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January 13, 2006 Federal Trade Commission Office of the Secretary Room H-135 (Annex O) 600 Pennsylvania Avenue, NW Washington, DC 20580 Re:
January 13, 2006

Federal Trade Commission
Office of the Secretary
Room H-135 (Annex O)
600 Pennsylvania Avenue, NW
Washington, DC 20580

Re:
Energy Labeling, Project No. R511994

To Whom It May Concern,

As one of the primary investigators in this line of research, interviewing consumers about
their comprehension of the Energy Guide label and other energy consumption
information, I am submitting comments to the appliance labeling rule (Energy Labeling,
Project No. R511994). I believe it is my experience in understanding energy
consumption and energy consumption displays that informs this discussion of energy
labeling more broadly.

A. Effectiveness of Labeling Program
1. The ACEEE research cited in the notice of the proposed rule is the most
comprehensive work that has been conducted on energy labeling programs in the
United States. Indeed, the multi-method research design of the ACEEE study
exceeds the power of any research study conducted worldwide. While it does not
estimate the costs associated with the current labeling program it provides
information that substantiates the clear benefit as a labeling program. The Energy
Guide label provides comparison information of multiple manufacturers that
consumers value at a cost that is much lower than comparable nationwide
information campaigns would entail.
2. The effectiveness should be measured in multiple ways. First, the effectiveness
should be determined by the ability of the consumer to comprehend and act upon
information about energy consumption and cost provided by the label. Second,
the label is effective if it conveys to the consumer not only the energy
consumption of the labeled product, but also what comparable products use.
Third, the label is effective if it allows consumers to make accurate conclusions
across product categories. Consumers should be able to use the same process to
evaluate energy labels and therefore the labels should be consistent across
products. Fourth, the label is effective if it convinces and encourages consumers
to purchase higher energy-efficient products. Fifth, the label is effective if is
universally applied. Finally, the label is effective if it encourages manufacturers
to produce more energy efficient products. Examples of labeling in other
countries suggest manufacturers produce higher efficiency products when
categorical labeling systems are implemented.
3. The current Energy Guide label is reasonably effective in providing consumers
with information about the annual operating cost associated with a particular product, but is less effective in conveying the energy efficiency of a particular
product for two reasons. One reason is that consumers generally regard any
labeled product as energy efficient. To a degree this is true as appliance standards
have eliminated extremely inefficient products from the market. However,
consumers are often not aware of the full range of efficiencies among products.
The second reason is the comparison graphic on the label is poorly understood
and doesnt provide customers with a complete picture of the labeled products
efficiency relative to other products. The net benefit of the current label is
positive because consumers do glean cost information and can make choices
based on that information. This net benefit could be sufficiently increased if
consumers were given better comparative information about consumption relative
to other products.
4. Research suggests that the current label does in some cases encourage customers
to choose higher efficiency products. This most often occurs when consumers
make comparisons using annual operating costs between two options. However,
there are two significant problems that limit the current labels effectiveness. The
first problem is the inconsistency of directionality in the comparison graphic.
When higher efficiencies are to the right on one label and to the left on another,
consumers often misinterpret efficiency information. Second, the division of
some products, notably refrigerators, into multiple product comparison groups
causes confusion when consumers see changing consumption scales in what they
regard as similar products. For example, consumers are often puzzled by the idea
that a 600 KW/year side-by-side refrigerator would appear in the high efficiency
portion of the graphic while a 550K KW/year top-mount refrigerator would
appear in the lowest efficiency portion of the graphic.
5. The Energy Star program has complemented the Energy Guide label by partially
correcting the flaw in the current labels design that makes it difficult for
consumers to gain information about comparative energy consumption, i.e. the
comparison of the labeled product to the energy consumption of similar products.
The Energy Star logo has allowed consumers to identify products in the top 25
th

percentile of energy consumption. If the Energy Guide label had been entirely
effective the Energy Star logo would be redundant.
6. Yes, changes to the current label, particularly changes that make clear to the
consumer the comparative consumption of the product in relation to similar
products would enhance the Energy Guide labels effectiveness.
7. There are only two reasonable options a switch to categorical labeling or
improved continuous labeling. Fundamentally, the most effective change FTC
can make to the Energy Guide label would be to convert it from its current
continuous scale to a categorical scale label system. At a minimum, simple
modifications to the current continuous label must be made. These modifications
include a standard for the directionality of the comparison graphic, enhancement
of the comparison graphic to make clearer the notion of the products position in
range of similar products energy consumption, reduction of the number of product
comparison groups, and other enhancements as described in ACEEEs 2002
report. Categorical labeling is clearly the best choice for improving consumer
comprehension and encouraging energy efficiency. 8. As mentioned above, categorical labeling would be the best option for FTC to
select. It would yield clear benefits to consumers through easier comprehension
and would be more effective at meeting program goals of improving energy
efficiency. While there would be implementation costs associated with
developing a new system of categories; the ongoing production costs of a
categorical label would be similar to that of the current label and might reduce
implementation cost by reducing the frequency of updates necessary to the label.
The improved performance of the label is well worth the transition costs
necessary to implement it.
9. I excuse myself from comment as I was heavily involved in the research design of
this product.
10. A categorical label would significantly improve energy efficiency by increasing
consumer comprehension of a products performance relative to other products. It
would also make it easier to implement public purpose programs, indirectly
improving energy efficiency through nationwide market transformation. Finally,
categorical labeling would likely encourage manufacturers to produce more
efficient products in order to claim the highest ranking among products.
Consumers have consistently been able to differentiate categorical energy rating
from other measures of product quality, e.g. reliability or innovation.
11. Establishing the criteria to implement a categorical rating system will require
significant technical analysis. FTC should convene a technical advisory panel
that can assist it in creating technically valid, consumer appropriate categories for
product ranking. Once the process has been formulated by the advisory panel,
implementation of the process to categorize any particular product should be
straightforward. FTC will therefore not be making judgment about specific
products, rather implementing a standard procedure for determining energy
efficiency for all products.
12. Please see above.
13. An Energy Guide label based on a categorical ranking system using stars would
complement the Energy Star program. Research done by ACEEE suggests that an
Energy Guide star label would enhance the Energy Star program. No consumer
comprehension issues were found when consumers were shown a categorical stars
system combine with an Energy Star logo.
14. As stated earlier, the preferred alternative for the FTC should be a categorical
labeling system. In a categorical labeling system, there would be no need to
consider changes to the current exemption for the Energy Star logo. If the FTC
chooses to not to create a categorical labeling system, the Energy Star logo clearly
should be moved from current placement. The current placement of the logo
reduces comparability b