SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1858 words

COMMITTEE: HOUSE ENERGY AND COMMERCE

SUBCOMMITTEE: ENERGY AND AIR QUALITY

HEADLINE: NATIONAL ENERGY POLICY

TESTIMONY-BY: MR. JORDAN CLARK, PRESIDENT

AFFILIATION: UNITED HOME BUILDERS ASSOCIATION

BODY:
June 22, 2001

Mr. Jordan Clark, President United Home Builders Association

National Energy Policy: Conservation and Energy Efficiency

Subcommittee on Energy and Air Quality

Mr. Chairman, members of the Committee, I appreciate the opportunity to testify today on the most important subject faced by Congress, the White House and 280 million Americans: ENERGY. I am Jordan Clark President of the United Homeowners Association (UHA) a decade old non-profit organization representing the interests of homeowners here in Washington. UHA has been actively involved in energy issues for a many years. As a House Committee Staff Member during the oil embargoes and as administrator of the Department of Energy's Conservation and Renewable programs in the mid eighties, I have been personally involved in energy issues for three decades. For homeowners across the country the cost of energy is finally taking center stage. A fact which is not missed by the 54 members of the California delegation and a growing number of members in other states, not to mention the White House. Unfortunately, despite the fact that, for decades, basic math and the laws of supply and demand could demonstrate beyond any doubt that our energy situation was precarious, it has taken a major decrease in supply and increase in cost to get the attention needed to start down the path of problem solving. I thank the committee for dealing with such a politically charged issue and hope that it will not rest until short, middle and long-term solutions are put into place.

In your letter of invitation, Mr. Chairman you asked me to address the issues of energy efficiency and conservation: Although tempted to pursue deregulation, generation, production, transmission, transportation, the recently released National Energy Policy, CAFE Standards, and other energy concerns affecting consumers, I'll resist temptation and proceed as requested.

The role of energy efficiency and conservation in helping to meet our Nation's energy demands.

Efficiency

Which comes first the chicken or the egg? Energy efficiency for the most part is in the hands of the manufacturing and transportation sectors. Consumers don't build products, they buy them. If we want more energy efficiency from consumers, manufacturing and transportation companies are going to have to produce more energy efficient refrigerators, air conditioners, water heaters, washers, dryers, toasters, light bulbs, vehicles (including SUVs), etc., etc., etc. Whether they will do this voluntarily or are forced to by legislation and or regulation is addressed later.

The fact that the private sector has not produced the most energy efficient appliances, heating and air conditioning systems or vehicles, doesn't excuse consumers from making wise energy choices. When we purchase a product, we should consider energy efficiency. Unfortunately, for other than the working poor and those on limited fixed income this consideration only occurs when energy prices sky rocket and is quickly forgotten when prices recede. As much as manufacturers and the auto industry are to blame for not producing more energy efficient products, consumers have to share the blame for not being more energy conscious.

Conservation

There are some positive results of high-energy prices and lack of supply, consumers are being forced to be more efficient and more conservative in their energy use.

Will revived energy sensitive consumers have "an effect on helping to meet our energy demands?" Not much, unless they know how and are willing to take the necessary actions, such as, turning down the thermostat in the winter, up in the summer, consolidating their trips to the marketplace, carpooling, using public transportation if available, turning out the lights and more.

As stated so well in the National Energy Policy Report (p 4-1), "For a family or business, conserving energy means lower energy bills."

More explicity, if a consumer's electric bill goes from $85 a month to $185, that consumer will start to think about ways to reduce consumption. Conversely, if the bill remains around $85, lowering the energy bill is not an issue and conservation is forgotten. Conservation is not a voluntary consumer action; it is produced by a substantial increase in price and/or a decrease in reliability.

The role of the Federal government in promoting conservation and efficient use of energy.

For the first time, Americans are experiencing simultaneous increases in their electric and heating bills, gasoline prices and in some areas of the country reliability problems. If direct energy prices remain high (our monthly bills from utilities and gas pump receipts) and prices of goods and services continue to increase because of higher energy prices being paid by manufacturers and providers, the Federal government will be forced to address the problem. Wednesday's proposed rebate action by the FERC is a good example of forced action because of consumer interest.

Because of its authority and responsibility under the interstate commerce clause of the Constitution and in light of a deregulated marketplace, the Federal Government is the key player in not only solving our short term energy crises, but also in insuring that long term policies are set in place which will fill our energy needs.

Education

Helping to educate consumers about energy use is the easiest role for the federal government to play. "The federal government can promote energy efficiency and conservation by including the dissemination of timely and accurate information regarding the energy use of consumers ' purchases, setting standards for more energy efficient products and encouraging industry to develop more efficient products." This is a direct quote from the National Energy Policy Report and a recommendation which, we hope, Congress will act upon. However, we are not convinced that encouragement alone will be enough to move industry.

Since 20% of our monthly energy bills goes toward running our appliances we recommend that energy guide labels be required on all home appliances, not just some. We also recommend that energy labels be consumer friendly. The one accompanying my statement is not. It is from a water heater I recently purchased. Not only is it difficult to read, it is outdated and places the burden of comparison on the consumer. A burden which most consumers will not accept.

Energy Standards

We are also convinced that minimum energy efficiency standards must be revisited and revised. Manufacturers can do this voluntarily in reaction to market demand or involuntarily as a result of legislation and/or regulation. Unfortunately, the most effective increase in energy standards to date has been a result of legislation and regulation, not voluntary actions of manufacturers or the transportation industry.

I would like to believe otherwise, but if Congress wants energy efficiency to play a role in reducing our consumption of energy, it will have to impose greater energy efficiency standards on manufacturers, the auto industry and, if it had jurisdiction, the home building industry. If there are doubts about voluntary standards versus legislated, consider this quote from the National Energy Policy Report (p4-10) "Despite the adoption of more efficient transportation technologies, U.S. average fuel economy has been flat for ten years. In large part, this is due to the growth of low fuel economy pick up trucks, vans and sport utility vehicles."

"Growth" is an interesting choice of words by the author. Gas- guzzlers aren't grown, they are manufactured. The author also failed to mention that CAFE (Corporate Average Fuel Economy) standards were circumvented and SUV's were born. The lesson being, that revised energy standards must not have loopholes allowing either manufactures or consumers to circumvent the intended results of the standards.

We also recommend that Congress consider renewing the successful tax deductions/credits programs of the seventies and eighties for the installation of energy saving devices or materials by homeowners. However, contrary to the national Energy Policy Report, we do not recommend giving consumers "a tax credit for fuel-efficient vehicles." A more effective policy would be to place a substantial tax on manufacturers and consumers whose new vehicles do not meet fuel efficiency standards.

Just as important, Congress and the White House have to sufficiently fund the Low Income Energy Assistance Program (LIHEAP) and DOE's Weatherization Assistance Program. To its credit, the Appropriations Committee doubled the request for LIHEAP funding and the Administration substantially increased the budget request for Weatherization funds. However, with energy prices at an all time high and little hope for the immediate future, we implore Congress to consider supplemental appropriations as needed for these programs.

The use of new and/or existing technologies and barriers to their widespread application.

Consumers are at the mercy of industry and government when it comes to the application of technology in the goods and services they purchase. As taxpayers and the ones most effected by high- energy costs, we hope that industry has enough bottom line incentive to develop and offer us energy efficient products at reasonable prices. However, from experience, we know that energy efficiency has not been a 'burning issue' for either the private or public sector.

Existing technologies which save energy and in many cases the environment are not always available to the public. For example, the technology to run our autos on natural gas has been available for years and has been proven by fleet use. Yet, the choice is not available to the public. In our homes 6% of our energy is consumed by lighting. Highly efficient bulbs are available, but most homeowners suffer sticker shock and buy the cheaper less efficient bulbs.

Even with my background in conservation and renewable energy, I don't pretend to know the scope of existing technologies available, nor like most consumers am I aware of new technologies that could be introduced. Those questions are best answered by DOE, other agencies and the private sector.

As for barriers to the efficient use of energy and conservation, there are many, the market place itself being one. Except for competition, there are little if any incentives for the producers of energy to promote efficiency or conservation. Their bottom line depends on consumers using energy, not conserving it. Our continued dependency on fossil fuels although we know the supply is limited, is the best example of market control over energy policy.

We consumers will continue to be barred from access to efficient and affordable energy use until the economic and social costs become too great for us to bear and change is demanded in the marketplace and political arena. A few more spikes in energy costs or rolling blackouts and we could be at that pivotal point.

I will be happy to answer any questions you have and appreciate the opportunity to present our views.



LOAD-DATE: June 29, 2001