[Federal Register: November 15, 2007 (Volume 72, Number 220)] [Proposed Rules] [Page 64431-64515] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr15no07-35] [[Page 64431]] ----------------------------------------------------------------------- Part IV Department of Energy ----------------------------------------------------------------------- Office of Energy Efficiency and Renewable Energy ----------------------------------------------------------------------- 10 CFR Parts 430 and 431 Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Electric and Gas Kitchen Ranges and Ovens, and Microwave Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers); Proposed Rule [[Page 64432]] ----------------------------------------------------------------------- DEPARTMENT OF ENERGY Office of Energy Efficiency and Renewable Energy 10 CFR Parts 430 and 431 [Docket No. EE-2006-STD-0127] RIN 1904-AB49 Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Electric and Gas Kitchen Ranges and Ovens, and Microwave Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers) AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Advance notice of proposed rulemaking and notice of public meeting. ----------------------------------------------------------------------- SUMMARY: The Energy Policy and Conservation Act (EPCA or the Act) authorizes the Department of Energy (DOE) to establish energy conservation standards for various consumer products and commercial and industrial equipment--including residential dishwashers, dehumidifiers, and electric and gas kitchen ranges and ovens and microwave ovens (hereafter referred to as ``cooking products''), as well as commercial clothes washers--if DOE determines that energy conservation standards would be technologically feasible and economically justified, and would result in significant energy savings. DOE is publishing this advance notice of proposed rulemaking (ANOPR) to consider establishing energy conservation standards for these products and to announce a public meeting to receive comments on a variety of issues. DATES: DOE will hold a public meeting on December 13, 2007, starting at 9 a.m. in Washington, DC. DOE must receive requests to speak at the public meeting no later than 4 p.m., November 29, 2007. DOE must receive a signed original and an electronic copy of statements to be given at the public meeting no later than 4 p.m., December 6, 2007. DOE will accept comments, data, and information regarding the ANOPR before or after the public meeting, but no later than January 29, 2008. See section IV, ``Public Participation,'' of this ANOPR for details. ADDRESSES: The public meeting will be held at the Holiday Inn Capital, 550 C Street, SW., DC 20024. Any comments submitted must identify the ANOPR for Home Appliance Products, and provide the docket number EE-2006-STD-0127 and/or Regulatory Information Number (RIN) 1904-AB49. Comments may be submitted using any of the following methods: Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. E-mail: home_appliance.rulemaking@ee.doe.gov. Include the docket number EE-2006-STD-0127 and/or RIN 1904-AB49 in the subject line of the message. Mail: Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121. Please submit one signed paper original. Hand Delivery/Courier: Ms. Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Room 1J-018, 1000 Independence Avenue, SW., Washington, DC 20585. Telephone: (202) 586- 2945. Please submit one signed paper original. For detailed instructions on submitting comments and additional information on the rulemaking process, see section IV of this document (Public Participation). Docket: For access to the docket to read background documents or comments received, visit the U.S. Department of Energy, Forrestal Building, Room 1J-018 (Resource Room of the Building Technologies Program), 1000 Independence Avenue, SW., Washington, DC, (202) 586- 2945, between 9 a.m. and 4 p.m., Monday through Friday, except Federal holidays. Please call Ms. Brenda Edwards-Jones at the above telephone number for additional information regarding visiting the Resource Room. Please note: DOE's Freedom of Information Reading Room (Room 1E-190 at the Forrestal Building) no longer houses rulemaking materials. FOR FURTHER INFORMATION CONTACT: Stephen Witkowski, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-7463. E-mail: stephen.witkowski@ee.doe.gov. Francine Pinto or Eric Stas, U.S. Department of Energy, Office of the General Counsel, Forrestal Building, Mail Station GC-72, 1000 Independence Avenue, SW., Washington, DC, 20585. Telephone: (202) 586- 9507. E-mail: Francine.Pinto@hq.doe.gov or Eric.Stas@hq.doe.gov. Regarding the public meeting, Brenda Edwards-Jones, U.S. Department of Energy, Building Technologies Program, Room 1J-018, 1000 Independence Avenue, SW., Washington, DC 20585. Telephone: (202) 586- 2945. E-mail: Brenda.Edwards-Jones@ee.doe.gov. SUPPLEMENTARY INFORMATION: I. Introduction A. Purpose of the Advance Notice of Proposed Rulemaking B. Overview of the Analyses Performed 1. Engineering Analysis 2. Energy and Water Use Characterization 3. Markups to Determine Equipment Price 4. Life-Cycle Cost and Payback Period Analyses 5. National Impact Analysis C. Authority D. Background 1. History of Standards Rulemaking for Residential Dishwashers, Dehumidifiers, and Cooking Products; and Commercial Clothes Washers 2. Current Rulemaking Process 3. Analysis Process 4. Miscellaneous Rulemaking Issues a. Joint Stakeholder Recommendations b. Standby Power for Dishwashers and Cooking Products 5. Test Procedures II. Analyses for the Four Appliance Products A. Market and Technology Assessment 1. Product Classes a. Dishwashers b. Dehumidifiers c. Cooking Products d. Commercial Clothes Washers 2. Market Assessment 3. Technology Assessment a. Dishwashers b. Dehumidifiers c. Cooking Products d. Commercial Clothes Washers B. Screening Analysis 1. Purpose a. Technological Feasibility b. Practicability To Manufacture, Install, and Service c. Adverse Impacts on Product Utility or Product Availability d. Adverse Impacts on Health or Safety 2. Design Options a. Dishwashers b. Dehumidifiers c. Cooking Products 1. Cooktops and Ovens 2. Microwave Ovens d. Commercial Clothes Washers C. Engineering Analysis 1. Approach 2. Technologies Unable To Be Included in the Engineering Analysis 3. Product Classes, Baseline Models, and Efficiency Levels Analyzed a. Dishwashers b. Dehumidifiers c. Cooking Products d. Commercial Clothes Washers 4. Cost-Efficiency Results a. Dishwashers b. Dehumidifiers c. Cooking Products d. Commercial Clothes Washers D. Energy Use and End-Use Load Characterization [[Page 64433]] 1. Dishwashers 2. Dehumidifiers 3. Cooking Products a. Cooktops and Ovens b. Microwave Ovens 4. Commercial Clothes Washers E. Markups To Determine Equipment Price 1. Distribution Channels 2. Approach for Manufacturer Markups 3. Approach for Retailer and Distributor Markups 4. Sales Taxes 5. Summary of Markups F. Rebuttable Presumption Payback Periods G. Life-Cycle Cost and Payback Period Analyses 1. Approach Taken in the Life-Cycle Cost Analysis 2. Life-Cycle Cost Inputs a. Total Installed Cost Inputs b. Operating Cost Inputs c. Effective Date d. Equipment Assignment for the Base Case 3. Payback Period Inputs 4. Life-Cycle Cost and Payback Period Results H. Shipments Analysis 1. Shipments Model 2. Data Inputs 3. Shipments Forecasts I. National Impact Analysis 1. Approach 2. Base Case and Standards Case Forecasted Efficiencies 3. National Impact Analysis Inputs 4. National Impact Analysis Results J. Life-Cycle Cost Subgroup Analysis K. Manufacturer Impact Analysis 1. Sources of Information for the Manufacturer Impact Analysis 2. Industry Cash Flow Analysis 3. Manufacturer Subgroup Analysis 4. Competitive Impacts Assessment 5. Cumulative Regulatory Burden 6. Preliminary Results for the Manufacturer Impact Analysis L. Utility Impact Analysis M. Employment Impact Analysis N. Environmental Assessment O. Regulatory Impact Analysis III. Candidate Energy Conservation Standard Levels IV. Public Participation A. Attendance at Public Meeting B. Procedure for Submitting Requests To Speak C. Conduct of Public Meeting D. Submission of Comments E. Issues on Which the Department of Energy Seeks Comment 1. Microwave Oven Standby Power 2. Product Classes 3. Commercial Clothes Washer Horizontal Axis Designs 4. Compact Dishwashers 5. Microwave Oven Design Options 6. Technologies Unable To Be Analyzed and Exempted Product Classes 7. Dishwasher Efficiency and Its Impact on Cleaning Performance 8. Dehumidifier Use 9. Commercial Clothes Washer Per-Cycle Energy Consumption 10. Commercial Clothes Washer Consumer Prices 11. Repair and Maintenance Costs 12. Efficiency Distributions in the Base Case 13. Commercial Clothes Washer Shipments Forecasts 14. Base-Case and Standards-Case Forecasted Efficiencies 15. Dehumidifier Cost and Efficiency Relationships 16. Trial Standard Levels V. Regulatory Review and Procedural Requirements VI. Approval of the Office of the Secretary I. Introduction A. Purpose of the Advance Notice of Proposed Rulemaking The purpose of this ANOPR is to provide interested persons with an opportunity to comment on: 1. The product classes that the Department of Energy (DOE) is planning to analyze in this rulemaking; 2. The analytical framework, models, and tools (e.g., life-cycle cost (LCC) and national energy savings (NES) spreadsheets) DOE is using in performing analyses of the impacts of energy conservation standards for residential dishwashers, dehumidifiers, cooking products, and commercial clothes washers (CCWs) (collectively referred to in this ANOPR as ``the four appliance products''); 3. The analyses performed for the ANOPR, including in particular the results of the engineering analyses, the LCC and payback period (PBP) analyses, and the NES and national impact analyses, which are presented in the ANOPR Technical Support Document (TSD): Energy Efficiency Standards for Consumer Products and Commercial and Industrial Equipment: Residential Dishwashers, Dehumidifiers, And Cooking Products And Commercial Clothes Washers, \1\ as summarized in this ANOPR (2007 TSD); and --------------------------------------------------------------------------- \1\ To be published on the DOE Web site at: http://www.eere.energy.gov/buildings/appliance_standards/residential/cooking_products.html_____________________________________- _- 4. The candidate energy conservation standard levels that DOE has developed from these analyses. B. Overview of the Analyses Performed The Energy Policy and Conservation Act (42 U.S.C. 6291 et seq.) directs DOE to consider establishing or amending energy conservation standards for various consumer products and commercial and industrial equipment, including the four appliance products which are the subject of this ANOPR. For each of these products, DOE conducted in-depth technical analyses for this ANOPR in the following areas: (1) Engineering, (2) energy and water use characterization, (3) markups to determine equipment price, (4) LCC and PBP, (5) shipments, (6) national impacts, and (7) preliminary manufacturer impacts. The ANOPR presents a discussion of the methodologies and assumptions utilized in these analyses. For each type of analysis, Table I.1 identifies the sections in this document that contain the results of the analysis, and summarizes the methodologies, key inputs, and assumptions for the analysis. DOE consulted with interested parties in developing these analyses, and invites further input from stakeholders on these topics. Obtaining that input is the purpose of this ANOPR. Thus, it should be noted that the analytical results presented here are subject to revision following review and input from stakeholders and other interested parties. The final rule will contain the final analytical results. [[Page 64434]] Table I.1.--In-Depth Technical Analyses Conducted for the Advance Notice of Proposed Rulemaking ---------------------------------------------------------------------------------------------------------------- ANOPR section for Analysis area Methodology Key inputs Key assumptions results ---------------------------------------------------------------------------------------------------------------- Engineering (TSD Chapter 5): Dishwashers............... Efficiency level Component cost Analysis can be Section II.C.3. Dehumidifiers............. approach data; extended in supplemented Performance subsequent with design values. analyses to option analysis. product classes and efficiency levels for which the Association of Home Appliance Manufacturers (AHAM) did not provide data. Cooking Products.......... ................. ................. Historical data from DOE's 1996 analysis on residential cooking products are still representative of current manufacturing costs. Commercial Clothes Washers ................. ................. Analysis can be extended to energy and water efficiency levels for which AHAM did not provide data. Energy and Water Use Characterization (TSD Chapter 6): Dishwashers............... Establish per- Per-cycle energy Per-cycle water Section II.D.1. cycle energy and and water use; use is a direct water use and Average annual function of per- then multiply by usage of 215 cycle energy use annual cycles. cycles based on (based on AHAM DOE test data). procedure; Variability of usage based on Energy Information Administration (EIA)'s Residential Energy Consumption Survey (RECS). Dehumidifiers............. Establish daily Per-cycle energy Average usage of Section II.D.2. energy use by and water use; 1095 hours is dividing product Average annual representative of capacity by usage of 1095 dehumidifier use. efficiency and hours based on then multiply by AHAM estimates; annual hourly Variability of usage. usage based on multiple sources. Cooking Products.......... Use recent survey Recent survey Recent survey data Section II.D.3. data to estimate data from are indicative of annual energy California and current household use. Florida--indicat cooking habits; es a drop in Historical data annual energy from DOE's 1996 use of ~40% for analysis on electric and gas residential ranges and ~15% cooking products for microwave are still ovens relative representative of to DOE test component energy procedure use (e.g., self- estimates; cleaning, clock, Variability of ignition). usage based on EIA's RECS. Commercial Clothes Washers Establish per- Per-cycle energy Per-cycle energy Section II.D.4. cycle energy and and water use; use data in DOE's water use and Average daily 2000 TSD on then multiply by usage of 3.4 residential annual cycles. cycles for multi- clothes washers family and 6 is representative cycles for of per-cycle laundromats; drying and per- Variability of cycle machine usage based on energy for multiple sources. commercial washers. Markups to Determine Equipment Price (TSD Chapter 7): Dishwashers............... Assess financial Distribution Markups for Section II.E. Dehumidifiers............. data from: (1) channels; SEC baseline and more- Cooking Products.......... U.S. Securities reports on efficient Commercial Clothes Washers and Exchange appliance equipment are Commission (SEC) manufacturers; different. reports on U.S. Census appliance Business manufacturers to Expenditure develop Survey; State manufacturer sales taxes; markups and (2) Shipments to the U.S. Census different States. Business Expenditure Survey to develop retailer and commercial distributor markups. Use markups to transform manufacturer costs into consumer prices. [[Page 64435]] LCC and PBP (TSD Chapter 8): Dishwashers............... Use Monte Carlo Manufacturer Only 3% of II.G.4 simulation in costs; Markups consumers combination with (including sales purchase inputs that are taxes); dishwashers at characterized Installation existing minimum with probability costs; Annual standards (based distributions to energy (and on AHAM data); establish a water) Standards do not distribution of consumption; impact repair and consumer Energy (and maintenance economic impacts water) prices costs; AEO2007 (i.e., LCC and future basis for energy savings and trends; price forecasts; PBPs) that Maintenance and Average product identify the repair costs; lifetime is 12.3 percent of. Product years; Average lifetime; discount rate is Discount rates. 5.6%. Dehumidifiers............. ................. ................. Approximately 30% of consumers purchase dehumidifiers at existing minimum standards (based on AHAM data); Standards do not impact repair and maintenance costs; Annual Energy Outlook (AEO) 2007 basis for energy price forecasts; Average product lifetime is 11 years; Average discount rate is 5.6%. Cooking Products.......... ................. ................. For gas ranges, only 18 percent of consumers purchase equipment with standing pilots; For electric cooking products and microwave ovens, 100 percent of consumer purchase equipment at baseline levels; Average product lifetime is 19 years for electric and gas ranges and 9 years for microwave ovens; Standards do not impact repair and maintenance costs; AEO2007 basis for energy price forecasts; Average discount rate is 5.6%. Commercial Clothes Washers ................. ................. Approximately 80 percent of consumers purchase equipment at existing minimum standards (based on AHAM data); Standards do not impact repair and maintenance costs; AEO2007 basis for energy price forecasts; Average product lifetime is 7.1 or 11.3 years depending on product application; Discount rate can be estimated by company-weighted average cost of capital. Shipments (TSD Chapter 9): [[Page 64436]] Dishwashers............... Forecast Historical Market segments II.H.3. Dehumidifiers............. shipments shipments (for are: new Cooking Products.......... through the use calibration construction, Commercial Clothes Washers of a product purposes); replacements, and stock accounting Historical first-time owners model by product (existing dividing market saturations; New households into segments-- construction without the e.g., new forecasts; product); construction, Survival Sensitivity to replacements, functions (based `relative price' and early on product is low. replacements, or lifetimes); Market segments first-time Sensitivity to are: replacements owners; Use `relative and first-time increases in price,' i.e., owners; purchase price sensitivity to Sensitivity to and savings in the combined `relative price' operating costs effect of is low. to forecast the purchase price Market segments impact of increases, are: new standards on operating cost construction, shipments. savings, and replacements, and household income. early replacements; Sensitivity to `relative price' is low. Market segments are: new construction and replacements; New construction shipments driven by multi-family housing market only; Sensitivity to `relative price' is low. National Impacts (TSD Chapter 10): Dishwashers............... Forecast national Annual forecasted Annual shipments Section II.I.4. Dehumidifiers............. annual energy shipments; from shipments Cooking Products.......... (and water) use, Forecasted base model; Forecasted Commercial Clothes national annual case and base case and Washers.. equipment costs, standards case standards case and national efficiencies; efficiencies annual operating Per-unit annual remain frozen at cost savings. energy (and levels in the water) year 2012; consumption, Per- National Energy unit total Modeling System installed costs; (NEMS) basis for Per-unit site-to-source operating costs; conversion Site-to-source factors; Discount conversion rates are 3 factors for percent and 7 electricity and percent real natural gas; based on Office Discount rates; of Management and Effective date Budget (OMB) of standard; and guidelines; Present year. Future costs discounted to present year: 2007. ---------------------------------------------------------------------------------------------------------------- 1. Engineering Analysis The engineering analysis establishes the relationship between the cost and efficiency of a product DOE is evaluating for standards. This relationship serves as the basis for cost and benefit calculations for individual consumers, manufacturers, and the Nation. The engineering analysis identifies representative baseline equipment, which is the starting point for analyzing technologies that provide energy efficiency improvements. Baseline equipment here refers to a model or models having features and technologies typically found in equipment currently offered for sale. The baseline model in each product class represents the characteristics of products in that class, and, for products already subject to energy conservation standards, usually is a model that just meets the current standard. After identifying the baseline models, DOE estimates their manufacturing cost, after which, DOE estimates the incremental manufacturing costs for producing more efficient equipment. For dishwashers, dehumidifiers, and CCWs, the engineering analysis uses industry-supplied cost-efficiency data, which are based on an efficiency-level approach (which calculates the relative costs of achieving increases in energy efficiency levels), and cost-efficiency curves that DOE derived based on a design-option approach (which calculates the incremental costs of adding specific design options to a baseline model). For kitchen ranges and ovens (including microwave ovens), DOE established cost-efficiency curves using its 1996 Technical Support Document for Residential Cooking Products,\2\ updated to the present time in the 2007 TSD for this rulemaking, as discussed below. Some stakeholders provided comments to DOE that the design options and associated efficiency increments were still valid for cooking products other than microwave ovens. For microwave ovens, DOE analyzed current efficiency data to validate the efficiency increments specified in the 1996 technical analysis, after which it was determined that no changes to those increments were necessary. To determine manufacturing cost increments, DOE, with the concurrence of manufacturers, used producer price index (PPI) data from the Bureau of Labor Statistics (BLS) to scale costs identified in the 1996 analysis to 2006$. Section II.C on the engineering analysis discusses this cost-efficiency relationship, as well as the product [[Page 64437]] classes analyzed, the representative baseline units, and the methodology to be used to extend the analysis to product classes for which DOE did not receive data --------------------------------------------------------------------------- \2\ Available online at DOE's website: http://www.eere.energy.gov/buildings/appliance_standards/residential/cooking_products_0998_r.html . --------------------------------------------------------------------------- 2. Energy and Water Use Characterization The energy use and water characterization provides estimates of annual energy and water consumption for the four appliance products, which DOE uses in the subsequent LCC and PBP analyses and the national impact analysis (NIA). DOE developed energy consumption estimates for all of the product classes analyzed in the engineering analysis, as the basis for its energy and water use estimates. In the case of dishwashers, DOE used the annual usage (in cycles per year) established in its test procedure to estimate the product's annual energy and water use. For dehumidifiers, DOE relied on industry-supplied estimates of annual usage (in hours per year) to estimate the product's annual energy use. For kitchen ranges and ovens, the 2004 California Residential Appliance Saturation Study (CA RASS) \3\ and a year-long monitoring study conducted in 1999 by the Florida Solar Energy Center (FSEC) \4\ indicate that household cooking has continued to drop since the mid-1990s; DOE used these surveys as the basis for estimating product annual energy use. For CCWs, DOE used industry-sponsored research to estimate the product's annual energy and water use. For further details on the CCW estimates, see section II.D.4 of this ANOPR. --------------------------------------------------------------------------- \3\ California Energy Commission. California Statewide Residential Appliance Saturation Study, June 2004. Prepared for the California Energy Commission by KEMA-XENERY, Itron, and RoperASW. Contract No. 400-04-009. http://www.energy.ca.gov/appliances/rass/index.html . \4\ Parker, D. S. Research Highlights from a Large Scale Residential Monitoring Study in a Hot Climate. Proceeding of International Symposium on Highly Efficient Use of Energy and Reduction of its Environmental Impact, January 2002. Japan Society for the Promotion of Science Research for the Future Program, Osaka, Japan. JPS-RFTF97P01002: pp. 108-116. Also published as FSEC-PF369- 02, Florida Solar Energy Center, Cocoa, FL. http://www.fsec.ucf.edu/en/publications/html/FSEC-PF-369-02/index.htm . --------------------------------------------------------------------------- 3. Markups to Determine Equipment Price DOE derives consumer prices for products based on manufacturer markups, retailer markups (for residential products), distributor markups (for CCWs), and sales taxes. In deriving these markups, DOE has determined: (1) The distribution channels for product sales; (2) the markup associated with each party in the distribution channels, and (3) the existence and magnitude of differences between markups for baseline equipment (``baseline markups'') and for more-efficient equipment (``incremental markups''). DOE calculates both overall baseline and overall incremental markups based on the product markups at each step in the distribution channel. It defines the overall baseline markup as the ratio of consumer price (not including sales tax) and manufacturer cost for baseline equipment; the overall incremental markup relates the change in the manufacturer sales price of higher-efficiency models (the incremental cost increase) to the change in the retailer or distributor sales price. DOE determined manufacturer markups through the use of U.S. Securities and Exchange Commission (SEC) reports on appliance manufacturers, and used U.S. Census Business Expenditure Surveys to develop retailer and commercial distributor markups. DOE collected consumer retail prices for each of the four appliance products to provide a rough validation of its markups for baseline equipment. Baseline equipment is produced in large volumes, is not heavily laden with consumer features, and is typically competitively priced by retailers and distributors; therefore, collected retail prices of baseline equipment are likely to reflect the actual cost of producing and selling minimally-compliant products. Because DOE's approach for calculating baseline retail prices through the use of manufacturing costs, baseline markups, and sales taxes are intended to capture only the cost of producing minimally- compliant equipment, any collected baseline retail prices serve as a good check on the prices calculated through the markup approach. But because more-efficient equipment often includes non-energy related features, DOE cannot rely solely on collected retail prices for high- efficiency products to validate the prices determined through its markup approach. Current retail prices for high-efficiency equipment likely reflect the added cost of consumer amenities that have no impact on efficiency and, therefore, mask the incremental price associated with features that only affect product efficiency. 4. Life-Cycle Cost and Payback Period Analyses The LCC and PBP analyses determine the economic impact of potential standards on individual consumers. The LCC is the total consumer expense for a product over the life of the product. The LCC analysis compares the LCCs of products designed to meet possible energy- efficiency standards with the LCCs of the products likely to be installed in the absence of standards. DOE determines LCCs by considering: (1) Total installed cost to the purchaser (which consists of manufacturer costs, sales taxes, distribution chain markups, and installation cost); (2) the operating expenses of the product (determined by energy and water use, energy and water prices, and repair and maintenance costs); (3) product lifetime; and (4) a discount rate that reflects the real consumer cost of capital and puts the LCC in present value terms. The PBP represents the number of years needed to recover the increase in purchase price (including the incremental installation cost) of more-efficient equipment through savings in the operating cost of the product. It is the change in total installed cost due to increased efficiency divided by the change in annual operating cost from increased efficiency. 5. National Impact Analysis The NIA estimates both the national energy savings (NES) and the net present value (NPV) of total customer costs and savings expected to result from new standards at specific efficiency levels (referred to as candidate standard levels). In conducting the NIA, DOE calculated NES and NPV for any given candidate standard level for each of the four appliance products as the difference between a base case forecast (without new standards) and the standards case forecast (with standards). DOE determined national annual energy consumption by multiplying the number of units in use (by vintage \5\) by the average unit energy (and water) consumption (also by vintage). Cumulative energy savings are the sum of the annual NES determined over a specified time period, which in the NIA consisted of the range of years for which the forecast was made. The national NPV is the sum over time of the discounted net savings each year, which consists of the difference between total operating cost savings and increases in total installed costs. Critical inputs to this analysis include shipments projections, retirement rates (based on estimated product or equipment lifetimes), and estimates of changes in shipments and retirement rates in response to changes in product or equipment costs due to standards. --------------------------------------------------------------------------- \5\ The term ``vintage'' refers to the age of the unit in years. --------------------------------------------------------------------------- [[Page 64438]] C. Authority Part B of Title III of EPCA established the energy conservation program for consumer products other than automobiles, including dishwashers and electric and gas kitchen ranges and ovens (which include microwave ovens). (This ANOPR refers to electric and gas kitchen ranges and ovens and microwave ovens collectively as ``cooking products.'') Amendments to EPCA in the National Appliance Energy Conservation Act of 1987 (Pub. L. 100-12; NAECA) established energy conservation standards for dishwashers and cooking products, as well as requirements for determining whether these standards should be amended. (See 42 U.S.C. 6295(g) and (h), respectively) Subsequent amendments expanded Title III of EPCA to include additional consumer products and certain commercial and industrial equipment, including dehumidifiers and CCWs. In particular, sections 135(c)(4) and 136(e) of the Energy Policy Act of 2005, Public Law 109-58; (EPACT 2005) amended EPCA to authorize DOE to consider the need to modify the energy conservation standards that the Act, as amended, prescribed for dehumidifiers (42 U.S.C. 6295(cc)) and for CCWs (42 U.S.C. 6313(e)), respectively. This includes authority for DOE to amend the water efficiency standard the Act, as amended, prescribes for commercial clothes washers. Before DOE prescribes any new or amended standard for any of the four appliance products, however, it must first solicit comments on a proposed standard. Moreover, DOE must design each new or amended standard for these products to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified, and such a standard must also result in significant conservation of energy. (42 U.S.C. 6295(o)(2)(A) and (o)(3); 42 U.S.C. 6316(a)) To determine whether a proposed standard is economically justified, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens to the greatest extent practicable, weighing the following seven factors: 1. The economic impact of the standard on manufacturers and consumers of products subject to the standard; 2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products which are likely to result from the imposition of the standard; 3. The total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard; 4. Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard; 5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; 6. The need for national energy and water conservation; and 7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i); 42 U.S.C. 6316(a)) D. Background 1. History of Standards Rulemaking for Residential Dishwashers, Dehumidifiers, and Cooking Products; and Commercial Clothes Washers For dishwashers, NAECA amended EPCA to establish prescriptive standards, requiring that dishwashers be equipped with an option to dry without heat, and further requiring that DOE conduct two cycles of rulemakings to determine if more stringent standards are justified. (42 U.S.C. 6295 (g)(1) and (4)) On May 14, 1991, DOE issued a final rule establishing the first set of performance standards for dishwashers (56 FR 22250); the new standards became effective on May 14, 1994 (10 CFR 430.32(f)). DOE initiated a second standards rulemaking for dishwashers by issuing an ANOPR on November 14, 1994 (59 FR 56423). However, as a result of the priority-setting process outlined in its Procedures for Consideration of New or Revised Energy Conservation Standards for Consumer Products (the ``Process Rule'') (61 FR 36974 (July 15, 1996); 10 CFR part 430, Subpart C, Appendix A), DOE suspended the standards rulemaking for dishwashers. Section 135(c)(4) of EPACT 2005 added dehumidifiers as products covered under EPCA and established standards for them that will become effective on October 1, 2007. (42 U.S.C. 6295(cc)) DOE has incorporated these standards into its regulations (70 FR 60407, 60414 (October 18, 2005); 10 CFR 430.32(v)). The amendments to EPCA also require that DOE issue a final rule by October 1, 2009, to determine whether these standards should be amended. (42 U.S.C. 6295(cc)) If amended standards are justified, they must become effective by October 1, 2012. (Id.) In the event that DOE fails to publish such a final rule, the EPACT 2005 specifies a new set of amended standards with an effective date of October 1, 2012. (Id.) As with dishwashers, NAECA amended EPCA to establish prescriptive standards for cooking products, requiring gas ranges and ovens with an electrical supply cord that are manufactured on or after January 1, 1990 not to be equipped with a constant burning pilot, and requiring DOE to conduct two cycles of rulemakings for ranges and ovens to determine if the standards established should be amended. (42 U.S.C. 6295 (h)(1)-(2)) DOE initially analyzed standards for cooking products as part of an eight-product standards rulemaking. It issued a notice of proposed rulemaking (NOPR) on March 4, 1994, proposing performance standards for gas and electric residential cooking products, including microwave ovens (59 FR 10464). In accordance with the Process Rule, DOE refined its standards analysis for cooking products. For gas cooking products, DOE focused on the economic justification for eliminating constant burning pilots. Partially due to the difficulty of conclusively demonstrating that elimination of constant burning pilots was economically justified for gas cooking products without an electrical supply cord, DOE issued a final rule on September 8, 1998, that covered only electric cooking products, including microwave ovens (63 FR 48038). The final rule found that no standards were justified for electric cooking products. DOE never completed its standards rulemaking for gas cooking products. Similar to dehumidifiers, EPACT 2005 included amendments to EPCA that added CCWs as covered equipment, and it also established standards for such equipment that is manufactured on or after January 1, 2007. (EPACT 2005, section 136(a) and (e); 42 U.S.C. 6311(1) and 6313(e)) DOE has incorporated these standards into its regulations (70 FR 60407, 60416 (October 18, 2005); 10 CFR 431.156). EPACT 2005 also requires that DOE issue a final rule by January 1, 2010, to determine whether these standards should be amended. (EPACT 2005, section 136(e); 42 U.S.C. 6313(e)) 2. Current Rulemaking Process To initiate the current rulemaking to develop standards for the four appliance products, on March 15, 2006, DOE published on its Web site the Rulemaking Framework for Commercial Clothes Washers and Residential Dishwashers, Dehumidifiers, and Cooking Products (the Framework [[Page 64439]] Document). The Framework Document describes the procedural and analytic approaches DOE anticipates using to evaluate the establishment of energy conservation standards for these products. This document is available at: http://www.eere.energy.gov/buildings/appliance_standards/pdfs/home_appl_framework_31506.pdf . DOE subsequently published a notice announcing the availability of the Framework Document, inviting written public comments to be submitted by May 11, 2006, and announcing a public meeting to discuss the proposed analytical framework for this rulemaking (71 FR 15059 (March 27, 2006)). At the April 27, 2006 public meeting, DOE described the different analyses it would conduct, such as the LCC and PBP analyses, the methods proposed for conducting them, and the relationship among the various analyses. Manufacturers, trade associations, environmental advocates, regulators, and other interested parties attended the meeting. The major issues discussed at the public meeting were: (1) Relevance of the existing DOE test procedure for microwave ovens; (2) baseline unit definitions for the four appliance products; (3) product classes for the four appliance products; (4) consideration of limiting standby power as a design option for all four appliance products; (5) technology options for improving efficiency for all four appliance products; (6) type of approach to employ for the engineering analysis; (7) efficiency levels to consider for all four appliance products; (8) inclusion of a water factor for dishwashers; (9) consideration of cleaning performance in setting dishwasher standards; (10) implications of clothes container volume on CCW efficiency; (11) proposed approaches for specifying typical annual energy and water consumption for all four products; (12) potential data sources for characterizing variability in annual energy and water consumption; (13) typical distribution channels and markups for all four appliance products; (14) data sources for retail prices; (15) type of approach to employ for the LCC and PBP analyses; (16) variability of forecasted energy and water prices; (17) repair, maintenance, and installation cost relationship to product efficiency; (18) product lifetimes; (19) development of consumer discount rates; (20) purchase price impacts on product shipments; (21) forecasted saturation rates of commercial clothes washers; (22) consumer subgroups; (23) water and wastewater utility impacts; and (24) wastewater discharge impacts. Written comments submitted during the Framework Document comment period elaborated on the issues raised at the meeting and also addressed other major issues, including the following: (1) Transparency of manufacturer cost data development; (2) engineering data availability for dishwashers, kitchen ranges and ovens, and CCWs; and (3) inclusion of embedded energy in supplying water and treating wastewater. DOE developed two spreadsheet tools for this rulemaking. The first tool calculates LCC and PBPs. There are six LCC spreadsheets, one each for the following products: (1) Dishwashers, (2) dehumidifiers, (3) cooktops, (4) ovens, (5) microwave ovens, and (6) CCWs. Each of the LCC spreadsheets includes product efficiency distributions and has the capability to determine LCC savings and PBPs based on average values. The spreadsheets also can be combined with Crystal Ball (a commercially available software program) to generate a Monte Carlo simulation, which incorporates uncertainty and variability considerations. The second tool (the NIA spreadsheet tool) calculates the impacts of candidate standards at various levels on shipments and calculates the NES and NPV at various candidate standard levels. There are five NIA spreadsheets, one each for the following products and combinations of products: (1) Dishwashers, (2) dehumidifiers, (3) cooktops and ovens, (4) microwave ovens, and (5) CCWs. DOE posted these spreadsheets on its Web site on December 4, 2006, for early stakeholder review and comment.\6\ --------------------------------------------------------------------------- \6\ Available online at DOE's Web site: http://www.eere.energy.gov/buildings/appliance_standards/residential/cooking_products.html_____________________________________- A> Comments received since publication of the Framework Document have helped identify issues involved in this rulemaking, and have provided information that has contributed to DOE's proposed resolution of these issues. This ANOPR quotes and summarizes many of these public comments. A parenthetical reference at the end of a quotation or paraphrase provides the location of the item in the public record. 3. Analysis Process Table I.2 sets forth the analyses DOE has conducted and intends to conduct in its evaluation of standards for CCWs, and residential dishwashers, cooking products, and dehumidifiers. Until recently, DOE performed the manufacturer impact analysis (MIA) in its entirety between the ANOPR and NOPR during energy conservation standards rulemakings. As noted in the table, however, DOE has performed a preliminary MIA for this ANOPR. DOE believes this change will improve the rulemaking process. Table I.2.--The Four Appliance Products--Analysis Process ------------------------------------------------------------------------ ANOPR NOPR Final rule ------------------------------------------------------------------------ Market and technology Revised ANOPR Revised analyses. assessment. analyses. Screening analysis........... Life-cycle cost sub-group analysis. Engineering analysis......... Manufacturer impact analysis. Energy use and end-use load Utility impact characterization. analysis. Markups for equipment price Net national determination. employment impacts. Life-cycle cost and payback Environmental period analyses. assessment. Shipments analysis........... Regulatory impact analysis. National impact analysis..... Preliminary manufacturer impact analysis. ------------------------------------------------------------------------ The analyses listed in Table I.2 reflect analyses used in the rulemaking, including the development of economic models and analytical tools. In addition, in an effort to support groups of interested parties seeking to develop and present consensus recommendations on standards, DOE posted draft versions of its LCC and NIA spreadsheets on its Web site. If timely new data, models, or tools that enhance the development of standards become [[Page 64440]] available, DOE will incorporate them into this rulemaking. 4. Miscellaneous Rulemaking Issues a. Joint Stakeholder Recommendations The Edison Electric Institute (EEI) suggested that DOE should use a negotiated rulemaking process for residential dishwashers and cooking equipment, because manufacturers appear to want regulatory certainty for these products. EEI suggested a separate negotiated process for CCWs because these products are designed for a different market. For dehumidifiers, EEI suggested DOE analyze the standards identified in EPACT 2005 that are due to become effective in 2012, and if they are technically feasible, economically justified, and will not reduce competition, consider a negotiated rulemaking so that standards can be issued before the October 1, 2009 deadline mandated by EPACT 2005. (EEI, No. 7 at p. 2) \7\ --------------------------------------------------------------------------- \7\ A notation in the form ``EEI, No. 7, p. 2'' identifies a written comment that DOE has received and has included in the docket of this rulemaking. This particular notation refers to a comment (1) by the Edison Electric Institute, (2) in document number 7 in the docket of this rulemaking, and (3) appearing on page 2 of document number 7. --------------------------------------------------------------------------- The Process Rule specifically identifies ``consensus proposals for new or revised standards as an effective mechanism for balancing the economic, energy, and environmental interests affected by standards. Thus, notwithstanding any other policy on selection of proposed standards, a consensus recommendation on an updated efficiency level submitted by a group that represents all interested parties will be proposed by DOE if it is determined to meet the statutory criteria.'' (10 CFR Part 430, Appendix A to Subpart C, section 5(e)(2)). Therefore, DOE encourages the submittal of any consensus proposals or joint stakeholder recommendations pertaining to any or all of the four appliance products. If the supporting analyses provided by the group address all of the statutory criteria and use valid economic assumptions and analytical methods, DOE expects to use these supporting analyses as the basis of a proposed rule. b. Standby Power for Dishwashers and Cooking Products Standby power is currently incorporated into the energy factor \8\ (EF) for conventional ovens via the measurement of clock power consumption and for gas cooktops via the energy consumption of constant burning pilots, both of which are incorporated into the EF calculation for their respective products. The dishwasher test procedure includes a measurement of standby power, but standby energy use is not incorporated into calculated EF. The issue of whether to include standby power in the energy efficiency metrics for dishwashers and cooking products was addressed in several comments that DOE received. The Alliance to Save Energy, American Council for an Energy-Efficient Economy (ACEEE), Appliance Standards Awareness Project, Natural Resources Defense Council, and Northeast Energy Efficiency Partnerships (hereafter ``Joint Comment'') stated that standby energy use should be included in the analyses for all products, with the appropriate metric for the standards being annual energy consumption rather than energy factor. The Joint Comment stated that EPACT 2005 instructs DOE to consider standby power in its rulemaking for all products, and where significant, to include standby power in some fashion into the appropriate standard. The Joint Comment further stated that standby energy use can be significant for clothes washers, dishwashers, and microwave ovens. (Joint Comment, No. 9 at p. 2) --------------------------------------------------------------------------- \8\ Energy factor (EF) is a measure of the energy consumption required by the product under the conditions of the DOE test procedure. The units of EF vary depending on the product. For example, the EF for dishwashers is expressed in cycles/kWh, while the EF for dehumidifiers is in liters/kWh. --------------------------------------------------------------------------- For dishwashers, Potomac Resources Inc. (Potomac) commented that it would be useful to address standby power directly through design options such as the power supply. (Public Meeting Transcript, No. 5 at p. 61) \9\ ACEEE, EEI, and Whirlpool Corporation (Whirlpool) agreed that standby power is important to include in the energy use calculations, but EEI and Whirl