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Energy Efficiency: Opportunities Exist for Federal Agencies to Better Inform Household Consumers

GAO-07-1162 Published: Sep 26, 2007. Publicly Released: Oct 04, 2007.
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Household energy use accounts for nearly one-fourth of all energy consumed in the United States, amounting to more than $200 billion per year spent by consumers. Recent increases in energy prices have heightened consumers' interest in making their households more energy efficient. To this end, the federal government manages two key efforts--EnergyGuide and Energy Star--to inform consumers about the energy consumed by certain household products. EnergyGuide is a mandatory labeling program created under the Energy Policy and Conservation Act of 1975 (EPCA) and administered by the Federal Trade Commission (FTC) with assistance from the Department of Energy (DOE). It requires manufacturers to label and prominently display information about the energy consumption and annual energy costs of 11 categories of household products. In recent years, manufacturers have used adhesive backed labels adhered to appliances and so-called "hang tags" loosely attached to the interior or exterior of appliances. In its August 2007 revisions to the rule, FTC, among other things, prohibited the use of hang tags on the exterior of appliances, but continues to allow them on the inside. The law requires retailers to provide this information in catalogs offering products for sale. In 2000, FTC interpreted its authority over catalogs to encompass Web sites and required retailers to provide the same information on Web sites where consumers may purchase such products. The law prohibits retailers from removing labels placed by manufacturers or making them illegible. Also, EPCA requires DOE, in consultation with FTC, to study new product categories to determine whether they should be added to the EnergyGuide program and to report annually on the energy savings of the program. Energy Star is a voluntary labeling program created in response to the Clean Air Act amendments of 1990, and the Energy Policy Act of 1992 and jointly administered by the Environmental Protection Agency (EPA) and DOE. In general, it is designed to identify models for 26 categories of household products that, without sacrificing performance, are the most energy efficient (the top 25 percent). Manufacturers are permitted to apply the Energy Star logo to products that the manufacturers identify are qualified, based on EPA or DOE criteria. Standards for internal control in the federal government require federal agencies, including FTC, EPA, and DOE, to establish goals, measure performance, and report program costs and accomplishments in order to improve management and program effectiveness. In this context, Congress asked us to analyze the EnergyGuide and Energy Star programs to determine (1) how these programs have changed over time, (2) how federal agencies verify the accuracy of the energy consumption estimates for household products covered by these programs, (3) the actions federal agencies take to ensure that the EnergyGuide is available to consumers and that the Energy Star logo is not misused, and (4) how federal agencies measure the effectiveness and cost of these programs.


Matter for Congressional Consideration

Matter Status Comments
To ensure that consumers have consistent access to information about the energy efficiency of household products, Congress may wish to consider granting FTC with specific authority to require retailers to prominently display the EnergyGuide in retail showrooms.
Closed – Not Implemented
After a decade of congressional cycles, it appears that the Congress does not plan on acting to implement GAO's suggested matter to give FTC the specific authority to require retailers to display EnergyGuides. As such, we are closing this matter as not implemented. (February 2017)

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy To ensure that consumers have access to information about the energy efficiency of the types of household products that account for a significant and growing portion of household energy consumption, such as computers and televisions, the Secretary of Energy, in consultation with FTC, should regularly review product categories not currently covered to assess whether they should be included in the EnergyGuide program.
Closed – Implemented
DOE has taken steps that will allow it to broaden coverage of the Energy Guide program. In 2010, DOE published a final rule in the Federal Register to define the term "household" and related terms (75 FR 13217, March 19, 2010). With the "household" definition in place, DOE may exercise statutory authority to include products beyond the EPCA specified products as covered consumer products. DOE can then set test procedures and efficiency standards for these products. With this new authority, FTC has taken steps to issue a standard for televisions (October 2010). Beginning in May 2011, manufacturers will have to place an Energy Guide label on new televisions offered for sale. The placement of this label will provide consumers with more information regarding estimated energy consumption prior to purchase.
Federal Trade Commission To ensure that the EnergyGuide program is effectively achieving its goal of improving household energy efficiency by establishing goals, measuring performance, and reporting program costs and accomplishments, the Chairman of the Federal Trade Commission, as required under federal standards for internal control in the federal government, should regularly measure the cost and, to the extent practical, the effectiveness of the EnergyGuide program.
Closed – Not Implemented
Based on contact with FTC's liaison in June 2011, FTC believes that it is taking action on a very limited basis. FTC regularly does review cost and benefits of specific regulations that fall under the Appliance Labeling Rule. For example, FTC has commissioned consumer research regarding the efficacy of current disclosures of light bulbs. However, it has not measured the overall effectiveness of the EnergyGuide program as a whole and does not believe that it should have to do so.
Department of Energy To assist FTC in measuring effectiveness, the Secretary of Energy should measure the energy savings of the EnergyGuide program, as required by EPCA.
Closed – Not Implemented
Based on contact with DOE's liaison in August 2011, DOE agreed with the recommendation but has not taken actions to implement it.
Federal Trade Commission To ensure that consumers have consistent access to accurate information about the energy efficiency of household products, the Chairman of the Federal Trade Commission should monitor the availability of the EnergyGuide label and, within existing authority, enforce compliance through periodic inspections of retailers' showrooms and Web sites and by routinely and systematically tracking complaints, the issues they raise, and the manner in which these matters are resolved.
Closed – Implemented
FTC has taken three key steps to assess the extent to which its rules are being followed. First, in November 2008, the FTC staff conducted multiple store visits across the country and inspected Web sites to gauge rule compliance and examine the extent to which required information is available to consumers. In particular, FTC staff visited 89 retail stores and collected information about the EnergyGuide label for 8,616 appliances. We found that the EnergyGuide label was missing on 21% of the appliances we reviewed and that the label was not easily read on 3% of the appliances. In the spring of 2009, the FTC staff reviewed 25 Web sites and examined a total of 618 appliances. We found that 75% of the appliances did not provide either an image of the EnergyGuide label or the disclosures required by the FTC's Appliance Labeling Rule. Second, in July 2009, the FTC staff sent warning letters to the operators of these 25 Web sites. The FTC staff conducted follow-up reviews of the Web sites and the Commission has taken action against those retailers it alleges were not in compliance with the Rule. Relatedly, on November 1, 2010, the Commission issued complaints and accepted consent agreements against three retailers to resolve allegations that they failed to provide the EnergyGuide information online. PC Richard & Son agreed to pay $180,000, Abt Electronics agreed to pay $137,500, and Pinnacle Marketing Group agreed to pay $100,000. The Commission also issued notices of proposed penalty of $540,000 against Universal Computers and Electronics and $100,000 against Universal Appliances, Kitchens, and Baths. Third, FTC staff also has implemented procedures to collect and maintain any complaints we receive concerning appliance labeling. Last year, we received six complaints that related to appliance labeling. The FTC staff will continue to follow these procedures with respect to complaints received in the future.
Federal Trade Commission To ensure that EnergyGuide remains effective in a changing retail market, the Chairman of the Federal Trade Commission should clarify FTC's rules regarding the display of EnergyGuide information in the current retail environment, such as for warehouse retailers and Web-based product purchasing.
Closed – Implemented
FTC has taken steps to improve its oversight of the availability of the Energy Guide label. In particular, in developing the rule for televisions, FTC agreed with commenters on the rule that it should require online retailers to provide access to an image of the Energy Guide label. The commission has also taken actions against online sellers of other products who were not providing such access, resulting in consent settlements and proposed fines of over $1 million.

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