October 9, 2001

DOE's Proposed Energy Conservation Standards for Residential Central Air Conditioners and Heat Pumps (2002)

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Energy Conservation Program for Consumer Products: Central Air Conditioners and Heat Pumps Energy Conservation Standards

Stated Purpose:

Require residential central air conditioners and heat pumps to be more energy efficient, reducing needed production of electricity and thereby resulting in a cleaner environment.

Summary of RSP Comment:

DOE's proposal would require all central residential air conditioners and heat pumps sold after July 25, 2006 to consume less energy. It estimates that these new standards will increase the installed cost of new air conditioners and heat pumps by $144 to $213. Despite these higher up-front prices, DOE estimates that the average consumer would experience annual utility bill savings between $31 and $50. This replaces a more stringent standard issued and then withdrawn by DOE earlier this year.

Though the proposed standards will harm consumers less than the withdrawn standards would have, they still make consumers worse off. DOE's analysis still focuses purely on the cost savings to the average consumer, without adequately considering either different usage patterns, or the value consumers place on reliability, performance (especially dehumidification), or esthetics. Thus, the standards would require consumers in northern states to purchase high-cost air conditioners, and residents of southern states to purchase high-cost heat pumps, even though they would not likely recoup those up-front costs in lower energy bills over the life of the unit. DOE's static comparison of up-front costs to operating costs also ignores the fact that once the initial investment is made, lower operating costs will encourage more usage of the unit, possibly leading to increased energy use (less conservation).

Manufacturers currently offer air conditioners and heat pumps that meet DOE's proposed specifications, but most consumers prefer models with lower up-front costs. Rather than setting standards that eliminate the models consumers prefer, DOE should seriously consider alternatives that ensure consumers have access to accurate information on life-cycle operating costs of different models.