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State panel doesn't get the picture

A commission's proposal to regulate TV energy consumption ignores the power of consumer demand and market competition.

October 03, 2009

California policymakers have played a vital role in promoting energy conservation in the United States, forcing manufacturers to produce less electricity-hungry kitchen appliances, air conditioners and numerous other devices large and small. Now the California Energy Commission is proposing the nation's first wattage limits for television sets. Applicable initially to TVs with screens up to 58 inches in diagonal (rules for larger sets to come), the standard would kick in two years from now if approved by the commission next month, with even tougher limits taking effect in 2013. The latter levels are so low, they would bar most of the flat-screen sets on the market today from being sold here. Not to worry, the commission says -- TV technology is improving fast enough to meet those limits too.

Therein lies the problem with the commission's proposal. We're strong supporters of energy conservation, but we don't see why the state should impose performance standards on an industry that is making so much progress on its own. The risk is that it will block new technologies that gain efficiency over time, deterring innovation and undermining its own goals. And although the commission claims that its standards are technology-neutral, it tries to guide TV design by giving its blessing to specific energy-saving components.

The commission contends that the emergence of flat-panel, high-definition sets is leading consumers to buy much larger screens, driving up energy consumption. To counter that trend, it proposes mandatory limits based on the Environmental Protection Agency's voluntary Energy Star standards. In essence, the commission would turn the EPA guidelines into mandates three years after they're adopted. The proposed standard for 2011 would require sets to use about a third less power than today's average; the level for 2013 would be 49% more efficient than current non-Energy Star sets. The result would be a whopping $8.1-billion reduction in consumers' electricity bills once they've replaced all of their sets (an average of three per home) with models that meet the 2013 standards. The reduced demand also would allow the state to build one fewer power plant and still meet its electricity needs.

The commission's goals are laudable, but it hasn't shown why the industry should be force-marched to meet them. Instead, its staff report outlines the many advancements that manufacturers have made voluntarily and notes the innovations that will spur greater efficiencies in the years to come. Those developments are a pretty good sign of the industry's motivation. So is the proliferation of sets that meet the Energy Star standards. There's a simple, inexpensive step the commission could take that would increase the incentive for more efficient products: It could require that TV marketing materials and displays make it easy for shoppers to see what each set would do to their electricity bills. Retailers offer little guidance today about energy use other than to note which TVs qualify for the Energy Star designation.

What's most disturbing about the commission's stance is that its members and staff seem to believe that one television set is just as good as another. The new rules wouldn't force consumers to spend a penny more, the commission says, because there are plenty of models in all sizes and price ranges that meet the new standards. That's true only if one ignores the wide variation in picture quality and features. Among top-quality big-screen TVs, the most efficient sets can cost hundreds, even thousands of dollars more than their counterparts. The commission cites such power-saving innovations as LED backlighting, laser-lit screens and organic LED without mentioning that these technologies raise the price of a set significantly.

The commission also says it isn't in the business of designing TVs, but the standard it proposes for 2013 would make it particularly hard for plasma screens -- a relatively new technology that lags behind LCD in energy efficiency -- to continue to be sold in California. Plasma panel manufacturers have been making steady gains in efficiency, so it's conceivable that additional breakthroughs would come in time to meet the proposed wattage limits. But even if they didn't, that wouldn't keep the state's consumers from buying the sets. Plasma TVs can cost hundreds of dollars less than comparable LCD sets, offsetting the higher electricity bills they generate.

Sticking with its assumption that all sets are created equal, the commission argues that California retailers wouldn't be affected by the likely ban on many plasma TVs because consumers would have other models to choose from. A much more probable outcome is that value-conscious shoppers would buy plasma sets online from out-of-state dealers. So would consumers who want feature-laden but power-hungry sets in other formats.

The flaws in the commission's assumptions about the TV market are so glaring, it's hard to believe the proposed regulations would generate the savings it projects. A more realistic approach would be to focus on the demand for electricity-hogging TVs, not the supply, which is already changing in response to the Energy Star guidelines. Make consumers more aware of how much electricity their sets consume and how they can save more by reducing the brightness levels of their sets. Require new TVs to be shipped with default settings that will consume less power. Provide rebates for consumers who replace analog TVs and computer monitors with more efficient digital ones. And make sure retailers display a set's likely energy cost as prominently as its contrast ratio or other features.

The consumer electronics industry is fiercely competitive and responsive to consumer demand. The commission should take advantage of those forces, rather than imposing mandates that it hasn't justified.

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