Are you seeing red when you open up your monthly utility bill? Vowing to spend the winter huddled under a stack of heavy blankets? The answer to both questions probably depends on the status of your home's heating system. Keeping warm is the largest energy expense for most homeowners, accounting for two-thirds of annual energy bills in colder parts of the United States.

But there's no need to turn down the thermostat and pile on the sweaters. If your house uses a boiler for heating, you can either refit your existing one or replace it with a more energy-efficient model to cut your heating costs. And by lowering your share of the billion tons of carbon dioxide spit out by heating systems in the U.S. every year, you'll also be doing the environment a big favor.

How to heat: considering your options
Most U.S. homes are heated with either a boiler or a furnace. What's the difference? Furnaces heat air and send it through the house via ducts. Boilers create either steam or hot water and send it out through pipes (if the system relies on steam) or through baseboard radiators or radiant floor slabs (if hot water). Some also heat the hot water you get from your taps. If you're starting from scratch, Lawrence Longo-manager of Gamma Certification Services, which certifies boilers and furnaces-says boiler systems may be better for those with respiratory issues. "Furnaces are cheaper to install," he notes. "But for those with asthma and allergies, a boiler may be better, because it pushes hot water or steam through the house. Better for the lungs than forced air."

A boiler acts like a giant teakettle, and typically consists of a large tank of water heated by burners fueled by oil, natural gas, or propane. Older boiler systems are often steam-based; they run at a higher temperature than hot water boilers and are therefore less efficient. A typical boiler will last about 25 years, so if yours is getting up there in age or looking worn, and/or your heating bills are mysteriously increasing, it's time for either a retrofit or replacement with a newer version. Old coal burners that were switched over to oil or gas are prime candidates for replacement, as are gas furnaces with pilot lights and without an induced draft fan.

Tweak or toss: whether to retrofit or replace
Weigh the cost of a retrofit against the cost of a new boiler, but don't let money be the deciding factor. It may be smarter to get a new one, especially if your current boiler will need to be replaced anyway within five years or if you plan to switch to or add on a new heating/cooling system. If your boiler is in sound shape, however, retrofit options can make a lot of sense.

The most common retrofit for gas boilers is adding a flue damper, which prevents chimney losses by closing off the vent when the boiler isn't firing. Steam boilers and bigger boilers benefit from vent dampers more than hot water and smaller boilers. On older boilers, you can replace always-on pilot lights with intermittent ignition devices. They cost about $250, need to be installed by a contractor, and usually last for 10 years or less. A better option: If you can control the pilot light, turn it off in the spring and on again in the fall, and you can usually save the same amount of money.

For older, inefficient oil-fired boilers, you have a few bill-lowering options. Have a contractor do a draft test: If too much heat is going up the chimney, installing a barometric flue damper is a good bet. The cost is less than $100 and could save you 5 percent of your fuel costs. Another bill reducer is a flame-retention burner, which blocks airflow up the chimney when the unit isn't running. The installation cost is around $500, but it could save you up to 20 percent in fuel costs.

By the numbers: what the specs mean
If you're starting from scratch with a new boiler, the most important factor to evaluate is its annual fuel utilization efficiency, or AFUE. Specifically, this is the ratio of a boiler's heat output to the total energy it consumes. So an AFUE of 90 percent means that 90 percent of the energy in the fuel becomes heat for the home and the other 10 percent escapes up the chimney. The federal government requires new boilers to display their AFUE on the yellow Energy Guide label so you can compare models' heating efficiency. The Energy Star website has a list of qualifying models (PDF) and their AFUEs.

For new boilers, the minimum AFUE rating is 80 percent; in comparison, most old boilers have AFUE ratings of 55 to 65 percent. Energy Star-qualified boilers must have an AFUE of at least 85 percent. According to the U.S. Department of Energy, upgrading your furnace or boiler from an AFUE of 56 percent to an AFUE of 90 percent in a typical cold-climate house will save 1.5 tons of carbon dioxide emissions annually if you heat with gas, or 2.5 tons if you use oil. John Krigger, an energy-conservation expert and partner in the consulting firm Saturn Resource Management, recommends staying away from steam: "Don't use it for a new residence-it's inefficient and basically obsolete as a heating source."

A new, all-electric boiler will have the highest AFUE rating (between 95 and 100 percent), but electricity costs make it an uneconomic choice for most people. If you live in a cold climate, it usually makes sense to invest in a higher-AFUE system. Those in milder climates with lower annual heating costs, however, don't need to spring for an AFUE any higher than 80 percent.

If you know your current boiler's AFUE rating, it's easy to calculate the savings you'll get by replacing it. The American Council for an Energy-Efficient Economy has created a chart on its website showing what you'll save in annual fuel costs by buying a new boiler. If your old boiler had a 65 percent AFUE and you're replacing it with an Energy Star-rated one at 85 percent, your projected saving is $23 for every $100 you spend in annual fuel costs. Thus, if your yearly fuel bill is $1,200, a new boiler will reduce it by $276. Is that a good return on your investment (ROI)? Say the boiler set you back $2,500. Divide that by $276 and you get a one-year ROI of 9 percent. That's a better return than you'll get from your savings account and most mutual funds these days. And if fuel prices increase, your annual savings and ROI will, too.

Most energy experts recommend a condensing boiler, which compresses water vapor produced in the combustion process and uses the heat from this condensation. The AFUE rating can be as much as 10 percent higher than for a non-condensing boiler. It will also cost you more up front but save you far more in fuel costs over its lifetime, especially in colder climates.

Henry Gifford, the mechanical-system designer for Architecture and Energy Limited, a New York City architecture firm that designs energy-efficient homes, recommends a boiler with sealed combustion, which brings outside air directly into the burner and sends the fuel-combustion gases directly to the outside. "It reduces the standby heat losses to almost nothing," he says. Boilers without sealed combustion take in heated air and then send it up the chimney, wasting the energy that could be used to heat the air. "A sealed-combustion boiler is almost inherently safer than one using indoor air for combustion, because it has a greatly reduced chance of backdrafting the dangerous gases into the house," Gifford adds. Sealed-combustion boilers generally produce an acidic exhaust not suitable for old, unlined chimneys, so make sure your chimney is lined before the boiler is installed.

If you're getting a boiler for hot water, consider an aquastat, or outdoor reset, which costs a few hundred dollars to install and controls the water temperature, keeping it at 180°F. In the cooler months, a modulating aquastat senses outdoor temperatures and adjusts the hot water temperature accordingly. (A cheaper alternative is to adjust the aquastat yourself, turning it down to 120°F during milder times.) Another option is a time-delay relay: When the thermostat clicks on, it lets hot water circulate without immediately turning on the boiler. After a set time, the boiler will fire up. It costs about $100. Both gadgets can cut your fuel costs by up to 10 percent.

The right stuff: what to look for in an installation contractorThe boiler is a big-ticket item, in terms of both purchase cost and installation charges, so you'll need the professional help of a contractor to get it ready. "Don't go with the cheapest bid," says Krigger. "These systems need a contractor with the expertise to install it. Less-qualified ones may not keep current with the latest technology and therefore may discourage you from better systems." Look for contractors certified by North American Technician Excellence (NATE) to install high-rated AFUE systems. To find one, click here and type in your ZIP code.

A good contractor will not make his suggestions based on the boiler you currently have. He should survey your home and do a "heat-load calculation," which will tell him how much heat the house loses in the winter and enable him to estimate the annual energy bills for the proposed boiler. He will also take time to properly size your boiler to the house-heating load. Too-big boilers mean less in energy efficiency, so a new boiler should be smaller than your old one but large enough to heat your home.

A little maintenance goes a long way with boilers. A service visit every two or three years should be enough for most units, although steam systems will need more frequent visits. For all boilers, a technician should check your chimney and vent connection for deterioration, inspect the heat exchanger for leaks, and fine-tune the controls for optimal water and air temperature settings. How do you know your boiler is working well? When your house it not too hot and not too cold, but just right when you're walking around in your everyday clothes. You'll also know when the energy bills start dropping as quickly as the temperature outdoors.

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