[BETA] Fortnightly

WHEN LAST I HEARD, U.N. SECRETARY GENERAL Kofi Annan had reached agreement with Iraqi President Saddam Hussein on weapons inspections, staving off war. But the American Gas Association is still battling the electric industry and the U.S. Department of Energy to save market share for its gas-fired water heaters. This battle is serious.

The water heater war takes in a wide range of issues and players. I hear that ASHRAE (the American Society of Heating, Refrigerating and Air-Conditioning Engineers), has raised gas industry ire with its new proposed standard 90.1. The industry complains that Underwriters Laboratories Inc. has begun to develop "non-governmental" indoor air quality standards with the complicity of the Environmental Protection Agency and the Consumer Products Safety Commission.

Demographics also play a role. Aging baby boomers use less hot water than teenagers. This fact alone could influence water heater standards. The current DOE model evaluates gas and electric water heater efficiency according to "energy factor,"or EF (em the ratio of heat output to energy input (em assuming a typical household will use exactly 64.3 gallons of hot water per day. A smaller reservoir capacity presumably could shorten recovery time, tipping the delicate balance between gas and electric appliances.

To win the day, natural gas must praise the enemy (em it must promote the most efficient electric water heater on the horizon. And electricity must do the reverse. Here's the idea: Convince the DOE that the most advanced technology for your opponent's water heaters is feasible and available. That forces the DOE to assign a higher minimum acceptable EF for your opponent, making him add high-tech features to his product line, forcing his price up. That should lead consumers and home builders to disdain your opponent's appliances (em and instead buy yours.

Mark Krebs, director of market planning for Laclede Gas Co., sees dire consequences if gas should lose.

"The electric industry certainly understands that without the gas-fueled water heater, with just a furnace supporting the fixed-cost portion of the gas bill, the cost-effectiveness of extending natural gas to a new home or subdivision is marginal.

"Pretty much all we have is the water heater and the furnace. If we lose the water heater, well1/4 that's the electric utility strategy in this new rulemaking."

Design Options

Both sides acknowledge that DOE efficiency standards can affect the market in home appliances. Consider the question of heat-pump technology.

Gas water heaters typically run on a blue flame burner, while the electric appliance employs resistance heating. As the DOE explains, "a heat pump water heater can easily double the EF, compared to a resistance type." But an HPWH would be expensive (em too pricey to compete successfully against gas, according to Steven Rosenstock, manager of electrotechnology policy at the Edison Electric Institute.

In the DOE's most recent proposal, its Technology Assessment and Screening Analysis, which was released about two months ago as Appendix B (supplement) to its 1997 Draft Water Heater Rulemaking Framework, the agency decided to eliminate heat-pump technology options from further consideration:

"DOE believes that the service and installation industry is not