Federal Energy Efficiency Mandates: DOE’s End Run vs. the Public Interest (Part I)

“EERE inappropriately colluded with NRDC, and some in the electric industry, to its predetermined and self-serving conclusions. Clearly, EERE’s mission is to promote energy efficiency and renewable energy. This fact makes them biased, consciously or unconsciously. They are an inappropriate custodian of such metrics.”

“Originally limited to technology development, assessment and promotion, some offices in DOE are now using the cudgel of regulation and ‘guidance’ to ensure their favored technologies ‘win’ regardless of the national interest.”

“Taking the form of an RFI, the proposed change is both procedurally and technically deficient, resulting in regulatory guidance that is discriminatory and lacks basis.”

This is Part 1 in a two-part article about an abuse of the Request for Information (RFI) process at the Department of Energy’s Office of Energy Efficient and Renewable Energy (EERE).

The issue involves revising a decades-old accounting convention for site-versus-source energy calculations. With the subsidy- and mandate-driven growth in various renewables for electricity, EERE determined that the existing accounting did not fully capture renewables.

Taking the form of an RFI, the proposed change is both procedurally and technically deficient, resulting in regulatory guidance that is discriminatory and lacks basis. Today we cover procedural deficiencies; Part 2 tomorrow will cover technical deficiencies. 

DOE’s RFI: Accounting Conventions for Non-Combustible Renewable Energy Use

On March 16, 2016, EERE published a Request for Information (RFI) titled “Accounting Conventions for Non-Combustible Renewable Energy Use” in the Federal Register (81 FR 7778).  At the time of its publication, the RFI was not assigned a docket number. Consequently, there was no repository for comments received from the public. Well after the comment period ended, a docket number was assigned (EERE-2016-OT-0010-0001) and populated with some, but not all, of the comments filed via regulations.gov.[1]

In  October 2016, EERE published a technical report titled “Accounting Methodology for Source Energy of Non-Combustible Renewable Electricity Generation.”  The Technical Report reveals a “bait and switch” strategy that began by EERE’s soliciting public review and comment on various methodologies for accounting for renewable electricity source energy efficiencies. However, based on subsequent articles published on the Natural Resource Defense Council’s (NRDC) “expert blog” website and E&E Daily’s Energywire, the outcome was apparently predetermined to be “captured energy.” Key excerpts of these articles that lead to this conclusion are provided below:

1. November 4, 2016, NRDC article: “Accounting for Renewable Electricity Saved by Efficiency.” The following excerpt is the second paragraph of that article:

• Recognizing this, the US Department of Energy (DOE) took a great step forward to update its thinking and approach, with a report released in October. NRDC joined with the American Public Power Association, Edison Electric Institute, and the National Rural Electric Cooperatives Association to request that DOE rethink these issues and also joined in commenting on DOE’s initial thoughts earlier this year. DOE’s efforts were further aided by thoughtful input from the natural gas industry, which also has great interest in getting the accounting right. The overall result at DOE shows that constructive, collaborative efforts can deliver real progress.

2. November 30^th, 2016 E&E Daily’s Energywire article: “How a data tweak could rock tomorrow’s grid.” Excerpts:

• On October, the Department of Energy made a little change to how it values renewable energy on the electric grid. It immediately resolved a tussle between the electric grid and the natural gas grid over efficiency standards, with the electric utilities scoring a strategic win. But that’s just the start of its consequences.
• Decades from now, if renewable energy like wind and solar keeps up its rapid growth, it could make electricity more appealing than gas as a means to curb carbon emissions and boost the electrification of all kinds of appliances. It could make the economic case for renewable energy stronger, while also boosting technologies and techniques that lower emissions, like energy storage and efficiency.
• And it could prompt a fundamental rethinking of the United States’ energy math, in ways that could have the country legitimately claim a big rise in energy productivity and an even more dramatic drop in energy use.
• The fact that the electric utility industry put a unified lobbying effort behind the change is itself significant. Utilities for years have been reluctant to embrace renewable energy. But now, as the pull toward wind and solar becomes irresistible, it has realized that correcting DOE’s 1970s assumption could be a boon. Using the new ratio, its products look better from an emissions perspective compared with appliances that can also be powered by natural gas, like furnaces and water heaters. And the more renewables the industry adopts, the bigger the advantage will become.
• The new site-to-source ratio, called captured energy, in essence puts renewable energy plants on a different footing than fossil fuel plants. It reports the amount of electricity that a renewable energy plant transmits, rather than the energy it takes to make that electricity. When dispensing of the assumption that a renewable energy plant burns fuel like a fossil fuel one, renewable energy becomes nearly three times as efficient.
• Captured energy will become a basis for some of the government’s most important efficiency metrics. It will be used as underlying data for market reports for products like LED lightbulbs, in efficiency calculations of appliances, and in energy benchmarking for homes and commercial and government buildings.
• DOE took up the ratio again last year, after four decades of inactivity, because of an obscure department report on standards for gas furnaces.
• Last year, the biggest groups representing electric utilities asked DOE to reconsider the captured energy approach, including Edison Electric Institute, which represents investor-owned utilities; the American Public Power Association, which works for municipal electric companies; and NRECA, which represents electric co-ops. They signed a letter alongside the Natural Resources Defense Council, which wants to reduce carbon emissions to fight climate change and realized that it and the electric utilities could make common cause.
• “The electrics were aware that their fuel mix is really changing, and will be changing more drastically over the next couple of decades,” said Robin Roy, a consultant with NRDC who helped lead the effort. “There was a recognition that their industry is moving into a time when getting these accounting issues right will really matter to their business.”

EERE inappropriately colluded with NRDC, and some in the electric industry, to its predetermined and self-serving conclusions. Clearly, EERE’s mission is to promote energy efficiency and renewable energy. This fact makes them biased, consciously or unconsciously. They are an inappropriate custodian of such metrics. This is a result of mission creep over the years.

Originally limited to technology development, assessment and promotion, some offices in DOE are now using the cudgel of regulation and “guidance”  to ensure their favored technologies “win” regardless of the national interest.

[1] https://www.regulations.gov/document?D=EERE-2016-OT-0010-0006

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Mark Krebs, an engineer by training, has been involved with energy efficiency design and program evaluation for more than thirty years. He has served as an expert witness in dozens of energy-efficiency filings, which he summarized in a Public Utilities Fortnightly article, “It’s a War Out There: A Gas Man Questions Electric Efficiency”(December 1996).

Tom Tanton, Director with Energy and Environmental Legal Institute, has worked 40 years in energy and environmental policy, focused on enabling technology choice and economic development. Mr. Tanton has testified to numerous state Legislatures and Congress as an expert on energy policy. He formerly served as Principal Policy Advisor at the California Energy Commission.