Want to buy your own water heater?
Ontario’s new harmonized sales tax will raise the cost of home heating. And if you rent your water heater, you’ll pay 13 per cent HST on the rental charges, instead of the 5 per cent GST you now pay.
So, why not consider buying your own water heater? Nowhere else in Canada do so many people rent tanks so they can get free repairs in case of breakdowns or free replacements if they want to upsize or downsize.
Here’s a guide to getting out from under your rental payments.
First step: Find out who you’re dealing with. Look for any identification tags on your heating equipment and check your bills.
You may be billed directly by the company that owns your water heater. But more likely, you’re paying monthly, bimonthly or quarterly fees on your gas or electricity bills.
Many utilities are no longer in the business of water heater rentals. Enbridge Gas and Toronto Hydro both sold their rentals to Direct Energy, but they still handle the billing for Direct Energy customers.
Union Gas sold its water heater rentals to Reliance Home Comfort, which bills some customers directly and is paid by others through their utility bills.
Second step: Call the company that owns your water heater. Ask how much it would cost to buy out the unit you’re now renting. This depends on the type of equipment you have and the age.
For example, I rent a 50-gallon conventional gas water heater that was installed in January 2000 by Direct Energy. The buyout cost today is $201 (plus 5 per cent GST).
If I wait until next January, the buyout cost for my 11-year-old unit goes down to $158 (plus 13 per cent HST). And if I wait until 2016 or later, the cost is a flat $25.
I pay $14.49 a month in rental fees (before tax). This means I can cover the buyout cost in just over a year. However, I do have to spring for unexpected repairs or maintenance.
Some newer companies that rent water heaters have long-term contracts and charge cancellation fees to get out early. Paying a cancellation fee does not guarantee you can buy out the tank that you currently rent, so ask the right questions first.
However, those who rent gas water heaters from Direct Energy must be given a clear buy-out option, reflecting the price at installation. They’re protected from exit fees and unreasonable rental rate increases under a 2002 consent order between the federal Competition Bureau and Enbridge.
The order expires in February 2012, but the Competition Bureau agreed earlier this year to approve a water heater rental contract that allows exit fees for new Direct Energy water heater installations. (It’s not yet in effect.)
Third step: Decide if you want to return the rental unit. You might want to buy something newer that comes with a manufacturer’s and/or retailer’s warranty.
Ask if you must pay a fee to get your old tank picked up. Direct Energy charges a $75 fee for customers within 30 kilometres of its water heater dropoff location (16 Lesmill Rd. in northeast Toronto). Those living further away can get a free pick-up.
You can avoid a pick-up fee if you or the company that installs your new unit drops off the old tank. However, you need to ensure the rental company actually gets it back.
“We process the return on the day we receive it,” says Joshua Orzech, a Direct Energy spokesman.
“The charges don’t stop when the tank leaves your house, but when it’s returned to us. So if the drop-off is done by a third party, you should get a copy of the return form.”
Fourth step: Check out the cost to buy a new water heater. Big-box home retail chains carry both gas and electric water heaters. Some offer installation at an extra cost and others don’t.
You may have to upgrade the plastic venting for your water heater – another cost to factor in – because of new rules adopted by the Technical Standards and Safety Authority. (They’re not retroactive, but apply to installations after August 2007.)
If this sounds like too much work, then just keep renting. But if you have the time to explore other options, you can get a quick payoff from buying your own water heater.
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