The Corn Latitudes

I see that Springfield’s municipal electric utility is still using rebates to incite the purchase of  energy-efficient home appliances (at the moment geothermal heat pumps and air conditioners). The city does not however require that buildings equip new houses with appliances more efficient that the State of Illinois’s minimum code requires. It is in the city’s interests to use less energy but it is the interest of the city’s electric utility—which generates more power than the city needs most days—that the city use more of it.

 

Until Springfield develops a taste for warm beer, refrigerators will continue to account (with air conditioners) for the major part of every household’s electricity bill. That’s especially true if the fridge is old. City Water, Light & Power estimates that there are 40,000 ice boxes built B.C.—Before Clinton—that are still running in its customers’ kitchens, basements, and garages. Every fridge of that vintage, says CWLP, typically uses two to four times more electricity than newer models. Such inefficiency costs owners $100 to $175 more per year per fridge than they would pay to run a newer one.

Thus the “Great Refrigerator Roundup.” Under this pilot program, CWLP hopes to encourage customers to unplug up to 3,600 pre-1993 refrigerators and freezers by providing a $50 rebate for each machine retired, recycled, and replaced by a machine that has earned the “Energy Star” efficiency rating.

The refrigerator rebate is a perfect government program. It promises to solve every problem at once—improve citywide energy efficiency, reduce the need for expensive future generating capacity, save the planet, and reinvigorate the economy. CWLP makes itself popular by spending someone else’s money. The wallets of participants are at least $50 fatter, and the city’s utility nudges the energy performance of the city’s appliance stock, which goes from god-awful to, well, slightly less god-awful.

In non-technical terms, “Energy Star”—the now-international standard for energy-efficient consumer products—means “best of a bad lot.” Appliances thus labeled are not the most efficient of their type, only more efficient than a very minimum standard. In any event, the rebates, even if every one is used, will remove less than a tenth of those 40,000 dinosaur machines.

The program might be expanded, of course, but ought it? Paying people to do what they ought to do for themselves is perverse economics, even if it is good politics. The people most likely to use the refrigerator rebates are those who have the cash or credit to buy a new Energy Star machine and who have a personal commitment to efficiency or environmental virtue—in short, people who are likely to buy energy-efficient appliances anyway. For them, the 50 bucks is merely a gift, and buys nothing for the city.

At the same time, the $50 rebate is not big enough to cover the difference between what many must pay to buy an efficient new machine and what they can afford to pay. Households of modest means must focus on purchase price and buy cheap, even though that means paying more per month to run it. Or they live in rentals, and landlords are not famous for taking money out of their own pockets to buy efficient appliances that put money in tenants’ pockets.

One way to replace more refrigerators is to set up a revolving fund that makes low- or no-interest loans available to poor customers for the purchase of such equipment. That eliminates the free-rider problem, since the money goes only to those who really need it to make a switch, and also is likely to incite a much higher turnover of older machines.

The problem is that even such enlightened efficiency programs are not a very efficient way to reduce energy use. More energy-efficient machines reduce the effective cost of energy, so people tend to use them more carelessly. That happened when drivers switched to more fuel-efficient automobiles; people who got more miles per gallon began driving more miles so that even though average gasoline usage per mile dropped across the U.S., total gas consumption rose.

The only certain way to reduce energy use is to make people pay more for it. CWLP could set rates to cover not only the cost of operations and paying off existing power plants’ debt, but also the anticipated costs of weaning the city from coal-based energy (including new generating plants, efficient buildings, and machines), providing aid to poor households, and installing meters that allow customers to turn on their energy-hungry appliances when it is cheapest to run them. Unfortunately, this is America. Here we pay tomorrow for the things we use today, not pay today for things we will use tomorrow.

When it comes to energy policy in particular, we prefer to live from paycheck to paycheck, or rather crisis to crisis. Energy professionals know that cheap energy is no bargain in the long run, of course, but they shrink from saying so out loud. Such talk outrages our patriots who are convinced that the right to cheap energy is mentioned somewhere in the Declaration of Independence. ●