There isn't much good news for consumers in the Senate energy bill passed last week. The world's greatest deliberative body seemingly forgot that the goal was to help ensure affordable and reliable energy supplies for Americans. Instead, the Senate energy debate turned into a special-interest banquet, and the final bill, which is considerably worse than the House version passed last August, actually contains several provisions likely to increase the cost of energy in the years ahead. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
However, there was one small victory for consumers and common sense worth noting — a ridiculously strict energy-conservation standard for central air conditioners was dropped just before the bill was passed.
The air-conditioner episode was one of the last regulatory efforts from the Clinton administration. In what became part of a wave of so-called “midnight regulations,” the Department of Energy (DOE) proposed several new energy-conservation standards for home appliances in the final months of Clinton's second term. One required a 20-percent increase over the existing energy-efficiency standard for central air-conditioning systems and heat pumps.
Then, on January 22, 2001, the very last day on which Clinton rules could be published in the Federal Register before the Bush team officially took over, DOE shocked almost everyone with a final rule mandating a 30-percent increase. DOE estimated that the new rule, to take effect in 2006, would boost the cost of a new air conditioner or heat pump by $335 to $435, considerably more than the 20-percent proposal. Others, including the National Association of Homebuilders, feared even higher costs. The Manufactured Housing Institute raised concerns that the 30-percent standard would require air-conditioning systems to be larger, resulting in additional renovation costs to fit these units into the small manufactured homes disproportionately owned by the poor and working class.
The Clinton DOE readily conceded that only a minority of homeowners could ever hope to earn back the increased upfront cost of an ultra-efficient air conditioner in the form of energy savings over the life of the system. Under one set of assumptions, DOE concluded that 58 percent of homeowners will suffer net costs from owning such a system, with 25 percent experiencing net savings and the rest breaking even.
Worse yet, the agency concurred with critics that the new rule will disproportionately burden low-income households. DOE found that as many as 69 percent of such households will end up spending more to stay cool. Nonetheless, the agency went ahead with this rule.
Sensing an onslaught of problematic regulations that could blow up on their watch, the incoming Bush administration decided to take a second look at this and several other last-minute Clinton regulations. The new team at DOE decided that the earlier 20-percent proposal was more reasonable, and has initiated steps to revise the final rule.
Though relatively modest, this regulatory change did not sit well with energy-conservation activists and their political allies, who brought up everything from 9/11 to last year's rolling blackouts in California as justification for the 30 percent standard. Consequently, Sen. Tom Daschle (D., SD) decided to amend the energy bill to reinstate the 30-percent rule.
But, in a rare moment of bipartisan rationality, the Senate voted 52 to 47 to nix the 30-percent standard. Thad Cochran (R., Miss.), citing estimates that the stricter standard would add another $300 to the cost of a new air conditioner, said that his state has “a lot of people who do not have enough money to afford an air conditioner if it costs that much more.” Tom Harkin (D., Iowa) noted the disproportionate impact on “senior citizens, lower and fixed income families.”
The energy bill still contains plenty of costly and downright dumb provisions that are sure to get consumers heated up in the years ahead. But at least they will be able to turn on the air conditioning.