What’s Behind the Rising Cost of Replacing a Furnace or AC System

Most people don’t understand why replacing a furnace or AC system costs more money nowadays than 10 years ago. Changing permit laws and higher efficiency requirements are the main issues behind these increasing costs.

New permits cost more and increase the work required

For any licensed contractor, a permit is required whenever a furnace or AC system is replaced or installed. In California, new laws went into effect in 2006 which increased the cost of permits, as well as the extent of inspections and work required to repair or replace any furnace or AC system. For each repair or installation, a ventilation duct test is now enforced, making the job more complex. Very often, sealing all ventilation ducting to make the air leakage test comply to regulations is a major factor in the increased cost of the overall work.

New efficiency requirements increase equipment costs

Annual fuel utilization efficiency (AFUE) is a rating for how efficiently a furnace operates across the entire heating season. The higher the rating, the more efficient the unit. In 2016, the statewide minimum requirement for all new furnaces is 80% AFUE. Certain towns require an even higher 92% AFUE rating; such units are more expensive, adding to the overall installation cost.

Air conditioning equipment is rated by the Seasonal Energy Efficiency Rating, or SEER. The higher the SEER rating, the more efficient the unit. The minimum rating for Energy Star compliance is 14 SEER. The highest efficiency air conditioners can meet or exceed 20 SEER.

Now in 2016, a 14 SEER AC system is the standard efficiency in most home installations. Back in 2006, a 10 SEER was the minimum standard efficiency for an AC system. With this requirement for higher efficiency ratings, the cost of equipment has also increased.