The Truth Behind Energy Star

(CBS)  It's a bitter pill for consumers to hear that a label they trust might not be so reliable. But that seems to be the story with the Energy Star logo, which is supposed to signal that an appliance is particularly energy efficient.

SmartMoney magazine investigated and found that the logo can be deceiving. Leigh Gallagher, senior editor, joined The Early Show Thursday to discuss the findings with co-anchor Julie Chen.

"It's really hard to walk into a Best Buy or Home Depot without seeing these products everywhere," Gallagher said. "This label is being heavily promoted. We looked at how the program is run and how the products are tested and it's not always what it's cracked up to be."

With televisions, for example, Gallagher said the testing is flawed because it is done when the TV is turned it off, not when it's turned on.

"The companies are responsible for policing themselves. The agencies that run the program don't actually test the products," she told Chen. "So there's a variety of reasons it's just not always as energy efficient as these products claim and as consumers think the label signifies."

The magazine found that the testing is least reliable on TVs, air conditioners, desktop computers, laptop computers and VCRs. Gallagher explained why, for example, the label is misleading on air conditioners.

"The way these things are tested is there's one standard test and it doesn't really account for variations in humidity," she said. "An air conditioner in Florida at 90 degrees, where it's humid, has to work a lot harder than one in Arizona, even at the same temperature. So the constant temperature means that it's not really going to tell you exactly how much you are going to be using and how much you are going to be saving."

Gallagher said the Energy Star logo is more reliable on dishwashers, refrigerators, freezers and washing machines. And consumers are willing to pay the higher price in exchange for the lower utility bills.

"What we found is, roughly speaking, the prices are about 20 percent to 30 percent higher on products bearing the Energy Star logo," she said. "And they are selling more. Refrigerator sales with the logo are up something like 40 percent. So people are looking at this and spending more for it.

"The theory with a lot of energy-saving appliances is that you spend a little more for them and if you have it for 10 or 12 years it will be worth it because the amount you'll save over time is worth it. But the thing is technology has improved across the board so that oftentimes if you see a washing machine with energy star label, the one next to it is also going to be pretty energy efficient."

Gallagher said certain products, including dryers, ovens, home water heaters, toaster or toaster ovens and MP3 players should never have the logo, but often do.

"This is one of the most egregious violations," she told Chen. "Clothes dryers use so much energy and they all use basically the same energy no matter what. They are excluded from the program. They aren't allowed to participate."

But some stores display rows of dryers with the Energy Star label prominently displayed, because retailers are allowed to participate in the marketing of the Energy Star program. While managers promised to correct the mistake, "in the meantime, lots of consumers went in and bought a dryer thinking they were going to save energy and it's not possible."

Gallagher said the more reliable way of checking whether a product is energy efficient is to look at the energy guide, which is on the back of all appliances.

"It's a yellow and black label mandated by the (Federal Trade Commission)," she said. "That's the energy guide label. This isn't the marketing splash of the Energy Star. It's an FTC required label that tells you where this falls in the range of other appliances and how much you'll save per year. This is a much better indicator. Not that the Energy Star means it's bad. It's just not always what consumers are led to believe."