Savings Claims Without Overpromising: The Honest Language

Why this matters

"How much will I save?" is the question that closes more equipment sales than any other, and it is the one that comes back to bite. Say "about 30 percent" at the kitchen table, and next winter is colder, the rate goes up, or a teenager moves home, and the customer's bill is higher than last year. Now the shop has a broken promise on the record, an angry review, and possibly a consumer-protection complaint. The estimator who answers with a range, the assumptions behind it, and the basis in writing sells nearly as well and never has that call. Savings are real; promises about them are not yours to make.

Three kinds of statement, and which ones you may make

Everything an estimator says about operating cost falls into one of three bins.

Facts you can state flatly. The equipment's rated efficiency, from the manufacturer's literature or the certified rating directory. The customer's own historical use, from their bills. The physics of the conversion: a furnace rated 95 AFUE delivers more heat per therm than one that tested at 70 when new. These need no hedge beyond naming the source.

Estimates you may give, with their basis. "Based on your last twelve months of gas bills, and assuming your old furnace is delivering somewhere between 65 and 75 percent, the new one would use about 18 to 27 percent fewer therms in a winter like last winter." Every word after "based on" is the basis. Strip it out and the estimate becomes a promise.

Promises you may not make. A guaranteed percentage, a guaranteed dollar figure, a guaranteed payback period, or a lower bill than last year. Each depends on weather, rates and how the household lives, none of which you control or know in advance.

The rule that sorts any sentence: if the statement could be proved false by next winter's weather or next year's rate, it is a promise, and it needs to be rewritten as an estimate with its conditions.

What the law expects

This is not legal advice, and the rules have more than one layer.

• Federal. The Federal Trade Commission treats objective claims in advertising and sales, including energy-savings claims, as needing a reasonable basis before they are made; an unsupported savings claim can be a deceptive practice under Section 5 of the FTC Act. That reaches what your shop says in ads, on its website, in proposals and at the door.
• Insulation specifically. The FTC's R-value Rule, 16 CFR Part 460, binds manufacturers, retailers and installers of home insulation. Its savings-claims provisions require a reasonable basis for any claim that insulation will cut fuel use or bills, and require the claim to carry the rule's stated disclosure, which opens with the words "Savings vary". If your shop sells or installs insulation and talks about savings, that wording is not optional.
• "Up to" claims. In 2012 the FTC settled with several replacement-window sellers over "up to" energy-savings percentages, taking the position that buyers read "up to" as what they will typically get. A maximum stated as a selling point is read as a typical result.
• State. State consumer-protection laws, and in many states home-improvement contractor statutes, add their own rules on representations, written contracts and cancellation. They differ by state; ask your own attorney which apply to your shop.

Worked example: a furnace replacement

The customer has a gas furnace with a nameplate AFUE of 70, roughly 25 years old. You are proposing a unit rated 95 AFUE. They want a number.

Start from their bills. Last year's gas use was 1,000 therms. Summer months average 13.3 therms for the water heater and range; twelve months of that is about 160 therms, so heating used 1,000 - 160 = 840 therms.

Choose a range for the old furnace, not a point. Its nameplate says 70, but that was a test result when new. Twenty-five years of wear, cycling and duct conditions could leave it delivering less. Use 65 to 75 percent as the range and say so.

Compute the heating savings at both ends. For the same heat delivered, fuel use scales with 1 / efficiency, so the fraction saved is 1 - old / new.

• Old at 75: 1 - 75 / 95 = 0.211, a 21.1 percent cut in heating therms. 840 x 0.211 = 177 therms.
• Old at 65: 1 - 65 / 95 = 0.316, a 31.6 percent cut. 840 x 0.316 = 265 therms.

Put it against the whole bill, not just heating. The water heater and range do not change. 177 / 1,000 = 17.7 percent and 265 / 1,000 = 26.5 percent of annual gas use. That is the honest range for the gas bill: roughly 18 to 27 percent fewer therms in a winter like last winter.

Leave the money symbolic. The saving in cost is the therms saved x the rate per therm on their bill, and both the rate and next winter's weather move it. Do not multiply it out into a figure and hand it over.

Check the range from the other side. If the old furnace delivered 70 percent, the house needed 840 x 100,000 x 0.70 = 58.8 million BTU, and at 95 percent that heat takes 58,800,000 / 95,000 = 619 therms, a saving of 840 - 619 = 221 therms. That sits between 177 and 265, as it should for a midpoint efficiency.

What it sounds like at the table

CUSTOMER:  So how much will I save?
ESTIMATOR: In a winter like last winter, I'd expect about
           18 to 27 percent fewer therms on your gas bill.
CUSTOMER:  Why a range? Just give me a number.
ESTIMATOR: Your old unit tested at 70 when it was new. I
           don't know what it does now, so I worked it at
           65 and at 75. The real figure is in between.
CUSTOMER:  So I'll save around a quarter on my bill.
ESTIMATOR: On gas use, in the same weather. A colder winter
           uses more gas with either furnace, and the rate
           can change. Your bill could still go up.
CUSTOMER:  When does it pay for itself?
ESTIMATOR: I can't promise that. I'll write down the therms
           and the rate on today's bill, and you can run it
           any year you like. It's all in the proposal.

Notice what the estimator did not do. He did not round the range up to "about 30 percent". He did not convert therms to a dollar figure. He corrected the customer's paraphrase from "bill" to "gas use, in the same weather" instead of letting it stand, because the customer's version is the one they will remember. And he refused the payback question without refusing to help with it.

Put the basis in writing

The proposal carries a short savings section, and it is what you point to if next winter goes badly. A workable one has:

• The data used: the twelve months of bills, total therms, and the heating therms after removing the summer baseline.
• The assumptions: old furnace efficiency taken as a range and why, new furnace rating with its source, last winter's weather as the comparison.
• The result as a range of therms or kWh, and as a percentage of the relevant fuel's use, with the base named.
• The conditions that change it: weather, rates, how the house is used, and anything else on the same fuel.
• A plain statement: savings vary, and this is an estimate, not a guarantee.

When the customer calls back next winter

Say the next winter's bills total 905 therms against last year's 1,000, only 9.5 percent lower (95 / 1,000), well short of the 18 to 27 percent range. Without a written basis that is a dispute. With one, the first questions are already on the page. Was the winter like last winter? If the new season ran colder, more heat was needed and the comparison is not the one the estimate was made for; normalize both winters before saying anything about the furnace. See related: How to Weather-Normalize Two Winters of Bills. Did the summer baseline change, a new gas dryer or a larger water heater? Then 160 therms is no longer the non-heating use. Only if the weather-adjusted heating therms fell short of the range does the furnace itself, its setup or the ducts become the question. That sequence is what the estimate's conditions bought you.

Rebates and incentives are their own claim. "You'll get a rebate" or "this qualifies for the tax credit" are statements about a program's rules, which change and carry conditions. Say the equipment may qualify, name the program, and send the customer to its current terms.

Phrases to retire, and what replaces them

• "This will cut your bill by 30 percent." Replace with the range, the fuel, and "in a winter like last winter".
• "Up to 40 percent savings." Replace with the range you actually expect for this house.
• "It pays for itself in five years." Replace with the inputs the customer can use to run it themselves.
• "You'll never see a bill like this again." Delete it.
• "The new one is twice as efficient." Check it first; 95 against 70 is a 36 percent improvement in heat per therm (95 / 70 = 1.36), not double. Precise words about efficiency are facts, and facts get checked.

Where this gets harder

Heat pump replacing gas or oil. The saving depends on two rates, not one, and on how many hours the backup heat runs. Give the expected kWh range and the fuel you stop buying, each as its own figure, and let the rates decide. See related: COP, AFUE and Delivered Heat: Putting Every Fuel on One Scale.

Measures with small, uncertain effects. Thermostats, sealing, and insulation upgrades on houses with unusual use patterns. If you cannot build a range from the customer's own data, say the effect is likely modest and depends on how the house is used, and do not attach a number.

A customer who wants it on the invoice. If they ask you to write "guaranteed 25 percent savings" for a lender or a family member, decline, and write the estimate with its basis instead.

References

• Federal Trade Commission Act, Section 5, and FTC guidance on advertising substantiation
• 16 CFR Part 460, Labeling and Advertising of Home Insulation (the R-value Rule), savings-claims provisions
• See related: Reading Energy Data Without Misleading the Customer
• See related: Why a Bill Rises: The Causes That Are Not the New Equipment
• See related: How to Compare Heating Costs Across Fuels per Million BTU