On The Money: In Hot Water?

Times are tough in California, but CBS 13 has learned consumers are paying a surcharge for lab testing on a leisure product – a huge appliance that many people could never afford. A CBS 13 viewer tipped us about the California Energy Commission's purchase of hot tubs.

That's right, hot tubs.

Consumers are paying 13 cents a month extra on electricity bills for California to purchase dozens of appliances, including brand new hot tubs directly from the manufacturer.

"Hot tubs? Give me a break. I mean that's pathetic. It makes no sense," said consumer Chrissy Thomas outside the State Capitol.

Under the program run by the California Energy Commission, lab technicians test the hot tubs twice – to see if they comply with energy efficiency standards, before the State sells the hot tubs at auction though the Department of General Services.

"It makes me kind of angry. I have to say, I mean that's my money," Morgan Chapman, a consumer, told CBS 13 opposite the Capitol.

CBS 13 examined three recent hot tub transactions.

• In one case, the State purchased a new electric spa for $4324, then sold it for $300 after testing
• A second unit cost the State $6640, but the sale price was just $2235
• A third unit was purchased for $4478, but sold for just $1000

"Those prices sound absurd," said Mindy Spatt, communications director for The Utility Reform Network. 

"They could probably do better on Craig's List or EBay," Spatt told CBS 13 in a satellite interview from San Francisco.

The California Energy Commission declined to be interviewed on camera for this report, but told CBS 13 the appliances must be purchased – and not borrowed –
to preserve the integrity of the testing process – and to make sure there's no product tampering from the manufacturer.

But the feds have found a way to do product testing for free. When the U.S. Environmental Protection Agency certifies new vehicles, regulators simply borrow them from the car manufacturers – then return them when the testing is over – at no cost to consumers.

Yet consumers are paying extra for hot tub testing in California – along with dozens of other appliances ranging from TVs to microwaves to refrigerators. Environmentalists contacted by CBS 13 said the electricity surcharge is well worth the expense.

"Consumers are paying 13 cents a month for the testing program, for the appliance standards program," said Peter Miller, of the Natural Resources Defense Council. The senior scientist in NRDC's energy program added, "But it's providing over a billion dollars a year in terms of savings on utility bills."

The Energy Commission says consumers are actually saving more than $2 billion a year in lower utility bills. But why would two different agencies, one state and one federal, take two divergent approaches to procuring consumer products for testing?

"The California Energy Commission is not the US EPA," said CEC's Adam Gottlieb.

"And appliances are not automobiles," Adam Gottlieb added. "The Commission contracts for the purchase of appliances for lab testing in the same way that Consumer Reports and UL does --off the shelf. Since all the appliances that are tested come from a multitude of 'assembly lines,' it is quite unrealistic to 'borrow' appliances for testing."

"The Energy Commission regulates 23 categories of appliances (such as air conditioners). Those categories include 75 sub-categories (e.g., central air conditioner, computer room air conditioner). At recent count, there are more than 236,000 models listed as active in the Commission's database of certified appliances," Gottlieb stated.

But critics remain skeptical of the program to purchase appliances.

"We're not getting the best bang for our buck when money is spent this way," said Mindy Spatt of The Utility Reform Network. "We need conservation programs, " Splatt added. "We need programs that change consumer behavior. What we don't need is programs that encourage the use of energy hogs."

California's energy testing program for appliances began back in 1976, as part of a mandate to reduce energy consumption.

If you see examples of wasteful spending – send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at twitter.com/mikeluery.