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There's a $500 energy-conservation prize waiting for you in the new federal energy bill

WASHINGTON—Making energy-efficient improvements to your home could net you a $500 rebate from the government.

The offer's buried in the 1,724-page energy bill that President Bush has said he'll sign next week. It gives consumers a credit off the bottom line of their 2006 or 2007 taxes equal to 10 percent of their energy-saving purchases. The maximum over the two years is $500 and applies to any owner-occupied home or condominium. It's probably a good deal for you, although it's pretty complicated.

Home energy conservation experts say you'll make the most out of the tax credit—and save even more on home energy costs in the long run—with the following approach.

First, pull together your utility bills and figure out what you're spending on energy now. If you have a neighbor with a similar residence, ask what he or she is spending on utilities. If you're a lot higher, you've got a lot to save. Note that if you're in a condo, you'll be eligible for a pro-rated share of any building upgrades.

For most homeowners, the fastest way to earn the rebate—plus long-haul savings—is a "no-brainer," said home energy auditor Lee O'Neil, president of NSpects of Chantilly, Va.: "Have the air sealing (draft protection) and attic insulation done."

This work is relatively cheap—$2,000 to $3,000 for an average single-family home—compared with five times that for replacing old windows. Moreover, the small print of the new law lets homeowners deduct up to $300 for insulation and eliminating drafts, which is what air sealing is all about. The maximum deduction for new windows is $200.

How good a deal this or any other energy-conservation outlay is for you depends on three factors: how much energy you're wasting, how much the improvement costs and how much savings you'll net.

The Environmental Protection Agency helps you figure this out with a nifty interactive Web site that asks you to describe your home, right down to the direction it faces, the window area on each side and the kinds of appliances you've got. It doesn't ask your latitude, which it gets from your ZIP code, but it asks you to detail your energy spending. Ultimately, it comes up with the ways that you can save the most.

The site is It's a demanding exercise but more than worth the time—literally.

The new tax rebate applies only to products that are more energy efficient than the minimum federal requirement. Such products bear the government-certified Energy Star label or a 2000 IECC label, indicating that they meet the International Energy Conservation Code.

Among the graded items are windows, heat pumps, water heaters, cooling system components, insulation and doors. For a complete list, go to then click on "Products" on the left side.

Energy Star dishwashers, laundry machines and refrigerators qualify for a separate rebate. Dishwashers earn up to $100 based on efficiency, washing machines $100 and refrigerators between $75 and $175. Keep in mind that energy-conserving appliances are often more expensive.

For whatever energy-saving products or services you buy, save your receipts for your taxes, just as you would your charitable deductions. The rebate period begins Jan. 1, 2006, and ends Dec. 31, 2007. You can claim a total of $500 for purchases made between those dates.

Here are some other tips:

_You can still claim a rebate if you replace an Energy Star appliance with another Energy Star appliance. It may not save you much beyond the tax credit, however.

_Don't buy something just because the rebate makes it attractive. "You want an improvement that will save you money over its lifetime in energy costs," said Lowell Ungar, an analyst with the Alliance to Save Energy, a Washington conservation group.

_You may be able to get help from your utility companies. Many offer free advice on-line; some even make house calls.

_If you want independent expert advice, consider getting a certified energy auditor to do a home inspection. It'll cost $300 to $500, though, and that's not covered by the rebate. To find an energy auditor, go to the National Association of State Energy Officials at Click on "Consumer Resources" on the left side.

_Some of the smartest fixes don't cost much money at all. Caulking drafty windows and doors can cut energy costs by 10 percent, according to the U.S. Department of Energy. Yearly maintenance of your heating and cooling systems, which usually costs about $100, can reduce your energy bill by 30 percent or more. Replacing incandescent light bulbs with compact fluorescent ones can cut lighting bills by up to 50 percent, according to the Energy Department. None of these fixes rate a rebate, however.

For more tips on making your home energy efficient visit:

You can also call the Department of Energy's Information Center for the tips in booklet form. The phone number is 1-877-EERE-INF (1-877-337-3463).


(c) 2005, Knight Ridder/Tribune Information Services.

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