‘Home Appliance Energy Efficiency Standards’ Hearing: Some Reflections (Part I)

“Over the years, there have been numerous iterations of more stringent minimum efficiency mandates for the most important appliances. Thus, the most economical ‘low hanging fruit’ has generally been picked clean with diminishing returns from continued picking.”

“Under the Obama Administration, DOE’s appliance energy efficiency oversight has been expanded far more than previous Administrations, from 15 appliance product categories to 60 product categories.”

Earlier this month, the House Committee on Energy and Commerce Subcommittee on Energy & Power held the above-named hearing. In all, it was much better than the usual lopsided infomercial under the guise of a hearing.  There was not time for all “stakeholders” to speak, but anyone could submit written testimony.

These were the witnesses:

• Joseph M. McGuire, President and CEO, Association of Home Appliance Manufacturers;
• Kevin J. Cosgriff, President and CEO, National Electrical Manufacturers Association; Stephen Yurek, President and CEO, Air Conditioning Heating and Refrigeration Institute;
• Sofie E. Miller, Senior Policy Analyst, The George Washington University Regulatory Studies Center;
• Elizabeth Noll, Legislative Director, Energy and Transportation, Natural Resources Defense Council; and
• Thomas Eckman, Director, Power Division, Northwest Power and Conservation Council.

Click here to view the video record for this hearing and to download testimony.

This post highlights some of the reoccurring themes of the speakers. Part II tomorrow will highlight, in the form of key excerpts, written comments entered into the record by various stakeholders who were not called upon to speak.

Energy Policy and Conservation Act of 1975: Font of Conservationism

First, the overall reoccurring theme: The 1975 Energy Policy and Conservation Act (EPCA) is outdated and needs to be overhauled.  After all, EPCA was written largely in response to the 1973–’74 oil embargo. Today, legislation is being written that would revise EPCA. Other issues being considered are evidenced by the Committee Majority Staff’s “Hearing Memo”.

These issues (with my paraphrasing and some illustrative expansion of critical concepts) are shown below.

1. Over the years, there have been numerous iterations of more stringent minimum efficiency mandates for the most important appliances. Thus, the most economical “low hanging fruit” has generally been picked clean with diminishing returns from continued picking.
2. Under the Obama Administration, DOE’s appliance energy efficiency oversight has been expanded far more than previous Administrations, from 15 appliance product categories to 60 product categories.
3. EPCA requires that energy conservation standards achieve the maximum improvement in energy efficiency that is economically justified and technologically feasible over the DOE expected lifetime of the product. This is setting a very low bar that effectively means a given energy efficiency savings only has to recoup the incremental cost over a period of time that may span a decade or two. Secondly, DOE’s low “hurdle rate” is further assisted by over-estimating numerous variables such as utility energy savings and product life-expectancy while simultaneously underestimating installation costs, incremental maintenance, (ad nauseam).
4. It doesn’t matter how many consumers are adversely affected by DOE’s appliance efficiency mandates as long as, on average, some undefined, non-negligible benefit can be shown (according to DOE’s inflated assumptions and inordinately complicated analyses).
5. While the statute forbids any new standard that would reduce product choice, features, performance, reliability, or safety–and even though separate provisions restrict DOE from setting a standard that do not yield “significant” energy savings–DOE has effectively shifted the burden-of-proof away from itself and onto “industry.” Usually then, “industry” has to whether to capitulate or litigate against DOE. See APGA’s written testimony for a good example.
6. Recently, DOE began to further assist (or inflate) its economic “findings” via social cost of carbon (SCC) – the estimated worldwide benefits from reducing energy use and thus greenhouse gas emissions from compliant appliances. See Sophie Miller’s written testimony for her estimate of how little of these avoided costs accrue to American consumers. Also note that much has been written or referenced at Master Resource by numerous authors regarding the positives of carbon emissions that offset the negatives.
7. In 1996, Congress was also concerned with DOE’s misdeeds and misdirection. The result was the “Process Improvement Rule.” However, an increasing chorus from “industry” is saying that DOE has significantly strayed from these process improvements. The stated objectives of this rule are:

(a) Provide for early input from stakeholders

(b) Increase predictability of the rulemaking timetable

(c) Increase use of outside technical expertise

(d) Eliminate problematic design options early in the process

(e) Fully consider non-regulatory approaches

(f) Conduct thorough analysis of impacts

(g) Use transparent and robust analytical methods

(h) Articulate policies to guide selection of standards

(i) Support efforts to build consensus on standards

(j) Reduce time and cost of developing standards

I’ve been documenting and addressing DOE’s straying from this path of improvement for about 15 years now; ever since I was an advisor to DOE. Much of this is referenced in my previous Master Resource articles.

Suffice it to say, a let-the-market, or let-the-consumer decide perspective has been rare in the energy conservation debate, and legislators and regulators, increasingly under the spell of anti-market ideology, has increased intervention dramatically.