Rebate rundown: Government handouts to consumers need careful structuring
Attempts to influence the market have mixed success.
Ah, the rebate – always great for the customer (unless it’s too little or too onerous) but can be a bit of a mixed blessing for retailers and manufacturers. That certainly seems to be the case with rebates for energy-efficient residential windows across Canada.
Before we examine rebate programs available in various provinces, let’s look at the big picture. While some believe these programs are offered by federal and provincial-territorial governments as an incentive to vote the party in power back in, governments generally claim they exist to help citizens save money on their heating bills and to reach broader policy targets for reducing greenhouse gas emissions. In February this year, the federal government held a stakeholder workshop called “Market Transformation for Residential Window Technologies in Canada” related to the Pan-Canadian Framework on Clean Growth and Climate Change. This meeting followed a related roadmapping R&D workshop in November 2017, where aspirational goals related to window cost and performance targets, R&D needs and more, were discussed. The goal is to move Canada’s codes and standards for new housing to Net Zero levels by 2030, and the fenestration component of that will mandate windows meeting a 0.80 U-factor – even for replacement windows. Obviously, this will increase the cost of windows significantly and Natural Resources Canada is looking at incentives to push the market to accept the investment.
It is uncertain what future rebate programs will come out of these discussions, but in terms of past and existing rebate programs, citizens of B.C. have had access to several in the recent past. In late 2007, a provincial sales tax exemption was offered within the Energy Star program and in February 2009, after the recession of the time was underway, three other programs kicked in: the federal Home Renovation Tax Credit (HRTC), the federal EcoEnergy Program and the LiveSmart Program from BC Hydro. In the mind of Cam Drew, president of ThermoProof Windows and Doors in Chemainus, B.C.,the small rebate involved in the PST exemption program only prompted customers who were getting windows replaced anyway to step up the quality of their order, but the triple whammy of programs in 2009 boosted window installations significantly.
Since then, there has been one program for windows in B.C. offered by BC Hydro called PowerSmart. However, Drew notes customers have to get two other items done besides windows, such as the installation of a heat pump, and that “the incentive is limited. It’s only for people doing major renovations, and not big enough to move the needle in terms of us doing more business.” BC Hydro declined to comment.
In Ontario, the first window rebate program offered was in the 1980s from Ontario Hydro: $5 per square foot for windows with low-E. “The downside, according to the people who ran the program, was that the quality of installation was not addressed,” notes Phil Lewin, sales and marketing manager at Gem Windows and Doors in Toronto.
The difficulty of implementing an effective rebate program was demonstrated in Ontario by GreenON. For 10 glorious months, from December 2017 through October of this year, it offered a large rebate of $500 for each Energy Star Most Efficient window installed by dealers making a qualifying list. However, complaints about GreenON abounded. Installers pointed out that invoicing and program submission requirements (age and type of existing windows, etc.) changed several times. A promised program logo never materialized. Webinar information contradicted other given information. The submission portal took four months to get up and running.
Finally, and perhaps most revealing of the problems with rebate programs, GreenON was abruptly cancelled in June by the newly elected PC government of Ontario. They had run on a platform of opposing carbon taxes of any kind, and GreenON was financed by revenues from Ontario’s cap-and-trade emissions-reduction program. GreenON has given homeowners and contractors until the end of October to complete outstanding work orders and until the end of November to apply for the rebate. Given the massive work backlog the program has generated, it seems virtually certain that many orders will not be delivered in time and receipt of those rebates put at risk.
Limited time versus long-term programs
Drew says the possible merits of limited time programs are discussed regularly in a lot of meetings he attends. He and his colleagues wonder if they “just move business over to a different year or whether they cause people to have work done that they would never have done with their home.” He adds that it’s always hard to say how much participation there will be in a limited program – it obviously depends on the level of incentive offered and the number of hoops participants have to go through. Drew does believe window makers want limited-time programs as they generally do bring in more profit, but that the HR challenges are tough. “We had to bring on new staff,” he says, referring to the triple offering in BC in 2009, “but then when the programs were over, business dropped by about 25 per cent. Of course at that point, we had to lay off staff, so it was a roller coaster. It’s not easy to bring on staff who realize the job may not be permanent.”
Many would rather see more permanent rebate programs. Lewin would like governments and utilities to find a simple way to provide ongoing encouragement of the purchase of great windows, well installed. Manitoba has offered one ongoing program since 2001, the Power Smart Residential Loan. Under this program, Manitoba Hydro offers loans of up to $7,500 at a low, cost-recovery interest rate (right now 4.8 per cent) for high-performance triple pane windows and/or other home energy-saving items provided by qualified suppliers. “It varies, but we have about 5,000 loans going every year,” notes Becky Radtke, Manitoba Hydro’s marketing specialist for the program. Radtke believes that this particular long-term arrangement is beneficial because both customers and contractors are familiar with it and therefore very comfortable. “The only comment we hear from contractors is that they’d like customers to be able to borrow more.”
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