BILL ANALYSIS SB 1198 Page 1 Date of Hearing: June 21, 2010 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE 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 products. 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 SB 1198 Page 2 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 appliances. 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 equipment. SB 1198 Page 3 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 (OAL). 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 SB 1198 Page 4 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 SB 1198 Page 5 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 marketplace. 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. REGISTERED SUPPORT / OPPOSITION : Support 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) SB 1198 Page 6 Sharp Electronics Corp. (Sharp) Opposition California Energy Commission (CEC) Planning and Conservation League Analysis Prepared by : DaVina Flemings / U. & C. / (916) 319-2083