Testimony of the National Consumer Law Center in Support of H. 7506:
Relating to Public Utilities and Carriers

Before the House Corporations Committee
March 3, 2004

Charles Harak, Esq., Senior Attorney, NCLC Energy Project

The National Consumer Law Center (“NCLC”) welcomes the opportunity to testify in support of H. 7506, a bill that establishes energy efficiency standards for eleven covered products. The Northeast Energy Efficiency Project estimates that this bill will save Rhode Island consumers $45 million dollars by the year 2010, and $270 million by the year 2020 through lower energy expenditures. Lower energy consumption also will allow the state to avoid building more than 60 MW of new generating capacity, leading to reduced air emissions and improved health for the state’s citizens.

NCLC’s interest in this bill is that it will help low-income people who struggle to pay their energy bills. NCLC was founded in 1969 to promote the interests of low-income people as consumers. For 35 years, NCLC has focused, among other issues, on the household energy needs of poor people. The past few winters well demonstrate the difficulty low-income households face in obtaining home heating oil, natural gas, electricity and other energy supplies. Due in large part to our increasing reliance on natural gas as the primary fuel for electric power plants, natural gas prices hit a new plateau in the winter of 200/2001, with no reduction in sight. According to the Energy Information Administration (“EIA’s Natural Gas Prices for Rhode Island”), residential customers in Rhode Island paid 25% more for natural gas in 2001-2003 than in the previous three years, 1998-2000. Also according to EIA, Rhode Island home heating prices averaged $1.18 in 2003, the highest in the past six years and 37% above the average for the 1998-2000 period While electricity prices are more stable, household budgets are strained by the sharp increases in other energy prices.

H. 7506 will help moderate electricity prices over the long term. By reducing the consumption of and demand for electricity, fewer new power plants will need to be constructed and existing plants that are more costly to operate will be run less. All of this translates into lower prices for consumers. But the consumers who experience the most benefit are those low-income households who struggle the hardest to keep up with their bills. The typical household energy burden of low-income families in the northeast averages between 15% to 20%, depending on the actual prices and temperatures in any given year. This is an extraordinary burden and explains why so many households are terminated for non-payment, approximately 2,000 to 3,000 each month. H. 7506, while no panacea, will help ameliorate the energy burden of low-income households.

Finally, H. 7506 will not burden low-income households. Most of the covered products are for commercial use, purchased by businesses that will reap direct savings over the entire useful life of the products. The residential products included have very quick payback periods: as little as 5 months to as long as two years. But low-income households, like all households in Rhode Island, will benefit from lower energy consumption and lower peak demands. Installation of more energy efficient appliances is a win-win situation for all. It is worth noting that in a recent appliance efficiency standards proceeding before the federal Department of Energy, the Environmental Protection Agency supported higher energy efficiency standards not only because of the reduced air pollution, but also for the reasons just noted: that low-income people stand to benefit the most from lower demands on our electrical generating system.

NCLC strongly supports this bill. We hope this committee will favorably report the bill soon.