I. Energy Efficiency

ENERGY

Energy is a necessity of life and the rising cost of energy has significant impacts on consumers’ costs of living. CFA has fought to curb efforts to artificially raise the price of energy and supports sound energy policy that cost-effectively increases energy efficiency without raising energy prices. Doing otherwise is grossly inequitable and ineffective and has led to those economic and environmental problems facing our economy today. Direct consumer involvement in energy decision-making should be encouraged. The policy resolutions that follow present a host of initiatives that would significantly reduce today’s economic problems. Any program should be available to multi-family as well as single-family dwellings.

I. ENERGY EFFICIENCY

CFA urges everyone in every economic sector to use energy more efficiently and urges government agencies to give high priority and incentives to appropriate conservation programs. Conservation is inexpensive, cost-effective, environmentally sound, and can be maximized by encouraging a switch from high-energy applications, such as internal combustion engines, to low-energy applications, such as electric motors. Government should encourage public awareness of available energy efficiency measures. Fairness should be given in conservation policy to the needs of the aged, handicapped, and those with low incomes.

A. Buildings

1. Increase the total amount of funds earmarked for weatherization grants for low-income consumers. Furthermore, the program should be expanded to provide funding for additional, cost-effective techniques to increase thermal efficiency, including furnace retrofit and rehabilitation. Limits on expenditures for each dwelling should be raised.

2. Initiate additional grant programs where cost-effective,and expand current loan programs directed to low-income and middle-income consumers.

3. Enhance national standards of energy performance (such as the Energy Star program) for appliances, mobile homes, lighting fixtures and new construction so as to provide essential information to consumers concerning thermal efficiency.

4. Increase the government's commitment to increasing the thermal efficiency of public housing units and subsidized housing units, housing on military bases, and housing of Native Americans on reservations.

5. Develop innovative programs to encourage landlords to make buildings more energy efficient and pass those savings onto tenants.

6. Reinstitute tax credits for individual or corporate expenditures forcost-effective energy conservation measures, including insulation of new homes, retro insulation of existing homes, and installation of ‘smart home’ technologies that affect energy conservation.

B. Transportation (See TRANSPORTATION)

1. Increase gas guzzler taxes and Corporate Average Fuel Economy (CAFÉ) standards for all vehicles including light trucks and SUVs in order to promote the production and purchase of energy efficient vehicles.

2. Incentives to encourage consumers to purchase alternative energy vehicles should be expanded.

3.Encourage the use and expansion of public transportation and van and car pooling, placing special emphasis on electric power and alternative fuels.

4. Upgrade Environmental Protection Agency mileage testing procedures to ensure that automobiles actually meet the standards and that consumers receive the benefits they are paying for.

5. Encourage improvement of engines to obtainbetter energy performance from large trucks, buses, etc.

6. Encourage development of non-polluting, cost-effective mass transit, individual fuel cells, electric, and hybrid electric vehicles, through research, grants, CAFÉ credits and tax credits. These programs and incentives should consider the source of the energy.

C. Industrial

1. Encourage industry to make more efficient use of energy by cogeneration and substantial heat recoupment. Industries with processes requiring high energy use should be encouraged to investigate more efficient methods for production.

2. Establish efficiency standards for motors and other industrial devices, based on life cycle fuel use, and label such devices.

II. FUELS

A rational, comprehensive policy that seeks to lower or stabilize energy prices will simultaneously relieve the consumer of an increasingly harsh obstacle to making ends meet, and benefit the economy as a whole.

A. Natural Gas

1. Require the Federal Energy Regulatory Commission (FERC) to retain regulated rates for natural gas transmission service at the cost of providing service, including a reasonable rate-of-return.

2. While use of natural gas has increased, there exists a critical absence of a comprehensive analysis of current and expected demands on U.S. and Canadian gas reserves. The long-term effects on price stability, including the potential for causing a reliance on importation, are serious consumer considerations and should be investigated by the appropriate regulatory agencies.

3. Support mandatory non-discriminatory transportation with appropriate consumer protections.

4. Ensure that pipeline transmission rates are reviewed by FERC at least every three years.

5. Support measures to enable natural gas consumers to obtain refunds, as wholesale electric customers are now entitled to obtain, when a pipeline is found to be overcharging its transmission customers.

6. Provide incentives for pipelines to conserve gas consumption, for example, by encouraging electric compression or cogeneration at compression stations.

7. Natural gas traders operating on exchanges like the NYNEX have their positions reported weekly to the Commodity Futures Trading Commission (CFTC). On the other hand, traders in the over-the-counter derivative (OTC) market are not required to disclose any information. This lack of transparency in the OTC market leaves a very large segment of the natural gas market open to the potential of participants engaging in manipulation strategies, themselves or through affiliates. Creating more transparency will reduce these opportunities for market manipulation and restore public confidence in natural gas markets. The Consumer Federation of America supports the enactment of legislation that would require traders holding large positions in the OTC market to report those positions to the CFTC.

B. Petroleum and Petroleum Products

1. Reject anti-consumermeasures to raise the price of oil, including import fees or import restrictions.

2. Recognize rationing consumption as preferable to rationing by price and make any rationing program equitable with respect to income, geographical location, and usage priorities.

3. Insure that consumers actually receive the benefits of over-charge settlements.

4. Enforce posting of clear and uniform gasoline octane ratings and frequent testing to assure the adequacy of posted ratings.

5. Support the continuing build-up of the Strategic Petroleum Reserve and preparation of explicit, public plans to usethe reserve in the event of a crisis.

6. Urge aggressive implementation of the 1985 law that provides for trade of surplus agricultural products for petroleum.

7. In order to break our dependence on oil, we urge a stronger effort to produce a more efficient battery for electric and hybrid electric cars and more research into hydrogen as a fuel for transportation.

8. Encourage the wider distribution and use of cleaner alternatives to gasoline as fuels for motor vehicles.

9. Urge legislation and regulations to assure that waste oil is collected and reused in environmentally appropriate ways rather than being illegally dumped.

10. Require the use of double hulled tankers for the transport of oil in U.S. territorial waters.

11. Encourage walking and cycling by providing and maintaining safe sidewalks, pathways, and bicycle lanes.

C. Outer Continental Shelf Oil and Gas

1. Eliminate the "cash bonus bidding" system.

2. Review potential sales to determine their competitive impact.

3. Make independent estimates of reserves.

4. Vigorously enforce "due diligence" clauses of leases, which require prompt development.

5. Build protections against major oil companies’ abuse of power, includingplacing joint ventures in a separate company completely independent from the parents, with ownership open to public investment.

D. Coal

Federal coal leasing policies must be committed to the following principles:

1. Ensure appropriate environmental protection in the mining, transportation, and combustion of coal.

2. Promote competition, for example, by the use of "royalty" or "deferred bonus bidding," and by effective implementation of federal law, giving a leasing preference to consumer-owned electric utilities.

3. Prevent energy companies that have held federal leases for speculative purposes from obtaining future leases and grant leases only to companies that demonstrate a need.

4. Require sale of coal reserves and coal companies held by other energy companies (e.g. oil companies).

5. Encourage development of cleaner coal burning technologies.

6. Protect electric consumers against imposition of excessive federal and state taxes and royalty costs assessed against federal coal.

E. Nuclear Waste

Give high priority to efforts to resolve the problem of safe transportation and storage of nuclear wastes, and support efforts to ensure the allocation of nuclear waste program costs based on federal defense use of storage facilities. Encourage the development of standardized methods for building, maintaining, repairing and decommissioning nuclear plants so as to reduce unnecessary labor and equipment costs. CFA urges Congress and the Department of Energy to ensure that the billions of dollars already collected from consumers as well as funds that will be collected in the future are only used for purposes specified in the Nuclear Waste Policy Act.

In implementing the Hazardous Wastes Transportation Act, the DOT should give due regard to the good faith efforts by states and localities in providing for safe transportation of nuclear wastes through their jurisdiction. In particular, DOT should not preempt state laws that require prior notification of transportation of low-level nuclear wastes through the state.

III. FOREIGN DEPENDENCE

The United States' dependence on imported oil contributes to a massive, growing trade deficit, and leaves the nation vulnerable to supply disruptions instigated for political or economic purposes. Yet national energy policy has been neither as forceful nor as expeditious as possible in reducing oil use. U.S. policy should be directed toward exploration and responsible development of those energy resources that are in domestic abundance, such as alternative fuels, Devonian shale, and coal gasification, where the development does not permanently damage the environment. The national transportation system, including pipelines, transmission lines and storage facilities, should be improved to make possible more efficient and equitable production, utilization and distribution of domestic fuel supplies.

In addition to the creation and development of rational alternatives to foreign oil, tax incentives for American oil companies should be eliminated.

IV. UTILITIES

Identification with consumer interests should be a prerequisite for appointment to utility regulatory agencies., Such agencies should ensure nondiscriminatory access for all stakeholders and must strictly enforce requirements for just, reasonable and nondiscriminatory rates, terms and conditions of service. Effective competition in the wholesale electric power supply market should be encouraged where the market is not subject to manipulation,but until truly competitive markets exist, regulatory agencies must continue to protect the interests of consumers. In the area of wholesale electric sales, competitive markets will not exist until all participants in the market have equal and nondiscriminatory access to transmission facilities, and the transmission system is adequate to support supplier-on-supplier competition. Decisions regarding the implementation of retail electricity competition programs should continue to be made by the states.

Choices about how to meet the nation's need for electricity in the decades ahead are among the most important economic decisions facing American consumers. Reasonable prices coupled with assured availability, reliability, and adequate transmission capacity for needed power, to the extent consistent with environmental protection, are significant consumer goals. In dealing with future requirements, the most effective approach is to assess a full range of alternative approaches, including local fuel resources, energy efficiency measures, load management, cogeneration, distributed generation, plant-life extension, imported and domestic hydroelectric power, domestic surplus generation, (expanded transmission, and new power plant construction) to determine the "least cost" answer to secure an adequate and reliable supply of electricity. For utility-owned cost-based generation facilities under construction, consumers and stockholders should bear an equitable share of prudently incurred costs after plants come on-line. CFA opposes special financial arrangements, such as CWIP or artificial tax treatments,that distort economic signals to utilitiesunless consumers are provided concomitant benefits.

A. Actions taken at the regional and/or federal levels should:

• Incorporate state and regional conditions and characteristics.
• Balance state obligations and rights to protect consumers with recognition that transmission is inherently regional.
• Assure fair prices for consumers.
• Enhance reliability.
• Where they have not already been exchanged, not substitute financial transmission rights for physical transmission rights.
• Ensure the continued availability of long-term firm transmission rights necessary for load-serving entities to meet their legal service obligations.
• Ensure sufficient oversight and accountability of Regional Transmission Organizations (RTOs) to consumers.
• Assure that actions of all market participantsare transparent.
• Require that consumers are fully involved in decision making.
• Include appropriate mechanisms to prevent, detect and remedy anti-consumer and anti-competitive behavior.

B. FERC should foster well-functioning wholesale electricity markets. FERC should also: support rational long-term generation resource arrangements that are in turn supported by long-term transmission service provided at just and reasonable rates; ensure appropriate investment in transmission and generationinfrastructure; recognize and respect regional industry differences and preferences; encourage cost-effective and not overly complex regional solutions; ensure that IOUsellers of power charge“just and reasonable” prices, even at market-based rates, and provide for greater accountability by RTOs.

C. FERC must address generation market power through a “bottom up” review and update of its market-based rate policy, for both RTO and non-RTO regions. The ability of public utility sellers to charge market-based rates is a privilege conferred under the Federal Power Act, not a right. Where regional wholesale generation markets are not competitive, FERC must adopt enforceable protective conditions on the market-based rate authorizations of specific public utility sellers, to ensure that rates remainjust and reasonable.

D. Consumers in RTO regions are experiencing substantial, across-the-board problems with spiraling RTO costs, unaccountable RTO governance, and ever-increasing provision of RTO services through questionable market mechanisms. Because of these problems, FERC should exercise great caution in even considering proposals for new RTOs. There are other, often more cost-effective means to provide open access transmission service and to promote market efficiency, including: joint development of regional Open Access Same-time Information Systems; regional provision of market monitoring; and development of open and inclusive regional transmission planning and expansion processes. Joint ownership of transmission facilities by all load-serving utilities in a region can also address many of the transmission access issues RTOs were intended to address.

E. The governing boards of RTOs should be reformed to provide full consumer participation. An Office of Consumer Advocacy should be established at FERCand interventions by interested parties should be encouraged through funding by entities subject to FERC jurisdiction.

F. FERC should also deal with residual discrimination inthe provision of transmission service through incremental revisions to and more vigorous enforcement of its Order No. 888 open access transmission regime. FERC should ensure that public utilities provide equal access to all qualified entities seeking transmission service at just, reasonable and nondiscriminatory rates, terms and conditions. To protect against anticompetitive activities and the creation of situations inconsistent with the antitrust laws, FERC must reject transmission pricing proposals that permit abuse of monopoly power or discriminate against transmission dependent utilities, or auction scarce transmission capacity without safeguards for small consumers.

G. Federal regulators, including FERC, the Securities and Exchange Commission, and the Commodity Futures Trading Commission must restore public confidence in theiroversight identifying, investigating, and mitigating market manipulation and ensuring transparency of relevant market information.

H. Automatic pass-throughs should be replaced by advance regulatory budgeting plans or interim rate increases, which, if proven unnecessary, must be refunded with interest.

I. Reductions in investor-owned utility costs -- including reduced fuel and purchased power prices, tax decreases, and lower charges for raising capital -- should be promptly passed on to wholesale and retail consumers. Where existing rates are found to be excessive, timely refunds, with interest, of all overcharges should be distributed among customers in the same manner the overcharges were collected.

J. Incentives provided for the development of clean energy technologies, and energy efficiency programs must be reasonable and available on a comparable basis for all electricity providers.

K. Inclusion of any construction-work-in-progress costs in the rate base for investor-owned utilities should be prohibited, and rate base should be founded on the “prudent” and "used and useful" principles. Customers should not be required to pay rate of return on research or demonstration projects.

L. Rate structures such as lifeline programs should be adopted if they are beneficial to low-income consumers and/or promote efficiency.

M. Communities should be encouraged and aided in exploring the potential savings of public or consumer ownership of their utility, or the development of a micro grid, and should be protected against anti-competitive, predatory practices of large investor-owned power companies where this option is being considered or has been exercised. Federal and state regulatory policies that undermine the economic benefits of the creation of public and consumer owned electric utilities, such as the tying of "stranded" generation costs to wholesale transmission rates, must be rejected. Laws that inhibit the formation of consumer-owned utilities -- such as the provision of the federal tax code that effectively denies communities access to tax-exempt financing to acquire facilities of investor-owned electric or gas utilities -- should be repealed. Efforts to eliminate tax-exempt financing by communities that have exercised the option of local ownership of electric and gas utility service, and all attempts to diminish the economic value of such financing, should be rejected. Federal and state policies should encourage and support the aggregation of residential and small business customers to allow them benefits from a competitive energy market, including aggregation by consumer owned/controlled cooperatives, municipalities or other public or non-profit organizations.