Experts warn Biden admin's water heater crackdown will hike prices, reduce consumer choice

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Energy experts and industry groups are warning that the Biden administration's latest home appliance crackdown on water heaters will, like other energy efficiency regulations, harm American consumers.

The Department of Energy (DOE) proposed energy efficiency regulations on water heaters late Friday, saying the new standards would go into effect in 2029 and save Americans billions of dollars while reducing carbon emissions. However, experts interviewed by Fox News Digital said the standards would ban cheaper alternatives, create minimal utility bill savings and reduce consumer choice.

"Their plan is to electrify everything they possibly can because they are under this distorted fantasy that renewables will be plentiful and cheap and reliable. They are none of the above," said Mark Krebs, a mechanical engineer, energy policy consultant and former DOE adviser. "The physics defy what they want to do, the raw materials defy what they want to do, a free market economy defies what they want to do."

Krebs added that the new water heater standards would lead to higher prices, higher installation fees and could even create serious corrosion risks in homes. He also argued more efficient, but expensive, alternatives to cheaper gas-fired water heaters are readily available on the market without government intervention.

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Secretary of Energy Jennifer Granholm, center, laughs while President Biden shakes hands with former White House Chief of Staff Ron Klain, left, at the White House on June 30, 2021. (SAUL LOEB/AFP via Getty Images)

"This is the administrative state — this is how they work," Krebs continued. "It's in their best interest to keep increasing their regulatory reach. That's how they work."

Overall, the DOE projected the regulations would save Americans about $198 billion while curbing emissions by 501 million metric tons over the next three decades. That is roughly the same carbon footprint as 63 million homes or half of all homes nationwide.

Under the rule, the federal government would require higher efficiency for heaters using heat pump technology or, in the case of gas-fired water heaters, to achieve efficiency gains through condensing technology. Non-condensing gas-fired water heaters, though, are far cheaper and smaller, meaning they come with lower installation costs.

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"One of the things about these appliance standards — they're all problematic — is they take away consumer choice," Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, previously told Fox News Digital in an interview. "But especially water heaters, stoves, furnaces. These are appliances that come in natural gas or electric version. There's a real effort underway by regulators to take away the natural gas option by making it less desirable." 

"I think what we're seeing with gas stoves and furnaces is what we're also seeing here with water heaters," Lieberman said. "The gas versions of water heaters will survive, but they'll be more expensive and they'll be a less desirable option than electric. So, this is using efficiency regulations to impose the electrification agenda."

He also noted that while condensing gas-fired water heaters and heat pumps are more efficient, they are more expensive and could be very costly to repair.

On his first day in office in January 2021, President Biden signed an executive order requiring the Department of Energy to make "major revisions" to current appliance regulation standards and standards set by the Trump administration. A month later, the agency listed more than a dozen energy efficiency rules impacting appliances like water heaters, cooking products and lamps, that it would review. (AP Photo/Evan Vucci)

Additionally, a top water heater manufacturer, Rinnai America Corporation, said the regulations Friday would "unreasonably restrict consumer access" to certain water heater products and disproportionately impact middle-income households and small businesses.

"As currently drafted, DOE’s proposed rule will create an uneven market that effectively bans an already energy efficient product and puts American jobs at risk," Frank Windsor, the president of Rinnai America Corporation, said in a statement. 

"Consumers who rely on access to tankless water heaters will see their options limited, resulting in higher energy bills and shorter appliance lifespans, while the very environmental goals prompting this rule will go unfulfilled," Windsor added. "We urge DOE to re-consider this untenable rule for standards that better protect American consumers and drive our energy efficiency goals forward."

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In addition, the American Gas Association (AGA) and the Association of Home Appliance Manufacturers (AHAM), which represents makers of appliances not including water heaters, both blasted the regulations. The two groups have both been outspoken in opposing energy efficiency regulations they say will increase costs.

"The natural gas industry has consistently partnered with the government, customers and communities to help ensure the reliable delivery of energy Americans need, while also decreasing emissions and investing is cutting edge solutions to achieve our nation’s energy and environmental goals," AGA President and CEO Karen Harbert said. 

"Yet despite this tangible progress, DOE continues to put forward electrification proposals guised as energy efficiency initiatives that would in fact slow environmental progress and increase costs," she continued. "DOE even emphasizes the cost impact this will have on customers in the NOPR, confirming there would be ‘additional installation costs’ where this action would drive customers to switch from natural gas to electric water heaters."

"This proposal reinforces the trajectory of consumer savings that forms the key pillar of Bidenomics and builds on the unprecedented actions already taken by this Administration to lower energy costs for working families across the nation," Secretary of Energy Jennifer Granholm said after proposing the water heater standards. (Jim Watson/Pool via AP)

AHAM spokesperson Jill Notini added the benefits of such DOE rulemaking would be marginal.

"This is yet another proposal that will hurt consumers," she said in a statement to Fox News Digital. "When it comes to DOE’s claim that its proposed energy standards will save consumers money, the Emperor has no clothes."

"Consumers will save only cents per month— no single proposal for Refrigerator-Freezers, Clothes Washers, Clothes Dryers, Cooking, Dishwashers will save consumers more than 65 cents per month," Notini said. "For several of the appliance proposals, about a quarter of consumers will actually not save anything—they will never recoup the additional cost to purchase a more efficient appliance."

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The Air-Conditioning, Heating, and Refrigeration Institute, which represents water heater manufacturers, said it was still reviewing the DOE's approximately 1,500 pages of information.

In addition to water heaters, over the last several months, the DOE has unveiled new standards for a wide variety of other appliances including gas stoves, clothes washers, refrigerators and air conditioners. The agency's comment period on a separate dishwasher regulatory proposal concluded last week.

According to the current federal Unified Agenda, a government-wide, semiannual list that highlights regulations agencies plan to propose or finalize within the next 12 months, the Biden administration is additionally moving forward with rules impacting dozens more appliances, including consumer furnaces, pool pumps, battery chargers, ceiling fans and dehumidifiers.

The Biden administration boasted in December that it had taken 110 actions on energy efficiency rules in 2022 alone as part of its climate agenda.

The DOE said Friday that, altogether, its appliance regulations will save Americans $570 billion and reduce greenhouse gas emissions by more than 2.4 billion metric tons over the next 30 years.