Back in what by today's standards was the mild winter of 1973, Michigan Public Service Commission chairman William G. Rosenberg was shoveling snow from the walk in front of his home in East Lansing, Mich.
He happened to glance up at the roof of a neighbor's house and noticed that snow was still there. But on Rosenberg's own roof, the snow had melted away. The neighbor's house, it turned out, had a layer of thick insulation in the attic; Rosenberg's house did not, and the escaping heat was melting the snow on the roof.
From that winter's day observation has developed an energy conservation program that is becoming a major centerpiece in the Carter administration's long range energy program for this country.
Rosenberg, who once headed Michigan's public housing authority, currently is with the Federal Energy Administration as assistant administrator for energy resource development.
Building on his work and experience in Michigan, where natural gas utilities have been pioneers in developing conservation programs, Rosenberg has devoted most of his time in Washington recently to drawing up a plan under which local utility firms would be given the responsibility for upgrading the insulation on their customers' residence. In addition, the utilities would install other fuel-saving devices.
The Rosenberg plan, now the subject of hearings and testing in more than a dozen state, is not without controversy. Many regulators are expected to question the wisdom of adding another line of business to the rate bases of local utilities, some consumers; weary of constantly rising heating bills and wary of the gas industry, are expected to oppose the plan outright.
After The Washington Post recently published an article on the Rosenberg plan, for example, several consumers called to suggest that it was another "rip-off." One suburban Maryland resident, whose natural gas is supplied by Washington Gas Light Co., said she had sought cost estimates from the utility for adding insulation as part of a program already offered by WGL.
She said WGL proposed to charge $400 for a job an independent contractor later completed for $100, with materials for which WGL would have charged $200 but which she purchased in a Sears, Roebuck catalog for about $80.
"This is a total consumer rip-off," she said. ". . . If the government is really serious about insulation, they should give a major tax credit and let people actually do it for less money."
Washington Gas Chairman Paul Reichardt emphasized last week that his firm's program involves actual installation by a subcontractor as well as a subsequent inspection by the gas company, which remains responsible for the job. The cost can be paid in installments with monthly WGL bills; in the year since the firm has offered the plan, about 2,500 homes here have been insulated.
Rosenberg concedes that a reservoir of mistrust about the natural gas industry may be drawn on to argue against his proposal. But he maintains that it is about the only thing that can be done now to help conserve natural gas resources consumed in residences.
Moreover, the Rosenberg plan has attracted an unusual variety of support from organizations normally at opposite ends of the natural gas controversy.
"This is one of the most exciting, innovative approaches that I have ever seen," said Sen. Robert P. Griffin (R-Mich.), former minority leader in the Senate. The American Gas Association, an industry trade group, said the plan "is in keeping with the sense of urgency needed."
Alexander J. Kalinski, president of The National Association Regulatory Utility Commissioners and a member of the New Hampshire regulatory agency, said he is impressed by the plan's "reasonableness. . . It makes no outlandish promises and extends no false hopes to the consuming public . . . Consumers, particularly lower income consumers, would live in thermally insulated homes and have their gas heating bills kept ot a minimum."
And Lee C. White, chairman of an Energy Policy Task Force that embraces the country's major consumer organizations, said that "techniques for more efficient use of a gas company's product by its consumers as a source of gas to meet additional company needs makes a great deal of sense."
What has attracted such widespread interest in Rosenberg's plan are the projected results: a savings of 1.2 trillion cubic feet of gas year if installed in all 34 million homes heated with gas over a seven-year period, the energy equivalent of 39 nuclear power plants. Monthly heating bills would be cut by a third for an annual savings of $1-$3 billion.
In addition, the Rosenberg plan would add up to an $8 billion investment, creating 70,000 jobs a year without federal subsidy.
Most important, by conserving gas, there would be additional supplies - enough to add 6 million residential customers, if that is the policy selected by government planners in allocating what would amount to "saved" gas resources.
Under the proposal, local gas utilities would install and pay for ceiling insulation to meet current federal standards (a thickness of six inches compared with the one-and-one-half-inche and three-inch thicknesses required in the homebuilding boom period from World War II to 1970); automatic thermostats that dial down the temperature by 5 to 7 degrees at night, and devices to increase furnace efficiency.
Rosenberg estimated that these measures would cost about $400 for each under-insulated home and $175 for fully insulated residences. The investment necessary for this program would be treated by regulatory commissions in the same manner as other programs designed to increase supplies, as part of the rate base.
Rosenberg's studies estimate that the cost of this so-called conservation gas - gas created by saving its consumption - would be less than importing liquefied gas (LNG) from Algeria, creating gas by synthetic processes or bringing gas by pipeline from Alaska.
In New Jersey, for example, the "cost" of gas saved under this conservation method would be $1.36 a thousand sand cubic feet compared with $4 for converting oil to gas and $2.80 for imported LNG from Algeria.
"It's simply cheaper to stop waste in attics of our home than ship new gas from Algeria or Alaska, or make it from coal or oil," Rosenberg said.
The main question for consumers is how much it will cost them in their monthly bills. Rosenberg said consumers will save thre ways: lower costs for gas vs. purchasing new supplies, reduced consumption and providing gas service where none is available.
For customers who already have adequate insulation, monthly bills still would increase but not by as much as without an overall conservation effort. In effect, all residential users would benefit by conserving natural gas, because that will reduce the cost of gathering adequate supplies. But the savings will be greater for people with homes that are not well insulated - a large part of the poorer population.
Studies at Public Service Electric and Gas Co., in New Jersey, showed that for a fully insulated home the average annual heating bill last year was $236. Given expected price increases without a broad conservation effort, Rosenberg estimated the average bill for such a home to be $359 in 1985. But if the conservation effort was launched, the 1985 bill would be 21 per cent less, or $359.
In homes without adequate insulation, the 1976 cost was $259 and the cost in 1985 would be $394 without the utility-insulation effort and $283 if adopted, for a savings of 28 per cent. For uninsulated homes, there would be an outright reduction from current costs - $283 in 1985 vs. $384 today.
Rosenberg has proposed that utilities be allowed a rate of profit on the insulation program of 17 per cent, or about the same level of return already pergas under the ground in Alaska.
"It is high even generous, but negotiable on the downside," said Rosenberg, who noted that state regulatory agencies would have to set rates of return for utilities under their jurisdiction. Even under a rate of return proposed by Rosenberg, the additional cost to an average residential gas consumer would be $1 a month, in his estimation.
The main issue now before federal energy experts is how to apply the natural gas conservation and insulation program to other forms of heating - electricity and fuel oil. Gas conserved today can be used in the future, for example, but electricity cannot be stored. An electric utility must build generating facilities to meet periods of peak demand whenever they occur - often during the summer, when air conditioners are used.Thus, cutting back on consumption of electricity for heating - through insulation - would not necessarily mean fewer generating plants are needed.
As a result, it may not be beneficial for some electric firms to invest in an insulation program that produces no return in terms of long-term reduction of peak capacity needs. In addition, electric firms have required better home insulation in the past because electric heating was more costly than gas, Rosenberg noted.
Fuel oil heat presents another difficulty because distributing firms are not public utilities. Federal energy planners are studying a number of methods by which such firms can be brought under a comprehensive conservation program. Among ideas being discussed, which would require new legislation, are economic incentives and financing aid for insulation programs.
Sen. Edward W. Brooke (R-Mass.), for one, says he opposes any plan that aids only consumers of natural gas.
"An unfortunately recurring theme that has been associated with federal energy policy development in recent years is the lack of equitable treatment amongst the users of all scarce fuels," he wrote Rosenberg recently.
"Under the guise of conservation, one scarce fuel source should not be permitted to capitalize on incomplete or improperly emphasized federal policy," he added.