Demand is high for gas switch BGE sales campaign for new homes also attracts electric users; Utility 'did not expect it'; Backlog of orders for heater conversion stretches into 1999


An article in the June 8 Real Estate section misspelled Mark Huston's name. The article also stated that conversions of homes to gas service were from electricity users. Conversions also come from users of oil and propane.

The Sun regrets the errors.

When Baltimore Gas & Electric Co. began to blitz the new-homes market in the early 1990s by offering natural gas as an energy source, it didn't realize that it also was unleashing a pent-up demand by existing homeowners frustrated by higher electric costs.

In 1991, according to Gary Huston, BGE director of gas development, there were around 100 homeowners who converted their homes from electric high-efficiency heat pump systems to natural gas. Today, BGE is at an all-time high of switching homeowners from electric to gas. And for those communities where gas is not available, but where homeowners have inquired about getting gas mains installed, the wait extends into 1999 -- that's how busy BGE is in trying to keep up with demand.

BGE has been concentrating its marketing efforts on new-home developments for the better part of the 1990s, getting builders to offer natural gas as a heating and cooking source. Their efforts have paid off, according to Huston. He said 75 percent of new homes built this year (approximately 10,000) in BGE's service area will offer gas as an energy source. In 1988, only 2 percent of the new homes built offered gas.

"Keep in mind that with the new-home program we were dealing with one person, which might be the developer, and they were requesting gas service for all the homes in their community. It was a much lower cost," Huston said. But on the coattails of the homes program and what surprised the company was the "grass-root" surge in inquiries from existing homeowners.

"I would say as a corporation we really did not expect it," Huston said. "We didn't expect customers to be willing to pay anywhere from $3,000 to $5,000 to convert their homes. But based on the interest we've seen since 1993 to the present, people have begun to see the value of natural gas."

Huston said BGE decided to test the conversion demand by running pilot programs in four Howard County communities. It met with great success and the conversion program has been racing to keep up with demand.

"It was a nice surprise to us and we've been pursuing it ever since," Huston said.

According to Huston, BGE converted 2,208 customers to gas in 1994. That figure jumped to 4,187 in 1995. "In 1995, the demand was outstripping our ability to make the capital investments" to convert more households, he said. In 1996 conversions reached 5,994, and Huston expects 1997 to top 6,000 -- where he expects conversions to stabilize in coming years.

"We put a lot of pipe in the ground between 1993 and 1996," he said. In fact, last year BGE added 339 miles of gas lines, giving it a total of nearly 5,400 miles of gas mains in the Baltimore metropolitan area, where 560,000 out of its 1.1 million customers use gas. "We put the pipe past 30,000 customers, and since that time we've been trying to hook up as many customers.

"If you were a customer where we put a gas line past and called up today, and you ask for gas service, we could do that very quickly, within a period of weeks," he said, adding that in summer the number of gas conversion orders decreases.

"If you were a customer who did not have a gas main front of your house, today, we have a backlog of people who fit in that category," Huston said, noting that conversion schedules for the rest of 1997 and 1998 are all ready penciled in.

BGE said that once a gas main is put in a community, it costs a homeowner a minimum of $400 to have a line come to the home. The real costs come when a homeowner decides which systems (heat, dryer, water heater, cooking) will be converted and the amount of plumbing required to do the job.

But BGE says the lower energy costs will eventually pay for the conversion. For example, according to BGE, an electric high-efficiency gas water heater costs $24.58 more per month to operate than a gas unit. It estimates the monthly payment to finance a $900 gas unit at 11.75 percent for five years is $19.91, leaving a savings of $4.67 each month. BGE says the same examples could be made for other systems.

As for BGE's costs, Huston estimated that it costs about $2,300 per home to cover the expense of placing gas mains and restoring the areas that are disturbed during the digging. That number would be higher if new plastic piping and technological advances in drilling hadn't been made, according to Huston.

It has been BGE's experience that 25 percent of the homes convert immediately to gas and that within five years of the time when gas had become available it gets up to 70 percent penetration within a community.

The demand for gas can also be felt by Realtors, who say homes that have converted to gas may be more marketable.

"Is it going to bring more money? I don't know," said Barbara Hickman, who works in the Phoenix office of Coldwell Banker Grempler Realty. "What it's going to do is make the difference that someone is going to buy the house with gas heat. There are buyers who call that won't even look at an electric heat pump.

"There is a certain segment of the population that says, 'I want gas heat.' To some people that is as important as having three bedrooms and two baths. That's one of their requirements. It's a nice added feature to offer in a house."

But as far as adding value to a home, Gary Dreiger, a home appraiser, says it would be difficult to put an exact dollar value on having gas over electric, but with two homes being equal in all other aspects, the home with gas would get "a plus."

Pub Date: 6/08/97

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