# 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

2 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
3CO2 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

67 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 Systems8



## 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 Results9 -$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 ?

11 -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

12

# 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 o Primary 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 o Eight out of the ten regions see substantially diminished benefits and increased costs o Impacts are especially significant in northern regions of the country. 13