Government Rebate for Energy Efficient Appliances

• Keith Akada
• January 5, 2010
• Seattle Real Estate

Associated Press – Wed Dec 30, 2009

SAN FRANCISCO – Next year may be to appliance buyers what 2009 was to car buyers: time for government rebates.

Modeled after the popular Cash for Clunkers program, which was intended to get cars with low gas mileage off the road, a federal appliance rebate program is launching in early 2010. It offers a boost to people buying energy-efficient clothes washers, refrigerators and other appliances – those that qualify for the federal “Energy Star” designation – and to manufacturers, whose sales fell 10 percent in 2008 and another 12 percent through mid-December this year.

The program has only $300 million, one-tenth as much money as Cash for Clunkers, or about $1 per U.S resident, so it could run out fast. States are receiving roughly the same amount per capita, with California getting the most at $35.2 million, but what’s eligible varies by state.

Here’s what to keep in mind as you decide whether to swap your washer for that supposedly whisper-quiet model or your old white refrigerator for a shapely stainless-steel number.

WHAT’S MY STATE OFFERING? For state by state information, visit the federal Web site energy savers and click on “state appliance rebate program” on the right.

California residents, for example, can get cash back on three types of appliances: $100 for washing machines, $75 for refrigerators and $50 for room air conditioners. Wisconsin offers rebates on washers and fridges plus $200 for boilers or furnaces, $75 for central air conditioning or geothermal heat pumps, $50 for freezers and $25 for dishwashers.

(Also in effect through Dec. 31, 2010, is a federal tax credit for 30 percent of the cost up to $1,500 on equipment for a primary residence.)

HOW DO I KNOW IT’S A DEAL? Joe McGuire, president of the Association of Home Appliance Manufacturers, said buying Energy Star appliances can mean hearty power savings. But it’s important to make sure you save enough in water and energy bills over time to justify paying for a new unit.

“A good example is a 10-year-old clothes washer,” he said. “With Energy Star, you could reduce utility costs by $145 a year and save 5,000 gallons of water a year.”

At that rate, a typical $500 to $700 dishwasher would pay for itself in four years. In larger households that use more power and water for laundry, the payoff can come much sooner.

It’s probably not worth replacing appliances less than five to seven years old just because rebates are available, unless you plan to upgrade to a far more efficient model. That’s because newer appliances are already more efficient. But switching from a top-loading to front-loading clothes washer could in itself cut water use enough to make a purchase worthwhile.

The older the appliance, the greater the possibility of saving money by buying a new one. McGuire says a 20-year-old refrigerator uses three times as much power as Energy Star-approved units made today, some of which run on less than 60 watts.

“You would save over $250 a year on an average 20-year-old refrigerator if you replaced it,” McGuire said. “That’s about $1,200 over five years. That is real savings to consumers.”

The Department of Energy estimates Americans saved more than $19 billion on utilities last year using Energy Star products.

WHEN WILL IT END? Rebates will be available until February 2012 or the money’s gone. And Jen Stutsman, a spokeswoman for the Department of Energy, expects the funds to run out fast.