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

By Mark Krebs -- June 30, 2016

“No more thousand-page ‘Technical Resource Documents’; those are too heavy to lift, let alone read. No more ‘too big and too expensive to analyze’ proprietary models and data bases that take a team of computer scientists to maintain and operate. No more ‘too big to sue’ tactics of intimidation of anyone who dares to challenge DOE’s ‘energy efficiency’ hegemony.”

Part I yesterday summarized the June 10th hearing from the major presenters. Part II today presents the highlights of the remaining assorted written comments where they provide additional insights not specifically covered above:

1. Joint comments by the National Multifamily Housing Council, National Apartment Association and National Leased Housing Association

These comments focused on DOE’s shortcomings in its ongoing efforts to ban non-condensing furnaces.  The following excerpt nails it.

“It is not possible, let alone cost-effective, to install a highly efficient condensing furnace. Consequently, property owners will need to patch older furnaces rather than replace them with newer, more efficient models. This is a case of the good being the enemy of the best! Efficient furnaces that could be used to replace older or improperly running furnaces will no longer be available on the market when the rule to shift to high efficiency condensing furnaces takes effect. This rule will have a serious impact on the comfort of our residents, force us to extend the useful lifetimes of old equipment and dramatically impact housing affordability.”

2. Letters of Support from Lighting Companies

Excerpt:

“The EPCA, for example, requires DOE to review and update, if it deems warranted, energy efficiency standards for covered product classes at least every six years. Although standard updates are not required every six years (i.e., the Secretary may determine that a standard need not be amended), DOE faces pressure from several stakeholder groups to act every six years. While this timeframe for repeated rulemakings/updates may seem logical on paper, mature technologies – including many in the lighting industry – are unable to produce sustained energy efficiency increases without undue costs for marginal upgrades in efficiency.“

3. Statement for the Record on behalf of Spire Energy ( I was the author)

I basically reiterated that the direct use of natural gas (via gas utilities) is the next target for phase-out.  Much of this content was “repurposed” from my recent two-part article about electrifying everything under the guise of “deep decarbonization” on Master Resource. The rest of the article cited the specific legal requirements and policies that DOE is supposed to follow in its appliance efficiency rulemaking processes.

4. Statement for the Record on behalf of APGA

 APGA (the American Public Gas Association) comments further documented DOE’s straying of the path established by the Process Improvement Rule.  APGA also documented what it cost them to resist DOE. Key excerpts:

“Specifically, in the furnace rulemaking initiated in 2015, DOE relied on proprietary data from two privately authored American Home Comfort studies in its life cycle costs calculation. To view this data, APGA was required to purchase the studies at a cost of $15,000 and retain expert consultants to analyze the data. What this data actually revealed was the opposite of what DOE asserted it showed, and APGA has pointed that out in comments to DOE on its NOPR, along with a demonstration that the spreadsheet science upon which DOE was relying was fundamentally flawed; whether DOE actually pays attention to these comments will be a strong indicator of whether DOE is approaching its responsibilities under the Energy Policy and Conservation Act in good faith or simply manipulating data to push a pre-set agenda.’’

“To further illustrate the stakeholder burden issue, on DOE’s residential furnace rule, APGA has spent close to a million dollars in scientific and legal costs pushing back on a standard that would cause great harm to natural gas consumers by doing away with non-condensing furnaces and thereby forcing consumers to fuel switch to less efficient appliances. The furnace rule appears to be an example of ideology driving the decision-making process and not sound science. DOE tried to push the original proposal through the direct final rule process five years ago despite receiving adverse concerns from over 30 separate organizations. APGA appealed that rule, and DOE’s response, after agreeing in appellate mediation to vacate the rule and remand the proceeding, was to publish an even more extreme proposal that under its own analysis would negatively impact one in five homeowners.”

5. Statement for the Record on behalf of NAHB

 NAHB (the National Association of Home Builders) comments also focused on the reoccurring themes of DOE’s lack of transparency within their ongoing residential furnace NOPR.  But NAHB also cited their differing cost effectiveness analyses as shown by the following excerpt:

“Last year, DOE proposed a rule to increase the energy-efficiency of non-weatherized gas furnaces, establishing a 92% AFUE (annual fuel utilization efficiency) national standard. While this rule makes sense for the northern climate zone, where colder temperatures require constant furnace operation, it is not cost-effective in the southern U.S., where homes are less dependent on furnaces. Unfortunately, DOE used a nationwide cost-benefit analysis to determine whether this rule is economically justified, and this neglects significantly lower energy savings that would be realized in the South. DOE’s own findings show 31% of consumers in the South would never recoup the initial investment of the higher efficient furnace over its life. An NAHB analysis (using DOE’s calculations) of two states in the deep South, Florida and Texas, showed annual energy savings of $8.40 and $26.10, respectively. With the cost of a furnace frequently exceeding $1,000, the economic payback for the consumer is well beyond the life of the equipment.“

NAHB’s testimony also suggested a solution to legislatively create an advisory group to:

1. Convene a representative advisory group of stakeholders to analyze the proposed rule to determine whether it is technically feasible and economically justified.
2. If the stakeholders conclude the rule fails to meet these criteria, then the stakeholders must participate in a negotiated rulemaking

6. Statement for the Record on behalf of AGA

AGA (the American Gas Association) testimony closely paralleled that of APGA’s and NAHB’s but with different illustrative specifics such as the following:

AGA and other stakeholders offered DOE alternative, market-based data for key variables in DOE’s Life Cycle Cost (LCC) analysis spreadsheet used to determine the economic feasibility of new standard levels for furnaces. Unfortunately, DOE did not engage the stakeholders in a discussion on the alternative data offered or utilize the data in the LCC spreadsheet. For example, although industry provided DOE with data indicating the average lifetime of gas furnaces is approximately 15 – 16 years, DOE chose to utilize their significantly longer lifetime estimate of 21.5 years in their analysis. DOE’s overly optimistic assumption has the effect of inflating DOE’s estimates of net economic benefits and energy savings to consumers, and increasing estimates of the share of consumers who experience life-cycle benefits.

My summary, conclusions and recommendations:

The above excerpts provide very rudimentary exposure of how the devils of DOE’s appliance efficiency “determinations” lie within the details. Learning the patterns of what these details are is the key to understanding how to remedy them. While this hearing was a good start, these details will require more opportunities for exploring and explaining them.

As for the recommendation of a stakeholder-driven alternative to DOE convoluted “determinations,” I advise to be careful about what you ask for. Too many times, I’ve witnessed stakeholder processes devolve into” packing the bleachers” for token consensus.  This situation has all the traits of being similar.

As for overhauling the Process Improvement Rule, how about insuring it’s enforced?  Some say this rule already has legal “teeth” in that much of it is mirrored in U.S code (which my testimony identifies). Otherwise, rewriting this rule does not necessarily insure adherence.

Einstein was an renowned energy expert whose “big idea” was e = mc².  This equation also personifies his advice that “solutions to problems should be as simple as possible, but no simpler.  This situation with DOE’s analytical bloat has a solution that I think Einstein would approve of.  Specifically, the Committee Majority Staff “Hearing Memo” mentioned DOE’s “rebuttable presumption” which is linked to a three-year simple payback. The truth is DOE never really uses its “rebuttable presumption” for anything; but it should. I propose it should be DOE’s only criteria.  Think about it:

1. No more thousand-page “Technical Resource Documents;” those are too heavy to lift, let alone read.
2. No more “too big and too expensive to analyze” proprietary models and data bases that take a team of computer scientists to maintain and operate.
3. No more “too big to sue” tactics of intimidation of anyone who dares to challenge DOE’s “energy efficiency” hegemony

Simply put, “industry” has another option to capitulation and litigation. It’s legislation. In pursuing that third option, follow Einstein’s advice.