Numbers

Numbers

Do you trust them? Sometimes you should and sometimes not. We just had new windows installed and in the process of interviewing various companies and checking their proposals I noticed an interesting thing on the energy savings calculations.

One Financial Return projection showed that after 10 years we would have a net cost of basically minus $3,868 (Recovered Costs plus Utility Expense Savings).The windows would actually put $3,868 in our pockets. In other words, they would more than pay for themselves. That seems pretty good, doesn't it?

When I drilled down on the numbers though, I noticed they had used a utility savings of 25% a year and estimated an average annual increase of 8% in energy costs. When I checked our historical records I found our energy costs had been increasing at only a 4% rate for the past decade. So, I went back to them and asked for a revised "estimate" based on lower numbers using what I considered to me more realistic, but still generous, numbers. The cost to us over ten years would be $896. That's a swing of $4,764 in the calculations just by changing a few percentages.

I have no idea what our actual savings will be, but the point is you can play with the numbers quite a bit when you are using "theoretical projections." I asked the person doing the calculations if he had any tangible proof that anyone had experienced actual savings close to the projections he was using and the answer was, "No."

Everything was nicely printed out by a computer and the projection had impressive logos and comparisons to other project returns and all kinds of official looking information, but here's the bottom line: It was a guess.

Being the inquisitive type, I went to a local utility and asked them how to calculate energy savings allowing for the changes in temperature and utility costs from year to year. They called and said they didn't have a handy formula for that. I had received the same energy savings pitch from the furnace company, as the window company, and was amazed there was not a formula of some kind to check the projected results.

We like our new windows but we have no idea how much energy they are really going to save or what "Recovered Costs" we'll actually have, but hopefully a lot. If I ever figure it out, I'll let you know.