When a struggling young electronics firm develops a device that prolongs and protects the life of appliances and just might also cut energy consumption by 10 or 15 per cent, it could be expected that the accomplishment would be hailed.

But that has not been the case of W. N. Phillips, Inc., a small precision electronic equipment company in this Michigan hamlet, which manufactures "Power Master," a device described as a transient voltage suppressor.

When Bill Phillips founded his little firm five years ago, he was trying to develop a product that would help prolong the life of appliances and other equipment that use electric power.

Because of "surges" or "transients" that Phillips said were frequently found on power lines, some electronic equipment could be affected by the changes in voltage.

The Power Master is the name of the device Phillips designed to counteract those surges and thus lessen the wear and tear on electronic equipment. To the lay person, it is only a little black box that could be anything, since Phillips does not give out the specifications of its Power Master.

Although Bill Phillips died a couple of years ago, the company has continued in business under the able direction of his wife, Virginia Phillips, and some loyal employees. Last year the firm did about $1 million worth of business, selling mostly to medium-sized firms that had specific equipment problems.

The small plant, which looks more like a storage shed from the outside than the home of a precision electronics manufacturer, sits on 4.9 acres of gog-shrouded land in chilly northern Michigan, eight miles from Cadillac. Although there are 23 fulltime employees, nearly half of them - all the production people - have been laid off until a large inventory can be sold.

Phillips has run into some major public relations problems that can be traced back to the energy industry. Because of a rash of fly-by-night firms that have tried to sell devices that claim to be "voltage supressors," adverse publicity has been directed toward the entire industry, which consists mostly of research-intensive, small firms.

The problems began a couple of years ago, when Phillips discovered to its surprise, that the Power Master not only prolonged the life of electronic equipment, but in many cases it also reduced energy usage. In order to capitalize on the new information, many of Phillips' distributors began to make promises that their product would cut anywhere from 10 to 15 per cent off power bills. "Unfortunately, that just isn't true in all cases," said Phillips' executive vice president Steve Sorger. "In certain special cases, we can save energy because the power coming into the customer's plant may not be clean - which means that the local utility is not delivering just what it promises to be delivering."

Words like those didn't make Sorger,or Phillips, popular with utility officials. Throughout the country utilities provided the impetus, and in many cases, the documentation or evidence, for attacks by consumer organizations on firms that produced "transient voltage suppressors."

At the same time, Phillips was struggling to gain a reputation as an honest and progressive firm with a genuine product that surely would help prolong the life of equipment and possibly save energy - in certain specific cases. Phillips restorted to (See PHILLIPS, E3, Col.1) (PHILLIPS, From E1) offering money-back guarantees to anyone who was not satisfied with the performance of the Power Master.

The money back offerings were practically a necessity, since lawsuits in Florida, New Jersey and other states had successfully uncovered several firms that were pretending to sell the same kind of device, but were in fact selling worthless "little metal boxes" that did nothing.

One example of a successful application of Power Master is the Boston Herald-American, a large daily newspaper.

The Herald was experiencing problems with its new computerized typesetting system. Like many major newspapers, the Herald has begun the transformation to what is known as "cold-type," or photocomposition, and had begun to set the type on video display terminals, computers which appear similar to television screens with typewriter keyboards attached.

There was frequent problems at the Herald when the computer system would "crash" causing the screens to go blank, and stories that reporters had written and typed into the computer system would disappear.

Acting on the advice of a computer consultant, Herald production man Jack Parker decided to see if the problem was related to transients in the power lines.

"We put in the Power Master units in all the areas where we had computer problems," Parker said, "because we thought we might be having line problems. We were right. It turned out that our presses were generating the transients and causing us to lose stories."

"Now," Parker said,"since we put in the units, we haven't had any problems. We are installing some additional units near the presses, because we think our presses may be affecting other customers on the same power lines." Parker says he doesn't know if there are any savings on energy use, but he doesn't really care.

"Any savings will be gravy," he said: "The total investment is peanuts."

There are testimonals that energy savings were realized by some, but not all, Power Master customers. In one case large savings were achieved in another motel of the same chain.

"It all depends on the type of energy coming in on the power company wires," says Sorger. "You just don't know if there will be savings."

But the Esison Electric Institute, a research institution funded by member power companies, wrote to its member last year to warn against transient voltage surpressors. The EEI said that while some tests did reveal that the devices "will protect lines across which they are connected, from voltage surges," there is no evidence that any energy savings will be realized.

In recent weeks, however, the trade press has begun to report on new studies indicating that Phillips just might have been right after all.

Dr. Walton N. Hershfield & Associates, a California electronics consulting firm, last month released the results of a test that "proves irrevocably that transient presence causes an increase of consumption of energy."

He concluded, therefore, that the effective use of transient-voltage suppression devices could, in cases where transients are found, reduce energy consumption.

A respected consultant who has done work for firms such as General Motors Corp., various airlines and utilities, Hershfield brings the first solid credibility to Phillips' claims.

An article in Energy User News, a Fairchild publication, stated that, "should Hershfield's findings be verified independently, his discovery would have far-reaching implications for the manufacturers and marketers of transient volatage supression equipment."

Hershfield has done a follow-up study that is scheduled to be published in an upcoming edition of Specifying Engineer, a trade Publication that circulates to 26,000 mechanical and electrical engineers around the world.

In that study, according to Specifying Engineer senior editor Robert Oliverson, Hershfield "proves conclusively that transient voltage supression devices can save energy in some cases."

The magazine is also running two other studies, one by an MIT engineer who discounts the value of the devices and another by an independent engineer contracted by the magazine to evaluate the device.

"Basically," said Oliverson,"we can now conclude that there is a need for this device, and that it can in certain instances save energy.

"And," he added, "we have also found that the utility companies in this country have bent over backwards to stop these devices, presumably because they are afraid they will cost them money in the long run."

In recent months, Phillips and some of its distributors have gone on the legal offensive, filling suits against utilities (and the Better Business Bureau in one city) to force them to withdraw blanket condemnations of the industry - or at least statements about the performance of Power Master.

And Phillips has taken major internal steps to reorganize its distribution network.

"We have had problems," says Sorger. "But we are trying to establish a network of distributors that are beyond reproach - with salesman who don't make false claims that can cause us problems."

Meanwhile, Virginia Phillips is serving on a statewide energy panel in Michigan and singlehandedly forcing other members of that panel - representatives of all levels of the energy industry - to realize that there is something to her product, and that it is in everyone's interest to save energy.

"And if it is the last thing I do," she says, "I'm going to make sure that everything Bill worked for gets the recognition it deserves. These are all good people here who have made personal sacrifices to keep this company afloat when others wanted it to go under. We owe our success to Bill and to each other."