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Study Examines DOE Standards

A Look at Projected and Actual Costs of Efficiency Standards

October 7, 2013

WASHINGTON — A new study by Steven Nadel and Andrew deLaski examines the estimated benefits of U.S. Department of Energy (DOE) appliance standards relative to the estimated costs, finding DOE only sets standards that it finds are cost-effective to consumers.

The study compares the projected and actual costs of nine appliance- and equipment-efficiency standards, finding across the nine rulemakings that DOE estimated an average increase in manufacturers’ selling price of $148. On average, the actual change in price was a decrease of $12. At the median change, DOE estimated $108, but the actual was only an increase of $10. DOE estimated the new standards would increase product prices by an average of 35 percent, but average actual prices did not change after adjusting for inflation.

The study asks why this is the case, with the authors recommending DOE conduct additional research on ways to model innovation when making price estimates, and that DOE include sensitivity analysis in its calculations to look at the cost-effectiveness of standards if past inaccuracies in DOE price estimates continue.

Publication date: 10/7/2013

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