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How ‘Cash for Caulkers’ might work

Posted on 15. Dec, 2009 by GMS Editor in Featured, Newsflash, ShowOnLatestPanel

By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: December 14, 2009: 4:53 PM ET

NEW YORK (CNNMoney.com) — President Obama’s Cash for Caulkers proposal has almost every homeowner wondering how they’ll be able to cash in.

The plan calls for greater incentives, perhaps amounting to thousands of dollars, for homeowners to get new energy-efficient appliances, windows and other such items.

But no one knows exactly how the federal program – part of a broader plan to stimulate the economy – might work. That’s because it’s still being written.

It may be modeled, at least in part, on New York State’s home energy efficiency program, said Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s advising on the federal proposal.

So how exactly does New York’s program work?

Homeowners interested in participating find a contractor licensed to do an energy audit by New York State – available on the state’s web page or by calling a toll-free number.

Then someone like David Scharf, a contractor based just north of New York City, shows up.

For about $500, Scharf will figure out how much energy the home wastes. He’ll put a giant fan in the door that will suck in air from outside the home, highlighting leaks in windows, doors or walls. He’ll test each appliance to see how much energy it draws. He’ll check the thickness of your insulation and windows.

Then, all this is fed into a computer model that generates a checklist with everything that could be replaced, how much it will cost, and how much in energy savings can be expected out of it. The homeowner decides how much work to do, and negotiates a price.

When the work is done, the homeowner pays Scharf directly. Scharf then submits paperwork to the state agency that runs the program. The homeowner then gets a reimbursement check from the agency for 10% of the project cost, up to $3,000, usually within 30 days.

If Obama gets his way, homeowners could get much bigger rebates than that in the future. No one knows what the numbers will be yet, but Nadel said other legislation currently in Congress would give homeowners a 50% rebate, with a maximum reimbursement of $12,000.

With so much money potentially on the table with Cash for Caulkers rebates, fraud is another big concern.

“Any program that is going to run through a third party and is going to distribute billions of dollars, needs to have lots of checks and balances to make sure there’s not abuse,” David Kreutzer, an energy analyst at the Heritage Foundation, told CNN earlier this week after Obama proposed the new federal program Tuesday.

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Tags: home improvement, rebates, stimulus