Since it was written as part of the Energy Policy Act of 2005, the appliance industry has been eager for funding to come around for a program that would offer consumer rebates for energy-efficient appliances. Earlier this month, the Department of Energy (DOE) announced that the payday has come.

DOE Secretary Steven Chu announced on July 14 that nearly $300 million from the American Recovery & Reinvestment Act (ARRA) will be put toward state-run rebate programs for consumer purchases of new Energy Star-qualified home appliances. The program underscores the ARRA’s commitment to improving energy efficiency. “Appliances consume a huge amount of our electricity, so there’s enormous potential to both save energy and save families money every month,” Secretary Chu said in a statement. “These rebates will help families make the transition to more energy-efficient appliances, making purchases that will directly stimulate the economy and create jobs.”

Rebate, Not a Tax Credit

Unlike other incentives outlined in the ARRA, such as those for roofing and insulation, Energy Star appliances will be eligible for consumer rebates, not tax credits. Manufacturers and the associations that represent them are pleased with this approach.

“We want people to feel immediate effects of the stimulus package, so we were happy to see a rebate rather than a tax credit,” says Jill Notini, vice president of marketing and communications for the Association of Home Appliance Manufacturers. “Rather than waiting until next April to file taxes and get the benefit, we’re pleased to see a direct immediate rebate being offered to the consumer.”

J.B. Hoyt agrees. “We like this approach better because it goes right back to the consumer right away, whereas with a tax credit, you install now, apply later, and get a refund sometime next spring,” says the director of regulatory affairs for Whirlpool. “There’s an additional benefit as well, in that the program is encouraging consumers to move up to an Energy Star product. Not only will they save money on the purchase, but they’ll continue to get energy efficiency and cost savings over the life of the product.”

Rulemaking Moves Forward

Also unlike other ARRA incentives, the Energy Star appliance rebates will be distributed an administered by the states. By August 15, states must “raise their hand,” as Hoyt puts it, and tell the DOE that they want to be included in the funds allocation. If not all states opt in, the $300 million will be reallocated among those that do.

Once they’ve acknowledged their interest, states must draft formal plans that outline specifically how their rebate programs will work. Details would include which appliances would be eligible for rebates, and how much each rebate would be. “The DOE has left it up to the states to determine their rebates based on their regional needs,” Notini says. “Some states might want to focus on water savings by giving rebates for Energy Star clothes washers or dishwashers, and others might want to focus on heating and cooling appliances.”

States’ plans must be submitted by Oct. 15, and the DOE anticipates that the funding will be allocated by the end of November. Francis Dietz, vice president of public affairs for the Air Conditioning, Heating, and Refrigeration Institute (AHRI) notes that up to 25% of the money allotted to a state can be used to administer the rebate program. “We’re really talking about, frankly, not very much money when it’s spread out over all the states,” Dietz says. “Having said that, to provide someone with any incentive to buy an Energy Star product, even $100 or $200 may be enough, so it could conceivably go farther.”

Hoyt says the legislation outlines that state rebate programs must wrap up by 2012, but that he expects many of them “to come to an end earlier than that. The money is likely to last a while. It won’t all be spent in 90 days, but it certainly won’t last forever either.”

Eligible Products

Though states will ultimately determine which Energy Star products will be eligble for rebates under their programs, Notini says the DOE’s recommendation to the states is that the programs focus on heating and cooling products and home appliances.

As such, Dietz adds that many of the products that will be eligible for rebates may also be eligible for federal tax credits outlined in the ARRA.

“Part of the DOE’s announcement listed items such as furnaces, air conditioners, boilers, and water heaters as products that homeowners are encouraged to buy because new Energy Star models can dramatically decrease energy use,” Dietz says. “Will homeowners be able to take both the federal tax credit and the state rebate? Yes, probably. But they have to remember that the federal energy efficiency standards for these products are much higher than they are for Energy Star.” For instance, Dietz explains that Energy Star-qualified air conditioners are generally around 15 SEER, but in order to get a federal tax credit, homeowners much purchase and install at least a system with at least a 16 SEER and 13 EER rating. (Visit the HVAC section of Remodeling’s June issue for more information on these federal regulations.)

Hoyt also notes that consumers should be aware of dates that efficiency levels are set to increase for certain product categories. As a timely example, the Energy Star efficiency standard for qualified dishwashers will be increased on August 11. “Ultimately, consumers will most likely need to submit a copy of their purchase receipts so administrators can identify that a certain product model was, in fact, Energy Star-qualified on the date of purchase,” he says.

To this point, what remains unclear is the date to which state programs will be retroactive. As of press time, a call to the DOE News Office had not yet been returned to clarify what the official start-dates of these programs will be.

Overall, manufacturers and associations are pleased to finally have funding in place for this 4-year-old concept. Representatives at all levels are working to ensure that the states are aware of the Aug. 15 opt-in deadline and the Oct. 15 plan-submission date. “The Energy Star name is very well known, and is one of the most recognized trademarks, so people are very aware of it,” Hoyt says. “At Whilrpool, we’re working closely with state energy officials and offering insight into the types of rebate programs we’ve seen work well in the past. Many states have offered rebate programs in the past, but there are states where creating a rebate program is new territory, so we’re giving them any help we can.”

Hoyt recommends that remodeling professionals stay in touch with the news media and their state energy offices going forward so that when the particulars of the programs are released, they can easily gear customers to qualified Energy Star models.”