Energy Literacy and Customer Outreach
... with Rebates & Incentives to Encourage 

Wise Energy Use and Efficient Appliances

5
Data indicates that a mandatory condensing 

furnace standard would limit these benefits

6
7

0 5 10 15 20 25 30 35 40 45 50

West South Central

Pacific

Mountain North

West North Central

East North Central

Middle Atlantic

New England

South Atlantic

East South Central

Mountain South

Percentage of Change in Heating/Water Heating Systems – Gas to Electric 

Census Regions

% Switching to Electric Water Heater % Switching to Electric Heat

Contractor/Builder Survey - Regional Results

A Condensing Furnace Standard Would Prompt a Significant Amount 

of Switching from Natural Gas Heating and Water Heating Systems
8

22.3

3.4

0 20 40 60 80 100

All

Percentage of Change in Heating/Water Heating Systems – Gas to Electric 

National Rollup of Census Regions

% Switching to Electric Water Heater % Switching to Electric Heat

Contractor/Builder Survey - National Results
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-$40,000

-$30,000

-$20,000

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Overall Change in Annual Energy Costs (Thousands)

DOE Anticipated Change 

in Consumer Energy Costs

-$35.9 Million

+$44.9 Million

Expected Change in 

Consumer Energy 

Costs based on 

Survey Results

* Energy costs calculated using marginal natural gas and electricity rates.

Consumer Costs: Delivering Benefits or 

Adding Costs?
Energy Usage: Reducing or Increasing Overall 

Consumption?

10

-4,577,695

+463,844

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000 Dth/Yr

DOE Anticipated Change 

in Primary Energy Usage

Expected Change in 

Primary Energy Usage 

based on Survey Results
Carbon Emissions: Improving the 

Environment or Increasing CO2 ?

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-280,618

+348,589

-400,000

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

Tons of CO2/YR

DOE Anticipated 

Change in CO2 

Emissions

Likely Real World 

Change in CO2 

Emissions 

Including Fuel 

Switching
Questions/Discussion

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What We Have Learned

Contractor and builder survey responses indicate a growing number of electric 

appliance installations with a national or regional condensing furnace standard 

oPrimary factors driving the change include:

First cost premiums for equipment and installation (venting and condensate 

disposal) for natural gas condensing furnaces

Changes in system choice would undermine our commitment to: 

o Reduce customer energy costs 

o Improve the efficiency of how we use energy

o Achieve nationwide emissions reductions

It is important to understand the regional impacts of changes in system choice

oEight out of the ten regions see substantially diminished benefits and 

increased costs

oImpacts are especially significant in northern regions of the country.

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