AGA Criticizes DOE Natural Gas Instantaneous Water Heater Rulemaking

WASHINGTON - The Department of Energy (DOE) released a pre-publication Federal Register final rule eliminating non-condensing instantaneous natural gas water heaters from the market in the 11th hour of the Biden Administration's tenure. While AGA and its members support efforts to conserve energy, the new rule unnecessarily would eliminate cost effective non-condensing natural gas water heaters from the market.

"DOE's decision to ban an entire segment of instantaneous water heaters is deeply concerning and irresponsible," said Matthew Agen, AGA Chief Counsel, Energy. "The final rule is a violation of the Energy Policy and Conservation Act (EPCA), which prohibits DOE from promulgating a standard that renders a product with a distinct performance characteristic unavailable. To make matters worse, DOE's own analysis claims that the average life-cycle cost savings would amount to barely $112 over the entire 20-year average product life. DOE's final rule is unjustifiable on legal and practical grounds."

The higher costs imposed by this rule create an average payback period of more than twelve years for customers. A full 40% of customers directly impacted by the rule would see a net cost increase from this rule, rather than even minimal savings. DOE's estimate of increased cost to customers is not reflective of real-world situations, with direct pricing information from a manufacturer suggesting that the difference in average product price alone is approximately $450 - 200% greater than the $231 difference claimed by DOE to justify the rule. Moreover, the customers most likely to opt for more affordable non-condensing water heaters tend to be low-income and senior households.

"Stakeholders, including AGA have made these issues known to DOE throughout this process, and regret that DOE chose not to incorporate our feedback into the final rule," continued Agen. "Forcing low-income and senior customers to pay far more upfront is particularly concerning. DOE's decision to go ahead with a flawed final rule is deeply disappointing."

AGA is currently awaiting a ruling on a separate lawsuit that covers similar legal issues regarding natural gas furnaces and commercial water heaters. If the rulemaking in AGA v. DOE is struck down, it will have significant implications for the legality of this rulemaking.

More information about the differences between condensing and non-condensing natural gas water heaters and furnaces is available here.