What is AFUE?

If you're buying a furnace, whether gas or oil, it will have an AFUE rating (Annual Fuel Utilization Efficiency). The AFUE tells you what percentage of your energy dollar spent for fuel goes into your house, the rest goes up the stack.

If you buy a furnace with an AFUE of 80, it means 20 cents out of every dollar in fuel goes up the stack. Likewise, a furnace with an AFUE of 94 will only waste 6 cents.

Is the 94% efficient furnace worth the extra money?

If you know how much fuel was used last year you may be able to approximate the savings using the following formula:

NEW AMOUNT OF FUEL = (OLD AFUE / NEW AFUE) x LAST YEARS FUEL

Using the same equation, if you assume an 80% furnace will use 600 therms, then a 90% efficient furnace should use 533 therms, for a savings of 67 therms. Convert this to monetary savings by multiplying 67 therms by the cost per therm. If gas is selling for $1.70 per therm then the new furnace will save $113.90 per year, excluding inflation (67 x $1.70). If the 90% furnace costs $800 more than the 80% furnace, then you will realize a seven year payback.

Sometimes the payback is not so good, but because you're purchasing a premium product the warranty may be better or longer on the 90% furnace. You must take all things into consideration.