I like free stuff. Who doesn’t? I especially like free stuff that saves me money over time. So when I got a mailer from my local big-box home improvement store offering me a practically free super energy-efficient water heater, I paid attention. The deal offered was straightforward: an instant $500 rebate from the big-box store plus an additional rebate of $800 from my electrical utility company, for a total of $1,300 in savings. The offer got even better, because the type of water heater offered is a relatively new, ultra-efficient heat pump type that reportedly uses 67 percent less energy than a standard electric water heater, for an annual savings of between $300 to $400 for an average family.
I was introduced to heat pump water heaters a few years ago while watching a television commercial that showed a group of Japanese snow monkeys basking in the warmth of a hot water spa, surrounded by snow and ice. The commercial showed the Macaques punching the controls of a new, energy-efficient heat pump water heater sitting on the banks of the spa, while the narrator quips, “Heating your water in your home any other way is going to seem primitive.” I was won over! Until I looked up the cost, which was about twice the cost of a standard version. Electric water heaters last anywhere from 10 to 15 years. Mine was only about seven years old. I could wait.
Good Things Come to Those Who Wait
The mailer informed me that my patience was about to pay off. I called my utility company first to confirm that this wasn’t some sort of scam. Yes, they confirmed, we will write you a check for $800 if you buy one of these water heaters before the end of the month and have it installed within a month of your purchase. Installation, however, was not covered and the rebate amount could be used only for the purchase price of the water heater—installation was on me. Hmmm, I wondered, how much could it possibly cost simply to switch out an old water heater for a new one? A couple hundred bucks tops? I’ll make that within a year with the new water heater! A call to my nearest home improvement store confirmed that they were offering a $500 rebate for a 50 gallon heat pump water heater, check. Did they offer installation? You bet! How much, I asked? Well, it depends. On what? On a lot of things! Well, what is a ball park minimum for installation? $500 minimum, I was told. Free was suddenly not so free anymore. But still, 500 bucks? That was less than 2 years with the new heat pump water heater. I was still committed, but time was running out—there were a mere 3 days left until the end of the month to get the (nearly) free stuff.
The Fine Print
Encouraged by all I had learned, I decided to get serious about this. It seemed like the timing was right, the planets were aligning, the deal imminent. I know from previous dealings with big-box home improvement stores and utility companies that the fine print is very important. What you read in the mailers and see in the slick energy-efficient brochures that come with each month’s bill, are not always what meets the eye.
The deal was for either a 50 gallon or an 80 gallon water heater, those were the choices. My current water heater is a 66 gallon unit but I reasoned that because the heat pump version was so much more efficient that I could probably get away with the 50 gallon unit. Whether or not that is true became moot when I found, in the utility rebate fine print, something called a Northern Climate Energy Rating derived from the number of bedrooms and bathrooms in one’s home. Turns out that my home’s rating removes the 50 gallon heat pump water heater option for the rebate. I was going to have to get the 80 gallon unit to qualify, which meant an additional $800 in out-of-pocket cost. I called my trusty local plumber, thinking I could get a better installation deal. She informed me that it would cost at least $600 to install the 80 gallon unit and likely more because of the necessary re-routing of the plumbing service connections to accommodate the larger unit. Free had now catapulted itself to about $1,400. At a minimum.
And my plumber offered more information. She told me that two of her customers that switched to heat pump water heaters were unhappy with their decisions. One because the unit failed after the owner failed to conduct the required maintenance—the heat pump part of the unit works like the heat pump that heats and cools a house, and must have filters replaced regularly and adequate space and air to function properly. The other client complained that the water never was hot enough—it is true that heat pump water heaters, when turned to the maximum energy efficiency setting of heat pump only, take much longer to recover when a large amount of hot water is used.
Looking more carefully at the energy labels on the water heaters, it became apparent that my likely annual savings in going with a heat pump water heater would be something like $200. My out of pocket costs for the “free” water heater would take at least seven years for me to recuperate. I ultimately decided against this amazing offer, because it turns out that it just isn’t all that amazing for me.