FR 2020-28880

General Summary

The Federal Trade Commission (FTC) has issued amendments to the Energy Labeling Rule, primarily focusing on portable air conditioners and central air conditioners. These updates align with changes made by the Department of Energy (DOE) to improve energy efficiency labeling. The FTC's objective is to make it easier for consumers to compare energy costs between different models, ultimately aiding them in making more informed purchasing decisions.

Significant Issues or Concerns

The amendments include introducing EnergyGuide labels for portable air conditioners, set to be effective by October 2022. These labels are expected to help consumers better understand and compare energy costs associated with different models. Additionally, updates to efficiency descriptors for central air conditioners have been made to conform with DOE standards effective in January 2023.

There are some concerns surrounding the prescriptive nature of the rule. Specifically, some stakeholders, including Commissioner Christine S. Wilson, highlighted the outdated elements of the rule that remain from the 1970s. The complexities and specifics required for the labeling process, such as precise measurements and detailed specifications, could potentially represent a regulatory burden. Another major point of contention is the discussion of transitioning from physical labels to electronic labels, a move that has been suggested due to changing consumer behavior and technological advancements. However, no immediate actions have been taken in this direction, leading to some frustration and concern among stakeholders.

Impact on the Public

The public stands to benefit from clearer, more informative labels that enhance their ability to make cost-effective purchases of energy-efficient appliances. As energy costs become a significant factor in purchasing decisions, the availability of consistent and accurate labeling should promote economic savings and potentially encourage the purchase of more efficient models.

Impact on Specific Stakeholders

For manufacturers, the changes present a mixed bag. On the positive side, standardized labeling that adheres to both FTC and DOE standards might simplify compliance across regulatory frameworks. However, some manufacturers might find the prescriptive nature of the rule burdensome, potentially increasing compliance costs related to specific labeling methods, particularly for those who find the mandates outdated.

The FTC has decided not to make broader changes, such as transitioning wholly to digital labels, which some industry representatives have supported. This could delay potential benefits that could come from reduced production costs and improved consumer convenience associated with electronic labels. The future consideration of electronic labels does, however, leave a window open for industry stakeholders who are advocating for modernization in regulatory practices.

Ultimately, while the FTC's amendments are a step in the right direction for improving consumer information, continued dialogue with stakeholders about modernization, particularly around electronic labeling, will be crucial for aligning regulatory practices with evolving market realities.

The Federal Trade Commission (FTC) has made several financial references in its amendments to the Energy Labeling Rule, which play a significant role in understanding the economic implications of these regulations.

Financial Implications for Consumers

The document highlights the cost and energy consumption associated with various air conditioning units. According to the Department of Energy (DOE) estimates, the average household electricity consumption for certain air conditioner models is 804 kWh per year, resulting in approximately $105 in annual energy costs at a rate of $0.13 per kWh/hr. The potential savings for consumers are emphasized by comparing the energy efficiency of different models, noting a difference of about $100 per year between the most and least efficient models. After implementing DOE standards in 2025, this range is expected to narrow to about $30-$50, depending on the size category. These estimates provide important context for consumers when evaluating the cost-efficiency of various models, aiding in informed decision-making.

Labor and Compliance Costs

The FTC provides estimated labor costs for compliance with the new labeling requirements. It calculates financial burdens for manufacturers revolving around recordkeeping, reporting, and testing. Specifically, the commission estimates an annual labor cost of $10,962 for reporting and $12,180 for labeling tasks, both calculated using an hourly wage of $16.24 for information processing staff. Testing requirements are estimated at an annual labor cost of $38,300, with engineering technicians earning $28.37 per hour. These figures illustrate the direct connection between policy implementation and associated labor costs, highlighting the regulatory impact on manufacturers.

Small Business Impact

The document acknowledges that certain businesses may be affected by these changes. Small businesses, particularly catalog sellers, qualify if their sales are under $8.0 million annually. The Rule aims to mitigate significant economic impact on these entities, with a focus on optimizing compliance processes.

Relation to Identified Issues

The financial details connect to the identified issue regarding the potential shift from physical to electronic labeling, as proposed by industry stakeholders like AHAM and AHRI. This transition could potentially reduce compliance costs associated with producing physical labels. However, the FTC did not implement these changes immediately, opting instead for further exploration, which could delay potential cost savings for manufacturers. Additionally, the extensive specificity in current labeling requirements signifies a continued financial burden, suggesting that a more streamlined, perhaps digital, approach might alleviate some of these costs. Commissioner Christine S. Wilson's dissent stresses the need to consider such updates to better reflect modern technological capabilities and consumer behavior, potentially leading to a more fiscally efficient regulatory framework.