The Truth and Consequences about Energy Star

Everyone knows about Energy Star. What most foodservice professionals don't realize is that the program is about to undergo some significant changes that could impact the industry.

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The Energy Star brand has become the ubiquitous and default symbol for the overall energy efficiency movement. Consumers have Energy Star-rated products littered throughout their homes and that trend has made its way over to the foodservice industry. When asked how they are making their businesses more environmentally friendly, most foodservice operators proudly state they specify Energy Star-rated equipment. As a result, foodservice manufacturers who make products that fall within one of the nine categories that carry Energy Star ratings doggedly pursue this form of recognition and beam with pride once they receive it.

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With high customer awareness and a motivated contingency of manufacturers seeking its designation, it would appear as if things could not be better for Energy Star, right? Wrong. In fact, as the calendar rolls over to 2011, the Energy Star program finds itself at a crossroads with the foodservice equipment community thanks to some new regulations that take effect January 1.

Why Energy Star is Important
Ask most any foodservice professional about Energy Star and they all agree on one point: Energy Star has a place within the foodservice industry because it promotes conservation. "It is important to the industry because its aim is to provide clarity," says Chris Moyer, manager of the National Restaurant Association's Conserve initiative. "There are a lot of different labels that claim energy efficiency but Energy Star provides something an operator can look for when making a purchase."

"It makes it really easy to communicate the program requirements to the marketplace, so we like Energy Star," says David Zabrowski, director of engineering for the Foodservice Technology Center. "Without Energy Star, the delivery is not as clean. But we want to get the energy savings regardless of whether they comply with the government program."

Foodservice equipment manufacturers like the Energy Star program for other reasons. "From a return on investment perspective Energy Star is important, too," says David Rolston, president and CEO of Hatco Corporation and the head of NAFEM's Government Relations Committee. "If an operator knew they would get 20 years out of a piece of equipment and knew they were going to be in business that long, they would buy their equipment differently."

And because of its success in the consumer products industry, Energy Star gained instant credibility among foodservice professionals. "Energy Star has strong brand recognition, too. So when foodservice operators see the Energy Star logo people think it is a better performing product," says Dean Stanley, vice president of engineering of AccuTemp Products, Inc.

As a result of its noble intentions and a strong reputation earned on the consumer side, foodservice equipment manufacturers came to embrace Energy Star. "It creates a level playing field between small and large manufacturers," Stanley says. "It allows us all to be listed in the same database as being as good as the next guy with respect to specific products. Basically, the program makes it easier for us all to compete and provides an instant level of credibility."

Energy Star also provides the impetus that drives foodservice equipment manufacturers to enhance the efficiency levels of their products. "As more and more manufacturers reach that level, Energy Star will raise the bar," says Dipak Negandhi, P.E., senior engineer for Unified Brands. "Theoretically, you will eventually reach a level where you can't improve any longer. When that happens, Energy Star phases out for that product. And that's a very good goal to have. So in theory, the whole concept is good."

In addition, the continued emphasis on Energy Star allowed the industry to address some common stereotypes about energy-efficient equipment. "There is a perception within the industry that you have to sacrifice performance to save energy," Zabrowski says. "On the cooking side, Energy Star products outperform other products, with the exception of steamers."

Energy Star — Then
The process for a piece of foodservice equipment to receive an Energy Star rating was rather straightforward. If the product fell in one of the nine categories the program recognizes, a factory representative would return a signed partnership agreement to Energy Star each year. The factory would also test the product's energy efficiency levels in their own lab or at a third-party facility and submit the results for consideration to Energy Star. If the results met the program's efficiency standards for the category then the factory was able to market their products as being Energy Star rated.

For some, the self-certification process was one of the program's strengths. "Self-certification was dependent more on our schedule than someone else's," Stanley says. "There are steps you need to go through and you need the right people and equipment to do it. But it was low cost because you could do it yourself. We have ASTM reports on steamers and used a lot of those for Energy Star qualification. When we brought on the griddle category for Energy Star, we did that ourselves, too."

Unfortunately, not everyone approached self-certification in the most honest and ethical way. "As much as I would like to say nobody in foodservice cheats, some were stretching the rules and it became known," Zabrowski says.

How Did We Get Here?
At the request of Maine senator Susan Collins, the U.S. Government Accountability Office (GAO) conducted an investigation that tested the Energy Star partnership and product certification process to determine if manufacturers could receive an Energy Star rating for products that do not meet the program's ratings. In March 2010 the GAO issued a 27-page report detailing the findings of its investigation. The GAO reported that the overall Energy Star program was vulnerable to fraud and abuse. As part of its research, the GAO obtained Energy Star ratings for 15 bogus products, including a gas-powered alarm clock.

"Perhaps the Energy Star ship was not being steered as well as it could have been," Stanley says. "Things can be going well on the surface but there may be some underlying issues that nobody knows until you go through a rough period. So the holes have been identified but exactly how they came about is not clear."

As a result of these findings, Congress mandated that the EPA revise its Energy Star standards to include third-party certification and verification testing of all products. "The EPA is saying they are not the experts in some of these areas and that's why they are getting involved with some of these people," Zabrowski says. "The GAO said they need to do accountability testing and show they are taking steps to preserve the integrity of the program. So the EPA is stuck between a rock and a hard place."

The EPA used what it describes as an open stakeholder process to gather feedback on the enhanced testing and verification process. (See sidebar for the EPA's response to this specific issue.) This included introductory conference calls with all stakeholders, soliciting feedback to a draft document from all stakeholders and issuing a final conditions and criteria document. The EPA also says it has had a number of calls and corresponded with individual manufacturers to listen to their concerns and address their feedback. In addition, EPA representatives met face to face with NAFEM representatives on several occasions.

As a result of these various forms of interaction, the EPA decided to allow witness verification of the data submitted in the certification testing phase. Beyond that, foodservice equipment manufacturers feel their efforts to contribute to the process were largely ignored. "Even though Energy Star says they want feedback, they've ignored most of it," says Zabrowski, who points out that comments NAFEM sent to the EPA regarding the proposed changes to Energy Star were not posted for public viewing. "The manufacturers feel like their comments have gone into a black hole. We have done a lot of work and done everything we said we would do."

Still, the manufacturers seem to understand that the EPA has been given a mandate to improve the program and they want to contribute to these efforts. "You can't ignore what they need and we need to work with them to find a middle ground," Stanley says. "Unfortunately, we feel as if our ideas have not been heard."

Energy Star submitted a revised partner agreement that outlines the new criteria for certification and verification testing, Zabrowski says. Anyone that wants to remain a partner had to return that by Nov. 30 or their products will be de-listed. In doing so, these manufacturers had to provide a list of products that they would continue to list as Energy Star-rated and designated which third-party accredited agency will certify their products.

"Prior to this mess, the position of the NAFEM Government Relations committee was to push Washington to come up with more standards for more categories," Rolston says. "So we were gently nudging them where we could. When the EPA came down with these testing requirements, we changed tactics. Now our goal is to try to get them to allow us to do the self-certification but with third-party oversight. These organizations oversee our testing, review our reports and then give their approval."

Energy Star – Now
One of the biggest changes to Energy Star as of January 1 is that third-party validation is required to certify a product as meeting the program's standards for efficiency. The third-party certification may be done in one of three ways: witness testing at the manufacturer's factory or testing facility; data acceptance, meaning the manufacturer actually tests the product and submits without the data for review and certification by an approved organization; or they may require the maker to submit the product to an approved lab for testing. Each certification body has an accredited lab they work with, according to Zabrowski.

"I suspect the bulk of the industry will do witness testing or data acceptance because it is the most cost effective all around," Zabrowski adds. "The certification bodies don't have enough lab space to do all of the testing."

While this step will certainly add some validity to the process up front, there are some flaws in this approach. For example, not every foodservice equipment manufacturer has the ability to test its own equipment. And those that do have the ability to test their own items have more experience working with commercial kitchen equipment than the certified testing labs, Zabrowski points out. So while the playing field may be a little more level, it will remain far from perfect.

"Create a test that reflects real world applications and usage. You don't want to create a test that just appeases people," says one manufacturer who requested to remain anonymous. "The test for the cold side is not real world by any means. They don't take into account functionality, proper sizing and other factors. When that restaurant is up and running you have temperature and humidity that is much higher than the testing protocols."

For example, the testing protocol for reach-in refrigerators calls for the doors to be opened six times an hour, according to one manufacturer. "During busy periods, the doors are opening and closing at a rate far greater than the testing protocol calls for. You need to have a test that's reflective of how the equipment — be it cold or hot — is really being used by the kitchen."

If the test is not representative of the environment found in most commercial kitchens, then the operator customers may not derive the benefits they had hoped to get when purchasing an energy-efficient piece of equipment. "Ultimately, what you are doing is lying to the consumer by saying this piece of equipment will save you energy but when they plug it in their kitchen it is not going to save them money. In fact, it will cost them more to operate because some manufacturers will change their systems to meet the qualification," said one manufacturer. "When it gets put into a real world application the energy-efficient item actually costs more to operate. I think that is where they are missing the boat by not engaging real world scenarios with these tests. The testing absolutely has to be third party and the energy protocols need to be better defined."

Of all the changes going into effect verification testing seems to raise the biggest concerns. Under the new verification guidelines, 10 percent of a manufacturer's Energy Star-rated products must be tested each year by a third-party certified testing organization. The product undergoing the tests will be purchased using public means, meaning the testing lab will buy it from a supplier to ensure the model is randomly selected and no strings are attached, Stanley says. So in addition to paying for the testing, the manufacturer will now have to pay full market value for their product and to have it shipped to the testing lab.

Most factories are frustrated with this aspect of the standards because they have gone from having no expenses associated with verification testing to a very expensive and complicated procedure. How costly will the testing become? Well, AccuTemp's Stanley has done the math and estimates it would cost his company $340,000 to qualify all of its models. "A big conglomerate may test all of its models but we may qualify one of each model," he says. "I think you will see some manufacturers not continue on with Energy Star. We don't have to have Energy Star. We existed before. If I can't afford it or it is too hard to work with, why continue?"

Ultimately, though, someone will have to pay for these new testing procedures. So factories will face a choice: absorb the expense as a cost of doing business or pass it along to the customers. And this factor may alter the competitive balance the program once helped to create. "It is the little company you worry about," Zabrowski says. "The bigger companies have the engineering resources and labs in place. The bigger companies have the market presence to absorb this."

But the added cost is just the beginning of the list of manufacturer concerns when it comes to verification testing. "The EPA standard also assumes that a standard item can be pulled off the shelf, but in this industry that is not the norm," Negandhi says. "The operators are trying to differentiate the product they serve and they want the equipment to be optimized for that. Depending on the type of ethnic food you are serving, you might want a slightly different or more precise control point than someone else who might use the same piece of equipment. You have standard items that you can assemble and ship in five days but we can't afford to have every combination of every item sitting on the shelf in our warehouse."

While the new requirements for certification and verification testing appear to be pretty clear, that's not the case with every aspect of the program and manufacturers are hoping to gain some clarification. For example, under the previous guidelines, entire families of products could carry the Energy Star label but only one item would need to be tested. "The way EPA has worded the document for initial qualification is that every variation of a product needs to be tested. But what that means is not exactly clear," Negandhi says. "In many cases, we have been able to prove that products within the same family have the same efficiency rating. But we are not sure how EPA is going to manage this."

This will be a critical issue for manufacturers and their operator, dealer and consultant customers moving forward. It is very common for a manufacturer to differentiate their model numbers by customer type or even by customers. For example, a specific piece of equipment may carry one model number for a particular chain, another for the non-commercial users such as colleges or universities and another for correctional foodservice. Oftentimes, the differences between the items are subtle such as using different casters, handles or nobs from one segment to another but they still require different model numbers.

"Those features have nothing to do with the basic cooking operations of the appliance and yet it could require separate testing, Negandhi says. "You have not changed the heating system or how you insulate the combustion chamber, so you will not see a change in efficiency."

FSTC's Zabrowski agrees. "I think the manufacturers have a strong argument to say the product is part of the family and should be treated as such."

Another issue that foodservice manufacturers continue to question is why the EPA is requiring 10 percent of a factory's Energy Star-rated products be submitted for verification testing on an annual basis. "Designs in foodservice equipment don't really change, unlike in consumer products, which change yearly to spur interest and sales," Zabrowski points out. "If you have not changed any of the specifications in your design then the efficiency is the same. But nobody has equated the design to the efficiency."

"So why do you need to test that 10 percent of products each year if nothing has changed?" Negandhi asks.

In addition, there is concern among many foodservice professionals about whether there is enough bandwidth among certified testing bodies to handle all that will be expected of them moving forward. Previously, it was not uncommon for a product to take a year or more to become Energy Star certified and that was before the verification testing was added. "It took ten years to populate these lists and now we are going to re-test all of these models in 24 months?" says Zabrowski, whose company is looking to become a certified testing bureau. "There is a concern about whether the infrastructure is there, and then there is the time and cost associated with the test."

For their part, some of the testing labs are confident of their ability to meet the challenges the new testing procedures will present. "I am confident that with the number of labs participating in the certification and verification process, there will be enough bandwidth to do these tests," Carl Bloomfield, director of business services for appliances and electronics and global business lead for Energy Efficiency Program at Intertek, a global testing body. "If we were in a society where everyone was doing it right, there would be no need for this type of approach. But the random studies done by Energy Star showed a bunch of products were qualified that should not have been. Each vertical market served by Energy Star will have a different point of view of this process. But when you go to a third party approach you level the playing field to ensure the mark means something."

In addition, Bloomfield feels that third-party verification testing will help contribute to a better overall process. "The standards used to be subject to a lot of interpretation, which meant the results may not have been as consistent," he says. "As a result of this new program, the EPA is doing the interpretations, which means the results should be more consistent."

Once the verification testing is done the factories are left trying to decide what to do with the equipment, seeing as these items can no longer be sold as new. "It would seem as if a mandate from up high within EPA requires certain things be done, no matter what," Stanley says. "Some of those mandates are hard, fast and without flexibility. So the whole program, from a manufacturer perspective, suffers."

Consumer vs. Commercial Products Testing
Although many may consider the new testing procedures far from perfect, it is important to point out that Energy Star appears to be taking a similar approach across all of the market segments it serves. Still, that point is of little comfort to most foodservice professionals.

"Foodservice equipment is more expensive than consumer items and the tests are more expensive," Zabrowski says. "That argument has fallen on deaf ears. Energy Star does not seem to be willing to treat any one category different."

The testing of foodservice equipment is not on the same scale as most consumer testing. For example, when testing a piece of gas cooking equipment the following variables must be taken into account: gas combustion rate, type of gas used, heating value, elevation of the location where the test takes place, humidity levels and air quality and food types used for the test such as meat, potatoes or vegetables.

The first day of testing the cooking equipment requires staff to setup the appliance to ensure it works correctly and verify the environmental factors mentioned earlier, Negandhi says. On the second day, staff tests the piece of equipment three times and reviews the data to ensure it is accurate.

These test methods have evolved over time to better reflect the actual applications of specific pieces of equipment and to develop results that are more meaningful to their customer base. For example, the efficiency of a griddle was once based on how long it took that piece of equipment to boil a pot of water or melt a piece of ice, says Negandhi. Over time, though, it became apparent that it was easier to boil water or melt the ice than it was to cook food items due to their starchy nature or density.

"The users could not relate to efficiency tests based on melting ice or boiling water but when we started using food they immediately recognized how it relates to what they are cooking," Negandhi says. "So the results have more value to the users. If the results are more meaningful, it means customers are more likely to buy a particular item."

In contrast, testing a consumer appliance, like a television, is much more straightforward, Negandhi points out. "There are no variables in the operating conditions," he says. "A television uses the same amount of energy in a 30-degree room as it does in an 80-degree room."

In addition, many foodservice manufacturers feel the EPA's new testing requirements are particularly harsh and not consistent with other types of tests equipment must endure to meet safety and sanitation regulations. "The EPA has not justified why any of these extra layers over and above the safety and sanitation standards are needed for energy testing," says Joel Hipp, agency approval engineer, Hobart Corporation, a division of ITW Food Equipment Group. "We believe there are other ways to handle this."

Like many other foodservice equipment manufacturers with Energy Star-rated products, Hipp would like to see the new standards leverage the existing protocol used by the safety and sanitation bodies such as UL, NSF, CSA and ETL. This would include periodic unannounced inspections on the shop floor to confirm the factories are using the same components that were in place when the product was first certified. Known more commonly as a file review, inspectors would bring with them documentation submitted by the factory that outlines the construction of each piece of equipment, including the componentry, its rate of energy consumption and more.

"We do not have to pass on the cost of annual re-testing to the customer through the price of the product," Hipp says. "The second benefit is that the consumer can be confident the product has been verified to meet the standard to which it was testing. These organizations already come into our factories today to inspect our products for safety and sanitation, anyway."

Energy Star in the Future?
In general, foodservice equipment manufacturers seem to support the goal of adding more substance to the process by which a product becomes Energy Star rated. At the same time, foodservice equipment manufacturers feel that the EPA could have been more open to their suggestions throughout the entire process, which would have resulted in more reasonable testing procedures both in terms of time and cost.

"We have consistently showed that an energy-efficient product will pay for itself over its lifecycle," Negandhi points out. "So we are all for Energy Star, but we want it to have a reasonable cost-benefit analysis. Congress did not intend for Energy Star to destroy any industry but the EPA is taking a heavy handed approach to working with industry."

One thing all the factories agree on is the potential for the complex testing system, particularly the verification process, to drive cost into a market with notoriously tight margins. "We are going from no verification costs to potentially enormous," Stanley adds.

Some foodservice professionals also feel the new regulations will have an adverse impact on the industry's competitive landscape. "It elevates the large companies over the smaller companies," Stanley says. "Someone with deep pockets can chalk it up as the cost of doing business. We don't even know all of the impact, yet."

The fallout from the new standards could be dramatic. "When they see what it is going to cost them, are the manufacturers still going to want it? It is a voluntary program and the manufacturers don't need to have it," Zabrowski says. "Right now the utility companies don't require Energy Star. They just require that your equipment meet certain energy efficiency guidelines."

"What it comes down to is that people want bucks but I don't need the Energy Star label to give them that," says Stanley. "When you look at the list of rebates for California, you don't see Energy Star listed anywhere. So maybe I will market my products as meeting California rebates."

"Although we are a large company, there are a lot of smaller companies in our industry who might drop out of the program," Hipp says. "If very few manufacturers participate it could water down the meaning of the label. That's what happened in Europe. They required third-party testing and many manufacturers stopped participating."

Some within the industry worry that if enough manufacturers decide to opt out of this program the government will make Energy Star-rated products mandatory to secure business from various municipal branches, such as schools, colleges, prisons and the like. "That would be the only hammer they have to swing at us, I believe, because Energy Star is voluntary," Rolston says. "But in the big picture, I am not sure that we are their biggest target. It's really the consumer side."

Conclusion
At first, little will change. "Everyone seems to have their products in line for The NAFEM Show, so they can have their Energy Star-rated products on display and be able to sell them as such," Zabrowski says. "We believe all the models will be in place through the first quarter of next year."

Rolston agrees and adds, "You have no choice at this point but to go along. Hopefully, someone on the consumer products side will scream loud enough to get the government's attention."

Once the first quarter is over, though, all bets are off. As the new specifications take effect then the foodservice landscape as it pertains to Energy Star will begin to change. And the first product category likely to feel the impact of the new specifications is hot food holding cabinets. "The EPA feels they have what they need to move forward with the new specifications for holding cabinets," Zabrowski says. "As a result, every holding cabinet will need to be re-tested and all manufacturers will need to sign new agreements and submit new data that is a result of the new verification process."

In addition, the EPA is reviewing the specs for fryers, ice machines, commercial dishwashers and convection ovens, Zabrowski says. "Once the revision is finalized, all products in the category will need to be re-tested. Refrigerators, steamers, freezers and griddles will be able to stay on the list with the caveat that 10 percent of the products will be re-validated each year per manufacturer," he says. "Manufacturers can select which of their products to re-validate or the EPA can request that specific items go through the process."

The new process may get off to a slow start but it won't be long before it gains considerable momentum, and manufacturers will be forced to decide whether they will continue to voluntarily be a part of Energy Star. And by 2012 the way foodservice equipment manufacturers communicate the energy efficiency levels of their products may change dramatically.

"Right now, there is nothing lost," Zabrowski says. "It will be interesting to see what happens when the costs start coming in and if they see the benefit of continuing to participate in Energy Star."

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