Existing renormalized theories of E region Farley-Buneman turbulence are reviewed, and their strengths and weaknesses briefly highlighted. A general framework for a fully self-consistent fluid theory is presented next. The new theory includes nonlinear electron inertia, which has been neglected in previous fluid theories. The effects of the nonlinear electron inertia are studied carefully and linked directly to an anisotropic anomalous collision frequency as well as to an anomalous polarization effect. The new theory indicates that Farley-Buneman wave energy is converted into parallel electron energy, owing to the presence of a wave-induced damping rate given by a &ngr;∥k&ohgr; term. The theory offers a self-consistent link between electron heating along the magnetic field lines and the anomalous collision frequency due to Farley-Buneman turbulence. This paper focuses on the self-consistent derivation of the anomalous effects and their physical interpretation, followed by a detailed discussion of the energy balance equation. ¿American Geophysical Union 1995