2025 CODE CYCLE:
Custom Cost
Effectiveness Analysis:
City of Glendale
Single Family AC to Heat
Pump Replacement
Prepared by:
Frontier Energy, Inc.
Misti Bruceri & Associates, LLC
Prepared for:
Kelly Cunningham, Codes and
Standards Program, Pacific Gas
and Electric
Revision: 1.0
Last modified: 2025/07/22
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Table 1. Summary of Revisions
Date Description Reference (page or section)
7/22/2025 Original Release N/A
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Acronym List
B/C – Lifecycle Benefit-to-
Cost Ratio
CBSC – California Building
Standards Commission
CBECC – California
Building Energy Code
Compliance
CZ – California Climate
Zone
GHG – Greenhouse Gas
GWP – Glendale Water and
Power
IOU – Investor-Owned
Utility
LCC – Lifecycle Cost
LSC – Long-Term
Systemwide Cost
NPV – Net Present Value
PG&E – Pacific Gas and
Electric Company
POU – Publicly Owned
Utility
PV – Solar Photovoltaic
SoCalGas – Southern
California Gas Company
TDV – Time Dependent
Valuation
Title 24 – Title 24, Part 6
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Table of Contents
1 Introduction .................................................................................................................. 3 2 Methodology and Assumptions .................................................................................. 5
2.1 Reach Codes ........................................................................................................ 5
2.1.1 Benefits ............................................................................................................ 5
2.1.2 Costs ................................................................................................................ 5
2.1.3 Lifecycle Cost Assuming Zero-NOx Standards for Space Heating After 2030 ... 8
2.1.4 Metrics .............................................................................................................. 9
2.1.5 Utility Rates .....................................................................................................10
2.2 Greenhouse Gas Emissions ................................................................................ 11 3 Prototype Designs and Measure Packages ............................................................. 12
3.1 Prototype Characteristics .....................................................................................12
3.2 Measure Details ...................................................................................................15 4 Results ........................................................................................................................ 16
4.1 Zero-NOx Scenario Results .................................................................................17 5 Summary .................................................................................................................... 18 6 References ................................................................................................................. 20 7 Appendices ................................................................................................................ 22
7.1 Map of California Climate Zones ..........................................................................22
7.2 Utility Rate Schedules ..........................................................................................23
7.2.1 Glendale Water and Power ..............................................................................23
7.2.2 Southern California Gas ...................................................................................24
7.2.3 Fuel Escalation Rates ......................................................................................25
List of Tables
Table 1. Summary of Revisions ............................................................................................ 1 Table 2. Lifecycle Incremental Cost Breakdown for a 4-Ton DFHP Existing Furnace ............ 7 Table 3. Lifecycle Incremental Cost Breakdown for 4-Ton HPSH ......................................... 7 Table 4. HVAC Measure Cost Assumptions – 4-Ton Electric Replacements ......................... 8 Table 5. SCAQMD Rule 1111 Proposed Manufacturer Compliance Targets ......................... 8 Table 6. Lifecycle Incremental Cost Breakdown for 4-Ton System DFHP Existing Furnace with no Gas Furnaces after 2030 ......................................................................................... 9 Table 7. Residential (Single Family and Detached ADU) Utility Tariffs in City of Glendale ..10 Cost-Effectiveness Analysis: City of Glendale
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Table 8. Residential Prototype Characteristics ....................................................................12 Table 9. Efficiency Characteristics for Three Vintage Cases ................................................14 Table 10. Heat Pump Single Family Cost-Effectiveness Summary ......................................16 Table 11. DFHP Existing Furnace On-Bill NPV and 2025 LSC Cost-effectiveness High Gas Escalation (Zero-NOx Rule) ................................................................................................17 Table 12. SoCalGas Monthly Gas Rate ($/therm) ................................................................24 Table 13: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis ...................................................................................................................................26 Table 14: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis .........................27
List of Figures
Figure 1. Map of California climate zones. ..........................................................................22
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1 Introduction
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments considering adopting a local ordinance (reach code) intended to support meeting local and/or statewide energy efficiency and greenhouse gas reduction goals. The program facilitates adoption and implementation of the code when requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language, sample findings, and other supporting documentation.
The California Building Energy Efficiency Standards Title 24, Part 6 (Title 24) (CEC, 2025) is maintained and updated every three years by two state agencies: the California Energy Commission (the Energy Commission) and the Building Standards Commission (BSC). In addition to enforcing the code, local jurisdictions have the authority to adopt local energy efficiency ordinances—or reach codes—that exceed the minimum standards defined by Title 24 (as established by Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards). Local jurisdictions must demonstrate that the requirements of the proposed ordinance are cost-effective and do not result in buildings consuming more energy than is permitted by Title 24. In addition, the jurisdiction must obtain approval from the Energy Commission and file the ordinance with the BSC for the ordinance to be legally enforceable.
This report is an addendum to the Single Family Air Conditioner Replacements (AC to HP) Cost-effectiveness Report (Statewide Reach Codes Team, 2025) modified to accurately represent local conditions for the City of Glendale, California with service territory in California Climate Zone 9. The study analyzes the cost-effectiveness of heat pump space heater measure upgrades in existing single family buildings that exceed the minimum state requirements under the 2025 Building Energy Efficiency Standards. Local jurisdictions in California may consider adopting local energy ordinances to achieve energy savings beyond what will be accomplished by enforcing building efficiency requirements that apply statewide. This report was developed in coordination with the California Statewide Investor- Owned Utilities (IOUs) Codes and Standards Program, key consultants, and engaged cities—collectively known as the Statewide Reach Codes Team.
The methodology, prototype characteristics, and measure packages are retained from the main study referenced above except for the energy costs are calculated using local Glendale Water and Power (GWP) utility rates. Measure packages include upgrades in existing single family buildings that meet or exceed the minimum state requirements. A 1,665 square foot single family home prototype with an attached garage was evaluated in this study.
Local jurisdictions may also adopt ordinances that amend different Parts of the California Building Standards Code or may elect to amend other state or municipal codes. The decision regarding which code to amend will determine the specific requirements that must be followed for an ordinance to be legally enforceable. Although a cost-effectiveness study is only required to amend Part 6 of the CA Building Code, it is important to understand the Cost-Effectiveness Analysis: City of Glendale
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economic impacts of any policy decision. This study documents the estimated costs, benefits, energy impacts and greenhouse gas emission reductions that may result from implementing an ordinance based on the results to help residents, local leadership, and other stakeholders make informed policy decisions.
Model ordinance language and other resources are posted on the C&S Reach Codes Program website at LocalEnergyCodes.com. Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at [email protected].
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2 Methodology and Assumptions
2.1 Reach Codes
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate selection.
2.1.1 Benefits
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both methodologies require estimating and quantifying the incremental costs and energy savings associated with each energy efficiency measure. The main difference between the methodologies is the way they value energy impacts:
• On-Bill: Customer-based lifecycle cost approach that values energy based upon estimated site energy usage and customer on-bill savings using electricity and natural gas utility rate schedules over a 30-year duration, accounting for a three percent discount rate and energy cost inflation per Appendix 0. • Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings, LSC reflects the Energy Commission’s current LCC methodology, which is intended to capture the total value or cost of energy use over 30 years. This method accounts for the hourly cost of marginal generation, transmission and distribution, fuel, capacity, losses, and cap-and-trade-based CO2 emissions (California Energy Commission, 2023). This is the methodology used by the Energy Commission in evaluating cost-effectiveness for efficiency measures in the 2025 Energy Code.
The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC).
2.1.2 Costs
The Reach Codes Team assessed the incremental costs and savings of the packages over the lifecycle of 30-years. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed measure relative to the 2025 Energy Code minimum requirements or standard industry practices.
In February 2024, the TECH Clean California statewide program completed an incremental cost study from cost data collected from 64 contractor participants (Opinion Dynamics, 2024). This report directly uses the TECH costs for all the scenarios for which there was TECH cost data available. These costs were supplemented with measure costs the Reach Codes Team obtained from a contractor survey conducted in the summer of 2023. Additional details on the contractor cost survey are available in the prior existing building statewide study (Statewide Reach Codes Team, 2025). The following summarizes key assumptions in this costing approach.
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• Average statewide costs from the TECH Study were used, no regional specific costs were applied.
• The TECH study provided cost for a minimum efficiency 60,000 Btu/h gas furnace.
However, beginning in 2028, newly installed residential gas furnaces must comply with updated federal efficiency standards requiring a minimum of 95% AFUE1.
Because the TECH study did not include cost estimates for a 95% AFUE condensing furnace, an adjustment was made using data from the statewide contractor cost survey. For systems requiring larger furnace capacities, cost estimates were derived as follows:
o 100,000 Btu/h furnaces (serving systems 4 tons and larger): The same method was applied using the corresponding cost differential for 100,000 Btu/h units.
• At the time of replacement for a furnace when it fails, the statewide study assumed a fan motor replacement. The TECH costs did not include this option. A $1,200 incremental cost was added to the TECH cost.
• At time of replacement for high efficiency heat pump, the sum of the TECH cost for standard efficiency heat pump and the incremental cost difference from the statewide study for high efficiency and standard efficiency heat pump was applied.
Over the 30-year analysis period, certain changes are assumed when the equipment is replaced that impact both lifetime costs and energy use. Table 2 and Table 3 present the lifetime scenario for the DFHP Existing Furnace and HPSH measures, respectively. The analysis assumed a 20-year effective useful lifetime (EUL) for a furnace, a 15-year EUL for an air conditioner, and a 15-year EUL for a heat pump. Lifetimes are based on the Database for Energy Efficient Resources (DEER) (California Public Utilities Commission, 2021b). The existing furnace is assumed to be halfway through its EUL at the beginning of the analysis period. After 10 years when the furnace reaches the end of its life and needs to be replaced, it will be subject to new federal efficiency standards for residential gas furnaces that go into effect in 2028 requiring 95 AFUE
1. Five years later the air conditioner reaches the end of its life and is replaced with a new air conditioner.
For the DFHP upgrade case, after 10 years when the furnace fails it’s expected that the furnace is abandoned in place since the heat pump serves primary heating and was sized to provide the full design heating load. In this case it is assumed that the fan motor is replaced with a new aftermarket unit and operates another five years until the heat pump fails and is replaced with a new heat pump and air handler. Table 2 and Table 3 presents the lifecycle incremental cost breakdown for a 4-ton system. The heat pump is sized based on the heating and cooling load, and the 4-ton system is used for Climate Zone 9. These surveys reflect the cost to the customer and include equipment, labor, permit fees, and required HERS testing.
1 https://www.energy.gov/articles/doe-finalizes-energy-efficiency-standards-residential-furnaces-save-americans- 15-
billion#:~:text=These%20furnace%20efficiency%20standards%20were,heat%20for%20the%20living%20space.
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Table 2. Lifecycle Incremental Cost Breakdown for a 4-Ton DFHP Existing Furnace Calendar
Year
Baseline
AC
Baseline
Future
Cost
Baseline
Present
Value Cost
Heat Pump
Heat Pump
Future
Cost
Heat Pump
Present
Value Cost
2026 AC fails,
install new
AC, keep
existing
furnace
$10,431 $10,431 AC fails,
install new
HP , keep
existing
furnace
$12,347 $12,347
2036 Furnace
fails, install
new 95AFUE
furnace
$7,879 $5,863 Furnace
fails, replace
fan motor
$1,200 $893
2041 AC fails,
install new
AC
$10,431 $6,695 HP fails,
install new
HP and air
handler
$14,529 $9,326
Total $22,989 $22,566
Incremental Cost -$424
Table 3. Lifecycle Incremental Cost Breakdown for 4-Ton HPSH Calendar
Year
Baseline
AC
Baseline
Future
Cost
Baseline
Present
Value Cost
Heat Pump
Heat Pump
Future
Cost
Heat Pump
Present
Value Cost
2026 AC fails,
install new
AC & furnace
$13,808 $13,808 AC fails,
install new
HP & AHU
$14,529 $14,529
2041 AC fails,
install new
AC
$10,431 $6,695 HP fails,
install new
HP & AHU
$13,529 $8,684
2046 Furnace
fails, install
new 95AFUE
furnace
$7,879 $4,363
- - -
2056 Remaining
useful life for
furnace
-
-$1,623
- - -
Total $23,243 $23,213
Incremental Cost -$30
Table 4 presents estimated first and lifetime costs for the baseline and heat pump scenarios for 4-ton equipment. Costs include all material and installation labor including providing new 240 V electrical service to the air handler location for all new air handler installations and decommissioning of the furnace for the cases where the furnace is removed. DFHP costs incorporate controls installation and commissioning to ensure the heat pump and the furnace communicate properly and don’t operate at the same time. Future replacement Cost-Effectiveness Analysis: City of Glendale
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costs do not include any initial costs associated with 240V electrical service or furnace decommissioning.
Table 4. HVAC Measure Cost Assumptions – 4-Ton Electric Replacements Measure Case
AC +
Evaporator
Coil
Gas
Furnace
/AC
DFHP Existing
Furnace HPSH
High
Efficiency
HPSH
Base Case - - AC +
Evaporator Coil
Gas
Furnace
/AC
Gas
Furnace
/AC
First Cost $10,431 $13,808 $12,347 $14,529 $17,506
Replacement Cost
(Future Value) $18,310 $18,310 $15,729 $13,529 $16,506
Replacement Cost
(Present Value) $12,558 $11,058 $10,219 $8,684 $10,594
Remaining Value at
Year 30 $0 -$1,623 $0 $0 $0
Total Lifecycle Cost $22,989 $23,243 $22,566 $23,213 $28,100 Incremental Cost - - -$424 -$30 $4,857
2.1.3 Lifecycle Cost Assuming Zero-NOx Standards for Space Heating After 2030
The California Air Resource Board proposed a strategy for reducing emissions in their 2022 Scoping Plan for Achieving Carbon Neutrality that includes a zero-emission standard for space and water heaters sold in California that would go into effect in 2030 (California Air Resources Board, 2022). The South Coast Air Quality Management District (SCAQMD) proposed Rule 1111 for the Reduction of NOx Emissions from Natural Gas-Fired Furnaces.
This rule applies to furnaces less than 175,000 Btu/hr and sets compliance goals for manufacturers with the proposed dates in Table 5. The sale of gas furnaces above the compliance target will incur a mitigation fee (SCAQMD, 2025).
Table 5. SCAQMD Rule 1111 Proposed Manufacturer Compliance Targets Target Dates 2027-2028 2029-2032 2033-2035 2036 and after NOx Emitting Units (e.g. gas) 70% 50% 25% 10%
Zero-Emission Units 30% 50% 75% 90%
The Bay Area Air Quality Management District (BAAD) adopted Rule 9-4 that similarly requires zero NOx standards for space heating systems sold in the Bay Area.
Implementation for residential furnaces will begin January 2029 (BAAD, 2025).
The BAAD Rule 9-4 has been adopted, but both the California Air Resources Board and SCAQMD Rule 1111 are proposed rules that have not yet been adopted, but given the implications these rulings would have on the 30-year cost-effectiveness if gas furnaces were Cost-Effectiveness Analysis: City of Glendale
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very limited or no longer available in 2030, a sensitivity analysis for this scenario is included in this study for the DFHP Existing Furnace scenario. The other heat pump measures would also be impacted by this ruling; however, for simplicity the team selected one measure to give a sense of the impact on the results. The costs in Table 6 reflect the DFHP Existing Furnace scenario where gas furnaces are not available in 2030. This 30-year lifecycle analysis assumes that in 10 years when the furnace reaches the end of its useful life and needs to be replaced, it will be subjected to the SCAQMD Rule 1111 or California Air Resources Board proposal and will be replaced with a heat pump.
Table 6. Lifecycle Incremental Cost Breakdown for 4-Ton System DFHP Existing Furnace with no Gas Furnaces after 2030
Calendar
Year
Baseline AC
Replacement
Schedule
Baseline
Future
Cost
Baseline
Present
Value
Cost
Heat Pump
Heat
Pump
Future
Cost
Heat
Pump
Present
Value
Cost
2026
AC fails, install new
AC, keep existing
furnace
$10,431 $10,431
AC fails, install new
HP , keep existing
furnace
$12,347 $12,347
2036 Furnace fails, install
new HP $14,529 $10,811 Furnace fails,
replace fan motor $1,200 $893
2041 - - - HP fails, install new
HP and air handler $14,529 $9,326
2051 HP fails, install new
HP $13,529 $6,462 - - -
2056 Remaining useful
life for HP - -$4,459 - - -
Total $23,245 $22,566
Incremental Cost -$679
2.1.4 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics.
• NPV: The Reach Codes Team uses net savings (NPV benefits minus NPV costs) as the cost-effectiveness metric. If the net savings of a measure or package is positive, it is considered cost effective. Negative net savings represent net costs to the consumer. A measure that has negative energy cost benefits (energy cost increase) can still be cost effective if the costs to implement the measure are even more negative (i.e., construction and maintenance cost savings). • B/C Ratio: Ratio of the present value of all benefits to the present value of all costs over 30 years (NPV benefits divided by NPV costs). The criteria for cost- effectiveness is a B/C greater than 1.0. A value of one indicates the savings over the Cost-Effectiveness Analysis: City of Glendale
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life of the measure are equivalent to the incremental cost of that measure. A value greater than one represents a positive return on investment.
Improving the energy performance of a building often requires an initial investment. In most cases the benefit is represented by annual on-bill utility or LSC savings, and the cost by incremental first cost and replacement costs. However, some packages result in initial construction cost savings (negative incremental cost), and either energy cost savings (positive benefits), or increased energy costs (negative benefits). In cases where both construction costs and energy-related savings are negative, the construction cost savings are treated as the benefit while the increased energy costs are the cost. In cases where a measure or package is cost-effective immediately (i.e., upfront construction cost savings and lifetime energy cost savings), B/C ratio cost-effectiveness is represented by “>1”.
Because of these situations, NPV savings are also reported, which, in these cases, are positive values.
2.1.5 Utility Rates
In coordination with the City of Glendale, the Reach Codes Team determined appropriate tariffs for each package, summarized in Table 7, based on the annual load profile of the prototype and the corresponding package, and the most prevalent rate for each building type.
For a more detailed breakdown of the rates selected refer to Section 7.2 Utility Rate Schedules.
Table 7. Residential (Single Family and Detached ADU)
Utility Tariffs in City of Glendale
Electric / Gas Utility Electricity Natural Gas
GWP / SoCalGas L-1-A GR
Utility rates are assumed to escalate over time according to the two scenarios described below.
1) Modest Gas Escalation: The first scenario is based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates throughout the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors.
2) High Gas Escalation: A second set of escalation rates were also evaluated to demonstrate the impact that utility cost changes have on cost-effectiveness over time. This set was based on those used within the 2025 LSC factors (LSC replaces TDV in the 2025 code cycle) which assumed steep increases in gas rates in the latter half of the analysis period.
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See Section 7.2.3 and the statewide 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2025) for details.
2.2 Greenhouse Gas Emissions
The analysis uses the greenhouse gas (GHG) emissions estimates built-in to CBECC-Res.
There are 8760 hourly multipliers accounting for time dependent energy use and carbon emissions based on source emissions, including renewable portfolio standard projections.
Natural gas fugitive emissions, which are shown to be substantial, are not included.
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3 Prototype Designs and Measure
Packages
3.1 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the cost- effectiveness of proposed changes to Title 24 requirements. Average home size has steadily increased over time, and the Energy Commission single family new construction prototypes are larger than many existing single family homes across California. For this analysis, a 1,665 square foot prototype was evaluated. Table 8 describes the basic characteristics of the single family prototype. Additions are not evaluated in this analysis as they are already addressed in Section 150.2 of Title 24, Part 6. The CEC has proposed significant changes to the 2025 Energy Code that would remove the allowance of gas space heating and water heating equipment for additions and instead require additions to follow the same space heating and water heating equipment requirements as new construction (California Energy Commission, 2025).
Table 8. Residential Prototype Characteristics
Three building vintages were evaluated to determine sensitivity of existing building performance on cost-effectiveness of upgrades. For example, it is widely recognized that adding attic insulation in an older home with no insulation is cost-effective, however, newer homes will likely have existing attic insulation reducing the cost-effectiveness of an incremental addition of insulation. The building characteristics for each vintage were determined based on either prescriptive requirements from Title 24 that were in effect or standard construction practice during that time period. Homes built under 2001 Title 24 are subject to prescriptive envelope code requirements very similar to homes built under the 2005 code cycle, which was in effect until January 1, 2010.
Table 9 summarizes the assumptions for each of the three vintages. Additionally, the analysis assumed the following features when modeling the prototype buildings. Efficiencies were defined by year of the most recent equipment replacement based on standard equipment lifetimes.
• Individual space conditioning and water heating systems, one per single family building.
• Split-system air conditioner with natural gas furnace.
Specification
Existing Conditioned Floor Area 1,665 ft2
Num. of Stories 1
Num. of Bedrooms 3
Window-to-Floor Area Ratio 13%
Attached Garage 2-car garage
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o Scenarios with an existing natural gas wall furnace without AC were also evaluated.
• Small storage natural gas water heater.
o Scenarios with an existing electric resistance storage water heater were also evaluated.
• Gas cooktop, oven, and clothes dryer.
The methodology applied in the analysis begins with a design that matches the specifications as described in Table 9 for each of the three vintages. Prospective energy efficiency measures were modeled to determine the projected energy performance and utility cost impacts relative to the baseline vintage.
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Table 9. Efficiency Characteristics for Three Vintage Cases Building Component Efficiency
Feature
Vintage Case
Pre-1978 1978-1991 1992-2010
Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-0a
2x4 16 inch on center wood frame,
R-11
2x4 16 inch on center wood frame,
R-13
Foundation Type & Insulation Uninsulated slab (CZ 2-15) Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-19 (CZ 1 & 16)
Ceiling Insulation & Attic Type
Vented attic, R-5 @ ceiling level for CZ
6 & 7,
Vented attic, R-11 @ ceiling level
(all other CZs)
Vented attic, R-19 @ ceiling level Vented attic, R-30 @ ceiling level Roofing Material & Color Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Radiant Barrier No No No
Window Type: U-factor/SHGCb Metal, single pane: 1.16/0.76 Metal, dual pane: 0.79/0.70 Vinyl, dual pane Low-E: 0.55/0.40 House Infiltration at 50 Pascals 15 ACH50 10 ACH50 7 ACH50 HVAC Equipment
Heating Efficiency 78 AFUE (assumes 2 replacements) 78 AFUE (assumes 1 replacement) 78 AFUE Cooling Efficiency 10 SEER (assumes 2 replacements) 10 SEER (assumes 1 replacement) 13 SEER, 11 EER Duct Location & Details Attic, R-2.1, 30% leakage at 25 Pa Attic, R-2.1, 25% leakage at 25 Pa Attic, R-4.2, 15% leakage at 25 Pa Whole Building Mechanical
Ventilation None None None
Water Heating Equipment
Water Heater Efficiency 0.575 Energy Factor (assumes 2
replacements)
0.575 Energy Factor (assumes 1
replacement) 0.575 Energy Factor
Water Heater Type 40-gallon gas storage 40-gallon gas storage 40-gallon gas storage Pipe Insulation None None None
Hot Water Fixtures Standard, non-low flow Standard, non-low flow Standard, non-low flow a Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use. b Window type selections were made based on conversations with window industry expert, Ken Nittler. If a technology was enterin g the market during the time period (e.g., Low-E during 1992-2010 or dual-pane during 1978-1991) that technology was included in the analysis. This provides a conservative assumption for overall building performance and additional measures may be cost -effective for buildings with lower performing windows, for example buildings with metal single pane windows in the 1978-1991 vintage.
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3.2 Measure Details
The following heat pump space heater (HPSH) measures were evaluated as described below. All included HERS verified refrigerant charge, 10% duct sealing, and 300 CFM/ton airflow, aligned with the proposed code requirements for the 2025 Title 24 code.
1) Dual Fuel Heat Pump (DFHP Existing Furnace): Replace existing ducted AC with an electric heat pump and install controls to operate the heat pump as the primary space conditioning source and to use the existing gas furnace (78 AFUE) for backup heat when heating demands cannot be met by the heat pump. In this report, dual fuel heat pumps were modeled to disable furnace operation above an outdoor temperature of 35°F in compliance with Energy Code Section 150.0(h)7, which requires this lockout for any heat pump with supplemental heating. A minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pump was evaluated. Savings are compared to a new AC (14.3 SEER2, 11.7 EER2) alongside the existing furnace (78 AFUE). A new evaporator coil is assumed to be installed with the AC system.
2) HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Minimum federal efficiency (14.3 SEER2, 11.7 EER2, 7.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).
3) High Efficiency HPSH: Replace existing ducted AC and natural gas furnace with an electric heat pump and air handler. Higher efficiency (17 SEER2, 12.48 EER2, 9.5 HSPF2) heat pumps were evaluated. Savings are compared to a new ducted natural gas furnace and AC (14.3 SEER2, 11.7 EER2, 80 AFUE).
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4 Results
The primary objective of the evaluation is to identify cost-effective energy upgrade measures at the time of air conditioner replacement in single family buildings, to support the design of local ordinances requiring upgrades, which may be triggered by different events, such as at the time of a significant remodel or at burnout of mechanical equipment. Table 10 shows the analysis results for Climate Zone 9 for the standard rate L-1-A rate.
Table 10. Heat Pump Single Family Cost-Effectiveness Summary Vintage
Year Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Utility Cost Savings Incremental Cost On-Bill Cost-Effectiveness 2025 LSC Cost-
Effectiveness
First
Year
Lifecycle
(2025$)
First
Year
Lifecycle
(2025$)
Modest Gas
Escalation
High Gas
Escalation
B/C
Ratio NPV B/C
Ratio NPV B/C
Ratio NPV
Pre 1978
DFHP Existing Furnace (738) 95 0.40 ($66) ($429) $1,916 ($424) 0.99 ($6) >1 $2,949 >1 $4,387 HPSH (Std Efficiency) (879) 99 0.40 ($101) ($1,173) $721 ($30) 0.03 ($1,143) >1 $1,909 >1 $4,415 HPSH (High Efficiency) (478) 99 0.44 $43 $2,018 $3,698 $4,857 0.42 ($2,839) 1.07 $345 1.49 $2,358 1978-
1991
DFHP Existing Furnace (499) 65 0.27 ($44) ($285) $1,916 ($424) 1.49 $139 >1 $2,141 >1 $3,127 HPSH (Std Efficiency) (599) 68 0.27 ($69) ($810) $721 ($30) 0.04 ($780) >1 $1,289 >1 $3,022 HPSH (High Efficiency) (300) 68 0.30 $35 $1,505 $3,698 $4,857 0.31 ($3,352) 0.76 ($1,187) 1.05 $232 1992-
2010
DFHP Existing Furnace (410) 54 0.23 ($36) ($218) $1,916 ($424) 1.94 $206 >1 $1,860 >1 $2,749 HPSH (Std Efficiency) (490) 56 0.23 ($56) ($642) $721 ($30) 0.05 ($612) >1 $1,096 >1 $2,589 HPSH (High Efficiency) (282) 56 0.25 $11 $856 $3,698 $4,857 0.18 ($4,001) 0.54 ($2,231) 0.85 ($750) Cost-Effectiveness Analysis: City of Glendale
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4.1 Zero-NOx Scenario Results
This section presents cost-effectiveness results for the DFHP Existing Furnace under the scenario where proposed air quality district zero-NOx rules go into effect over the next 10 years. In the base case, at time of replacement of the gas furnace at year 10 a heat pump is installed. The energy profile between the base case and the heat pump upgrade case are subsequently identical for the remaining 20 years of the 30-year analysis period. As a result, energy and cost savings only persist for the first 10 years.
Table 11 shows the On-Bill NPV cost-effectiveness results and the LSC cost-effectiveness results for all three vintages. 2025 LSC savings were calculated using individual year multipliers for the first 10 years, 2026 through 2035.
Table 11. DFHP Existing Furnace On-Bill NPV and 2025 LSC Cost-effectiveness High Gas Escalation (Zero-NOx Rule)
Vintage Year
NPV
On-Bill 2025 LSC
Pre 1978 $400 $608
1978-1991 $492 $424
1992-2010 $532 $372
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5 Summary
This analysis evaluated the feasibility and cost-effectiveness of heat pump upgrades at time of air conditioner replacement in GWP territory for homes built before 2010. The Statewide Reach Codes Team used both On-Bill and LSC-based LCC approaches to evaluate cost- effectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the incremental costs associated with the measures.
Conclusions and Discussion:
• The heat pump installation alongside the existing furnace (DFHP Existing Furnace) was found to be cost-effective under the high gas escalation and LSC cost-effective in all vintages.
• The complete heat pump system installation (heat pump and air handler – HPSH) was found to be cost-effective under the high gas escalation and LSC cost-effective in all vintages.
• The complete heat pump system installation with high efficiency heat pump was found to be cost-effective under the high gas escalation in the pre-1978 vintage and LSC cost-effective in all vintages, with exception to the 1992-2010 vintage. • Under the modest gas escalation scenario, only the DFHP Existing Furnace in the 1978-1991 and 1992-2010 vintages were found to be cost-effective. • Challenges to On-Bill cost-effectiveness include higher first costs and higher first- year utility costs due to higher electricity tariffs relative to gas tariffs. However, On- Bill cost-effectiveness improves under GWP rates compared to SCE rates, primarily because GWP electricity rates are lower.
• Given the adopted Bay Area Air Quality Management District Zero NOx rule, and the proposed California Air Resource Board or South Coast Air Quality Management District (SCAQMD) Zero-NOx rules, and gas furnaces may not be available to be installed after 2030. A sensitivity analysis was performed for the Zero NOx scenario using the high gas escalation rate scenario and found that cost-effectiveness decreases in all DFHP cases. Utility cost impacts are experienced over the first 10- year period, during which gas rate escalation is lower and electricity rate escalation higher. As a result, this scenario has higher lifetime increases in utility cost. Even though lifetime incremental costs are lower, the combined impact is a lower net present value.
• While not evaluated in this report, the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2025) shows it is beneficial to combine a heat pump space conditioning system with photovoltaics (PV) because the additional electricity required by the heat pump can be met by the PV system and result in reduced utility bills.
• In this study the dual fuel heat pump is evaluated with an existing furnace, however the homeowner could choose to replace the existing furnace with a new furnace at this time as well. This measure (DFHP New Furnace) was evaluated in the 2022 Cost-Effectiveness Analysis: City of Glendale
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Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2025) but found to be less cost-effective than the DFHP Existing Furnace case.
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6 References
BAAD. (2025, May 7). Rules 9-4 and 9-6 Building Appliances. Retrieved from Bay Area Air District: https://www.baaqmd.gov/en/rules-and-compliance/rule- development/building-appliances
California Air Resources Board. (2022, August 12). 2022 State Strategy for the State Implementation Plan (2022 State SIP Strategy). Retrieved from California Air Resources Board Web site: https://ww2.arb.ca.gov/sites/default/files/2022- 11/Proposed_2022_State_SIP_Strategy.pdf
California Energy Commission. (2023). 2025 Energy code Hourly Factors. Retrieved from https://www.energy.ca.gov/files/2025-energy-code-hourly-factors California Energy Commission. (2025). Final Express Terms for the Proposed Revisions to 2025 Title 24, Parts 1 and 6. Retrieved from
https://efiling.energy.ca.gov/GetDocument.aspx?tn=261222&DocumentContentId=97 581
California Public Utilities Commission. (2021a). Utility Costs and Affordability of the Grid of the Future: An Evaluation of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1. Retrieved from https://www.cpuc.ca.gov/-/media/cpuc- website/divisions/office-of-governmental-affairs-division/reports/2021/senate-bill-695- report-2021-and-en-banc-whitepaper_final_04302021.pdf
California Public Utilities Commission. (2021b). Database for Energy-Efficient resources (DEER2021 Update). Retrieved April 13, 2021, from
http://www.deeresources.com/index.php/deer-versions/deer2021 Heinemeier, K. (2025). Residential HVAC Performance. Retrieved from https://title24stakeholders.com/wp-content/uploads/2025/03/Residential-HVAC- Performance.pdf
Opinion Dynamics. (2024). TECH Clean California: Incremental Cost Study. Final Phase I Findings. Retrieved from
https://techcleanca.com/documents/4258/TECH_Cost_Study_- _FINAL_Phase_I_Findings_2.12.24_2.pdf
SCAQMD. (2025, February 21). Space and Water Heating Building Appliances. Retrieved from South Coast AQMD: https://www.aqmd.gov/docs/default- source/Agendas/ssc/ssc-agenda-2-21-2025.pdf
Statewide Reach Codes Team. (2024, September). 2022 Cost-Effectiveness Study: Single Family New Construction. Retrieved from
https://localenergycodes.com/download/1240/file_path/fieldList/2022%20Single%20 Family%20NewCon%20Cost-eff%20Study.docx
Cost-Effectiveness Analysis: City of Glendale
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Statewide Reach Codes Team. (2025). Single Family Air Conditioner Replacements (AC to HP) Cost-effectiveness Report. Retrieved from
https://localenergycodes.com/download/2034/file_path/fieldList/2025%20Single%20 Family%20AC%20to%20HP%20Cost-eff%20Study.pdf
Cost-Effectiveness Analysis: City of Glendale
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7 Appendices
7.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure . The map in Figure 1 along with a zip-code search directory is available at:
https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html Figure 1. Map of California climate zones.
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7.2 Utility Rate Schedules
The Reach Codes Team used City of Glendale electricity and SoCalGas gas tariffs detailed below to determine the On-Bill savings for each package.
7.2.1 Glendale Water and Power
Following shows the City of Glendale electricity tariffs applied in this study. The L-1-A rate was applied to all packages.
L-1-A Standard Service Rate
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7.2.2 Southern California Gas
The SoCalGas monthly gas rate in $/therm applied in this analysis is shown in Table 12. The gas rates were developed based on the latest available gas rate for May 2025 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from SoCalGas’s monthly residential tariffs between 2015 and 2024. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual curves were then averaged to arrive at an average normalized annual curve. Long- term historical natural gas rate data was only available for SoCalGas’ procurement charges.
The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on May 2025 rates. The costs presented in Table 12 were then derived by establishing the baseline and excess rates from the May 2025 tariff as a reference point and then using the normalized curve to estimate the cost for the remaining months relative to the May rates.
Table 12. SoCalGas Monthly Gas Rate ($/therm)
Month
Total Charge
Baseline Excess
January $1.57 $2.06
February $1.40 $1.88
March $1.34 $1.82
April $1.28 $1.76
May $1.29 $1.77
June $1.32 $1.81
July $1.34 $1.82
August $1.38 $1.86
September $1.34 $1.83
October $1.33 $1.82
November $1.37 $1.86
December $1.43 $1.91
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7.2.3 Fuel Escalation Rates
The average annual escalation rates in Table 13 present the moderate gas escalation scenario used in this study. The electricity and natural gas rates are based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates throughout the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. No data was available to estimate electricity escalation rates for Glendale, therefore electricity escalation rates for SCE and statewide natural gas escalation rates were applied.
Table 14 presents the high gas escalation scenario escalation rates used in this analysis.
Rates were applied for the same 30-year period and are based on the escalation rate assumptions within the 2025 LSC factors from 2026 through 2055. These rates were developed for electricity use statewide (not utility-specific) and assume steep increases in gas rates in the latter half of the analysis period. Data was not available for the year 2026 and so the CPUC En Banc assumptions were applied for those years using the average rate across the three IOUs for statewide electricity escalation.
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Table 13: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis
Year
Statewide Natural
Gas Average Rate
(%/year, real)
SCE Electric
Average Rate
(%/year, real)
2026 4.6% 1.6%
2027 4.6% 1.6%
2028 4.6% 1.6%
2029 4.6% 1.6%
2030 4.6% 1.6%
2031 2.0% 0.6%
2032 2.4% 0.6%
2033 2.1% 0.6%
2034 1.9% 0.6%
2035 1.9% 0.6%
2036 1.8% 0.6%
2037 1.7% 0.6%
2038 1.6% 0.6%
2039 2.1% 0.6%
2040 1.6% 0.6%
2041 2.2% 0.6%
2042 2.2% 0.6%
2043 2.3% 0.6%
2044 2.4% 0.6%
2045 2.5% 0.6%
2046 1.5% 0.6%
2047 1.3% 0.6%
2048 1.6% 0.6%
2049 1.3% 0.6%
2050 1.5% 0.6%
2051 1.8% 0.6%
2052 1.8% 0.6%
2053 1.8% 0.6%
2054 1.8% 0.6%
2055 1.8% 0.6%
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Table 14: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis
Year
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Statewide
Electricity
Residential
Average Rate
(%/year, real)
2026 4.6% 2.1%
2027 4.2% 0.6%
2028 3.2% 1.9%
2029 3.6% 1.6%
2030 6.6% 1.3%
2031 6.7% 1.0%
2032 7.7% 1.2%
2033 8.2% 1.1%
2034 8.2% 1.1%
2035 8.2% 0.9%
2036 8.2% 1.1%
2037 8.2% 1.1%
2038 8.2% 1.0%
2039 8.2% 1.1%
2040 8.2% 1.1%
2041 8.2% 1.1%
2042 8.2% 1.1%
2043 8.2% 1.1%
2044 8.2% 1.1%
2045 8.2% 1.1%
2046 8.2% 1.1%
2047 3.1% 1.1%
2048 -0.5% 1.1%
2049 -0.6% 1.1%
2050 -0.5% 1.1%
2051 -0.6% 1.1%
2052 -0.6% 1.1%
2053 -0.6% 1.1%
2054 -0.6% 1.1%
2055 -0.6% 1.1%
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Last modified: 2025/07/22