Appliance Recycling Policies

Just like the “Cash for Clunkers” program where people were given monetary incentives to trade in their old car for a more efficient newer one, programs in place across the country incentivize people to get rid of energy draining appliances and fixtures to buy new ones.  Energy companies are currently paying their customers to get rid of their energy draining appliances to get new ones, in the process costing future profits to be lost to the company through reduced power consumption. 

Michigan’s Consumer’s Energy will not only pick up your old appliance free of charge, but will pay you money to help offset the cost of buying a replacement – in the case of a refrigerator, $50 [1].  The company also states that the recycling will not only benefit the environment by saving energy but by also recycling more than 188 pounds of materials per unit such as foam, glass, and metal [2]. 

I do not know whether this particular company is participating in this program voluntarily, but some companies are not. 

At least in some cases, policy makers have forced the hand of energy companies to sign on to these types of programs in the name of saving the environment.  For example, the Public Utility Commission of Ohio approved a policy that obligates the primary energy provider, FirstEnergy Corp., to conduct such an “energy-efficiency program”.  In addition to delivering cash rebates for old appliances, FirstEnergy has to provide compact fluorescent light bulbs to residents when they call.  It will also take part in a “May capacity auction that sets the price for reserve power used on hot summer days” [3]. 

The editorialist of one newspaper article says that “First Energy should embrace the program and move on” because the program is good for the residents of Ohio who will have smaller electricity bills and less pollution from the coal-fired power plants [3].  In fact, he seems offended that FirstEnergy is considering appealing this policy, mostly on the grounds of the auction.  FirstEnergy has also been working from the ground up, lobbying state lawmakers to get rid of some of the energy efficiency standards and explaining that they cost the customers money. 

To me, that seems like common sense, but Robert Kelter of the Environmental Law and Policy Center seems to not buy into that argument, stating “any homeowner who has cut their energy use can look at their bill and see they’ve saved money” [4].  Yes, I’ll buy that, however irrelevant it of a statement it is.  What FirstEnergy is saying is that because an outside agency is forcing them to reduce their profits on two fronts, they, FirstEnergy, have to make up those profits.  And they make up those profits by charging their customers more.  Mr. Kelter is looking at the situation statically, when it really is a dynamic situation.  It’s similar to the minimum wage policy.  Yes, if you bump up the minimum wage to $10 an hour, employees will make more money.  Why not bump it up to $20, or $50?  Employees would be making tons of money then.  But, it actually hurts low-skilled workers the most, the group which was being targeted by the minimum wage legislation in the first place.  Why?  Because businesses hire employees based on their worth to the company.  If an employee can only produce $5 worth of productivity to a company, you should not be paying him $10.  So instead of hiring perhaps 3 employees to do low-skilled labor, you can only hire 2 employees because that’s all you can afford.  Furthermore, and more relevantly to these recycling programs, the businesses affected by these minimum wage policies end up raising the prices of their products and services to offset the cost of paying their employees wages which they do not deserve as a function of their productivity. 

So, when FirstEnergy is told that they have to give away money and enact a program that will end up losing them profits, they will in all likelihood end up passing on that cost to their consumer.  Although the environment and resource reserves will no doubt benefit to some extent from this type of legislation, I doubt that the consumers will see reduced electricity bills.  And the crowning quote of the day is from the offended editorialist who concludes his article referring to the energy-efficiency standards and policies, stating “FirstEnergy should resolve to learn to live with them” [3].  That rings as an arrogant and condescending remark from a person who wouldn’t know the first thing about running a business.

[1] http://www.consumersenergy.com/eeprograms/RHome.aspx?id=4117&utm_source=recycle&utm_medium=redirect&utm_campaign=eeprograms&utm_nooverride=1

[2] http://www.mlive.com/business/west-michigan/index.ssf/2013/04/consumers_energy_appliance_rec.html

[3] http://www.cleveland.com/opinion/index.ssf/2013/04/firstenergy_should_accept_that.html

[4] http://elpc.org/2013/03/20/public-utilities-commission-of-ohio-approves-firstenergy-energy-efficiency-plan-ee-saves-customers-money

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