Tax Rebates May Be Gone, But Utility Rebates Remain

By Jon Sedey

What would you do if major utility companies like Nicor, ComEd and Peoples Gas would pay you to change your energy consumption habits? If you knew you could get free money out of these companies, would you modify your behavior now, to fix things today? The obvious answer is yes, you would change. And in a depressed economy where contractors, builders and homeowners are seeking alternative methods to save money and spend less on everything, more utility providers are making free and easy money a reality.

According to the Lawrence Berkeley National Laboratory, the average home’s expenditure on total energy cost in 2009 was as follows: 11% on cooling, 29% on heating, 14% on water heating, 13% on appliances, 12% on lighting and 4% on plug-in electronics. There are numerous changes at the individual and building envelope level that can improve these figures. Additionally, several utility rebates are specifically driven to change those numbers.

These rebates are becoming more visible and utilized as utility companies expand the range of available rebates. The main reason for the recent growth is that federal money for tax credits has vanished. The 2012 Residential Federal Tax Credit only includes 30% of the cost with no upper limit, expires in December 2016 and is only applicable to existing homes and new construction toward geothermal heat pumps, wind turbines and solar energy projects. Other than that, easy pickings like furnace and insulation credits are all gone.

Without federal money available, it is up to us, as the taxpayers and users, to pay for the rebate programs. One way or another, they are already paid for and almost everybody funds the programs and might not even know it.

Users can figure out how much they pay for the rebate programs by looking at their current bills. There is a line item on each bill that notes monthly contribution to the programs. In order to get this money back, an energy efficiency improvement has to be made.

The Database of State Incentives for Renewables & Efficiency (DSIRE) describes various types of financial incentives and rebates at the state and local level. However, the most common rebates are equipment installation by contractor, multi-family direct installs, energy audits and on-bill financing. Utility companies like Nicor, Peoples Gas, ComEd and Ameren all offer these types of rebates. Every company offers almost identical programs to one another as well as combined programs to create stackable and multiple discounts.

Equipment installation ranges from water heaters to furnaces to boilers. Even though they are typically the largest up-front investment, these equipment replacement rebate programs provide a significant return on investment. For example, Nicor offers homeowners $350 to replace and install a high efficiency furnace with a 95% Annual Fuel Utilization Energy (AFUE) and an Energy Star rating.

In addition to that, if residents replace a boiler before March 31, 2012, they are eligible for an additional $100 bonus. With the bonus, there can be anywhere from a $350 to $550 returned to the homeowner just for replacing old equipment.

In addition to single equipment replacement, Nicor and ComEd offer Complete System Replacement (CSR) rebates. With one application, the resident can get a significantly larger amount returned to them. For instance, one CSR including a furnace with a 92% AFUE and a central air conditioner with a seasonal energy efficiency ratio of 14.5 can yield a $600 rebate. A CSR can be beneficial because the resident can get a check in the mail or work with the contractor to get the money instantly off their bill.

Rebates in multi-family direct installs include incentives on common area lighting, low-flow shower heads and other low-hanging fruit that can be easily identified and corrected. Ameren Illinois’s ActOnEnergy rebate program enables multi-family property owners to make critical energy-efficiency improvements that will lower energy usage and save on maintenance costs. In addition to that, Ameren offers free high efficiency shower heads, compact fluorescent lights and faucet aerators. The only stipulation is that the properties must have three or more units and the units must be customers of Ameren Illinois.

Home energy audits or energy savings programs conduct an entire home assessment for approximately $100. These assessments include a comprehensive review of the home’s HVAC, hot water, lighting, insulation, air leakage and major appliances. Nicor and ComEd have been on the forefront with this rebate program that can offer incentives of up to $1,250. Through the process—completed by Conservation Services Group—auditors will install up to ten compact fluorescent light bulbs, high efficiency faucet aerators and shower heads and a hot water pipe wrap. Once completed, they give the residents an estimated payback report so the residents will know how much the improvements will pay back.

A more controversial program is on-bill financing. As of now, this program is only offered through Peoples and Northshore Gas. These rebates allow the resident to get a very low cost loan that goes onto the utility bill to help pay for the energy efficient improvements. This program is not stackable, but it does include equipment and project costs up to $20,000 with a three, five or ten year loan at five percent with no money down. The resident’s overall utility cost will decrease, but the payment will increase due to the loan. Hopefully in the end, the costs will offset each other and the resident will be operating at a more energy-efficient level.

There are more conventional, smarter ideas for homeowners that can result in hundreds of dollars of rebates. ComEd offers their customers a range of rebates that range from free installation of energy-saving products for qualified buildings and Energy Star lighting discounts. ComEd also offers refrigerator, freezer and clothes washer rebates. They will pick up and recycle a second working refrigerator or freezer for free and pay owners $35 for it. Similarly to the freezer and refrigerator rebate, residential customers can get a $75 rebate on a top-loading Energy Star clothes washer.

The free money is out there, it just take some alternative strategies and thinking outside the box to find them. Besides DSIRE, there are other sites that can help you save money on energy efficiency improvements.

Energy Impact Illinois provides information on low interest loans for home improvement projects such as boilers, furnaces, water heaters and other Energy Star equipment. Energybills.org helps find available rebates based on geographical location. HomeEQ Now provides a baseline score for energy usage and waste. It provides residents with a benchmarking tool (a report) to see within ten minutes if they need an energy audit.

A final place to investigate energy requirements is the Illinois General Assembly website. On that site, it is possible to track any bill when there is a vote or an amendment to legislation.

Energy standards are getting more serious and as a result, utility companies are offering more and more incentives for residential improvements. The standards set in the 2012 IECC and future editions will only be more rigorous. Creative changes to code formatting and/or enforcement will be needed. As the economy continues to stabilize, utility companies will continue to find alternative measures to meet standards and provide rebates and other incentives.

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