St. Cloud (MN) Times
December 2, 2009
Cash for appliances can pay off
As this summer's Cash for Clunkers program fades into memory the results are still being debated. According to federal data, the program paid out nearly $3 billion in subsidies on more than 675,000 car and truck purchases in July and removed more than 550,000 trucks, vans and SUVs from our highways.
Some argue the influx of sales saved the auto industry; others argue that it simply prompted people who would have bought cars in the fall to do it sooner. In either case, the program was clearly flawed in several ways, not the least of which was subsidizing the purchase of terribly inefficient new vehicles that undermined the potential for the program to increase the overall economy of the vehicle fleet.
Now, lurking just around the corner, comes another federal subsidy program aimed at boosting retail sales and supporting conservation efforts: cash-for-appliances.
Unnoticed by most of the public, last winter's massive stimulus bill — the nearly $800 billion American Recovery and Investment Act — included $300 million to encourage the purchase of energy-efficient appliances.
The funds were to be distributed to the states by the U.S. Department of Energy upon the approval of a state plan to offer rebates to residents purchasing Energy Star-rated major appliances. Minnesota's plan was approved last month and the state will soon receive $5 million to distribute through the state Department of Commerce's Office of Energy Security. Rebates of $100 to $200 on energy-efficient refrigerators, freezers, dishwashers and washing machines should be available in Minnesota by next March.
The program raises a host of questions. Will it increase sales? Will it improve our energy efficiency? Is it worth the cost?
Like cash-for-clunkers, some of these questions can't be answered until the final numbers are in. Others may depend on your ideological or political views about government intrusion in the marketplace or the efficacy of deficit spending as an economic stimulus. But from a purely family-economics standpoint it may make sense for some to participate.
If you have large appliances that are 10 or more years old and plan on staying in your house at least another five years, it's worth giving some thought to upgrading at least your refrigerator to a more efficient model and taking advantage of the $100 rebate from the state.
Here's an example: Imagine you bought a new refrigerator in 2000 and moved your even older 1985 model to the basement rec room. According to EPA averages, running both in our area will cost you about $245 annually for electricity. But if you bought a new Energy Star-rated model — $850 retail will get you a nice one — to replace the main unit, moved the 2000 fridge to the basement, and recycled the antique, you'd save about $137 per year on electricity.
After the $100 rebate that new fridge would pay for itself in energy savings in a little more than five years. If you were wiser you'd decide to recycle both of the old units, resolving to climb the stairs when you wanted a cold beer, and save about $200 annually running just the new fridge. In that case the payback period drops to less than four years.
Not a bad deal, especially if you're concerned about the environmental impact of all that wasted electricity — or you just want to get rid of that avocado or harvest gold monstrosity in the basement.
The cash-for-appliances program is unlikely to spur a rush on appliance stores like cash-for-clunkers did for cars. Because it's funded at just 10 percent the level of the auto program it clearly can't have the same economic impact either. But for many families that extra $100 or $200 in savings may be just enough to push the payback on a new appliance into the realm of consideration.
If so, it could provide a modest boost to local retailers and because only highly efficient models will qualify for the rebates, it will undoubtedly have some positive effect on household energy bills.
-Dr. DRL
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