Cash for clunkers II: Appliances

The federal Cash for Clunkers program, which ended last Monday (Aug. 24), provided consumers between $3,500 and $4,500 in exchange for handing over qualifying low-mpg cars. The program encouraged nearly 700,000 consumers to take gas guzzlers off the roads. These motorists then purchased vehicles that consume fuel far more parsimoniously.

Now, the Department of Energy is poised to roll out what I’d like to call Son of Cash for Clunkers. This time, the feds will be targeting electricity-sucking home appliances. And while the program does not require that cash recipients surrender their old clunkers, I offer a personal anecdote suggesting why they should.

Funding for the new appliances program comes from the Recovery Act, passed earlier this year. One of its provisions sets aside $296 million to help states and territories develop customized financial carrots — aka rebates — to foster smart buying choices. States can use up to half of the Recovery money from this program to cover administrative costs.

DOE will apportion money to states on the basis of their population. However, to get the money, each state must first justify how it would spend our tax dollars and administer them efficiently (presumably that means in ways that keep bureaucratic overhead low). “We are in the process of awarding the first 10 percent for each state and territory to help them develop a comprehensive rebate program,” says Jen Stutsman, DOE’s Deputy Press Secretary.

Each state can choose which appliances will qualify, how big rebates will be and what hoops buyers will have to jump through to get some cash back. States have until October 15 to propose their plans. “Then the Department [of Energy] will move as quickly as possible to review those applications and award the rest of the funding,” Stutsman says. The goal is to have at least some of those state programs up and running before the big holiday spending spree at the end of this year.

To qualify for cash back, appliances must carry an Energy Star rating, meaning the federal government has already validated their diminutive electricity appetite.

I know some people will view this as just another hemorrhage of tax dollars for some unnecessary do-gooder program. But it will help cut energy use and the risk of runaway global warming. And it can also provide substantial personal economic benefits — a lesson I stumbled upon after renovating our kitchen, last year.

It was the room’s first major overhaul in 40 years, from what I can tell. As part of that homestead renewal, I decided to permit myself an indulgence: a new refrigerator with double doors on top and a freezer drawer on the bottom. My husband was a good sport and told me to go ahead and opt for the stainless steel version, an upgrade that appealed to his aesthetics. I found the only such unit that could be shoehorned into the small area of our kitchen reserved for a fridge.

At the time, we had a 4-year-old unit that worked fine and a 14-year-old backup, then exiled to the basement, which had an erratic performance record (explaining why we had pulled it from the kitchen four years earlier). Both appliances were white and conventional (with a freezer on top, single door below). The new stainless three-door model cost more than $1,000 — a seemingly big price to pay when we already had two working refrigerators.

But we went ahead and moved the new fridge into the kitchen, had the delivery guys move the 4-year-old white unit into the basement and then ditched the really old refrigerator (although “really old” is a relative term, since the appliance it had replaced was 42 years old when it gave up its ghost).

Within six months of doing this refrigerator shuffle, my husband began asking me why our electric bills were so low. Huh? Our power company sends a comparison of this month’s bill with what we spent in the same month a year earlier. And month after month we were spending roughly $100 less than the year before.

After tracking this trend and scratching our respective noggins for the better part of a year, the proverbial light bulb went off. The only difference in our energy-use patterns was that we had traded in a 14-year-old refrigerator for a new one.

And the big eureka moment: We realized this indulgence had actually been an unwittingly smart investment, in that it paid for itself in less than a year and is now earning us $100 a month from reduced kilowatt-hour expenditures.

OK, one might argue that we should have learned, five years ago, to live with a single refrigerator. (That extra basement unit, however, sure is a convenient annex for leftovers, the occasional ice cream cake and all of those supplies for holiday feasts.) Or, on the other hand, maybe DOE could advertise some case studies, like mine, to document how investing in an especially efficient appliance can pay for itself in months, not years. On it’s own, that might prompt on-the-fence consumers to invest in a new unit.

But as the wildly successful two-month-long automotive Cash for Clunkers program attests, Americans love cash-back programs. So maybe helping consumers over the decision-making hump with a plump rebate check makes good public policy.

And as much as I would like to qualify for such rebates, our nation would probably get more bang for the public buck if state programs targeted landlords and low-income families. These groups tend to buy the cheapest (but least efficient) appliances available and then keep them in service as close to forever as possible. With smart planning, however, the new rebates could help hoarders relinquish their energy hogs — and go green in ways that leaves discernably more money in their wallets each month.