Response From An Expert: Anti-Energy Efficiency Testimony Falls Flat

Tags: clean energy, energy, energy efficiency, energy policy

The Michigan House Energy and Technology Committee held a hearing on Tuesday, where they invited the Heritage Foundation to testify in opposition to Michigan's Energy Optimization program. 

The fact that someone could be found to speak in opposition of the cleanest form of Michigan-made energy was a surprise on its own accord; some of the information they presented? Shocking. Energy efficiency expert Dr. Marty Kushler (that's him in the photo, after he testified in support of energy efficiency last week) responds to the main points that the Heritage Foundation made on Tuesday: 

Heritage Foundation: The main problems with energy efficiency: upfront costs are too high and optimization standards cost US jobs.

Kushler: Suggesting that energy efficiency costs too much stands reality on its head. Energy efficiency saves electricity at less than one-third the cost of new electricity generation supplies. As for jobs, repeated studies demonstrate that utility spending on energy efficiency produces far more jobs than traditional utility investments. Energy efficiency is a very labor-intensive industry.

Heritage Foundation: Energy optimization standards are unnecessary because the market already incentivizes Americans to be energy efficient. Mandates only get in the way of the market.

Kushler: Energy efficiency has improved dramatically precisely because of federal and state policies and programs over the past 30 years. As an example, the Appliance Standards Awareness Project (ASAP) reports that energy efficiency standards are saving the average household $500 annually, and that by 2035, these existing efficiency measures will save enough energy to meet the current US energy demand for two full years, saving American consumers $1.1 trillion dollars. These outcomes are specifically the result of policy action. Sound policies help the market perform better.

Heritage Foundation: Energy efficiency standards will benefit a few, but will negatively impact a majority of Americans because individuals are much more capable of making efficient decisions than government officials.

Kushler: We have 25 years of extensive research on the market barriers and other obstacles that result in individual consumers and businesses not investing in energy efficiency measures, even though they are very cost-effective. Moreover, in my testimony, I presented data on dozens of specific measures where Michigan homes and businesses have been shown to have major existing needs for energy efficiency improvement -- based on over one thousand randomly selected on-site energy audits conducted around the state and reported by the Michigan Public Service Commission. Many customers simply have not made basic energy efficiency improvements on their own, which is why we need Energy Optimization programs. This is proven data, not economic theory.

Heritage Foundation: Proponents of energy efficiency say that upfront costs may be higher, but long-term savings offset those costs. In actuality, savings estimates are over-generous, and payback periods are longer than people keep energy efficient appliances. Being efficient does not pay off.

Kushler: There is an entire industry of professional energy program evaluators who document the energy efficiency program savings through rigorous scientific methods, and their results routinely withstand scrutiny in contested case hearings in states around the nation. The Heritage Foundation’s theoretical assertions do not counter the empirical evidence. The proof is in the data, and there are plenty of sound numbers to digest, courtesy of scientific research done by the American Council for an Energy-Efficient Economy (ACEEE), International Energy Program Evaluation Conference, and the Appliance Standards Awareness Project (ASAP).

Question from committee member Rep. Ray Franz (R - Onekama): "When we save money on energy, we invest in more energy using items. In the end, we use more energy, even though it is more efficient. Doesn’t energy optimization end up encouraging more energy use in the long run?" Answer from Heritage Foundation: It does.

Kushler: This is more theorizing by ivory tower economists. The savings from utility energy efficiency programs are real, and even the regional electric system operators are building these energy efficiency program effects into their electric supply plans.

Dr. Martin Kushler is a Senior Fellow with American Council for Energy-Efficient Economy, and a life-long resident of Michigan. Click here to read his testimony in support of energy optimization standards.

For live updates from Committee, follow Michigan LCV on Twitter: @MichiganLCV.