Be Skeptical of 'Energy Star' Label When Buying Home Appliances

This ranking of energy efficiency has served as a shopping guide for consumers looking to spend less money on utilities. Unfortunately, these ratings can be meaningless.
By: Neil Parmar: The Wall Street Journal Online
As consumers look to shave every nickel they can off their energy bills, the Energy Star label has served as a welcome shopping guide. Unfortunately for millions of energy-conscious Americans, these ratings can be meaningless. The reasons run from outdated test procedures to a simple lack of policing of the program. A SmartMoney investigation found that the Energy Star label often is little more than a marketing gimmick.

Ask an appliance salesman what the Energy Star designation means, and he'll tell you that it's issued by either the Environmental Protection Agency or the Department of Energy and is awarded only to the most energy-efficient products. The truth is a little hazier.

While participation in the program is voluntary, more than 1,400 appliance makers submitted test data on their products in 50 categories last year - some 32,000 in all. It's easy to see why. Products bearing the Energy Star logo sell better than others and often fetch a higher price - as much as 20% to 30% more. While the designation was originally supposed to apply to the 25% of products in any category that were most energy-efficient, the label is on 85% of all new dishwashers and 98% of desktop computers, suggesting the testing takes place at Garrison Keillor's Lake Wobegon, where all children, too, are above average.

Tougher on Washer Than TV

Then there's the problem with certain test procedures, which determine what products qualify for the sticker. On the one extreme, some procedures are "very strict," says Noah Horowitz, a senior scientist with the Natural Resources Defense Council. Washing machines are stuffed with "test cloth" and run at a maximum temperature of 135 degrees while software reads the machines' vitals, including wattage and water usage.

On the other extreme are tests like the ones for televisions. These procedures were devised eight years ago and require sets to be plugged in but turned off. Yet the average plasma TV uses 80% to 90% of its energy when turned on. And until 2003, dishwashers with special soil-sensing ability were tested with clean, not dirty, dishes.

"Consumers have the utmost trust in this program, but the way it's run is embarrassing," says Sam Kazman, general counsel for the Competitive Enterprise Institute, a free-market advocacy group. "The more you dig, the more problems you find with it."

With energy prices skyrocketing, conservation is gaining appeal. Though electricity costs haven't spiked the way oil or natural-gas prices have, a recent poll by the EPA found that 72% of consumers said they made a "special effort" to buy energy-efficient products. Some consumers are willing to pay through the nose, even if short-term savings are small.

The Energy Star program has been widely praised ever since the EPA launched it in 1992. But over the years, after the Energy Department joined the effort in 1996, the agencies have largely ceded control over the program to manufacturers. While the agencies still set Energy Star qualifications (based on a moving target that is continually updated), appliance makers test their own products, then award themselves the star. Only then do they notify the agencies which models made the cut - often after products have already been shipped to stores.

On a visit to a Best Buy store in Manhattan, we found an entire row of clothes dryers, all bearing big, oversize Energy Star stickers. Nothing would have looked out of the ordinary to the average shopper. But since all dryers consume roughly the same amount of energy, the category doesn't qualify for an Energy Star label. Best Buy, which joined the program late in 2004 during a larger push by the EPA to involve more retailers, says the labels were put on by mistake and is working to correct the problem.

Agencies Say They're Trying

"Energy Star is never going to be 100% perfect," says Kathleen Hogan, who oversees the program at the EPA. She says the agency is trying to address some of the issues, noting that the testing method for TVs is currently being revised. The Department of Energy, meanwhile, says it plans to crack down on label abuses and keep a closer eye on new partners.

But that is little reassurance for some consumers. "I would expect the manufacturers to keep in the spirit of the program," says Jeff Whiton, a homeowner from Loveland, Colo., who estimates he spent more than $15,000 on new Energy Star appliances and a heating system in the past year: "When we buy a new house in another five years, I'll be looking at Energy Star a lot closer and harder."