Back in 1975, when oil shortages made conservation "in," Congress directed the Energy Department to set energy efficiency standards for nine major home appliances, such as refrigerators, furnaces and dishwashers. DOE began developing the standards, but the Reagan administration cut that process short. Last week, DOE formally announced that the standards would neither save money nor be economically justified, both grounds under the legislation for not issuing the regulations.

Rep. Richard L. Ottinger (D-N.Y.), chairman of a House Energy subcommittee, disputes those findings, arguing that the standards could save the equivalent of 2 billion barrels of oil and $19.3 billion in the next 25 years. Furthermore, Ottinger said, DOE's decision to impose its no-standard policy on states is the "antithesis" of President Reagan's "New Federalism." Under DOE's proposal, existing standards in 40 states would be wiped out and no new ones would be allowed, unless the states got exemptions from DOE. Ottinger plans to introduce legislation that would allow states to issue their own energy efficiency standards.

DOE, which also found that the appliance industry has responded on its own to consumer demand by turning out more energy-efficient products, plans to hold hearings in Chicago and Washington before a final decision is made. The proposal would not affect the labeling of appliances to allow shoppers to determine which are the most energy-efficient. That program is administered by the Federal Trade Commission and has been in place since 1980.