The efficiency of a furnace is measured by the amount of energy or fuel that is used to generate heat for your home. This is known as the Annual Fuel Utilization Efficiency rating or AFUE.

Every heating system loses energy during the combustion process; however, some systems convert a greater portion of the energy into heat than others. The AFUE is a calculation that considers the ratio of heat generated versus the amount of energy consumed by the system.

Today’s furnaces have an AFUE rating of at least 90 percent. This means that 90 percent of the energy consumed is converted into heat for your home. The remaining 10 percent is lost during the combustion process and through venting.

If your system is 20 years old or older, it probably started out with an AFUE of around 78 percent or lower. Over time, this efficiency has declined even further. A condensing furnace with an AFUE of 95 percent will result in significant savings on your monthly heating costs, which could offset the price of the new unit very quickly. A variable or two-speed system will provide even more savings.

Any furnace with an AFUE of 80 percent or lower is considered low-efficiency and should be replaced.