Many utilities engage in hedging to protect customers from price spikes. But unless regulators are involved in crafting and monitoring these programs, they can turn into speculative ventures that...
- because an electric option is not available. Neither option would make sense.
- Energy Consumption. Mr. Hemphill implies that DOE's standards-setting activities are related to recently observed reductions in residential gas . Yet AGA reported in January that "the for natural gas in new single-family homes rose to 70 percent in 1998, up from the 69 percent captured in 1996 and 1997." (Emphasis added by the author. Reference AGA press release dated Jan. 14.) Maybe the standards are working?
On the other hand, DOE has issued no new gas furnace or water heater standards for nearly 10 years. In fact, a recent study by Rand Corp. for DOE found that the basis for setting energy standards (site or source) had no impact on markets for electric and gas water heaters. ("Measures of residential energy consumption and their relationships to DOE policy," Ortiz and Bernstein, Rand Corp., MR-1105.0-DOE, November 1999.)
- Cost and Payback. Mr. Goldstein of the National Resources Defense Council states that "the much more useful way to measure energy is in cost." Mr. Fritts seems to agree. In fact, cost is one of DOE's main criteria in standard-setting, as required by statute. Review of several recent DOE support documents for proposed appliance standards shows that life cycle cost and payback are the main criteria used by DOE in determining the level of efficiency that is reasonable for a standard. To their credit, DOE has even expanded their cost analyses based on stakeholder recommendations to be able to statistically determine what percentage of the population will be harmed or will benefit from new standards.
Although I personally don't always agree with DOE's standards determinations, the current process used by DOE makes the source vs. site issue irrelevant and arguments of bias tenuous at best. The arguments of bias appear more targeted at using these standards as a way to capture market share. So let's drop the source energy debate, and move on!
Timothy A. Bernadowski Sr., P.E., C.E.M.
Conservation and Customer Technology
Glen Allen, Va.
This letter concerns April 15 article entitled "Appliance Efficiency: Does the Fuel Cycle Make a Difference?" by Carl J. Levesque. I have been representing the natural gas industry on the U.S. Department of Energy's Advisory Committee for Appliance Energy Efficiency Standards by secretarial appointment since 1997. Although the article accurately conveyed the traditional debate between "site vs. source," as well as the problems of getting such issues discussed within the forums provided by DOE, it only alluded to the fundamental issue: how energy policies are increasingly manipulated by vested interests to determine whose ox gets gored in the marketplace.
Since the advent of energy efficiency legislation in the mid-'70s, the direct use of natural gas has been held to a much higher performance standard than electricity. Subsequently, gas end-use consumption began to plateau, while electric consumption continues to increase unabated. Thus, site-based energy efficiency policies significantly increase the revenues of the electric utility industry. In fact, according to Edison Electric Institute's Mike McGrath, in the Oct. 23, 1998 Washington Letter, losing its market advantage through site-based