8

- E

- i APPENDIX 8

- E

. MAINTENANCE AND REPAIR COST DETERMINATION FOR BOILERS

TABLE OF CO NTENTS

8

- E.1 INTRODUCTION

................................ ................................ ................................ 8

- E

- 1 8

- E.2 MAINTENANCE COST FOR BOILERS

................................ ............................ 8

- E

- 1 8

- E.2.2 Low Sulfur Fuel Oil

................................ ................................ .............................. 8

- E

- 2 8

- E.2.2.1 Sulfur Producti on

................................ ................................ .......... 8

- E

- 2 8

- E.2.2.2 Currently Regulatory Requirements

................................ ............. 8

- E

- 3 8

- E.2.2.3 Reduction of Sulfur Effects on Boiler Maintenance

..................... 8

- E

- 4 8

- E.2.2.4 Market Share of Low Sulfur Boilers (<300,000 kBtu/h )

.............. 8

- E

- 6 8

- E.2.2.5 Low Sulfur Energy Prices

................................ ............................. 8

- E

- 7 8

- E.3 REPAIR COST FOR BOIL ERS

................................ ................................ ........... 8

- E

- 8 8

- E.4 REGIONAL MATERIAL AN D LABOR COSTS

................................ ............... 8

- E

- 8

LIST OF TABLES

Table 8

- E.1.1 Example Cost Table

................................ ................................ ................... 8

- E

- 1 Table 8

- E.2.1 Maintenance Fractions based on 2008 American Home Comfort Survey

................................ ................................ ................................ ........ 8

- E

- 2 Table 8

- E.2.2 States and Year of NO X Regulation Implementation, and Regional Oil Boiler Market Shares ,

................................ ................................ ................. 8

- E

- 7 Table 8

- E.3.1 Warranty Period Assumptions

................................ ................................ ... 8

- E

- 8 Table 8

- E.3.2 Service Contract Assumptions

................................ ................................ ... 8

- E

- 8 Table 8

- E.4.1 RS Means 2013 National Average Labor Costs by Crew

.......................... 8

- E

- 8 Table 8

- E.4.2 RS Means Labor Costs Markups by Trade

................................ ................ 8

- E

- 9

LIST OF FIGURES

Figure 8

- E.2.1 States with Low Sulfur Regulations (Source: EIA)

................................ ... 8

- E

- 4 Figure 8

- E.2.2 Boiler Deposits by Fuel Oil Type

................................ .............................. 8

- E

- 58

- E

- 1 APPENDIX 8

- E. INSTALLATION, MAINTE NANCE, REPAIR COST
DETERMINATION FOR BOILERS

8

- E.1 IN TRODUCTION

This appendix provides further details about the derivation of maintenance and repair
cost s for boilers

. The Department of Energy (DOE) estimated maintenance and repair costs for boiler s based on RS Means, a well

- known and respected construction cost estimation method , as well as manufacturer literature and info rmation from expert consultants. Table 8

- E.1.1 offers an example of the cost calculation method . All labor costs are derived using the latest residential 2012 RS Means labor costs by crew type. 1 M aintenance and repair cost ta bles include a trip charge

, which is often charged by contractors and calculated to be equal to one half hour of labor per crew member. Labor hours (or person

- hours) are based on RS Means data, expert data, or engineering judgment. Bare c osts are all the c osts without any markups. Material costs are based on RS Means data, expert data, or internet sources. The total includes overhead and profit (O&P), which is calculated using labor and material markups from RS Means. Values reported in this appendix are ba sed on national average labor costs. The labor costs shown in the tables in this appendix are the national average values. In its analysis, DOE used regional labor costs to more accurately estimate installation costs by region. Section 8

- D.5 describes the derivation of regional labor costs. DOE then applied the appropriate regional labor cost to each RECS sample household. The total costs include O&P. (Note that the unit “L.F.” in the tables means “linear foot.”)

Table 8

- E.1.1 Example Cost Table

Descripti on Crew Labor Hours Unit Bare Costs ( 2012 $ ) Quantity Total incl. O&P Material Labor Total
Trip Charge CREW1 0.5

- 0.00 23.00 23.00 1 35.00 Description of Installation Item CREW1 0.5 Ea. 15.00 23.00 48.00 1 51.50
Total 1.0 15.00 46.00 71.00 86.50

8

- E.2 MAINTENANCE COST FOR BOILERS

The maintenance cost is the routine annual cost to the consumer of maintaining equipment operation

. I t is the cost associated with general maintenance. DOE assumes that this maintenance cost is the same at all efficiency levels.

The frequency with which the maintenance occurs was derived from a 2008 consumer survey 2 on the frequency with which owners of different types of boilers perform maintenance.8

- E

- 2 Table 8

- E.2.1 Maintenance Fractions based on 2008 American Home Comfort Survey Frequency of Maintenance Assumed Frequency for Analysis Fraction of Households

Oil Boilers Other Boilers

Last maintenance within a year Annual 71% 53%
Last maintenance within two years Biannual 17% 17%

Last maintenance o ver 2 years Every 5 years 7% 15%

Never Never 5% 14%

DOE estimated costs for annual maintenance using data from a consumer survey on the frequency with which owners of different types of boiler s perform maintenance. For condensing oil boiler s, the high quantity of sulfur in the fuel results in frequent clean ing of the secondary heat exchanger, and DOE accounted for this cost.

DOE investigated the effects of recent low sulfur fuel oil requirements on oil boiler maintenance. See section 8.E.2.2. Based on this information , DOE adjusted maintenance costs
to ta ke into account these changes. Around 65 % of residential boiler shipments are to s tates which currently have or will have low s ulfur restrictions . Some studies suggest that low sulfur fuel oil can reduce maintenance costs. For this analysis, DOE assumes that in:

1) Non

- regulated areas: Purchase high sulfur oil fuel with the current maintenance frequency for non

- cond ensing and condensing equipment. For this analysis, the frequency of maintenance remains the same, but condensing maintenance costs is

assume d to be 10% higher.

2 ) Regulated areas: Purchase low sulfur oil with decreased maintenance costs for all equipment. For this analysis, the frequency of maintenance is doubled and condensing and non

- condensing costs are equal.

3) Fuel prices are assumed t o be already adjusted in AEO 2013 projections.

8

- E.2.2 Low Sulfur Fuel Oil

8

- E.2.2.1 Sulfur Production

Ordinary oil fuel used for heating in the United States typically contains sulfur levels on the order of 2,500 parts per million. a Approximately 99% of the burned sulfur turns into sulfur

a Low Sulfur Heating Oil in the Northeast States: An Overview of Benefits, Costs, and Implementation Issues. NESCAUM. December 2005.8

- E

- 3 dioxide (SO 2 ), which, when emitted to the atmosphere, can irritate lungs, contribute to pulmonary disease, and create haze. b

In addition to the production of SO 2 , a small amount of the sulfur pre sent in fuel oil is also converted during combustion into sulfur trioxide (SO 3 ). SO 3 combines with the water present in combustion gas and creates sulfuric acid, which condenses within heat exchangers and venting systems when heated to high temperatures. T his sticky acid can react with the iron or steel of the heat exchanger walls, flue pipe, and chimney interior, to create scale which both reduces the boiler’s efficiency, and damages the equipment. c

Low sulfur fuel oil has a smaller amount of sulfur pre sent, typically on the order of 15 to 500 ppm. Not only can the use of low sulfur fuel oil reduce production of sulfur dioxide and trioxide, but the same process that removes sulfur from fuel has the added benefit of also removing nitrogen. d

8

- E.2.2.2 Currently Re gulatory Requirements

New York was the first state to mandate th e EPA rules that establish ed the use of Ultra Low Sulfur Diesel (ULSD) (less than 15 ppm sulfur) for transportation in certain parts of the country e be applied to heating oil. The following chart shows the individual states t hat have also mandated ULSD levels for heating oil

. f

b http://www.ppmcsa.org/pdf/AdvantageofUl tra

- LowSulfurHeatingFuels.pdf

c http://www.ppmcsa.org/pdf/AdvantageofUltra

- LowSulfurHeatingFuels.pdf
d http://www.ct.gov/deep/lib/deep/air/siprac/2013/fuel_sulfur_factsheet.pdf

e http://www.epa.gov/otaq/fuels/dieselfuels/
f http://www.eia.gov/todayinenergy/detail.cfm?id=112118

- E

- 4 Figure 8

- E.2.1 States with Low Sulfur Regulations

Several sources state that the Northeast restrictions that will take effect in 2018 will mark

a drastic decline of the high sulfur fuel market in the U.S

. g , h

, i

At the federal level, high sulfur diesel exists despite being banned for on

- road use in 2010 and off

- road use (such as barges and locomotives) in 2012. j However, lowering the sulfur
content of highway diesel has had some impact on heating oil sulfur content as well. Because refineries are manufacturing highway diesel and heating fuel through the same process, there is often a mix of the two fuels, leading to lower sulfur levels in heating fu el. Therefore heating fuel refined directly after highway diesel has decreased the overall sulfur content. k

8

- E.2.2.3 Reduction of Sulfur Effects on Boiler Maintenance

A variety of sources cite the fact that lower

- sulfur fuel can reduce operating and maintenance costs and improve boiler efficiency. l

, m , n , o Tests by Brookhaven National Laboratory and the New York State Energy Research and Development Authority (NYSERDA) show that 500 ppm low sulfur fuel leads to very clean heat exchangers, while 15 ppm fuel leads t o completely clean exchangers. p , q The most consistent decrease in the rate of sulfur particles collecting on solid surfaces was two

- and

- a

- half times, but some test results have shown even better rates. r NYSERDA and Brookhaven studied 20 homes in a larger 1 ,000 home study to assess fouling deposits. The following graph shows some of their findings:

g http://blogs.platts.com/2013/03/27/heating

- oil/
h http://www.platts.com/latest

- news/oil/houston/feature

- ultra

- low

- sulfur

- heating

- oil

- production

- 21465954
i http://www.eia.gov/todayinenergy/detail.cfm?id=5890 j http://blogs.platts.com/2013/03/27/heating

- oil/
k http://www.cecarf.org/publications/CECA%20Low%20Sulfur%20White%20Paper%209

- 12

- 03.pdf
l http://nyccleanheat.org/content/ultra

- low

- sulfur

- 2

- oil

m http://w ww.ppmcsa.org/pdf/AdvantageofUltra

- LowSulfurHeatingFuels.pdf

n http://www.nyoha.org/aboutOilheat.php

o http://www.oeconline.org/resources/publications/factsheetarchive/biodieselforboilers

p http://www.ppmcsa.org/pdf/AdvantageofUltra

- LowSulfurHeatingFuels.p df

q http://www.ecvt.net/assets/files/Brookhaven

- Low

- Sulfur.pdf

r http://www.cecarf.org/publications/CECA%20Low%20Sulfur%20White%20Paper%209

- 12

- 03.pdf8

- E

- 5 Figure 8

- E.2.2 Boiler Deposits by Fuel Oil Type

Normal sulfur oil produced 0.28 pounds of deposits per million BTU of fuel consumed. Deposits in the low sulfur group, exc luding “heating only boilers” and “high smoke boilers,” produced 0.14 pounds per million BTU of fuel. This equates to a 2:1 reduction in deposits from the use of low sulfur fuel oil, results which correspond with research conducted by Brookhaven National L aboratory and CAMET Energy Technology Centre in Canada. s A 1995 report entitled “Oilheat Advantages Project

– Engineering Analysis and Documentation Report” also states that decreased fouling of heat exchangers from low sulfur fuel can either extend the pe riod between cleanings from 21 months (the average interval between cleanings) to 58 months, or cleanings at the existing frequency will take less time than the current average of 1.1 hours. t

Using lower

- sulfur heating oil with boiler systems can not only reduce the emission of particulate matter, but also allow the use of secondary condensing heat exchangers on oil

- fired boilers. u

The are some downsides to low sulfur fuel: the German organization Institut Fur wirtschafliche Oelheizung performed res earch in 2003 by testing 50 ppm fuel with condensing and wall hung units with blue flame burners (which burn at a higher temperature than standard current yellow flame oil

- fired burners), and found that the combustion was impacted by low lubricity and meta l dusting. However, these issues may also be related to the blue flame burners, the metal dusting was not observed in the field. v In addition, more information is needed to determine the application of higher temperature blue flame burners in the U.S. market.

s http://www.ecvt.net/assets/files/Brookhaven

- Low

- Sulfur.pdf

t http://www.cecarf.org/publications/CECA%20 Low%20Sulfur%20White%20Paper%209

- 12

- 03.pdf

u http://www.edf.org/sites/default/files/10072_EDF_BottomBarrel_Ch4.pdf

v http://www.ppmcsa.org/pdf/AdvantageofUltra

- LowSulfurHeatingFuels.pdf8

- E

- 6 Boilers that burn either residual or heavy

- distillate fuel oils require more maintenance because of soot

- production. In ord er to compensate for this production, daily soot blowing is required during the heating season to remove excess soot from heat exchanger surfaces, in addition to regular boiler tuning to ensure proper combustion air volume. w

MJ Bradley and Associates re commend the following annual maintenance service for boilers that burn No. 2, distillate, heating oil:

• Burner tip and heat exchanger cleaning

• Ash and soot removal

• Flue gas analysis/carbon monoxide test

• Air intake filter replacement

• Oil filter replacement

For residential boilers that burn natural gas normally, less maintenance is required but should still include:

• Air intake filter replacement

• Flue gas analysis/carbon monoxide test.

8

- E.2.2.4 Market S hare of Low Sulfur Boilers ( <300,000 kB tu/h)

Based on the list of S tates above with low sulfur restrictions and the number of residential boiler shipments from 1987

- 2003 to th o se S ta tes, DOE approximates that 23% of residential boi lers shipments are currently to areas with l ow sulfur restrictions and estimates that th is fraction could rise to 65% by 2020

.

w http://www.edf.org/sites/default/files/10072_EDF_BottomBarrel_Ch4.pd f8

- E

- 7 Table 8

- E.2.2 States and Year of NO X Regulation Implementation, and Regional Oil Boiler Market S hare s x , y State Year of Implementation Residential Oil Boiler (Cast Iron) Shipment Fraction (1987

- 2003) New York 2012 (ULSD, <15ppm) 24% Connecticut 2011 (<50ppm), 2014 (ULSD, <15ppm) 11%

New Jersey 2014 (<500ppm), 2016 (ULSD, <15ppm) 8%

Maine 2016 (<50ppm), 2018 (ULSD, <15ppm) 5%

Massachusetts 2014 (<500ppm), 2018 (ULSD, <15ppm) 17%

Vermont 2014 (<50 ppm), 2018 (ULSD, <15ppm) 1%

Total by 2020 65%

8

- E.2.2.5 Low Sulfur Energy Prices

Heating oil prices are influenced by factors such as demand per season, the cost of crude oil, competition among heating oil dealers, and regional costs such as distribution. Marketing and distribution usually accounts for 46 percent of the retail price to consumers. z Low sulfur regulations could also potentially affect the price of fuel oil. DOE found a 2003 report that cites the price differential between regular #2 heating oil and low sulfur oil as o ne to two cents per gallon. aa Research funded by the Connecticut government states that the stock of ultra

- low sulfur fuel in the US has increased significantly over the last decade, which would also affect pricing. bb Data already shows that New York State’s requirement of ultra

- low sulfur fuel oil will result in slightly higher heating oil futures prices when compared to historical prices. For example, i n February and March of 2013, the difference between the April heating oil contract and the May heating oi l contract averaged nearly $0.08 per gallon.” cc

DOE believes that low sulfur oil pricing for regulated regions is already taken into account in EIA’s AEO 2013 projections.

x http://www.eia.gov/todayinenergy/detail.cfm?id=5890

y http://www.eia.gov/todayinenergy/detail.cfm?id=11211

z http://www.cecarf.org/publications/CECA%20Low%20Sulfur%20White%20Paper%209

- 12

- 03.pdf

aa http://www.cecarf.org/publications/CECA%20Low%20Sulfur%20White%20Paper%209

- 12

- 03.pdf
bb http://www.ct.gov/deep/lib/deep/air/siprac/2013/fuel_sulfur_factsheet.pdf

cc http://www.eia.gov/todayinenergy/detail.cfm?id=112118

- E

- 8 8

- E.3 REPAIR COST FOR BOILERS

The repair cost is the cost to the consumer for replaci ng or repairing components in the boiler that have failed. DOE estimated repair costs at each considered efficiency level using a variety of sources, including 2012 RS Means Facility Repair and Maintenance Data

, 3 manufacturer literature, and information from expert consultants. DOE accounts for regional differences in labor costs.

Table 8

- E.3.1 Warranty Period Assumptions Warranty Period Fraction of Households

One year Labor and Parts 100%

5 years parts only 90%
10 year parts only 10%

Table 8

- E.3.2 Service Contract Assumptions Service Contract Types Fraction of Households

Oil Boiler s Other Boiler s Total Package (Labor and Parts) 27% 15%
Annual Cleaning 11% 6%

None 62% 79%

8

- E.4 REGIONAL MATERIAL AND LABOR COSTS

DOE used regional material and labor costs to more accurately estimate installation, maintenance, and repair costs by region. RS Means provides average national labor costs for different trade groups as shown in Table 8

- E.4.1

. Bare costs are given in RS Means, while labor costs including overhead and profit (O&P) are the bare costs multiplied by the RS Means markups by trade shown in Table 8

- E.4.2

.

Table 8

- E.4.1 RS Means 20 13 National Average Labor Costs by Crew

Crew Type Crew Description Laborers per Crew Cost per Labor

- Hour Bare Costs Incl. O&P * Q1 1 Plumber, 1 Plumber Apprentice 2 $ 50.23 $7 8.15 * Q&P includes markups in Table 8

- A.8.28

- E

- 9 Table 8

- E.4.2 RS Means Labor Costs Markups by Trade

Trade Workers Comp. Aver Fixed Overhead Overhead Profit Total

Plumber (Repair/Remodel) 6.7 % 17.9% 16 .0% 15 .0% 55 .6 %

RS Means also provides material and labor cost factors for 295 cities and towns in the U.S. To derive average labor cost values by s tate, DOE weighted the price factors by city or town population size using 2012 census data. DOE used the material and labor cost factors for cost associated wi th fire suppression, p lumbing , and HVAC

. See appendix 8

- D for more details.8

- E

- 10 REFERENCES

1. RS Means Company Inc., RS Means Residential Cost Data . 31st Annual Edition ed. 2012: Kingston, MA

2. Decision Analysts, 2008 American Home Comfort Study: Online Database Tool , 2009. Arlington, Texas. < http://www.decisionanalyst.com/Syndicated/HomeComfort.dai >

3. RS Means Company Inc., RS Means Facilities Maintenance & Re pair Cost Data . 2012. Kingston, MA.