Press Office

April 2005

April 28, 2005

The Honorable Colorado Senate
Sixty-Fifth General Assembly
First Regular Session
State Capitol
Denver, CO 80203

Ladies and Gentlemen:

I am returning to the House of Representatives House Bill 05-1162, "Concerning energy efficiency standards for specified devices." I vetoed this bill as of 3:40 p.m. today and this letter sets forth my reasons for doing so.

House Bill 1162 forces state government to intervene in the consumer marketplace by mandating a minimum energy efficiency standard for 14 appliances and devices sold in Colorado. These new government-mandated standards would take effect no later than 2010. The sale of appliances or devices that fail to meet these standards would be banned. If this bill became law, Colorado would be one of only five states to adopt laws that exceed the already stringent federal energy efficiency standards.

The economic predictions of elected officials, at any particular point in time, almost always lag the movement of the marketplace. Decisions and predictions made today cannot anticipate the pace of innovation and change that will affect the marketplace in the next few years.

In fact, over the course of the last three decades, the United States has become dramatically more energy efficient. According to the American Enterprise Institute, in 1999, Americans used 10,920 BTUs per real (1996) dollar of gross domestic product. This is a drop from 18,960 BTUs in 1970, a reduction of 42 percent. It is also worth noting that in 1999, energy consumption per capita--at 354 million BTUs--was actually lower than in 1973.

Market forces provide powerful, and often unpredictable, incentives for consumer goods to become more efficient, and less expensive. They do so, in most cases, without the heavy hand of government mandates and central planning.

In this case, the Legislature has developed a crystal ball and peered into the consumer marketplace for 14 appliances and devices for up to five years hence. And, in its crystal ball, it sees the type of energy efficiency standards that will be needed for each and every device.

Yet history and experience tells us that the crystal ball of government central planners is murky at best. There is

however, one aspect of the future we can foretell with certainty if this bill were to become law: the costs on businesses and consumers will rise. And when government mandates increased costs on businesses, these mandates can cost jobs.

This is the tradeoff we are asked to endorse in House Bill 1162: a guess by legislators about the state of the market and energy technology in 2010 versus a guaranteed expanded burden on consumers, businesses and the job market. I will not endorse such a tradeoff.

Examining the list of the appliances and devices covered in this legislation, we see everything from certain light fixtures to commercial refrigerators and freezers to traffic signals to digital television adapters. It is quite easy to see how this legislation, by placing mandates on these and other products, could have sweeping and costly impact in every corner of Colorado.

The bill also creates the potential for a national patchwork of standards, since the same products covered by this bill in Colorado may see different standards applied in different states. Energy efficiency standards for products, which are inherently nationwide in their retail distribution, should necessarily be dealt with by federal guidelines to maintain free- flowing commerce for consumers—regardless of the state in which they reside.

Accordingly, I have vetoed this bill.

Sincerely,

Bill Owens