Saving Money on Heating & Cooling Systems | A.J. Perri NJ HVAC Skip to content

How can I save money on a heating or air conditioning system?

Will the lowest priced heating and air conditioning system end up costing you money in the long run with high operating costs or by needing to be replaced sooner? Will the lowest priced system provide the comfort you expect? Before you make your final decision, you should consider operating costs and efficiency ratings.

Comparing energy efficiency of different brands of home heating systems and central air conditioners is relatively easy. There are three standardized rating systems used. Each rating is used for a specific type of product (in other words, all furnaces use the same system, heat pumps use a different system, and so on).

AFUE (Gas Heating)
The efficiency of a furnace is measured in a rating known as AFUE (Annual Fuel Utilization Efficiency). A lot like your car’s miles-per-gallon rating, AFUE tells you how efficiently the furnace converts fuel (gas or oil) into heat. An AFUE of 80% means that 80% of the fuel is used to heat your home, while the other 20% basically goes up the chimney.

The government mandated a minimum AFUE rating for furnaces installed in new homes is 78%. (In contrast, many furnaces manufactured before 1992 had AFUE ratings as low as 60% — so nearly half the fuel was being wasted.) Furnaces with AFUE ratings of 78% to 80% are considered “mid-efficiency”; those with ratings of 90% or higher are known as “high efficiency.” The maximum furnace efficiency available is around 96.6%.

In general, a higher efficiency furnace usually means you pay a higher price for the system but endure a lower monthly operating cost. If you have an older furnace (with an AFUE of about 60%), you could save up to 60% on your heating bills by replacing it with a new high-efficiency furnace. So the cost to replace your old, inefficient furnace is paid back through lower utility bills.

Furnace Replacement Payback
If you live in a cold climate, you could see a payback in a few short years. If you live in a moderate climate, it might make more sense to purchase a mid-efficiency furnace. An A.J. Perri representative can use heating system data from your area to help you determine about how long it would take you to recover the additional cost of a high-efficiency model in energy savings. And after the payback, you continue to save on your energy bills for the life of the system.

SEER (Cooling)
Cooling efficiency for air conditioning systems and heat pumps is indicated by a SEER (Seasonal Energy Efficiency Ratio) rating which tells you how efficiently a unit uses electricity. The higher the number, the greater the efficiency. The typical SEER rating of units manufactured prior to 1992 is about 6.0. Now, the government mandated minimum is 10.0 SEER. High-efficiency units have a SEER of at least 12.0; the maximum available is about 17.

HSPF (Heat Pump Heating)
Heat pumps also have heating efficiency ratings, indicated as an HSPF (Heating Seasonal Performance Factor). In general, the higher the HSPF rating, the less electricity the unit will use to heat your home. The government mandated minimum heating efficiency standards for new heat pumps is 6.8 HSPF. Most heat pumps manufactured before 1992 have HSPF ratings below 5.0. Today, an HSPF of 7.5 or higher is considered high-efficiency; the maximum available is 10.0.

Higher efficiency in heat pumps and air conditioners usually means higher cost but lower utility bills. If you live in a warm and/or humid climate, you will probably see the higher cost of a high-efficiency air conditioner or heat pump paid back (through lower utility bills) in a few short years. Ask an A.J. Perri representative to help you determine about how long it would take you to recover the additional cost in energy savings. Of course, after the payback, you continue to save on your energy bills.

Matching Your Heating and Air Conditioning System for Optimum Efficiency
There’s one other factor that affects the efficiency of your air conditioning or heat pump system: the indoor coil. (Your heat pump or air conditioner is a “split system” which means that there is an outdoor unit or condenser and an indoor unit or evaporator coil.) If your condensing unit is not matched with the proper indoor coil, it may not give you the stated SEER and/or HSPF ratings and could even develop performance problems. When you’re replacing an existing home heating and air conditioning system, make sure you replace both units so your new condensing unit will give you optimal performance, efficiency and comfort.

Want to learn more about energy ratings and environmental impacts of your home heating and air conditioning system? The U.S. Environmental Protection Agency’s Energy Star Program offers information about the environmental standards in place in the heating and air conditioning industry.

The U.S. Environmental Protection Agency promotes residential energy efficiency because household energy use contributes to air pollution, including:

  • 20 percent of all U.S. carbon dioxide emissions
  • 26 of all U.S. sulfur dioxide emissions
  • 15 of all U.S. nitrogen oxides emissions

By using more energy-efficient appliances, home heating systems and air conditioning equipment, and constructing more energy-efficient homes, we can reduce this pollution and 151; and save money at the same time!

Why is the U.S. Environmental Protection Agency promoting energy-efficient furnaces?
Furnaces are the most commonly used residential heating system in the United States.

  • Approximately 38 million gas furnaces are currently operating in U.S. homes and approximately 2.5 million of these furnaces are replaced annually.
  • A 15-year-old furnace may be only 66% efficient and cost up to $730 per year to operate
  • A new high-efficiency furnace can be 90% efficient or greater and cost as little as $525 to operate annually.
  • Choosing to purchase a furnace in the 90-96% efficiency range can reduce pollution and save homeowners hundreds of dollars over the equipment’s lifetime.

What is the U.S. Environmental Protection Agency Doing About It?

Industry-leading furnace manufacturers have signed agreements with U.S. Environmental Protection Agency to produce and promote high-efficiency furnaces that are 90% efficient or greater. These high-efficiency gas furnaces squeeze energy savings from furnaces using an advanced “condensing” technology. Products qualifying for this U.S. Environmental Protection Agency program will be identified by the U.S. Environmental Protection Agency Energy Star logo.

How much money can my Energy Star furnace save?

Over 10 years an Energy Star furnace could save:

  • $1,700 relative to an old furnace*
  • $920 relative to a new standard furnace*

*Savings based on $732 average annual heating bill from a 1993 American Gas Association survey for the Middle Atlantic region. U.S. Environmental Protection Agency estimates for old furnace AFUE = 66%; standard furnace = 78%; and Energy Star = 92%. Actual savings for individual homeowners will vary based on geographical area of the country, local gas rates and the age and size of the home.

For more information about Energy Star furnaces, please contact: Peter Banwell, Manager, Energy Star Furnaces, U.S. Environmental Protection Agency (6202J), 401 M Street, S.W., Washington, D.C. 20460. Phone: (202) 233-9408. Fax: (202) 233-9578.

Air conditioners and heat pumps
About half of all energy used by households goes to heating and cooling the home. Over 7% of all homes are heated and cooled with heat pumps and 24% of new homes are built with them.

  • Seventy-seven percent of new homes are now built with central air conditioning, up from 43% in 1972
  • Over 40% of all existing homes now have central air conditioning
  • In 1994, over 1 million air-source heat pumps and almost 4 million central air conditioners were shipped from manufacturers, the most ever.

By increasing the efficiency of new heat pump and air conditioning units being installed, we can dramatically reduce the nation’s energy consumption and resultant pollution. This will also help utilities offset their peak loads and avoid having to construct costly new power plants. More efficient equipment has the added benefit of helping consumers save money on their energy bills.

What is the U.S. Environmental Protection Agency Doing About It?
U.S. Environmental Protection Agency has formed a new Energy Star program with air conditioner and heat pump manufacturers. The Energy Star heat pump and air-conditioner program is a voluntary partnership between manufacturers and U.S. Environmental Protection Agency to stimulate the market for high-efficiency products. The Energy StarSM logo is a symbol that consumers can look for to identify heat pumps and air conditioners that save energy and prevent pollution. Energy Star air conditioners are 20 percent more efficient than ones currently meeting the federal government standards. Energy Star air-source heat pumps and central air conditioners could save consumers over $350 million per year by the year 2000 in heating and air conditioning bills. Consumers will easily recognize the new, more efficient products because they will be identified by the U.S. Environmental Protection Agency Energy Star logo shown above.

Purchasing Energy Star Heat Pumps and Air Conditioners
Utilities all over North America are promoting high-efficiency heat pumps and air conditioners because they help reduce peak demand and provide higher customer satisfaction. Energy Star heat pumps and home central air conditioning systems also produce a variety of other benefits:

  • Energy bills are dramatically reduced
  • All units come with a manufacturer’s warranty
  • Pollution is reduced through the use of high-efficiency products.

In addition to asking for Energy Star when purchasing heat pumps and air conditioners, consumers should consider the following:

  • Make sure the unit is properly sized and installed to ensure maximum comfort and efficiency.
  • Contractors should be well trained in the proper installation of air-source heat pumps and central air conditioners.
  • The duct work should be installed properly, since an improperly installed system can dramatically reduce efficiency.

How Much Money Can My Energy Star Unit Save?
U.S. Environmental Protection Agency Energy Star heat pumps and air conditioners can save you money by reducing electricity bills. Look for the Energy StarSM logo when purchasing a home heating system or central air conditioner to be sure of lowering your energy bill.

This information courtesy of the U.S. Environmental Protection Agency.