WASHINGTON – Senator Susan Collins, Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, says that a federal investigation into the Energy Star program, which consumers rely on to identify energy-efficient products, demonstrates that it is unreliable and vulnerable to fraud.

At Senator Collins’ request, the Government Accountability Office (GAO) conducted an undercover investigation to assess the product review and certification processes for the Energy Star program. That report was released today.  To access the full GAO report, click here.

The GAO formed four fake companies that created 20 bogus energy-efficient products, several of them outrageous on their face. Of the 20 fictitious products, 15 were granted Energy Star status by the Environmental Protection Agency (EPA) and the Department of Energy (DOE), which jointly run the program. Of the four fake companies, all were named Energy Star partners by the federal agencies.

Senator Collins said: “Through the bogus businesses, the GAO was able to secure Energy Star certifications for a gasoline-powered alarm clock and a room air cleaner that, in a picture prominently displayed on one bogus company’s Web site, showed an electric space heater with a feather duster and strips of fly paper attached to it. As incredible as it sounds, both of these products were approved for the coveted Energy Star logo.

“And it didn’t stop there,” she said. “The GAO also obtained Energy Star certification for 13 other dubious products. The GAO’s investigation proved that the absence of controls and oversight make the Energy Star program highly vulnerable to fraud and abuse.”

Energy Star, which is jointly managed by the two government agencies, the EPA and the DOE, is a voluntary labeling program designed to promote energy-efficient products. It touts itself as a trustworthy source for informing consumers about products that deliver the same or better performance as comparable models, while using less energy and thereby also saving money.

Senator Collins said taxpayers bear the heaviest burden of failed oversight. “If I were to write a headline for this stunning and highly disturbing GAO report, it would be ‘Taxpayers Get Duped – Twice,’ ” she said.

“Taxpayers are shortchanged twice when Energy Star products are not thoroughly vetted, as required. First, buyers willing to pay more for these products may not reap the promised levels of energy-efficiency that the Energy Star logo certifies. Second, taxpayer dollars are being used to encourage purchases of these products through rebates and tax credits, without – we now know – the rigorous testing to ensure the products actually meet Energy Star standards. In this way, the taxpayers are being fleeced twice.”

The primary purpose of the Energy Star program, begun in 1992, is to help consumers identify and purchase the most energy-efficient products. It was created in response to the Clean Air Act amendments of 1990 and the Energy Policy Act of 1992. In general, the program is designed to identify models for approximately 60 categories of household and commercial products that are the most energy efficient – meaning efficiencies of 10 to 25 percent above minimum federal standards.

In 2008, the Energy Star program reported saving consumers $19 billion dollars on utility costs. The federal government also encourages this program by offering tax credits and other incentives to encourage people to buy Energy Star products. For example, the American Recovery and Reinvestment Act provides approximately $300 million for states to establish rebate programs for consumers who purchase energy-efficient products.

Consumers have come to rely on the Energy Star logo when making purchases because they are led to believe the label is a foolproof guide to the most energy-efficient appliances and products. That is why Senator Collins believes stringent controls must be in place to protect consumers and to ensure the integrity of the program.

“The results of the GAO’s investigation are astounding and raise doubts about the validity of the Energy Star rating. It also causes concern that companies that do produce truly energy-efficient products could be out-priced by unscrupulous firms,” Senator Collins said.

“The results of GAO’s investigation require an effective response to address these quality gaps and to improve the program’s certification and oversight requirements. We must fix this problem immediately, to allow the government, manufacturers, and consumers to once again have confidence in the Energy Star label.”

The Senator acknowledged two recent developments in that regard, including a March 19 announcement that DOE and the EPA would strengthen Energy Star through expanded testing and a March 24 release noting that the DOE had issued subpoenas to three companies which were selling lamps that failed to meet federal energy efficiency standards.

Still, Senator Collins said, “I will push for increased oversight and aggressive internal controls to verify product claims on energy efficiency. I want to make sure we pursue changes that are more than window-dressing. As GAO’s investigation results indicate, increased use of third-party verification may be an effective mechanism to help ensure that energy efficiency claims are confirmed. I will continue to press the EPA and the DOE to follow through by increasing oversight in the Energy Star program.”