It Is Time for Congress to Update the Regulatory Model

It Is Time for Congress to Update the Regulatory Model

Kevin J. Cosgriff, President & CEO, NEMA

testimony
Kevin Cosgriff testifies to the House Subcommittee on Energy and Power

On Friday, June 10, I presented oral testimony on behalf of NEMA’s nearly 400 member manufacturers to the House Subcommittee on Energy and Power, urging Congress to stop serial rulemaking on mature products that now experience diminishing returns on savings. My testimony was regarding the Energy Conservation Standards program implemented by the Department of Energy (DOE) under the Energy Policy and Conservation Act (EPCA). NEMA is in a central position in the dialogue over EPCA given that our members manufacture 20 of the 63 products (and components of another 30 of those products) covered in the DOE program.

I made three main points in my testimony:

  1. Multiple rulemakings on the same product result in diminished energy savings.
  2. Future energy-efficiency opportunities should include looking at energy-use systems—not solely individual products.
  3. Serial regulation limits consumer choice.

The limits of efficiency improvements

The EPCA was written 40 years ago, and many of the covered products have since achieved then-unimagined levels of efficiency. Several products have been through two or more different rulemakings. The EPCA statute requires the DOE to determine whether higher standards are warranted on every single covered product at least every six years. This applies even to products that have already reached a stage of regulatory maturity—that is to say, products for which cost-effective efficiency improvements have essentially reached their limit.

There are two components to this situation that warrant congressional attention. First, we should retire several of the mature covered products that have been through multiple iterations of energy conservation efforts. Second, stakeholders, including government, require a sufficient amount of time to analyze the impact of a previous regulation before a new rulemaking cycle begins. The current review cycle requires that the DOE start a new rulemaking procedure for a product barely after that product has entered the market. Therefore, neither government nor other stakeholders have time to understand the impact of the previous regulation before a new rule is in the works.

A new approach for energy savings

The EPCA was created to regulate individual products. The challenge ahead is to build on past industry success with a new, more holistic approach to energy savings. Individual products are increasingly interconnected, operating as systems rather than singularly. Congress has an opportunity to use the leverage this creates.

Serial regulation against consumer choice

Demand from global competition, government regulation, and the all-important consumer preference require manufacturers to sprint to remain competitive. While our members are accustomed to running this race, and endless regulatory environment erects hurdles they must repeatedly clear each and every time to remain viable.

One aspect of the EPCA regulatory program is that it will tend toward eliminating certain products from the market. Under this regulatory scheme, there will be fewer and fewer choices offered to consumers and other end users. We assert that markets should drive and, indeed, are driving the energy-efficient economy more than government action. Federal agencies also need to coordinate to ensure that non-compliant products are not entering the U.S. market, thereby depriving consumes of the energy-efficiency benefits and disadvantaging law-abiding manufacturers.

Efficiency gains save consumers money, while giving them a range of products and systems that perform in ways they desire. That said, we would caution against the risk of limiting what consumers can choose to put in their personal shopping carts.

Opportunity for a new model

In conclusion, electrical manufacturers’ contribution to the energy-efficiency economy has been diligent and commendable. Throughout this effort, NEMA has made constructive proposals to Congress and the DOE to advance energy efficiency where we believed it was justified and where the energy savings were significant. We have resisted regulation for the sake of “doing something more” when the benefits were insignificant or the costs were just too high.

The 40-year-old model of regulating the energy use of components and single products has done its duty. But its diminishing energy returns exact and increasing cost for our industry and higher prices for our customers. A legislative overhaul that builds on the success of the last 40 years—but allows us all to keep moving forward—is what we wish to support.

I urge Congress to seize the opportunity to transition to a new era.

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