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Portland Energy Conservation, Inc. (PECA) was selected by the Bonneville Power Administration (BPA) to conduct an evaluation of the Efficient Water Heater Program (EWHP). EWHP is a component of the Appliance Efficiency Program funded by BPA. Program participants receive a $60 rebate for purchasing an electric water heater that meets program eligibility requirements. Presently, over 16,000 rebates for purchasing energy-efficient electric water heaters have been dispensed throughout the Pacific Northwest.

Due to the magnitude of this program, the relatively long lifetime of a water heater (estimated at 12 years), and increasing availability of natural gas, concerns were raised as to whether the program is influencing customers' fuel choice for water heat. Is the opportunity for a rebate driving the market to choose electric water heaters over gas water heaters?

The two primary sources of information for this analysis are a series of confidential interviews with participating utilities and BPA staff (central office and area office), and a mail survey of program participants. Twenty-six interviews comprised the sample selected for confidential interviews. The mail survey was sent to a stratified random sample of 2,760 program participants. The rate of return for the survey was 50 percent.


Confidential Interviews
It was universally agreed by utility staff that the water heater rebate is too small to persuade a customer to switch from an electric to a gas-fueled water heater. If, however, a property owner decided to switch from fuel heating oil tanks to gas or electricity, then a primary consideration could be the cost of installation.

Generally, utilities believe that customers will replace a failed electric water heater with a similar appliance using the same fuel. The cost of gas line extensions and home modifications necessary for fuel switching in a retrofit are high, and unless the home space is already gas heated, conversion to gas in unlikely.

If customers heat their homes with electricity, then they will install an electric water heater. If they heat their homes with gas, then customers may consider converting to a gas water heater, but probably only if the cost of installing a gas appliance is not excessive. Also, an issue for many customers is the fear of gas as a volatile fuel source.

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