1975, when they were considering these efficiency standards they were supposed to consider that the technology was really feasible and that there was an economic justification for it. But today thats beginning to be blurred and we know, certainly, at epa when they consider it, they certainly dont consider whether its technologically feasible or economically justified. So if we wanted to have a more balanced approach what were trying to do is hear from people who are involved in this on a daily basis because the American Public when they go to the Appliance Store to buy an appliance, they dont understand all about this efficiency. They just know what the price is, and then some people are telling them well you are going to save money even though its a lot more, because of the electricity that will go down. And other people make the other argument. So one of our objectives today is to just try to get a better understanding of what is the reality of this. And thats why were here. So i want to thank all of you for joining us. And at this time id like to introduce the distinguished gentleman from illinois mr. Rush for his Opening Statement. I want to thank you, mr. Chairman, for holding todays hearing on the Home Appliance north efficiency standards under the department of energy stake holders perspect i. I want to welcome, mr. Chairman, all of our witnesses before the subcommittee here today. Mr. Chairman, since there are deo standards that we are addressing here today i think that it would definitely benefit the members of the subcommittee to also hear from the agency directly. And i hope that we can invite them to testify on this issue at a near date in the near future. Mr. Chairman, historically, Energy Efficiency has proven to me the low hanging fruit that has brought more parties together legislatively while also making our country safer, more secure, and more attentive to the impacts of Climate Change. Indeed, the story of Energy Efficiency, mr. Chairman s one that is filled with Success Stories that are really helpful to pay our country forward by making us more independent and more secure while also reducing the cost of energy both in our pocket books and its impact to our environment. In fact, mr. Chairman, by does own estimation, American Families saved close to 63 billion as a result of their energy bills going down. And this is the result of the these appliance standards that we are considering just in the year 2015 alone. The agency also forecasts, mr. Chairman, that standards issued since 2009 would save the American Consumer over 53 billion in utility costs and decreased common emissions by 2. 3 billion metric tons by the year 2030. Mr. Chairman, in addition to the Huge Energy Savings and the benefits to the environment, appliance and equipment standards also lead to additional investments in the work force and and ultimate creation of jobs. A 2011 report by the American Council for an Energy Efficient economy entitled, and i quote appliance and equipment efficiency standards, a money maker and a job creator, end of quote found that in the efficiency standards led to net job creation in every single state. The study also found that by 2020, appliance and equipment standards will contribute up to 387,000 annual jobs to the u. S. Economy. Mr. Chairman, while almost every effort by doe to establish or revise Energy Efficiency standards has been met with some type of opposition, traditionally, this issue has been pursued and i would commend both sides of this subcommittee they have been presumed in a bipartisan matter with contributions to the party put forward by our president s and by past congressmen even though those congressmen and the white house have been under the control of both republicans and democrats. It is my hope, mr. Chairman, that following todays hearing we will ultimately get back to that type of collaboration and that type of cooperation on this issue. Mr. Chairman, it is critically important that the federal government maintains its leadership role of promoting, encouraging, and enticing interested stakeholders to continue with the progress that has already been made in efficiency technologies so that we can continue to keep moving the Nations Energy policy forward. Mr. Chairman, i want to end my saying i look forward to todays hearing. Im looking forward to expert witnesses on the successes and the challenges that are facing this nation as it relates to Energy Efficiency appliance. With that i yield back. The gentleman yields back. At this time i recognize the gentleman from illinois, mr. Shimkus. Its important to hear from stakeholders because the stories that we we have been here may not always reflect the real world and we are hoping that you will give us whats going on on the ground. And so i want to we have been a little story to put this all in perspective, too. Congressman bosnia boston and i met with a Small Manufacturer about two months ago. And there subject to a d. O. E. Enforcement case. And of course because of the enforcement case, they have been told to stop selling a piece of equipment. This company spent several months trying to find out why a they and a Third Party Lab that tested the product why they met the standard, and why why when d. O. E. Got their hands on it they didnt meet the standard. So d. O. E. Tested the product seven months later. And not only and ill we have been the story of why d. O. E. Came to a different conclusion. But it is also under a new regulation than when the product was originally produced. So heres this fraudian, catch 22 world in which you all have to try to live in to try to catch up after a product has been manufactured to a new regulation, and then face the heavy hand of the federal government. So the company was not aware of section 2. 11 because it was not included in the proposed rule making. It was two lines in a large rule previously represented as not materially altering efficiency measures. This piece of equipment did not pass the automatic test. But it did pass the manual test. So this is a piece of equipment that you operate manually or you can hook up a thermostat and it will operate automatically. It did meet the standards for the manual test. It didnt meet the test for the automatic. D. O. E. Would never tell them why they failed the test until months later. Even when they asked for transparency, show us your work, tell us what you are doing. So this is a crazy world in which we live in. The federal governments there to help, not punish. Federal government is there to if they want to have efficiency and they want to encourage Movement Forward they should be insenting. They should not this Small Company its a Small Company has a proposed 241,000 penalty because d. O. E. Is now saying that they knowingly, knowingly kind of jimmied the efficiency standards where the equipment met the manual standard, didnt meet the automatic standard. Of course when you fall into this regime you cant sell your product. Its banned from being sold until this conflict gets resolved. Small Companies Just cant survive this type of work. It would be best, as we hear, im sure, similar stories about the struggles of maintaining it. Businesses go as they have to raise capital, assume risk, hoping to get a return. And while they are doing that, they create jobs. If the government we just want the government to be fair players in this system. If were going to create these new standards, give industry a chance to meet them. And dont play games of delay by not working with the industry and telling them why they failed to meet the standard. Or changing the rules for automatic or manual type systems. So im really looking forward to the hearing. I think its very, very important. And ive got questions when we come to it on to address the jobs debate, which i think people will find pretty problematic that these are now causing the loss of jobs in our country. And i yield back my time. Thia yields back. This time recognize gentleman from new jersey, mr. Pallone, for five minutes. Thank you mr. Chairman. The appliance and equipment efficiency Standards Program at the department of energy has been successful in reducing Energy Consumption and lower Consumers Energy bills. The program also has been beneficial to manufacturers making Energy Saving products more ubiquitous and leaving leveling i should say the Playing Field nationally. In fact, efficiency standards for consumer appliances and other products likely constitute the single most effective evident to reduce Energy Consumption in the United Statesle according to the energy department, americans saved 63 billion on their utility bills last year because of these standards. And this is also resulted in avoiding 2. 6 billion tons of Carbon Dioxide emissions which would equal the annual level of emissions from 543 million vehicles. These figures are staggering and highlight the benefits this program. Consumers save money and our environment is spared billions of tons of pollution every year. All of this began with enactment of the energy and conservation act which was signed into law by republican president gerald ford, a highlight republican. This started a trend because with an exception to the amendment to the statute under the carter administration, every major expansion of the appliance efficiency Standards Program has been signed into law by a republican president. While some of our witnesses and my colleagues on the other side of the aisle may lament the long list of appliance standards proposed by the Obama Administration, they should remember that depending on your point of view much of the credit or blame for the obama standards can be traced back to two laws signed by president george w. Bush. The Energy Policy act of 2005 and the Energy Independence and security act of 2007. And while the 2007 act was passed by a democratic congress, the Energy Policy act of 2005 was born out of a fully Republican Congress and authored by the former republican chairman of this committee. I dont know why i have to keep saying fully Republican Congress. Thats obviously not what i like. But the fact of the matter is that that most of this legislation was done by Republican Congress and president s. This underscores an important fact. For the past 40 years Energy Efficiency has been a by part san issue where republicans and democrats have come together to reduce Energy Consumption and save consumers money. Times have changed. Certainly there are few republicans who still understand the importance of Energy Efficiency. Mr. Mckinley has worked with mr. Welch to demonstrate trait the bipartisanship in this area is still alive to some degree. Regrettablebly that seems to be the only republican support for major efficiency legislation in this congress. Consider the recent house vote to go to congress on an Energy Package that would actually increase consumption by rolling back efficiency. Again, how times have changed. Could the fsht standard setting process use improvement . Of course it could. Because there is always room for improvement. Despite a revisionist view that disputes efficiency standards over new development the fact is that the standard setting process has always yielded some controversy from one industry participant or another. But these controversies were generally worked out and the results were better products, more efficiency, and often useful changes to the standard setting process. My concern is that improvements simply may not be possible in this current koung. Last year when we were working to forge a bipartisan compromise on furnace standards certain stake holds made me question the sincerity of the socalled reform efforts. Perhaps its a matter of perspective. What some stakeholders view as minor tweaks look an awful lot to me like a thorough getting of the Standards Program. Ultimately i believe a serious successful Energy Efficiency policy for our nation must address demand as well as supply. Thats why efficiency has traditionally been a concept that brought parties together. Mr. Chairman i hope one day well see that again. It doesnt seem like today is the day. Thank you. I yield back. Gentleman yields back. And that concludes the Opening Statements on our side. So at this time our first witness will be ms. Sofie miller who is a senior policy analyst at the George WashingtonUniversity Regulatory study center. Ms. Miller, thanks for being with us. And you will be given five minutes. Just make sure the microphone is on and its up close to you so we can hear every single word that you say. And you are recognized for five minutes. Well thank you, chairman whitfield. And rank member rush and member of the subcommittee for inviting me to share my expertise today. I appreciate the subcommittees interest in the department of energys Energy Conservation program as well as opportunities for congress to improve it. I am the senior policy analyst at the George WashingtonUniversity Regulatory study center where i analyze the effects of regulation on public welfare, including effect of do. E doughs Energy Efficiency standards on consumers specifically. Through my research i have identified ways in which these standards can harm consumers rather than benefiting them by limiting the products available and removing from the mark appliances that might best suit their needs. Does efficiency standards regulate most appliances in households. And as a result they affect almost all u. S. Consumers. These standards increase the prices of common appliances in exchange for reducing Consumers Energy and water bills in the future. While doe does estimate consumers receive large net benefits from this trade off it doesnt take into account the diversity of americans or that u. S. Households have different needs and prirchss when it comes to Household Appliances. As a result, one size fits all energy if thesy standards can deprive consumers of the act to make purchases that best suit their circumstances and constraints. In such cases these regulations are a cost to consumers rather than a benefit. For example, efficient dishwashers or clothes dryers save money in the long term the more frequently they are used and tend not to benefit households with lower frequency of use which includes couples or single residents such as the elderly. Doe calculated large benefits by estimating that a household operates its clothes washer 392 times per year or more than once a day on average. While this might be realistic for large families or households with small children, it does not represent every household. In fact, even after accounting to their lower energy bills, the standards ended up costing the nearly 70 of American Households that use clothes washers less frequently than six times per week. To illustrate from personal experience, a very efficient dishwasher made sense for my mother, who has nine children and used to run the dishwasher as must have as four times per day, if you can imagine that. But my current household of two, we run the dishwasher twice a week. In our case its not likely that a more efish and more expensive appliance is going to be worth the investment. In addition, efficiency standards are particularly costly for low income households. Wealthier americans can afford to wait years or even decades to recoup the higher cost of an efficient appliance while poor americans with less certain streams of income have higher opportunity costs. Doe calculates high benefits by using a relatively low time value of money which field studies find represents wealthier households. Changing does mole to reflect the actual time value of money to low and Median Income households shows that they encourage large net cost as a result of efficiency standards. When a paycheck has to cover rent, food, and other necessiti necessities, a very efficient appliance may not be affordable even if it does reduce electric bills in the fucht many families cannot borrow at the 3 rates that doe assumes. But Energy Cost Savings are not the only justification for these standards as more efficient appliances can also reduce Environmental Emissions but these environmental ben pits are quite small relative to the cost of the standards. The fact the cost outweighs the benefits by a factor of 3 to 1. By looking at the Environmental Standards alone. Doe wouldnt be able to in sum, the payoff will vary depending on a households income, size, and other characteristics such as geographic location. It is perfectly rational