Insights & Advice


Cash for Caulkers—A No Brainer for Consumers

Just like its predecessor, ‘Cash for Clunkers’, the recently announced $6 billion government program (officially called HOMESTAR) gives us working class people a tax break, energy savings and may also put a few good men and women back to work. What’s not to love about that?

Specifically, the program provides incentives for homeowners to make energy-saving improvements, like winterizing, and receive point-of-sale rebates when purchasing insulation materials at hardware stores and dealers. Up to $1,500 is available in these so-called ‘Silver Star’ rebates for piecemeal home improvements. The Obama administration is hoping that this will provide enough of an incentive for me to insulate my attic, replace a water heater and fix or replace several drafty windows and doors that I’ve been meaning to fix.

For those who plan a more comprehensive retrofit of their homes, the government will provide up to $3,000 (and potentially more) for a home energy audit, insulation materials and installation. The incentives are tied to overall reductions in energy usage. Additional rebates for energy savings in excess of 20% could also be available. For example, a 20% reduction in energy output could be eligible for as much as $3,500 in rebates, with each 5% of additional energy savings adding $1,500 in incentives.

But the government would fund no more than 50% of any project’s total cost. Naturally, the government is not just going to take your word for it when it comes to these energy savings rebates and what you spent.
“We suspect there may be some kind of requirement that will require contractors or energy auditors to have the technological skills and qualifications to do this work,” says Alan Silverstein, Co-Director of CET, the Center for Ecological Technology, the Pittsfield-based, non-profit organization that also has offices in Northampton and Springfield.

CET carries out most of MASS SAVE’s energy services in western Massachusetts. It conducts energy audits for over 5,000 homes a year in this area as just one of their services.
MASS SAVE is an energy resource organization consisting of the state’s utilities, energy efficiency service providers and state organizations that provide a wide range of services, incentives, training and information to promote energy efficiency. It should be your ‘Go To’ site whenever you are planning an energy saving move.

In the real world, the Gold Star program of home energy improvements would work something like this:
You the homeowner would hire a local energy auditor to figure out how much energy your home wastes. Auditors use a giant fan in the doorway that sucks in outside air into the house, high lightening all the leaks in the windows, walls and doors. Then they test your appliances to see how much energy they draw. They will also check the thickness of your insulation and windows.

Once that’s done, the auditor inputs their data into a computer model that generates a checklist with everything that could be replaced, how much it will cost and how much energy savings can be expected out of replacing the old equipment or materials. If her company does all that replacement work then you decide how much work you want done and negotiate a price.

After the work is done, you pay the contractor directly. She then submits paperwork to the government agency that runs the program and you get a reimbursement check for up to $3,000 or more.

Energy retrofitting is a much bigger deal than trading in your old auto clunker. By retrofitting the nation’s homes we can reduce energy use by up to 40% per home and reduce energy bills in this country by $21 billion a year. On an individual basis it could save you $200-$500 a year. Many of our homes were built in the first half of the last century or earlier and use 50% more energy than homes built today. And in this area, energy conservation can mean big savings due to our cold winters and not-so-cool summers.

“This program will be great for adding new jobs in green energy,” says Laura Dubester, co-director of the CET.

She is right. The HOMESTAR program could also help in alleviating the unemployment rate, especially around here. You may not realize that the jobless rate in the construction sector nationwide is close to 25% and construction workers are a big part of our regional work force As I look out my office window, a swarm of Hard Hats are busily installing a new roof on a residential property across the street. Several of the laborers are part-time and hoping that this program will increase demand for new roofs within our community. Even if roofing doesn’t take off, it is not a big leap for someone handy with their hands to learn how to install energy efficient cooling and heating systems, solar panels and insulation.

So whether you’re a do-it-your-selfer or in the market for some professional help to increase the energy efficiency of your home, while at the same time cutting costs, tell your congressman that this program is just as important as bailing out yet another set of banks and tell him now.

Posted in Macroeconomics, The Retired Advisor