Appliance and Equipment Efficiency Standards: Impacts by State

Steven Nadel and Miriam Pye

Energy efficiency standards for appliances and other equipment have been one of the major policies used by governments, first at the state and then at the federal level, to reduce energy use and consumer energy bills. Appliance and equipment efficiency standards set minimum efficiency requirements for newly manufactured appliances and other energy-consuming products. The standards prohibit the production, import or sale of products less efficient than the minimum requirements. Appliance standards were first adopted by California and other states in the 1970s and early 1980s, and laid the groundwork for adoption of federal standards in the late 1980s and early 1990s. Nationwide, standards already in force will reduce total U.S. energy use in 2015 by a projected 2.7%, and standards now under development will raise the savings to 4.3% of U.S. energy use (by comparison, estimated savings from existing and future appliance and equipment standards is 5.5% of 1993 energy use). As a result, by 2015 these standards will reduce U.S. electric-generating-plant needs by approximately 75,000 MW (the equivalent of 150 large [500 MW] coal-fired power plants) and will result in net consumer benefits of approximately $140 billion (1993 $). At present energy prices, the annual savings in 2015 will total approximately $250 per American household.

This paper analyzes savings from existing and future standards state by state. In the more populous states, such as California, New York, Texas and Florida, annual consumer energy bill savings from standards will exceed $2 billion in 2015 (1993 $). Consumers in each of six additional states will save more than $1 billion. On a cumulative basis over the 1990-2015 period, even after subtracting out the slightly increased purchase costs of more efficient appliances, savings will be enormous, totaling approximately $15 billion in California alone. Energy savings vary as a function of local appliance ownership patterns, weather, and the importance of residential and commercial appliances and equipment to statewide energy use. States where projected savings in 2015 equal or exceed 7% of current energy use include Arizona, Colorado, Connecticut, Florida, New York, North Carolina, Virginia, and the District of Columbia. In addition to these factors, consumer energy bill savings also depend on local energy prices. In Connecticut, Illinois, Massachusetts, New Jersey, and Rhode Island we project that savings per household in 2015 will exceed $300 annually.

In addition to saving energy, appliance- and equipment-efficiency standards can increase local employment and reduce pollution emissions. Due to these multiple benefits, it is important for states and utilities to include present and future standards in their energy use forecasts and plans, and to take steps to ensure that the appliance standards process stays on track so that these many benefits can be assured for each state's economy.

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