, Results of GRI/AGA Survey on Costs

Associated with Installing Larger

Diameter Water Heaters

DOE Rulemaking Workshop -- June 20, 2000

Washington, DC

Bob Hemphill Darrell Paul

GRI Battelle

(773) 399-8250 (614) 424-5890

Fax: (773) 399-8170 Fax: (614) 424-5890

rhemphil@gri.org paul@battelle.org

EE-RM-97-900 COMMENT 120EE
Impact of Larger Diameter Water Heaters

* GRI/AGA/Battelle survey of LDCs to obtain expert

judgement of percentage of locations impacted by increasing

the jacket insulation of water heaters.

* Includes impacts of maintaining first hour rating, upsizing

drain pans where required, and atypical water supply piping,

vent connector, and/or gas supply piping modifications.

· DOE has not included these cost adders in their analysis.

EE-RM-97-900 COMMENT 120EE
GRI/AGA/Battelle Survey

* When replacing existing water heaters that are

located in tight spaces, new units with increased

jacket insulation will require added installation

costs in some instances for:

* Tempering valves on smaller replacement units

· Drain pans

* Gas piping modifications

· Water supply line modifications

* Vent connector modifications

* A survey of gas LDCs was conducted to estimate

the percentage of existing installations that would

be affected.

EE-RM-97-900 COMMENT 120EE
Results of GRI/Battelle/AGA a Survey of

mpact of Larger iameterTanks

* Responses from 15 U.S. companies with

residential customers numbering from 2,000 to

5,000,000

* Wide geographical area: service territories of

companies responding cover 24 states and D.C.

* Single and multifamily breakdown

EE-RM-97-900 COMMENT 120EE
Distribution of Survey Results

Legend:

AL Ala. Gas PM Piedmont NG

AT Atmos Energy PS Public Service of N

I Intermountain SC So. Conn. Gas

K KN Energy SG So. Cal. Gas

MC Chas MacCauley SW Southwest Gas

MD Municipal Dist U UGI

NJ NJ Natural Gas W Washington Gas

NY NYSEC

EE-RM-97-900 COMMENT 120EE
Single Family -- Floor Space Available for Retrofit

Water Heater Installation

Less than 24" x

24" Floor Space

24%

Greater than or

equal to 24" x 24"

Floor Space

76%

S~~~~~~~~11 i111

EE-RM-97-900 COMMENT 120EE
Single Family -- Less than 24" x 24" Space for

Water Heater by Location

Other

2%

Garage Basement

18%

Laundry/Utility

Room

25%

Appliance Closet

50%

S~~~~~~~~~~ -

EE-RM-97-900 COMMENT 120EE
Multi-Family -- Floor Space Available for Retrofit

Water Heater Installation

Less than 24" x

24" Floor Space

39%

Greater than or

equal to 24" x 24"

Floor Space

61%

S ~ ~ ~ to

EE-RM-97-900 COMMENT 120EE
Multi-Family -- Less than 24" x 24" Space for

............................. W..a. te............... ........ Water Heater by Location E

Other

1%

Basement

Garage 6%

2% % 1 

Laundry/Utility

Room

30%

Appliance Closet

S ~ ~ 61%

EE-RM-97-900 COMMENT 120EE
Small Spaces

* Installations in which tempering valves are

installed on next smaller sized water heater in the

existing tight space

* A 30 gallon tank water at 160.7 F equals the same

available hot water energy as a 40 gallon tank at

135 F. Likewise, a 40 gallon tank at 154.3 F equals

50 gallon tank at 135 F.

* Percentage of installations impacted = 12.3%

(40+50 only)

* Equipment Cost

* Tempering and check valves = $126.92

· Labor= $ 30.00

· Total = $156.92

EE-RM-97-900 COMMENT 120EE
Drain Pans

* Assumed that all installations that currently

require a drain pan will have to upsize the pan by

adding 2 inches to the diameter.

* Percentage of installations impacted = 13.3%

* Cost breakdown

* Drain Pan: 20 inch diam. (new 30 gal) = $11.37

. Drain Pan: 22 inch diam. (new 40 gal) = $11.79

* Drain Pan: 24 inch diam. (new 40 gal) = $16.68

. Drain Pain: 30 inch diam. (new 75 gal) = $27.98

* Impacted

· Apply to 40 and 50 gal

· Existing: total; new: difference

EE-RM-97-900 COMMENT 120EE
Vent System Modifications .................... eUU..........................................i

* Assumed vent displacement for larger diameter

units required replacement of one length of

straight vent connector

* Percentage of installations impacted = 13.5%

* Cost breakdown

* Vent materials= $ 4.46

. Labor = $10.00

. Total = $14.46

EE-RM-97-900 COMMENT 120EE
Water Supply Line Modifications

* Assume that any modification to the location of

the water supply piping attached to the water

heater would require modification.

* Impacts existing, no small spaces.

* Percentage of installations impacted = 13.5%

* Cost breakdown

* Materials= $23.15

· Labor = $10.00

. Total = $33.15

EE-RM-97-900 COMMENT 120EE
Gas Piping Drop Leg Modifications ...... u..........................................................I

* Assumed that the cost of modifying the gas

piping was included in the baseline installation

cost unless the gas piping drop leg had to be

moved due to the larger diameter water heater.

* Impacts existing, with rigid.

* Piping, no small spaces.

* Percentage of installations impacted = 8.8%

• Cost breakdown

· Materials = $29.69

* Labor = $10.00

· Total = $39.69

EE-RM-97-900 COMMENT 120EE
Pressure Relief Valve Piping Modifications

for Water Heaters in Tight Spaces

* In most cases the pressure relief valve piping

arrangement has some flexibility in how it is

installed. The baseline installation cost includes

switching the pressure relief valve piping over

from the old unit to the new unit.

* Percentage of installations impacted = 12.2%

* These modifications were assumed to be

included in the baseline installation costs.

EE-RM-97-900 COMMENT 120EE
Life Cycle Costs for 2 inches of Jacket Insulation

The weighted average life cycle cost (6 % discount rate) for

2 inches of water blown foam jacket insulation was $39.33

higher than the baseline when the added installation costs

associated with larger diameter water heaters were taken

into account. This means that adding 2 inches of jacket

insulation is not economically justified.

EE-RM-97-900 COMMENT 120EE
Venting Issues Associated with Higher

Recovery Efficiency Gas Water Heaters

DOE Rulemaking Workshop -- June 20, 2000

Washington, DC

Bob Hemphill Darrell Paul

GRI Battelle

(773) 399-8250 (614) 424-5890

Fax: (773) 399-8170 Fax: (614) 424-5890

rhemphil@gri.org paul@battelle.org

EE-RM-97-900 COMMENT 120EE
Impact on the Venting Guidelines in the

National Fuel Gas Code (NFGC)

A margin of safety was built into the current venting guidelines in the

National Fuel Gas Code:

* The current venting tables for draft hood equipped water heaters were

incorporated into the code in the early 1960's and assumed a flue loss

efficiency of 78 percent (which is roughly equivalent to a recovery

efficiency of 76 percent).

* In 1990, the minimum energy factor for gas water heaters was set at

0.54 and those units typically had flue loss efficiencies of about 78 percent

(or recovery efficiencies of about 76 percent), which is at the value used

to derive the NFGC venting guidelines.

*Raising the recovery efficiency of gas water heaters above 76%, as DOE

is proposing, will further reduce the safety margin that exists in the

current codes and standards.

EE-RM-97-900 COMMENT 120EE
Venting Issues

DOE's is proposing that gas water heaters with a

recovery efficiency of approximately 78 percent are

economically justified. DOE assumed that these units

could be vented using the current guidelines in the

National Fuel Gas Code (NFGC).

All current venting tables in NFGC: Part 11 are based

on a recovery efficiency for draft hood equipped

appliances of approximately 76 percent or less. These

tables were generated in the 1960s and have remained

unchanged since that time.

S

EE-RM-97-900 COMMENT 120EE
Single Appliance Venting

"Nat Max" values in Part 11 venting tables need to be

reduced if the flue loss efficiency of the baseline water

heater is increased.

In some cases, the vertical vent may have to be replaced

with the next larger size to properly vent the new water

heater. These costs were not taken into account in

DOE's analysis.

EE-RM-97-900 COMMENT 120EE
Common Venting Two or More Appliances

"Fan Min" and "Fan Max" values in Part 11 common

venting tables assumed that the fan-assisted appliance

was common vented with a draft hood equipped

appliance with a 78 percent flue loss efficiency. In some

cases, the vent system for both the fan-assisted appliance

and the draft hood equipped appliance may have to be

modified. For instance, masonry chimney reliners may

be required, or the Type B vertical vent re-sized. DOE

did not take this into account in their analysis.

EE-RM-97-900 COMMENT 120EE
Outdoor Design Temperatures (97.5 % Values, ASHRAE) *EEUEEEEEEU EEEEEUUE JJEEEEEJ EEEEUEEEJJEE EEEEEEEUUUEEEEEUEEEUEE I

m g······

It~~~~~~~~~~~~~~~~~~~~~~~~L

EE-RM-97-900 COMMENT 120EE
Vent System Modifications

* It is estimated that higher recovery efficiency gas

water heaters will require that single wall vent

connectors be replaced by Type B double wall

vent connectors

* Cost breakdown

* Vent materials = $53.47

. Labor= $32.00

. Total = $85.47

EE-RM-97-900 COMMENT 120EE
The Space Heating Experience When

Minimum Efficiencies Were Raised

Numerous lawsuits, out of court settlements, and CPSC

actions have resulted from condensation and corrosion

concerns of higher efficiency space heating equipment.

The gas industry does not want "history to repeat itself'

with gas water heaters.

EE-RM-97-900 COMMENT 120EE
Design Option Markup Factors Used in

the GRI/Battelle Life Cycle Cost Analyses

DOE Rulemaking Workshop -- June 20, 2000

Washington, DC

Bob Hemphill Darrell Paul

GRI Battelle

(773) 399-8250 (614) 424-5890

Fax: (773) 399-8170 Fax: (614) 424-5890

rhemphil@gri.org paul@battelle.org

EE-RM-97-900 COMMENT 120EE
Design Option Markup Factor

..................................................................

The objective of this task is to derive a credible

design option mark-up factor for use in the

NAECA water heater rulemaking. This factor is

critical in determining the consumer cost of

water heater design options that DOE is

considering for improving the efficiency of gas

water heaters.

EE-RM-97-900 COMMENT 120EE
With DOE's low value for the manufacturer markup, the

incremental retail price of the design options are low and it is

much easier to economically justify design option improvements

Life-Cycle Cost Analysis at 6% Discount Rate

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Reducefu~~~~~~~~~~~~~~~~~~~e:l:~:~ ib~:ill

EE-RM-97-900 COMMENT 120EE
Cost Estimation Methodology

- Tear-down analysis of 6 water heaters

Purchased from mega-retail store in Columbus, OH

· 40 gal., 3" flue

· 40 gal., 4" flue

* 40 gal., low profile

* 30 gal., 3" flue

· 50 gal., 3" flue

* 75 gal.

* Parts cataloged by material, size, features, joining

method

SEE-RM-97-900 COMMENT 120EE
Cost Estimation Methodology ........... .......................................................

* Sheetmetal parts modeled using BDI Design for

Manufacture: Sheetmetal Working software, Ver.

2.0.1

· Estimates obtained for purchased parts

* Largest single item cost: gas valve = $22.00

* Assembly processes modeled using BDI Design for

Assembly software, Ver. 8.2.1

EE-RM-97-900 COMMENT 120EE
Sheetmetal Cost Assumptions

Material costs:

Hot rolled, low carbon steel - $0.23/lb.

Hot rolled, low carbon steel, P&O - $0.24/lb.

Cold rolled, cabinetry steel - $0.26/lb.

Cold rolled, low carbon steel, pre-paint - $0.71/lb.

Cold rolled, hot-dipped galvanized steel - $0.30/lb.

301 stainless steel, #4 polish, 0.036" sheet - $1.08/lb.

Machine Costs:

Fixed and variable rates: $20/hr. - $70/hr. (32T - 1000T)

Part reject rate: 0.5 %

Shop efficiency: 85%

EE-RM-97-900 COMMENT 120EE
Sheetmetal Cost Assumptions

· Tooling costs

* Die set costs: (used to calibrate cost by required

die size)

. 12" x 6" plate - $375; 24" x 12" plate - $1200

* Die construction time:

* Blanking die - 120 hours

* Bending die (4 simultaneous bends) - 180 hours

· Construction rate: $70/hr. (including overhead and

profit)

* Operator labor rate: $30/hr.

EE-RM-97-900 COMMENT 120EE
Process Cost Assumptions

* General

* Operator labor rate: $30/hr.

* Manufacturing rate: 6 units/min.

* Assembly tool and fixture cost not considered

* Software default values used for standard

assembly processes (e.g., threaded fastening,

spot welding)

* Automatic seam welding time

. Modified BDI formula: time = 8.03 * weld length*

thickness1 .26

* Continuous chemical cleaning line

Estimated operating cost: $150/hr.

EE-RM-97-900 COMMENT 120EE
Process Cost Assumptions

* Glass coating

* Coating thickness = 0.020 in.

* Application rate = 3.5 in.3/sec.

. Material density = 0.055 Ib./ in.3

* Material cost = $0.45/lb.

* Continuous furnace bake

· Estimated operating cost = $300/hr.

* Continuous paint line

* Estimated operating cost = $209/hr. per booth

EE-RM-97-900 COMMENT 120EE
Process Cost Assumptions

* Insulation foaming operation

* Fill rate = 260 in.3/sec. (expanded volume)

* Material density (expanded) = 0.002 Ib./ in.3

* Material cost = $1.00/lb.

* Cardboard packaging

. Material cost = $0.04/ft.2

EE-RM-97-900 COMMENT 120EE
Cost of Additional Jacket Insulation

· Insulation material and fill time

* Size of outer sheetmetal (wrapper, caps)

· Length of couplings, gas tubes, gas valve bulb

* Size of cardboard packaging

EE-RM-97-900 COMMENT 120EE
Battelle Estimates of Material Plus Labor Costs for Baseline Water

Heaters

$160.00

B Compare to GAMA $139.77 $140.00 -----.--.....----------.....--..-- i-...i......... ........ j ------ --- Aveiagi G;ien to DOE ii . . |

T~ $ W W~of $87.51

$llllll ^$86.06 $ 1... ................. W80.83ae 9

$80.00

s8$60.00

$40.00

$20.00 ........

30 40 50 75

Water Heater Size, Gallons

EE-RM-97-900 COMMENT 120EE
Average Retail Cost of Water Heaters

(From DOE Spreadsheet LCC-Gas, June 1999)

$600 - $546 $546

$ 5 0 0 . ........................................................................................................ .........

$400

$286

$200 -- $176.. .......................................... $ 0 . ........ .................. .................. .................. i*Z~ ~i li i i i ........

$1oo

30 40 50 75

Water Heater Size, Gallons

EE-RM-97-900 COMMENT 120EE
Battelle Mark-Up Factor for Design Option Costing

3.91

3 .0 ......................................................................................... 3. 9 . . 3.14

2.18 2.11

2.0 --------

1.0 ... .... ...

0.5 ........ .

0.0

30 40 50 75

Water Heater Size, Gallons

S Xt

EE-RM-97-900 COMMENT 120EE
Installed Base of Water Heaters by Size of Unit

(From GRI Technical Advisory Group, Sept. 1999)

60%

50.0%

50%

40% -

Watr H e 25.0 22.0%

20% ...........................................................

10% . ..... ....................................

3.0%

0%

30 40 50 75

Water Heater Size, Gallons

EE-RM-97-900 COMMENT 120EE
Average Design Option Mark-Up Factor

When the mark-up factors for different water

heater sizes are averaged based on the market

share percentages, the weighted-average markup factor is 2.44

EE-RM-97-900 COMMENT 120EE
Mark-Up Factor Comparison With Previous

Battelle/GRI Work Done on Water Heaters in 1991

1991 1991 1991 1991

Manufacturer Distributor Retailer Overall

Factor Factor Factor Mark-Up

1.5 X 1.2 X 1.4 = 2.52

This is in excellent agreement with the current mark-up

factor of 2.44 derived from a rigorous cost breakdown of

existing units.

EE-RM-97-900 COMMENT 120EE
Deficiencies in DOE's Methodology for

Determining a Water Heater Mark-Up Factor

The DOE methodology for determining residential water

heater mark-up factors requires that estimates of the

costs associated with materials, labor, marketing,

facilities, other capital costs, overhead rates, etc., be

assigned on a per water heater basis. Due to the business

sensitivity and difficulty in accurately collecting this

information, it is nearly impossible to obtain accurate

estimates of a mark-up factor based on DOE's approach.

GAMA, AGA, GRI, Battelle, and others have all

submitted written and oral comments to DOE outlining

deficiencies in DOE's approach.

EE-RM-97-900 COMMENT 120EE
GRI/Battelle Mark-Up Factor

The GRI/Battelle mark-up factor is based only on estimates

of the cost of materials and labor for residential water

heaters. Standard engineering procedures are used to

derive these input parameters, and all underlying

assumptions are explicitly documented. The derived markup factor of 2.44 is in excellent agreement with a mark-up

factor of 2.52 derived from standard business practices for

manufacturers, distributors, and retailers in the water

heater industry.

EE-RM-97-900 COMMENT 120EE