The plight of choosing a home comfort system in the rural home has been a gamble since fossil fuels came around in the late 1950s. Betting on which energy source would make the best use of the consumer’s money remains a challenge.
Historically the rural home had to rely on wood, coal/pellet, propane, or electricity to power their home comfort heating appliance. For those of us with snow on the roof (grey hairs for the young ones), we have lived through all of them. Each one of them had claims of being the best source for the long haul. But none of them are future-proof.
So, what exactly does it mean to provide future-proof products? I guess the best way to explain it would be to look at it in reverse. What is not future-proof? A good example would be smartphones and computers; this type of technology is constantly being updated. Future-proofing would be buying a computer that is adaptable and able to accept the newest technology for the next 10 to 12 years.
How does future-proofing work?
I am sure most of you have heard the term “begin with the end in mind.” If a contractor picks a product with a lifetime warranty, there is an expectation that the product will be able to operate for its intended purpose for the targeted period. Here is an analogy almost everyone can relate to.
When buying a new car, it will likely be financed over a period of time. There probably are expectations for how long it will take to pay off this vehicle on or before the end of its useful life. The average consumer finances over an 84-month term, while some even choose to go for a 120-month repayment schedule as automobiles have risen in price.
Here are two choices to make: the first is to go out and buy the flashiest, V-super charged pickup truck with all the bells and whistles. The price comes in at around $100,000. The second option is to select a more modest SUV, which is hybrid, has leather seats, lots of comfort features, and comes with a $65,000 price tag.
One example is future proof and the other is destined to be forfeited back to the dealer with a loan that carries over to the next or possibly the next two vehicle purchases, often referred to as being upside down in the loan-to-equity ratio.
What happened?
With the new luxury tax being imposed as of Sept. 1, vehicles that meet the definition of a subject vehicle under the act and are valued above the $100,000 price threshold will be subjected to an extra 20 per cent of the retail price, post-GST. That tax will likely take three years to pay off in a 120-month load.
In addition, with gas prices exceeding $2 a litre in some parts of Canada, fuel expenses have skyrocketed for most. Add in the carbon tax in ten years hovering around forty cents a litre and insurance costs also increasing, the second example is starting to look more attractive. The luxurious truck, by year five, will see its useful life expiring. There might even be a bit (or more than a bit) of anger towards the car salesperson.
For the second example, the owner would be able to take advantage of tax rebates, rely more on electricity and less on fuel, and insurance rates advocate for hybrid vehicles. Properly maintained, the vehicle’s useful life should surpass the loan payments and have a higher residual value. That is called a future-proof purchase. So, why is it our responsibility to assist our customers in future-proofing their homes?
We are the experts
It’s as simple as that. We are the ones with the knowledge of what is going on with energy costs and energy by-products that are damaging the planet. Hopefully, we are the ones also providing the best possible solutions to both new homes and retrofit homes in not only rural areas but for urban retrofits as well. I cringe every time I see a re and re system identical to the previous system because it worked for 15 years! Horse pucky! Why do you want the customer to be mad at you five years from now? Do you want them telling their friends about how you led them into the big fancy pickup truck without educating them on the hybrid SUV?
If we consider that a system has a useful life of 10 to 12 years and we gaze down the road to the end of its life, what has it cost along the way? Do you want to know? I will estimate the cost at the end of life for some examples.
Oil to oil: An A/C to A/C retrofit could cost around $11,000; adding in the annual maintenance for 12 years could be $2,400, fuel costs could reach $67,200 (based at 1.99/litre), the carbon tax would cost around $25,735, repairs at $1,500 (same for all), and hydro costing $6,000. The total cost of life could reach, $103,935, not including an insurance premium of approximately $3,600 if you can get insurance
Propane to propane: An A/C to A/C retrofit could cost around $9,000, with annual maintenance of $1,250, fuel costs of $39,600 (based on .98/liter), the carbon tax at $12,163, repairs of $1,500, and hydro costs of $6,000. With no insurance premium surcharge, the total cost of life would be around $69,513.
Gas to gas: An A/C to A/C retrofit would cost around $8,600, the annual maintenance around $1,250, fuel costs at $12,492, the carbon tax at $11,065, repairs could cost $1,500, and hydro of $6,000. With no insurance premium surcharges, the system would have a total cost of life of around $40,907.
If we were to replace just the air conditioner in any of these three scenarios with a heat pump of 16 SEER, we could reduce the cost of life by $35,100 for oil, $16,300 for propane, and finally, $6,900 for gas. Better yet, if we offered an all-electric heat pump, which can qualify for up to $5,600 in rebates and up to $40,000 in interest-free loans, this would save the homeowner tens of thousands of dollars.
So, the next time you are quoting a re and re, like-for-like, think about the end in mind. Are you offering a future-proof system?