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energy labeling five star rating system

In its NPRM, the Commission did not propose using a five-star rating system for the energy disclosure.

While the research suggested some benefits, the Commission identified five problems with the five-star system.

First, the system did not perform better than energy cost in helping study respondents answer energy questions.

Second, the star system may have a greater tendency to convey inadvertent quality representations. Third, the fivestar system could create confusion over time because some bulbs rated as efficient today may be rated as inefficient in the future.

Fourth, in some contexts, the five-star systems interaction with ENERGY STAR may cause confusion. Fifth, as noted above, efficiency ratings sometimes can lead consumers to buy bulbs that are brighter, and thus use more energy, than is necessary.

Comments: The comments revealed mixed opinions about the adoption of a categorical (i.e., five-star) energy efficiency descriptor. CEE recommended against any star system because consumers might wrongly view the disclosure as an indicator of overall bulb quality and because consumers might confuse the star-rating system with the ENERGY STAR logo. However, the Energy Efficiency Advocates supported the star rating. Specifically, they argued that the FTCs research demonstrates that a five-star system would complement the cost disclosure.

In their view, the system would not only help consumers identify energy efficient bulbs, but would also be more useful and trustworthy than other disclosures.

The Energy Efficiency Advocates noted these findings were consistent with research indicating that categorical labeling helps motivate consumers to identify and purchase higher efficiency products. With regard to consumer inferences about quality, they noted that all descriptors in the FTC study performed poorly on the quality question and that consumer education will be necessary regardless of the descriptor.

The Energy Efficiency Advocates also questioned the FTCs interpretation of its consumer research.

In particular, they noted that where respondents viewed labels bearing the ENERGY STAR logo, the FTC study found no differences in responses between the five-star rating system and other disclosures.

The five-star rating system only performed poorly compared to the other disclosures where none of the labels in the question had an ENERGY STAR logo. In their view, the former scenario better represented the real shopping environment.

Finally, they noted that the FTCs concerns about updating a star rating system over time also applies to any comparative label system, including those used for the FTCs EnergyGuide program.

Discussion: The Commission declines to adopt a five-star rating system. 60 While the Energy Efficiency Advocates raised important points, the Commissions NPRM addressed many of these issues.

First, the Commissions study raised valid concerns regarding the five-star system communicating bulb quality to consumers. Although all treatments (i.e., label designs) in the study yielded incorrect answers about quality, the studys main purpose was to identify performance differences between various label designs and not the significance of overall response rates.

Looking at the differences between treatments, the star rating caused confusion more often than other energy disclosures.

Second, the Commission finds that a five-star system could cause confusion for consumers over time. For example, DOEs upcoming EISA-mandated efficiency standards would drastically alter any rating system developed by the Commission at this time. As a result of such changes, bulbs rated as four stars today may rate only one or two stars in the near future. Such changes could confuse consumers.

Third, a star rating system would be more difficult to maintain than an operating-cost disclosure. Whereas changes to operating-cost estimates simply require mathematical calculations, changes to categorical rating systems require subjective judgments.

For instance, the European Union recently had difficulty reaching consensus on how to recalibrate the rating categories for appliances in its energy-labeling program.

This experience demonstrates the significant policy challenges that can complicate efforts to update rating systems.

Finally, the Commission remains concerned that consumers would confuse a star rating with ENERGY STAR.

In the study, the star rating system was more likely than other disclosures to create confusion with ENERGY STAR when no ENERGY STAR logo appeared on the product.

The Energy Efficiency Advocates assert that light bulbs ordinarily are marked with the ENERGY STAR logo and that the study did not show confusion with ENERGY STAR in that circumstance.

However, because ENERGY STAR currently covers only CFLs and LEDs, consumers will encounter many bulb packages without the ENERGY STAR logo. Indeed, if a retailer groups its bulbs by technology, a consumer examining a shelf of halogen bulbs will not see any products marked with the ENERGY STAR logo.

As indicated in the study, these consumers may confuse a star rating with ENERGY STAR.

Importantly, the FTC label aims to complement, not detract from, the ENERGY STAR rating. As the Commission explained in its NPRM, the combination of the FTC label and the ENERGY STAR program provides a sound framework for conveying energy information to consumers and promoting energy efficiency. Specifically, the FTC label displays detailed energy information about bulbs regardless of energy efficiency, while ENERGY STAR provides the U.S. Governments imprimatur for high efficiency products. This system, as a whole, provides a robust source of energy information for consumers.

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