A unique confluence of events have made this Autumn the best time in years for consumers to replace their whole house heating and air conditioning systems.  Federal tax credits up to $1500, local utility rebates up to $1050, manufacturer rebates up to $1200 and new regulations have combined to create amazing values for homeowners.  However, this unique opportunity will end soon as contractors, distributors and manufacturers adjust to the changes.

President Obama’s American Reinvestment and Recovery Act has provided stimulus for many different areas of the economy.  One provision allows a tax credit of up to $1,500 for energy saving investments in your home.  This investment includes improvements like insulated windows, tankless water heaters, and heating and air conditioning systems that meet certain efficiency requirements.  These efficiency requirements are specific, and must be met to take the tax credit.  For example, gas furnaces must be 95% efficient in their ability to turn the energy in the gas into warm air for your home.  Air conditioners and heat pumps are measured by other standards that vary slightly from system to system.  Government websites, manufacturer websites, and your local contractor all have details about these requirements.

Heating and air conditioning manufacturers have been working all summer to put together good packages that meet these efficiency standards.  Most heating and air conditioning contractors should now be able to give you several options from different manufacturers that meet these standards so that you can claim the $1,500 credit.  Keep in mind, however, that your contractor is not a tax professional.  Even though they can install qualifying equipment, your particular tax situation may or may not allow you to take advantage of this credit.  To be sure, check with a tax professional.

Other savings on a new heating and air conditioning system are available in the form of rebates from your local utility provider.  For example, PG&E is offering rebates of $300 to gas customers who purchase new furnaces that are over 94% efficient and $200 over 92% efficient.  SMUD is offering $650 rebates for high efficiency air conditioners and heat pumps, while Roseville Electric is offering up to $750 in rebates.  As a result, if you purchased a qualifying system as a Roseville homeowner, you could receive $1,050 in rebates for your new system.  Check with your local utility office to see what is offered in your area.

As a result of the economic slowdown, heating and air conditioning manufacturers have been offering direct-to-consumer rebates on qualifying systems.  For example, Rheem is offering up to $1,200 for their high efficiency “Prestige” product.  However, these rebates vary depending on the type of product offered and the manufacturer offering the rebate.  Also, many of the rebates were offered to boost summertime air conditioning sales and will be expiring soon.

New regulations in the air conditioning industry have also created opportunities for the consumer.  First, new Energy Star Standards were instituted in 2009 causing manufacturers to make changes to their product line.  Also, manufacturers will no longer be able to manufacture equipment with R22 refrigerant.  Starting in 2010, all new air conditioning equipment must use R410 refrigerant.  This represents a major engineering change in the industry and most manufacturers have already shifted their factory capacity to the new equipment.  These kinds of product changes always create equipment surplus, and equipment surplus is good for the consumer.  As distributors are stuck with “last year’s model”, prices drop, and special deals are suddenly available.  Not all of these models will qualify for the Federal tax credit, but most will still qualify for local utility rebates and some may qualify for manufacturers’ rebates.  Ask your heating and air contractor for details on distributor surplus, but these opportunities will not last long.

As you can see, this Fall is a unique time in the heating and air industry creating fantastic opportunities for home owners.  The total savings in tax credits, utility rebates, and manufacturer rebates can total over $3,700, not to mention the substantial savings on your utility bill.  As well, industry regulation has created equipment surplus, dropping the price of many systems.

As tough economic times cause you to spend your money wisely, consider HVAC replacement.  Many homeowners are finding that the monthly payment of a financed high-efficiency heating and air conditioning system is less than the savings on their energy bill.  Take advantage of this unique time to purchase a new system inexpensively.  Save on the installation, and put money in your pocket monthly.

Bill Horbaly is an HVAC Administrator for Bonney Plumbing, Heating & Air.
He may be reached at (916) 444-0551 or online at Bonney Plumbing, Heating & Air