Fresh Eye on the Radio: Calculating the appliance rebate benefit

A person who seemed perturbed that I made fun (on The Current) of Minnesota’s computer servers (some of which crashed under the weight of the Cash for Appliances program) nonetheless gave me some valuable information this afternoon which might help analyze whether this program makes any sense for anyone other than those who are getting money to buy appliances.

Just a note to let you know that I got on the state’s crashing website ( this afternoon about 3:30 p.m. (after being unsuccessful earlier in the day, through either the website or the phone number) and I was successful in reserving my $150 dishwasher rebate. About 43% of the rebate money had been committed at that time, so they must have been somewhat successful in processing requests for the rebates.

Hand me a pen and that napkin!

Forty-three percent of the money committed would be $2.15 million handed out today. Let’s — somewhat generously — assume that most of the appliances being purchased are dishwashers or washers… things that use a fair amount of electricity.

Let’s also assume that the average rebate is between $50 and $200 — $125. That means that our friend is one of 17,200 people who got rebates today.

How much electricity does a new appliance save over an old appliance? According to the federal government:

Energy savings will depend on the specific appliance and model being replaced, but new ENERGY STAR appliances save significantly more energy than those manufactured years ago. For example, replacing a clothes washer made before 2000 with a new ENERGY STAR model can save up to $135 per year. Replacing a refrigerator made before 1993 with a new ENERGY STAR model can save up to $65 per year.

These numbers are somewhat different than what’s provided by the National Resources Defense Council, which says $100 savings for refrigerators, $110 for clothes washers, and $25 for dishwashers. The average works out to about $78 there. $70 with the fed’s numbers. Fine, let’s go with $75 annual savings.

So 17,200 people in Minnesota will save $1.29 million. The energy savings costs will offset the taxpayer contribution effort in a little under two years. The offset to the customer’s cost would be at least twice that.

The energy-efficient appliances use about 25 percent less electricity and the utility companies say saving energy keeps them from having to build power plants.

A dishwasher (I’ve chosen the appliance between the energy-hogging water heater and the pretty-efficient refrigerator) uses 112 kilowatt hours per month if it’s used every day and if you choose to heat the water (a third of that if you don’t).

17,200 people, then would use 481,600 fewer kilowatt hours per month than they are without the new appliances..

A typical 500 megawatt coal plant produces 3.5 billion kilowatt-hours per year, according to the Union of Concerned Scientists. That’s 399,543 per hour. So the new appliances purchased with today’s rebates will save about about an hour and 12 minutes of generating time a year at the local power plant.

Your mileage may vary.

Here’s today’s news conversation with The Current’s Mary Lucia that got us onto the topic.

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  • Bob Moffitt

    Honestly, Bob, you should tone down your non-stop cheerleading for these federal “clunker” programs…(grin).

    Well, a dose of healthy skepticism never hurt anyone. I noted when I bought my new Energy Star-rated washer (3 week too early to qualify) that the energy savings are based on the assumption that you are using the washer with an electric water heater.

    Mine is natural gas fired. I’s new, too.

  • Bob Collins

    I think it’s always a good idea to question politicians and others who justify certain expenditures. They may be right, they may be wrong. But it’s always a good idea to do the math.

  • tiredboomer

    Is the objective to produce a fixed number of energy efficient appliances at a price certain, or is the objective to create an expanded pipeline for producing energy efficient appliances?

  • greg

    A very interesting and comprehensive calculation. You covered the financial and energy savings, but did miss any accounting for potential job creation.

  • Bob Collins

    I sort of touched on it, Greg, noting that few appliances are made in the U.S. anymore. Many manufacturers have moved their plants.

    In Iowa, right now, Whirlpool is looking at $6.5 million to keep its plant going.