June, 2006
Why Fighting Back Against Record High Heating Costs Should be
One of Your Top Priorities
By Rob Tarnowski
When the prices for natural gas increased dramatically last year it was summer time so most apartment building owners and managers didn’t feel the full impact. But now that everyone has received those winter heating bills the impact is really starting to sink in. With costs up 30 to 50% for most owners the heating bills are taking a huge bite out of building profitability. And all indications are natural gas costs aren’t going to go down any time soon so the higher costs are here to stay.
Many owners simply take the increased heating costs in stride and say it could be worse. Well it is worse. A lot worse!! The real costs of the higher heating bills are not just the increased monthly costs and decreased cash flow. It’s the huge hit to your building value that should be causing you to be really concerned. For most owners the true costs of the higher heating bills are not thousands or tens of thousands of dollars but rather hundreds of thousands of dollars or even millions. Why do we say this? Building value is a function of the profitability of your building and the market cap rates for your building location. Increase heating costs and you reduce profitability. Reduce profitability and you reduce building value. The chart below demonstrates exactly what the real impact of those higher heating bills is for your building.
Impact of Increased Heating Costs
|
Size of |
50 |
75 |
100 |
150 |
200 |
|
Previous Annual Heating Costs |
$32,500 |
$48,750 |
$65,000 |
$97,500 |
$130,000 |
|
Increased Annual Heating Costs (30% Increase) |
$42,250 |
$63,375 |
$84,500 |
$126,750 |
$169,000 |
|
Reduction in |
$9,750 |
$14,625 |
$19,500 |
$29,250 |
$39,000 |
|
Decrease in |
$195,000 |
$292,500 |
$390,000 |
$585,000 |
$780,000 |
|
1 Year Cost to Owner (lost profit plus lost building value) |
$204,750 |
$307,125 |
$409,500 |
$614,250 |
$819,000 |
|
3 Year Cost to Owner (lost profit plus lost building value) |
$224,250 |
$336,375 |
$448,500 |
$672,750 |
$897,000 |
Yes these are real numbers. Now you see why increased heating costs simply shouldn’t be taken in stride and doing something to minimize the impact should be one of your top priorities.
OK so you get the point. But what can you do without breaking the bank and getting a reasonable return on your investment. The first thing that seems to be advised is to replace your boilers with higher efficiency boilers. This is a great suggestion if your boilers need replacing in the first place but really expensive and payback is usually about 7 years. I am strong advocate of going after the low hanging fruit first – that which is simple to do and gives a quick payback on investment. Sticking with your boiler there are a number other of things you can do that can provide a significant reduction in heating costs, offer a much quicker payback, and won’t cost you nearly as much.
-
Clean your boilers - By cleaning your boilers we mean the critical inside components (heat exchanger and burner). Well over 50% of the boilers we see have heavy soot build up on the heat exchanger. Even a small soot build-up can reduce your efficiency by as much 20%. This cleaning should be done at least every second year.
-
Ensure the boiler is set correctly – We frequently come across boilers that have settings that are grossly incorrect. Gas manifold pressures way too high or too low, inadequate combustion air, or incorrect thermostat set points. To properly check your boiler for efficiency you really need to have a flue gas analysis done, as this is ultimately the only thing that will ensure you have efficient boiler combustion.
-
Install external controls that optimize your boiler’s operation – There are many options for controls, but what you should be looking for is those that factor in both outside and inside temperature and optimize how often your boiler runs. Such devices can provide huge savings
-
Control your boiler draft – Boiler draft is simply the amount of exhaust air that flows out of your boiler stack or chimney. Not a lot of attention has been paid to this area in the past as the old rule of thumb was simply to ensure there was enough draft and nobody even worried about too much draft. However now we understand that too much draft can rob your boiler of as much as 30% of the heat it produces. That’s 30% of your heating dollars simply going up your chimney.
This is not an exhaustive list by any means but hopefully enough to get you off to a good start. I think the two biggest things we have encountered in dealing with heating issues is disinterest or and a feeling that the heating system is really too complex for the average owner to understand. Well hopefully with showing you the real costs of higher heating bills we have cured your disinterest. As for too complex to understand, we find we are able to give our clients a good understanding of how the system works in less than 5 minutes. It’s your money so you should be both interested and understand.
Rob Tarnowski is President of Draft Control Solutions,
which specializes in controls for boiler draft and who are exclusive
distributors of the Eddy Draft Regulator™. He can be reached at rob@draftcontrol.com or
at 604
929-3991.
