Energy Efficiency
Opportunities Exist for Federal Agencies to Better Inform Household Consumers Gao ID: GAO-07-1162 September 26, 2007Household energy use accounts for nearly one-fourth of all energy consumed in the United States, amounting to more than $200 billion per year spent by consumers. Recent increases in energy prices have heightened consumers' interest in making their households more energy efficient. To this end, the federal government manages two key efforts--EnergyGuide and Energy Star--to inform consumers about the energy consumed by certain household products. EnergyGuide is a mandatory labeling program created under the Energy Policy and Conservation Act of 1975 (EPCA) and administered by the Federal Trade Commission (FTC) with assistance from the Department of Energy (DOE). It requires manufacturers to label and prominently display information about the energy consumption and annual energy costs of 11 categories of household products. In recent years, manufacturers have used adhesive backed labels adhered to appliances and so-called "hang tags" loosely attached to the interior or exterior of appliances. In its August 2007 revisions to the rule, FTC, among other things, prohibited the use of hang tags on the exterior of appliances, but continues to allow them on the inside. The law requires retailers to provide this information in catalogs offering products for sale. In 2000, FTC interpreted its authority over catalogs to encompass Web sites and required retailers to provide the same information on Web sites where consumers may purchase such products. The law prohibits retailers from removing labels placed by manufacturers or making them illegible. Also, EPCA requires DOE, in consultation with FTC, to study new product categories to determine whether they should be added to the EnergyGuide program and to report annually on the energy savings of the program. Energy Star is a voluntary labeling program created in response to the Clean Air Act amendments of 1990, and the Energy Policy Act of 1992 and jointly administered by the Environmental Protection Agency (EPA) and DOE. In general, it is designed to identify models for 26 categories of household products that, without sacrificing performance, are the most energy efficient (the top 25 percent). Manufacturers are permitted to apply the Energy Star logo to products that the manufacturers identify are qualified, based on EPA or DOE criteria. Standards for internal control in the federal government require federal agencies, including FTC, EPA, and DOE, to establish goals, measure performance, and report program costs and accomplishments in order to improve management and program effectiveness. In this context, Congress asked us to analyze the EnergyGuide and Energy Star programs to determine (1) how these programs have changed over time, (2) how federal agencies verify the accuracy of the energy consumption estimates for household products covered by these programs, (3) the actions federal agencies take to ensure that the EnergyGuide is available to consumers and that the Energy Star logo is not misused, and (4) how federal agencies measure the effectiveness and cost of these programs.
Overall, opportunities exist for the EnergyGuide program to improve how it provides information that could help consumers improve their households' energy efficiency and decrease energy consumption nationally. The EnergyGuide program has changed little over time, even though energy consumption patterns are changing substantially. Although FTC has pursued labeling for some products that are covered by law but are currently not subject to labeling, such as televisions, it does not have independent authority under EPCA to add some new products to the EnergyGuide program, such as computers and microwave ovens. FTC is not required to, and does not, independently verify energy consumption estimates provided by manufacturers. FTC staff told us they rely on manufacturers to verify competitors' energy consumption estimates and to report any problems to FTC. However, FTC only tracks some of the complaints it receives from manufacturers and therefore could not provide the exact number of complaints it receives about the EnergyGuide program. FTC does not know whether EnergyGuide is available to consumers because it has undertaken no significant efforts since 2001 to ensure EnergyGuide's availability to consumers in showrooms and on Web sites. FTC does not measure the overall effectiveness or costs of the EnergyGuide program, contrary to federal standards for internal controls, and DOE does not measure the energy savings of the program, as required by law. Overall, Energy Star has been generally successful in identifying and highlighting the most energy efficient products, but faces some challenges. Energy Star has regularly expanded to include new products and keep pace with a changing market. However, 6 of 26 categories of household products currently qualify for Energy Star based on factors other than the estimated total energy consumption. DOE and EPA test some products to verify their energy consumption estimates, but generally rely on manufacturers to verify competitors' efficiency estimates. EPA monitors stores, Web sites, and advertising to prevent misuse of the Energy Star label and follows up on problems. GAO inspections found few instances of the Energy Star mark being misused. DOE and EPA conduct efforts to measure the effectiveness of the Energy Star program which are useful but have limits. To measure effectiveness, DOE analyzes sales data to estimate energy savings, which were about $7 billion per year. Separately, EPA analyzes a consumer awareness survey of the Energy Star program. However, this survey does not assess how many additional energy-efficient products are purchased due to awareness of the Energy Star program.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-1162, Energy Efficiency: Opportunities Exist for Federal Agencies to Better Inform Household Consumers
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United States Government Accountability Office: GAO:
Report to the Chairman:
Committee on Energy and Natural Resources: U.S. Senate:
September 2007:
Energy Efficiency:
Opportunities Exist for Federal Agencies to Better Inform Household
Consumers:
GAO-07-1162:
Contents:
Letter:
Summary:
Concluding Observations:
Matter for Congressional Consideration:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Briefing to the Committee on Energy and Natural Resources,
U.S. Senate, June 13, 2007:
Appendix II: Scope and Methodology:
Appendix III: Comments from the Department of Energy:
Appendix IV: Comments from the Environmental Protection Agency:
Appendix V: Comments from the Federal Trade Commission:
GAO Comments:
Appendix VI: GAO Contact and Staff Acknowledgments:
Figure:
Figure 1: EnergyGuide Label and Energy Star Logo:
Abbreviations:
AHAM: Association of Home Appliance Manufacturers:
ASE: Alliance to Save Energy:
CEA: Consumer Electronics Association:
CEC: California Energy Commission:
CEE: Consortium for Energy Efficiency:
DOE: Department of Energy:
DVD: digital video disc:
EIA: Energy Information Administration:
EPA: Environmental Protection Agency:
EPCA Energy Policy and Conservation Act of 1975:
FTC: Federal Trade Commission:
GAO: Government Accountability Office:
NASEO: National Association of State Energy Officials:
NYSERDA: New York State Energy Research and Development Authority:
VCR: video cassette recorder:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 26, 2007:
The Honorable Jeff Bingaman:
Chairman:
Committee on Energy and Natural Resources:
United States Senate:
Dear Mr. Chairman:
Household energy use accounts for nearly one-fourth of all energy
consumed in the United States, amounting to more than $200 billion per
year spent by consumers. Recent increases in energy prices have
heightened consumers' interest in making their households more energy
efficient. To this end, the federal government manages two key efforts-
-EnergyGuide and Energy Star--to inform consumers about the energy
consumed by certain household products.
EnergyGuide is a mandatory labeling program created under the Energy
Policy and Conservation Act of 1975 (EPCA)[Footnote 1] and administered
by the Federal Trade Commission (FTC) with assistance from the
Department of Energy (DOE). It requires manufacturers to label and
prominently display information about the energy consumption and annual
energy costs of 11 categories of household products.[Footnote 2] In
recent years, manufacturers have used adhesive backed labels adhered to
appliances and so-called "hang tags" loosely attached to the interior
or exterior of appliances. In its August 2007 revisions to the rule,
FTC, among other things, prohibited the use of hang tags on the
exterior of appliances, but continues to allow them on the
inside.[Footnote 3] The law requires retailers to provide this
information in catalogs offering products for sale. In 2000, FTC
interpreted its authority over catalogs to encompass Web sites and
required retailers to provide the same information on Web sites where
consumers may purchase such products. The law prohibits retailers from
removing labels placed by manufacturers or making them illegible. Also,
EPCA requires DOE, in consultation with FTC, to study new product
categories to determine whether they should be added to the EnergyGuide
program and to report annually on the energy savings of the program.
Energy Star is a voluntary labeling program created in response to the
Clean Air Act amendments of 1990[Footnote 4] and the Energy Policy Act
of 1992[Footnote 5] and jointly administered by the Environmental
Protection Agency (EPA) and DOE. In general, it is designed to identify
models for 26 categories of household products that, without
sacrificing performance, are the most energy efficient (the top 25
percent).[Footnote 6] Manufacturers are permitted to apply the Energy
Star logo to products that the manufacturers identify are qualified,
based on EPA or DOE criteria.
Figure 1 shows examples of the EnergyGuide label and the Energy Star
logo that consumers see in retail stores and on Web sites.
Figure 1: EnergyGuide Label and Energy Star Logo:
[See PDF for image]
[End of figure]
Standards for internal control in the federal government require
federal agencies, including FTC, EPA, and DOE, to establish goals,
measure performance, and report program costs and accomplishments in
order to improve management and program effectiveness.[Footnote 7]
In this context, you asked us to analyze the EnergyGuide and Energy
Star programs to determine (1) how these programs have changed over
time, (2) how federal agencies verify the accuracy of the energy
consumption estimates for household products covered by these programs,
(3) the actions federal agencies take to ensure that the EnergyGuide is
available to consumers and that the Energy Star logo is not misused,
and (4) how federal agencies measure the effectiveness and cost of
these programs. We provided a briefing to your staff on the results of
our work in June 2007. This report summarizes and formally transmits
the information provided to your staff during that briefing. It
incorporates formal comments and technical comments provided by
agencies since the briefing.[Footnote 8] The attached slides provide
more details on our findings and suggested actions.
To perform our review, we interviewed agency officials and staff,
representatives from trade associations, major retailers,
manufacturers, and experts; and reviewed literature, authorizing
legislation and regulations,[Footnote 9] program materials, and program
accountability documents. In addition, we inspected about 4,000
individual appliances displayed for sale in 30 retail stores across 5
cities and inspected about 3,600 Web sites to evaluate compliance with
the EnergyGuide and Energy Star programs. We also examined Energy
Information Administration estimates and projections of household
energy consumption over time.
We performed our work from November 2006 through September 2007
according to generally accepted government auditing standards.
Summary:
EnergyGuide:
Overall, opportunities exist for the EnergyGuide program to improve how
it provides information that could help consumers improve their
households' energy efficiency and decrease energy consumption
nationally:
* The EnergyGuide program has changed little over time, even though
energy consumption patterns are changing substantially. For example,
televisions,[Footnote 10] computers, and other product categories--
which are expected to account for nearly half of household energy
consumption by the year 2020--do not currently require an EnergyGuide
label. Although FTC has pursued labeling for some products that are
covered by law but are currently not subject to labeling, such as
televisions, it does not have independent authority under EPCA to add
some new products to the EnergyGuide program, such as computers and
microwave ovens. FTC has added new categories only five times since the
program was first implemented in 1980, according to a program official,
and only when required by law. Although DOE, in consultation with FTC,
is required to study new products to determine if any products should
be added to EnergyGuide, DOE staff could not identify any instance of
such a study, and told us that they have not completed one for at least
10 years.
* FTC is not required to, and does not, independently verify energy
consumption estimates provided by manufacturers. FTC staff told us they
rely on manufacturers to verify competitors' energy consumption
estimates and to report any problems to FTC. However, FTC only tracks
some of the complaints it receives from manufacturers and therefore
could not provide the exact number of complaints it receives about the
EnergyGuide program. FTC staff told us it does not track complaints
about the EnergyGuide program because it receives only a few each year
and does not need a formal, systematic method for tracking these few or
their resolution. According to FTC staff, there was little evidence to
suspect a significant pattern of widespread misreporting of EnergyGuide
information because of the small number of complaints they had
received. In a related issue, energy efficiency experts and agency
officials told us that computer controls in modern appliances can
enable appliances to detect test conditions and temporarily reduce
energy use, making it difficult to ensure that tests accurately measure
energy consumption under normal operating conditions. According to one
manufacturer and a consumer group, another manufacturer may have used
computer controls to manipulate energy tests and to register lower-
than-normal energy consumption. DOE reviewed the matter and found that
the manufacturer had complied with the law, but DOE is considering
changing its rules to prevent manufacturers from manipulating energy
tests in the future. Without such changes, FTC could face increasing
difficulties in ensuring that EnergyGuide provides consumers with
accurate estimates of appliances' energy efficiency.
* FTC does not know whether EnergyGuide is available to consumers
because it has undertaken no significant efforts since 2001 to ensure
EnergyGuide's availability to consumers in showrooms and on Web sites.
GAO's inspections of major appliances found that EnergyGuide often is
unavailable or difficult to use when consumers are purchasing products.
GAO's inspections of appliances subject to EnergyGuide in retail
showrooms found that 26 percent of these appliances lacked an
EnergyGuide label, and another 24 percent of labels were no longer
affixed in a prominent and easily accessible location. For example,
many EnergyGuide labels were folded or crumpled, hidden by racks or
bins, or placed upside down or backward inside appliances--this was the
case for both adhesive backed and hang tags. Furthermore, we observed
some changes in the retail environment that may prevent the EnergyGuide
label from being easily accessible, such as the growing number of
warehouse retailers that sell appliances such as water heaters still in
the manufacturer's shipping boxes (with the EnergyGuide label not
visible) as opposed to displaying unboxed appliances in a showroom. In
addition, GAO examined about 3,600 products on Web sites of major
appliance retailers and found that about 12 percent of these products
lacked EnergyGuide information, and another 44 percent had links to
EnergyGuide information that were difficult to find and use. According
to FTC staff, although FTC has taken steps since 2001 to ensure that
EnergyGuide information is available to consumers, there have been no
enforcement actions for this program since 2001 because the agency has
limited resources and has given the EnergyGuide program a lower
priority than its other enforcement priorities. FTC staff told us they
have adequate authority to ensure the EnergyGuide is available on Web
sites; however, they told us they lack specific statutory authority to
ensure that retailers display the EnergyGuide in showrooms. According
to these staff, the current statute does not require retailers to
ensure that the EnergyGuide label is available to consumers in
showrooms; it only prohibits them from removing it. In addition, staff
told us enforcement actions are difficult because FTC must prove that
retailers removed the EnergyGuide labels.
* FTC does not measure the overall effectiveness or costs of the
EnergyGuide program, contrary to federal standards for internal
controls, and DOE does not measure the energy savings of the program,
as required by law. Although FTC staff told us that a recent survey
measured effectiveness by asking consumers whether EnergyGuide was
useful, FTC has not examined whether the program is achieving its goal
of improving energy efficiency. FTC staff told us they did not examine
the effectiveness and costs of the EnergyGuide program, and in
particular did not measure the effectiveness of the program in saving
energy because it would be difficult and would not be useful. DOE is
required by EPCA to annually estimate the energy savings of the
EnergyGuide program, but DOE staff were unable to provide us with any
recent annual estimate.
Energy Star:
Overall, Energy Star has been generally successful in identifying and
highlighting the most energy efficient products, but faces some
challenges:[Footnote 11]
* Energy Star has regularly expanded to include new products and keep
pace with a changing market. However, 6 of 26 categories of household
products currently qualify for Energy Star based on factors other than
the estimated total energy consumption. For example, some products--
including televisions, home audio products, DVD players, and stereos--
qualify for Energy Star based on how much energy these devices consume
when they are in standby mode, which may account for only a small
percentage of total energy consumption. In the case of one Energy Star-
qualified plasma television that we reviewed, standby power accounted
for less than 10 percent of the annual estimated total energy
consumption. However, the total energy consumed by the television
amounted to more than the total annual energy consumption of some
refrigerators. EPA officials told us televisions would qualify for
Energy Star based on total energy consumption starting in 2008, and
they are considering similar changes for some other product categories,
unless it is appropriate to continue using standby power. In addition,
for a few product categories, Energy Star no longer highlights only the
most energy efficient models. In these cases, Energy Star-qualified
products account for well over the program's general goal of
identifying the top 25 percent of products available in a particular
category. As a case in point, more than 70 percent of dishwashers sold
from 2004 to 2006 qualified for the Energy Star before new qualifying
criteria were implemented in 2007. According to one DOE official, this
occurred because it took longer than expected to revise its criteria to
identify only the most energy efficient models.
* DOE and EPA test some products to verify their energy consumption
estimates, but generally rely on manufacturers to verify competitors'
efficiency estimates. EPA and DOE officials told us that they did not
believe further verification testing is needed because manufacturers
would report discrepancies they find while testing competitors'
products. Again, experts and agency officials told us that the computer
controls in modern appliances make it difficult to accurately test
normal energy consumption. In a related issue, DOE officials reiterated
concerns expressed by some manufacturers that their competitors may
have used computer controls to manipulate energy tests in the United
States, and that this has been a widespread problem in another country.
In its comments, DOE reported that it is considering changing its rules
to prohibit manufacturers from manipulating energy tests in the future.
Without such changes, DOE could face increasing difficulties in
ensuring that Energy Star informs consumers about energy efficient
products.
* EPA monitors stores, Web sites, and advertising to prevent misuse of
the Energy Star label and follows up on problems. GAO inspections found
few instances of the Energy Star mark being misused.
* DOE and EPA conduct efforts to measure the effectiveness of the
Energy Star program which are useful but have limits. To measure
effectiveness, DOE analyzes sales data to estimate energy savings,
which were about $7 billion per year.[Footnote 12] Separately, EPA
analyzes a consumer awareness survey of the Energy Star program.
However, this survey does not assess how many additional energy-
efficient products are purchased due to awareness of the Energy Star
program. Agency officials recognized that this would be useful, but
told us developing more extensive analysis of the program's impact
would be difficult.
Concluding Observations:
EnergyGuide and Energy Star share the laudable goal of providing
information to help consumers reduce their household energy
consumption, thereby reducing energy consumption nationally. However,
there are opportunities to improve the programs' long-term
effectiveness that require the attention of Congress and the agencies.
The EnergyGuide program's familiar yellow label has aided consumers for
over 25 years, but the lack of timely additions of new product
categories has left consumers with little meaningful information about
the energy efficiency of some of the most common and most energy-
consuming household products. Moreover, because of changes in the
current retail environment such as the growth of warehouse retailers
and Web-based appliance sales, because statutory authority does not
specifically require enforcement in some instances, and because FTC
does not verify and enforce the display of the EnergyGuide label in
retail stores, the effectiveness of the EnergyGuide program as it is
currently implemented may be diminished. It is clear that consumers
making purchasing decisions can only benefit from the EnergyGuide when
it is available and easy to find and use. The August 2007 revisions to
the labeling rule may address one source of missing labels--missing
labels that were attached to the outside of the appliance--but do not
appear focused on addressing the other problems we found with adhesive
backed labels, hang tags initially attached on the inside, nor problems
we found on Web sites. Overall, FTC's position is that it lacks
resources and sufficient authority for more robust enforcement in
retail stores. However, there may be opportunities for FTC to enhance
enforcement within existing authority by coordinating its enforcement
activities with existing Energy Star enforcement activities to reduce
costs. In addition, FTC could improve the value of consumer and
manufacturer complaints as a monitoring tool if it tracked complaints
and their resolution. Moreover, without a meaningful assessment of the
effectiveness and costs of the EnergyGuide program, FTC and Congress
lack information that could help them empower consumers to improve
household energy efficiency.
In contrast, Energy Star has regularly expanded to keep pace with the
market and consumers generally equate the Energy Star logo with better
energy efficiency than comparable products. However, EPA and DOE's
efforts to raise consumers' awareness of the Energy Star program may be
undermined and consumers may be confused if program officials continue
to allow products to qualify for Energy Star based on factors other
than total energy consumption, such as energy used in standby mode,
which may account for only a small percentage of total energy
consumption for many devices. Moreover, both programs may face emerging
challenges as computerized controls become more common in appliances
and other products, making it more difficult to measure their true
energy consumption.
Matter for Congressional Consideration:
To ensure that consumers have consistent access to information about
the energy efficiency of household products, Congress may wish to
consider granting FTC with specific authority to require retailers to
prominently display the EnergyGuide in retail showrooms.
Recommendations for Executive Action:
To ensure that consumers have access to information about the energy
efficiency of household products, we recommend that the Chairman of the
Federal Trade Commission and the Secretary of Energy take the following
four actions:
* To ensure that consumers have access to information about the energy
efficiency of the types of household products that account for a
significant and growing portion of household energy consumption, such
as computers and televisions, we recommend that the Secretary of
Energy, in consultation with FTC, regularly review product categories
not currently covered to assess whether they should be included in the
EnergyGuide program.
* To ensure that the EnergyGuide program is effectively achieving its
goal of improving household energy efficiency by establishing goals,
measuring performance, and reporting program costs and accomplishments,
we recommend that the Chairman of the Federal Trade Commission, as
required under federal standards for internal control in the federal
government, regularly measure the cost and, to the extent practical,
the effectiveness of the EnergyGuide program. To assist FTC in
measuring effectiveness, we also recommend that the Secretary of Energy
measure the energy savings of the EnergyGuide program, as required by
EPCA.
* To ensure that consumers have consistent access to accurate
information about the energy efficiency of household products, we
recommend that the Chairman of the Federal Trade Commission monitor the
availability of the EnergyGuide label and, within existing authority,
enforce compliance through periodic inspections of retailers' showrooms
and Web sites and by routinely and systematically tracking complaints,
the issues they raise, and the manner in which these matters are
resolved.
* To ensure that EnergyGuide remains effective in a changing retail
market, we recommend that the Chairman of the Federal Trade Commission
clarify FTC's rules regarding the display of EnergyGuide information in
the current retail environment, such as for warehouse retailers and Web-
based product purchasing.
Agency Comments and Our Evaluation:
We provided a draft of our report to DOE, EPA, and FTC for review and
comment. We received written comments from all three agencies and they
are presented in appendices III, IV, and V respectively.
DOE said it strongly concurred with the statements and recommendations
regarding its responsibilities and historical actions for the
EnergyGuide and Energy Star programs. DOE also noted a series of steps
it is undertaking to address three specific areas of concern: updating
the EnergyGuide program, addressing the possible use of computer
controls to circumvent DOE test procedures, and updating Energy Star
qualifying criteria and test procedures.
EPA's comments clarified issues related to verifying manufacturers'
energy consumption estimates, updating Energy Star qualifying criteria,
and explaining why some Energy Star products may qualify based on
criteria other than total energy consumption. We incorporated these
comments as appropriate.
FTC noted in its comments that while the report contained helpful
observations and suggestions, the Commission said that the report's
conclusions were based on factual inaccuracies and outlined several
issues of concern, such as GAO's characterization of FTC's efforts to
measure costs and effectiveness and their efforts to enforce
compliance. As previously discussed, we disagree with FTC's
characterization of our report's conclusions and note that FTC did not
point out any material factual inaccuracies in their written comment
letter on our draft. FTC also provided technical changes which were
incorporated. FTC's written comment letter and our detailed responses
to issues raised by the Commission appear in appendix V. We continue to
believe our report presents a fair presentation of the facts and issues
associated with both programs and have not changed our recommendations.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 7 days
from the report date. At that time, we will send copies to the Chairman
of the Federal Trade Commission, the Secretary of Energy, and the
Administrator of the Environmental Protection Agency and other
interested parties. We will also make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or gaffiganm@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix VI.
Sincerely yours,
Signed by:
Mark Gaffigan:
Acting Director:
Natural Resources and Environment:
[End of section]
Appendix I: Briefing to the Committee on Energy and Natural Resources,
U.S. Senate, June 13, 2007:
Energy Efficiency: Opportunities Exist for Federal Agencies to Better
Inform Household Consumers:
Briefing to the Committee on Energy and Natural Resources:
U.S. Senate:
June 13, 2007:
Note: Slides updated to reflect technical comments provided by FTC in
August 2007.
Background:
Energy Efficiency of Household Products Is Important:
Household energy use accounts for nearly one-fourth of total U.S.
energy consumption, with over $200 billion per year spent.
Recent increases in energy prices have increased consumers‘ interest in
making their households more energy efficient.
According to experts, lack of information for consumers is a
significant barrier to improving household energy efficiency.
Two Key Federal Efforts to Inform Consumers about Household Energy
Efficiency:
* Mandatory labeling program estimates annual operating energy
consumption and cost for 11 categories of household products (figure
shows EnergyGuide label).
Implemented by:
- Federal Trade Commission (FTC), has lead;
- Department of Energy (DOE) provides support.
* Voluntary labeling program designed to identify most efficient
products for 26 categories of household products (figure shows Energy
Star logo).
Implemented by:
- Environmental Protection Agency (EPA);
- DOE.
EnergyGuide:
Established by the Energy Policy and Conservation Act of 1975:
* Goal is ’to provide for improved energy efficiency;“
* Allows consumers to compare estimated energy consumption and cost.
Mandatory labeling program:
* Requires manufacturers to test and label certain product categories
with estimated energy cost and consumption;
* Requires retailers not to remove or render illegible EnergyGuide
labels.
Includes 11 product categories:
* Heating and cooling (furnaces,* room air conditioners,* central air
conditioners and heat pumps*);
* Appliances (clothes washers,* dishwashers,* refrigerators,*
freezers*);
* Lighting (light bulbs* and fluorescent ballasts);
* Household water heaters and pool heaters.
* Some or all of category also included in Energy Star program.
Product Categories Covered and Not Covered by EnergyGuide:
Product categories allowed by law and currently in EnergyGuide program:
* Furnaces;
* Room air conditioners;
* Central air conditioners and heat pumps;
* Clothes washers;
* Dishwashers;
* Refrigerators;
* Freezers;
* Light bulbs;
* Fluorescent ballasts;
* Household water heaters;
* Pool heaters;
* Ceiling fans (2009).
Product categories allowed by law, but not in program [a]:
* Clothes dryers;
* Direct heaters;
* Kitchen ranges and ovens;
* Televisions;
* Wine refrigerators.
Examples of energy-using product categories not currently in program
[b]:
* Computers;
* Computer monitors;
* Printers;
* VCRs and DVD players;
* Television set-top boxes;
* Microwave ovens;
* Well-water pumps;
* Dehumidifiers;
* Audio systems.
Notes:
[a] FTC may exclude product categories if including them would not (1)
assist consumers, (2) be technically feasible, or (3) use a DOE test
procedure.
[b] FTC could include these categories in the program if (1) DOE
determined labeling would improve efficiency, (2) FTC determined
labeling would assist consumers and that labeling is technically
feasible, and (3) DOE established a test procedure.
Energy Star:
Jointly administered by EPA and DOE:
* Intended to identify the most energy-efficient products;
* According to EPA, identifies cost-effective products with no
sacrifice in performance;
* Agencies have targeted the top 25% of the models in the market.
Voluntary program, considered successful:
* Allows manufacturers of products meeting certain specifications to
use the Energy Star logo to promote products;
* Serves as focus of some federal, state, and local efficiency
promotions;
* Energy Star for household products estimated to save consumers about
$7 billion per year and costs about $25 million per year, according to
EPA and DOE;
* Energy Star label recognized by more than 25 other countries.
Includes 26 categories of household products:
* Appliances (clothes washers,* dehumidifiers, dishwashers,*
refrigerators and freezers,* room air cleaners);
* Heating and cooling (air source heat pumps,* boilers,* ceiling fans,
central air conditioners,* furnaces,* geothermal heat pumps,*
programmable thermostats, ventilating fans, room air conditioners*);
* Lighting (compact fluorescent light bulbs* and residential light
fixtures);
* Home electronics (televisions, DVD players, VCRs, TV combination
units, cordless phones, external power adapters, home audio, computers,
monitors, printers).
* Some or all of category also included in EnergyGuide program, which
will expand to include ceiling fans on January 1, 2009.
Objectives:
1. How have the EnergyGuide and Energy Star programs changed over
time?
2. How do federal agencies verify the accuracy of the energy
consumption estimates for household products in these programs?
3. What actions do federal agencies take to ensure that the EnergyGuide
is available to consumers and that the Energy Star label is not
misused?
4. How do federal agencies measure the effectiveness of these
programs?
Scope and Methodology:
Relied on Review of Key Documents, GAO Site Inspections, Data Analysis,
Interviews.
Scope focused on EnergyGuide and Energy Star:
* Energy-consuming products only (no insulation, windows, doors,
etc.).
Methodology:
* Reviewed literature, including authorizing legislation, program
materials, and accountability documents;
* Examined estimates and projections of household energy use and
product consumption;
* Interviewed agency officials and staff, industry and trade
association representatives, major retailers, manufacturers, and
experts;
* Using a nongeneralizable sample, GAO inspected about 4,000 appliances
in 30 retail stores in 5 cities and 3,600 appliances on retail Web
sites.
Work completed from November 2006 to September 2007 according to
generally accepted government auditing standards.
Results in Brief:
EnergyGuide May Not Be as Effective as It Could Be in Informing
Consumers about Household Energy Use:
EnergyGuide has rarely changed to include new product categories
comprising a growing share of household energy consumption.
FTC is not required to, and does not, independently verify
manufacturers‘ energy consumption estimates.
FTC does not know whether EnergyGuide is available to consumers:
* GAO inspections found EnergyGuide often not available or accessible
at retail Web sites and in retail stores;
* FTC does little to ensure the EnergyGuide is available for
consumers.
FTC and DOE do not measure the overall cost and effectiveness of the
EnergyGuide program.
Energy Star Has Been Generally Successful at Highlighting Energy-
Efficient Products:
Energy Star has expanded to include 26 household product categories,
but in some cases qualification for inclusion in the program is not
based on total energy consumption.
DOE and EPA test some products, but agencies generally rely on
manufacturers to verify competitors‘ efficiency estimates.
Energy Star generally used in compliance with rules; GAO found few
instances where the Energy Star was misused.
DOE and EPA conduct efforts to measure the effectiveness of the Energy
Star program which are useful but have limits.
Matter for Congressional Consideration Regarding EnergyGuide:
Congress may wish to consider granting FTC with specific authority to
require retailers to prominently display the EnergyGuide label in
retail showrooms.
Recommendations for Executive Action Regarding EnergyGuide:
1. DOE in consultation with FTC should regularly review product
categories not currently covered to determine whether to include in
EnergyGuide program.
2. FTC and DOE should measure the cost and, to the extent practical,
the effectiveness of the EnergyGuide program.
3. FTC should monitor the availability of the EnergyGuide label and
within its existing authority, enforce compliance with display rules
through periodic inspections of retailers‘ showrooms and Web sites and
by routinely tracking complaints, issues raised, and their resolution.
4. FTC should clarify its rules regarding the display of EnergyGuide
information in the current retail environment.
Note: FTC staff told us they believe that its rules were sufficiently
clarified in its August 2007 revision of the Appliance Labeling Rule.
Shared Observations on EnergyGuide and Energy Star:
1. Energy Star credibility may be damaged and consumers may be confused
unless products qualify for Energy Star based on total, normal, annual
energy consumption -– rather than standby power.
2. The use of devices, including computer controls in appliances and
other products, make it more difficult to measure true energy
consumption and may require additional oversight to ensure that energy
test results reflect normal energy consumption.
Analysis of the EnergyGuide Program:
(Image of EnergyGuide label is shown):
Note: This image represents the EnergyGuide label as it appeared at the
time of our briefing on June 13, 2007.
EnergyGuide:
EnergyGuide Has Rarely Changed to Include New Categories Comprising a
Growing Share of Household Energy Consumption.
Table: Estimated and Projected Share of Total Household Energy
Consumption Not Covered by Energy Guide, 2004-2020:
2004: 39%;
2005: 40%;
2010: 43%;
2015: 44%;
2020: 46%.
Source: GAO analysis of EIA, 2007 Annual Energy Outlook data.
[End of table]
Law requires DOE, in consultation with FTC, to review whether to add
new product categories to EnergyGuide.
New categories only rarely added:
* Since 1980, only 5 new categories have been added by law;
* DOE and FTC have not conducted any review of potential new categories
for inclusion in EnergyGuide for at least 10 years;
* FTC recognizes need to add televisions, but requires DOE action.
EnergyGuide does not cover key product categories expected to account
for nearly half of household energy consumption:
* Computers;
* Televisions and video displays;
* Others.
EnergyGuide:
Energy Cost and Consumption of Products for which EnergyGuide Is and Is
Not Required:
58-inch plasma television (photograph shown):
* $143/year estimated cost;
* 1,379 kWh/year;
* No EnergyGuide required.
25 cubic foot refrigerator(photograph shown);
* $52/year estimated cost;
* 579 kWh/year;
* EnergyGuide required.
EnergyGuide:
Comparison Between Products for which EnergyGuide Is and Is Not
Required:
According to FTC, the EnergyGuide program does not include beverage
refrigerators because current DOE test procedures are not appropriate
for use.
Standard refrigerator, about 6 ft. by 3 ft. (photograph shown):
* EnergyGuide required.
Wine refrigerator, about 6 ft. by 2 ft. (photograph shown):
* No EnergyGuide required.
EnergyGuide:
FTC Is Not Required to, and Does Not, Independently Verify
Manufacturers‘ Energy Consumption Estimates:
Law requires FTC to ensure that manufacturers disclose energy
efficiency information provided for use on the EnergyGuide, but does
not require FTC to verify manufacturers‘ estimates:
* FTC has sole legal authority to require manufacturers, at their
expense, to provide covered products for testing by FTC.
Manufacturers provide EnergyGuide energy consumption estimates.
FTC does not independently verify manufacturers‘ estimates:
* According to FTC staff, they lack expertise to verify manufacturers‘
estimates.
FTC relies on manufacturers to verify competitors‘ estimates and report
discrepancies, but does not track complaints:
* According to FTC staff, there is little evidence suggesting a
significant pattern of widespread misreporting of EnergyGuide
information.
EnergyGuide:
FTC Does Not Know Whether EnergyGuide Is Available to Consumers:
Law requires that energy information be available to consumers:
* Manufacturers are required to post information on appliances;
* Retailers may not remove or render illegible EnergyGuide labels.
GAO found substantial noncompliance in our inspections:
* Half of appliances inspected in retail showrooms had EnergyGuide
labels that were missing or difficult for consumers to access;
* In about 12% of the products on four retailers‘ Web sites that GAO
examined, EnergyGuide information was missing; another 44% were
difficult to find.
FTC has done little to verify compliance for displaying EnergyGuide:
* FTC staff told us that it lacks specific authority, and has limited
resources and multiple enforcement priorities;
*FTC staff told us that it has received few recorded complaints of
problems;
* Undertaken only two significant formal efforts in 25 years and none
since 2001;
* FTC has relied on manufacturers to ’self-police“ the industry and
report complaints regarding compliance issues, but does not track all
complaints.
EnergyGuide:
FTC Noted Rules on Display of EnergyGuide Are Difficult to Enforce:
FTC has limited resources and multiple priorities;
* About 1,100 staff;
* Responsible for numerous consumer protection statutes;
* FTC noted that its other priorities sometimes take precedence.
Few reports of complaints or problems;
* FTC staff told us that its limited database had only a few complaints
related to EnergyGuide;
* Acknowledged not all complaints are entered into database.
Retailers may not be responsible for EnergyGuide problems;
* In the case of showrooms, store guests (including children) can
remove guides from appliances;
* EnergyGuide regulation is limited regarding retailer
responsibilities;
- Retailers are prohibited from removing the EnergyGuide label or
making it illegible;
* According to FTC staff, law does not specifically allow them to hold
retailers responsible for displaying EnergyGuide;
* EnergyGuide can be difficult to replace.
FTC has committed limited resources to formal enforcement.
EnergyGuide:
More than Half of Appliances Inspected in Retail Stores Had
EnergyGuides that Were Difficult for Consumers to Use:
Figure: Pie chart: Accessibility of Energy Guide for Inspected
Appliances:
Visible: 50%;
Missing: 26%;
Difficult for consumer to use: 24%.
[End of figure]
GAO inspected:
* More than 4,000 household appliances in over 30 showrooms in 5 major
metropolitan areas;
* Reviewed Web sites of 4 major retailers.
GAO found:
* Some in stores and on Web prominent, easy to locate;
* For retail showrooms, half of EnergyGuide labels were missing or
difficult to use;
- Many missing (26%);
- Inside box for water heaters;
- Some potentially moved;
- Some poorly placed, hard to use;
* For retail Web sites, over half had missing or hard-to-find
EnergyGuide information;
- About 12% of information missing, another 44% were difficult to find;
- Web sales large and growing.
Note: GAO inspections used a nongeneralizable sample of stores and Web
sites.
GAO Inspections:
Regulations Define Requirements for EnergyGuide Placement:
FTC Appliance Labeling Rule (16 C.F.R. § 305.11):
* Placement. Manufacturers shall affix a label to the exterior surface
on covered products in such a position that it can easily be read while
standing in front of the product as it is displayed for sale. The label
should be generally located on the upper-right-front corner of the
product, except that for low-standing products or products with
configurations that make application in that location impractical, some
other prominent location may be used;
* Use of hang tags. Information prescribed above for labels may be
displayed in the form of a hang tag, which may be used in place of an
affixed label. If a hang tag is used, it shall be affixed in such a
position that it will be prominent to a consumer examining the product.
Note: This language represents the Appliance Labeling Rule as it was
stated during our briefing in June 2007. In its August 2007 final rule,
FTC clarified placement and use of adhesive labels and hang tags,
prohibiting the use of hang tags on the outside of appliances. FTC
noted in its comments that it believes that the elimination of hang
tags outside of appliances will address missing labels.
GAO Inspections:
Some Appliances with EnergyGuide Labels Affixed as Required:
Some EnergyGuide labels affixed and easily visible to consumers:
Two photographs of appliances in retail showrooms.
Source: GAO photo of appliances in retail showroom.
GAO Inspections:
Many EnergyGuide Labels Were Hard to Use, Water Heaters Were Inside
Boxes:
Many water heaters were sold in their boxes by warehouse-style
retailers, making it impossible to see the EnergyGuide attached to the
water heater inside (photograph of appliances in retail showroom).
Source: GAO photo of appliances in retail showroom.
GAO Inspections:
Many Labels Were Hard to Use, No Longer Affixed:
Many labels were crumpled, folded, or otherwise hard to use (photograph
of appliance in retail showroom).
Many labels were facing backward or upside down, and were in tubs,
racks, bins (photograph of appliance in retail showroom).
Source: GAO photo of appliance in retail showroom.
GAO Inspections:
Labels May Have Been Moved and Placed under the Lid:
This model appears as it would when the manufacturer packaged it –the
label is in upper right-hand corner and easily visible (photograph of
appliance in retail showroom).
This is the same model as it appears on the showroom floor –it appears
that the label has been removed and placed under the lid (photograph of
appliance in retail showroom).
Source: GAO photo of appliance in retail showroom.
GAO Inspections:
Some Retailers Photocopied Missing EnergyGuides:
Some retailers reprint EnergyGuide labels from the Web or other sources
(two photographs of appliance in retail showroom).
Source: GAO photo of appliance in retail showroom.
GAO Inspections:
EnergyGuide Information Easier to Find on Some Retailers‘ Web Sites:
Use of EnergyGuide graphic in prominent location next to Energy Star
symbol, and product, makes it easy to find EnergyGuide information on
this Web site (representation of website with EnergyGuide graphic
displayed).
Source: GAO representation of retailer Web site.
GAO Inspections:
EnergyGuide Information Harder to Find on about 40% of Inspected
Retailers‘ Web Sites:
(Representation of two websites):
Source: GAO representation of retailer Web site.
GAO Inspections:
EnergyGuide Information Missing from about 10% of Inspected Retailer
Web Sites:
(Representation of two websites):
Source: GAO representation of retailer Web site.
EnergyGuide:
FTC Does Not Measure the Overall Cost and Effectiveness of the
EnergyGuide Program:
Federal standards for internal controls require agencies to measure
programs‘ progress, costs, and effectiveness:
* 2005 law directed FTC to evaluate the effectiveness of the
EnergyGuide label, including consideration of alternate label designs;
* Standards for internal control in the federal government require FTC
to measure the cost and effectiveness of the EnergyGuide program;
* EPCA requires DOE to annually assess the progress and energy savings
of the EnergyGuide program.
FTC has undertaken only a limited effort to examine the effectiveness
of the EnergyGuide program;
* FTC staff reported that measuring effectiveness is quantitatively
difficult and not useful;
* FTC has not assessed whether EnergyGuide is achieving the goal of
improving energy efficiency as described in EPCA;
* FTC does not track expenditures or resources used by the program;
* FTC recently conducted consumer survey;
- Survey focused primarily on consumer recognition and understanding of
the EnergyGuide label and consideration of alternative label designs;
- FTC did not examine whether program improves energy efficiency.
EnergyGuide:
FTC Studied the Effectiveness of the EnergyGuide Label Design and
Proposed New Designs:
To examples of the new design are displayed.
* Based on a study of consumers, FTC proposed a new EnergyGuide label
displaying annual costs, and an alternative label that displays five-
year costs;
* FTC finalized its rule in August 2007, with the amendments effective
February 2008.
Note: At the time of our briefing on June 13, 2007, FTC had not
finalized its changes to the EnergyGuide label. FTC finalized its
changes in August 2007.
Matter for Congressional Consideration:
Congress May Wish to Consider Granting FTC Specific Authority to Ensure
that EnergyGuide Is Available to Consumers:
FTC may not have sufficient authority over retailers;
* Law requires manufacturers to affix, and retailers not to remove, the
EnergyGuide label;
* FTC staff said they lack statutory authority to pursue legal action
against retailers for missing EnergyGuide labels;
* FTC will not generally pursue enforcement action concerning missing
labels, because it often is very difficult to prove the retailer,
rather than a consumer, has removed the label;
* As a result, some consumers may lack access to information about
energy efficiency and may purchase less efficient household products
than they would otherwise have chosen.
Matter for Congressional Consideration:
* Congress may wish to provide FTC specific authority to require
retailers to prominently display EnergyGuide labels in retail
showrooms.
Recommendation:
DOE and FTC Should Regularly Review Product Categories to Determine
Whether to Include Them in EnergyGuide Program:
A growing share of household energy use is not covered by EnergyGuide:
* Law requires DOE, in consultation with FTC, to review whether new
product categories should be included in the EnergyGuide program;
* DOE and FTC have not conducted any review of potential new product
categories for inclusion in EnergyGuide for at least 10 years, and
could not tell us whether a review had ever been conducted;
* FTC has only added new product categories when required by law,
partly because it said that it lacks independent authority for some
products;
* As a result, the EnergyGuide program does not include some product
categories responsible for significant, growing household energy use
such as televisions and computers.
Recommendation:
DOE, in consultation with FTC, should regularly review products not
currently covered (e.g., televisions, computers) to assess whether they
should be included in the EnergyGuide program.
Recommendation:
FTC and DOE Should Measure the Cost and Effectiveness of the
EnergyGuide Program:
FTC and DOE do not measure the costs and effectiveness of the
EnergyGuide program;
* Federal standards for internal control requires that agencies,
including FTC and DOE, regularly assess how effective their programs
are at achieving their objectives;
* DOE is required to annually assess the progress and energy savings of
the EnergyGuide program;
* FTC never comprehensively assessed the costs and effectiveness of
EnergyGuide program in improving energy efficiency, and has undertaken
only a limited effort to examine the effectiveness of the EnergyGuide
program;
* FTC reported that tracking effectiveness of educational programs is
difficult;
* As a result, FTC and DOE do not know how much the program costs to
administer or how effective the program is in achieving its goals.
Recommendation:
FTC and DOE should regularly measure the cost, and to the extent
practical, the effectiveness of the EnergyGuide program.
Recommendation:
FTC Should Ensure that EnergyGuide Is Available to Consumers:
FTC has undertaken few efforts to enforce display of EnergyGuide;
* Law requires manufacturers to affix, and retailers not to remove, the
EnergyGuide label;
* GAO inspections found about half of EnergyGuide labels in retail
showrooms and on retail Web sites were missing or difficult to use;
* FTC has undertaken few efforts to ensure EnergyGuide is available to
consumers;
* As a result, some consumers may lack access to information about
energy efficiency and may purchase less efficient household products
than they would otherwise have chosen.
Recommendation:
To better ensure that consumers have consistent access to information
about the energy efficiency of household products, FTC should monitor
availability of EnergyGuide and enforce compliance through periodic
inspections and routine, systematic tracking of complaints, issues
raised, and their resolution.
Recommendation:
FTC Should Clarify EnergyGuide Rules to Respond to Changing Retail
Environment:
FTC has undertaken few efforts to clarify rules regarding the display
of EnergyGuide in response to changing retail environment:
* FTC requires retailers to display EnergyGuide information on Websites
and manufacturers to label appliances
* GAO inspections found Energy Guides missing or difficult to find on
more than half of appliances in retail stores and about 12% of Web
sites lacked EnergyGuide labels while another 44% were difficult to
find;
* In some cases, warehouse retailers keep products in packages where
EnergyGuide cannot be seen;
* As a result, some consumers may lack access to information about
energy efficiency and may purchase less efficient household products
than they would otherwise have chosen.
Recommendation:
To ensure that EnergyGuide remains effective in a changing retail
market, FTC should clarify its rules regarding the display of
EnergyGuide information in the changing retail environment, such as for
warehouse retailers and Web-based product purchasing.
Analysis of Energy Star Program:
Energy Star logo is displayed.
Energy Star:
Energy Star Expanded to Include 26 Categories, but Qualifies Some
Products on Factors other than Total Energy Consumption:
Energy Star has expanded in recent years;
* Initially applied to only office equipment (computers,
monitors,etc.);
* Has expanded to cover 26 household product categories, including many
covered by EnergyGuide;
* Energy Star has sought to lead by identifying and targeting areas for
potential energy savings (e.g. standby power for televisions, etc.).
Energy Star qualifications not solely based on total energy
consumption:
* Energy Star qualification based on standby power for 6 of 26 product
categories;
* Televisions (Energy Star awarded based on standby power until 2008).
Energy Star has recently moved to make changes:
* New qualifying criteria for televisions and computers;
* Faces challenges in developing standardized testing procedures.
Energy Star in a few cases does not highlight top 25% of models in
market;
* Dishwashers (over 70% qualified for Energy Star 2004-2006; updated
January 2007);
* Televisions (65% qualified for Energy Star in 2005; however, update
planned 2008).
Energy Star:
DOE and EPA Test Some Products, but Agencies Generally Rely on
Manufacturers to Verify Competitors‘ Efficiency Estimates:
DOE and EPA are required to ’preserve the integrity of the Energy Star
label.“
DOE and EPA generally rely on manufacturers to verify the accuracy of
competitors‘ energy consumption estimates for products they manage:
* EPA and DOE officials told us further verification testing was not
needed because manufacturers would report discrepancies in
competitors‘products.
DOE and EPA have limited testing/verification efforts:
* DOE and EPA test products not covered by EnergyGuide (e.g., EPA tests
dehumidifiers, DOE tests compact fluorescent bulbs);
* EPA does limited testing for some televisions and other
electronics”but only in low power, standby, or sleep mode (current
standard);
* Verification for products covered by EnergyGuide relies on other
agencies‘ enforcement, however other agencies do not test products.
Energy Star:
Energy Star Generally Used in Compliance with Rules;GAO Found Few
Instances Where Energy Star Label Was Misused:
Mislabeling is a violation of Energy Star‘s trademark, which can be
enforced through lawsuits.
GAO inspections found few noteworthy instances where retailers had
misapplied Energy Star labels:
* Two clothes washers removed from list of qualified Energy Star
appliances were found labeled as Energy Star in showrooms;
* One dryer labeled with Energy Star (dryers are not eligible);
* One manufacturer‘s sticker closely resembles Energy Star label.
Energy Star program monitors stores and Web sites:
* EPA monitors the Web, advertising, and retail stores, and uses
’secret shoppers“ to ensure that products are not mislabeled.
GAO Inspections:
Two Clothes Washers Removed from List of Qualified Energy Star
Appliances Were Found Labeled as Energy Star in Showrooms.
Two photographs of appliances in retail showroom are displayed.
Source: GAO photo of appliance in retail showroom.
GAO Inspections:
One Dryer Labeled with Energy Star Even Though Dryers Are Not
Eligible.
One photograph of appliance in retail showroom is displayed.
Source: GAO photo of appliance in retail showroom.
GAO Inspections:
One Manufacturer‘s Sticker Closely Resembles Energy Star Label:
According to DOE officials, a manufacturer‘s label closely resembles
the Energy Star label.
DOE officials were not aware of this label until we notified them.
One photograph of appliance in retail showroom is displayed.
Source: GAO photo of appliance in retail showroom.
Energy Star:
DOE and EPA Conduct Efforts to Measure the Effectiveness of the Energy
Star Program which Are Useful but Have Limits:
Federal standards for internal controls require agencies, including
FTC, DOE, and EPA to measure programs‘ progress, costs, and
effectiveness.
DOE and EPA conduct efforts to measure the effectiveness of Energy Star
which are useful but have limits:
* EPA and DOE compare projected sales with actual sales data to
estimate benefits of Energy Star;
* EPA uses survey of consumers regarding their awareness of the Energy
Star label;
* Survey does not assess how many additional energy-efficient products
are purchased due to awareness of Energy Star.
Agency officials told us developing more extensive analysis of the
impact of the program would be difficult.
Observation on Energy Star:
Energy Star Credibility May Be Damaged and Consumers Confused Unless
Criteria Is Based on Total Energy Consumption:
Energy Star is supposed to identify the most efficient products.
Energy Star sometimes awarded for specific technology use not related
to total energy consumption:
* Televisions;
- Energy Star awarded based on standby power alone until 2008;
- Large plasma televisions advertise Energy Star, despite large energy
consumption;
* Dishwashers;
- Nearly all qualified for Energy Star in 2006; criteria updated
January 2007.
Program flexibility allows agencies to determine Energy Star criteria,
including focus on standby power consumption rather than total energy
consumption.
As a result, consumers buying Energy Star-rated products may end up
consuming more energy, and this revelation could confuse consumers on
the purpose of the program, damaging its credibility.
Energy Star:
Energy Star Sometimes Awarded for Specific Technology Use Not Related
to Total Energy Consumption:
Bar graph: Comparison of Standby and Active Energy Used by one 58-inch
Energy Star Plasma Screen Television (kWh/year):
Standby power: approximately 100 kWh/year;
active power: approximately 1300 kWh/year.
Source: GAO analysis of data on energy consumption of Panasonic
TH58PX600U provided by CNET, assumes 8 hours/day active power estimated
by Nielsen.
[End of graph]
Energy Star for televisions:
* Awarded based on standby power alone until 2008;
* Standby power consumption accounts for only a small share of total
energy consumption.
Manufacturers advertise Energy Star, despite large energy consumption:
* Large plasma televisions can use more electricity than a
refrigerator.
Shared Observation on EnergyGuide and Energy Star:
EnergyGuide label and Energy Star logo are displayed.
Shared Observation on EnergyGuide and Energy Star:
Changes in Product Design Raises Potential for Efficiency Testing
Manipulation and May Increase Importance of Verification:
DOE required to develop standardized test procedures that reflect
expected usage patterns that will be used by manufacturers to estimate
energy consumption.
Modern appliances can include sophisticated computer controls that can
increase the performance and energy efficiency of appliances, but that
also can detect known testing conditions.
Problems have emerged:
* Regulators in another country have found energy consumption estimates
in test conditions varied significantly from actual usage;
* Refrigerator manufacturer may have used computer controls to register
low consumption;
* DOE found that manufacturer complied with law, but is considering
rulemaking to address the issue.
As a result, energy consumption for some products using sophisticated
controls may not reflect actual usage under all conditions.
Shared Observation on EnergyGuide and Energy Star:
Manufacturer May Have Used Computer Controls to Register Low
Consumption; Complied with Law; DOE Considering Changes to Rules:
A photograph of a refrigerator is displayed.
One refrigerator registered low consumption for EnergyGuide and was
awarded an Energy Star based on DOE test procedures.
A competing manufacturer reported that the refrigerator‘s computer
controls were set to reduce energy consumption during the test
procedure, thereby circumventing the test.
DOE found that the manufacturer had complied with the law.
Energy consumption under test conditions may not reflect actual
usage”actual energy consumption could be about 20% higher.
DOE considering ’anticircumvention“ rulemaking for refrigeration, no
timetable established.
[End of section]
Appendix II: Scope and Methodology:
To determine the extent to which EnergyGuide and Energy Star programs
for household products have changed over time, we reviewed authorizing
legislation[Footnote 13] and regulations, including the Federal Trade
Commission's (FTC) Appliance Labeling Rule[Footnote 14] and other
program materials documenting processes, guidance, and actions that
agencies have taken to implement these programs. We also interviewed
key federal agency officials and staff at the Department of Energy
(DOE), Environmental Protection Agency (EPA) and FTC. In addition, we
interviewed representatives of industry and trade associations,
including the Association of Home Appliance Manufacturers (AHAM) and
the Consumer Electronics Association (CEA); major manufacturers of
household products and major retailers of household products and
consumer electronics; energy efficiency experts identified on the basis
of referral by key agency officials, staff, and other experts,
including experts at a national laboratory; efficiency advocates,
including the Consortium for Energy Efficiency (CEE) and the Alliance
to Save Energy (ASE); consumer advocates, including Consumers Union;
and the National Association of State Energy Officials (NASEO) and
state energy offices in locations with significant outreach efforts,
including the California Energy Commission (CEC) and the New York State
Energy Research and Development Authority (NYSERDA). Further, we
performed quantitative analysis of the Energy Information
Administration's (EIA) Annual Energy Outlook 2007 of residential energy
consumption projections to evaluate the share of total household energy
consumption not covered by the EnergyGuide over time. EIA's consumption
projections are not statements of what will happen but of what might
happen, given the assumptions and methodologies used by EIA. As such,
EIA's projected data reflect known technological and demographic trends
and current laws and regulations, and generally do not reflect
potential impacts of pending or proposed legislation, regulations, and
standards, or of unknown technologies. The projected data presented in
this report reflect projected energy consumption for the scenario EIA
considers to be the most likely; other scenarios reflected similar
results. In the past, EIA projections of energy consumption have been
relatively close to realized outcomes; however, it cannot be predicted
how the underlying factors of EIA's model will change in relation to
one another or other currently unknown factors. We assessed the
reliability of EIA projected data by performing manual testing of the
data, reviewing related documentation, and interviewing Census
officials regarding the uses of the data and the data's internal
controls. We found the data to be sufficiently reliable for the purpose
of our analysis.
To determine how federal agencies verify the accuracy of energy
consumption estimates in the EnergyGuide and Energy Star programs, we
reviewed legislative and regulatory requirements for developing energy
consumption estimates and agency procedures including DOE's test
procedure for measuring energy consumption. We identified federal
agencies' efforts to verify energy consumption estimates by reviewing
agency documentation[Footnote 15] and interviewing key federal agency
officials and staff at DOE, EPA, and FTC. We also interviewed major
manufacturers of household products about their role in providing
estimates and their efforts to verify competitors' estimates of energy
consumption. We identified efforts taken by other agencies and
organizations to test appliances for energy consumption by interviewing
individuals identified on the basis of referral by key agency officials
and experts, including experts at a national laboratory, Consumers
Union, CEC, and NYSERDA. Finally, we evaluated the extent to which
circumvention of rules for developing energy consumption estimates has
been detected in the United States and abroad by interviewing experts
and reviewing the literature.
To identify the actions DOE, EPA, and FTC take to ensure the
EnergyGuide label is available to consumers and the Energy Star label
is not misused, we reviewed legislative and regulatory requirements. We
also reviewed program documentation on enforcement activities and
interviewed key FTC staff about efforts taken to enforce compliance
with the EnergyGuide program rules as well as DOE and EPA officials
about efforts taken to ensure that the Energy Star label is not
misused. We also examined the August 2007 revision of the Appliance
Labeling Rule. In addition, we interviewed representatives of industry
and trade associations, including AHAM and CEA, as well as major
manufacturers of household products and major retailers of household
products and consumer electronics. We interviewed energy efficiency
experts identified on the basis of referral by key agency officials,
staff, and other experts, including experts at a national laboratory;
efficiency advocates, including CEE and ASE; consumer advocates,
including Consumers Union; and NASEO and state energy offices in
locations with significant outreach efforts, including CEC and NYSERDA.
To evaluate the extent of compliance with agency rules and guidance for
displaying the EnergyGuide label on products, we visited five major
metropolitan areas selected to increase geographic diversity and
minimize travel costs. In these 5 metropolitan areas we conducted site
visits of 30 retail stores, including national, regional, and local
retailers of major appliances or consumer electronics. Within these
stores, we inspected all major appliances available for sale in five
categories of major household products required to carry the
EnergyGuide label: refrigerators, freezers, clothes washers,
dishwashers, and water heaters. Our inspections resulted in a
nongeneralizable sample of 3,987 major household appliances on display
for sale in showrooms.[Footnote 16] We determined whether labels for
different products were difficult to use based on details about their
placement and condition including whether labels were difficult to read
because they were crumpled or folded, damaged, placed next to labels
with differing data, or obscured by bins, shelves, racks or
advertising, or other documents; placed upside down or backward inside
appliances; or pasted to inside walls or surfaces that were difficult
to access (such as clothes washer drums or the back or lower interior
walls of dishwashers or refrigerators). Our results were generally
similar for a variety of different metropolitan areas. In addition, to
evaluate compliance with EnergyGuide display rules for products sold
electronically on the Web, we inspected a nongeneralizable sample of
3,595 major household appliances for sale in 5 product categories
(refrigerators, freezers, clothes washers, dishwashers, and water
heaters) on the Web sites of 4 major retailers of household appliances
and consumer electronics. To evaluate the extent of compliance with
agency rules and guidance for displaying the Energy Star label, we
examined a nongeneralizable sample of 220 Energy Star products during
our site visits,[Footnote 17] such as major household appliances and
consumer electronics. To determine the misuse of the Energy Star label,
we compared the sample of products sold to Energy Star's 2007 list of
qualified products (last updated April 2007).
To determine how federal agencies measure the effectiveness and cost of
the EnergyGuide and Energy Star programs, GAO reviewed legislative and
regulatory requirements for measuring program effectiveness in the
Standards for Internal Controls in the Federal Government[Footnote 18]
and EPCA. We reviewed DOE, EPA, and FTC program documentation, annual
reports, and performance reports to better understand how these federal
agencies measure the effectiveness of these programs. In addition, we
interviewed federal officials and staff at DOE, EPA, and FTC about
efforts they have taken to measure the performance of the Energy Star
and EnergyGuide programs, including efforts to measure cost and
effectiveness. We interviewed representatives of industry and trade
associations, including AHAM and CEA, as well as representatives from
major manufacturers and retailers of appliances and consumer
electronics and experts to better understand their perspective on the
effectiveness of federal efforts. We interviewed energy efficiency
experts identified on the basis of referral by key agency officials,
staff, and other experts, including experts at national laboratories;
efficiency advocates, including CEE and ASE; consumer advocates,
including Consumers Union; and NASEO and state energy offices in
locations with significant outreach efforts, including CEC and NYSERDA.
We conducted our work from November 2006 through September 2007
according to generally accepted government auditing standards.
[End of section]
Appendix III: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
September 10, 2007:
Mr. Mark Gaffigan:
Acting Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Gaffigan:
Thank you for the opportunity to work with the U.S. Government
Accountability Office (GAO) on the EnergyGuide and Energy Star programs
and to review the draft report titled, "Opportunities Exist for Federal
Agencies to Better Inform Household Consumers." The Department of
Energy was pleased to assist in providing your office with input and
explanations on what we do to provide the American household consumer
with accurate and up-to-date information on this important topic.
The Department, after reviewing the draft report, strongly concurs with
the statements and recommendations regarding the Department's
responsibilities and historical actions taken to meet these
responsibilities. The report does an excellent job of documenting the
potential and in some cases, real deficiencies in the implementation of
the EnergyGuide and the Energy Star program. We take these deficiencies
very seriously. Over the past year we have taken several steps to
identify and rectify these deficiencies. The GAO report has performed a
great public service by explicating several areas of cone= to the
Department.
In particular, we are taking immediate steps to address three areas of
concern for the Department and identified in the GAO report: Review and
updating of the EnergyGuide; modernization and protection of test
procedures; and modernization and protection of Energy Star.
Review and updating of the EnergyGuide
The draft report recommends that DOE take the following actions:
[I)] To ensure that consumers have access to information about the
energy efficiency of the types of household products that account for a
significant and growing portion of household energy consumption, such
as computers and televisions, we recommend that the Secretary of
Energy, in consultation with the Federal Trade Commission, regularly
review product categories not currently covered to assess whether they
should be included in the Energy Guide program.
[2)] To assist FTC in measuring effectiveness, we also recommend that
the Secretary of Energy measure the energy savings of the Energy Guide
program, as required by EPCA.
The Department has begun work to determine whether any new products
should be added to the program. As required by section 322(b)(2)(C) of
the Energy Policy and Conservation Act, as amended (EPCA), the first
step in the process is to conduct a rulemaking to define "household."
The next step is to determine whether any products meet the "average
annual per-household use" threshold in section 322(b)(1) of EPCA. DOE
will then confer with the Federal Trade Commission (FTC) to review
product categories for possible inclusion in the EnergyGuide labeling
program. At the same time, the Department will meet with FTC to develop
plans for analyzing and evaluating the effectiveness of the program,
including an assessment of energy savings accrued due to energy
conservation standards, the EnergyGuide label and the Energy Star
label.
Modernization and protection of test procedures
The Department shares the GAO concern with respect to reports of
certain products which include control features that manipulate tests
to provide lower energy consumption than normal use. This is of great
concern to DOE and, upon review, the Department has found that in
certain instances, the test procedures allowed room for use of advanced
technologies that were not contemplated when the test procedures were
developed.
In order to reduce the potential for such manipulation in the future,
we are undertaking the following actions:
* DOE is preparing a rulemaking to adopt provisions to limit
manufacturer circumvention of DOE test procedures. These rules would,
for example, specifically require manufacturers to have all energy
consuming features in the "on" mode when testing the product per the
DOE test procedure. This rulemaking has been referred to as the "anti-
circumvention" rulemaking and is currently being reviewed by the
Department's Office of General Counsel.
* The Department has recently revised the criteria for qualifying
refrigerators for the Energy Star program to ensure manufacturers test
their products with all energy consuming features in the "on" mode when
testing the product per the DOE test procedure.
Modernization and protection of Energy Star:
For some products, the Energy Star program has been too dependent upon
the DOE appliance test procedures and that DOE has not been able to
update the test procedures in a timely fashion. Because technology has
evolved faster than DOE can conduct rulemakings, the Department has
found it can update its Energy Star criteria in a more timely fashion
and is doing so. For example, we recently modified the refrigerator
Energy Star criteria to deal with the new control features that would
turn off certain energy consuming features in the test mode.
Manufacturers have been introducing new products into the marketplace
in response to a number of drivers, including energy standards, Energy
Star, rising energy prices, energy supply limits, advances in
technology and a general increase in energy awareness. These new
products must be addressed in an expeditious fashion and while DOE will
continue the link between Energy Star and the DOE test procedures, we
find that adding additional requirements to the DOE test procedures,
through the Energy Star criteria, provides us with a mechanism to keep
the test procedures relevant.
Finally, the report mentioned perceived slowness of the Department in
revising its qualification requirements for dishwashers, thus allowing
an abnormally large market share of dishwashers to be labeled as Energy
Star product. This reflects the success of Energy Star program and the
inter-dependency of Energy Star and the DOE test procedure activities.
Manufacturers adopted a new technology that was able to modify the wash
cycle, depending on how dirty the dishes are. Once the DOE test
procedure was amended, the Energy Star criteria were revised.
Thank you for the opportunity to comment on the draft report. We look
forward to working with GAO on improving the opportunities for the
Federal Government to assist the American consumer in the purchase of
energy efficient products. If you have further questions, please
contact me at (202) 586-5523.
Sincerely,
Signed by:
David E. Rodgers
Deputy Assistant Secretary for Energy Efficiency:
Office of Technology Development:
Energy Efficiency and Renewable Energy:
[End of section]
Appendix IV: Comments from the Environmental Protection Agency:
United States Environmental Protection Agency:
Office Of Air And Radiation:
Washington, D.C. 20460
Mr. John B. Stephenson:
Director:
Natural Resources and Environment:
U. S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Stephenson:
The US Environmental Protection Agency appreciates the opportunity to
provide the following clarifications on GAO's draft report entitled:
Energy Efficiency: Opportunities Exist for Federal Agencies to Better
Inform Household Consumers.
Verification Testing (first complete bullet, page 6):
While the competitive nature of product manufacturers in the United
States is an advantage in terms of compliance monitoring, EPA does not
rely exclusively on manufacturers to report discrepancies in
competitors' products. EPA expressly reserves the right to test any
qualified product. The Agency instituted a verification testing program
in 2002 to serve as a deterrent to non-compliance by raising the
prospect that a manufacturer's products could be tested. This testing
program has been operated as a screening tool with the presumption that
testing would be expanded if systemic issues were revealed. In
addition, EPA leverages a number of well-established, credible testing
programs, including a verification testing program for residential
lighting funded in part by regional energy efficiency programs -- the
Program for the Evaluation and Analysis of Residential Lighting
(PEARL). Through PEARL, we have been notified about and addressed a
number of fixture models that failed to meet Energy Star performance
specifications. In addition, the third-party certification programs run
by various trade associations, although voluntary, are generally
comprehensive and broadly participated in. For example, all but one
manufacturer of gas furnaces for the US market participates in the Gas
Appliance Manufacturers Association's (GAMA's) certification program
which has an established test cycle that tests all participating
manufacturers' products within a three year period. Our reliance on
these programs to ensure proper reporting of product performance is
consistent with the federal government's reliance on them to ensure the
credibility of the federal efficiency standards program.
Energy Star Product Market Shares (top of page 6):
The Energy Star product labeling program was designed to ensure that
key consumer preferences are met – economic savings, product
performance and the reward of protecting the environment. In order to
consistently deliver on these expectations, the Energy Star program has
six established principles that guide decisions in terms of whether and
at what level to establish an Energy Star specification and when to
revise it.
1) Significant energy savings can be realized on a national basis
2) Product performance can be maintained or enhanced with increased
energy efficiency.
3) Purchasers will recover their investment in increased energy
efficiency within a reasonable time.
4) Energy efficiency can be achieved with several technology options,
at least one of which is non-proprietary.
5) Product energy consumption and energy performance can be measured
and verified with testing.
6) Labeling would effectively differentiate products and be visible for
purchasers.
Each time an Energy Star efficiency level is established, whether for
the first time or as part of a revision, these principles are balanced
to ensure that the specified level will deliver significant aggregate
energy savings while differentiating products that are cost-effective
to the consumer and do not compromise functionality or performance. In
order to effectively differentiate products, the specified efficiency
level must allow for a reasonable, nationally available selection of
products from a range of manufacturers. In many circumstances, setting
an Energy Star efficiency level so that the top 25% of models in terms
of efficiency can meet it, offers the desired amount of selection and
availability while also promising significant energy savings, cost-
effective options and no compromise in performance.
The Energy Star product labeling program delivers energy savings and
greenhouse gas reductions by facilitating the purchase of more
efficient product alternatives. Accordingly, an increase in qualified
product market share after an Energy Star specification goes into
effect is an important measure of program success. Further, the value
of the program is not diminished when there is ultimately broad
availability of qualified product in the market place. No matter what
the market share of Energy Star qualified products, a consumer who
purchases a labeled product gets a product that will contribute to a
cleaner environment and. save them money without sacrifice in
performance.
At the same time, when Energy Star qualified products represent a high
percentage of the market for a given product category, it suggests
there may be an opportunity for additional savings. In general, once
market share for a given product category exceeds 50%, that product
category is identified for ongoing evaluation in terms of a possible
revision. Whether and when a specification revision goes forward is
determined by an assessment of market conditions against the key
principles.
Specifications Not Solely Based on Total Energy Consumption (bottom of
page 5):
EPA initially established Energy Star performance specifications based
on stand-by power for a number of products (such as TVs) because, at
the time, usage patterns were such that overall energy use could be
dramatically reduced through reductions in stand-by. As technologies
and usage patterns change, EPA is moving forward to update
specifications to better address overall efficiency through total
energy consumption. However, for some product categories, such as audio
equipment, addressing overall efficiency will continue to be
effectively addressed through a stand-by specification.
Once again, thank you for the opportunity to review the draft report
and provide comments.
Sincerely,
Signed by:
Robert J. Meyers:
Principal Deputy Assistant Administrator:
[End of section]
Appendix V: Comments from the Federal Trade Commission:
Note: GAO comments supplementing those in the report text appear at the
end of this appendix.
Federal Trade Commission:
The Chairman:
Washington, D.C. 20580:
September 10, 2007:
Mark Gaffigan:
Acting Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
Washington, D.C. 20548:
Dear Mr. Gaffigan:
Thank you for the opportunity to comment on a draft of your report
titled "Energy Efficiency: Opportunities Exist for Federal Agencies to
Better Inform Household Consumers" (Report). We appreciate GAO staffs
work in examining the Federal Trade Commission's implementation of the
EnergyGuide labeling program. We understand that the agencies' staffs
worked cooperatively throughout the Report's preparation and that the
FTC staff provided extensive informal comments on the draft Report,
some of which were incorporated. While GAO's Report contains helpful
observations and suggestions, some of the Report's conclusions are
based on factual inaccuracies. Below, we provide background on the
Commission's EnergyGuide labeling program and then address the Report's
principal conclusions.
I. Background on the FTC's EnergyGuide Labeling Program:
As directed by the Energy Policy and Conservation Act (EPCA), the
Commission issued the Appliance Labeling Rule (16 C.F.R. Part 305) in
1979. The Rule directs manufacturers to disclose energy information
about major household appliances identified as covered products under
EPCA. The EnergyGuide label serves two important purposes. First, the
operating cost and energy consumption information on the label allows
consumers to compare competing models. Second, the label provides
useful information to consumers who are seeking to buy high-efficiency
products that reduce energy use and thus help the environment. The
combination of the FTC EnergyGuide label and the Energy Star program,
run by the Department of Energy (DOE) and the Environmental Protection
Agency (EPA), provides a robust system for making energy information
available to consumers. The FTC label provides detailed operating cost
and energy information about all covered products regardless of energy
efficiency, while Energy Star provides a government endorsement
designed to identify and promote high efficiency products.
Over the years, we have amended the Rule and made improvements to the
EnergyGuide program, taken informal and formal actions to ensure
compliance, provided regular guidance to industry members, distributed
consumer education materials, posted national appliance energy data on
the Internet, and coordinated our efforts with other federal agencies.
In addition, the Commission recently completed a two-year rulemaking to
examine the effectiveness of the EnergyGuide labeling program. After
several rounds of public comment, a public workshop, and a significant
consumer research study, the Commission announced amendments to the
Rule that include, among other things, a new label design that should
significantly enhance the utility of the EnergyGuide program.
Despite this ongoing work, we recognize that challenges remain. As
discussed below, the availability of the label on products in retail
stores remains an issue of concern. We will continue to work with
manufacturers and retailers to ensure that the label is available and
visible to shoppers. Moreover, we recently simplified the required
Internet disclosures and will monitor these disclosures to ensure that
consumers are provided the information they need in a clear and
conspicuous manner. Finally, we will continue our efforts to implement
the Rule and address changing marketplace conditions in a way that is
consistent with our authority under EPCA.
II. GAO's Report:
We address some of the conclusions of GAO's Report below.
A. Availability of EnergyGuide Labels:
GAO Comment: "FTC does not know whether the Energy Guide is available
to consumers because FTC has undertaken no significant efforts since
2001 to ensure that the Energy Guide is available to consumers in
showrooms and on Web sites."
FTC Response: We share GAO's concern about the availability of the
label in showrooms and on the Internet.[Footnote 23] As discussed
below, we have focused on retail availability of the label in the past
and explored label placement improvements in our recent rulemaking.
The maintenance of labels on appliances in showrooms is a difficult
issue, but one that the agency has addressed. EPCA prohibits retailers
from removing labels but contains no provision requiring them to
affirmatively maintain labels on products. Because it is difficult to
prove that missing labels in showrooms are the result of a retailer's
violation instead of removal by a consumer, this issue raises law
enforcement challenges. Nevertheless, in 2001, the FTC staff announced
inspections of over 144,000 appliances in 144 showrooms. As a result of
those inspections, FTC staff sent letters to 70 retailers informing
them of their responsibilities. At the same time, the staff also
announced that it sent similar letters to Internet sellers.
Although we have not conducted similar on-site inspections since 2001,
we have taken steps to ensure that EnergyGuide information is available
to consumers. In 2003, the FTC began posting energy data for covered
appliances on its website. See [hyperlink,
http://www.ftc.gov/appliancedata]. The site provides a list of each
type of covered appliance by brand, as well as by energy efficiency.
This ensures that energy data is available to consumers online in one
location (See comment 1).
In 2005, the Commission initiated its rulemaking to examine the
effectiveness of the EnergyGuide labeling program pursuant to the
Energy Policy Act of 2005, and in the process, explored ways to improve
the requirements for the placement of EnergyGuide labels on covered
products. In August 2007, the Commission announced its final Rule
amendments which, among other things, prohibit the label's placement on
hang tags attached to the outside of appliances. We adopted this change
to reduce the number of labels that become dislodged from products in
showrooms. The new amendments also simplify the disclosure requirements
for website retailers and encourage website sellers to post a copy of
the EnergyGuide label itself to help consumers with their purchases.
Now that the Commission has completed its review of, and amendments to,
the Rule, we will continue to enforce the Rule and to address the
availability of the label for consumers in showrooms and on websites.
Finally, the evidence demonstrates that the EnergyGuide label has been
successful in meeting consumers' energy information needs. The
Commission's consumer research, conducted as part of its recent
rulemaking, found that over 85% of recent appliance purchasers who
visited a retail showroom recalled seeing a label with energy
characteristics. Of those respondents, 59% scored the usefulness of the
label at a seven or higher on a scale of zero to ten. 72 Fed. Reg.
6836, 6841 (Feb. 13, 2007).[Footnote 24] While we recognize that the
availability of labels in showrooms warrants further attention, we do
not believe such results would have been achieved if problems with the
availability were as serious as the GAO suggests (See comment 2).
B. Effectiveness of the EnergyGuide Program:
GAO Comment: "FTC does not measure the overall effectiveness or costs
of the EnergyGuide program ..."
FTC Response: The Commission has considered the effectiveness of the
current label in assisting consumers in their purchasing decisions and
improving energy efficiency as part its recently completed rulemaking.
In addition, the FTC routinely examines the costs of the program as
part of its obligations under the Paperwork Reduction Act (See comment
3).
The FTC's recent rulemaking on the EnergyGuide label examined the
effectiveness of the label in aiding consumers in their purchases and
improving energy efficiency in two ways. First, the Commission sought
comments on the benefits of the EnergyGuide program. The results
demonstrated a consensus among industry, consumer advocates, and energy
efficiency groups that the current program is useful. (72 Fed. Reg. at
6840 (Feb. 13, 2007)).
Second, the FTC conducted consumer research to evaluate alternative
label designs, and as part of this project, we explored consumers'
views about the current label's effectiveness. The research suggests
that consumers are willing to pay more for higher efficiency models
when given the information on the EnergyGuide label, Additionally, as
discussed above, study participants recognized the label and found it
useful. The consumer research also explored additional effectiveness
measures. For example, we examined how well various label designs allow
consumers to identify and rank models of different energy efficiency;
and the impact of the label on consumer comprehension of the Energy
Star program. Based on this research and commenters' suggestions, we
established a new label that should increase the program's
effectiveness.
GAO's Report appears to urge the FTC to derive a quantitative measure
of energy savings from the placement of EnergyGuide labels on
appliances. A study of the label's impact on energy consumption would
involve a comparison of the appliances purchased by consumers, and
their use of those appliances, with and without the availability of
labels. Because the label initially appeared nearly thirty years ago,
and is required on all covered models, it is doubtful that a reliable
baseline of comparison could be generated for such a study. Even if
such a baseline could be established, a host of variables would impact
any effort to derive a quantitative gauge of the label's effects. Such
factors include, but are not limited to: (1) non-energy related factors
considered by consumers, such as size, features, costs, color,
performance, and quality; (2) the impact of DOE conservation standards
on products offered in the market; (3) the uncertain relationship
between label comprehension and actual buying behavior; (4) the impact
of the Energy Star program on consumer decisions;[Footnote 25] and (5)
the actual use of products by consumers.[Footnote 26]
In light of all of these variables, we expect that any attempt to
derive a quantitative measure of energy savings would yield highly
speculative conclusions. [Footnote 27] Accordingly, we have sought to
examine the label's effectiveness in other ways, including by asking
consumers about the label's effectiveness as part of our consumer
research project and through the rulemaking process. We believe that
our analysis of the label's effectiveness has been useful, appropriate,
and cost efficient, leading to the Commission's recent improvements to
the EnergyGuide program (See comment 3).
C. Labels for New Products:
GAO Comment: "The Energy Guide program has changed little aver time,
even though energy conservation patterns are changing substantially.
For example, televisions, computers, and other product categories -
which are expected to account for nearly half of household energy
consumption by the year 2020 - do not currently require an Energy Guide
label."
FTC Response: The FTC has no authority under EPCA to add new consumer
products, such as computers, to the EnergyGuide program. [Footnote 28]
Only Congress and DOE (pursuant to 42 U.S.C. § 6294(a)(19)) have this
authority. For products that are covered by the law but currently not
subject to labeling (such as televisions), the Commission has pursued
labeling. For example, the Commission sought comment on the need for
labels on televisions as part of our recent rulemaking. As discussed in
our Federal Register notice (72 Fed. Reg. 6836 (Feb. 13, 2007)), energy
information on television labels must reflect DOE test procedure
results. The current DOE test procedure is inapplicable to modern
televisions. Therefore, until DOE updates its test procedure, the FTC
cannot require labeling for televisions (See comment 4).
D. Complaints and Enforcement:
GAO Comment; "FTC officials told us they rely on manufacturers to
verify competitors energy consumption estimates and to report any
problems to FTC. However, FTC only tracks some of the complaints it
receives from manufacturers and therefore could not provide the exact
number of complaints it receives about the Energy Guide program."
FTC Response: We wish to clarify the way in which the FTC staff handles
complaints and addresses enforcement matters under the Appliance
Labeling Rule. The data manufacturers must display on EnergyGuide
labels is the same data they must provide to DOE under the testing and
certification requirements of that agency's energy conservation
standards program. The FTC has expertise in labeling and advertising
law, but we do not have our own testing facilities nor any technical
expertise to evaluate appliance energy data (See comment 5).
In evaluating industry compliance, however, the FTC staff does not rely
solely on competitor testing. In the past, the staff has used testing
information and expert analysis from other agencies, such as DOE and
the National Institute of Standards and Testing, in addressing
compliance concerns under the Rule, The FTC staff also considers
complaints raised by other organizations and consumers. In addition, we
view competitors as an important source of complaints. The required,
standardized DOE test procedures allow manufacturers to verify their
competitors' claims. Competitors who discover problems can provide this
information to both DOE and the FTC. We see this as a positive aspect
of the statutory framework Congress has developed under EPCA.
The FTC collects and maintains the complaints it receives on the Rule.
Our staff s informal analysis conducted earlier this year showed that
the FTC received fewer than a dozen complaints related to the Appliance
Labeling Rule over the previous twelve months[Footnote 29](See comment
6).
Despite the limited volume of complaints, the staff examines
significant compliance issues as they arise and, where appropriate,
takes measures to bring companies into compliance. Considering the wide
array of consumer issues we address and the relatively small number of
compliance issues that arise under the EnergyGuide program, we believe
that the FTC's approach to enforcement in this area is appropriate.
E. Computer Controls on Appliances:
GAO Comment: "In addition, energy efficiency experts and agency
officials told us that the computer controls in modern appliances can
enable appliances to detect test conditions ... making it difficult to
ensure that tests accurately measure energy consumption under normal
operating conditions."
FTC Response: By discussing this test procedure circumvention issue in
a paragraph related to FTC enforcement, the Report incorrectly implies
that this is an FTC enforcement problem. Under EPCA, manufacturers of
most covered products must use applicable DOE test procedures to
measure the energy use of their products. Judging and modifying the
adequacy of DOE test procedures is not within the FTC's purview. If DOE
determines that a manufacturer is complying with the government-
required test procedure, the FTC has little basis to challenge the
legality of that manufacturer's practice. As GAO's Report indicates,
DOE is considering changes to its rules to prevent manufacturers from
manipulating energy tests (See comment 7).
The Commission appreciates the opportunity to review and comment on
GAO's Report.
By direction of the Commission.
Signed by:
Deborah Platt Majoras:
Chairman:
The following are GAO's specific comments on the Federal Trade
Commission's (FTC) letter dated September 10, 2007.
GAO Comments:
1. Although placement of information on the Web site may be helpful, it
is not a sufficient step on its own to ensure that consumers have
access to energy efficiency information in retail stores and on retail
Web sites where consumers purchase equipment covered by the
EnergyGuide. Neither the law nor the program's rules allow
manufacturers and retailers to substitute placement of energy data on
FTC's Web site for placement of labels on equipment or on retailer Web
sites. In addition, even if such alternative placement was allowed, it
is not clear how most consumers would know to go to FTC's Web site when
shopping for covered equipment. We continue to believe that FTC should
inspect retail stores to ensure that EnergyGuide labels are available
to consumers.
2. Although FTC has conducted a survey of consumers as part of its
recent rulemaking, we do not believe that the consumer survey
demonstrates the EnergyGuide is available to consumers. FTC stated that
85 percent of consumers answered that they recalled seeing a label with
energy characteristics and of those respondents, 59 percent found it
useful and FTC presented this evidence that EnergyGuide labels are
available. We disagree that the FTC survey is convincing in
demonstrating this point. In contrast to our study, which was based on
direct inspection of many appliances in multiple locations, the FTC
survey relied on consumers to accurately recall--and to accurately
report--whether or not they saw a label on an appliance for as long as
two years prior to the date of the survey. We did not attempt to assess
the reliability of FTC's survey; however, other results from the FTC
survey raise questions about the accuracy of some respondents' memories
and the usefulness of the survey as a tool to reliably assess the
availability of EnergyGuide labels. For example, 41 percent of the
respondents who reported seeing a label could not recall that the label
was yellow with black letters, which raises doubts about the accuracy
of some respondents' memories and the usefulness of the survey to
support FTC's position.[Footnote 26] Given the limitations with FTC's
survey, we agree with FTC's statement that the availability of labels
in showrooms warrants further attention. As such, we continue to
believe that FTC should monitor the availability of the EnergyGuide
label and, within existing authority, enforce compliance through
periodic inspections of retail showrooms and Web sites.
3. Regarding the effectiveness of the EnergyGuide program, FTC states
that it routinely measures the costs of the EnergyGuide program as part
of its obligations under the Paperwork Reduction Act, and qualitatively
measured the program's effectiveness during its February 2007
rulemaking. During the course of our audit work, FTC staff was unable
to provide to us information describing the costs and effectiveness of
the program in recent years and expressed a variety of concerns about
doing so. The Paperwork Reduction Act costs FTC now cites, but still
has not provided to GAO in sufficient detail for us to review them, may
or may not fully cover the costs of administering the program. Also, we
disagree with FTC's statement that FTC measured effectiveness in its
consumer survey and that measuring energy savings would be "highly
speculative." As noted in our response to comment 2, we have concerns
about FTC's reliance on its 2007 consumer study and comments it took
during its recent rulemaking to measure the effectiveness of the
EnergyGuide program, and believe it would be better to develop an
estimate of the program's actual energy savings. We recognize that
measuring program results and effectiveness generally involves some
estimation; Standards for Internal Control in the Federal Government
point out that internal controls only need to provide reasonable, not
absolute, assurance that goals and objectives are being met.[Footnote
27] Moreover, the 2006 survey is not an adequate measure of
effectiveness because it is not done regularly. In this regard, we
continue to believe that FTC should regularly report the costs and
accomplishments of the program, and it appears, as DOE noted in its
comments, that DOE plans to meet with FTC to help it do so.
4. As noted in our report, we believe FTC has a shared responsibility,
with DOE, for adding new products to the EnergyGuide program. As
suggested in our recommendations, and noted in DOE's comments, we
believe that FTC should work with DOE to collaboratively evaluate and
determine whether additional products should be included in the
EnergyGuide program. We continue to believe that FTC should work with
DOE to add new products to the EnergyGuide program to keep the program
relevant with changes in consumer purchasing patterns.
5. While FTC is not required to verify energy consumption estimates,
the Energy Policy and Conservation Act (EPCA) clearly contemplated that
such testing may be desirable or required. In this regard, the law
specifically provides FTC with the sole legal power to require
manufacturers, at their expense, to provide FTC with appliances for
testing and verification.[Footnote 28] We recognize that such testing
could be difficult given FTC's current lack of expertise to evaluate
appliance energy data. However, FTC could augment its own expertise
with that of others, such as DOE, the National Institutes of Science
and Technology, and others FTC identified in its comments. As such, we
believe that this presents another opportunity for FTC and DOE to
collaborate for the benefit of consumers. Therefore, we continue to
believe that our characterization is appropriate.
6. During the course of our audit, FTC staff told us that they
collected complaints regarding the EnergyGuide program. However, when
we asked to examine these complaints, FTC did not provide us either
with records of these complaints or information on how the issues were
resolved, nor evidence that these issues were resolved. FTC also
informed us that individual staff members received some complaints that
they did not track, and that these complaints were resolved informally.
We continue to believe that FTC should use a routine, systematic method
of tracking complaints that it receives from manufacturers and others
and the manner in which the issues raised in these complaints are
resolved in order to improve effectiveness; however, based on FTC's
comments, we clarified the language of our recommendation to better
reflect the need for systematic tracking of complaints, the issues
raised in these complaints, and their resolution.
7. We did not intend for our report to imply that this issue was solely
the responsibility of FTC. Rather, because it could become more
important in the future, we believed it was important to raise this
issue to FTC, DOE, EPA, and the Congress. As DOE notes in its comments,
DOE is considering revisions to its testing procedures to limit
manufacturers' circumvention of DOE test procedures. As DOE completes
these revisions, FTC enforcement will be needed because EPCA requires
FTC to enforce the accuracy of EnergyGuide labels.[Footnote 29] In
response to this comment, we clarified the language in our report to
better reflect our intent.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Mark Gaffigan, (202) 512-3841, gaffiganm@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, key contributors to this report
included Dan Haas and Jon Ludwigson (Assistant Directors), Lee Carroll,
Kristen Massey, Alison O'Neill, Frank Rusco, Rebecca Shea, and Barbara
Timmerman. Important assistance was also provided by Nicolas Alexander,
Jeffrey Barron, Mark Braza, Casey Brown, Dan Egan, Amy Higgins, Randy
Jones, Jennifer Leone, Stuart Ryba, and Bruce Skud.
[End of section]
Footnotes:
[1] Pub. L. No. 94-163 (1975).
[2] EPCA currently provides for 16 product categories, but allows FTC
the discretion not to include the categories if including them would
not (1) assist consumers, (2) be technically feasible, or (3) use a DOE
test procedure. The EnergyGuide program currently includes 11 product
categories: furnaces, room air conditioners, central air conditioners,
heat pumps, clothes washers, dishwashers, refrigerators, freezers,
light bulbs and fluorescent ballasts, household water heaters, and pool
heaters.
[3] In the Energy Policy Act of 2005 (Pub. L. No. 109-58 § 137),
Congress amended EPCA to require FTC to initiate a rulemaking to
consider (1) the effectiveness of the EnergyGuide program and (2)
changes to the label's format. FTC conducted a study that primarily
focused on alternative EnergyGuide label designs, revised the format of
the label, and finalized its revisions to the program's implementing
regulation on August 29, 2007 (16 C.F.R. § 305).
[4] Pub. L. No. 101-549 (1990).
[5] Pub. L. No. 102-486 (1992).
[6] For the Energy Star program, we examined the 26 household product
categories out of about 50 categories of commercial and household
Energy Star products. Household products include clothes washers,
dishwashers, refrigerators and freezers, dehumidifiers, room air
cleaners, air source heat pumps, boilers, ventilating fans, ceiling
fans, room air conditioners, central air conditioners, furnaces,
geothermal heat pumps, programmable thermostats, compact fluorescent
light bulbs, residential light fixtures, televisions, digital video
disc (DVD) players, video cassette recorders (VCRs), television
combination units, cordless phones, external power adapters, home audio
products, computers, monitors, and printers. Our review included
neither commercial Energy Star products, such as traffic lights, exit
signs, copiers, and electrical transformers, nor Energy Star products
that do not directly consume energy, such as insulation, windows, and
doors.
[7] GAO, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[8] The briefing slides and draft report were updated to reflect the
final amendments to the Appliance Labeling Rule (16 C.F.R. § 305) that
FTC issued in August 2007.
[9] Specifically, we reviewed FTC's Appliance Labeling Rule and DOE's
regulations for energy test procedures (10 C.F.R. § 430 Subpart B).
[10] Some televisions may use an amount of electricity comparable to
refrigerators, one of the most energy-intensive product categories.
[11] The EPA Inspector General recently described similar challenges in
a report reviewing EPA's implementation of the Energy Star program. The
report provided specific recommendations for strengthening the
management controls that protect the integrity of the label for the
Energy Star areas managed by EPA. See Environmental Protection Agency,
Office of Inspector General, Energy Star Program Can Strengthen
Controls Protecting the Integrity of the Label (Washington, D.C., Aug.
1, 2007).
[12] EPA reported that in 2006, the entire Energy Star program,
including products in the commercial, industrial, and residential
sectors, saved consumers a total of about $14 billion in energy costs
in 2006 and cost about $60 million. Looking only at products commonly
used in households, such as appliances, computers, and consumer
electronics, EPA and DOE officials estimate program savings of about $7
billion for 2006 with program costs of about $25 million.
[13] Energy Policy Conservation Act (EPCA), Pub. L. No. 94-163 (1975);
Energy Policy Act of 2005, Pub. L. No. 109-58 (2005).
[14] 16 C.F.R. § 305.
[15] We also reviewed a recently issued report by the EPA Inspector
General reviewing EPA's implementation of the Energy Star program. See
Environmental Protection Agency, Energy Star Program Can Strengthen
Controls Protecting the Integrity of the Label (Washington, D.C., Aug.
2, 2007).
[16] The results of the nongeneralizable sample are not intended to
statistically estimate the number of labeled products in compliance for
all products across the United States.
[17] In some cases, we inspected products bearing both the EnergyGuide
and the Energy Star labels.
[18] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
[19] GAO's study of appliances on showroom floors stated that some
labels were missing or damaged. We do not have the details of GAO's
study, and therefore, we cannot provide specific comments on its
findings.
[20] These numbers should be viewed in light of the fact that
presumably, for some percentage of consumers, energy efficiency is not
a high priority.
[21] GAO's Report indicates that EPA and DOE have generated such
measures. EPA officials examine consumer awareness of the Energy Star
program, much as we have done with the EnergyGuide label. EPA and DOE
officials also provided GAO with general estimates of the Energy Star
program's energy savings that appear to be based on sales data,
According to the GAO Report, however, EPA officials recognize that more
extensive analysis of the program's impact would be "difficult." We
agree.
[22] For example, if a consumer purchases a new dishwasher that uses
significantly less energy per load but, hypothetically, must be run
twice to clean dishes thoroughly, then the more "energy efficient"
product may, in fact, lead to higher energy use.
[23] We note that EPCA does not specifically identify energy savings as
a factor for the FTC to consider in determining whether or not to
require energy labels on covered products. For most covered products,
EPCA (42 U.S.C. § 6294(a)(1)) directs the FTC to require product
labeling unless the Commission finds that labeling is not
"technologically or economically feasible." For some products, the
statute also allows the FTC to consider whether labeling would "assist
consumers in making purchasing decisions." (42 U.S.C. § 6294(a)(2)(A)).
[24] Section 324(e) of EPCA, 42 U.S.C. § 6294(e), requires DOE "in
consultation with the" Commission to "study consumer products for which
labeling rules under this section have not been proposed...." GAO's
Report implies that the Commission has joint responsibility for such a
task instead of the advisory role the statute's plain language assigns
to the FTC. If Congress had intended FTC to have such joint
responsibility, however, we expect it would have stated so clearly.
See, e.g., section 615 of the Fair Credit Reporting Act which states
"The Federal banking agencies, the National Credit Union
Administration, and the Commission shall jointly ... establish and
maintain guidelines ..." (15 U.S.C. § 168 Im(e)).
[25] We note that the FTC does not resolve individual consumer
complaints but, instead, uses such complaints to identify patterns of
law violations that may warrant attention.
[26] Harris Interactive, FTC Energy Label Research Study, a special
report prepared for the Federal Trade Commission, January 2007, p. 7.
[hpyerlink,
http://www.ftc.gov/os/2007/01/R511994EnergyLabelingEffectivenessFRNConsR
esBkgrdInfo.pdf].
[27] GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999), p.6.
[28] Pub. L. No. 94-163 § 326(b)(3)
[29] Pub. L. No. 94-163 § 333(a)
[End of section]
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