WallStreet Journal
Eco-Friendly ... and Frugal
Thursday February 12, 2009 4:28 pm ET
By Anjali Athavaley

Appliance makers are pushing a new wave of energy-efficient products this year. But instead of simply marketing them as "green," companies are now pushing their products' potential cost savings, in an attempt to attract penny-pinching consumers during the economic downturn.

At the International Builders Show last month, manufacturers advertised long-term cost-savings estimates for a host of new appliances. Co., for instance, says its hybrid electric water heater to be released this year will save consumers approximately $250 annually. Kohler Co. says that switching to its latest models of water-conserving showerheads, toilets and faucets saves a family of four between $90 and $200 a year. Corp. says its new top-load Cabrio HE washer can save up to $900 in lifetime water and energy costs.

Appliance manufacturers are pushing the financial savings because their eco-friendly green appeal alone may otherwise be a hard sell in a recession. But energy-efficient gadgets are also becoming more attractive because the price difference between them and traditional devices is narrowing. Kohler, for instance, says it doesn't charge extra for its products that meet efficiency standards for a federal designation known as WaterSense. The latest faucets, toilets and showerheads are priced at $150 and up, $250 and up, and $75 to $100, respectively. Whirlpool now offers Energy Star-rated models of its Classic washers and dryers, which are priced between $549 and $679 and are generally cheaper than its other lines. Energy Star -- a joint program by the Department of Energy and the U.S. Environmental Protection Agency -- is a designation for products that beat certain federal standards for energy efficiency. The Energy Star label can be found on a host of products -- appliances included -- and can also be applied to new homes and commercial buildings.

More appliance makers are trying to quantify exactly how much energy and how many dollars people can save in the long run. "If they can see in black and white that there is a cost savings involved, they are more inclined to buy it," says Mark Delaney, director of the home-industry sector at NPD Group, a market research firm.

The cost savings don't usually amount to much in the short term. And many families may not see the kinds of savings that the companies promise. That is because company estimates make certain assumptions, such as how long the new product lasts, how old your previous appliances were, and whether you are using the latest gadget with other energy- or water-efficient devices under the same brand name.

Kohler's estimated savings of $90 to $200 a year, for example, applies to consumers who have updated all of their showerheads, toilets and faucets to Kohler-brand water-saving products. A company spokesman says it doesn't break down the cost savings for individual products. And while Whirlpool says that consumers can save $900 over "a lifetime," the actual amount of time the appliance lasts can vary. (A company spokeswoman says the estimate is based on 10 years of use.) Another appliance maker, Electrolux, has an Ecosavings calculator on its site that shows cost savings for switching to energy-efficient appliances for each state. But the calculation assumes that a household is replacing 10-year-old appliances with the latest Electrolux products.

In general, actual dollars saved annually end up being lower than most consumers expect when they invest in the product, says David Lockwood, director of consumer insights at Mintel International, a market-research firm.

Lori Villarreal, 35, of Sherman, Texas, had new Kohler-brand water-saving showerheads and dual-flush toilets -- which have different settings for liquids and solids -- installed in two bathrooms last July. She says she paid $359 for each toilet. Kohler says its water-efficient showerheads range from $75 to $100.

She says she opted for the new appliances for two reasons: "Part of it was wanting to do something to conserve water, but practically speaking it's also going to save us money," Ms. Villarreal says. But so far, she hasn't experienced much of a difference in her water bill, which was $2 to $5 less in January and February of this year, compared with the same months last year.

Government rebates can add to the savings, however. At least 15 states -- Colorado, Arizona and Illinois are examples -- have rebate programs for Energy Star appliances, according to the Association of Home Appliance Manufacturers. The programs are often offered through utility companies. For instance, Pacific Gas & Electric Co. in California offers rebates of up to $75 for washers and up to $50 for dishwashers and room air conditioners for certain Energy Star-designated models. Consumers can go to energystar.gov and type in their ZIP Code to see what rebates are available in their area.

And more rebate programs may be on the way. The stimulus bill recently passed by the U.S. House of Representatives includes $300 million to fund such rebates. If the provision is a part of the final bill signed into law, it would allow more states to adopt similar programs for consumers who want to replace older appliances, says Jill Notini, spokeswoman for the home-appliance trade group.

Last week, President Obama made his own push to strengthen appliances' energy-efficiency. While the DOE is required by law to finalize energy-efficiency standards for a host of products -- household appliances included -- by certain dates, the agency has missed its deadlines in the past. President Obama put the heat on the DOE by issuing a memorandum telling the agency to both meet its August deadline and to first set standards for products that will result in the greatest energy savings.

To be sure, manufacturers are continuing to unveil appliances that simply contain eco-friendly features and have green appeal. Whirlpool, for instance, is rolling out a Resource Saver refrigerator in March for $2,099. It exceeds federal energy-efficiency standards by 30% and uses energy comparable to the amount required to power a 60-watt light bulb, Whirlpool says. The company also released last Sept. a dishwasher priced at $799 that saves consumers 4,300 more gallons of water a year compared to hand-washing, Whirlpool says.

Still, with the housing downturn expected to deepen this year, manufacturers face an obstacle in getting people into their showrooms. The long-term benefits of energy-efficient appliances are unlikely to be enough for many consumers to make the investment upfront in the current housing market, Mintel's Mr. Lockwood says. A July Mintel report shows that shipments of laundry appliances, for instance, were forecast to drop to 15.4 million in 2008 from 16.3 million in 2007. "If no one is building or buying houses, they are also not buying the equipment to build them," he says.

Write to Anjali Athavaley at anjali.athavaley@wsj.com



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WallStreet
·Homebuyers Go Green to Cut Bills
·Sorting Through The Stimulus Breaks
·Appliance Makers Push 'Green' Savings


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