December 4, 2000

DOE's Proposed Energy Conservation Standards for Residential Central Air Conditioners and Heat Pumps (2003)

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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 January 1, 2006 to consume less energy. It estimates that these new standards will increase the installed cost of new air conditioners and heat pumps by $274 to $687, or between 11 and 19 percent. Despite these higher up-front prices, DOE estimates that the average consumer would save enough in energy costs over the 18-year life of the unit to achieve a net savings of $45.

DOE's one-size-fits-all standards would apply uniformly throughout all 50 states, from Maine to Oregon and from Alaska to Hawaii. They appear to ignore that consumers in different regions of the country face different weather conditions and have different usage patterns for air conditioners and heat pumps. The standards would require consumers in the 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. More than likely, fewer residents in regions of the country where air conditioners or heat pumps are marginally used would choose to purchase them. Low-income consumers will be the hardest hit by the new standards, and the least likely to be able to afford to purchase new units.

Manufacturers currently offer air conditioners and heat pumps that meet DOE's proposed specifications, but most consumers prefer models with lower up-front costs. DOE discounts revealed consumer preferences, however, on the presumption that consumers choose to purchase inefficient models, even though they are less costly over their useful life, because they are either misinformed or irrational. Yet, DOE's analysis 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. Its 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).