TASK REPORT

GTI PROJECT NUMBER 21492

Fuel Switching Survey 

Observations

Reporting Period:

August 2013 through April 2014

Report Issued:

June 4, 2014, V3 Revision December 14, 2015

Prepared For:

American Gas Association, American Public Gas Association

GTI Technical Contact:

Neil Leslie

R&D Director

End Use Solutions

847-768-0926

Fax: 847-768-0916

neil.leslie@gastechnology.org

Gas Technology Institute

1700 S. Mount Prospect Rd.

Des Plaines, Illinois 60018

www.gastechnology.org
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page ii

Disclaimer

This information was prepared by Gas Technology Institute (“GTI”) for the American Gas Association 

(AGA) and the American Public Gas Association (APGA).

Neither GTI, the members of GTI, AGA, APGA, nor any person acting on behalf of any of them:

a. Makes any warranty or representation, express or implied with respect to the accuracy, completeness, 

or usefulness of the information contained in this report. Inasmuch as this project is experimental in 

nature, the technical information, results, or conclusions cannot be predicted. Conclusions and analysis 

of results by GTI represent GTI's opinion based on inferences from measurements and empirical 

relationships, which inferences and assumptions are not infallible, and with respect to which competent 

specialists may differ.

b. Assumes any liability with respect to the use of, or for any and all damages resulting from the use of, 

any information, apparatus, method, or process disclosed in this report; any other use of, or reliance on, 

this report by any third party is at the third party's sole risk.

Copyright © Gas Technology Institute All Rights Reserved
FUEL SWITCHING SURVEY ANALYSIS REPORT

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TABLE OF CONTENTS

EXECUTIVE SUMMARY ..........................................................................................................................1

1 BACKGROUND.........................................................................................................................2

2 OBJECTIVE................................................................................................................................5

3 APPROACH................................................................................................................................5

4 OBSERVATIONS ......................................................................................................................6

4.1 Response Rate .............................................................................................................................6

4.2 Responses to Survey Questions...................................................................................................6

4.3 Builder and Contractor Comments............................................................................................14

4.3.1 Sample Builder Comments .................................................................................................14

4.3.2 Sample Contractor Comments............................................................................................15

5 CONCLUSIONS.......................................................................................................................16

LIST OF FIGURES

Figure 1 Map of Regions for the 2011 DFR Furnace Standards..................................................................2

Figure 2 DFR Lifecycle Cost and Payback Period Results for Non-Weatherized Gas Furnaces................3

Figure 3 Expected Fuel Switching by Builders with a Condensing Furnace Minimum Standard...............8

Figure 4 Energy and Technology Options Expected by Builders Under Two Future Scenarios.................9

Figure 5 Expected Fuel Switching by Contractors with a Condensing Furnace Minimum Standard........10

Figure 6 Energy and Technology Options Expected by Contractors Under Two Future Scenarios..........11

Figure 7 Impact of Installed Cost Differential on Builder Furnace Fuel Switching Behavior ..................12

Figure 8 Impact of Modification Costs on Contractor Water Heater Fuel Switching Behavior................13

LIST OF TABLES

Table 1 DOE Direct Final Rule Proposed Standards for Residential Furnaces...........................................2

Table 2 National and Census Region Response Rates.................................................................................6

Table 3 Response Rate by State...................................................................................................................7
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 1

Executive Summary

The objective of the research summarized in this report and accompanying spreadsheet was to 

develop and publish information on current and expected fuel switching behavior related to residential 

heating and water heating systems in new construction and replacement markets at national, regional, and

state levels. The survey data is intended for use in evaluating the impact of fuel switching on the

technical feasibility and economic justification for increasing federal minimum efficiency requirements 

from non-condensing furnace efficiency levels to condensing furnace efficiency levels. 

The approach was to develop, administer, collect, and analyze a nationwide survey of builders and 

installing contractors regarding their current fuel and technology choices for heating and water heating 

systems as well as their expected fuel switching behavior under two future scenarios: 

• Scenario 1: The future federal minimum efficiency requirement for natural gas furnaces remains 

the same as it is today (i.e., non-condensing furnaces).

• Scenario 2: The future federal minimum efficiency requirement changes to condensing furnaces.

A Project Advisory Committee provided high level project guidance to AGA and APGA, and helped 

coordinate local distribution company (LDC) participation in launching the survey. A Technical 

Advisory Committee provided technical guidance to GTI, AGA, and APGA, and provided critical 

feedback on draft survey questions developed by GTI.

The response rate varied significantly in different states and between builders and contractors. 1,124 

respondents started the survey (311 builders, 813 contractors); 603 completed all questions. Twenty or 

more respondents started the survey in 20 states (AZ, NC, AL, MA, MI, NV, UT, MO, OR, PA, IN, IL, 

MD, NE, AR, OH, VA, MN, GA, and NJ). However, there were few responses in the four largest states 

(CA, NY, FL, and TX), and no responses in 12 states (CO, HI, ID, KS, ME, MT, ND, NH, SD, VT, WV, 

and WY).

Fuel switching survey responses indicate that at least some incremental fuel switching from gas to 

electric technology options is expected if the future federal minimum efficiency requirement changes to 

natural gas condensing furnaces. Fuel switching is expected to occur in both heating and water heating

systems. Some differences in behavior are expected between builders and contractors, and some 

differences are expected across regions and states. Contractors expect more fuel switching than builders 

according to the survey. Comments were collected to assist in cataloging reasons for fuel switching 

behavior. 

Installed cost differentials between gas and electric options are expected to impact fuel switching

behavior. Some builders and contractors consider themselves less sensitive to price, while others indicate 

that they will be more likely to switch to electric options as the price differential increases. 

Missing data will require extrapolation for many states and some census divisions. The methodology 

selected to extrapolate the available information may impact analysis results.
FUEL SWITCHING SURVEY ANALYSIS REPORT

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1 Background

The Energy Policy and Conservation Act of 1975 requires the Department of Energy (DOE) to 

establish energy conservation standards for select consumer products and equipment and to update the 

stringency of these standards when it is determined that in addition to yielding energy savings, the 

updated standards are technologically feasible and economically justified. A DOE Direct Final Rule 

(DFR) published in the Federal Register on June 27, 2011, proposed to increase the minimum energy 

efficiency standards for non-weatherized residential gas furnaces to 90% AFUE in 30 states in the North 

Region of the United States (Table 1 and Figure 1). Under the DFR, these 90% AFUE standards were to 

take effect in 2013. 

Table 1 DOE Direct Final Rule Proposed Standards for Residential Furnaces

Product Class South Region

Standards

North Region 

Standards

Non-weatherized gas AFUE = 80% AFUE = 90%

Mobile home gas AFUE = 80% AFUE = 90%

Weatherized gas AFUE = 81% AFUE = 81%

Non-weatherized oil-fired AFUE = 83% AFUE = 83%

Mobile home oil-fired AFUE = 75% AFUE = 75%

Weatherized oil-fired AFUE = 78% AFUE = 78%

Electric AFUE = 78% AFUE = 78%

Figure 1 Map of Regions for the 2011 DFR Furnace Standards

A technical support document (TSD) based on a sophisticated Excel/Crystal Ball spreadsheet tool 

prepared for DOE by LBNL provided the technical rationale for DOE’s determination that the proposed 

standard is technologically feasible, economically justified, and will save significant amounts of energy. 

This spreadsheet tool was used by DOE to calculate the lifecycle cost and payback periods for the 

proposed efficiency increases under specific scenarios. Figure 2 shows a summary table of the results 

included in the DFR. Multiple variables strongly affect the results of lifecycle cost and payback period 

analyses, which jointly serve as the basis for DOE’s determination that the proposed rule is economically 

justified. One of the key variables missing from the TSD was the impact of harmful fuel switching 

caused by the proposed efficiency increases.
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Figure 2 DFR Lifecycle Cost and Payback Period Results for Non-Weatherized Gas Furnaces

Source: DOE Direct Final Rule, Technical Support Document Chapter 81

For the DFR, DOE did not explicitly quantify the impact of fuel switching from gas furnaces to 

electric heating equipment. In its reasoning, DOE stated that because the operating costs of electric space 

heating systems are relatively high due to the price of electricity, using an electric system in a cold 

climate is significantly more expensive than using a gas furnace. Based on the this logic, DOE inferred 

that consumers with high heating loads would be unlikely to switch to electric space heating systems as a 

result of amended standards. Also likely to be impacted by the DFR, but not included in the TSD, is fuel 

switching from gas to electric resistance water heaters as a result of the amended standard. According to 

the TSD, in 5% to 10% of instances in which the mandated shift to a condensing furnace results in an 

orphaned water heater, the consumer will install a new electric water heater to replace the gas unit, 

because this is a less expensive alternative to a separately vented water heater.2

 

1 U.S. Department of Energy website. “Residential Furnaces and Central Air Conditioners and Heat Pumps Direct Final Rule 

Technical Support Document.” Chapter 8. Life-Cycle Cost and Payback Period Analyses. 

http://www1.eere.energy.gov/buildings/appliance_standards/residential/residential_furnaces_central_ac_hp_direct_final_rule_tsd.html.

2 Department of Energy, Residential Furnaces and Central Air Conditioners and Heat Pumps Direct Final Rule Technical Support 

Document, Appendix 8-B. Installation Cost Determination for Furnaces, Page 8-B-35, July 2011.
FUEL SWITCHING SURVEY ANALYSIS REPORT

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This fuel switching has both energy cost and environmental consequences. The operating costs, 

primary energy consumption, and greenhouse gas emissions of an electric water heater are typically more 

than twice as high as a comparable gas storage water heater. It is important to consider the impact of such 

fuel switching 

APGA filed a petition challenging the 2011 DFR in court (American Public Gas Ass’n v. U.S. Dep’t 

of Energy, No. 11-1485, U.S. Court of Appeals for the District of Columbia Circuit). The APGA petition 

requested that the court vacate the direct final rule as it applies to residential gas furnaces and remand the 

matter to DOE for further rulemaking proceedings to establish new efficiency standards. Environmental 

and efficiency advocates as well as appliance distributors intervened in the court litigation. In January 

2013, APGA and DOE filed a joint motion with the court agreeing to settle the case by vacating the direct 

final rule with regard to natural gas furnaces and sending the matter back to DOE for further rulemaking 

proceedings to establish new minimum efficiency standards for gas furnaces. The joint motion was 

opposed by, among others, the Heating, Air-Conditioning, & Refrigeration Distributors International 

(“HARDI”), which argued that it should be substituted as a petitioner and be permitted to continue to 

challenge the direct final rule even if the court grants the APGA-DOE motion. The court issued an order 

granting a stay of the compliance deadline for the regional standards for gas furnaces and ordered the 

parties to submit a proposed format for the re-briefing of the case. 

On March 11, 2014, a joint motion was filed with the court with the consent of all parties to the 

litigation that would resolve the litigation in all respects. In the settlement agreement motion, the parties 

requested that the court enter an order vacating the direct final rule and the notice of effective date of the 

direct final rule as they relate to energy conservation standards for residential (“non-weatherized”) gas 

furnaces, including DOE’s determination that such furnaces constitute a single class of products, and 

remand the matter to DOE for notice-and-comment rulemaking. On April 24, 2014, the court ordered that 

the joint unopposed motion to vacate in part and remand for further rulemaking, filed March 11, 2014, be 

granted. 

In the joint settlement agreement, DOE committed to using best efforts to issue a notice of proposed 

rulemaking (NOPR) regarding new efficiency standards for gas furnaces within one year of the issuance 

of the remand and to issue a final rule within the later of two years of the issuance of the remand or one 

year of the issuance of the proposed rule. DOE also committed that if it grants an extension of the 

comment period or determines additional time is necessary, the period for completion of the final rule will 

be extended accordingly. DOE further committed to making its data available within 30 days after it 

sends a draft proposed rule to the Office of Management and Budget (OMB) for review, and that it will 

provide a comment period of at least 90 days and will follow its normal practice in notice and comment 

proceedings with regard to any request for extensions of the comment period. DOE also agreed to include 

in the record the data gathered for the direct final rule concerning the impact on consumers resulting from 

the trial standard levels considered in the Technical Support Document for that proceeding for gas 

furnaces.

Before DOE issues its draft NOPR to OMB, there is an opportunity to provide input to the new TSD 

that will be used to provide justification for the level(s) selected by DOE in the NOPR. The most 

important and also the most challenging opportunity is the development of defensible fuel switching 

information, at a regional or even state level if possible. This will help to ensure that a technically robust, 

transparent assessment of fuel switching impacts is included in the revised TSD.
FUEL SWITCHING SURVEY ANALYSIS REPORT

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2 Objective

The objective of the research summarized in this report and accompanying survey instrument and 

spreadsheet was to develop and publish information on current and expected fuel switching behavior 

related to residential heating and water heating systems in new construction and replacement markets at 

national, regional, and state levels. The survey data is intended for use in evaluating the impact of fuel 

switching on the technical feasibility and economic justification for increasing federal minimum 

efficiency requirements from non-condensing furnace efficiency levels to condensing furnace efficiency 

levels. 

3 Approach

The approach to providing defensible public domain fuel switching information was to develop, 

administer, collect, and analyze a nationwide survey of builders and installing contractors regarding their 

current fuel and technology choices for heating and water heating systems as well as their expected fuel 

switching behavior under two future scenarios: 

• Scenario 1: The future federal minimum efficiency requirement for natural gas furnaces remains 

the same as it is today (i.e., non-condensing furnaces).

• Scenario 2: The future federal minimum efficiency requirement changes to condensing furnaces.

A Project Advisory Committee provided high level project guidance to AGA and APGA, and helped 

coordinate LDC and ACCA participation in launching the survey. A Technical Advisory Committee 

provided technical guidance to GTI, AGA, and APGA, and provided critical feedback on draft survey 

questions developed by GTI for the survey instrument. GTI staff also interacted with LBNL staff during 

the survey development and administration to obtain input and feedback on useful survey topics and 

specific questions that would maximize the value of the survey. 

GTI staff developed the draft fuel switching survey instrument using the SurveyMonkey® web tool, 

selected for its ease of use and flexibility. Initial draft questions and format options were reviewed with 

TAC members and revised in response to feedback. In addition, draft questions were reviewed with 

LBNL staff and revised based on their feedback.

In November 2013 a small trial launch was conducted by New Jersey Natural Gas, Vectren, and 

Philadelphia Gas Works to obtain feedback from targeted respondents on survey content, effort to 

complete, and understanding. Based on collective feedback from the TAC, PAC, and LBNL, GTI 

developed the final survey instrument and instructions for LDC’s throughout the United States to help 

them launch the survey to builders and contractors. ACCA also was provided a link to the survey to 

permit additional responses by ACCA members. 

The final survey instrument was an anonymous survey expected to take approximately 15 minutes to 

complete. The survey included quantitative and qualitative questions, opportunity for comments after 

each question, options to skip certain questions, and an option for follow-up interviews if individual 

respondents voluntarily provided contact information. The survey remained open from January 20, 2014, 

through April 15, 2014. 

The survey included questions on current behavior related to equipment choices, energy choices, 

rationale, and impact of installed cost differential on equipment and energy decisions. It also included 

questions on expected behavior in the future related to a non-condensing furnace minimum standard and a 

condensing furnace minimum standard. 

To facilitate analysis of survey results, the SurveyMonkey® exportable raw data were incorporated 

into an interactive spreadsheet accompanying this report that allows national, regional, and state level 

analysis as desired by the user. The spreadsheet also permits segregation by builder or contractor size.
FUEL SWITCHING SURVEY ANALYSIS REPORT

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The public version of the survey responses accompanying this report includes all comments and 

responses to questions, but deleted individual contact information to maintain anonymity. The complete 

set of survey responses, including individual contact information, was provided as confidential 

information to LBNL staff as well as AGA, APGA, and PAC members to permit follow-up interactions 

deemed appropriate by analysts and stakeholders. 

4 Observations

4.1 Response Rate

The response rate varied significantly in different states and between builders and contractors. Table 

2 shows the national and census region response rates. Table 3 lists response rate by state. 1,124 

qualified respondents started the survey (311 builders, 813 contractors); 603 completed all questions. 101 

respondents started the survey but were disqualified because they indicated they were neither a builder 

nor a contractor. Twenty or more respondents started the survey in 20 states (AZ, NC, AL, MA, MI, NV, 

UT, MO, OR, PA, IN, IL, MD, NE, AR, OH, VA, MN, GA, and NJ). However, there were few responses 

in the four largest states (CA, NY, FL, and TX), and no responses in 12 states (CO, HI, ID, KS, ME, MT, 

ND, NH, SD, VT, WV, and WY). Some states (e.g., MD) had significantly higher contractor response 

rates, while others (e.g., IL) had higher builder response rates. Missing data will require extrapolation for 

many states and some regions. The methodology selected to extrapolate the available information may 

impact analysis results

Table 2 National and Census Region Response Rates

4.2 Responses to Survey Questions

The interactive spreadsheet accompanying this report is the primary source of information and 

analysis of the fuel switching survey results. Selected graphs contained in the spreadsheet are included 

below in support of the following top level observations. 

• Fuel switching survey responses indicate that at least some incremental fuel switching from gas to 

electric technology options is expected if the future federal minimum efficiency requirement 

changes to natural gas condensing furnaces. 

• Fuel switching is expected to occur in both heating and water heating systems. Some differences 

in behavior may occur between builders and contractors, and there may be some differences 

across regions and states. Contractors expect more fuel switching than builders due to additional 

perceived issues in the replacement market. 

• Installed cost differentials between gas and electric options are expected to impact fuel switching

behavior. Some builders and contractors expect less sensitivity to cost in the marketplace; others 

expect a higher likelihood of switching to electric options as the cost differential increases. 

Responses 

Started

Responses 

Finished

Percent 

Finished

Responses 

Started

Responses 

Finished

Percent 

Finished

Responses 

Started

Responses 

Finished

Percent 

Finished

ALL 1225 603 49.2% 311 178 57.2% 813 425 52.3%

Pacific 63 42 66.7% 20 13 65.0% 43 29 67.4%

Mountain North 44 30 68.2% 6 1 16.7% 38 29 76.3%

West North Central 156 99 63.5% 57 29 50.9% 99 70 70.7%

East North Central 181 115 63.5% 94 61 64.9% 87 54 62.1%

Middle Atlantic 261 81 31.0% 37 16 43.2% 224 65 29.0%

New England 72 30 41.7% 14 5 35.7% 58 25 43.1%

South Atlantic 229 144 62.9% 87 46 52.9% 142 98 69.0%

East South Central 62 35 56.5% 42 23 54.8% 20 12 60.0%

West South Central 90 50 55.6% 16 7 43.8% 74 43 58.1%

Mountain South 41 24 58.5% 3 1 33.3% 38 23 60.5%

All Home Builders Installing Contractor

Census Region
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Table 3 Response Rate by State

Responses 

Started

Responses 

Finished

Percent 

Finished

Responses 

Started

Responses 

Finished

Percent 

Finished

Responses 

Started

Responses 

Finished

Percent 

Finished

ALL 1225 603 49% 311 178 57% 813 425 52%

AK 1 0 0% 1 0 0% 0 0 0%

AL 23 13 57% 17 10 59% 6 3 50%

AR 52 29 56% 4 4 100% 48 25 52%

AZ 20 12 60% 0 0 0% 20 12 60%

CA 10 5 50% 1 0 0% 9 5 56%

CO 0 0 0% 0 0 0% 0 0 0%

CT 4 2 50% 1 0 0% 3 2 67%

DC 2 0 0% 0 0 0% 2 0 0%

DE 4 1 25% 4 1 25% 0 0 0%

FL 6 2 33% 4 2 50% 2 0 0%

GA 94 63 67% 46 31 67% 48 32 67%

HI 0 0 0% 0 0 0% 0 0 0%

IA 4 1 25% 1 0 0% 3 1 33%

ID 0 0 0% 0 0 0% 0 0 0%

IL 37 24 65% 36 24 67% 1 0 0%

IN 34 22 65% 23 14 61% 11 8 73%

KS 0 0 0% 0 0 0% 0 0 0%

KY 10 5 50% 6 4 67% 4 1 25%

LA 2 2 100% 0 0 0% 2 2 100%

MA 25 18 72% 3 2 67% 22 16 73%

MD 37 24 65% 2 1 50% 35 23 66%

ME 0 0 0% 0 0 0% 0 0 0%

MI 26 19 73% 10 7 70% 16 12 75%

MN 78 50 64% 20 7 35% 58 43 74%

MO 32 23 72% 21 14 67% 11 9 82%

MS 4 3 75% 3 2 67% 1 1 100%

MT 0 0 0% 0 0 0% 0 0 0%

NC 20 12 60% 12 5 42% 8 7 88%

ND 0 0 0% 0 0 0% 0 0 0%

NE 37 23 62% 15 9 60% 22 14 64%

NH 0 0 0% 0 0 0% 0 0 0%

NJ 244 45 18% 18 6 33% 226 39 17%

NM 1 0 0% 0 0 0% 1 0 0%

NV 27 16 59% 0 0 0% 27 16 59%

NY 2 1 50% 0 0 0% 2 1 50%

OH 58 40 69% 15 11 73% 43 29 67%

OK 19 12 63% 1 0 0% 18 12 67%

OR 33 24 73% 9 8 89% 24 16 67%

PA 33 28 85% 6 3 50% 27 25 93%

RI 1 1 100% 0 0 0% 1 1 100%

SC 4 2 50% 2 1 50% 2 1 50%

SD 0 0 0% 0 0 0% 0 0 0%

TN 10 5 50% 8 3 38% 2 2 100%

TX 11 6 55% 3 2 67% 8 4 50%

UT 30 23 77% 1 0 0% 29 23 79%

VA 60 42 70% 8 4 50% 52 38 73%

VT 0 0 0% 0 0 0% 0 0 0%

WA 6 5 83% 3 3 100% 3 2 67%

WI 1 0 0% 0 0 0% 1 0 0%

WV 0 0 0% 0 0 0% 0 0 0%

WY 0 0 0% 0 0 0% 0 0 0%

State

All Home Builders Installing Contractor
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Figure 3 provides an illustration of expected fuel switching behaviors by builders if the future federal 

minimum efficiency requirement changes to condensing furnaces, and natural gas is available in the 

development. Overall, 6% of the 205 builders from various regions of the country that responded to the 

survey question expect to fuel switch from gas heating and water heating to electric heating, electric water 

heating, or both. 4% of builders expect to switch from gas heating to electric heating, and 2% expect to 

switch from gas water heating to electric water heating. Census division information summarized in 

Figure 3 highlights regional variations in expected behavior as well as the gaps in the response data set. 

States included in the Mountain North, New England, and Mountain South census divisions did not have 

any respondents that completed this question. 

Figure 3 Expected Fuel Switching by Builders with a Condensing Furnace Minimum Standard

6

13

0

9

1

3

0

5

8

-4

0

4

13

0

2

1

5

0

7

2

0 0

2

4

0

9

0 -1

0

-2

5

-4

0

-6

-4

-2

0

2

4

6

8

10

12

14

ALL Pacific Mountain

North

West North

Central

East North

Central

Middle

Atlantic

New

England

South

Atlantic

East South

Central

West South

Central

Mountain

South

percent change if standard changes from non-condensing to condensing

Fuel Switching - Builders

when standard goes from non-condensing to condensing

Went from all gas to not all gas

Went from gas heat to electric heat

Went from gas water heating to electric water heating

Type of Respondent: Home Builder

State of Respondent: ALL

Census Region: ALL

Number of Homes Built: ALL

Respondents: 205
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Figure 4 provides further details on expected behavior changes by builders if the future standard 

changes from non-condensing furnaces to condensing furnaces, and natural gas service is available for the 

home. Each of the columns represents the fraction of installations that are expected to include the design 

option pairs for heating and water heating. The first two columns provide the “all-gas” option of a gas 

furnace and a gas water heater. If the future standard remains a non-condensing furnace, 17.2% of 

installations are expected to be a non-condensing furnace paired with a gas water heater, while 57.4% are 

expected to be condensing furnaces paired with gas water heaters. This is consistent with the current 

preference by builders for condensing furnaces. If a condensing furnace is the minimum requirement, 

then the fraction of non-condensing furnaces with a gas water heater is expected to drop from 17.2% to 

0%, since that option would not be permitted under a condensing furnace standard. As shown in the 

second column, condensing furnace installations are expected to increase by 11.4%, a net reduction of 

5.8% (11.4 – 17.2). This reduction in “all-gas” options represents top level fuel switching behavior by 

builders induced by the condensing furnace minimum standard. 

The other columns show various combinations of gas and electric heating and water heating options. 

This information helps clarify the types of fuel switching behavior expected by builders. Heat pump 

installations are expected to increase by 5% overall (with either gas or electric water heaters), and gas 

furnace/electric water heater installations are expected to increase by about 2%. Few electric resistance 

heating options are expected to be installed by builders in either scenario.

Figure 4 Energy and Technology Options Expected by Builders Under Two Future Scenarios

17.2

57.4

3.2

0.6

3.9

8.5

5.5

2.0 1.7

68.9

7.0

0.3

13.7

6.7

1.6 1.9

-17.2

11.4

3.8

-0.3

-3.9

5.1

1.2

-0.4 0.2

0

10

20

30

40

50

60

70

80

90

100

-40

-30

-20

-10

0

10

20

Heating: minimum 

efficiency (noncondensing) furnace; 

Water heating: 

natural gas

Heating: high 

efficiency 

(condensing) 

furnace; Water 

heating: natural gas

Heating: electric 

heat pump; Water 

heating: natural gas

Heating: electric 

furnace or 

baseboard; Water 

heating: natural gas

Heating: minimum 

efficiency (noncondensing) furnace; 

Water heating: 

electric

Heating: high 

efficiency 

(condensing) 

furnace; Water 

heating: electric

Heating: electric 

heat pump; Water 

heating: electric

Heating: electric 

furnace or 

baseboard; Water 

heating: electric

Other combinations

percent of installations

change in percentage of installations

current efficiency standard

high efficiency (condensing) standard

response change non-condensing --> 

condensing

Type of Respondent: Home Builder

State of Respondent: ALL

Census Region: ALL

Number of Homes Built: ALL

Respondents: 205
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Figure 5 provides an illustration of expected fuel switching behaviors by contractors if the future 

federal minimum efficiency requirement changes to condensing furnaces. Overall, 7% of the 589 

contractors from various regions of the country that responded to the survey questions expect to fuel 

switch from gas heating and water heating to electric heating, electric water heating, or both. Seven 

percent of contractors expect to switch from gas heating to electric heating, and 1% expect to switch from 

gas water heating to electric water heating. Census region information summarized in Figure 5 highlights

regional variations in expected behavior. Unlike the builder survey responses, there were at least some 

contractor respondents within each census division. 

Figure 5 Expected Fuel Switching by Contractors with a Condensing Furnace Minimum Standard

7

2

10

8

5

4

9

10

20

6

13

7

5

8

8

6

4

9

9

20

5

12

1

-3

1

2

1

1

2 2

7

2

0

-5

0

5

10

15

20

25

ALL Pacific Mountain

North

West North

Central

East North

Central

Middle

Atlantic

New

England

South

Atlantic

East South

Central

West South

Central

Mountain

South

percent change if standard changes from non-condensing to condensing

Fuel Switching - Installation Contractors

when standard goes from non-condensing to condensing

Went from all gas to not all gas

Went from gas heat to electric heat

Went from gas water heating to electric water heating

Type of Respondent: Installing Contractor

State of Respondent: ALL

Census Region: ALL

Number of Gas Furnaces Installed: ALL

Installs in New Construction: ALL

Performs Replacements in Existing Homes: ALL

Respondents: 589
FUEL SWITCHING SURVEY ANALYSIS REPORT

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Figure 6 provides further details on expected behavior changes by contractors if the future standard 

changes from non-condensing furnaces to condensing furnaces, and natural gas service is available for the 

home. Each of the columns represents the fraction of installations that are expected to include the design 

option pairs for heating and water heating. The first two columns provide the “all-gas” option of a gas 

furnace and a gas water heater. If the future standard remains a non-condensing furnace, 30.4% of 

installations are expected to be a non-condensing furnace paired with a gas water heater, while 48.1% are 

expected to be condensing furnaces paired with gas water heaters. If a condensing furnace is the 

minimum requirement, then the fraction of non-condensing furnaces with a gas water heater is expected 

to drop from 30.4% to 0%, since that option would not be permitted under a condensing furnace standard. 

As shown in the second column, condensing furnace installations are expected to increase by 23.6%, a net 

reduction of 6.8% (23.6 – 30.4). This reduction in “all-gas” options represents top level fuel switching 

behavior by contractors induced by the condensing furnace minimum standard. 

The other columns show various combinations of gas and electric heating and water heating options. 

This information helps clarify the types of fuel switching behavior expected by contractors. Heat pump 

installations are expected to increase by 6% overall (with either gas or electric water heaters). Gas 

furnace/electric water heater installations are expected to decrease slightly (by about 0.5%). Few electric 

resistance heating options are expected to be installed by contractors in either scenario, with an increase 

of 0.6% expected under a condensing furnace standard.

Figure 6 Energy and Technology Options Expected by Contractors Under Two Future Scenarios

30.4

48.1

3.4 1.2 2.4 3.2 5.5

1.3

4.6

71.8

8.1

1.8

5.1 6.8

1.5

5.0

-30.4

23.6

4.7

0.6

-2.4

2.0 1.3 0.2 0.4

0

10

20

30

40

50

60

70

80

90

100

-40

-30

-20

-10

0

10

20

30

Heating: minimum

efficiency (noncondensing) furnace;

Water heating:

natural gas

Heating: high

efficiency

(condensing)

furnace; Water

heating: natural gas

Heating: electric

heat pump; Water

heating: natural gas

Heating: electric

furnace or

baseboard; Water

heating: natural gas

Heating: minimum

efficiency (noncondensing) furnace;

Water heating:

electric

Heating: high

efficiency

(condensing)

furnace; Water

heating: electric

Heating: electric

heat pump; Water

heating: electric

Heating: electric

furnace or

baseboard; Water

heating: electric

Other combinations

percent of installations

change in percentage of installations

current efficiency standard

high efficiency (condensing) standard

response change non-condensing --> condensing

Type of Respondent: Installing Contractor

State of Respondent: ALL

Census Region: ALL

Number of Gas Furnaces Installed: ALL

Installs in New Construction: ALL

Performs Replacements in Existing Homes: ALL

Respondents: 589
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 12

Figure 7 provides information on the expected impact of installed cost differential between a gas 

furnace and an electric space heating system on fuel switching behavior by builders. As the installed cost 

differential increases, there is a range of expected behavior by builders, with an aggregate expectation for 

increased fuel switching to electric heating by builders as the installed cost differential increases. This 

information is intended for use in a methodology to conduct a fuel switching analysis for heating systems 

based on sensitivity to installed cost differentials. 

Figure 7 Impact of Installed Cost Differential on Builder Furnace Fuel Switching Behavior

7

5

11

17

124

7

8

13

30

104

11

18

15

32

79

19

25

18

41

54

38

21

32

25

39

49

33

20

19

32

58

33

20

16

28

67

30

16

15

27

4.0

2.8

6.2

9.6

70.1

4.0

4.5

7.3

16.9

58.8

6.2

10.2

8.5

18.1

44.6

10.7

14.1

10.2

23.2

30.5

21.5

11.9

18.1

14.1

22.0

27.7

18.6

11.3

10.7

18.1

32.8

18.6

11.3

9.0

15.8

37.9

16.9

9.0

8.5

15.3

0 20 40 60 80 100 120 140

$0 - Never

$0 - Sometimes

$0 - Half the Time

$0 - Usually

$0 - Always

$1 - $250 - Never

$1 - $250 - Sometimes

$1 - $250 - Half the Time

$1 - $250 - Usually

$1 - $250 - Always

$251 - $500 - Never

$251 - $500 - Sometimes

$251 - $500 - Half the Time

$251 - $500 - Usually

$251 - $500 - Always

$501 - $750 - Never

$501 - $750 - Sometimes

$501 - $750 - Half the Time

$501 - $750 - Usually

$501 - $750 - Always

$751 - $1000 - Never

$751 - $1000 - Sometimes

$751 - $1000 - Half the Time

$751 - $1000 - Usually

$751 - $1000 - Always

$1001 - $1200 - Never

$1001 - $1200 - Sometimes

$1001 - $1200 - Half the Time

$1001 - $1200 - Usually

$1001 - $1200 - Always

$1201 - $1500 - Never

$1201 - $1500 - Sometimes

$1201 - $1500 - Half the Time

$1201 - $1500 - Usually

$1201 - $1500 - Always

$1501 and above - Never

$1501 and above - Sometimes

$1501 and above - Half the Time

$1501 and above - Usually

$1501 and above - Always

percent or number of respondents

If a high efficiency (condensing) furnace costs more to install by the amount shown in each row below, would you 

never, maybe, or always choose a high efficiency (condensing) furnace over an electric space heating system?

Number

Percent

Question 15

Type of Respondent: Home Builder

State of Respondent: ALL

Census Region: ALL

Number of Homes Built: ALL

Respondents: 177
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 13

Figure 8 provides information on the expected impact on fuel switching behavior by contractors of 

increased costs associated with “orphaned” gas water heater issues when a condensing furnace is 

installed. As the modification cost increases (e.g., vent relining, new vent installation), there is a range of 

expected behavior by contractors, with an aggregate expectation for increased fuel switching to electric 

water heaters by contractors as the modification cost of the gas water heater increases. This information 

is intended for use in a methodology to conduct a fuel switching analysis for water heating systems 

affected by the installation of a condensing furnace based on sensitivity to modification costs. 

Figure 8 Impact of Modification Costs on Contractor Water Heater Fuel Switching Behavior

289

54

4

11

29

240

67

16

20

13

186

96

38

17

12

176

89

37

34

11

169

74

36

42

26

165

65

26

45

45

69.1

12.9

1.0

2.6

6.9

57.4

16.0

3.8

4.8

3.1

44.5

23.0

9.1

4.1

2.9

42.1

21.3

8.9

8.1

2.6

40.4

17.7

8.6

10.0

6.2

39.5

15.6

6.2

10.8

10.8

0 50 100 150 200 250 300 350

$0 - Never

$0 - Sometimes

$0 - Half the time

$0 - Usually

$0 - Always

$1 - $200 - Never

$1 - $200 - Sometimes

$1 - $200 - Half the time

$1 - $200 - Usually

$1 - $200 - Always

$201 - $400 - Never

$201 - $400 - Sometimes

$201 - $400 - Half the time

$201 - $400 - Usually

$201 - $400 - Always

$401 - $600 - Never

$401 - $600 - Sometimes

$401 - $600 - Half the time

$401 - $600 - Usually

$401 - $600 - Always

$601 - $800 - Never

$601 - $800 - Sometimes

$601 - $800 - Half the time

$601 - $800 - Usually

$601 - $800 - Always

Above $800 - Never

Above $800 - Sometimes

Above $800 - Half the time

Above $800 - Usually

Above $800 - Always

percent or number of respondents

If the increased cost is more than this you would replace the gas water heater

If the vent on an existing gas water heater needs modification due to a cond. furnce install replacing the gas 

water heater with an elec. one is an option, but it may require upgrading the elec. service. 

Percent

Number

Question 40

Type of Respondent: Installing Contractor

State of Respondent: ALL

Census Region: ALL

Number of Gas Furnaces Installed: ALL

Installs in New Construction: ALL

Performs Replacements in Existing Homes: 

ALL

Respondents: 418
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 14

4.3 Builder and Contractor Comments

The interactive spreadsheet that accompanies this report includes all anonymous comments provided 

by survey respondents. The following small sample of comments illustrate builder and contractor 

opinions and observations. Within both groups below, sample comments related to specific questions are 

provided first, then general comments are shown.

4.3.1 Sample Builder Comments

Question: When you chose a high efficiency furnace over a minimum-efficiency furnace, what 

drives the decision?

• Our state energy code (IL, IN, WA)

• Marketing (NE)

Question: What percentage of the homes you completed last yr. had high eff. furnaces and electric 

water heaters?

• Venting issues [drive the decision] when customers don’t want to spend the money to vent a 

regular gas water heater (IL)

• The only time we use electric water heaters are if the customer requests it or the power 

company has a large incentive (AL)

• Cost of gas water heaters is higher than electric (MI, MN)

General Builder Comments

• I personally have gas heat, dryer, hot water, and fireplace and recommend gas every time it’s 

available (AL)

• Gas is harder to install and very costly to the builder. The subcontractors charge a lot to do 

gas piping. (AL)

• Is it [gas] really cheaper or is it gas company sales (GA)?

• At this point in time, natural gas heating and water in area seems to be the most cost effective 

to operate and therefore that is why we use gas. If we had a change in operating costs, we 

would probably switch to the more competitive energy source (IL).

• Do not believe that high-efficiency furnaces should be mandated because of the extra cost to 

install in both new homes and to retrofit in an existing home (NJ).

• The consumer will ultimately make the decision based on how much they will pay for the 

equipment vs. how much per month they will spend for energy. We will build the homes 

based on what they want. (MI)

• Keep the code the same or relax it for what is left of affordable housing. Now is not the time 

to increase new home prices. Current rising costs and low buyer confidence for the last 

several years should not be compounded by even higher requirements. Additionally, I am not 

sure the science of "tight" homes is correct (OR).

• Efficiency of construction, equipment life, geographic region, owner habits, and anticipated 

future costs of service all play a role in choosing equipment (OR).
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 15

4.3.2 Sample Contractor Comments

Question: Natural gas is currently used and the federal minimum has changed. What percentage of 

replacements are in these categories?

• I try to push the high efficient gas furnace and recommend not switching to electric because 

of the better comfort in heating with gas (AL)

• 95% furnaces are easy to sell and install, the cost needs to have a tip over with some rebates 

and tax incentives. A 1/3 of the cost is usually enough (CA) 

• As an HVAC contractor in the state of CT for over 25 years, myself, and fellow tradesmen 

have no choice but to choose reliability over efficiency...it always seems to come back to 

haunt us with condensate issues from drainage to freeze ups (CT)

• Most people won't pay to re-line the common vent. GA power has rebates for electric water 

heaters (GA)

• If 90% is required, we would be forced to install heat pumps on occasion due to the venting 

(GA)

• If the building does not lend itself to venting a condensing gas furnace, the electric heat pump 

is usually the only viable energy efficient option. The gas industry will lose that segment of 

the market (IN)

• Many homes can't be converted to a direct vent furnace because of location within the home 

and don't have adequate electric supply to convert to electric heat and be code compliant 

(MD)

General Contractor Comments

• Electric rates are very high in Southern California. Gas is the way to go. If the solar systems 

and other systems make the rate affordable then it may change. Electric conversion to heat 

with the present technology is always less efficient than gas (CA)

• Our local rates are competitive so on new homes we go with the customers wishes on gas 

verses electric. On existing gas heated homes we always recommend they stay with gas and 

go at least 95% efficient. I never try to talk a customer out of using an electric water heater as 

customers tell us they have a quicker recovery rate (IN)

• There must be a way to file a waiver to be able to still install 80% furnaces for multi family 

dwellings (NJ)

• If the trend is toward high efficiency, it must become more affordable. If it does not, then I 

see much more demand for electric heat pumps for heat and cooling both. The same would 

happen with hot water, more electric heat pumps (UT)

• Let the customer decide. The government has no business regulating efficiency. Efficient 

equipment should pay for itself (UT)

• Requiring condensing furnaces can be done with few problems in new construction. 

However, in a retrofit application it will be counter-productive, resulting in customers opting 

to repair older furnaces, and will actually decrease overall efficiency compared to installing a 

new standard efficiency system. Retrofit installation can be difficult, and cost prohibitive due 

to the need for new venting and drains through finished space (WA)
FUEL SWITCHING SURVEY ANALYSIS REPORT

Page 16

5 Conclusions

Fuel switching survey responses indicate that at least some incremental fuel switching from gas to 

electric technology options is expected if the future federal minimum efficiency requirement changes to 

natural gas condensing furnaces. Fuel switching is expected to occur in both heating and water heating

systems. Some differences in behavior are anticipated between builders and contractors, and there may 

be some differences across regions and states. Contractors expect more fuel switching than builders due 

to additional perceived issues in the replacement market. 

Installed cost differentials between gas and electric options are expected to impact fuel switching

behavior. Some builders and contractors expect less sensitivity to cost in the marketplace; others expect a 

higher likelihood of switching to electric options as the cost differential increases. 

Missing data will require extrapolation for many states and some census divisions. The methodology 

selected to extrapolate the available information may impact analysis results.

Builder and contractor comments are predominantly against new regulations, with a range of 

concerns expressed related to installation challenges and other consequences. Some commenters noted 

that they already favor condensing furnaces, and new regulations are not much of a threat.