States' 'Cash For Clunkers' Majap Deadline Nears

By Alan Wolf -- TWICE, 9/28/2009

WASHINGTON — States have until Oct. 15 to submit final applications to participate in a $300 million federal appliance rebate program.

The effort, part of the Obama administration's economic-stimulus package, mirrors the auto industry's “cash for clunkers” program in that purchases of new, energy-efficient appliances will be partially subsidized with federal funds.

But it differs from the car plan in that each state will run the program individually, setting its own rules regarding product eligibility, rebate amounts, payment administration and disposal of old appliances.

According to the Department of Energy (DOE), which oversees the program, the rebates will likely range from $50 to $200 and will apply only to Energy Star-qualified products. The DOE is recommending that states include room air conditioners, clothes washers, dishwashers, freezers, refrigerators, and home heating and cooling systems in their eligibility criteria.

The program, which manufacturers had sought for years, was first authorized as part of a 2005 energy bill, but failed to receive funding. The plan was revived under the American Recovery and Reinvestment Act amid a dramatic downturn in appliance demand, which was triggered by the collapsing housing market and compounded by the recession.

But retailers are mixed on the program's impact. While all hope it will help revive sales, some fear it will encourage consumers to defer purchases until after November, when DOE expects to complete most of the funding. Other dealer concerns expressed to TWICE are:

• the lack of provisions for the removal of old appliances;

• that the onus for processing the rebates will fall on dealers;

• that differing state-by-state criteria will prove an administrative nightmare for multi-regional chains; and

• that the $300-million allocation, which only covers about three-weeks' worth of production, is grossly inadequate.