Inspector General Shows DOE Standards Program Getting Even Better

The Department of Energy’s (DOE) inspector general (IG) released an audit report Wednesday on the agency’s management of the national appliance efficiency standards program. The audit confirms serious concerns that we have been raising for years. More importantly, it shows DOE is addressing those concerns and strengthening a vital program.

How vital? According to the report, the IG launched the audit to better ensure that the agency is managing the national standards program effectively, “given the significance of the Standards Program for energy savings.” DOE itself estimates that already existing national standards will reduce consumer energy costs by about $1.7 trillion and eliminate 6.5 billion tons of carbon dioxide (CO₂) emissions cumulatively by 2030. New and improved standards will increase that.

The IG [PDF]report highlights three concerns: missed deadlines, incomplete enforcement efforts, and inadequate oversight of contractor estimates of standards’ impacts on manufacturers. We and others have been highlighting DOE’s missed deadlines over the past year. Fortunately, DOE has begun to respond. The agency has completed two out of eight standards that were overdue at the beginning of the year and issued a draft rule for a third (metal halide light fixtures) last week. In a [PDF]letter to several state attorneys general, the Natural Resources Defense Council, the National Consumer Law Center, and others earlier this month, DOE committed to a firm schedule for completing all of the overdue standards in the months ahead. Two more draft standards are to be issued this month.

DOE’s challenge will be to stick to this new schedule for overdue standards and still meet the [PDF]rest of its deadlines. DOE has already missed a July deadline (published earlier this summer) for draft furnace fan standards. We hope the president’s climate action plan will spur all parts of the administration, including the White House and its Office of Management and Budget, to do their part to make sure DOE’s deadlines are met.

Enforcement is one area highlighted by the IG report where DOE has made tremendous strides over the past few years. When President Obama took office, DOE had essentially no enforcement program for national standards. The agency estimated that manufacturers submitted efficiency performance certifications for only about 20% of models for which they were required, and the agency almost never tested products to confirm efficiency performance. The IG’s report suggests that DOE’s ramped up efforts have worked: in a survey of products sold by one big-box store earlier this year, the IG found that 93% were certified.

As the IG points out, the remaining 7% is still too much. Fortunately, DOE is already testing an automated software system designed to monitor the market to better ensure that consumers are getting products with certified efficiency ratings.

The last area highlighted by the IG concerns part of the extensive analyses conducted by DOE when updating standards. Since the impact on manufacturers is one of the key considerations when setting a new standard, DOE performs estimates, which often predict significant costs. We have sometimes argued that these estimates are inflated, in part because the data for the analysis comes from the manufacturers themselves. Making matters worse, the analyses are a “black box,” meaning that the core of the manufacturer impact analysis is conducted by private contractors using information obtained from the manufacturers under non-disclosure agreements. Neither DOE staff nor the public get to see what goes into these analyses.

In general, DOE has recognized that the public benefits from new standards vastly outweigh the estimated manufacturer impacts (even if the estimates are inflated). However, increased transparency and scrutiny of these estimates, as recommended by the IG, will improve their accuracy and future decision making.

Perhaps the best news in the new report is contained in the response from the deputy assistant secretary in charge of the program, Kathleen Hogan. In her letter, appended to the report, she “concurs” with each of the recommendations outlined by the IG and describes specific concrete steps being taken to further strengthen the national appliance standards program.

That’s good news for the consumers who buy the more efficient products and for all Americans who benefit from the reduced air emissions due to the huge energy savings these standards can achieve.