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winning documentaries at student cam.org. industry leaders testified about proposed energy efficiency rules for household appliances at a house energy and commerce sub-committee hearing. they talked about the possible effect of regulations on consumer prices and efficiency of large appliances, including dishwashers, re refrigerators and washing machines. this is two hours and 10 minutes. >> like to call the hearing to order this morning. and i'm going to thank our panel of witnesses for being with us. i'm going to introduce you right before we -- right before you give your opening statements and i'll introduce you individually at that time. i would like to recognize myself for five minutes for an opening statement. today's hearing is entitled home appliance energy firsefficiency

standards. since 1987 we've had energy efficience standards for certain appliances. it came about because back in 1975 there was a federal energy policy act that established that format. the reagan administration was sued because it was not being implemented and as a result of that lawsuit we have found ourselves in the fifth or sieveth gyration of the energy efficiency standards which apply to almost anything that plug news the wall in your home, whether it is an air-conditioning, refrigerator, washer, dryer, water heater, lightning, whatever it might be. and the argument was initially that you would save energy bills over time because of the efficiencies to use less electricity and the small amount of additional cost you would end up saving money.

now some people today are questioning that because we're, as i said, we're at about the fifth, sixth, seventh round of the firsty standards and some people say you reach the point of diminishing returns and some people say that the additional cost now is at such a rate that you really don't have any savings over the long-term because the energy efficiencies are simply not that great. now other people say that's not the case. and of course, additionally now everybody is talking about global warming. and so there is additional emphasis being placed on this because of that. one of the problems that we have is in america we feel like we're doing more than any other country in the world on these types of issues.

i was reading an article the other day that said there are 3 billion people in the world who use open flames to cook today. and in the developing world, by 2040, they expect 65% of energy consumption mr. come from the developing world. we also hear a lot today about people being concerned about the cost of living. and we know that in california and in new york they are trying to raise the minimum wage and many people are urging that we raise the minimum wage. some people agree with that and some people don't. but it is interesting that those strong advocates for raising the minimum wage, they don't want to consider the additional cost caused by regulations. and it is one thing to say, okay, we need to raise the minimum wage, but to low income and middle class families if these appliances are going to cost additional money, what does

that mean to their pocketbook. and then we're even hearing now from some of the appliance makers that some of these new appliances really don't work as well as the old ones. and so it's a situation where i think no one really expected that the department of energy and this administration would be as aggressive as they have been, on so many different fronts. now the good news was in 1975, when they were considering these efficiency standards, they were supposed to consider that the technology was really feasible and that there was economic justification for it. but today that is beginning to be blurred and we know certainly at epa when they consider -- they certainly didn't consider whether it is technology feasible or economically justified. so if we want to have a more balanced approach, what we're

trying to do is hear from people who are involved in this on a daily basis. because the american public, when they go to their appliance store to buy an appliance, they don't understand all about this efficiency. they just know what the price is, and then some people are telling me, well you will save money, even thoep it is more because of -- even though it is more because of electricity and it will go down and some of the other people make the arguments. so one of our objectives today is to get a better understanding of what is the reality of this. and that is why we're here. so i want to thank all of you for joining us. and this time i would like to introduce the distinguished gentleman from illinois, mr. rush for his opening statement. >> i want to thank you, mr. chairman, for tolding todholdin hearing on the home appliance energy efficiency standards through the department of energy, a stakeholders

perspective, and i want to welcome, mr. chairman, all of our witnesses before the sub-committee here today. mr. chairman, since there are statistics that we are addressing here today, i think it would definitely benefit the members of the sub-committee to also hear from the agency directly. and we can invite them to testify on this issue at a date in the near future. mr. chairman, historically energy efficiency has proven to mean the low-hanging fruit that is allowed both parties together legislatively and also making our country safer, more secure and more atentive to the impacts of climate change.

and the story of energy efficiency, mr. chairman, is one that is filled with success stories that will hell propel our country forward by making us more independent and more secure while also reducing the cost of energy mostly in our pocketbooks and its impact to our environment. and i thank mr. chairman by the doe own estimation american families save close to $63 billion as a result of their energy bills going down and this is the result of the appliance

standards that we are considering just in the year 2015 alone. the agency also forecast, mr. chairman, that standards issued since 2009 would save the american consumer over $53 billion in utility costs and increase common emissions by 2.3 billion metric tons, rather, 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 workforce and the 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", and end of quote, and the efficiency standards that led to net job creation at every single state. the study also found that by 2020 appliance and equipment standars 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 is -- this issue has been pursued and i will commend most times on this sub-committee and pursued in a bipartisan manner. with contributions to put forward by our presidents and by past congresses even though those congresses and the white house had been under the control of both republicans and democrats. it is my hope, mr. chairman, that following today's 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 and encouraging and enticing interesting stakeholders to continue with the progress that has already been made in efficiency technologies so that we can continue to keep moving the nation's energy policy forward. mr. chairman, i want to end by saying i look forward to today's hearing. i look forward to expert witnesses on the successes and the challenges that are facing this nation as it relates to energy efficiency appliance and with that i yield back. >> gentleman yields back. recognize the gentleman from illinois, mr. shimkus for five minutes. >> thank you, mr. chairman and welcome.

it is important to hear from stake homelande stakeholders because the stories that we weave hear may not -- here may not reflect the real world and we hope you will give us what is going on, on the ground. so i want to weave a little story to put this all in perspective. congress in boston and i met with a small manufacturer about two months ago, and there subject to a doe enforcement case, and because of the enforcement case, they had been told to stop selling a piece of equipment. they -- this company spent several months trying to find out why a third -- they and a third party lab that tested the product, why they met the standard and why when doe got their hands on it, they didn't meet the standard. so -- and d.o.e. tested the product seven months later and

not only -- and i'll read the story of why doe came to a different conclusion. but it is also under a new regulation than when the product was originally produced. so here is from fraudy an 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 it is not materially altering efficiency measures. this piece of equipment did not pass the automatic test. but it did test past the manual test. so this is a piece of equipment that you can operate man all lie or hook up a thermostat and operate automatically. it did meet the standards for

the manual test, it didn't meet the test for the automatic. doe 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 today are there to help. not punish. federal government is there to -- if they want to have efficiency and encourage movement forward, they should be inde indent -- indenting. so they have a $200,000 penalty because the doe say that they knowingly -- knowingly kind of jimmied the efficiency standards, where the equipment met the manual standard, didn't

meet the automatic standard. of course, when you fall into this regime, you can't sell your product. it's banned from being sold until this conflict gets resolved. small companies just can't survive this type of work. it would be best, as we hear, i'm 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 the system. if we are going to create these new standards, give industry a chance to meet them. and don't play games of delay by not working with the industry

and then telling them why they failed to meet the standard, or changing the rules for automatic or manual type systems. so i'm really looking forward to the hearing. i think it is very, very important. and i've got questions when we come to it on -- to address the jobs debate which i think people will find pretty problematic that tease are now -- that these are now causing the loss of jobs in our country and i yield back my time. >> gentleman yields back. recognize the gentleman from new jersey, new jersey, mr. pal own for five minutes. >> the appliance and efficiency standards have been incredibly successful over the years in reducing energy consumption and lowering consumer energy bills. the program has been beneficial to manufacturers making energy saving products more ubiquitous and leveling the playing field nationally.

in fact, efficiency standards for consumer appliances and other products likely constitute the single most effective federal effort to reduce energy consumption in the united states, according to the energy department, americans save $63 billion on the utility bills last year because of these standards. and also resulting in avoiding 2.6 billion tons of carbon dioxide emissions which would equal the annual level of emissions from roughly 543 million vehicles. these figures are staggering and highlight the dual benefits of this important program, consumers save money and our environment is spared billions of tons of pollution every year. and you will this began with the enactment of the energy act epca signed into republican gerald ford. i highlight republicans. with an exemption to the amendment to the statute directing doe to establish

firsty standards under the carter administration, every administration has been signed into law by a republican president. so while some of the colleagues on the other side of the aisle may lament the proposals by the obama administration they should remember that depending on your point of view, much of the credit or the blame for the obama standars could 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 don't know why i have to keep saying republican congress. that is not what i like. but the fact of the matter is that that most of this legislation was done by republican congress and

presidents. and this underscores an important fact. for the past 40 years energy efficiency has been a bipartisan issue where republicans and democrats have come together to reduce energy consumption and save consumers money. times have changed, obviously. certainly there are few republicans who still understand the importance of energy efficiency. mr. mckinley has worked with mr. welch to make sure bipartisan is still alive to some degree but regrettably that seems to be the only republican support for major efficiency legislation in this congress considering the recent house vote to go to conference on an energy package that would increase consumption by rolling back efficiency. again how times have change. could the efficiency standards use improvement? of course it could. because there is always room for improvement. despite a revisionist few that dispute over efficiency tand ards or a new development, the standards setting process has

yielded controversy from one industry participate or another and the result is better products and more efficiency and often useful changes to the standards-setting process. my concern is that improvement might not be possible in this current congress. last year when we were working on a compromise for furnace standards less than forth right positions taken by certain stakeholders may question the so-called reform efforts. maybe it is a matter of respective. what some stakeholders review as minor tweaks look to me like a thorough gutting of the standards program so ultimately i believe a serious successful energy policy must address demand and not just supply and improving the use of the resources we have to get more from less is common sense and that is why efficiency has traditionally been a concept of both parties together and mr. chairman i hope that one day we'll see that again. it doesn't seem like today is

the day. so thank you. i yield back. >> gentleman yields back. and that concludes the opening statement on our side. so at this time, our first witness will be mrs. sophie miller, a senior policy analysis at the george washington university regulatory study center. so miss miller, thanks for being with us and you'll be given five minutes and make sure the microphone is on and up close to you so we could hear every single word that you say. and you are recognized for five minutes. >> well, thank you very much, chairman witnessfield and member rush and remembers of the sub commity for inviting me to share my expertise today. i remember appreciate the interest in the department of energy energy conservation program and opportunities for congress to improve it. i am the senior policy analysis at the george washington university regulatory tuddies center where i analyze the effects of regulation on public welfare, including theesques of

doe energy standards on consumers specifically. through my research, i've identified ways in which the standars could harm and removing from the mashlt a -- market appliances that could best fit their needs. they represent dish washers and air-conditioners and refrigerateors and they affect almost all u.s. consumers. these standars increase the prices of common appliances in exemption for reduction of energy water bills in the future. while doe estimates that consumers receive large net benefits from the tradeoff, it does not take into account the diversity of americans and that households have different needs and preferences when it comes to household appliances. as a result, one size fits all energy efficiency standars can deprive consumers of the ability to make purchases that best suit their circumstances and

constraints. and in such cases, these regulations are a cost to consumers rather than a benefit. for example, efficient dish walkers or -- dishwashers or clothes dryers save over the use they are used and tend not to benefit couples or single residents such as the elderly. in proposing energy first standards for close washers, doe estimated that a house hold operates its clothes washer 392 times per year, or more than once a day on average. and all of this might be realistic for large families or households with small children, it does not represent every household. in fact, even after accounting for the lower energy bills, standards ended up costing nearly 70% of american households that use clothe washers less frequently than six times per week. and 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 much as four times per day, if you could imagine that. but my current household of two, we run the dishwasher twice a week and in our case it is not likely that a more efficient and more expensive appliance will be worth the investment. in addition, efficiency standards are particularly costly for low income households. wealth iyer americans can afford to wait years or decades to recoup the higher cost of efficient appliance while poorer americans 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 the doe model to reflect the actual time value of money to low and median income households shows theyen occur

large net cost as a result of energy standars. when a paycheck has to cover rent, food and other necessities, a very efficient appliance may not be affordable, even if it does reduce electric bills in the future. many cannot borrow at the 3% rate doe assumes. but energy cost rating is not the only industry standards as they could also reduce environmental emissions. but the environmental benefits are quite small relative to the cost of the standards. in fact, the cost outweigh the benefit by a factor of three to one. by looking at environmental benefit as loan, doe would not be able to justify the standars that it set for most appliances. in sum, the payoff from more efficient appliances will vary depending on a house hold's income, size and other characteristics such as geographic location. it is perfectly rational for individual households to prefer to purchase different appliances, including those that

do not meet doe standards. by taking away those choices, and preventing households from buying the appliance that best suits their individual needs, doe is imposing a cost on consumers and not a benefit. this is particularly true for low and median income americans and the elderly who bear the highest cost of appliance efficiency standards. thank you all for your time. i look forward to your questions. >> thank you ms. miller, very much for your opening statement. and our next witness this morning is mr. joseph mcguire, who is the president and ceo of the association of home appliance manufacturers. thanks for being with us and you're recognized for five minutes. >> chairman whitfield -- >> and turn your microphone on. and get it close. >> mr. chairman and ranking member rush and members of the sub-committee. >> thank you for the opportunity to testify this morning.

the ahem membership includes more than 150 companies throughout the world and employees tens of thousands of people in the united states. our members produce more than 95% of the household appliances shipped for sale in this country. i don't think there is any disagreement at this table that the appliance standards in energy star programs have been successful. energy efficiency gains across core major appliance categories are dramatic and undeniable. for example, most commonly purchased modern refrigerator uses the same amount of electricity as a 50 watt light lull b. a new clothes washer uses 70% less energy than it did in 1990 and half of the water. i want to make clear that our industry is a strong supporter of the programs and involved in numerous rule making and legislative improvements to improve the program. in 1998 i led the 200 plus organizations that initiated and supports the appliance energy

conservation act. we strongly support federal standards and do not propose a roll back of any standards. while the programs are successful, they are both in need of modernization to recognize the success achieved and programs focused on meaningful additional efficiency gains. yes, there should be standards that guarantee efficiencies but ab sent technology break-throug break-throughs, a process toward ratcheting industry standars particularly for products subject to multiple revisions does not make sense for the environment, the consumer or the economy. but this will not happen under the current standards construct. reform legislation is needed. hr-8 is a practical step along that path offering modest sensible changes that will essentially require doe to follow the regulatory procedures it had agreed to with the very organizations that advocated for reform in 1987.

but more is needed. today ahem is calling on congress to take further steps to modernize our national energy efficiency law by ending mandatory serial rule making and permitting amended standards only when justified by quantifiable metrics, including a list of covered products for which no further ruling is needed absent game-changers. considering cumulative regulatory burden on product manufacturers. mandating procedures regarding transparency and public engagement, no more black box analysis. applying the administrative procedure to the energy star program. there have been more than 30 standards and amendments that apply to the program and there have been numerous test procedure revisions accompanying the standards. the reality is for many product categories the recentless march of sequential role making is not

justified because the opportunities for additional energy savings beyond those already achieve ready severely diminished as products are nearing maximum efficiency under technology. further standards are likely to increase costs to consumers and manufacturers beyond an acceptable level and for some products reduced energy use will likely result in degraded performance and functionality. we saw that in the fraud proposed dishwasher rule last year with the consumer payback period exceeded the product life and results in products that could not clean dishes. doe, to its credit, recorrected the proposal but it shouldn't take a national uproar for this to happen. the rule should have never been proposed. as for energy star, the program has grifted from efficiency into other areas beyond its expertise and this authority. this draft must be considered in concert with the reality that the success of the program has essentially made it mandatory in the market place. congress needs to bripgs this

program under the much more traditional procedures and specific criteria of the administrative procedures act which applies to virtually every other program epa administers. and it is important that congress makes clear that energy star is about energy efficiency only, not about epa ideas regarding quality, and sustainability and other nonenergy factors. our objective is to improve the u.s. regulatory environment in measurable ways that foster a fair and more predictable and for efficient regulatory landscape. as an industry we'll continue to live up to our responsibility to provide consumers with liven hansing products that deliver superior performance for energy and environmental benefits. our industry is very competitive, which driving not only innovation but reduced product cost through hundreds of millions of dollars in productivity improvements and that is why the home appliance don't keep up with the cpi, not

because appliance standards. productivity hide the fact that changing product design and materials to meet energy standards adds costs, implying that the huge efforts in time and capital investments to achieve productivity somehow make energy efficiency free is a great misunderstanding. mr. chairman and members of the sub-committee in summary we call on congress to modernize ep caw so it addressed current circumstances by recognizing the diminishing energy savings opportunities for many products, and evaluating cumulative regulatory burden and the impact of past rules in improving transparency and stakeholder engagement. thank you for the opportunity to testify. we will be happy to answer any questions. >> thank you, mr. mcguire. our next witness is elizabeth noll, the legislative director for energy and transportation at the natural resources defense council. thank you for being with us and you are recognized for five minutes. >> good morning. mr. chairman and members of the sub-committee. thank you for the opportunity to

share the perspective of the national resources defense council on national energy standards set by the department of energy for many household appliances and commercial products. this program sets dependable minimum levels of energy firsty that all americans can count on to reduce the utility bills and harming human health and promoting innovatiino vision an opportunities. my name is elizabeth noll and i'm from nrdc. we have long supported energy efficiency standars and we are far from alone. we've successfully worked among the groups here today and support was reiterated in a op ed with the national association of manufacturers. and let's not forget the initial law was signed by president ronald reagan and expanded with brought bipartisan support in laws by george w.h. and w. bush.

and why is there such strong supportive for standars. this program is successful and delivering tremendous consumer and national benefits. it has broad and bipartisan support founded on a long history of collaboration and consensus building and by all accounts there is still huge potential for even more energy and financial savings now and in the future. to my first point, by every single measure the proglam provides huge benefits. they are the second biggest energy saving policy in u.s. history. second only to vehicle fuel economy standars. appliance standars are saving the typical u.s. hold house about $500 on their utility bills. last year consumers saved $63 billion. and and th and thanks to standards already on the books today, it will taf $2 trillion on energy bills due to improved appliance and equipment sold through 2035. because these standards are

cutting american energy consumption, it also reduces the need to burn polluting fossil fuels to run those appliances and equipment. last year alone, national appliance standards helped the u.s. avoid emissions of 300 million tons of carbon dioxide. that is equivalent to the annual pollution from about 63 million cars. as i noted earlier, three republican presidents have signed laws supporting energy sufficiency standards and since the 90s they are up to date with the deadlines that congress enacted. the agency has done more than ever to open up avenues to increase stakeholder participation and collaboration. of the 42 standards finalized since 2009, almost a quarter stemmed from consensus agreements negotiated with industry support. and those that aren't negotiated go through a normal rule making process which includes multiple

opportunities for input from industry. and as a result a vast majority of energy efficiency standard goes into effect without controversy. as noted in other testimony today, manufacturers much prefer a single national standard over a state by state patch work of requirements. consumer groups, stake governments, business groups, utilities, all have engaged constructively and support the program. one might ask, are there more energy consumer and environmental savings to be achieved? em fasityicly, yes. one example involves the biggest energy and plus saver from the agency history which was completed in january for commercial rooftop heaters and warm air furnaces and represents the third revision to the standard. this standard is excepted to save 15 billion quadruple --

which is equivalent to all of the coal burned in the united states in one year. a forthcoming report from councils find that the savings potential for federal standards that will be eligible for update within the next eight years exceeds what has been accomplished over the last eight. and innovation by our leading manufacturers is likely to open up new opportunities for savings that we cannot even contemplate today. without standards, cost effective and energy efficiency opportunities will be lost leading to high energy bills and increased energy consumption and more harmful consumption and uncertainty for manufacturers. there is no doubt this program works and will continue to deliver huge consumer and environmental value now and into the future. thank you for the opportunity to share my views and i look forward to your questions. >> thank you, miss noll, for your statement. at this time, i would like to

introduce mr. kevin cosariff who is the president of the national electrical manufacturers association and thanks for about with us and you are recognized for five minutes. >> thank you, mr. chairman. ranking member rush and members of the sub-committee for having us today. i'm the president and ceo of the national electrical manufacturers association, some nearly 400 members that provide virtually everything in the electrical world. i appreciate this opportunity to talk about this with the sub-committee. we have a central position in this dialogue given that 20 of the 63 covered products are made by nema members. and in addition 30 covered products contain components of nema members. i have three main points i would like to make today. first, as has been stated, there are diminishing energy savings returns to multiple rule-makings on the same product. that is not saying that we don't believe in energy savings, we're

just saying there is diminishing returning on multiple rule makings that ought to be considered. future energy efficiency opportunities should include looking at energy use systems, not simply components or individual products. and lastly, serial regulation does over time limit consumer choice. first on diminishing returns, they have written 40 years ago and many of the covered products have since achieved then unimagined leave levels of efficiency. several products have been through two more or different rule-makings and the statute requires the doe to determine whether higher standars are warranted on every single covered product at least every six years. this suppose -- applies to privates that have reached the stage of regulatory maturity as it were, that is to say the products for which

cost-effective efficiency have reached their limts. cost effective energy has reached their limts. there are two components that we believe warrant congressional retention. we should retire several mature covered products and by that i mean retire at the current level of efficiency and not backslide and that stake holders including government should be given sufficient time to analyze the impact of a previous regulation before a new rule-making cycle kicks off. barely has a product entered the market before the next rule process kicks often. there has not been enough time to analyze the information in the real world to see if it works. my second point is that energy efficiency should look at individual products. the challenge ahead is to build on the past industry success with a new more wholistic approach to these savings

opportunities. individual products are increasingly interconnected and operate as a system rather than singularly. we suggest congress consider this opportunity when considering these savings. i think energy savings from a building versus energy savings from a lamp. demands -- my third point is serial regulation impacts consumer choices. demands from global competition and government regulation and the all important consumer preference require manufacturers to sprint to remain competitive. while members are accustomed and good at running the race, an endless regulatory environment of rules they must clear each and every time to remain viable. they are the definition of having skin in the game. one tendency of ep caw is that over time it will trend toward eliminating certain products from the market. under this type of regulatory scheme, there will be fewer and fewer choices offered to

consumers. we assert that markets should drive and in fact are driving the energy efficient economy. one choice that markets can do without, however, is available of products entering the united states that do not comply with u.s. law and policy. this deprives consumer of energy efficient benefits and disadvantaged logged by manufacturers. this is an area where the federal government especially could be helpful with policing up these imports. in conclusion, electrical manufacturers contribution to the energy efficient economy is diligent and i believe commendable. throughout thisef nema has -- nema has worked with other stakeholders to advance energy efficiency where we believe it was justified and where the savings were significant. we've resisted regulation for

the sake of simply doing something more when the stakes were insufficient and the stakes were too high. in many cases this has done its dou duty, but this is a high cost for our industry and higher price for consumers. a legislative overhaul that builds on the success of the last 40 years but allows us to all keep the energy efficiency economy moving forward is what we wish to support. we urge congress to seize this unique opportunity. thank you and i like forward to your questions. >> thank you, mr. cosariff. our next witness is mr. thomas eckman, the director of the power division of the northwest power and conservation council. thank you for being with us. you are recognized for five minutes. >> thank you, mr. chairman and my name is tom eckman.

from the northwest conservation council. i'll start with a thumbnail of who we are, since there are no delegates here, it might be important to figure out why i'm here representing the northwest. the northwest power and conservation council was established under a northwest power conservation of 1980 public law 5601 and we are an interstate compact authorized by you folks here in congress to do power planning for the northwest. so for the states of oregon, washington, idaho and western montana, we produce a 20-year power forecast to meet your needs and a resource plan to meet the needs for electricity and we are to treat energy efficiency as one of the resources we could rely on to meet those needs. over the past three decades, 3 and a half, 35 years, we produced seven different power plans, we're to update the plans every five years so we started back in 1982 with the first plan and called for cost effective

energy efficiency to be a major component of that planning process. as directed by congress. over that past 35 years, energy efficiency has been a very significant contributor to the northwest economy and to meeting our needs. in summary, since 1980, the northwest region has saved enough electricity through codes and standards and utility programs to be equivalent to roughly six seattles in annual electricity consumption or more than one and one quarter times the actual consumption of the state of oregon. so it roughly represents the second largest resource in the region. it met 55% of low growth since 1980. so we believe in energy efficiency, that is cost effective. the reason i'm here is to talk to you about the world at federal standards have played in

making that happen and what they look like going forward. over the past 35 years, federal standards have basically produced one fifth of the total savings that we've been able to achieve. energy codes about 20% and the remaining through funded utility programs. one fifth of the savings turns out it be worth about $1 billion in annual savings out of the -- on an annual basis and saves about 5 million metric tons of carbon off of our system and we have a very clear system because about half of the power comes from hydroelectricity so that is a significant component. it is about 10% of the total carbon emissions on a annual basis. so on a going forward basis we look at the forward standards adopted between 2009 and 2014. those standar -- standards alone will reduce the forecast from 1.1% to .8%, about 30% reduction in growth, again saving

significant consumer cost with new generation and saving consumer pain and agony from carbon emissions. so we are here to support those standards because not only have they have been a huge benefit to us, but we have been involved in the negotiations that led to the federal standards and many of the standards adopted since -- since 1987. i'm a member of the appliance standards rule-making advisory committee appointed by doe to facilitate better communication between manufacturers and advocates for energiy efficiency to begin to develop more transparent and open process to engage in rule making and that -- and the at vent of that committee, which was formed at the behest of the department of itself because it understood that it could do a better job of rule-making in negotiations and in a standard and noticing comment process. it can't always do a better job but in some instances, elizabeth

noted that appliance rule making for air-conditioners and package rooftop systems, those consensus agreements between manufactures and advocates have produced better standars and more regulatory certainty on be half of the manufactures and greater compromise on behalf of the manufacturers. so i think those -- that particular improve was not envisioned in the original statute but it's a regulatory process that doe a regulate it's improved immeasurably the transparency of the process on an ongoing basis. i think we can talk more about that in the time you have questions for me. i'll stop there. thank you. >> thanks mr. eckman. and our next witness and last witness is mr. steven euric, the president and ceo of the air conditioning heating and refrigeration institute. so thanks for being with us and you're recognized for five

minutes. >> thank you, chairman whitfield, ranking member rush and members of the subcommittee for inviting me to testify on this important topic. i'm steve y you urek president and ceo. we have 315 member companies that manufacture more than 90% of the residential commercial and industrial air conditioning, space heating water heating and commercial refrigeration equipment sold installed in north america. our members employ over 100,000 people in manufacturing and more than 1 million american jobs when you include those involved in distribution, installation and maintenance of our equipment. i want to make it clear ha that our industry has a long record of leadership when it comes to innovation, energy efficiency and environmental stewardship. in fact, the equipment our members produce is 50% more efficient than it was just 20 years ago. but even as we innovate and

develop the next generation of highly efficient equipment we always have in mind the needs of our customers who are after all the people who buy and use our equipment. we have three main concerns with the current statute that i'd like to discuss today. first, the authority congress set forth through setting efficiency standards, the energy policy conservation act is 40 years old. and is t has not been updated to reflect new technologies and economic realities. two, in in addition to the impact in our industries, consumers are paying a heavy price both in real monetary costs and in comfort and safety. when new equipment costs more than consumers can afford, they find alternatives. some of which compromise their comfort and safety while saving less energy and in some cases actually using more energy. finally, american jobs are being lost in part because of the prom ul gaigs of ever more stringent

efificiency regulations and the worst thing is doe admits these regulations cost jobs. while the clinton administration issued six major efficiency rules during his eight years in office, the current administration issued eight major efficiency rules in 2014 alone. there are real consequences from this rush to regulate. yes, complying with these rules cost my member companies millions and millions of dollars, but what is far more important, it should be far more worried to congress is that american jobs are being lost and consumers who are already feeling financially squeezed are being forced to pay more for products they rely on in their everyday lives from comfort cooling and heating to refrigeration to hot water. requires that all efficiency standards meet the twin tests of technically feasible and economically justified and yet deo has issued rules that use unrealistic assumptions in its

analys analyses. i'll give you a couple of examp examples. doe estimates the new standard would save just eight-tenths of a percent more energy than the existing standard but would cost manufacturers up to $24 million to comply. for residential boilers and commercial refrigeration equipment, doe justified the economic impact of the higher efficiency levels by using the assumption that no matter how much the product increases in price, demand for that product would never decrease. every time doe issues a new rule, it issues a press release estimating the rules' benefits and cost savings to consumers and energy savings for the nation based on theoretical models. d. d.e.o.e. has never looked back to see what the energy saves actually were or if consumers actually ever benefitted from spend more money. in the kurnltd law, it doesn't even require such a review.

finally, d.o.e. projects future job losses in several of its rule makings for our products. for example, in two separate rule makings for different types of commercial air conditioning units, doe noted small business manufacturers would need to re-design their entire product offering or leave the market. doe acknowledged in a potential scenario in which a rule making for commercial refrigeration equipment could cause all existing production to be moved outside of the united states resulting in a loss of over 3,500 jobs. changes to he ka should be implemented in phases with the collaboration of all stakehol r stakeholders. i urge all members of the upcoming conference committee to ensure the technical corrections in hr-8 remain part of the final energy bill. broader epca reform should stress flexibility, enhanced technical and economic

justifications and the process should be overhauled to maximize transparency and stakeholder engagement. congress should require doe to convene stakeholders to discuss a new framework. we're ready to work with congress and doe and stakeholders to discuss how we can update this 40-year-old law to create a new more open process conserve energy, help manufacturers remain competitive in the global marketplace and benefit all consumers. i appreciate the chance to appear today and i look forward to answering any questions you might have and working with you as we move forward on this important issue. >> thank you, mr. yurek. and thank all of you very much for your testimony. we appreciate it. i'll recognize myself for five minutes of questions. ms. miller, the george washington university regulatory

study center, how old is this center? >> it began in 2009. >> 2009. >> that's right. >> and you how long you have been there? >> since 2012. >> 2012. so if you were running for public office or you were going to some rotary club peeking somewhere around the country, could you categorically say that these efficiency regulations are saving consumers money because the reduction of electricity costs exceeds the additional cost of the new appliance? >> i would say that these standards have very different affects on different households based on some of the characteristics i mentioned and shs also some i that state as well in my written testimony. for instance, if you live in texas, maybe it's more beneficial for you to have an efficient air conditioner but do uf care how efficient your furnace is? how often are you going to use

it? in that case you may not save my in any getting afternoon efishlt furnace. so i would say different -- >> so geographical area would have an impact on it. >> absolutely. >> then you indicated the use of the product obviously would have an impact on it and you mentioned i think that some elderly people who maybe use it less would have less benefit from it as well, is that correct? >> that is correct. and the department notes that in its analysis. >> so all of us make comments about, oh, this is going to save money and so forth, but it certainly is possible in many instances, i would assume, that low-income people and elderly are harmed more by these regulations perhaps than they are benefitted. wow agree with that? >> that seems to be the case. and the department also does acknowledge that there are negative impacts on those groups in its own analyses. it's not a view that's outside the mainstream. >> originally, this started

because of the arab oil embargo. the reason that this all started was because of trying to conserve the use of energy and certainly that has changed today because we have an abundance of energy in america. but today it's become more of a climate change issue. that's what people talk about, well, we've got to be more efficient. less co2 and so forth. mr. mcgwire, you and mr. koss grieve and mr. yurek all touched on this, the need for reform. and you all made some pretty strong statements. you said that sometimes the product is not going to be as effective, it's going to cost more to consumers. it's going to you reduce consumer choice. and one comment i would also make on hr-8, which is our

energy bill, one of the most controversial aspects of it related to the process that the doe goes through in adopting these new standards. for example, they really are not transparent on this. the data analysis is really not available until they get ready to notice it. and so all we were saying in this one provision which was like we were turning the world upside down was we want doe to sit down with the manufacturers, the people who make these goods, and have a more open and transparent discussion with them. i mean, you would agree with that, right? >> we would agree with that, mr. chairman. and actually, that process that you're describing used to be used by the department of energy where manufacturers would have an opportunity to test a product under a new standard or to even employ a new test procedure before you could determine whether a standard was appropriate. but what we've seen in the last

several years is just because so many rule makings are going on at the same time that doe has not been able to go through this very thorough process of let's do a test procedure and make sure that works. the a test can be repeatable and reproducible before we set a standard so the companies can see if you can test a product. it's very -- manufacturers spend an enormous amount of resources on compliance to these standards. the testing is very complicated. >> right. >> these products are more sophisticated than they used to be be. so you want to get that right. you don't want to mess that up. >> right. >> and what's happened is the process has become convict flaitded an it's very difficult to understand what's happening sometimes. >> mr. goss grove, do you agree with that, basically? >> i would agree with that. maybe think as mr. mcgwire was answering your question, the product cycle of some of the

products entering the market in our area, l.e.d. lamps as an example, is in many cases less than a year. so if you miss one of these hurd els elss i've referred to, you've missed a product cycle. that's a very big deal. and for a small or medium-sized company of which there's many making l.e.d.s, that could be fate al. >> well, i have a lot of other questions but my time has already expired. mr. rush, you're recognized for five minutes. >> i want to thank again the panelists for your interesting testimony so far. there's a question that i have, and there is an argument that while the efficiency standards have been very valuable at reducing energy costs and consumption, many of these

standards have already reached their maximum efficacy, and we cannot squeeze any more juice from the grapes in a certain manner of speaking. do you agree with the statement that many of these appliances are as efficient as they can reasonably become? or is there no -- and there's no room to move forward with these new standards or do you believe there's something more cost-effective standards and measures and pathways that we can implement in order to greater have more efficiency and cost savings? >> thank you, congressman rush. yes, i do think that there are more cost-effective pathways to

achieve greater energy savings that have yet could come. and i'd begin by just as i say today in my opening remarks the rule that was finalized just last year for commercial rooftop units represented the largest energy saving -- single standard in agency history. and that was the third time that that standard had been revised. and while this is going to deliver huge consume irand environmental value, it was nowhere near the most energy efficient technology that's commercially available. so it just suggests that there is still room to improve, and i would also note that as i mentioned in my opening remarks that the forthcoming report from aceee in the -- looks at the rules that will be up for revision in the next eight years and has shown that the energy savings opportunity from those rules will exceed that of which -- of those that were finalized in the last eight years.

again, just further suggesting that -- and some of those standards will be ones that have products that have already had standards and have gone through revisions in the past. and i did finally would just say that standards increase innovation and that innovation, technological innovation creates new product features, new design opportunities, our refrigerators today have more features than ever before and that also could unlock opportunities for increased energy savings. and that could form the baseline for future revisions to standards in the future. >> yes, ma'am. i want to shift my focus. my office has had many conversations regarding energy efficiency standards for appliances and their impacts on low income families. one of the arguments that we

hear quite often is that the cost of complying with new energy efficiency standards will have a disproportionate impact on low income consumers. how do you respond to this charge, and secondly, are there any benefits to lower income households if industry is forced to comply with the most current energy efficiency appliance standards? >> thank you. i guess i would -- i'd begin by saying i know the impacts on low income customers is a priority of yoursor, as it is for nrdc. and minimum efficiency standards set a dependable level of energy efficiency that every american can count on. our analysis suggests that appliance standards will save the average american household including low income households $500 a year compared to before

standards were set. so that is significant. and i agree that low income households pay a disproportionately higher portion of their income goes energy costs. in a recent report by nrdc and ac triple e shows that energy efficiency is a key strategy for reducing the energy burden that low income households face. i would say that is why groups like the national consumers law center and texas rose and other consumer advocacy groups engage and are highly active in the standards setting process because of the important benefits that it servesor for the low income populations that they support. >> thank you, mr. careman. i yield back. >> recognize the gentleman from illinois. >> thank you, mr. chairman. this is actually a very good panel. you know, there really is more that unites us than divides us

on this whole debate. and i thai that's true across the board. first of all for mr. mcgwiuircg mr. koss grove and mr. yurek. you're say willing there's a need for some reform, but you're not claiming that there's a desire to jettison energy efficiency standards, are you? >> no, not at all of we're supporters of the program. >> let me -- i'm going to go quickly. mr. koss grove? >> absolutely not. >> mr. yurek? >> no. >> so this is an example where we really can work together to get some sensible changes to affect folks like the narrative that i provided earlier today. there is that trap that people do fall into from big federal agencies and the rolling out of regs and, as the fluorescent light bulb case, mr. cosgrove, they get caught in a trap and you don't want to miss a cycle of putting a product on the

shelves because for a small company, that could be deadly. and ms. noll, you did mention in the discussion with my colleague mr. rush that we should -- the confusing thing is we're not talking from a baseline of families. what is a family? what is a cost? i think ms. miller mentioned it. her cost and a two-family household is different than a family -- i'm one of seven kids -- of nine. grew up aloft different cost, a lot different projected savings. don't you think that if we're going to have this debate that the department of energy ought to help us define what is a family, what is a savings, and to have part of that transparency? >> thank you. i would say the department of energy does take into account many perspectives. >> but don't you think they should help define this so we

could have a better, accurate discussion of what the savings are and who they're saving? this amorphous savings is being disputed by economists based upon real data and real numbers. >> as many of the colleagues that i work with, we strive to find -- get better data -- >> the question is, shouldn't the department of energy help us define their savings? the answer is they don't. mr. yurek, following up on this question, don't you think they should do a better job, department of energy should help us define savings and costs? >> yes, i think the process -- the doe is in a mind in some ways by the statutory language of this 40-year-old act and how they're required to do the analysis. they're in a bind by the time frame in which they need to do all these rules. they don't have the time anymore because of all the rules that they're involved in to do the deep analysis that they used to be ail able to could and confer

with everybody. and they also have a court order saying they need to meet these deadlines. >> let's go quickly to job losses. you highlighted it in your testimony. talk about the job losses and shouldn't doe talk about that there is a loss of jobs, especially as you get to this point of, as again my colleague mr. rush says, how much juice are you squeezing from the grape? you identified that just in your testimony. >> yes. i think that's one of the economic analysis that needs to be be done. i think they forget the purpose of this act is not to go to the maximum tech and maximum efficiency. it's to slowly raise the bottom so everybody can purchase that equipment and have those savings. there's other programs such as mr. mcguire mentioned related to energy star that are the poll to get people to buy that equipment. what we're seeing now is that this program is being used to go to the max tech versus going to the minimal level where people get save gdz and benefits but don't have the cost. >> aren't you ask rg for a

return to a collaborative approach with the department of energy, mr. mcguire? >> yes, we are. >> mr. koz grieve? >> yes. >> mr. -- >> yes. >> so i do have to applaud the doe. we have actually been pressuring them years and also the epa to say, tell us how this affects jobs so in this most recent proposal rule march 12, 2015, this is what it says, some large manufacturers have already begun moving production to lower cost countries. short term, u.s. job loss. this is the department of energy saying that. an amended standard that necessitates large increases in labor content or that requires large expenditures to retool facilities should cause other manufacturers to reevaluate production siting option. what that means is that if we squeeze too much -- my colleague

mr. rush, if we go too much, we lose jobs to overseas manufacturers, and that would be unfortunately. thank you, i yield back my time. >> gentleman's time has expired. the chair recognizes the ranking member of the full committee from new jersey for five minutes. >> thank you, mr. chairman. ms. noll, from listening to some of the people silting next to you on the panel and some of my colleagues on the other side, you'd think that the standards process has suddenly become far more contentious than it used to be. in my opening statement i talked about the fact that the standard setting process has always yielded some controversy from one industry to another and that's not to say that complaints or controversies weren't always important or even valid. but i just see some contention as inevitable part of any meaningful standard setting process no matter how well it functions. so while not every standard can be negotiated my sense is that there has been more consensus than ever before and that every trade represented here today has

been evolved and likely benefitted from that consensus. so my question is, do you agree with me that there actually seems to have been more consensus in the standards setting process over the past eight yees and of have the rules finalized in the last raitt years, what percentage of those rules has been established through consensus negotiations if you could. >> good morning. yeah, it's interesting because i think about the number of rules and the number of negotiations that have taken place over the years, and there's so many to choose from. i mean, the last two revisions to home air conditioning standards went through a consensus process and landed a negotiated consensus outcome. and that's fantastic for consumers and the value of that is going to deliver to them and for the environment as well. so i think from my perspective i would say that the controversy is the exception and not the rule. you know, that we can demonstrate i think of the -- as i said in my opening remarks --

42 standards that have been finalized since 2009, almost a quarter of those stemmed from jointonsensus negotiations. and that's not to say that every rule needs to or can come from a consensus or a negotiation. and those that didn't went through the normal rule making process. and with the exception of maybe a few standards have been without controversy and supported by stakeholders through the process and input. so, yeah, i would just encourage us not to characterize action as controversy at this point. >> i'm a strong supporter of energy efficiency programs and again i'm kfrzed by some of the claims being made by members of today's panel. i find it difficult to believe that there are no more significant energy efficiency gains to consumer products unless you assume that we can't improve upon current technology or develop entirely new technologies that are more

energy efficient. for example, tv went from tubes to liquid crystal displays to plasma to l.e.d. in a little over decade. are we truly done with refrigerato refrigerators, dishwashers, air conditioners, furnaces, whatever? >> our experience has been no. i mean, i think in the latest refrigerator standard revision this was the sixth time including the state standards that that standard had been revised. it represented about 20% to 30% improvement over the previous standard, and that's on par with other revisions, fully supported by manufacturers and stakeholders. and i think we've seen, you know, that tra victory has held troh. refraijors are 75% mauer efficient. they have more features and are 20% larger and they cost half as much. i think the lighting revolution that we've seen take place is another example of -- i don't

think in 2000 we could have predicted the number of choices and the efficiency that we would get from l. dext. s today. so those are just a examples of where this could be headed. >> right. several witnesses have referred to mandatory serial rule makings. my understanding of the law is that it mandates the rule of a standard every six years. however, to my knowledge, the law doesn't require that the standard be updated every six years. so just to clarify, would you just answer yes or no to the following questions, okay? does the law require a standard be reviewed every six years, yes or no? >> once it's gone through its statutory requirements, then yes it's required to be reviewed every six years. >> does the lawman date that a standard be updated every six years regardless of any other fact pattern? >> no. >> does the doe have to determine whether rule making is likely to result in significant savings before requiring a standard be updated? >> yes.

>> and does doe have to determine whether rule making is likely to be technological feasible and cost-effective before updating a standard? >> yes. >> okay. thanks a lot. thank you, mr. chair hanman. >> the chair uses the privilege to recognize himself. a hearty texas welcome. in the initial time i have one question about air conditioning. southeast texas, my home, exists in a climate we call 95/95. from early april to late september it's 95 degrees fahrenheit with 95% humidity. until 1902, the only job in that region was picking cotton and gardening prisoners in big state prisons. that provided very, very slow,

low growth. and then this carrier invented the air conditioner in 1902. that single invention combined with oil being discovered in beaumont and the 51-mile houston ship channel being built has put houston on track to be the nation's third largest city sometime this decade. federal actions affecting air conditioning gets the attenti attention -- doe is demanding higher efficiency standards for air conditioners while epa is banning certain refrigerants and foam blowing agents for being used in air conditioners. so my only question is for you, mr. mcguire and you mr. yurek. can companies comply with these

conflicting standards? can they comply with these? what are the challenges? >> first off, yes, they can comply with it. but how they comply with it is it costs a considerable lot of money in the conflict between the two statutes going into effect in and the needs to spend money on research and development and then once that -- the research and development is completed, they need to then retool their plants. yes, they can do it. it's going to cost the big manufacturers that have the funds will have the ability to do it. there will be several of the small manufacturers that don't have the funds available that will go out of business either being acquired by the bigger wunz or just leaving the area. >> big guys pay, the small guys go away. mr. mcguire, can they compete, work with these conflicting regulations from different departments? >> the industry can comply, but the problem is it takes a certain amount of time to do that. and the epa decisions proposals

on refrigerants is not being coordinated with doe on the efficiency standards. with the vast majority of greenhouse gas emission avoidance benefits come from the appliance standards, not reducing the -- changing the refrigerants. we have to deal with the fact that the safety standards in the u.s. do not allow the type of refrigerants we have to go to yet and the amounts necessary. that requires a safety risk assessment tests that companies are going. it takes a lot of time, sequence and investment for this to happen and it would be prudent for the two agencies to talk about this and reach a decision that makes sense for the environment and for the people that are making these products. >> final question, sir. do you believe the obama administration is meeting their own goals set with their executive orders to minimize the cumulative impact of these regulations? they said, let's make that lower. does this achieve that, or is this in violation of that?

>> we do not believe the doe is in a proper analysis to the cumulative regulatory burden on manufacturers when they're doing their appliance efficiency standards because they're not taking into account the cost and investments that have been made for previous versions that haven't been recouped as well as the investments that have to be made in alternative refrigera refrigerants. >> mr. yurek, your thoughts sir? >> i agree with mr. mcguire in that that proper analysis has not been done and the burden on manufacturers is not being considered and actually has been ignored when raised in some of the rule makings related to commercial refrigeration equipment where we did raise epa changing the refrigerants that could be used at the same time efficiency regulations went into effect. doe said they haven't changed it yet so we're using the current refrigerant. they issued the rule six months later epa banned those refrigerants. there's two different implementation dates, one is 2016 for the refridge rants and 2017 for the energy efficiency standards.

you have to redesign twice in two different periods of time. >> thank you. my time is expired. one word of warning. don't mess with texas air conditioners. chair recognizes the gentleman from california for five minutes. >> i thank the assistant chair. i believe that you stated mr. cosgrove that many of the imported products are not held to the same stnlds as american made products. is that right? of i didn't say many. i said that we should be on guard to make sure that nonqualified products enter the stream of commerce inside the united states. >> so that must be happening then. is that happening? are products entering -- >> we receive information from our manufacturers routinely that they find products in the stream that don't by objectist standards meet the standards of the united states of america. >> so u.s. consumers are buying products made overseas that are

potentially less efficient and cost american jobs at the same time. >> they might be, yes, sir. >> can we remedy that situation in manufacture well, neem ma in the past has worked with commerce in the past in the area, for instance, customs and border security to make it available to their agents so they can know what they're looking for, to be able to identify what constitutes a valid third party certification mark, what might be a counterfeit and other tells that you might see in -- >> so this is an endorsement issue, not a trade rules issue. >> mostly enforcement, yes, sir. >> okay, very good. mr. eckman, please elaborate a little bit if you would on how the rule making process could be improved, the transparency of the rule making process could be improved. >> i'll go through a little bit

of history so that the context is there. in mid-2000s, doe staff directed their consulting staff to sit down with advocates and manufacturers to help negotiate white good standard with aham folks so the technical staff that was supporting doe's rule making was appraised and involved in those negotiations that were informal at the time. they weren't authorized by doe. we were handling those on the side. and that led to another process on electal transformers where both doe staff and their consultants got involved an finally doe established under the federal administrative procedures act a negotiated rule making group called as rack which now oversees a series of requests that might come in from parties that want to enter into negotiations and through a regulatory process as opposed to a rule making through a standard

comment process. and that has opened i think the doors to more consensus agreement. the agreement on major refrigeration products, the hvac equipment, pumps, and electrical transformers all came from those kinds of negotiations where there's a great deal more transparency interaction with the manufacturers, with advocates and doe staff and its consultants because they can get down and talk face to face, roll the sleeves up in a meeting not in a very formal hearing s type process. i think that has improved both the outcomes and the feelings that come out of those outcomes about we agree we can't get everything we need, you but the compromise works for all of us. and that process to me is really central to in advancing the rule making process. >> thank you. mr. cosgrove again, you mentioned that the -- or i'm going to ask this question. do you believe that the current standards have room to drive

more innovation? >> do i believe the current standards have -- >> can drive more innovation. >> can drive more innovation. i think the manufacturers are driving innovation. i think competition is driving innovation and i think standards have a part in that. but i wouldn't overstate what their part is. so if a product is at the low end of efficiency, then the standards are a welcome boost. if a product like a transformer is approaching 99% efficiency, i'm not sure what they're accomplishing. >> thank you. ms. noll, could you give some examples of efficiency improvements that are still possible. >> yes, i'd be happy to. you know, i think that as we look at some of the products that are still -- that will be revised in the next eight years, there's standards for equipment and household appliances that have seen standards before. water heaters is the likely

potential opportunity for increased savings. as mr. cosgrove just mentioned, distribution transformers, they may be reaching a high level of efficiency but all of the electricity that is produced in america goes through transformers so even half of a percent improvement there is going to be a significant national benefit. so i do think that there is opportunities that still exist to improve through the standards process. >> thank you, mr. chairman. >> the chair recognizes the gentleman from ohio for five minutes. >> thanks, mr. chairman. and i also would like to echo that i think this is a great panel today and i really appreciate you all being here. i'm kind of april expert. my wife and i in the last six weeks just bought a washer and dryer and the refrinl rairt is next. but in northwest ohio we do make hvac. we make dishwashers. we make dryers. we make washing machines. we also make waffle irons.

we make large mixers. and we also have a large freezer plant right in west central ohio. so we have a lot of things going on. it's very important to our economy, but mr. mcguire, if i could start with you, you've been particularly critical of the proposed new standard for dishwashers. can you explain what is wrong with the standard both in terms of the substance of the proposed rule as well as the process by which it has come about. >> well, the proposed dish washerer standard from last year, first of all, it required a 20-year payback to the consumer for a product whose useful life is 13 years. it reduced the amount of water that a dishwasher uses in a cycle from 5 gallons to 3. and the proposed rule did not go through any type of performance or consumer testing before it was issued. we did not get a chance to do that. we normally do in these rule makings. >> let me interrupt.

why didn't you get to be part of that? >> doe just didn't do that part of the process. they just went right to the rule without that type of testing. so once it was proposed, we did the testing and we demonstrated to doe and others that dishes were not cleaned and multiple product manufacturers products it did not clean the dishes. sot utility of the product was affected. the consumer pay back was not there and the energy savings was minimum. less than a quad. 7% of one quad. now, the current dishwasher standard that's in place today, that has a payback to the consumer of 12 years so that was already at the limit in terms of economic sense. there was no need for this fifth dishwasher standard. so it didn't -- it messed up the product. and it dmot make sense for the consumer to buy such a product. so our view is that there's something wrong when the process spits something out like that. that has to be a product or a

category where you don't do another rule making unless some quantity final measure can show there's going to be a real significant savings in energy that won't harm the consumer. but under the current process, it's very difficult to get doe's assumptions and other things that go into their analyses done by their contractors of the national labs so that's part of the process change we'd like to see. >> just out of curiosity, when you were doing this testing when you were going from five gallons to three gallons, how much did that cost the industry? and what did that cost the consumer in the end? >> well, how much did it cost the consumer? >> when you are doing the testing, going from five gallons to the three gallons you said, i was just curious, is there a cost to the industry that you had to do? >> oh, sure. >> and overall, i assume that would go back to the consumer. >> well, these tests that we did on this proposed rule were --

the standard didn't go into effect so those costs were absorbed by the companies. thousands dollars to do the tests. but once the standard is in effect, in order to prove your compliance with the standard, you have to test your product before it's submitted to the marketplace and then a regular routine testing market surveillance that our industry actually does some of that testing to police ourselves and to provide some information to the government. those tests are very expensive, and the cost of compliance -- the tolerances are very, very tight. so manufacturers invest a lot to make sure their products meet the standards and the tests are sophisticated so it's a costly part of being an appliance manufacturer. and those costs are going to the product like any other cost and are passed on to the consumer. >> thank you. mr. yurek, i'm concerned about the economic effects that the administration's aggressive regulatory agenda has. it's my understanding that doe

is implementing rules that set new standards for individual components in your members' residential and consumer products such as the new standard for the efficiency of furnace stands. how does regulating a specific component on a large heating or cooling system add to the cost of a furnace or air conditioning system? >> we have a lot of concern and i think looking at this 40-year-old law that it's dealing with products and in some instances it's going into the components in those products and pieces of equipment. which is the wrong direction. really what we should be looking at is how these products are put into the house or into the building and looking at an overall systems approach to efficiency to really look at the gains because if you start dictating and regulating the components, be it the compressor, now they're looking at regulating the fans that go into the air conditioning and

furnaces and others. you're dictating how these products are designed. once they're put into the product, they might have -- we've shown in a case in a proposal out with the california energy commission when they were doing this with air handlers, what they were proposing and the efficiency level for fans actually used more energy when applied in the air handler than being abe to design the overall product and the energy use of that air handler. and so we just want to make sure that this is done rationally and the current law doesn't give doe that kind of authority to look at the broader picture. i think we just need to step back and say, it's 40 years old. let's look at it and make some changz and make it better so we can actually get some energy savings out in the field and have consumers be able to afford the equipment. >> thank you very much. mr. chairman, i yield back. >> the chair recognizes the gentleman from vermont, mr. welch, for five minutes. >> thank you very much. this is a great panel. appreciate it. couple of things. we don't have a bill yet, right?

so this is kind of an abstract discussion? and i thought mr. shimkus kind of laid out the potential for cooperation here. i do like the notion of collaboration in the process because you've got folks at doe who are doing their best to implement efficiency standards. you've got real world folks that are the manufacturers that have to contend with the very practical issues of implementation. i mean, ms. noll, you're okay with that, right? >> yes. >> i mean, i think standards are incredibly important. i don't think they're everything. mr. goz grokoz groefs, you ment that -- if you've got something that's highly efficient then it's not going to accomplish all that much. i mean, a lot of what you're saying sounds very reasonable to me. the jobs issue i think it really is all -- it's not so much the

jobs issue. i mean, air conditionings by the way is one of the most outrageous loss of jobs is with carrier leaving indiana to go down to three buck an hour wages in mexico, which i think is pretty appalling but has nothing to do with standards particularly since whatever it is that's mafr manufactured at 3 bucks an hour has to meet the standards before it can come back into this country, right? so you've got a level playing field as long as the standards apply to everywhere. but i do, as a strong, strong supporter of efficiency standards with mr. mckenly, who's got a lot of experience in this, i feel that those of us who believe standards can work have to be extremely diligent in tryinging to address practical concerns as they come up. that makes sense to me. so i've heard the industry folks saying that you're not for unraveling them. you want them to be more

practical. y yeah. i'm not asking a lot of questions because i don't think there's that much disagree the and we don't have a bill. but i think one thing that would be helpful as part of this process would be to get the doe folks in here and ask them what are some of perhaps the congressionally imposed burdens we're imposing 0 on them, where you're saying they've got so many rules they've got to deal with they don't have the time and space. the bottom line here, collaboration i think is really good. i think standards are absolutely essential. i mean, the energy efficiency savings that we've had have been tremendous in -- if they're done right, it can save consumers money. it's not without impact. i mean, we all understand that. but there was a cost associated with requiring the automobile manufacturers install seat belts. that cost more money when you bought a car. but most of us think it's about time. mileage standards have been tremendous. that is a cost, but it's really had an impact on the average

mileage in our fleet. so really what i'm asking for is to take up mr. shimkus on his observation that this is an area where there's some opportunity for us to cooperate, but that means not letting it get adversaryial if there's acknowledgement even from the people who are affected by this in ways that they he are a little dro little too agrisive to have interaction with doe and us to see what the process im improvements we can make to get the benefits of standard. mr. mcguire and mr. yurek, is that a problem for you, the approach i'm talking about? >> it's not a problem. we've used convict sense uns many times in the past. but we think consensus ought to be to change the law so that the process requires these improvements and they're not discretionary. >> well, that's got to be a discussion -- there's no specifics here. so you're making -- we don't

have a bill in front of us. >> there are some process improvements in the energy bill in conference, but the ones we're talking about the major reforms aren't, you're right -- >> i'll tell you what would be helpful for me. if each of you did like a one-page bullet point assessment of convict katrina things that you think in the process would improve it. then we can assess it, have a discussion, talk to doe, how does that work? would it improve it or not? what's the downsiefd? we're just having this real ab instruct discussion here. and regulations i think are really important and can be really beneficial, but they also if they're not done right can have a lot of downside to them with no upside. ms. noll, how about you? >> i would be happy to do that. i just would also encourage us to look at some of these -- where the process is working and i think dishwashers is an example of that where doe heard from industry and congress granted them the authority to

look at consumer utility and performance as one of the criteria. >> that would be helpful. >> for economic justification. >> just as an scam. how it's working and serving to protect consumers and also ensuring a balance both the impacts on manufacturers as well as the impacts on consumers and the environment and reducing our energy consumption. >> what about you -- >> gentleman's time's expired. recognize the gentleman from west virginia mr. mckinley for five minutes. >> thank you, mr. chairman. let me just build a little bit on some of the remarks that were made earlier about some of the credentials. peter pell much and i have had a wonderful working relationship. we both -- we chair the efficiency caucus. we put language into the current energy bill that we're waiting to see what's going to happen in the senate. we've been to the white house for signatures on energy efficiency bills. so this is something i think he and i really grasp fairly well this. back when i was in private

practice in engineering, we designed some of the first lead certified schools in office will buildings in west virginia. working with tonka over energy efficiency with the turbines to create energy. energy efficiency is one of the prime areas i like to play with and get involved in here. but i get to a point, there's a vast difference -- i want to play back a little bit on what my colleague and good friend bobby rush from illinois was talking about, the disparity of income when people are facing this. if you look at this, it poses a challenge for all of us. it really does for us. if you look at mississippi, my colleague here from harper, mississippi, their medium family income is $36,000 a year. in miss my. $36,000 a year. but in maryland it's over

$70,000 per family income. so in those affluent states or neighborhoods, they make choices. they have choices. you'll probably if we went through the motor vehicle licensing we probably find they have more bmws and lexus cars there than we have in some other areas of the country or in neighborhoods. we have -- so cars are going to be different because people have choices. we have housing, different pricing for housing because people have choices for that. we have health care. when you go to the shangs under obamacare, there are different exchanges you get so people have choices. but when it comes to their major consumer appliance, they don't. for your air conditioning, your refrigerator, your range, your dishwasher, your furnace, all of these now have been mandated that this is the only one that they have available to them. i'm troubled with that because

of the diversity of income, their capability of doing it. don't tell me it's going to save me $500 a year because we understand the whole pay-back is so much longer on all these. so i'm wondering, is there a suggestion you all could make that might make it more palatable for people to be able to have a choice? so that they're not confronted with this hard decision. i know of families that are trying to fix anything they can -- their equipment as much -- make it last as long as possible because they know that they can't afford the cost of the new one. so they're spending a lot of money in repairs because they don't have a choice. they know what the cost is. that air conditioning costs the same in connecticut as it does in mississippi. or that dish washerer. so what would you suggest that we in congress could do to make ameliorate some of these differences so that the poor

conditions or state that's have trouble, how can they afford to have this cost? >> congressman, i think this is a really important issue. i think it's bring back the balance that was originally put out in the 40-year-old law where it says technically feasible and economically justified. right now the folk you us is too much on the technical feasible in dsaying, hey, my manufactures manufacture products everywhere from the federal minimum to very high efficiency. yes, we could go to the high efficiency but we need to look at the cost. i think it's bringing that balance back to that economic justification in saying, this law is intended to raise that floor slowly. people that have the incomes in maryland and other places are going to purchase the things with all the different bells and whistles on their refrigerators, their dishor washers, air conditioners and everything else. but there's a lot of people in

this country when you look at the costs now of the minimum efficient air conditioner, you're looking at $6,000 to $10,000 at a minimum that is done in an unplanned time because most of the time these units go out when it's the hottest day of the year. or the furnace when it's the coldest day of the year. and the federal reserve just had a study last week that said over 47% of the american people have less than $400 in emergency cash available to them. so what are they going to do? they need that comfort in the wintertime they need the heat a lot of times for medical reasons they need the cooling in the summer. and so it's bring back that balance. you know, probably putting more of an emphasis on the economic justification versus the -- >> my time is expired. could each the six of you, would you mind putting together a little paper or something to say what you would suggest that might be a solution to help out for families in depressed areas? thank you very much. i yield back. >> gentleman's time has expired. the chair recognizes the

gentleman from new york for five minutes. >> thank you, mr. chair and thank you to our witnesses. certainly we're citing a 40-year history. to repeat what my colleague from my colleague from vermont we have to look at some of the trade suations where offshoring of jobs might have helped some families retain those jobs and be able to afford these items and this job loss thing i think is much more complex than just suggesting standards caused it. our energy efficiency standards have improved products that benefit all of our constituents, many of these are not luxury goods but necessities found in nearly every home. we've heard support for national standards from manufacturers and consumers and we've heard from industries, states, environmental groups that there is convict sense us that this program has been a success. i'm certainly open to improving the program but improvements cannot undermine the purpose of this program. and while we look for those improvements we should not lose

sight of the fact that this program is incredibly successful while there have been a few contentious rules, it is my understanding that of the final rules issued since 2009 almost one-quarter were the result of negotiated consensus agreements and only five have been subject to litigation. so to our witnesses, do you agree that many of these rules have been consensus driven? >> yes. >> yes, most of them -- as ms. noll said, 25% of the rules in this administration have been through the consensus process. that means 75% of those 40 others have not. and i think we all support and would encourage that negotiation consensus process because there's more of that give and take that mr. eckman talked about versus the notice in comment where you only have the adversarial is much more adversarial versus the negotiation.

i think that's something we should look at. >> i think it's worth noting that doe has a history of working to improve the program, especially around increasing stakeholder engagement dating back to the 1990s. a few years ago doe established as i understand the pleiss standards regulatory advisory committee which formalized the process for negotiated consensus rule making for the first time. and a number of our witnesses participate on this committee which includes again our manufacturers, our trade associations, states an consumer groups. can anyone comment on this committee's work and what -- you know, what it is as a positive -- what it might be as a positive step to formalize this process. mr. eckman? >> you yeeah, i think it has imd the process a lot, particularly where there's a likelihood that both the manufacture hes and the efficiency advocates and the doe agency personnel and consultants can come to a more flexible

conclusion than would otherwise be provided. and i think that's -- it's allowed for lots of horse trading that wouldn't occur as mr. yurek said under the standard process that was rule making hearings process and file your report. so i think that's -- it's been a huge advantage. i've been a member since the committee was established. we've had multiple work groups, seven different work groups so far, negotiating standards. they work the best when both the parties that want to participate in that come before the committee and say be, we think we can work this out, give us a chance. if that's not possible or there's not really an issue everybody thinks we can do this through rule and comment, that's a much more expedient process. it takes a lot of time and energy to do the negotiation e goegss and you're aware, but they turn out to be better rules as a consequence for everyone involved. i think supporting that on a continuing basis the as rack committee in process, that has a really -- has improved the process a lot.

>> does anyone else -- >> i would just want to note that on the 75% that weren't consensus or joint negotiations does not mean that they weren't going through the normal rule making process to deliver a superior outcome and only five of those rules have been litigated. i think that is still a very small number on the grand scheme of things. >> thank you. mr. cosgrove? >> and to mr. yurek's point following up a little bit, when you're sitting around a table talking about technical sitting talking about technical things you'd better have the technical chaps to have that conversation. so in this highly quantified algorithm that asrac and d.o.e. consultants are using i'd like to see inside that. we have mathematicians. we can figure it out. i don't understand why we can't see what the key assumptions are and how those assumptions play inside the model they built and run through the computer. one of the things we've learned over the last four years i think is that this incoming tide has raised all the boats.

this is a good news story. now let's perfect it but let's do it in as scientific a way as possible and as transparent as possible. >> anyone else? mr. mcgwire? >> mr. tonko -- >> the gentleman's time has expired. make it quick. i recognize the gentleman from missouri mr. long for five minutes. >> thank you, mr. chairman. mr. mcgwire, could you recommend to me what type of hair dryer would be the best purchase for my dishwasher so i can dry my dishes whenever the cycle is through? >> i'll provide that for the record. >> my dishes are not feeling the burn as they once did. mr. cosgrove, in some of the testimony given today the issue of the department of energy coordinating better with another agency was mentioned as an area for improvement. particularly in the area of making sure that imported

products containing regulated components are held to the same standard as domestically manufactured products are on their own. what are your thoughts on how we can ensure a level playing field for u.s.-made components? >> there will be a number of things. i think clearly it may not be d.o.e.'s responsibility but it would be their responsibility to make sure their fellow travelers, principally customs and similar policing functions, are aware of what the standards are, what to be looking for -- >> can you pull your mike a little closer? >> i think industry has a role in that too. we should step up and offer our technical expertise. there's other distributors would have a role in that. systems manufacturers will have a role in that. so it's not going to be one easy solution, but we don't want those products in the stream or in the system. >> the energy conservation standards program requires department of energy to start a

new rule-making procedure on a product as part of a six-year review cycle. could you tell me generally how long it takes to fully comply with energy conservation standards for a product factoring in all of the cumulative rules including test procedures? >> three years sticks in my mind. i think it would be different for different products. i mentioned lighting happens a little faster. if we're doing a motor, meeting a motor efficiency standard, that's a bit more complex. machines. so i think it's different. assuming it's -- we have three years to get into compliance, and then that gives you three years of run time before the next rule making kicks off and d.o.e. tends to, as you'd expect and as they should, start that rule-making early. so they're able to comply with the law when they get to six years. i'd also point out in the covered products for nema we know of only two times where the department has chosen for the

cost benefit analysis to forgo the rule. >> what are some of the challenges in complying with both the energy conservation standards and additional test procedures? >> go ahead. >> congressman, that's one of the interesting things that was -- the change when we made the serial rule part of i think it was 2005 amendments to epka, you have to review the standards every six years. the requirement is you review the test procedures every seven. and what we're starting to see in a lot of our products, the test procedures aren't complete for the products that they're setting standards for. so as a matter of fairness we don't even know what the test procedure's going to be and how our products are going to be measured. the information isn't there. and they're setting efficiency standards at minimum levels. and so i think the interrelationship is very

important. we need to know what the rules are, be able to evaluate what those rules are through testing our products and provide that information to d.o.e. before they start setting the next standard. the same thing is the previous question mr. cosgrove, our products it's a five-year implementation time from the standard being set and when it becomes effective. and it takes the entire time to do it. what we're seeing is even before in some cases the standards are put into effect we're seeing the next round. and we saw that with residential air conditioners. the standard went into effect in january of 2015. the fall of 2014 they already started discussing the next round of efficiency. so you're looking at increasing the efficiency standards on this equipment even before the prior standard went into effect. >> welcome to washington, d.c. mr. cosgrove, do you care to comment on that as far as what the challenges are? >> they're pretty much as mr.

urich said, it's going to take us some daysal time depending on the product. >> mr. chairman, i yield back. >> the chair recognizes the gentleman from north carolina mr. hudson for five minutes. >> thank you, mr. chairman and thank the panel for being here today. very informative discussion. which of your appliances have been regulated multiple times? do you believe we're reaching a point of diminishing returns with this serial rule making. >> virtually all of our products have been regulated multiple times. the current refrigerator standard that's been in effect since last year is the fourth version of that standard. same for dishwashers. the rule i mentioned that was proemzed last year was the fifth division. we believe we reached the point of diminishing returns in the last tranche of standards negotiated through the consensus process. we think standards going forward for most of our products are not justified on the economics or the energy savings.

>> appreciate that. mr. long asked one of the other panelists about the issue of having the d.o.e. propose new standards for some products while the underlying test procedures are also changing. would you like to elaborate on how this is a problem for you? >> it's a major issue because a manufacturer cannot tell whether they -- what they have to do to comply with a new standard until they know how to test to it. that's why the law as to the test procedures come first. but that process is a little out of whack right now. so we in the case of portable air-conditioners, we've had to comment on a proposed standard before we knew what the final test procedure was. that's really impossible to do. but that's what we're forced to do under the current process that's being employed. >> that seems like it's not serving the best interests of the people either. if we aren't getting the true assessment of the results of these tests. obviously i see why that's a mistake. many of your manufacturers make

several regulated products and face multiple rules. what's the challenge? maybe you can elaborate a little more for your member companies in terms of complying with all these different requirements simultaneously just in addition to sort of the testing thing we talked about. but just elaborate on that. >> the initial investment to gear up for a new standard as mr. urich and cosgrove said is quite something to undergo the test procedure. but ongoing a manufacturer has to test and identify those products to the department of energy if you want your products to be energy star qualified, that requires a further up-front test as well as ongoing testing of a certain percentage of your products. so that's a pretty significant testing burden for the manufacturers and when the test procedures are under revision it has to be very precise in order

for you to design a product. what we've experienced is energy star sometimes will want a different test procedure than d.o.e. requires for the standard. one of the benefits we found for negotiating.consensus is we would peg it to the standard requirement with the same test procedure so manufacturers can plan that out. that hasn't always been the tas. these are processes that used to be employed but haven't been across the board in recent years. >> thank you. industry groups have repeatedly asked d.o.e. to establish separate product categories for condensing and non-condensing covered products only to have the d.o.e. provide a response that con dennising and non-con dennising equipment provide the same utility to consumers, so there's no justification for establishing separate product categories. is this another area that warrants an objective third-party review? >> congressman, what you're

talking about is the famous furnace rule. and there again it's related to technology. this equipment is at a point where you have condensing and non-condensing and there's cost differences that are considerable between the two technologies. right now we are at the highest level of non-condensing efficiency. and the rule-making is looking at moving to a condensing requirement. i think the groups -- this would have been a rule that would have been great for negotiation because what we've seen over the years is that every rule that's come out has ended up in litigation. and to see if the groups could come together and reach a solution i think would have been a better solution. reer right now in the midst of a notice and comment. d.o.e. has just issued their proposed rule to o.m.b. for review. so we'll see what happens there.

but having two separate product classes for con dennising and non-con dennising doesn't look like it will be something that's put forward. >> looks like my time's about expired. so i'll yield back. >> the chair recognizes the gentleman from ohio mr. johnson for five minutes. >> thank you, mr. chairman. and i too want to thank the panel. i know you've been here a while already. for mr. mcgwire, mr. cosgrove and mr. urich, how important is early stakeholder input for the rule-making process? what are the additional challenges that you face when d.o.e. issues a notice of proposed rule-making without having consulted with you beforehand? mr. mcgwire, let's start with you. >> i think it's very important from an effectiveness point of view. if the manufacturer hasn't had the ability to be in a dialogue with the government about the proposal and how they expect the efficiency requirements to be