Senator Paul's Toilet Troubles: Time to Call Joe the Plumber

Senator Rand Paul has gotten a lot of media attention these last few days for his tirade during last Thursday’s Senate Energy and Natural Resources Committee hearing. The purpose of the hearing was to consider two bills related to appliance efficiency standards. During his questions to Kathleen Hogan, the Department of Energy’s deputy assistant secretary for energy efficiency, Senator Paul went on a rant about how standards limit choice and blamed his non-functional toilets on the federal government. History, however, has shown that the opposite is true – appliance standards help drive innovation and increase consumer choices while saving them energy.

The bills under consideration in Thursday’s hearing actually had nothing to do with toilets, rather other appliance efficiency standards. The first, S.395, would implement new minimum efficiency standards for residential heating and cooling equipment, home appliances, and other types of equipment. As I’ve blogged about before, the standards in this bill were negotiated by industry, consumer advocates, and efficiency and environmental groups. If enacted, these standards will save consumers a net $43 billion by 2030.

The second bill under consideration was the BULB Act, which would repeal the federal light bulb efficiency standards enacted by Congress in 2007. Supporters of the BULB Act claim that the light bulb standards ban the incandescent bulb, but this simply isn’t true. As my colleague Jim Presswood blogged about, there are still incandescent bulbs that meet the standards, they just use almost 30 percent less energy. The standards have actually driven domestic investment in factories to produce these high efficiency incandescent bulbs, which would not have been produced without the standards. More broadly, the standards have driven investment and innovation in a whole new range of lighting options, from high efficiency incandescent bulbs to CFLs to LEDs, that will save consumers money while providing them with the choice of lighting quality and features they want. More than a thousand new jobs have been created in the US producing these high efficiency bulbs.

The fact that standards spur investment and innovation and end up providing consumers with more choices is not new. For instance, refrigerators today use less than ¼ the energy on average they did 35 years ago, while they have gotten bigger, added more features, and cost about half as much. Clothes washers are a similar success story, recent Consumer Reports testing showed that almost all models clean well (even the budget options) despite the fact that they use less water and energy than they did before.

While these energy efficiency standards may have eliminated the worst energy using products on the market, they also drove innovation in more efficient options that ended up delivering more to consumers. Why wouldn’t this have happened without the standards? It comes back to the issue of choice, but in a different way than Senator Paul views choice. The issue is that many people make choices over the life of a consumer product, not just the end-user. These include choices made by the manufacturer, the distributer, the vendor, and the purchasor (not necessarily the ultimate end-user). All of these choices lead to decisions that affect the end-user but are not always made with the end-user's energy costs in mind. So without standards, consumers are often limited to only one option for efficiency because only one option is produced.

For instance, the users of appliances aren’t always the people who purchase them. Most people have at least one appliance in their home that they did not choose, but rather is a relic of a previous owner, a builder/developer, or their landlord. I personally rent my home and while thankfully my appliances comply with minimum standards, they certainly weren’t selected by someone who was planning to pay the energy bills. Instead, they were selected based on cheapest first cost alone, without regard to how much energy they would consume.  This is a common situation. Furthermore, when purchasers do go for more expensive products, they tend to buy for other, more visible high end features. Energy efficiency can’t be seen so it is harder to sell, even though it offers great benefits to the consumer.

 And in terms of Senator Paul’s malfunctioning toilets, there will always be lemons when it comes to consumer products. That’s the nature of markets and competition. Lemons are not produced by government, they are produced by manufacturers, or in some cases, by one particular manufacturer. Were Senator Rand’s poorly performing toilets a side effect of government regulation? Probably not! The toilet water efficiency standard was actually enacted in a 1992 bill signed into law by President George H.W. Bush, not by DOE as Senator Paul implied. It went into effect for products manufactured after January 1, 1994 and probably did not affect most retail installations until almost a year later. Senator Paul claimed he has been waiting 20 years to complain about his toilet. While he may well have been exaggerating, if you do the math his toilets were installed well before the standard even took effect. Their performance had everything to do with markets and nothing to do with regulation. This is not an unusual experience: one of my colleagues also had problems with a toilet that had to be flushed twice, or more, to remove solids. That toilet was also an older, very inefficient one. When he replaced it with a toilet that met the 1992 standards, the problems disappeared. In short, Senator Paul can’t blame his long-broken toilet on standards. After twenty years, it’s time for Senator Paul to stop complaining and call Joe the Plumber to get his toiled fixed.

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