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Saturday, September 19, 2009

California's proposed plasma TV ban

The California Energy Commission Friday proposed to phase in regulations banning TVs from sale in California that don’t meet minimum efficiency standards — calculated in terms of watts per square inch. According to the Merc, about 20% of current TVs would be banned in 2011, while 80% would be rejected in 2013.

The effect of the regulation appears to be to ban plasma screens, and to force use of OLED or other technologies that are less mature and more expensive.

Retailers and manufacturers that would lose sales naturally opposed the proposal, as did the industry’s main trade association:
“We share the goal of energy efficiency and have worked with the CEC to develop alternatives that will achieve the same or better energy efficiency goals without killing jobs or thwarting innovation. The CEC has chosen to ignore alternatives and input, and small businesses and consumers in California will pay the price.”
Meanwhile, makers of the more efficient technologies praised the proposed regulation that would shift demand in their favor. As the LA Times reported
"The average Californian should not see a cost premium," Bruce Berkoff, chairman of the LCD TV Assn., said in a letter to the Energy Commission. "They will, however, benefit from dozens to hundreds of dollars in energy cost savings over their TV's lifetime, thus making the proposed standard extremely cost-effective for the state of California."
By regulating TV energy consumption the CEC is venturing into politically tenuous territory — unlike, say, Title 24, which impacts only home builders (who are invisible) and rich people who build their own homes. Large screen HDTVs are seen as a god-given right by American consumers — both rich and poor. A poll conducted by opponents claims that 57% of Californians oppose the move. I predict that enterprising state politicians, spotting an opportunity, will campaign in 2010 for repeal of the ban.

According to the LAT, the governator supports the CEC action, suggesting his tenure as a business-friendly environmentalist was short-lived — or that the business opponents of the planned RE regulation are more politically influential than are opponents of the TV EE regulation.

Whether or not this is a good idea in principle, the timing seems terrible. In August, California unemployment hit a postwar record 12.2%. More convincingly, the CEC has not made a compelling argument that this is a state issue. The design and manufacture of televisions have high economies of scale, so cutting the state off from the global market will inevitably increase costs to consumers.

Also, this is not the Bush-era federal government. The Obama Administration and Energy Secretary Chu have made clear that energy efficiency is a major national priority, and additional federal action here during the president’s first term is a virtual certainty.

Earlier this month, the EPA already raised the efficiency expectations 40% for Energy Star-certified televisions, to be phased in in May 2010 and May 2012. While the industry has opposed many aspects of those changes — in part, because they seem to favor small TVs over large TVs — the Energy Star choices are voluntary ones. Consumers can still buy brighter, cheaper TVs that are not Energy Star qualified if that’s what they prefer, even though they’ll pay more for energy over the life of the TV.

The CEC argues that energy use by consumer televisions is increasing, and that at some point it will require an additional power plant to serve all these big screen TVs. Apparently the unelected CEC seems to think that ordinary consumers will make “bad” decisions if left to their own devices, and so that it’s their responsibility to take away those “bad” choices.

However, the CEC could use market mechanisms to achieve the same goal. A free market uses the price system to give feedback between various alternatives, so that (for example) it’s up to consumers to trade off up front purchase price (or features or quality) against long-term energy consumption.

If consumers don’t make “good” up front decisions, then the CEC should try to better inform voluntary choices. One way would be to work with the EPA to create energy usage stickers for TVs like those that are already common for refrigerators. Those stickers have done more than Energy Star to help consumers make intelligent long-term decisions on their appliance purchases, since they disclose the actual consumption differences rather than merely bifurcating products into “good” and “bad.”

Perhaps the problem is that the impact on society of new electricity capacity is not being fully paid by consumers making these decisions. If so, the answer is simple: raise energy prices (whether on average, or for usage above a baseline amount). Some consumers will buy more efficient appliances, some will cut energy usage elsewhere, and some will pay the additional cost. Higher energy prices would also increase the market value of renewable energy.

The CEC now enters a 45 day comment period prior to its planned Oct. 13 hearing. Comments can be submitted via the pending decisions web page, by emailing the commission with the relevant docket number (09-AAER-1C).

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