Is the gas company's conversion program a good deal?

Discussion in 'Tankless Water Heater Forum' started by Fogy, Apr 21, 2019.


What should I do?

  1. These bid and program prices are within expectation. Just do it. It's actually a good deal.

  2. The program adds hidden costs. Skip the program and deal direct.

  3. Offer the contractor beer and weekend work. Get the permit and inspections still.

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  1. Fogy

    Fogy New Member

    Apr 21, 2019
    My questions: Should I save money partially executing the bid work myself (namely buying mats, some drywall, punch throughs), and am I getting a fair deal?

    The situation: We lost our electric water heater and want to take this opportunity to switch to gas. Our local gas company has a program where they tap the main and install the meter, finance the heater and the first 25' of gas and water piping, including labor.

    We're buying the RU80EN (retail $1104) and the program price is $1619.

    We're adding a gas dryer and fireplace hookup. The outdoor heater and fireplace will be within 2' and 5' respectively of the main, which is to be installed on the back wall of the fireplace. The dryer will be about 30' away. The water lines would be 25', reconnecting to the old heater lines, in proximity to the dryer.

    We got 5 bids from the list of approved installers. All bids were between $2700 to $3100 for piping and permit after the initial 25' mats and labor paid by the program. Call it $2900.

    There is a $675 rebate on the heater.

    I'm trying to figure out what the hidden costs to me are and where I can save. It feels like the gas company keeping the rebate, plus the mark up, PLUS the contractor bids, is too much.

    If I buy the unit:
    • The RU80EN costs $1104.00
    • I get the $675 rebate
    • I pay for the total install cost
      • Even if I buy the piping and fittings retail, say $500, is that ballpark?
      • Say I pay for 10 hours @ $150/hr = $1500
      • I pay $200 permit and $350 elec.
    • Cost to me: $2979
    If I go with the gas program:
    • The RU80EN costs $1104.00
    • The gas company gets the rebate
    • The gas company marks the heater up $515 for 25' of gas and water install
    • I pay the remaining install of $2900
    • The gas company gets $1619 + $675, contractors get $2900
    • Total effective receivables: $5194
    Am I missing $2215 of costs somewhere? Is the piping way more expensive? Is 10 hours labor not enough? I don't begrudge markups, but what am I missing? The bids were identical, but I don't get where the $2900 comes from if most of the punch through and pipe fitting labor and pipe length are covered by the program.
  2. hj

    hj Moderator & Master Plumber Staff Member

    Aug 31, 2004
    Cave Creek, Arizona
    The cost TO YOU is $4519.00 for them doing the whole job. In your breakdown, you are showing $2550.00 for the work after the meter, which in the other estimate is $2,900, and have NOT included anything, ($515.00?), for the meter installation or initial piping. IF they are using the rebate to cover part of the meter cost, it would cost you an additional 675.00 for the meter which would put you at approximately $4519.00.
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  4. Dana

    Dana In the trades

    Jan 14, 2009
    What is the driving motivation for going to an outdoor gas fired tankless?

    For the amount money you're talking you could even buy a Sanden CO2-refrigerant split heat pump water heater that uses 1/4 the amount of electricity as the old electric water heater. An even cheaper tank top compressor heat pump water heater might be a better deal, and reduce the latent load and some of the sensible load on your cooling system, but uses ~1/3 the amount of electricity of plain old electric tank (if you don't count the cooling savings.) The net operating cost of a heat pump water heater is likely to be less than a gas fired tankless at your gas & electricity rates, the peak flow rates are higher too.

    The down side of a heat pump water heater (split or tank-top compressor) is that the tank takes up 4-5 square feet of floor area. Some tank-top compressor type heat pumps can be noisy too. The Sanden's compressor unit is always outdoors- looks like a mini-split condenser, but the refrigeration unit is self-contained- all plumbing connections to it are plain old potable water. In Australia it's common to put the tank outdoors too:


    Does the state or electric utility in Tampa have kick-backs for heat pump water heaters?

    A tank top type would be a lot cheaper though- an 80 gallon Rheem is a couple grand at box stores- half the price of an 80 gallon Sanden. (A 65 gallon or 50 gallon is cheaper still.)
    Last edited: Apr 22, 2019
    MASTERPLUMB777 likes this.
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