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February 07, 2011

Pres. Obama's Efficiency Plans Mirror Welch Legislation

Picture 023 In his effort to "win the future," Pres. Barack Obama is proposing two new energy-efficiency programs that mirror legislation introduced in the last Congress by Rep. Peter Welch (D-VT, center in photo).

Obama is currently touring the country in an effort to drum up popular support for investing in energy efficiency as a way to help businesses and homeowners reduce costs and power use, spur job growth and cut greenhouse-gas emissions.

"Our homes and our businesses consume 40 percent of the energy we use. Think about that. Everybody focuses on cars and gas prices, and that’s understandable.  But our homes and our businesses use 40 percent of the energy," Obama told a crowd last week during a stop at Penn State University. "They contribute to 40 percent of the carbon pollution that we produce and that is contributing to climate change. It costs us billions of dollars in energy bills. They waste huge amounts of energy.

"So, the good news is, we can change all that," the president continued. "Making our buildings more energy efficient is one of the fastest, easiest and cheapest ways to save money, combat pollution and create jobs right here in the United States of America.  And that's what we’re going to do."

Welch said he was glad to hear the president call for a greater focus and investment in energy efficiency. It's an issue that he and the president spoke about face-to-face at the Congressional Democratic retreat earlier this month in Maryland.

"The point that I made to the president was that efficiency got bipartisan support in the House," said Welch. "The president said very emphatically in the State of the Union [address] that we are going to have an energy agenda this year and he is now following through."

"If we are successful with these major energy-efficiency bills, they will have real benefits: environmental benefits, economic benefits and job-creating benefits," added Welch. "I am delighted the president is proceeding with this legislation and I think this is one where we can have broad, bipartisan support."

Welch believes that even in a Republican-led Congress that will be at odds with the president on a number of issues, energy efficiency is one that can pass the House with support across the aisle. Whether it can pass the Senate remains to be seen.

In the last Congress, Welch sponsored several bills — all of which passed the House but died in the Senate. One provided rebates and low-interest loans to business owners and apartment building owners who install energy-saving materials and products. This was dubbed  "Building Star."

The program would have provided direct incentives to business owners, encouraging them to invest their own capital in American-made, retrofit materials, such as building envelope insulation, windows and doors, low-slope roofing, heating and ventilation equipment and energy management and monitoring systems.

Welch introduced a similar piece of legislation for homeowners, dubbed "Home Star," which spawned the name "Cash for Caulkers," since the money from the program was directed at making homes more energy efficient.

The bill passed by the House last May by a bipartisan vote of 246 to 161. Welch's office estimates the bill would have helped three million families save an estimated $200-$500 a year on their utility bills.

In order to get the legislation passed, Welch brought Democrats and Republicans from coal districts together with environmentalists together for dinner at his D.C. apartment to help work out issues so they could all support energy legislation.

Though Welch will not sit on the House Energy and Commerce Committee, he does plan to keep an active role in energy legislation.

How these efforts will be paid for is likely to differ from the past Congress.

Pres. Obama's investments would be paid for through tax incentives, not direct government subsidies or stimulus funds, as had been proposed previously. Welch had initially argued to fund the programs with stimulus funds. With that money gone, and funding by taxpayers unlikely, using tax incentives and point-of-sale rebates is the most palatable, Welch said. Even conservative Rep. Joe Barton (R-TX) supported Welch's bill.

Obama told folks in Pennsylvania that the tax incentives will be paid for since they will mean less money coming into the Treasury. So, where will the money come from?

"To pay for it, I’ve asked Congress to eliminate the billions in taxpayer dollars that we currently give to oil companies," Obama said. "They are doing just fine on their own. So, it’s time to stop subsidizing yesterday’s energy; it’s time to invest in tomorrow’s. It’s time to win the future. That's what our project is."

It's a continual cycle: I spend way too much heating my house, because my house was built without adequate insulation. I could add more insulation (and I have) but most of my cash gets spent on buying fuel.
Now I understand that Congressman Welch wants to help. Congressman I'd like to see you working on expanding natural gas service in Vermont- it's much more stable and affordable than either propane or oil. Much like internet service, we should be pushing the gas lines out from Burlington to Vermont's other deserving towns and villages and that will take some muscle.

The continual cycle is actually glossed over or not reported at all. The fact is the money generated by energy needs to be relatively fixed. If you conserve energy, energy companies can't afford to pay the workers and maintain the lines. So they increase costs. You are going to pay the same regardless if you conserve energy or not. So all the money put into efficency really doesn't benefit the consumer, it benefits ultimately the electric companies.

As usual, JCarter is just spouting nonsense.

Generating electricity is not free. It costs money, which is passed on to ratepayers in their rates. If customers are consuming less electricity, power companies will have lower power costs, which will be passed through to ratepayers. In addition, cutting consumption relieves the need for more and more transmission and distribution lines (or for upgrading existing lines), the cost of which would have been passed on to ratepayers. So ratepayers gain both from lowered cost of power and from holding back spending on (which they would pay for) on transmission and distribution. That's precisely why Energy Efficiency Vermont has targeted congested areas of Vermont for increased efficiency efforts, in an attempt to relieve transmission bottlenecks.

Sure, a portion of the electric bill (currently about 1/2) is for relatively fixed costs, so the relationship is not one to one. And thanks to the complexities of rate-making, it doesn't happen in anything resembling real time either. But, in the end, lowering power consumption DOES lower costs to ratepayers.

Finally, it's worth noting that power companies make money by earning a rate of return on allowable assets, which, along with their costs is collected through rates. Until and unless efficiency becomes an allowable asset, power companies neither make nor lose money on it.

I strongly believe that if policymakers find a way to make efficiency a profit center for utilities, the result will be a win-win-win for them, for consumers and for the environment.

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