Your next refrigerator will be more efficient, thanks to the U.S. DOE, and it will probably cost a little more, unless you succumb to the industry's efforts to sell you one with more features and end up paying a lot more.
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View full sizeThe GE Cafe refrigerator meets the new U.S. Department of Energy efficiency standards. WASHINGTON, D.C. -- Refrigerators are going on another energy diet. Consumers will be picking up the tab.
That's right, another energy efficiency standard that household refrigerator and freezer manufacturers must meet became law this week.
It's the fourth efficiency upgrade in less than 40 years for an appliance invented only 100 years ago.
What was the largest energy hog in any home until the 1980s now has the electrical appetite of a mouse, consuming about a sixth of the power used by the its 1970s ancestor.
The new standards require that refrigerators be 25 percent to 30 percent more efficient that those built just a year ago, under standards that had not been overhauled since 1990.
This has required some engineering feats -- and the redesign of entire production lines. And it has been expensive.
Prices of new refrigerators will rise.
The question is how much will they rise. And will the savings in your electric bill offset the higher purchase price.
The answers may surprise many and make getting hot under the collar a waste of time as well as energy. The increases may not be as high as some consumers fear or even as high as the federal government has projected. And the new models are expected to save a household about $200 in electric costs over the life of the appliance, compared to those built last year under the old standard, according to federal projections.
"Pricing is still a little bit of a puzzle, " said Jeff Blumenthal, president of B&B Appliance in Euclid, "because the manufacturers, knowing the deadline for production, ramped up production of the old models so that they would have a good supply prior to having to comply with the new standards.
"We have been told the top model freezers will have price increases, probably in the $30-to-$40-range, which probably translates to a 5 percent or 6 percent increase," he said.
Frank Edwards, a veteran salesman at Myers Appliance in Ravenna, said prices have gone up $20 to $30 on some brands of traditional models, those with the freezer at the top. These refrigerators typically sell for about $600. He said price increases of up to $100 are going to show up on the high-end refrigerators which last year had price tags as high as $3,000.
"I have not seen a great deal of price increase. We have had some of these (refrigerators meeting the new standards) on the floor for a couple of months," he said, as he walked around the showroom, noting that the new 15-and-16 cubic-foot models are already on the floor, and that some of the high-end models were upgraded "a couple of years ago."
Jaclyn Pardini, spokeswoman for Lowes Home Improvement stores, also said many of the new models are already on Lowes' floors.
"Prices range from $600 for an Energy Star top-mount freezer-refrigerator to more than $6,000 for the latest, innovative French door model," she said.
Part of the present price confusion could be because the industry has known since 2011 that the tougher standards would become law this month.
In fact, the industry help write the standards in 2010, negotiating not only with government engineers following Congressional mandates, but also with scientists and experts from green groups such as the Natural Resources Defense Council pushing to lower power plant emissions by reducing demand for electricity, and with consumer and efficiency organizations looking to lower electric bills.
Some General Electric models have met the new efficiency standards for two years, said Julie Wood, the Louisville-based spokeswoman for GE Appliances.
She said GE redesigned the factory in 2012 that turns out the high-end refrigerator with French doors and a bottom freezer, and that those refrigerators have met the new standards since then. GE redesigned other factories last year and some earlier this year.
"This is something we have been working on a long time and we have planned for it," she explained.
The bottom line on price increases?
Price increases will vary by manufacturer and by model. Some are already in effect. And future increases may be so modest for many models that consumers won't notice them, especially during an advertised sale.
Appliance pricing is not exactly an open process, explained one analyst.
"Cost estimates are tightly guarded by manufacturers since it's a very competitive business," said Andrew deLaski, executive director of the Boston-based Appliance Standards Awareness Project, who has authored some of the price studies in an effort to see whether efficiency upgrades caused price spikes.
"How changes in the cost to make something translate into prices consumers face is complex," he said. "Manufacturers and retailers work very hard to hit an entry level price-point for a basic, top-mount fridge and then offer fridges at a variety of price-points from $500 to $2000 and up."
deLaski co-authored a 2013 study with Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, that looked at refrigerators and eight other appliances. They found that studies done by the U.S. Department of Energy before it issued an efficiency standard typically over-estimated the increase that would be caused by the new standard.
"We find that the actual cost of standards was always lower than DOE estimated for the nine product standards we examined," the report concluded.
Nadel and deLaski hypothesized that manufacturers may be finding lower-cost ways to meet the standard when their engineers redesign an appliance.
"In other words, in competitive markets, manufacturers have an incentive to do better than the DOE estimated in order to gain a competitive advantage," the report concluded.
The DOE agrees that pricing is complex and difficult to summarize.
"For example, the average cost in 2013 of a side-by-side refrigerator with a through-the-door ice/water maker was $1,109 for a baseline unit prior to the new efficiency standard versus $1,197 for a unit that meets the new standard. Meanwhile, the average cost of a refrigerator with a bottom-mounted freezer in 2013 was $914 for a baseline unit prior to the new standard versus $924 for a model that meets the new standard," a spokeswoman said in an email.
Just as was the case with the federal rules requiring household light bulbs to be more energy efficient, the industry, at least at this point, is completely on board.
"The industry is definitely on board and excited to make this happen," said Jill Notini, vice president, communications and marketing for the Association of Home Appliance Manufacturers. "This is our fourth standard for this product."
Notini said consumer price studies have consistently shown that refrigerator prices have steadily fallen since federal efficiency rules began in the 1980s.
"It has always been a popular argument that costs will increase and we have always seen that that has not been the case," she said. "I don't think the public should be concerned."
She noted one other wrinkle that consumers will find perplexing. The Federal Trade Commission's efficiency label that must be on every appliance has changed this year -- reflecting more stringent DOE testing for energy consumption. Labels from the old tests cannot be compared to those reflecting new test results.
The labels will still tell shoppers how many kilowatt-hours a refrigerator will use in a year and calculate total cost based on U.S. average electric rates. "You have to know your own electric rate," she said, in order to figure out your cost.
(In Northeast Ohio, rates averaged 14 cents per kilowatt-hour over the summer, according to the latest available data from the Public Utilities Commission of Ohio's monthly utility rate survey. Those in Columbus were 16 cents while rates in Cincinnati were 13 cents. Fall and winter rates are typically a penny or two lower. )
For those who want to blame the President for this imposition by the DOE, they will have to start with President Gerald Ford, who signed the first bill that set the stage for energy conservation, the Energy Policy and Conservation Act of 1975.
Coming on the heels of the Arab oil embargo, this is the same bill that established the Strategic Petroleum Reserve and got rid of price regulations on natural gas and import fees on oil. And it required the DOE to consider setting energy efficiency standards for more than a dozen household appliances.
In a statement issued when he signed the bill, Ford wrote, "On balance, therefore, I find that this legislation is constructive and puts into place the first elements of a comprehensive national energy policy,
The disgruntled will also have to blame President Ronald Reagan, who signed the National Appliance Energy Conservation Act in 1987 that actually set the first energy efficiency standards for household appliances.
And in 2007, President George W. Bush signed the Energy Independence and Security Act, the bill led to the creation of efficiency standards that led to the end of old-fashioned incandescent household light bulbs.