A New Air Conditioner? Ask the Government

Want to ditch that old window air conditioner that sounds like a jet engine every time you switch it on? Uncle Sam is giving you a little more incentive.

On the heels of the "cash for clunkers" program, which ended Monday, the Department of Energy (DOE) is betting a similar program will inspire consumers to junk their old, electricity-sucking refrigerators, air conditioners and washers to buy new, more energy-efficient models.

The program will be funded by the federal stimulus package but carried out at the state level. The DOE plans to allocate $296 million to the states (and U.S. territories) for the rebate program based on a formula using each state’s population. For instance, California’s energy office will get $35.2 million while Connecticut will get $838,000. All 50 states and the District of Columbia are participating.

The initiative is designed to retire inefficient home appliances while stimulating the economy at the same time. There’s no trade-in provision akin to the clunkers program, so consumers don’t need to worry about whether their unwanted dishwasher is inefficient enough. Rebates will be available only for products with the government’s Energy Star label, a symbol that the appliance meets energy efficiency guidelines set by the Environmental Protection Agency and the DOE.

Troubled appliance manufacturers are hoping this rebate program will do for them what the clunkers program did for auto makers. Through July, home-appliance shipments were down 15% this year over the same period in 2008, according to the Association of Home Appliance Manufacturers, an industry trade group.

Reimbursement details won’t be settled until the fall, when the DOE approves states’ plans. But for now, here’s what you’ll need to know to save on appliances at home.

What appliances qualify in your state?

States have the flexibility to choose which Energy Star home appliances to include in their programs and the rebate amount for each. These details are likely to be released in the fall. The DOE recommends that states focus their programs on heating and cooling equipment, appliances and water heaters because these products have the greatest energy-saving potential.

The Energy Star-qualified categories eligible for rebates include central air conditioners, room air conditioners, heat pumps, boilers, furnaces (oil and gas), clothes washers, dishwashers, freezers, refrigerators and water heaters.

(For tips on how to cut your electricity bill, read our story.)

Will your state’s existing rebate program disappear?

Some states already have similar rebate programs in place. They typically return $50 to $200 to consumers depending on the product. With the new money from the stimulus bill, which the DOE expects to award by Nov. 30, states can extend or supplement their existing incentive programs. They could increase their rebate amounts or add eligible products to their programs, says Steven Nadler, the executive director of the American Council for an Energy-Efficient Economy, a nonprofit organization that tracks energy policy.

For instance, Colorado already has several programs that encourage residents to purchase energy-efficient products, “but we are in the midst of revamping all of them in preparation for spending Recovery Act dollars,” says Todd Hartman, a spokesman for the governor’s energy office.

States that don’t have comparable programs will likely develop new ones after the money is doled out.