Upgrading to a higher efficiency model could cost less.

The other day, a friend of mine bragged to me about how "good a deal" he thought a local air-conditioning company gave him, because they had repaired his 20-year-old air conditioner. He said another company had tried to "rip him off" the week before, because their recommendation was to get rid of the old system and sell him a new one. But, as I pointed out, the first company had actually offered him the better option. Why?

Well, first of all, consider what the man now has for his money: He had spent some $450 to replace a compressor. However, its operation is only warranted for a few months. What's more, the problem that originally caused the first compressor failure is likely still there. So, what is the system's life expectancy? Since the average life of residential HVAC systems is in the 15-year range, I would say that it was already five years older than it should be.

If he had purchased the new system, how long would it be warranted for? One year on labor, one year (or five years) on parts? The new system would be expected to run at least five years before experiencing a parts failure and it should operate adequately for the next 15 years ¿ which is important here in the warm climate of Central Florida. But a running air-conditioner is important wherever you live because you only operate them when you really need them, and nobody wants to put up with the heat while the unit is broke down.

Now, let's forget about what continuing service will cost my friend for his aging air conditioner (probably about $200 per year.). Let's discuss how much extra it will cost him to operate it every year, for as long as it lasts.

Consider this: Most air conditioners that were sold before 1991 operated at about 6-SEER when new. That is, for every watt of electricity consumed, the customers received 6-Btus of cooling per hour of operation. But air conditioners (and refrigerators) don't maintain such efficient operation. From the day they are installed, the rated efficiency drops at a rate of about 2% per year, due to coil deterioration. This means that my friend's air conditioner is currently operating in the 4-SEER range, and getting lower every day.

Now, let's consider the operating costs of a new air conditioner: What is the minimum efficiency of even a builder-model unit today, 10-SEER, 12-SEER, 13-SEER? And customers can even purchase units with ratings of 20-SEER and higher. A 12-SEER unit uses one-third as much electricity to operate it, and a 20-Seer unit uses one-fifth of the electricity.

Considering the fact that my friend keeps his windows and doors closed and operates his unit 24/7 for 10 months of the year, his current electric bill (with a 3-ton 4-SEER air conditioner at $0.10/kwh) is running close to $200 per month. If he had replaced it with a 12-SEER unit, the bill would have dropped to about $90 per month. In other words, the replacement would have paid for itself on electrical savings alone in about 30 months.

Let's put it another way: If a replacement system for my friend cost him $3,500 and he financed it at 10% over 60 months, his payments would run about $75/month. This means that at the end of each month, his combined electric bill and financed payments would be about $35/month less than he is currently paying for electricity alone. So, with the cost of the repair for his old unit, the continuing repairs (if it lasts another five years), and the electrical losses, it will cost him $3,350 more than what it would have cost him to replace the unit, over the next five years. Some "deal!"

Of course, my friend is an extreme case and he lives in an extreme climate. His unit likely actually runs for some 2700 hours per year. That wouldn't be true in Duluth, Minn., for example, where running an air conditioner is something that you might do for a few hours in July and August. There, even a 20-SEER unit doesn't make much difference on the annual electric bill (for residential customers).

However, that scenario might not be true of commercial/institutional/industrial customers. They may have windows that can't be opened and high internal heat loads, and their air conditioners may operate year-round. So, they could realize a major operating savings by replacing their air conditioners for higher-efficiency systems.

Unfortunately, though, manufacturers of commercial air-conditioning systems have been slow to recognize this potential market and have dragged their feet when it comes to building high-efficiency cooling systems. I guess they are awaiting legislation to force them (again) to do something that is in their own best interests. Yet, many higher-efficiency commercial systems are starting to become available.

So, depending on the type of customer and the type of climate where the customer lives, repairing an old air conditioner may not be the "best deal." The life expectancy of the system, the higher repair costs due to age and deterioration, the higher electrical operating costs, and the hidden savings from reduced operating downtime must all be considered when making a wise recommendation. <<