Comments on the Department of Energy’s Proposed Energy Conservation Standards for Residential Water Heaters
I. INTRODUCTION
The undersigned free market and consumer organizations have a longstanding interest in bringing to light the deleterious consequences of federal regulations, which are often neglected by agencies in their attempts to adopt a regulatory agenda. For over 20 years, we have participated in rulemakings conducted by the Department of Energy (DOE) regarding energy and water conservation standards for home appliances. This includes agency rulemakings and subsequent litigation impacting dishwashers, air conditioners, clothes washers and dryers, showerheads, light bulbs, furnaces, and stoves.
Our focus has been on ensuring that the consumer protections built into the underlying statute, the Energy Policy and Conservation Act of 1975 (EPCA), are given full weight by DOE in the rulemaking process, and that the statutory option of declining to set a standard is chosen when appropriate.[1] In our view, these consumer protections have frequently been downplayed or ignored by the agency when setting excessively stringent appliance efficiency standards that raise overall costs and/or compromise product quality and choice.
Over the last two years, the risk of DOE appliance overregulation has been heightened by the Biden administration’s “whole of government” prioritization of climate change considerations, which has been fully adopted by the agency.[2] This agenda serves as a finger on the scale favoring more stringent appliance regulations on the grounds that they help reduce greenhouse gas emissions. It is also being used by the administration to discourage the use of residential natural gas in favor of the electrification of all appliances.[3] However, doing so subordinates the best interests of consumers to unrelated environmental objectives and thus is contrary to EPCA’s overriding emphasis on consumer utility.
In the first eight months of 2023 alone, we have seen proposed new efficiency standards for stoves, refrigerators, clothes washers, ceiling fans, dishwashers, and now water heaters. All of them would be detrimental to the interests of consumers. Some will raise the up-front cost of appliances enough to make it prohibitive for some homeowners and less likely to be recouped in the form of energy savings for others. Some would compromise choice, features, and performance. The water heaters proposal may well do both.
As will be discussed below, we believe the proposed efficiency standard is not compliant with the consumer protections in EPCA. In particular, it would reduce product choice and also encourage fuel switching by disproportionately burdening natural gas-using water heaters relative to electric ones. For these and other reasons, we believe the proposed rule should be withdrawn.