A New York Consumer Energy Efficiency Program Strengthens Consumer Confidence

Just before Labor Day, we found out that U.S. consumer sentiment took a nosedive.  Meanwhile, businesses say they won't invest in hiring new employees until consumer demand assuredly picks up.  Whether it was a sympton of “Post-Traumatic Stress Disorder” as Ben Bernanke recently alluded to, or some other set of fears about market uncertainty, consumer demand needs a lift. 

It’s been said that luck is when preparation meets opportunity.  New York consumers were treated to a bit of this kind of ‘luck’ and foresight when the New York State Energy Research and Development Authority (NYSERDA) flipped the switch on a program known as the “Buy Green, Save Green NYS High Efficiency Appliance Rebates” just before Labor Day, which offered consumers rebates for high-efficiency clothes washers and fridges.  The program did its part to 'energize' consumer demand in a big way, as reported on by Aaron Scholder of Gannett’s Albany Bureau:

"The $3.5 million appliance rebate initiative announced last week by the New York State Energy Research and Development Authority ran out of funds on Tuesday, effectively ending the program after just five days.            

The program offered consumers rebates of up to $350 if they purchased new refrigerators and washing machines that met super-high efficiency standards.

Timing of the program’s start could not have been better for consumers, who reaped the benefits that came with the rebates coupled with retailers’ Labor Day sales."

It was no fluke that the consumer rebate program saw such rapid uptake.  The Buy Green, Save Green NYS High Efficiency Appliance Rebates program was actually part of a much longer-running and successful NYSERDA program known as the New York Energy $mart Products Initiative [see p.122].   This larger initiative aims to accomplish two goals:

1) To increase the supply of products through partnerships with retailers, manufacturers and distributors, and

2) To create demand for high efficiency and ENERGY STAR products through consumer awareness and understanding of the ENERGY STAR label.

I blogged about the NYSERDA program over two years ago as a similar concept got play in a provision known as the Best-in-Class Appliance Deployment Program in the 2009 Waxman-Markey Climate "ACES" Bill.  Here’s how I described the Energy $mart Products Initiative back then:

The NYSERDA program rewards retailers who sell a higher proportion of ENERGY STAR-labeled products to non-qualifying high efficiency products.  Retailers can use any variety of creative and innovative aims to get consumers to purchase the more efficient products.  Common retailer sales tactics that have emerged include eye-catching energy and environmental promotional pieces, coupons and price markdowns for the efficient products, consumer education via signs showing product energy savings, and favorable shelf positioning for efficient appliances.  And the program does not discriminate based on store or company size - everything from local "ma and pop" hardware stores to Home Depot, Lowe's, and Best Buy are able to take part and benefit from the program.

 . . . Using the cost-benefit test known as the Program Administrator Cost (PAC) test , which [only] measures the energy savings from affected appliance sales against the cost of the program [public spend], the NYSERDA program comes out at a ratio of 19:1.  (My apologies for the wonkiness.)

Add in the total consumer spend  for purchasing these products and the ratio only goes higher.  Taken together, New Yorkers not only reaped a big payback for making energy efficient product purchases, they also realized immediate and sustained savings by reducing their own personal and household electric utility cost burdens.  And that translates into additional money in consumers’ pockets to spend elsewhere in the economy.  The NYSERDA program is yet another great example of energy efficiency at work in helping to strengthen our weakened economy and protect our environment.