Collins: Gas water heater ban begins in 2027

On March 15, 2023, the Bay Area Air Quality Management District banned gas water heaters starting in 2027 and gas furnaces beginning in 2029. This will affect the majority of homeowners in the area, so we as an association are actively trying to inform homeowners of the upcoming changes.

While your gas water heater and gas furnace can still be repaired after the sunset dates, the challenge arises if your unit experiences a complete failure, which is usually the main reason for replacing a water heater. A typical failure occurs when the tank rusts out, leaving the homeowner with a garage full of water from the leaking tank.

Here lies the issue: In most cases, you will not be able to replace a gas water heater with an electric one. Additional wiring, plumbing and electrical panel upgrades are typically necessary.

“For both water heaters and furnaces conversions, the major cost is determined by the electrical panel,” Leyla Rezakhani, a general contractor and realtor, said. “Most homes built before 2000 have 60-100 amp panels. Even at 125 amp, the panel can’t handle the load of an electric water heater (typically 30 amp) or electric furnace. Homeowners need to know that before either of these appliances can be converted to electric.”

Rezakhani said a licensed electrician needs to do load calculations based on the current electrical panel to determine if it’s safe to install the electric water heater or furnace. Otherwise, lights will flicker and circuits will pop, indicating the panel is exceeding full capacity. A new panel that can handle the electrical load will typically cost a minimum of $10,000.

To replace a water heater, Rezakhani said you’ll want to hire a general contractor because there are at least three to four trades involved. You need to disconnect the gas and safely retire the gas line. Drain the water heater and disconnect the plumbing connections. Close off venting from the old gas appliance, which likely requires patching the roof. An electrician then runs a wire from the electrical panel to the new appliance.

“The cost of this connection is determined by how far away the appliance is from the panel,” Rezakhani said. “Running this wire in most homes is $2,000 to $3,000 alone. Plumbing and new electrical connections are needed in addition to labeling the panel with the new circuits.”

Each house is a unique challenge, so prices for labor, parts and appliances vary considerably based on the complexity of the installation and cost of the appliances.

Other considerations include permit costs, inspection delays and long waiting periods if PG&E is involved in installing upgraded service from the street. These variables can add months of delays to your project. Kraig Constantino of Intero Real Estate recently had a client in Los Altos who was remodeling their home and had to wait more than six months for PG&E to connect power to their upgraded electrical panel.

“At the end of the day, this mandate will cost homeowners thousands of dollars, while the shortage of contractors needed to electrify approximately 2 million residences in the nine-county Bay Area remains a significant challenge,” Santa Clara County Association of Realtors President Joe Brown said.

So, if you don’t want to get in a situation where you could potentially be out of hot water or heat for an extended period, you may want to consider upgrading your home before the 2027 and 2029 deadlines.

This mandate is likely to be a source of stress for homeowners. The cost of retrofitting, delays and lack of qualified tradespeople are going to create significant hardships for homeowners. A final consideration is whether to retrofit your entire home at one time. It’s plausible the electric mandates keep coming and eventually we will have to convert our homes to 100% electric.

If this is what you believe, then doing all the infrastructure work at once rather than piecemeal may make economic sense, even with a price tag that is likely to exceed $50,000 or more.

San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Association of Realtors, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. Contact Neil at [email protected].