S c i e n c e Policy Research Division
T H E LIBRARY OF CONGRESS
CONGRESSIONAL RESEARCH SERVICE
MAJOR ISSUES SYSTEM
D A T E ORIGINATED 06/14/82
D A T E UPDATED 12/12/83
T h e Energy Policy and Conservation Act (EPCA! (P.L. 94-163), a s amended by
the National Energy Conservation Policy Act (NEPCA) (P.L. 95-619) , requires
that energy efficiency standards be established f o r each of 1 3 classes of
appliances that are major consumers of energy.
stipulates that such
standards "be designed to achieve the maximum
efficiency which the Secretary
[ o f Energ'y] determines is technologically
feasible and economically justified." The Department of Energy announced
proposed standards for 8 of the 13 classes of appliances in J u n e 1 9 8 0 a n d
initiated public hearings on them prior to f i n a l promulgation.
1 9 8 1 , the D O E suspended this process; after re-studying the proposed
standards, it announced in April 1 9 8 2 a finding that n o standards a r e
GAO has criticized this finding o n t h e grounds that
the basic assumptions of the analysis are questionable.
Others a r e concerned
that the D O E ' S adoption of "no standards" may preclude individual States f r o m
adopting their own sets of standards for appliance efficiencies because of
specific prohibitions under EPCA.
C o n g r e s s , in its f i r s t major legislation directed at energy conservation,
the Energy Policy a n d Conservation Act, adopted several measures to i m p r o v e
the energy efficiencies of major energy-consuming appliances.
One was the
mandated labeling of appliances offered for s a l e to show their estimated
annual operating c o s t s , a s well a s the range of annual operating
comparable appliance u n i t s , to provide essential information about t h e
relative efficiency of each appliance offered for sale.
required energy efficiency targets for major energy-consuming a p p l i a n c e s ,
targets that were to "be designed to achieve the maximum
improvement i n
energy efficiency which the Administrator
[ o f the Energy Research a n d
Development Administration] determines is economically a n d technologically
feasible t o attain f o r each such type [ o f a p p l i a n c e ] manufactured in calendar
All targets were to result i n increases i n energy efficiency o f
a t least 20% over the average efficiency levels found 'in 1972. T h e Act a l s o
provided that the Administrator (now the Secretary of Energy)
should imposemandatory energy efficiency standards for new appliances in those cases where
it appeared that the energy efficiency targets might not be met by 1980.
The following classes of appliances were specifically
provisions of EPCA:
Refrigerators a n d refrigerator-freezers
Room. a i r conditioners
H o m e heating equipment, not including
Kitchen r a n g e s and ovens
Humidifiers a n d dehumidifiers
Central air conditioners
P l u s , any other
t o consume more
appliances that the Administrator deems
the purposes of the Act which a r e likely
than 1 0 0 kilowatt-hours of energy, o r its
household per year.
Effect on State and Other Laws
To simplify and regularize the imposition of .energy efficiency
a n d to preclude the imposition of a s many BS 5 0 d i f f e r e n t , and possibly
incompatible, State standards
EPCA provided that 1) the standards, 2)
required of manufacturers to establish a n d maintain
standards, a s
adopted for the Federal Government by the D O E according to the provisions
the A c t , would supersede any State or local regulation f o r the same purposes.
H o w e v e r , EPCA did provide that a State or local government could
exception to this provision if it could demonstrate to the
the Administrator (of E R D A , whose authority i s now held by the Secretary of
Energy) that there is a substantial State o r local need sufficient to justify
a special regulation requiring greater efficiency
r e g u l a t i o n , and that such a
special regulation would
not unduly burden
Amendments to EPCA Under NECPA
T h e National Energy Conservation Policy Act amended EPCA in a number
the concept of
t a r g e t s , and
instead required that energy efficiency standards be adopted for e.ach of
13 classes of appliances stipulated i n EPCA.
The concept of a
improvement was dropped i n favor of a requirement that "...energy
standards for each type (or class) of covered produ'cts
shall be designed to
a c h i e v e the maximum improvement i n energy efficiency which the Secretary
E n e r g y ] determines is technologically f e a s i b l e and economically justified.I1
In a d d i t i o n , i n response
to complaints from a
spokesmen about the financial and other burdens t h a t efficiency
would i m p o s e , NECPA required a thorough analysis of t h e c o s t s and benefits of
such regulation prior to the imposition of
the S e c r e t a r y , after receiving
whether a standard is economically justified
standard...shall determine that the' benefits of the standard
burdens, based to the greatest extent practicable, on a weighing
(1) the economic impact of the standard o n the
manufacturers and on the consumers of the products
subject to such standard,
(2) the savings i n operating costs throughout the
estimated average life of the covered products in
the type (or class), compared to any increase i n the
price o f , or in the initial charges f o r , o r
maintenance expenses o f , the covered products which
a r e likely to result from the imposition of the
(3) the total projected amount of energy savings likely
to result directly from the imposition of the
( 4 ) any lessening of the utility or the performance
of the covered products likely to r e s u l t from the
imposition of the standard,
( 5 ) the impact of any lessening of competition determined
in writing by the Attorney General that is likely
to result from the imposition of the s t a n d a r d ,
( 6 ) the need of the Nation to conserve energy a n d
( 7 ) any other factors the Secretary considers relevant."
D O E P r o p o s e s Standards f o r 8 Classes of Appliances in 1 9 8 0
The Federal Register of June 3 0 , 1 9 8 0 (Vol. 4 5 , No. 127) set forth D O E 1 s
conclusions on efficiency standards f o r 8 of the 1 3 classes of appliances
stipulated i n EPCA.
After extensive analysis according to the guidelines set
forth in N E C P A , energy efficiency
refrigerators and refrigerator-freezers, 2) f r e e z e r s , 3) clothes d r y e r s , 4)
Water heaters, 5) room air conditioners, 6) kitchen ranges a n d o v e n s , 7)
central a i r conditioners, and 8) furnaces. Each of the standards was claimed
to produce more 'than a - 2 0 % improvement i n efficiency
over 1 9 7 2 l e v e l s , i n
accord with the original provisions o f EPCA.
T h e DOE-determined costs and
benefits of these standards to the Nation a s a whole a r e set f o r t h i n . TABLE
1. Though these figures have been superseded by later D O E a n a l y s e s , they
continue to be quoted by proponents of standards a n d a r e provided
TABLE 1. The Original D O E Calculations of Energy
Savings to Result from Appliance Standards.
Value of the
1 9 7 8 dollars)
Room air conditioners
Kitchen ranges and ovens
Central air conditioners
Federal Register, Vol. 4 5 , No. 127.
The 1 9 8 1 Revision of D O E ' S Original
Energy Savings Calculations
Refrigerators and refrigerator-freezers
Room air conditioners
Kitchen ranges and ovens
Central air conditioners
In every c a s e , the life cycle cost of the appliance to the a v e r a g e
consumer was calculated by D O E to be lower than the l i f e cycle cost of
current appliances. H o w e v e r , D O E ' S analysis of the ability of manufacturers
to r a i s e the necessary
capital to comply with the standards indicated
possible hardships. While it was expected that 98-99% of the manufacturers
o f refrigerators and refrigerator-freezers, clothes d r y e r s , central air
conditioners, and furnaces would be able to earn sufficient capital to comply
with the standards, only 93-94% of the manufacturers of room a i r conditioners
and of kitchen ranges and ovens might be expected to do s o , a n d only 80% of
water heater manufacturers and 75% of freezer manufacturers.
Response to the D O E Proposed Standards
P u b l i c hearings a n d invited comments on the proposed appliance standards
indicated a number of concerns a b o u t the D O E analysis, both technical and
economic. Though i n many of the comments there was objection to the
presence, or to the method of imposition and enforcement, of the proposed
standards, industry spokesmen offered evidence to indicate that the D O E
analysis had underestimated the costs of compliance to i n d u s t r y , and had
overlooked a number of important practical problems related to the s i z e ,
s h a p e , and performance capabilities of certain appliances designed to meet
the proposed standards.
Faced with these comments, D O E performed a new round of economic and
energy a n a l y s i s , making appropriate changes i n basic assumptions.
produced a marked reduction i n total expected energy savings: from a range
of i3.8-25.1 Quads in the first round of a n a l y s i s to 10.9 Quads in the second
r o u n d , a s outlined i n the TABLE 2. As a r e s u l t , DOE intended to revise its
proposed standards downward i n required e f f i c i e n c y , and to drop standards for
kitchen ranges, o v e n s , and clothes dryers.
A New Round of A n a l y s i s , and Reversal of Viewpoint
O n Dec. 1 7 , 1 9 8 0 , . D O E notified Congress that i t could not meet the Jan. 2 ,
1 9 8 1 deadline for a final determination on the proposed standards.
2 3 , 1 9 8 1 , D O E issued notice to Congress that i t intended to
implementing the standards that i t originally proposed pending further study.
D O E formed a n internal task f o r c e of senior officials to review the appliance
standards developmental work that had been performed and to recommend what
course D O E should follow with respect to stan.dards.
T h e task f o r c e
commissioned a new analysis of the costs and benefits of
hypothetical standards requiring three or f o u r different levels of efficiency
for each appliance and postulating a more rapid rise in energy prices than
had been assumed i n the past.
T h e results were published
in the Federal
Register Apr. 2 , 1 9 8 2 (Vol. 4 7 , No. 64).
In this new a n a l y s i s , DOE revised its basic approach f o r calculating the
benefits of setting energy efficiency standards , f o r . a p p T i a n c e s .
calculations were performed in two steps. F i r s t , C a l ~ ~ l a t i O nwere
to estimate the energy savings that would result from consumer preferences
f o r more e f f i c i e n t . a p p l i a n c e s i n response to D O E ' S projected
S e c o n d , these savings were compared .with the energy savings
calculated by D O E to be expected from the imposition of energy efficiency
standards, but neglecting the e f f e c t s of energy prices on consumer appliance
Calculations were performed
using the Oak Ridge National
Laboratory (ORNL) Residential Energy End Use Model, the same model
used - to
calculate energy savings f o r the 1 9 8 0 findings.
T h e time period was
to 1987-2005 from 1982-2005.
On the basis of th'is latest analysis, and of its analysis of ' t h e costs
standards o n manufacturers, D O E concluded' that
standards a r e not necessary, because
rising prices wili
prompt consumers to d e m a n d , and manufacturers to produce, appliances that a r e
of efficiency comparable to the efficiencies that would
The DOE finding was that:
T h e increase i n the cost of energy i n the l a s t ten
has created substantial incentives for manufacturers
to m a k e , and consumers to buy, more energy efficient
T h e s e incentives to a certain extent have been
restrained by reguiation of the price of o i l and natural
g a s , which subsidized consumption and discouraged
conservation...In the years ahead...with the deregulation
of o i l and the scheduled deregulation of most natural g a s i n
1 9 8 5 , market f o r c e s are expected to play a n increasingly
dominant role i n the pricing of a l l energy.
expects that the appliance market will respond swiftly i n
the level of energy efficiency provided i n new appliances.
In s h o r t , if standards are not a d o p t e d , the appliance market
can be expected, over the period 1987-2005, to increase the
l e v e l of shipment-weighted energy efficiency of the average
new appliance to. levels generally comparable to those that
might be required by mandatory standards.
D O E ' S analysis found
that in the absence of
standards, the average
efficiency of six of the most energy consumptive appliances Will
improve i n
efficiency by 32% in t h e period 1978-2005.
The imposition of standards would
produce a n average improvement of 37% i n these same appliances (oil and
furnaces, room air conditioners, central air conditioners, electric and g a s
water heaters, refrigerator-freezers, and freezers.)
P u t more
estimates that improvements i n efficiencies without standards f o r any of
appliances will result, i n the 1987-2005 period, i n savings of
whereas D O E estimates that the imposition of standards would produce
D O E ' s conclusion i s that the difference
of 32.8 Quads i n that s a m e period.
between these two predictions is not significant, primarily because
in such predictions.
In a d d i t i o n , D O E points out
standards may not be beneficial
variations i n the expected use of each appliance and because of variations i n
the expected duration of ownership of the appliance.
Continuing this line of thought, D O E ' s 1 9 8 2 analysis
f i n d s that
factors a s 1) reductions i n life cycle cost, 2)
reductions i n electrical
generating capacity to power
(3) r e d u c t i o n s - in
the a c t u a l
impact from the reduced combustion of f u e l for energy, and
savings in energy fuels and energy costs a r e not predicted (by the Oak R i d g e
Model) to be significantly affected by the imposition of standayds.
lists the increases in energy savings that the Oak Ridge Model predicts will
occur if appliance standards are imposed instead o f le-aving energy efficiency
improvements to the marketplace.
T h e , s a v i n g s listed a r e those predicted
the most stringent standards that D O E analyzed
would produce lower savings of energy, except where noted).
T h e 1 9 8 2 D O E Calculations of Energy Savings to be
Expected from Appliance Standards
Room a i r conditioners
Central air conditioners
Value of the
( $ i n billions
1 9 7 8 dollars)
*In this c a s e , the imposition of the most stringent efficiency
standard was predicted by the Model to cause more energy
to be used with
the standard than without it.
If a lower
level of energy efficiency were required under a lower
standard, a small saving in energy was predicted by the Model.
Federal Register, Apr.
2 , 1 9 8 2 (vol. 47, no. 64)
The General Accounting Office examined the 1 9 8 2 D O E analysis of appliance
standards (Rept. EMD-82-78) and summarized its conclusions a s follows:
D O E ' S basis f o r i t s proposal that no appliance efficiency
Standards be established i s highly questionable.
F i r s t , the
analysis i n support of D O E t s proposal relies heavily on a n
unvalidated k e y assumption that consumers will purchase
substantially more efficient appliances in response to
increases in real energy prices.
Secondly, D O E has been
inconsistent in projecting the e f f e c t of market forces
On Consumers and appliance manufact'urers. F i n a l l y ,
during the standards development process, D O E projected
future energy savings from standards using four markedly
different energy price assumptions, and used a significantly
higher price assumption in its April 1 9 8 2 NOPR [ ~ o t i c eof
Proposed Rulemaking, a s published i n the Federal Register]
than other available estimates. T h e ~ o t e n t i a limpact of
the inconsistent treatment of market forces and the use
of high energy price assumptions is to decrease the
energy savings f r o m , a n d increase the costs o f , appliance
In testimony before the House Committee on Energy and Commerce on May
1 9 8 2 , Dexter P e a c h , Director of G A O ' s Energy and Minerals D i v i s i o n , stated
that DOE'S analysis "...relies heavily o n a n unvalidated key assumption that
consumers will purchase substantially more efficient appliances i n response
to increases in real erfergy prices.
We f o u n d that actual consumer purchases
of appliances during the 1970s -- a time of rising real energy prices -- did
not support DOE' key assumption." Among his other points in that t e s t i m o n y ,
Peach pointed o u t t h a t , i n performing
the analysis for its
reCommendations, D O E used energy price projections
that are "significantly
higher than other available estimates."
CalCUlatiOnS of the Cost impacts of standards on manufacturers had n o t been
performed i n consistent fashion because none of the c o s t s of manufacturing
more efficient appliances was ascribed to factors other than standards
a s consumer preferences for more efficient appliances).
However, GAO concluded that DOE'S second proposed set of standards
were never formally announced, but which relaxed requirements for six of the
appliances and provided no standards for kitchen ranges and ovens or for
clothes dryers) "had potential." This was based in part o n a GAO finding that
even With n o increase i n real energy prices the second set of standards might
produce 1.5 Quads o f . e n e r g y savings i n the single year of 2 0 0 0 , . if it was
assumed that the average efficiencies of purchased appliances remained
unchanged unless standards were imposed.
In p a r t i c ~ ~ a rG-A0
f e l t that the
second proposed set of
standards provided useful efficiency levels for
f u r n a c e s , central a i r conditioners, water heaters, and refrigerators.
recommended that the Secretary of Energy not adopt a " n o standzrd'l rule until
reviewing GA'O's views and conclusions.
THE FOCUS OF CURRENT ISSUES
The crux of the issue would seem to be whether
assimilate and act upon the energy labeling information that EPCA
labeling requirements will not be affected by
decisions about appliance
standards. With the exception o,f furnaces and
where customers must rely on manufacturers' specification sheets
generally regarded a s being too comblicated for most
this information will continue to be provided by
l a b e l s that report
results of standardized.testing procedures mandated under EPCA.
ignore the information provided, or if manufacturers
f a i l to offer
efficient appliances for s a l e , then the use of
The Pre-emption of State Standards
At present, "no standards" determination by the Secretary of Energy w o u l d ,
by virtue of the provisions
in EPCA mentioned
a b o v e , preempt
States and localities from imposing their own energy
unless the Secretary concurs that some special circumstance exists which
justifies such standards for their areas and that it can be shown that
standards will not burden interstate commerce.
Legislation has been proposed
'(H.R. 3244) by Rep. Richard Ottinger to remove the preemption provisions from
EPCA so that States and local governments could adopt their own standards.
This could result in a good deal of regulatory disparity among States.
might even create a situation i n which a State (or States) with a l a r g e and
attractive appliance market might make regulations that came to be
by a l l major appliance producers.
In such a c a s e , individual States might
effectively preempt a Federal decision that no standards be imposed.
Officials from States such a s Florida and California
hearings have claimed that the State standards, which h a v e been
the interim period before Federal standards are d e c i d e d , have saved a great
amount of energy and enabled their residents to avoid considerable c o s t s in
constructing new electrical generating capacity.
They a r g u e for the value of
State standards i n lieu of Federal standards from the
needs a n d interests.
A Proposed Alternative
An alternative proposal has been offered by
the entire question
of F e d e r a l energy
standa'rds by eliminating the standards and
State preemption provisions
EPCA while retaining the energy efficiency labeling pr0Vis.ionS of
His position has been that State and local governments
responsible for the regulation of energy conservation activitie-s, rather than
the Federal Government.