A new bill from two Democratic senators would set a national mandate for utilities to reduce customers’ energy use, which the proponents say would save consumers billions of dollars on energy bills and create hundreds of thousands of jobs.
Sens. Tina Smith of Minnesota and Peter Welch of Vermont introduced the American Energy Efficiency Act that would build upon the energy-saving work done in states through what’s known as energy efficiency resource standard or EERS.
An EERS sets long-term targets for saving energy that utilities or other authorities meet by getting households and businesses to reduce energy use, such as by requiring more efficient appliances or HVAC systems.
Critics warn that high-efficiency appliances, water heaters and HVAC systems are expensive and it can take consumers years to recoup upfront costs from small monthly savings on utility bills.
Over 25 states have EERS policies in place already, with the strongest being in Massachusetts and Rhode Island, according to the American Council for an Energy-Efficient Economy. The policies aim to encourage using electricity and natural gas efficiently.
Massachusetts and Rhode Island are also among the states with the most expensive electricity rates. Massachusetts and Rhode Island ranked fourth and second for most expensive electricity rates, respectively, according to the U.S. Energy Information Agency.
Hawaii had the highest electricity rates and California ranked third highest, according to EIA.
The Smith-Welch bill would set guidelines for a national EERS that would be put in place by each state. By 2039, retail electric utilities would have to achieve energy savings of 22%, and natural gas utilities would have to achieve energy savings of 14%.
The bill also would encourage distributors to obtain energy savings and direct the Department of Energy to set uniform national energy savings measurement protocols for retailers.
The legislation is likely going nowhere with the Democrats’ thin majority in the Senate and a Republican-run House. But the bill highlights the direction in which the Democrats want to move.
“Increasing our energy efficiency is one of the most effective tools we have to reduce greenhouse gas emissions and cut back on the amount of energy we use overall,” Ms. Smith said in a statement. “This bill would save families money on energy costs and build upon the good work that states are already doing, including by leveraging the Inflation Reduction Act’s unprecedented federal investment in clean energy efficient technologies.”
Mr. Welch said the new act “builds on Vermont’s success by establishing a nationwide efficiency standard for retail electric and natural gas utilities and making efficiency upgrades more affordable for families across the country.”
The bill currently has nearly 20 endorsements by different energy groups.
“Countless families struggle to pay their energy bills, yet in many states, there are few if any utility-run programs to help them make energy-saving improvements in their homes,” said Alexander Ratner, federal policy counsel for the American Council for an Energy-Efficient Economy or ACEEE, which endorsed the legislation. “This bill would help reduce people’s costs by ensuring all utilities save their customers significant energy through efficiency incentive programs, while giving the power companies flexibility in how they meet those targets. This plan will save consumers precious money on their monthly bills, create jobs, and reduce air pollution.”
Over 2.2 million Americans work in energy efficiency, according to a 2023 report by energy entrepreneurs E2 and E4TheFuture. The senators cited studies that estimated a national EERS could create 400,000 jobs, reduce CO2 emissions by over 280 million tons and save consumers over $56 billion on their energy bills.
However, these types of energy savings come at a cost, warned Francis Dietz, vice president of public affairs for the Air-Conditioning, Heating, and Refrigeration Institute.
He said it’s important that this type of legislation focuses on the availability and affordability of energy-efficient equipment. The products and equipment they’re talking about — heating, cooling, water heating — are “necessities, not luxuries,” so they must continue to be affordable.
“Highly efficient equipment is by its very nature more expensive,” he said. “You have to figure in that there’s a cost premium when consumers buy the equipment. And then maybe they make that back in savings on their energy bills.”
Mr. Dietz urged lawmakers to “recognize that there is a limit to what many consumers can afford and that’s why we have a wide range of equipment and a wide range of prices.”
• Mallory Wilson can be reached at mwilson@washingtontimes.com.
Please read our comment policy before commenting.