Tuesday, January 6, 2009


Flat-screen TVs to face energy-efficiency rules in California
Starting in 2011, state regulators want retailers to sell only the most energy-efficient models of power hungry LCD and plasma sets. The industry opposes the new rules and warns of higher prices.
By Marc Lifsher

January 3, 2009

Reporting from Sacramento — That 52-inch, flat-screen television on the family room wall may have a terrific picture, but there's a big drawback: It's an energy hog.

State regulators are getting ready to curb the growing power gluttony of TV sets by drafting the nation's first rules requiring retailers to sell only the most energy-efficient models, starting in 2011.

The consumer electronics industry opposes the regulations, expected to pass in mid-2009, and claims that they could remove some TVs from store shelves and slightly boost sticker prices.

But the California Energy Commission is looking for ways to relieve the strain on the power grid. Officials say the standards, once fully in place, would reduce the state's annual energy needs by an amount equivalent to the power consumed by 86,400 homes.

During a peak viewing time when most sets are on, such as the Super Bowl, TVs in the state collectively suck up the equivalent of 40% of the power generated by the San Onofre nuclear power station running at full capacity. Televisions account for about 10% of the average Californian's monthly household electricity bill.

Some manufacturers could struggle to meet the new standards, particularly those that make plasma TVs. And the regulations could create a "gray" market, sending consumers intent on buying power-hungry models to Amazon.com and other Internet retailers based outside the state.

Sales of television sets are growing by 4 million a year, the vast majority of them flat-panels. LCD -- liquid crystal display -- sets use 43% more electricity, on average, than conventional tube TVs; larger models use proportionately more. Plasma TVs, which command a relatively small share of the market, need more than three times as much power as bulky, old-style sets.

The regulations would be phased in over two years, with a first tier taking effect on Jan. 1, 2011, and a more stringent, second tier on Jan. 1, 2013. Purchasers of Tier 1-compliant TVs would shave an average of $18.48 off their residential electric bill in the first year of ownership, the Energy Commission estimates. Tier 2 sets would save an additional $11.76 a year.

Over the years, California has pioneered similar tough standards for appliances, home insulation and food service equipment that eventually were adopted by the federal government and promoted to consumers with utility rebate programs.

"I think this is basically doable," said Energy Commission member Arthur Rosenfeld, an international leader for more than three decades in finding ways to save energy by boosting the efficiency of household appliances.

"Refrigerators and air conditioner manufacturers have grown up with standards, and, now, they are generally considered successes." he said. "But this is a new wrinkle for the TV industry."

Television manufacturers, wholesalers and national electronics chains stress that they are committed to making energy-frugal products and are moving as quickly as they can to respond to consumers' desire for energy-efficient televisions. But they aren't enthusiastic about the California plan, which they say will limit customer choice.

"The passion is correct. The proposal is not," said Doug Johnson, senior director of technology at the Consumer Electronics Assn. in Arlington, Va. "We can accomplish this without regulation as a result of innovation and voluntary approaches."

Mike McMaster, president of Wilshire Entertainment Inc., worries that a rush to impose TV efficiency standards "would be basically the end of our business." His locations in Thousand Oaks and Valencia employ 54 people and specialize in sales and installation of custom home theater systems centered on extremely large TVs.

"It would kill dealerships because people would buy on Amazon and have them shipped in and maybe not pay sales tax," he said. "If a customer wants a 12-cylinder car or a 60-inch plasma that uses this much energy, they're going to get it."

But shoppers waiting for a Best Buy store to open in Sacramento's post-Christmas fog showed little concern that some less efficient televisions might not be available two years from now.

"They should take them off the shelves," said Sam Ortega, a retired state worker. "We need to monitor our energy. It's good for everybody."

California should apply the same efficiency standards to televisions that it has used for the last 32 years with refrigerators and other products, argued Duane Larson, director of customer energy efficiency at Pacific Gas & Electric Co., the state's largest investor-owned utility, which serves customers from the Oregon border to the Tehachapi Mountains north of Los Angeles.

About two years ago, PG&E began thinking about applying energy-efficiency know-how to the consumer electronics industry, whose products, including computers, televisions and audio equipment, have become common in nearly every room of a house.

"We project that by 2010, one-quarter of the energy in a house will be used by consumer electronics," Larson said.

Increasing TV energy efficiency provides a triple benefit to California by boosting the economy, lowering electricity ratepayers' utility bills and helping the state meet its goals of reducing greenhouse gas emissions 15% by 2020, Larson said. "Every dollar spent on energy efficiency returns $2 in savings," he added.

Such savings should be encouraged, but not at the expense of businesses, large and small, that may see sales fall if they don't offer a wide variety of televisions, industry officials say.

The industry isn't sure how the regulations will affect it. The Consumer Electronics Assn. presented three scenarios to the commission, showing 10%, 20% and 30% drops in product availability and each of their potential financial effects.

If 30% of televisions fail to meet standards and can't be sold, California could lose $130 million in tax revenue and 15,800 jobs, Shawn DuBravac, an economist with the Consumer Electronics Assn., testified at a Dec. 15 Energy Commission workshop.

Rosenfeld was skeptical. DuBravac's numbers sounded "like arguments we heard from General Motors and Ford that SUVs are more profitable to make and create more jobs," he said. "There's a catch to it, as we all know."

What's more, Rosenfeld noted that a number of television makers already produce models that meet the proposed commission efficiency standards and that 87% of current stock complies with the planned 2011 threshold. That deadline may be pushed back a bit if the industry needs a little more time "to get used to the standards," he said.

More time might make the efficiency standards a lot more palatable, said Bob Smith, a training executive at AVAD, a Van Nuys wholesaler that supplies TVs and related equipment to independent installation contractors.

"I would hate to wake up one day and discover that 30% of my flagship products were no longer allowed to be sold." he said. "But I have no objection to regulations per se as long as there's enough lead time for manufacturers to meet the target."

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