Obama’s Dim Bulbs

U.S. Taxpayer paid Philips Global $10 million and all they got was a $50 light bulb

March 14, 2012

The Department of Energy paid Dutch energy-giant Philips Global $10 million for its newest LED light bulb. Now the two are trying to figure out what to do with it.

The bulb, which is slated to replace the 60-watt incandescent light bulb lawmakers banned in 2007, costs $50, well above the $1 consumers are used to spending on traditional bulbs and double the price of many existing LED lights.

The department has gone from judge to partner to help Philips sell the product. It is now trying to coax utility companies to grant discounts and rebates to customers in order to create demand for the light bulb.

"We are actively working with (utilities) to hammer out deals to introduce the product to their region," said an official familiar with the L-Prize. "DOE’s mission is energy savings and in order to get that there needs to be widespread market adoption."

Thirty-one utility companies have partnered with the department and Philips to grant rebates to customers who purchase bulbs, the highest being a $25 rebate from Efficiency Vermont.

Philips Lighting USA has splashed references to the L-Prize bulb—a name assigned to the product by the federal government—and is doing its best to market the product to businesses before launching residential sales next month.

"I know everyone is looking at the $50 price tag, but Philips has been actively working to get those rebates," company spokeswoman Silvie Casanova said. "The price reflects that it’s harder to make this bulb than existing 60 watt LEDs."

That technology is also constructed at more expensive plants in Wisconsin and San Jose, rather than the Chinese factories that churn out the company’s existing line of energy efficient bulbs.

Other officials familiar with the project told the Washington Free Beacon that there is little the department or Philips can do to lower the price in the short-term except wait for consumers to adapt the new bulb, as traditional incandescents are phased out.

"The point of the award is to help reduce the cost of this domestically produced technology over time—just like the price of plasma TVs has fallen from $25,000 in 1998 to $500 today," said Jen Stutsman, spokeswoman for the Energy Department.

The steep price tag is not the competition’s first brush with controversy.

A House Appropriations Committee report issued in June slammed the department for announcing the $10 million prize without prior approval from Congress.

"The Committee strongly opposes the Department announcing funding opportunities when those funds have not yet been made available by Congress," the report reads. "In the case of the L Prize, the Department risks damaging its credibility."

The warning was enough to worry higher-ups at Philips, which spent nearly $1.8 million lobbying Congress to fund the program.

The committee granted the award money to spare the department embarrassment, but changed its rules to prohibit "announcements in advance of appropriations."

Philips received about $5.6 million from the federal stimulus to advance its LED lighting technology. It spent nearly as much—$4.5 million since 2008—lobbying Congress and the Obama administration for bills friendly to lighting appropriations.

Casanova refused to "talk to the lobbying spending," but emphasized that the bulb maker did not use any stimulus dollars for researching the bulb.

"We didn’t get any money to develop this bulb," she said.

Department officials are backing away from the contest’s initial call to draft an affordable bulb that could come to market at $22 and drop to $8 per bulb by its third year.

"The idea of that light bulb contest was to provide for a goal going further down to get a light bulb that eventually, Americans can afford," Secretary of Energy Steven Chu told Congress on Tuesday.

Energy officials remain optimistic about the expensive competition and its initial results.

Department lab tests found that the bulbs will last up to 25,000 hours, which would save consumers about $160 over the lifetime of the bulb, according to department estimates.

The department plans to continue with the program, announcing a second competition in March.