New Incentives For Being Green

In wake of a new energy bill, appliance makers push more-efficient products.
By: CHERYL LU-LIEN TAN: The Wall Street Journal Online
Appliance makers are gearing up to push new energy-efficient clothes washers and refrigerators in the wake of the energy bill passed last week that offers tax credits to homeowners who upgrade to electricity-saving appliances.

Manufacturers from Whirlpool Corp. to General Electric Co. are rolling out a new generation of products with the latest energy-efficient technology designed to run refrigerator engines more efficiently and shorten washing and drying cycles for dishes and clothes. While some versions of these products have been available before, the companies hope the tax credits and the publicity will provide a new opening for them to market energy-saving products.

KitchenAid's dishwashers can sense how dirty the dishes are.

In air conditioning, industry giant Carrier Corp. says it has invested $250 million in developing new heat exchangers -- a major component in air conditioners -- that use less energy and are about 20% smaller and 30% lighter than current energy-saving versions. Carrier's energy-efficient models are almost double the size of its regular central air-conditioning units. The company speculates this model's bulk may have been a deterrent for homeowners. The new air conditioners are expected to hit the market in the first quarter of 2006.

Even high-end appliance makers, who largely have ignored that energy-efficiency category, are getting in on the action. Viking Range Corp. is starting to ship a $3,800 to $5,100 stainless-steel freezer -- its first energy-efficient one -- which will land in stores this month. It also is developing energy-saving dishwashers and refrigerators for its lineup next year.

Manufacturers are hoping the new tax credits, coupled with the promise of energy-bill savings, will spur more sales at a time when the industry is expecting a slowdown in a few major categories. For example, unit shipments of combination refrigerator/freezers are expected to go up less than 1% this year after growth rates of 2.8% to 5.8% in each of the past three years, according to the Association of Home Appliance Manufacturers.

The new bill could prompt homeowners to upgrade to energy-saving appliances. If you replace an appliance with an energy-efficient version, you can reduce your taxes by 10% of the amount you spent (though only up to a limit).

To get an Energy Star label from the Department of Energy, an appliance has to use less energy than minimum efficiency standards for its category; for instance, refrigerators have to use at least 15% less energy than the standard, and dishwashers have to be at least 25% more energy-efficient than the standard. Consumers should look for a blue and white Energy Star sticker on an appliance, or, to seek a more comprehensive list, go to www.energystar.gov. In addition to home appliances, the department also gives Energy Star ratings to office equipment and electronics.

Last year about 25% of all clothes washers on the market were Energy Star-rated, up from 1% in 1997, according to the Department of Energy. In refrigerators, the figure last year was 33%, up from none in 1997. The biggest jump has occurred in dishwashers -- 86% of dishwashers on the market last year had the Energy Star label, up from 6% in 1997.

Viking Range Corp.'s first Energy Star freezer.

The prices of these energy-saving appliances can be a deterrent. Doug Kelly, director of appliance merchandising for P.C. Richard & Son, which has 49 stores in New York and New Jersey, says energy-efficient clothes washers sold at his stores generally range in price from $600 to $1,300, while the average price of regular washers falls between $249 and $449. Even so, Mr. Kelly says, customers have been purchasing the more expensive units because they expect to save money over the lifespan of the appliance, which he says is about 15 years on average.

One challenge for consumers is to determine whether the markup for "energy efficiency" is worth it. The Department of Energy estimates that an Energy Star-rated clothes washer costs $110 less per year to run than a model made before 1994. In other categories, though, the saving per year is $10 or less.

Here is a sampling of some technologies that are being used to create energy-efficient appliances:

Dishwashers. Many have sensors that test the level of dirt in the water to determine whether a wash cycle can be shortened. GE Profile has a new SmartDispense dishwasher, retailing for $1,029 to $1,429, with a "CleanSensor" technology that periodically measures the water temperature and the level of dirt in the water so the cycle can be adjusted.

GE Profile's Harmony Clothes Care system

KitchenAid has new $499 to $1,499 dishwashers with an "Optical Water Indicator" that checks the water three times in the first six minutes to determine how long the cycle should be, ranging from 25 to 95 minutes. While it is difficult to estimate the energy savings from these particular models, the Department of Energy estimates that if a consumer replaces a dishwasher manufactured before 1994 with an Energy Star version, the saving will be at least $10 a year.

Clothes washers. Front-loading washers often are more energy-efficient because they use less water and also tend to extract more water from clothes, enabling the homeowner to use a shorter drying cycle. BSH Home Appliances Corp.'s Bosch brand has $899 to $1,399 front-loading washers with an "Auto Load Adjust" sensor that continually adjusts water level, wash time and energy used. LG Electronics Co. has front-loading washers for $799 to $1,199 that are designed to circulate water in the base of the drum during the cycle, using less water, electricity and detergent.

Refrigerators and Freezers. Some new ones have compressors that run at different speeds and go into high, energy-guzzling speeds only when necessary. (Many refrigerators and freezers have compressors that run at just one speed.) The saving on Energy Star versions runs up to $7 a year, the Department of Energy says.

Whirlpool has a new $2,199 side-by-side refrigerator with a "Fast-Fill" dispensing system on the door that the company estimates will save $253 in utility bills over 13 years. Samsung Electronics Co. has $1,299 French-door refrigerators with a "twin-cooling system" designed so the compressor doesn't have to work at high energy levels to balance temperature throughout the fridge.

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