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Can switching to gas from electric save you money?

Want to cut your energy bill? Consider switching to gas to fuel your household appliances.

By Smart Spending Editor Jun 27, 2013 5:21PM
This post is by Kelli B. Grant from partner site CNBC.

MSN Money partnerBuying an energy-efficient appliance is a regular tip for cutting energy bills. The new twist: picking an appliance that uses a different kind of fuel.

Image: Laundry (© Somos Images/Corbis/Corbis)Consumers haven't exactly been clamoring for natural gas appliances. Market share for gas-powered furnaces, water heaters and clothes dryers has declined slightly since 2003, according to 2013 figures from the American Gas Association. Ownership of gas ranges has held steady.

But experts think that could change in the near future. More than a third of U.S. consumers have expressed interest in switching to gas appliances from electric, according to a new study released Thursday from consulting firm Accenture. It surveyed 11,154 consumers in 21 countries in December 2012, including 1,020 Americans.

According to the survey, 38% of Americans are considering switching to a gas range or water heater, 37% to a gas furnace and 30% to a gas clothes dryer.

The motivation: savings.

"Depending on the market, natural gas prices can be substantially less than other fuels," said Greg Guthridge, the head of Accenture's Energy Consumer Services group.

For example, homeowners could save $1,698 a year using a gas furnace versus an electric one, according to Wisconsin Public service, a utility that offers both kinds of fuel. Annual savings from using a gas range could tally $79; a clothes dryer, $81; and a water heater, $297.

A production surge prompted a decline in natural gas prices last year, to an average $10.66 per thousand cubic feet from $11.03, according to the Energy Information Administration. (Some of that increase stemmed from increased use of techniques such as hydraulic fracturing, or fracking.)

Prices are expected to stay fairly flat through 2014, said Angelina LaRose, team leader for natural gas markets analysis at the Energy Information Administration. Even though production costs could result in prices' nearly doubling by 2040, the EIA's long-term forecast calls for natural gas to be "far less expensive" than energy produced from oil, including electricity.

In the kitchen, there's some evidence the switch isn't entirely cost-related.

Jim Kabel, a certified remodeler with Case Design/Remodeling in San Jose, Calif., said he's seen an uptick in gas conversions as consumers remodel to include chef-worthy kitchens.
"Gas tends to be the preferred cooking method, for its fine degree of control," he said.

If the reason for the purchase is savings, they may not be immediate -- particularly for kitchen and laundry appliances -- as prices for gas appliances are typically higher. LG's Smart ThinQ electric clothes dryer is $1,599; the gas model is $1,699. A GE Profile 30" convection range has a wider gap, with Sears selling an electric version for $1,080 and a gas one for $1,800.




There's also the cost of installing a gas line. Homes dating to the 1970s and earlier often don't have one, according to Kabel. Even newer homes may have a gas line in the laundry room or utility area, but not the kitchen.

Adding a gas line can cost $1,500 to $3,000, he said. The distance from the gas meter to where the appliance will be installed, the size of the line and work required can also influence cost.

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"If you're very close by to where the gas meter is or where an existing line can be tapped off of, it can be less expensive," Kabel said.

Some utilities are offering rebates to help consumers offset the expense of the changeover.
For example, Puget Sound Energy in Washington offers a rebate of up to $3,550 for customers who switch their home and water heating to natural gas. Pennsylvania-based utility PECO offers customers up to $500 for converting to a natural gas heating system, a discount on the cost of installing a gas line and financing plans.

Federal tax credits may also apply. As part of the $500 tax credit for energy-efficient projects, which expires Dec. 31, homeowners can claim $150 of the cost to install a qualifying gas (or propane or hot water) hot water boiler, and $150 for a qualifying gas (or propane or oil) furnace.

More from CNBC:

8Comments
Jun 28, 2013 11:44AM
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I think oil heat is even worse.  In cold winters, my neighbor -with his new tank and new oil furnace pays about $600/month vs $200/month for me.  I told him that even with the cost of replacing the heat delivery parts of his system, the cheaper cost of a gas vs. oil furnace, no oil tank, and yearly savings would pay for the switchover within three years but, stuck in his ways, he didn't listen.  I think he's been sick ever since every time he has to fill up his tank.
Jul 5, 2013 10:01AM
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wait i have gas stove for heating and cooking when everyone coverts over they will have big price increases on gas
Jun 28, 2013 10:32AM
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I've had both gas and electric.  I just purchased an electric stove even though the gas-line was already there and I had to have a 220 outlet installed...the reason...I'm tired of having to always have someone unhook gas appliances for me.  I want to just reach out and pull the plug to move stuff around.  I also enjoy having the flat ceramic cooktop that's uber-easy to keep clean compared to the burners/grates on the former gas stove.
Jun 28, 2013 1:17PM
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This is one of the worst generalizations I've read in a long time.  The cheapest option at any given time is going to be a function of your gas and electric rates which can vary considerably based on location, and even the time of day depending on your pricing structure. 

 

Any reasonable comparison also needs to differentiate between the use of heat pumps versus radiant electric heating.  Radiant electric heating is essentially 100% efficient with 1 btu of electric converted to 1 btu of heat.  Heat pumps transfer heat instead of creating it from scratch (like your AC or fridge) with efficiencies measured in COP which is the ratio of outgoing heat to electric used. COPs can range from 2 to 6 depending on the tyep of heat pump and difference between the two temperatures the heat is moving between. The less temperature difference, the higher the performance.  So a heat pump operating on a cool day with a COP of 3 would convert 1 btu of electric to 3 btus of heat.

 

IMHO, in the long term there is no question heat pumps will be more cost effective than nat gas. New combined cycle nat gas plants are up to 60% effiecient, so 100 btu of nat gas can become 60 btu of electric.  If you run that 60 btu of electric through a heat pump with even a low COP of 2, you end up with 120 btu of useable heat. On a warm day and operating at a COP of 4, you'd end up with 240 btu of heat from 100 btu of nat gas.  If you run the same gas through your home furnace, you only end up with maybe 90 btu of heat...

Jul 5, 2013 10:01PM
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I totally agree with oscar 09. Whenever people start buying things at a favorable
price, the greedy merchants raise the prices,just like they do at Wal-Mart!!

Jul 5, 2013 1:22PM
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running a gas line in a home, if it's not there, can cost well over $1000. for most people it's not worth the expense. i love my gas dryer at my home, but my sister's electric works well enough in drying my pants. i prefer a gas range for cooking. it's easier to control the burner heat. but if i had electric with no gas line already there to pull off of, i'd probably stick with electric because i'm not that into cooking. as for heating, i've had both gas and electric. but they both average out the same in monthly cost.
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