BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 1198
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          Date of Hearing:   June 21, 2010

                               Steven Bradford, Chair
                    SB 1198 (Huff) - As Amended:  April, 27, 2010

           SENATE VOTE  :   24-9
          SUBJECT  :   California Energy Commission: regulations.

           SUMMARY  :   This bill delays implementation of the California  
          Energy Commission's (CEC) television energy use labeling  
          requirement until July 1, 2011, to allow the Federal Trade  
          Commission (FTC) time to develop and adopt its own national  
          energy efficiency labeling rule for televisions. Specifically,  
           this bill  :   

          1)Provides that the television product labeling regulations  
            adopted by the CEC would not be effective until July 1, 2011,  
            if the FTC fails to issue a final labeling rule for those  
            products as of July 1, 2011.

          2)Provides that those regulations would remain in effect only  
            until the FTC issues a final labeling rule for television  

           EXISTING LAW  :

          1)Requires the CEC to adopt regulatory standards for minimum  
            levels of operating efficiency for appliances the use of which  
            requires a significant amount of energy or water on a  
            statewide basis. These regulations cannot result in any added  
            total of costs for consumers over the designed life of the  
            regulated appliances.

          2)Federal law authorizes the FTC to require energy disclosures  
            for certain consumer electronics, including televisions,  
            personal computers, cable or satellite set-top boxes,  
            stand-alone digital video recorder boxes, and personal  
            monitors and preempts state labeling regulations once a rule  
            is adopted for a specific appliance.

           FISCAL EFFECT  : Unknown.

           COMMENTS  :  California has pursued its energy demand reduction  


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          goals through two primary avenues:  (1) utility-sponsored  
          programs to reduce end-user consumption, and (2) codes and  
          standards designed to lower the energy use of buildings and  

          According to the CEC, by 2004, these efforts had cumulatively  
          saved more than 40,000 gigawatt hours (GWh) of electricity and  
          12,000 megawatts (MW) of peak electricity, equivalent to 24  
          500-MW power plants.  More than half of the statewide savings  
          has come from the building and appliance standards, with the  
          balance resulting from programs implemented by the state's  
          investor owned utilities and local publicly owned utilities.  As  
          a result of these efforts, California's energy use per-capita  
          has remained stable for more than 30 years while the national  
          per-capita average has steadily increased and is nearly double  
          that of California. 

           CEC Appliance Standards  : California's Appliance Efficiency  
          Regulations were established in 1976 in response to a  
          legislative mandate to reduce California's energy consumption.   
          The regulations are updated periodically to allow consideration  
          and possible incorporation of new energy efficiency technologies  
          and methods. 

          The current Appliance Efficiency Regulations, (California Code  
          of Regulations, Title 20,
          Sections 1601 through 1608), dated August 2009, contain  
          amendments that were adopted by the California Energy Commission  
          on December 3, 2008, and replaced all previous versions.
          The official version of these regulations is published by the  
          Office of Administrative Law.

          The Appliance Efficiency Regulations include standards for both  
          federally-regulated appliances and non-federally-regulated  
          appliances.  Twenty-three categories of appliances are included  
          in the scope of these regulations which include commercial and  
          residential products including water heaters, clothes washers,  
          dishwashers, traffic signals and lighting, and heat and air  
          conditioning systems.  The standards within these regulations  
          apply to appliances that are sold or offered for sale in  
          California, except those sold wholesale in California for final  
          retail sale outside the state and those designed and sold  
          exclusively for use in recreational vehicles or other mobile  


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          As part of the Appliance Efficiency Regulations, in November  
          2009, the CEC adopted energy efficiency standards (Docket  
          #09-AAER-1C) for new televisions offered for sale in California  
          beginning in 2011 and 2013.  Currently, statewide TV energy  
          consumption is estimated to be 6,360 million kilowatt hours  
          (kWh) per year, or roughly two percent of California's gross  
          system electricity usage.  This percentage is expected to  
          increase as the current stock (mostly analog cathode ray tubes)  
          is replaced by the newer and larger TV types.  There are many  
          "large-screen" digital televisions on the market that use 500 or  
          more kWh per year, as much energy as many new refrigerators.  

          There are two tiers of efficiency standards in the adopted  
          regulations: one for televisions manufactured on or after  
          January 1, 2011, and other for televisions manufactured on or  
          after 2013.  The Tier 2 efficiency standards are more stringent  
          than Tier 1 standards.  However, the labeling requirement  
          applies uniformly to both Tiers of televisions.  The first  
          television standard (Tier 1) could potentially reduce energy  
          consumption by average of 33 percent.  The second television  
          standard (Tier 2), in conjunction with Tier 1, could potentially  
          reduce energy consumption by an average of 49 percent.

          The standards have no effect on existing televisions.   
          Televisions sold in California, beginning January 1, 2011, will  
          be required to be permanently marked with the on-mode power  
          consumption in watts and list the same data in any publication  
          website, document or retail display that is used for selling the  
          product.  The regulation package specifies July 1, 2010, but the  
          CEC reports that this was a typographical error that will be  
          changed to January 1, 2011 at the Office of Administrative Law  

          The CEC estimates that the proposed regulations will generate an  
          estimated 6,515 GWh in energy savings annually after all  
          existing stock is replaced with televisions that meet the Tier 2  
          standard.  This savings will avoid the need to build a new power  
          plant to supply this power that otherwise would have been used  
          by televisions.  The net present value of the overall energy  
          cost savings to consumers for California, over the life of a  
          television, is expected to be approximately $8.1 billion.  The  
          estimated total present value of this regulation is  
          approximately $8.7 billion, which is the sum of the net present  
          value of the energy cost savings from the proposed standards  
          over the expected life of a television once all televisions meet  


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          the Tier 2 standards and savings in avoided construction cost of  
          a $615 million natural gas power plant.

          According to the CEC, this is a conservative estimate on several  
          grounds.  This estimate does not account for any increases over  
          time in the price of energy, should they occur as expected.   
          Furthermore, it does not include any savings from the power  
          factor and luminance requirements of the standards.   Finally,  
          the estimate does not include any savings from televisions that  
          exceed the Tier 2 standards, as some already do.

          The regulation package has been adopted by the CEC and will be  
          submitted to OAL within the next month.  

           Pending FTC Television Labeling Requirement  :  The FTC's  
          Appliance Labeling Rules require energy disclosures for a  
          variety of covered products, including home appliances,  
          lighting, and plumbing products.  The Rule requires most covered  
          products to have, at the point of sale, yellow EnergyGuide  
          labels containing estimated annual operating cost information  
          based on Department of Energy test procedures.  The label  
          information must also appear in catalogs and on Internet sites  
          offering the products for sale.

          Prior to the CEC proposing its own approach to energy-use  
          labeling, the FTC proposed earlier this year to extend the  
          labeling rule to televisions to help consumers make better  
          purchasing decisions.  Within the proposed rulemaking (16 CFR  
          Part 305), the FTC would require each television to have  
          specific information consistent with EnergyGuide labels for  
          other products including annual energy costs based on a uniform  
          electricity rate of 11-cents per kWh, an on-mode usage rate of  
          five hours per day and 19 hours per day in standby mode to  
          calculate annual cost and energy consumption information.  The  
          label would also have comparative information to other  
          televisions grouped by screen size. 

          According to the FTC, public comments to the proposed rulemaking  
          were received in May 2010 and are still being reviewed.  No  
          statutory deadline has been set forth by the FTC for release of  
          a final rulemaking.  Upon final issuance of the ruling, the  
          labeling requirements will become effective in six months to  
          allow the states time to implement the rules.

           Proponents Comments  : According to the sponsors, the Consumer  


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          Electronics Association (CEA), the general concern with the  
          CEC's adopted requirements for energy labeling on televisions is  
          that the CEC's requirements disregarded the federal rulemaking  
          already underway (which began in early 2009).  This concern was  
          raised by stakeholders numerous times during the CEC's  
          rulemaking. Furthermore, CEA notes the CEC's television labeling  
          requirements have presented several interpretation problems for  
          both manufacturers and retailers.  CEA believes the methodology  
          CEC's labeling requirements were not based on a careful and  
          considered approach to consumer product labeling and thus  
          included font size requirements that are impractical for the  

           Opponents Comments  : According to the CEC, the FTC labels could  
          be misleading.  By conveying operating costs in dollars,  
          compared with the CEC labels which convey power consumption  
          information in watts, Californians could be misled into  
          believing that the television is cheaper to operate than it  
          really is due to different rate structures across the country.  

          The CEC has been performing energy efficiency standards for  
          decades, which has made California the leader in energy  
          efficiency policies.  The CEC states that appliance labeling  
          plays a crucial role in efficiency and consumer choice and has  
          saved Californians millions of dollars over the years.  The CEC  
          states that this bill only serves to dilute the CEC's standards  
          because the federal standards are almost always less stringent  
          that California's.  

          In addition, this bill seeks to reverse California's important  
          and pioneering work in energy efficiency.  The CEC notes that it  
          has adopted California regulations and viable efforts should not  
          be thwarted.   



           California Retailers Association (CRA)
          Consumer Electronics Association (sponsor)
          Consumer Electronics Retailers Coalition (CERC)
          Custom Electronic Design & Installation Association (CEDIA)
          Mitsubishi Digital Electronics America (MDEA)
          Plasma Display Coalition (PDC)


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          Sharp Electronics Corp. (Sharp)


           California Energy Commission (CEC)
          Planning and Conservation League

           Analysis Prepared by  :    DaVina Flemings / U. & C. / (916)