[Congressional Record (Bound Edition), Volume 147 (2001), Part 15]
[Senate]
[Pages 21173-21175]
[From the U.S. Government Publishing Office, www.gpo.gov]



                   SEASONAL ENERGY EFFICIENCY RATING

  Mr. BINGAMAN. Mr. President, I am here to address another aspect of 
the energy issue that will come before us as comprehensive energy 
legislation, hopefully either this fall or early next year. It may seem 
to be an unusual item to address on Halloween as we are going into the 
colder months of the year, but it is one which I think deserves 
attention.
  There was a development 10 days ago that I think needs to be called 
to the attention of colleagues in the Senate. About 10 days ago, the 
Environmental Protection Agency transmitted formal comments to the 
Department of Energy--that is one agency of the Federal Government 
commenting to another Agency or Department of the Federal Government--
on the proposed standard for efficiency in central air conditioners. 
The Clinton administration had finalized a rule that mandated a 30-
percent increase in efficiency for those central air conditioners. It 
was a so-called 13 SEER standard. SEER stands for seasonal energy 
efficiency rating.
  Shortly after the current administration took office, they proposed 
to back off this mandate and reduce it to only a 20-percent increase or 
a 12 SEER standard. The argument used by the new administration in 
rolling back the air-conditioning standard struck many of us in 
Congress as being based on outdated price data and a faulty analysis.
  The Committee on Energy and Natural Resources, where the 
distinguished Presiding Officer and I both serve, had a hearing on this 
topic. We had expert testimony that demonstrated these analytical 
problems in the decisionmaking which the new administration had gone 
through.
  This EPA filing 10 days ago capsulized those concerns eloquently. In 
the Agency's own words, the new proposed standard--that is, the 12 SEER 
standard, the lesser standard this administration embraced--
``overstates the regulatory burden,'' it ``understates the savings 
benefits of the 13 SEER standard, over and underestimates certain 
distributional inequalities,'' and ``mischaracterizes the number of 
manufacturers that already produce at the 13 SEER level or could 
produce at the 13 SEER level through modest changes to the product. . . 
.''
  I will read one other quotation from the explanation of the EPA 
position. It says:
       EPA believes there is a strong rationale to support a 13 
     SEER standard.

  That is what the previous administration adopted.

       EPA also believes that the more stringent standard will be 
     more representative of the long term goals of the 
     administration's energy policy and will do more to reduce 
     both the number of new power plants that need to be 
     constructed, as well as the emissions resulting from these 
     plants. . . .

  While these comments by the Environmental Protection Agency have 
received some attention, I believe they deserve broader attention by 
the public and certainly deserve to be recognized by people in the 
Senate.
  I ask unanimous consent that the text of the EPA letter to the 
Department of Energy and their explanation which they attached to that 
be printed in the Record following my statement.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. BINGAMAN. Mr. President, getting to a more efficient air-
conditioning standard is an important part of a national energy 
strategy. This

[[Page 21174]]

past summer, a nationwide heat wave in August led to brownouts and 
blackouts as our electricity system was stretched to its limits. While 
the new standard would take effect gradually over the long term, it 
would help reduce the peak demand for electricity on very hot days, and 
it would give consumers a break.
  I have been informed that thousands of public comments have been 
filed with the Department of Energy favorable to the 13 SEER standard, 
demonstrating broad public support for sticking with that standard.
  Previously, I indicated my belief that we should include a 
legislative provision mandating a 13 SEER standard in any energy 
legislation that we pass. It should be clear to all that this is a 
matter where there is broad public support for the better standard, and 
I believe the administration should try to be in line with that public 
sentiment.
  I hope the Department of Energy decides to go back to the earlier 
established standard, and they can certainly do that administratively 
without Congress having to act. But if DOE continues to push for 
watering down the standard, then I hope the Office of Information and 
Regulatory Affairs in the Office of Management and Budget will exercise 
its watchdog role to ensure that good technical and economic analysis 
carries the day on this issue.
  I expect we will continue to see strong legislative support for this 
standard in the debate on energy legislation we have over the next 
weeks and months, and I hope that ultimately the EPA view of this 
matter will prevail.

                               Exhibit 1

         United States Environmental Protection Agency,
                                 Washington, DC, October 19, 2001.
     Ms. Brenda Edwards-Jones,
     U.S. Department of Energy, Washington, DC.
       Dear Ms. Edwards-Jones: On behalf of the U.S. Environmental 
     Protection Agency, I am pleased to submit the attached 
     comments to Docket No: EE-RM-98-440, the Department of 
     Energy's Proposed Rule: Energy Conservation Program for 
     Consumer Products; Central Air Conditioners and Heat Pumps 
     Energy Conservation Standards.
       DOE has proposed a change to its previously issued standard 
     that decreases energy efficiency requirements for residential 
     air conditioners and heat pumps. DOE proposes to withdraw its 
     previously issued 13 SEER standard and replace it with a 12 
     SEER standard. These comments affirm EPA's support for DOE's 
     original 13 SEER standard.
       EPA believes there is a strong rationale to support a 13 
     SEER standard. A 13 SEER standard represents a 30% increase 
     in the minimum efficiency requirements for central air 
     conditioners and air source heat pumps. In contrast, a 12 
     SEER standard represents only a 20% increase. The 
     Administration's National Energy Policy stresses the 
     important role that energy efficiency plays in our energy 
     future. A 13 SEER DOE standard will do more to stimulate 
     energy savings that benefit the consumer. DOE has quantified 
     these savings at approximately 4.2 quads of energy over the 
     2006-2030 period, equivalent to the annual energy use of 26 
     million households and resulting in net benefits to the 
     consumer of approximately $1 billion by 2020. In comparison, 
     DOE projects that only 3 quads of energy would be saved over 
     that same period with a 12 SEER standard.
       A 13 SEER standard will also do more to reduce fossil fuel 
     consumption and more to limit emissions of air pollutants. 
     For example, by avoiding the construction of 39 400 megawatt 
     power plants, a 13 SEER standard will reduce nitrous oxides 
     (NOX) emissions by up to 85 thousand metric tons 
     versus up to 73 thousand metric tons that would be reduced 
     with a 12 SEER standard. A 13 SEER standard will also result 
     in cumulative greenhouse gas emission reductions of up to 33 
     million metric tons (Mt) of carbon. This is in contrast to a 
     12 SEER rule which will reduce up to 24 Mt of carbon 
     equivalent by avoiding the construction of 27 400 megawatt 
     power plants. At a time when many areas across the nation are 
     struggling to improve their air quality, the additional 
     emissions reductions achieved by a 13 SEER standard are 
     especially important.
       Thank you for the opportunity to provide these written 
     comments. Should you have any questions, please contact Dave 
     Godwin in EPA's Office of Air and Radiation at 202-564-3517 
     or via e-mail at [email protected].
           Sincerely,
                                                  Linda J. Fisher,
                                             Deputy Administrator.

 Comments of the U.S. Environmental Protection Agency on the Proposed 
 Rule: Energy Conservation Programs for Consumer Products; Central Air 
Conditioners and Heat Pumps Energy Conservation Standards, October 10, 
                                  2001


                        overview of epa comments

       The Environmental Protection Agency welcomes the 
     opportunity to comment on the Department of Energy's Proposed 
     Rule setting forth energy conservation standards for 
     residential central air conditioners and central air 
     conditioning heat pumps. EPA recognizes that the new proposed 
     DOE rule represents a 20% increase in minimum efficiency 
     standards for central air conditioning and heat pumps. 
     However, we instead support the previous final rule of a 30% 
     increase.
       EPA has issue with several of the arguments DOE used to 
     justify the withdrawal of the previous final rule as outlined 
     within the Federal Register Notice of July 25, 2001 and the 
     Technical Support Document. In summary, EPA believes that the 
     information in the Federal Register Notice of July 25, 2001
       overstates the regulatory burden on manufacturers due to 
     HCFC phase-out and concludes that the industry is under 
     greater financial pressure from a 13 SEER standard than it 
     is,
       understates the savings benefits of the 13 SEER standard,
       over and underestimates certain distributional 
     inequalities,
       mischaracterizes the number of manufacturers that already 
     produce at the 13 SEER level or could produce at the 13 SEER 
     level through modest changes to the products, and thereby 
     mischaracterizes the availability of 13 SEER product.
       [EPA believes there is a strong rationale to support a 13 
     SEER standard. EPA also believes that the more stringent 
     standard will be more representative of the long term goals 
     of the administration's energy policy and will do more to 
     reduce both the number of new power plants that need to be 
     constructed, as well as the emissions resulting from these 
     plants.] EPA's more detailed comments are provided below.
       Another example would be:
       Move directly to producing R-407C and/or R-410A units that 
     meet the new DOE efficiency regulations;
       Increase the production of these units to meet customer 
     demand by 2006;
       Meanwhile, phase out all HCFC-22 units by 2006.
     Of course, some combination of these strategies is more 
     likely to be taken and seems to offer the most opportunity 
     for manufacturers to reduce regulatory burden.
       The TSD states ``To the extent that manufacturers can 
     introduce new products utilizing the new refrigerant and 
     meeting the new efficiency standard, the cumulative burden 
     will be reduced.'' (TSD page 8-62). EPA believes that there 
     is ample opportunity to meet both a 13 SEER efficiency 
     standard and a ban on HCFC-22 in new equipment with limited 
     regulatory burden.


         Underestimates of Savings in the Cost Benefit Analysis

       DOE's analysis of the benefits of the withdrawn 13 SEER 
     rule are significantly underestimated. DOE's analysis is 
     based on summer 1996 electricity prices, adjusted downward 
     based on EIA projections of future annual electricity prices. 
     Changes in the electricity market due to utility deregulation 
     has resulted in increased electricity prices overall. DOE did 
     not consider this trend in its analysis.
       According to Synapse Energy Economics' wholesale 
     electricity price data, DOE analysis underestimates the cost 
     of electricity for residential air conditioning by an average 
     of approximately $0.02/kWh. In addition, the California 
     Public Utilities Commission raised some residential rates by 
     as much as 37%, affecting more than 10% of the U.S. 
     electricity market and thereby, raising the national average 
     electricity prices above DOE's projections. Adjusting DOE's 
     analysis to include more recent electricity prices will 
     definitely and drastically alter the results indicating that 
     a DOE minimum standard of 13 SEER represents the better 
     decision for the nation.


         Over and Under Estimates of Distributional Inequities

       EPA sees distributional inequalities that DOE has not 
     adequately considered. One results from the fact that the 
     residential price of electricity does not capture the 
     complete cost for running systems that largely run at peak 
     times. That is, except in select circumstances, residential 
     customers purchase electricity based upon average rates, not 
     ``time-of-use'' rates. The actual costs of electricity at 
     peak times are dramatically more and therefore, higher peak 
     rates drive up the average costs. Less efficient equipment 
     operating at peak times drives up the cost of electricity for 
     all customers, including those of low income, who are less 
     likely to have central air conditioning. According to 1997 
     Residential Energy Consumption Survey (RECS) microdata (the 
     same data set used by DOE in their analysis), of the total 
     101 million households represented, approximately 46% have 
     central air conditioning, but among poor households, only 25% 
     have central air conditioning; just half the rate of presence 
     among non-poor households (See Exhibit 2).
       Also related to distributional equities and according to 
     the RECS data, among households below the poverty level, 
     about 60% rent their housing units. This is in contrast to 
     27% of above poverty level households that rent (See Exhibit 
     2). Therefore, low-income consumers, or those defined as 
     ``poor''

[[Page 21175]]

     in TSD Table 10.1, are not the ones to buy a central A/C or 
     heat pump product, but they would be the one to pay the 
     utility bill (or likely face increased rents if utilities 
     were included in their rent) for the use of that product. 
     Instituting a higher minimum efficiency standard will 
     actually ensure that low-income consumers have lower utility 
     bills, providing a benefit to this population.


                 misinformation on product availability

       DOE justifies a lower SEER rule because the higher 
     efficiency levels would put manufacturers out of business. 
     However, according to the Air Conditioning and Refrigeration 
     Institute (ARI) database of model combinations, many 
     manufacturers already produce models that meet the 13 SEER 
     requirements. This technology has been available for many 
     years to large and small manufacturers alike. Although 
     confidential ARI shipment information may not reflect large 
     sales of high efficiency equipment, the publicly accessible 
     ARI database of models shows extensive product availability. 
     Over 7,000 air source heat pump model combinations and over 
     14,000 central air conditioner model combinations currently 
     meet or exceed the 13 SEER level as listed by ARI.
       The TSD (TSD page 8-2) describes a group of manufacturers 
     that ``offer more substantial customer and dealer support and 
     more advance products. To cover these higher operating 
     expenses, this group attempts to ``sell-up'' to more 
     efficient products or products with features that consumers 
     and dealers value.'' With a higher standard, these 
     manufacturers would not go out of business, but would rather 
     continue to sell-up, to even higher efficiency levels or 
     additional valued features.
       Furthermore, results and upcoming plans for utility 
     programs around the country also document the availability of 
     13 SEER and above products, as well as the demand for such 
     products. Austin Energy's Residential Efficiency Program 
     2000-2001 gave rebates to single family existing homes for 
     installation of split systems and heat pumps with 
     efficiencies of 12 SEER and above. Rebates were staged: $150 
     for 12.0-12.9 SEER; $250 for 13.0-13.9 SEER; $400 for 14.0-
     14.9 SEER; and $500 for 15.0 and above. In total, 4,000 
     rebates averaging $312 were given to consumers. These numbers 
     illustrate that a significant portion of the rebates given 
     were for 13 SEER and above units.
       In New Jersey, a 3-year rebate structure began in 2000 with 
     a $370 rebate given for the installation of 13.0 SEER 
     equipment and a $550 rebate given for 14.0 SEER equipment. A 
     total of 14,000 rebates were given in the year 2000. As of 
     August 2001, 8,000 rebates were given out with approximately 
     6,000 of these units at the 14.0 SEER level. Overall results 
     in New Jersey show that 27% of the market (1998-2000) are 13 
     SEER or higher with 60% of those being at the 14 SEER or 
     higher levels.
       The Long Island Power Authority (LIPA) instituted a program 
     similar to the one in New Jersey offering rebates for 
     installation of 13.0 and 14.0 SEER equipment. Results to date 
     show that LIPA is on target to reach their goal of 
     approximately 3,500 rebates for 13 SEER equipment. 
     Approximately 80% of these rebates are for SEER 14 equipment. 
     LIPA is expecting to ramp up to 5,000 rebates in 2002. 
     Overall, 17% of LIPA's market in 2000 is at 13 SEER or 
     higher, with the market share for existing homes even higher 
     at 22%.
       Program plans for 2002 in Texas and California are geared 
     toward equipment at 13 SEER and above. Reliant Energy in 
     Southeast Texas is planning an incentive program to target 13 
     SEER and above matched systems. California's two large 
     municipal utilities (Sacramento Municipal Utility District 
     and Los Angeles Department of Water and Power) and four 
     investor owned utilities (San Diego Gas and Electric, 
     Southern California Gas, Southern California Edison, and 
     Pacific Gas and Electric), serving over 30,000,000 consumers, 
     are planning rebate programs to assure California residents 
     receive energy efficient equipment, measures, and practices 
     that provide maximum benefit for the cost. These programs all 
     revolve around 13 SEER equipment or higher. Actual incentive 
     amounts are not yet available.

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