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Published April 20, 2012, 12:00 AM

New fridges could save Minnesota renters cold cash - and help the environment

Minnesota could save huge amounts of energy, and renters across the state could save some money, if the state adopts incentives for landlords to replace old refrigerators.

By: John Myers, Duluth News Tribune

Minnesota could save huge amounts of energy, and renters across the state could save some money, if the state adopts incentives for landlords to replace old refrigerators.

That’s the finding of a report released Thursday by the public policy advocacy group Minnesota 2020.

There are nearly 538,000 rental units across the state — one out of every four homes is a rental — and all of them probably have a refrigerator. Of those, an estimated 148,000 fridges are 10 years old or older and gulping more than twice the electricity of new models.

While conserving energy isn’t as sexy as new solar or wind energy projects, Minnesota 2020 says conservation can dramatically reduce our use of fossil fuels, cut air pollution and save consumers big money. Replacing those 148,000 older refrigerators statewide would save 75 gigawatt hours of electricity per year, enough to power 6,500 homes — or a city the size of Chisholm — for one year. And it would save renters a combined $8 million per year on their electric bills.

The problem is that landlords usually buy the appliances for rental property while renters pay the electric bills. And that means there’s little incentive to buy new appliances because the landlord doesn’t recoup any of the energy savings.

“What we’ve found in talking to landlords and tenants is that landlords generally just don’t replace an appliance until it doesn’t work any more, and even then they may try to fix an old one,” said Will Nissen, Minnesota 2020 fellow and author of the report. “There’s no economic incentive for landlords to upgrade to energy efficient appliances.”

To solve what economists call that “split incentive” problem, Minnesota 2020 suggests:

  • Customized rebates to rental property owners to help defray the costs of the new appliances. That money could come from the funds utilities are required to set aside for energy-efficiency work or could come from the state in the form of a rental industry tax break.

  • No-interest loans that would allow renters to pay for new appliances on their electric bill a little bit every month. The added cost on the bill would be capped at 90 percent of the monthly energy savings, so the renter would see a stable or slightly lower bill, Nissen said. If the renter moved the cost would stay with the apartment until the loan was paid back.

  • A new state law that would require landlords to disclose the monthly energy cost for each apartment before the renter signs a lease. That would add “market incentives” to encourage landlords to consider energy efficiency to make their units more attractive — renters would seek out units with lower monthly costs.

    “People generally think location and price when they pick an apartment. They may not consider utility bills until they find out the bill is so high they have to move out,” Nissen said.

    Refrigerators are generally the single largest user of electricity for renters (heat and hot water generally are paid by the landlord.) Replacing an old refrigerator, especially those made in the 1990s or older, with a new Energy Star model can cut energy use for that one appliance by 70 percent. That would save each renter about $87 per year on their electric bill.

    Jodi Slick, the head of ecolibrium3, which runs the Duluth Energy Efficiency Program, said the city program offers rebates of up to 25 percent, or $10,000 per building, for apartment building owners to make energy efficiency upgrades — everything from new windows and heating to insulation, lights and appliances. The repairs have to have a 12-year or better payback.

    Minnesota Power spokeswoman Amy Rutledge agreed that reaching owners of rental housing has been a “challenging sector” to reach as the utility pushes energy efficiency as part of its state-mandated mission.

    “We are excited to see that this is being looked at more closely in the state of Minnesota and we’ll certainly take their (Minnesota 2020’s) recommendations under advisement for planning purposes for our programs,” Rutledge said, noting the Duluth-based utility already is working with Duluth’s Community Action Program on energy efficiency in low-income, multi-unit housing.

    A refrigerator rebate program has worked well for homeowners in the Northland. Minnesota Power has offered a $50 rebate for any refrigerator turned in that still runs. Since the “Refrigerator Roundup’’ began in 2009, Minnesota Power has collected 7,275 refrigerators and freezers. That’s enough energy saved to power 623 homes for a year.

    The rebate program runs through July 31, and Minnesota Power will come to your home to pick the unit up. Throw in an old window air conditioner and they will throw in another $25 rebate.

    Minnesota2020 is a progressive, Twin Cities-based think tank that focuses on state economic development, education, health-care, transportation and energy issues.

    For more information on the Duluth Energy Efficiency Program call ecolibrium3 at (218) 336-1038. For more information on Minnesota Power’s Refrigerator Roundup rebate, call (866) 552-6755.

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