Energy Conservation Program: Energy Conservation Standards for Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial and Industrial Equipment (Commercial Clothes Washers), 57738-57802 [E9-26544]
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE–2006–STD–0127]
RIN 1904–AB93
Energy Conservation Program: Energy
Conservation Standards for Certain
Consumer Products (Dishwashers,
Dehumidifiers, Microwave Ovens, and
Electric and Gas Kitchen Ranges and
Ovens) and for Certain Commercial
and Industrial Equipment (Commercial
Clothes Washers)
srobinson on DSKHWCL6B1PROD with PROPOSALS2
AGENCY: Office of Energy Efficiency and
Renewable Energy, Department of
Energy.
ACTION: Supplemental notice of
proposed rulemaking and notice of
public meeting.
SUMMARY: On October 17, 2008, the U.S.
Department of Energy (DOE) issued a
notice of proposed rulemaking (NOPR)
in which DOE proposed amendments to
the energy conservation standards for
several residential products and
commercial equipment, including
commercial clothes washers (CCWs).
DOE decided to conduct additional,
supplemental rulemaking analyses for
CCWs to address certain alleged data
problems. Today’s document details
these supplemental analyses and
proposes revised CCW standard levels
for consideration.
DATES: DOE will hold a public meeting
on November 16, 2009, from 9 a.m. to
5 p.m., in Washington, DC. DOE must
receive requests to speak at the public
meeting and receive a signed original
and an electronic copy of statements to
be given at the public meeting before 4
p.m., November 13, 2009.
DOE will accept comments, data, and
information regarding the supplemental
notice of proposed rulemaking (SNOPR)
received not later than December 9,
2009. See section VII, ‘‘Public
Participation,’’ of today’s supplemental
notice for details.
ADDRESSES: The public meeting will be
held at the U.S. Department of Energy,
Forrestal Building, 1E–245, 1000
Independence Avenue, SW.,
Washington, DC 20585. (Please note that
foreign nationals visiting DOE
Headquarters are subject to advanced
security screening procedures. If you are
a foreign national and wish to
participate in the workshop, please
inform DOE of this fact as soon as
possible by contacting Ms. Brenda
Edwards at (202) 586–2945 so that the
necessary procedures can be
completed.)
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Any comments submitted must
identify the SNOPR for Energy
Conservation Standards for Home
Appliance Products, and provide docket
number EERE–2006–STD–0127 and/or
regulatory information number (RIN)
1904–AB93. Comments may be
submitted using any of the following
methods:
1. Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
2. E-mail: home_
appliance.rulemaking@ee.doe.gov.
Include docket number EE–2006–STD–
0127 and/or RIN number 1904–AB93 in
the subject line of the message.
3. Postal Mail: Ms. Brenda Edwards,
U.S. Department of Energy, Building
Technologies Program, Mailstop EE–2J,
1000 Independence Avenue, SW.,
Washington, DC 20585–0121. Please
submit one signed original paper copy.
4. Hand Delivery/Courier: Ms. Brenda
Edwards, U.S. Department of Energy,
Building Technologies Program, Room
1J–018, 1000 Independence Avenue,
SW., Washington, DC 20585–0121.
Telephone: (202) 586–2945. Please
submit one signed original paper copy.
For detailed instructions on
submitting comments and additional
information on the rulemaking process,
see section VII, ‘‘Public Participation,’’
of today’s supplemental notice for
details.
Docket: For access to the docket to
read background documents or
comments received, visit the U.S.
Department of Energy, Resource Room
of the Building Technologies Program,
950 L’Enfant Plaza, SW., Suite 600,
Washington, DC 20585–0121, (202) 586–
2945, between 9 a.m. and 4 p.m.,
Monday through Friday, except Federal
holidays. Please call Ms. Brenda
Edwards at the above telephone number
for additional information regarding
visiting the Resource Room.
FOR FURTHER INFORMATION CONTACT: Mr.
Stephen Witkowski, U.S. Department of
Energy, Energy Efficiency and
Renewable Energy, Building
Technologies Program, EE–2J, 1000
Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–7463. E-mail:
Stephen.Witkowski@ee.doe.gov.
Ms. Francine Pinto, Esq. or Ms. Betsy
Kohl, Esq., U.S. Department of Energy,
Office of General Counsel, GC–71/72,
1000 Independence Avenue, SW.,
Washington, DC 20585–0121.
Telephone: (202) 586–5000. E-mail:
Francine.Pinto@hq.doe.gov,
Elizabeth.Kohl@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
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Table of Contents
I. Summary of the Proposed Rule
II. Introduction
A. Consumer Overview
B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking
D. Test Procedures
E. Technological Feasibility
1. General
2. Maximum Technologically Feasible
Levels
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and
Consumers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of
Equipment
e. Impact of Any Lessening of Competition
f. Need of the Nation to Conserve Energy
g. Other Factors
2. Rebuttable Presumption
III. Methodology and Revisions to the
Analyses Employed in the October 2008
Proposed Rule
A. Equipment Classes
B. Technology Assessment
C. Engineering Analysis
1. Efficiency Levels
a. Revised Efficiency Levels
b. Technological Feasibility of the Revised
Top-Loading Max-Tech Level
2. Manufacturing Costs
D. Life-Cycle Cost and Payback Period
Analysis
1. Equipment Prices
2. Installation Cost
3. Annual Energy Consumption
4. Energy and Water Prices
a. Energy Prices
b. Water and Wastewater Prices
5. Repair and Maintenance Costs
6. Equipment Lifetime
7. Discount Rates
8. Effective Date of the Amended Standards
9. Equipment Energy Efficiency in the Base
Case
10. CCW Split Incentive
11. Rebound Effect
12. Inputs to Payback Period Analysis
13. Rebuttable-Presumption Payback
Period
E. National Impact Analysis—National
Energy Savings and Net Present Value
Analysis
1. General
2. Shipments
a. New Construction Shipments
b. Replacements and Non-replacements
c. Purchase Price, Operating Cost, and
Income Impacts
3. Other Inputs
a. Base-Case Forecasted Efficiencies
b. Standards-Case Forecasted Efficiencies
c. Annual Energy Consumption
d. Site-to-Source Conversion
e. Energy Used in Water and Wastewater
Treatment and Delivery
f. Total Installed Costs and Operating Costs
g. Discount Rates
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
h. Effects of Standards on Energy Prices
F. Consumer Subgroup Analysis
G. Manufacturer Impact Analysis
H. Employment Impact Analysis
I. Utility Impact Analysis
J. Environmental Assessment
K. Monetizing Carbon Dioxide and Other
Emissions Impacts
IV. Discussion of Other Comments
A. Proposed TSLs for Commercial Clothes
Washers
B. Proposed Standards for Commercial
Clothes Washers
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy
Savings
1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable-Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value
c. Impacts on Employment
4. Impact on Utility or Performance of
Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
C. Proposed Standards
1. Overview
2. Conclusion
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility
Act
C. Review Under the Paperwork Reduction
Act
D. Review Under the National
Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates
Reform Act of 1995
H. Review Under the Treasury and General
Government Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General
Government Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality
Bulletin for Peer Review
VII. 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 DOE Seeks Comment
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VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
The Energy Policy and Conservation
Act 1 (EPCA), as amended, provides that
any amended energy conservation
standard DOE prescribes, including
those for CCWs, shall be designed to
‘‘achieve the maximum improvement in
energy efficiency * * * which the
Secretary determines is technologically
feasible and economically justified.’’ (42
U.S.C. 6295(o)(2)(A) and 6316(a))
Furthermore, any new or amended
standard must ‘‘result in significant
conservation of energy.’’ (42 U.S.C.
6295(o)(3)(B) and 6316(a)) In accordance
with these and other statutory criteria
discussed in this notice, DOE proposes
in today’s SNOPR to amend the energy
conservation standards for CCWs and
raise efficiency levels as shown in Table
I.1. The standards would apply to all
CCWs manufactured in, or imported
into, the United States 3 years after the
publication of the final rule in the
Federal Register.
TABLE I.1—EXISTING AND PROPOSED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS
Existing energy conservation standards (effective January 1, 2007)
Proposed energy conservation standards
Standards
Equipment class
Standards
Commercial clothes washers .........
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Equipment class
1.26 Modified Energy Factor/9.5
Water Factor.
Top-loading commercial clothes
washers.
Front-loading commercial clothes
washers.
1.6 Modified Energy Factor/8.5
Water Factor.
2.00 Modified Energy Factor/5.5
Water Factor.
DOE estimates that the energy
conservation standards proposed in
today’s SNOPR would save a significant
amount of energy—an estimated 0.10
quadrillion British thermal units (Btu),
or quads, of cumulative energy over 30
years (2013–2043). This amount is
equivalent to 2 days of U.S. gasoline
use. In addition, today’s proposed
standards for CCWs save over 143
billion gallons of cumulative water
consumption over 30 years (2013–2043).
The cumulative national net present
value (NPV) of total consumer costs and
savings of today’s proposed standards
from 2013 to 2043, in 2008 dollars
(2008$), ranges from $0.4 billion (7percent discount rate) to $0.9 billion (3percent discount rate). This is the
estimated total value of future
operating-cost savings minus the
estimated increased equipment costs,
discounted to the present year (2009).
DOE estimates the CCW industry net
present value (INPV) to be
approximately $62 million in 2008$. If
1 42
DOE adopts today’s proposed standards,
manufacturers expect a decline of
between 7.8 percent and 11.4 percent of
the INPV, which is approximately $5 to
$7 million. However, the NPV for
consumers (at the 7-percent discount
rate) would exceed industry losses due
to energy efficiency standards by at least
80 times.
DOE believes that the impacts of
standards on consumers would be
positive for CCWs, even though the
standards may increase some initial
costs. DOE estimates that today’s
proposed modified energy factor (MEF)
and water factor (WF) standards for
CCWs would increase the retail price by
$214 per unit for top-loading washers
and $23 for front-loading washers, but
the operating cost savings outweigh
these price increases, resulting in
positive economic impacts to CCW
consumers.
DOE’s analyses indicate that the
energy savings resulting from today’s
proposed standards would have benefits
to utilities and to the environment. The
energy saved is in the form of electricity
and natural gas, and DOE expects the
energy savings from today’s proposed
standards to eliminate the need for
approximately 18 megawatts (MW) of
generating capacity by 2043. This result
reflects DOE’s use of energy price
projections from the U.S. Energy
Information Administration (EIA)’s
April 2009 release of the Annual Energy
Outlook 2009 (AEO 2009) reflecting
provisions of the American Recovery
and Reinvestment Act of 2009 (ARRA
2009; Pub. L. 111–5). DOE intends to
use the most recently available version
of EIA’s AEO to generate the results for
the final rule.
In addition, today’s proposed
standards would have environmental
benefits, which would be estimated to
result in cumulative (undiscounted)
greenhouse gas emission reductions of
5.1 million tons (Mt) of carbon dioxide
(CO2) from 2013 to 2043. DOE estimates
that the range of the monetized value of
U.S.C. 6291 et seq.
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
CO2 emission reductions based on
global estimates of the value of CO2 is
$13 million to $140 million at a 7percent discount rate and $28 million to
$303 million at a 3-percent discount
rate. The standards for CCWs would
also result in 3.04 kilotons (kt) of
nitrogen oxides (NOX) emissions
reductions from 2013 to 2043. The
standards for CCWs would also possibly
result in power plant mercury (Hg)
emissions reductions of up to 0.03 t
from 2013 to 2043.
The benefits and costs of today’s
proposed standards can also be
expressed in terms of annualized
(2008$) values from 2013–2043.
Estimates of annualized values are
shown in Table I.2. The annualized
monetary values are the sum of the
annualized national economic value of
operating savings benefits (energy,
maintenance and repair), expressed in
2008$, plus the monetary values of the
benefits of carbon dioxide emission
reductions, otherwise known as the
Social Cost of Carbon (SCC) expressed
as $19 per metric ton of carbon dioxide,
in 2007$. The $19 value is a central
interim value from a recent interagency
process. Although this $19 value
represents emissions that are valued in
2007$, the monetary benefits of
cumulative emissions reductions are
reported in 2008$ so that they can be
compared with the other costs and
benefits in the same dollar units. The
derivation of this value is discussed in
section V.B.6. Although summing the
value of operating savings to the values
of CO2 reductions provides a valuable
perspective, please note the following:
1) the national operating savings are
domestic U.S. consumer monetary
savings found in market transactions
while the CO2 value is based on a range
of estimates of imputed marginal social
cost of carbon from $5 to $55 per metric
ton (2007$), which are meant to reflect
the global benefits of carbon dioxide
reductions; and 2) the assessments of
operating savings and CO2 savings are
performed with different computer
models, leading to different time frames
for analysis. The present value of
national operating savings is measured
for the period 2013–2065 (31 years from
2013 to 2043 inclusive, plus the lifetime
of the longest-lived equipment shipped
in the 31st year), then converted the
annualized equivalent for the 31 years.
The value of CO2, on the other hand is
meant to reflect the present value of all
future climate related impacts, even
those beyond 2065.
Using a 7-percent discount rate for the
annualized cost analysis, the combined
cost of the standards established in
today’s notice for CCWs is $23.4 million
per year in increased equipment and
installation costs, while the annualized
benefits are $60.6 million per year in
reduced equipment operating costs and
$5.1 million in CO2 reductions, for a net
benefit of $42.2 million per year. Using
a 3-percent discount rate, the cost of the
standards established in today’s final
rule is $22.7 million per year in
increased equipment and installation
costs, while the benefits of today’s
standards are $72.8 million per year in
reduced operating costs and $5.9
million in CO2 reductions, for a net
benefit of $56.0 million per year.
TABLE I.2—ANNUALIZED BENEFITS AND COSTS FOR COMMERCIAL CLOTHES WASHERS
Units
Category
Primary estimate
(AEO reference case)
Low estimate
(low growth case)
High estimate
(high growth case)
Annualized Monetized ..........
(millions$/year) .....................
Annualized Quantified ..........
60.6 ..............................
72.8 ..............................
0.14 CO2 (Mt) ...............
0.087 NOX (kt) .............
0.001 Hg (t) ..................
0.16 CO2 (Mt) ...............
0.094 NOX (kt) .............
0.001 Hg (t) ..................
5.1 ................................
54.9 ..............................
65.3 ..............................
0.14 CO2 (Mt) ...............
0.087 NOX (kt) .............
0.001 Hg (t) ..................
0.16 CO2 (Mt) ...............
0.094 NOX (kt) .............
0.001 Hg (t) ..................
5.1 ................................
66.6 ..............................
80.4 ..............................
0.14 CO2 (Mt) ...............
0.087 NOX (kt) .............
0.001 Hg (t) ..................
0.16 CO2 (Mt) ...............
0.094 NOX (kt) .............
0.001 Hg (t) ..................
5.1 ................................
2008
2008
NA
NA
NA
NA
NA
NA
2008
7
3
7
7
7
3
3
3
7
31
31
31
31
31
31
31
31
31
5.9 ................................
65.7 ..............................
78.7 ..............................
5.9 ................................
59.9 ..............................
71.2 ..............................
5.9 ................................
71.6 ..............................
86.3 ..............................
2008
2008
2008
3
7
3
31
31
31
23.4 ..............................
22.7 ..............................
21.9 ..............................
20.9 ..............................
24.6 ..............................
23.9 ..............................
2008
2008
7
3
31
31
42.2 ..............................
38.1 ..............................
47.0 ..............................
2008
7
31
56.0 ..............................
50.3 ..............................
62.4 ..............................
2008
3
31
Year
dollars
Disc
(in
percent)
Period
covered
Benefits
CO2 Monetized Value (at
$19/Metric Ton, millions$/
year).
Total Monetary Benefits .......
(millions$/year)* ...................
Qualitative.
Costs
Annualized Monetized ..........
(millions$/year) .....................
Qualitative.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Net Benefits/Costs
Annualized Monetized, including Carbon Benefits*
(million$/year).
Qualitative.
*Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
In sum, today’s proposed standards
represent the maximum improvement in
energy and water efficiency that is
technologically feasible and
economically justified. DOE found that
the benefits of today’s proposed
standards (energy and water savings,
consumer average life-cycle cost (LCC)
savings, national NPV increase, and
emissions reductions) outweigh the
costs (loss of INPV and LCC increases
for some consumers). DOE has
concluded that the standards proposed
in today’s SNOPR are economically
justified and technologically feasible,
particularly since units achieving these
standard levels are already
commercially available. DOE notes that
it considered higher efficiency levels as
trial standard levels (TSLs), and is still
considering them in this rulemaking;
however, DOE tentatively believes that
the burdens of the higher efficiency
levels (loss of INPV and LCC increases
for some consumers) outweigh the
benefits (energy savings, LCC savings for
some consumers, national NPV increase,
and emissions reductions). After
reviewing public comments on this
SNOPR, DOE may ultimately decide to
adopt one of the other TSLs or another
value in between.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
II. Introduction
A. Consumer Overview
DOE is proposing in today’s SNOPR
energy conservation standard levels for
CCWs as shown in Table I.1 above.
These proposed standards would apply
to equipment manufactured or imported
3 years after the date the final rule is
published in the Federal Register.2
DOE research suggests that
commercial consumers will see benefits
from today’s proposed standards even
though DOE expects the purchase price
of the high efficiency CCWs to increase
(by 2 to 28 percent) from the average
price of this equipment today. However,
the energy efficiency gains are expected
to result in lower energy and water
costs, saving consumers $53 to $103 per
year on their energy and water bills,
again depending on the equipment
class. When these savings are summed
over the lifetime of the equipment,
consumers are expected to save an
average of $20 to $190, depending on
the equipment class, utility costs, and
other factors. DOE estimates that the
payback period for the more efficient,
higher-priced equipment will range
2 DOE anticipates publishing a final rule for
commercial clothes washer energy conservation
standards by January 1, 2010, pursuant to the
requirements of the Energy Policy Act of 2005
(EPACT 2005; Pub. L. 109–058), which would make
any amended standards effective on January 1,
2013.
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from 0.2 to 5.6 years, depending on the
equipment class.
B. Authority
Title III of EPCA sets forth a variety
of provisions designed to improve
energy efficiency. Part A–1 of Title III
(42 U.S.C. 6311–6317) establishes an
energy conservation program for
‘‘Certain Industrial Equipment,’’ which
deals with a variety of commercial and
industrial equipment (referred to
hereafter as ‘‘covered equipment’’)
including CCWs. (42 U.S.C. 6312;
6313(e)) EPCA sets both energy and
water efficiency standards for CCWs,
and authorizes DOE to amend both. (42
U.S.C. 6313(e))
Section 136(a) and (e) of the Energy
Policy Act of 2005 (EPACT 2005; Pub.
L. 109–058) added CCWs as equipment
covered under EPCA and established
standards for such equipment that is
manufactured on or after January 1,
2007.3 (42 U.S.C. 6311(1) and 6313(e))
These amendments to EPCA also require
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))
If amended standards are justified, they
would become effective no later than
January 1, 2013. (Id.)
It is pursuant to the authority set forth
above that DOE is conducting the
present rulemaking for CCWs. The
following discusses some of the key
provisions of EPCA relevant to this
standards-setting rulemaking.
Under EPCA, the overall program
consists of the following core elements:
(1) Testing; (2) labeling; and (3) Federal
energy conservation standards. The
Federal Trade Commission (FTC) is
responsible for labeling equipment
covered by part A, and DOE implements
the remainder of the program. Under 42
U.S.C. 6293 and 6314, EPCA authorizes
DOE, subject to certain criteria and
conditions, to develop test procedures
to measure the energy efficiency, energy
use, or estimated annual operating cost
of covered equipment. The test
procedures for CCWs appear at 10 CFR
part 430, subpart B, appendix J1
(pursuant to 10 CFR 431.154).
EPCA provides criteria for prescribing
new or amended standards for covered
products and equipment.4 As indicated
3 Under the statute, a CCW must have a modified
energy factor (MEF) of at least 1.26 and a water
factor (WF) of not more than 9.5.
4 The EPCA provisions discussed in the
remainder of this subsection directly apply to
covered products, and also apply to certain covered
equipment, such as CCWs, by virtue of 42 U.S.C.
6316(a). Note that the term ‘‘product’’ is used
generally to refer to consumer appliances, while
‘‘equipment’’ is used generally to refer to
commercial units.
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above, any new or amended standard
must be designed to achieve the
maximum improvement in energy
efficiency that is technologically
feasible and economically justified. (42
U.S.C. 6295(o)(2)(A) and 6316(a)) The
statute also provides that, in deciding
whether a standard is economically
justified, DOE must, after receiving
comments on the proposed standard,
determine whether the benefits of the
standard exceed its burdens by
considering, to the greatest extent
practicable, the following seven factors:
(1) The economic impact of the
standard on manufacturers and
consumers of the products or equipment
subject to the standard;
(2) The savings in operating costs
throughout the estimated average life of
the covered products or equipment in
the type (or class) compared to any
increase in the price, initial charges, or
maintenance expenses for the covered
products that 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 or
equipment 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
considers relevant. (42 U.S.C.
6295(o)(2)(B)(i) and 6316(a))
Furthermore, EPCA contains what is
commonly known as an ‘‘antibacksliding’’ provision. (42 U.S.C.
6295(o)(1)) This provision prohibits the
Secretary from prescribing any amended
standard that either increases the
maximum allowable energy use or
decreases the minimum required energy
efficiency of a covered product or
equipment. Also, the Secretary may not
prescribe an amended or a new standard
if the Secretary finds that interested
persons have established by a
preponderance of the evidence that the
standard is likely to result in the
unavailability in the United States of
any product type (or class) with
performance characteristics, features,
sizes, capacities, and volume that are
substantially the same as those generally
available in the United States at the time
of the Secretary’s finding. (42 U.S.C.
6295(o)(4))
In addition, EPCA, as amended (42
U.S.C. 6295(o)(2)(B)(iii)), establishes a
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rebuttable presumption that a standard
is economically justified if the Secretary
finds that ‘‘the additional cost to the
consumer of purchasing a product
complying with an energy conservation
standard level will be less than three
times the value of the energy (and as
applicable, water) savings during the
first year that the consumer will receive
as a result of the standard,’’ as
calculated under the test procedure in
place for that standard. (42 U.S.C.
6295(o)(2)(B)(iii)) See Section II.G.2.
In promulgating a standard for a type
or class of covered product or
equipment that has two or more
subcategories, DOE must specify a
different standard level from that which
applies generally to such type or class
of products or equipment ‘‘for any group
of covered products which have the
same function or intended use, if * * *
covered products within such group—
(A) consume a different kind of energy
from that consumed by other covered
products within such type (or class); or
(B) have a capacity or other
performance-related feature which other
products within such type (or class) do
not have and such feature justifies a
higher or lower standard’’ than applies
or will apply to the other products. (42
U.S.C. 6295(q)(1)) In determining
whether a performance-related feature
justifies such a different standard for a
group of equipment, DOE must consider
‘‘such factors as the utility to the
consumer of such a feature’’ and other
factors DOE deems appropriate. Id. Any
rule prescribing such a standard must
include an explanation of the basis on
which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
Federal energy conservation
requirements generally supersede State
laws or regulations concerning energy
conservation testing, labeling, and
standards. (42 U.S.C. 6297(a)–(c)) DOE
can, however, grant waivers of Federal
preemption for particular State laws or
regulations, in accordance with the
procedures and other provisions of
EPCA found in 42 U.S.C. 6297(d).
Specifically, States that regulate an
energy conservation standard for a type
of covered product for which there is a
Federal energy conservation standard
may petition the Secretary for a DOE
rule that allows the State regulation to
become effective with respect to such
covered product. (42 U.S.C.
6297(d)(1)(A)) DOE must prescribe a
rule granting the petition if the
Secretary finds that the State has
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established by a preponderance of the
evidence that its regulation is needed to
meet ‘‘unusual and compelling State or
local energy * * * interests.’’ (42 U.S.C.
6297(d)(1)(B))
C. Background
1. Current Standards
EPCA, as amended by EPACT 2005,
prescribes energy conservation
standards for CCWs manufactured on or
after January 1, 2007. (42 U.S.C. 6313(e))
These standards require that CCWs have
an MEF of at least 1.26 cubic feet of
capacity (ft3) per kilowatt-hour (kWh)
and a WF of not more than 9.5 gallons
of water (gal) per ft3. (Id.; 10 CFR
431.156)
2. History of Standards Rulemaking
To initiate the current rulemaking to
consider energy conservation standards,
on March 15, 2006, DOE published on
its Web site a document titled,
Rulemaking Framework for Commercial
Clothes Washers and Residential
Dishwashers, Dehumidifiers, and
Cooking Products (Framework
Document).5 71 FR 15059 (March 27,
2006). The Framework Document
described the procedural and analytical
approaches that DOE anticipated using
to evaluate energy conservation
standards for these products, and
identified various issues to be resolved
in conducting the rulemaking. DOE held
a public meeting on April 27, 2006, to
present the Framework Document, to
describe the analyses it planned to
conduct during the rulemaking, to
receive comments from interested
parties, and to inform and facilitate
interested parties’ involvement in the
rulemaking. DOE received 11 written
comments in response to the Framework
Document after the public meeting.
On December 4, 2006, DOE posted
two spreadsheet tools for this
rulemaking on its Web site.6 The first
tool calculates LCC and payback periods
(PBPs) and included spreadsheets for:
(1) Dishwashers; (2) dehumidifiers; (3)
cooktops; (4) ovens; (5) microwave
ovens; and (6) CCWs. The second tool—
the national impact analysis (NIA)
spreadsheets—calculate the impacts on
shipments and the national energy
5 This document is available on the DOE Web site
at: https://www1.eere.energy.gov/buildings/
appliance_standards/commercial/
clothes_washers.html.
6 These spreadsheets are available on the DOE
Web site at: https://www1.eere.energy.gov/buildings/
appliance_standards.
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savings (NES) and NPV at various
candidate standard levels for: (1)
Dishwashers; (2) dehumidifiers; (3)
cooktops and ovens; (4) microwave
ovens; and (5) CCWs.
DOE published the advance notice of
proposed rulemaking (ANOPR) for this
rulemaking on November 15, 2007
(November 2007 ANOPR) (72 FR
64432), and held a public meeting on
December 13, 2007, to present and seek
comment on the November 2007
ANOPR analytical methodology and
results. The November 2007 ANOPR
included background information on the
history and conduct of this rulemaking.
72 FR 64432, 64438–39 (Nov. 15, 2007)
In the November 2007 ANOPR, DOE
described and sought further comment
on the analytical framework, models,
and tools (e.g., LCC and NIA
spreadsheets) it was using to analyze the
impacts of energy conservation
standards for these products. In
conjunction with the November 2007
ANOPR, DOE also posted on its Web
site the complete November 2007
ANOPR technical support document
(TSD). The TSD included the results of
a number of DOE’s preliminary
analyses, including: (1) The market and
technology assessment; (2) screening
analysis; (3) engineering analysis; (4)
energy and water use determination; (5)
markups analysis to determine
equipment price; (6) LCC and PBP
analyses; (7) shipments analysis; (8)
NIA; and (9) manufacturer impact
analysis (MIA). In the November 2007
ANOPR and at the public meeting, DOE
invited comment in particular on the
following issues concerning CCWs: (1)
Product classes; (2) horizontal-axis
designs; (3) technologies unable to be
analyzed and exempted product classes,
including potential limitations of
existing test procedures; (4) per-cycle
energy consumption; (5) consumer
prices; (6) repair and maintenance costs;
(7) efficiency distributions in the base
case; (8) shipments forecasts; (9) basecase and standards-case forecasted
efficiencies; and (10) TSLs. 72 FR
64432, 64512–14 (Nov. 15, 2007).
On October 17, 2008, DOE published
a NOPR (October 2008 NOPR) in the
Federal Register, in which it proposed
amended energy conservation standards
for certain products and equipment,
including CCWs. 73 FR 62034. The
energy conservation standards proposed
in the October 2008 NOPR for CCWs are
shown in Table II.1.
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TABLE II.1—COMMERCIAL CLOTHES WASHER ENERGY CONSERVATION STANDARDS PROPOSED IN THE OCTOBER 2008
NOPR
Modified energy
factor, ft3/kWh
Equipment
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Top-loading CCWs ........................................................................................................................................
Front-loading CCWs ......................................................................................................................................
In the October 2008 NOPR, DOE
described and sought further comment
on the analytical framework, models,
and tools (e.g., LCC and NIA
spreadsheets) it was using to analyze the
impacts of energy conservation
standards for this equipment. In
conjunction with the October 2008
NOPR, DOE also posted on its Web site
the complete technical support
document (TSD), which along with the
October 2008 NOPR, is available at
https://www1.eere.energy.gov/buildings/
appliance_standards/. The TSD
included the results of a number of
DOE’s analyses, including: (1) The
market and technology assessment; (2)
screening analysis; (3) engineering
analysis; (4) energy and water use
determination; (5) markups analysis to
determine equipment price; (6) LCC and
PBP analyses; (7) shipments analysis; (8)
NES and national impact analyses; and
(9) MIA. In the October 2008 NOPR and
at the public meeting held on November
13, 2008 (referred to as the ‘‘November
2008 public meeting’’), DOE invited
comment in particular on the following
issues concerning CCWs: (1) The
efficiency levels; (2) DOE’s
determination of the maximum
technologically feasible (max-tech)
efficiency levels for top-loading and
front-loading CCWs; (3) the magnitude
of possible equipment class shifting to
front-loading CCWs; (4) the analysis and
data relevant to the price elasticity of
demand for calculating the anticipated
energy and water savings at different
TSLs; (5) the analysis of consumer
knowledge of the Federal ENERGY
STAR program and its potential as a
resource for increasing knowledge of the
availability and benefits of energy
efficient appliances in the home
appliance consumer market; (6)
discount rates other than 7 percent and
3 percent real to discount future
emissions reductions; (7) data that
might enable DOE to test for market
failures or other specific problems for
CCWs; and (8) the determination of
anticipated environmental impacts of
the standards proposed in the October
2008 NOPR, particularly with respect to
the methods for valuing the expected
CO2 and NOX emissions savings. 73 FR
62034, 62133 (Oct. 17, 2008).
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The October 2008 NOPR also
included background information, in
addition to that set forth above, on the
history and conduct of this rulemaking.
73 FR 62034, 62040–62041 (Oct. 17,
2008). DOE presented the
methodologies and results for the
October 2008 NOPR analyses at the
November 2008 public meeting.
Comments presented by interested
parties during this meeting and
submitted in response to the October
2008 NOPR concerning the accuracy of
the stated max-tech CCW efficiency
level led to a thorough investigation of
CCW efficiencies and today’s SNOPR.
DOE subsequently tested the max-tech
unit at an independent test facility,
revised the max-tech level, updated the
analysis, and is publishing the SNOPR
to allow interested parties to comment
on the revised efficiency level
proposals.
DOE expects to issue a final rule in
this rulemaking no later than January 1,
2010, as required by EPCA, as amended
by EPACT 2005 (42 U.S.C. 6313(e)).
Based on this schedule, the estimated
effective date of any amended energy
conservation standards for this
equipment would be January 1, 2013, 3
years after the final rule is published in
the Federal Register.
D. Test Procedures
EPCA directs DOE to use the same test
procedures for CCWs as those
established by DOE for residential
clothes washers (RCWs). (42 U.S.C.
6314(a)(8)) 73 FR 62034, 62043–62044
(Oct. 17, 2008). While DOE believes
commercial laundry practices likely
differ from residential practices,7 DOE
concluded in the October 2008 NOPR
that the existing clothes washer test
procedure (at 10 CFR part 430, subpart
B, appendix J1) adequately accounts for
the efficiency rating of CCWs, and that
DOE’s methods for characterizing
energy and water use in the October
2008 NOPR analyses adequately
accounted for the consumer usage
patterns specific to CCWs.
In response to the October 2008
NOPR, Alliance Laundry Systems
(Alliance), GE Consumer & Industrial
7 CCWs are typically used more frequently and
filled with a larger load than RCWs.
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Water factor,
gal/ft3
1.76
2.0
8.3
5.5
(GE), and AHAM agreed with DOE’s
conclusion that the DOE clothes washer
test procedure is adequate for rating
CCWs. (Alliance, Public Meeting
Transcript, No. 40.5 at p. 22; Alliance,
No. 45 at p. 1; GE, No. 48 at p. 4;
AHAM, Public Meeting Transcript, No.
40.5 at pp. 26–27; AHAM, No. 47 at
p.4) 8 DOE did not receive any
comments objecting to the use of the
DOE clothes washer test procedure for
CCWs. Therefore DOE continues to
consider the existing DOE test
procedure adequate to measure energy
and water consumption of CCWs.
E. Technological Feasibility
1. General
DOE considers a design option to be
technologically feasible if it is in use by
the respective industry or if research has
progressed to the development of a
working prototype. Therefore, in each
standards rulemaking, DOE conducts a
screening analysis, based on
information it has gathered regarding
existing technology options and
prototype designs. In consultation with
manufacturers, design engineers, and
other interested parties, DOE develops a
list of design options for consideration
in the rulemaking. Once DOE has
determined that a particular design
option is technologically feasible, it
further evaluates each design option in
light of the following three additional
criteria: (a) Practicability to
manufacture, install, and service; (b)
adverse impacts on product utility or
availability; or (c) adverse impacts on
health or safety. 10 CFR part 430,
subpart C, appendix A, section 4(a)(3)
and (4). All design options that pass
these screening criteria are candidates
for further assessment in the
engineering and subsequent analyses in
the NOPR (or SNOPR) stage.
DOE published a list of evaluated
CCW technologies in the November
2007 ANOPR. 72 FR 64432, 64458 (Nov.
15, 2007). For the reasons described in
8 A notation in the form ‘‘Alliance, No. 45 at p.
1’’ identifies a written comment (1) made by
Alliance Laundry Systems (Alliance), (2) recorded
in document number 45 that is filed in the docket
of this rulemaking (Docket No. EE–2006–STD–
0127), maintained in the Resource Room of the
Building Technologies Program, and (3) which
appears on page 1 of document number 45.
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srobinson on DSKHWCL6B1PROD with PROPOSALS2
the November 2007 ANOPR and in
chapter 4 of the SNOPR TSD, DOE is not
considering the following design
options, as they do not meet one or
more of the screening criteria: bubble
action, electrolytic disassociation of
water, ozonated laundering, reduced
thermal mass, suds saving, and
ultrasonic washing. In this
supplemental notice, DOE has not
screened out any additional technology
options that were retained in the
October 2008 NOPR analyses. No
comments were received objecting to
the technology options which were
screened out in the October 2008 NOPR.
73 FR 62034, 62052 (Oct. 17, 2008).
Therefore, DOE believes all of the
efficiency levels evaluated in this
notice, which are based upon the
retained design options, are
technologically feasible. For more detail
on DOE’s method for developing CCW
technology options and the process for
screening these options, refer to the
chapters 3 and 4 of the SNOPR TSD.
2. Maximum Technologically Feasible
Levels
When DOE considers an amended or
new standard for a type (or class) of
equipment such as front-loading or toploading CCWs, it must ‘‘determine the
maximum improvement in energy
efficiency or maximum reduction in
energy use that is technologically
feasible’’ for such equipment. (42 U.S.C.
6295(p)(2) and 6316(a)) For the October
2008 NOPR, DOE determined the maxtech efficiency levels for front-loading
and top-loading CCWs in the
engineering analysis, based on
published MEF and WF values of
commercially available equipment. (See
chapter 5 in the NOPR TSD.) In
proposing these max-tech levels, DOE
noted that some CCWs exceed the maxtech MEF or WF levels, but not both.
For example, two front-loading models
exceed the max-tech MEF—they are
rated at 2.45 and 2.68 MEF,
respectively, in the Consortium for
Energy Efficiency (CEE) qualifying
product list for its Commercial, FamilySized Washer Initiative—but don’t
achieve a max-tech WF level—they are
rated at 5.69 and 5.47 WF, respectively.
In the California Energy Commission
(CEC) equipment database for CCWs,
DOE found one top-loading model that
exceeds the max-tech WF—it is rated at
7.3 WF—but not the max-tech MEF
level—it is rated at 1.32 WF. This model
has been discontinued, as discussed in
the November 2007 ANOPR and the
October 2008 NOPR TSD. The max-tech
efficiency levels proposed in the
October 2008 NOPR were selected to
represent the best available
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17:24 Nov 06, 2009
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combinations of high MEF and low WF
for each equipment class.
For the October 2008 NOPR, DOE
proposed the max-tech levels shown in
Table II.2. 73 FR 62034, 62036 (Oct. 17,
2008).
TABLE II.3—COMMERCIAL CLOTHES
WASHER MAX-TECH EFFICIENCY
LEVELS PROPOSED FOR THIS
SNOPR
Max-tech level
Equipment class
TABLE II.2—COMMERCIAL CLOTHES
WASHER MAX-TECH EFFICIENCY
LEVELS PROPOSED IN THE OCTOBER
2008 NOPR
Max-tech level
Equipment class
MEF,
ft3/kW
WF,
gal/ft3
Top-Loading CCWs ..
Front-Loading CCWs
MEF,
ft3/kW
1.60
2.35
WF,
gal/ft3
8.5
4.4
F. Energy Savings
1. Determination of Savings
DOE used its NIA spreadsheet tool to
estimate energy savings from amended
Top-Loading CCWs ..
1.76
8.3 standards for CCWs. (Section III.E of
Front-Loading CCWs
2.35
4.4 today’s supplemental notice and chapter
11 of the SNOPR TSD describe the NIA
spreadsheet model.) DOE forecasted
According to the CEE database, three
energy savings over the period of
front-loading CCWs rated at the maxanalysis (beginning in 2013, the year
tech efficiency level are on the market
that amended standards would go into
in the United States. One model listed
in the database which exceeds the max- effect, and ending in 2043) for each TSL,
relative to the base case, which
tech level is rated at (2.84 MEF/3.68
WF), but DOE determined this CCW has represents the forecast of energy
consumption in the absence of amended
yet to be sold in the United States. The
energy conservation standards. DOE
front-loading max-tech level was based
quantified the energy savings
on a single model listed in the CEC
attributable to amended energy
database.
conservation standards as the difference
The max-tech top-loading CCW
in energy consumption between the
efficiency rating in the October 2008
standards case and the base case. The
NOPR was questioned by Alliance at the base case represents the forecast of
November 2008 NOPR meeting.
energy consumption in the absence of
(Alliance, Public Meeting Transcript,
amended energy conservation
No. 40.5 at pp. 90–92) In response, DOE standards. The base case considers
contracted an independent testing
market demand for more efficient
equipment.
laboratory to verify the performance
The NIA spreadsheet tool calculates
ratings for the max-tech top-loading
the electricity savings in ‘‘site energy’’
CCW. The laboratory results (based on
expressed in kWh. Site energy is the
a 3-unit sample) suggest that the unit
energy directly consumed on location
achieves 1.63 MEF/8.4 WF. Based on
by an individual equipment. DOE
this information, for the SNOPR
analysis, DOE revised the max-tech top- reports national energy savings on an
annual basis in terms of the aggregated
loading CCW level downward to 1.60
source energy savings, which is the
MEF/8.5 WF, a level proposed in the
October 2008 NOPR as a ‘‘gap-fill’’ level savings of energy that is used to
generate and transmit the energy
and one which DOE concludes is
consumed at the site. To convert site
attainable by the max-tech CCW model.
energy to source energy, DOE derived
For more details on this selection of
conversion factors, which change with
max-tech levels for the SNOPR, see
time, from the March 2009 release of the
section III.C.1 of today’s supplemental
AEO 2009. (See TSD chapter 11
notice.
accompanying today’s supplemental
In sum, Table II.3 lists the max-tech
notice for further details.)
levels that DOE is proposing for today’s
2. Significance of Savings
SNOPR. Today’s proposed front-loading
EPCA, as amended, prohibits DOE
max-tech level is the same as in the
from adopting a standard for a product
October 2008 NOPR, whereas today’s
proposed top-loading max-tech level has if that standard would not result in
‘‘significant’’ energy savings. (42 U.S.C.
been revised based on the independent
6295(o)(3)(B)) While the Act does not
test results.
define the term ‘‘significant,’’ the U.S.
Court of Appeals for the District of
Columbia, in Natural Resources Defense
Council v. Herrington, 768 F.2d 1355,
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1373 (D.C. Cir. 1985), indicated that
Congress intended ‘‘significant’’ energy
savings in this context to be savings that
were not ‘‘genuinely trivial.’’ The energy
savings for energy conservation
standards at each of the TSLs
considered in this rulemaking are
nontrivial, and, therefore, DOE
considers them ‘‘significant’’ within the
meaning of 42 U.S.C. 6295(o)(3)(B).
G. Economic Justification
1. Specific Criteria
As noted earlier, EPCA provides
seven factors to be evaluated in
determining whether an energy
conservation standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)). The
following sections discuss how DOE has
addressed each of those seven factors in
this rulemaking.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
a. Economic Impact on Manufacturers
and Consumers
DOE uses an annual-cash-flow
approach in determining the
quantitative impacts of a new or
amended standard on manufacturers.
This includes both a short-term
assessment, based on the cost and
capital requirements during the period
between the announcement of a
regulation and the time when the
regulation becomes effective, and a
long-term assessment. The impacts
analyzed include INPV (which values
the industry on the basis of expected
future cash flows), cash flows by year,
changes in revenue and income, and
other measures of impact, as
appropriate. Second, DOE analyzes and
reports the impacts on different types of
manufacturers, with particular attention
to impacts on small manufacturers.
Third, DOE considers the impact of
standards on domestic manufacturer
employment, manufacturing capacity,
plant closures, and loss of capital
investment. DOE also takes into account
cumulative impacts of different
regulations on manufacturers. For more
details on this analysis, see section III.G.
For commercial consumers, measures
of economic impact include the changes
in LCC and payback period for the
equipment at each TSL. Under EPCA,
the LCC is one of the seven factors to be
considered in determining economic
justification. (42 U.S.C.
6295(o)(2)(B)(i)(II)) It is discussed in
detail in the section below.
b. Life-Cycle Costs
The LCC is the sum of the purchase
price of equipment (including the
installation) and the operating expense
(including energy and maintenance
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expenditures), discounted over the
lifetime of the equipment.
In this rulemaking, DOE calculated
both LCC and LCC savings for various
CCW efficiency levels. DOE established
the variability and uncertainty in energy
and water use by defining the
uncertainty and variability in the use
(cycles per day) of the equipment. The
variability in energy and water pricing
were characterized by regional
differences in energy and water prices.
To account for uncertainty and
variability in other inputs, such as
equipment lifetime and discount rate,
DOE used a distribution of values with
probabilities attached to each value. For
each consumer with a CCW, DOE
sampled the values of these inputs from
the probability distributions. As a result,
the analysis produced a range of LCCs.
This approach permits DOE to identify
the percentage of consumers achieving
LCC savings or attaining certain payback
values due to an increased energy
conservation standard, in addition to
the average LCC savings or average
payback for that standard. DOE presents
the LCC savings as a distribution, with
a mean value and a range. In the
analysis prepared for the October 2008
NOPR, DOE assumed that the consumer
will purchase the equipment in 2012.
For today’s SNOPR, that assumption has
been changed to 2013 due to the
expected effective date of any amended
standards. See section III.D for more
details on the analysis.
c. Energy Savings
While significant conservation of
energy is a separate statutory
requirement for imposing an energy
conservation standard, EPCA requires
DOE, in determining the economic
justification of a proposed standard, to
consider the total projected energy
savings that are expected to result
directly from the standard. (42 U.S.C.
6295(o)(2)(B)(i)(III)) As in the October
2008 NOPR, DOE used the NIA
spreadsheet results in its consideration
of total projected savings expected to be
directly attributable to the considered
standard levels. See section III.E for
more details on this analysis.
d. Lessening of Utility or Performance of
Equipment
In establishing classes of equipment,
DOE considered whether the evaluated
design options would likely lessen the
utility or performance of CCWs. (42
U.S.C. 6295(o)(2)(B)(i)(IV)) In the
October 2008 NOPR, DOE determined
that none of the considered TSLs would
reduce the utility or performance of the
equipment under consideration in the
rulemaking. Specifically, the standards
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57745
proposed in the October 2008 NOPR
would maintain the consumer utility of
washing clothes in a washer with either
top or front access. 73 FR 62034, 62047
(Oct. 17, 2008). This conclusion remains
the same for the proposed standards in
today’s SNOPR. As in the October 2008
NOPR, the efficiency levels considered
in today’s SNOPR for both equipment
classes require no changes in equipment
design or unusual installation
requirements that could reduce the
utility or performance of CCWs.
e. Impact of Any Lessening of
Competition
EPCA directs DOE to consider any
lessening of competition that is likely to
result from standards. It directs the
Attorney General to determine the
impact, if any, of any lessening of
competition likely to result from a
proposed standard and to transmit such
determination to the Secretary, not later
than 60 days after the publication of a
proposed rule, together with an analysis
of the nature and extent of such impact.
(42 U.S.C. 6295(o)(2)(B)(i)(V) and
(B)(ii)). DOE received the Attorney
General’s determination dated
December 16, 2008. It is discussed in
section V.B.5 below, and is reprinted at
the end of this SNOPR. Impacts on
manufacturers are also discussed in
section III.G below.
f. Need of the Nation To Conserve
Energy
The non-monetary benefits of today’s
proposed standards are likely to be
reflected in improvements to the
security and reliability of the Nation’s
energy system–namely, reductions in
the overall demand for energy will
result in reduced costs for maintaining
reliability of the Nation’s electricity
system. DOE conducts a utility impact
analysis to estimate how standards may
impact the Nation’s needed power
generation capacity. This analysis
captures the effects of efficiency
improvements on electricity
consumption by the equipment which is
the subject of this rulemaking.
Today’s proposed standards also are
likely to result in improvements to the
environment. In quantifying these
improvements, DOE has defined a range
of primary energy conversion factors
and associated emissions reductions
based on the estimated level of power
generation displaced by energy
conservation standards. DOE reports the
environmental effects from each TSL in
an environmental assessment in chapter
16 of the SNOPR TSD. (42. U.S.C.
6295(o)(2)(B)(i)(VI) and 6316(a)) See
section III.J for more details on this
analysis.
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g. Other Factors
The Secretary, in determining
whether a standard is economically
justified, may consider other factors that
the Secretary deems to be relevant. (42
U.S.C. 6295(o)(2)(B)(i)(VII)) In
considering amended standards for
today’s SNOPR, the Secretary found no
relevant factors other than those
identified elsewhere in today’s SNOPR.
2. Rebuttable Presumption
As set forth under 42 U.S.C.
6295(o)(2)(B)(iii), there is a rebuttable
presumption that an energy
conservation standard is economically
justified if the increased installed cost
for equipment that meets the standard is
less than three times the value of the
first-year energy savings resulting from
the standard (and water savings in the
case of a water efficiency standard).
DOE’s LCC and PBP analyses generate
values that calculate the payback period
for consumers of equipment meeting
potential energy conservation standards,
which includes, but is not limited to,
the 3-year payback period contemplated
under the rebuttable presumption test
discussed above. (See chapter 8 of the
TSD that accompanies this notice.)
However, DOE routinely conducts a full
economic analysis that considers the
full range of impacts, including those to
the consumer, manufacturer, Nation,
and environment, as required under 42
U.S.C. 6295(o)(2)(B)(i). The results of
this analysis serve as the basis for DOE
to definitively evaluate the economic
justification for a potential standard
level (thereby supporting or rebutting
the results of any preliminary
determination of economic
justification). Section III.D.13 of today’s
supplemental notice addresses the
rebuttable-presumption payback
calculation.
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III. Methodology and Revisions to the
Analyses Employed in the October 2008
Proposed Rule
DOE used economic models to
estimate the impacts of the TSLs used
in weighing the benefits and burdens of
amended standards for the equipment
that is the subject of this rulemaking.
Specifically, DOE developed the
relationship between cost and efficiency
for this equipment, and calculated the
simple payback period for the purposes
of addressing the rebuttable
presumption that a standard with a
payback period of less than 3 years is
economically justified. The LCC
spreadsheet calculates the consumer
benefits and payback periods for
amended energy conservation
standards. The NIA spreadsheet
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provides shipments forecasts and then
calculates NES and NPV impacts of
potential amended energy conservation
standards. DOE also assessed
manufacturer impacts, largely through
use of the Government Regulatory
Impact Model (GRIM).
Additionally, DOE estimated the
impacts of energy conservation
standards due to equipment on utilities
and the environment. DOE used a
version of EIA’s National Energy
Modeling System (NEMS) for the utility
and environmental analyses. The NEMS
model simulates the energy economy of
the United States and has been
developed over several years by the EIA
primarily for the purpose of preparing
the AEO. The NEMS produces forecasts
for the United States that are available
in the public domain. The version of
NEMS used for appliance standards
analysis is called NEMS–BT and is
primarily based on the AEO 2009 April
Release with minor modifications.9 The
NEMS–BT offers a sophisticated picture
of the effect of standards, since it
accounts for the interactions between
the various energy supply and demand
sectors and the economy as a whole.
A. Equipment Classes
In general, when evaluating and
establishing energy conservation
standards, DOE divides covered
products or equipment into classes by
the type of energy used, capacity, or
other performance-related features that
affect consumer utility and efficiency.
(42 U.S.C. 6295(q); 6316(a)) Different
energy conservation standards may
apply to different equipment classes. Id.
In the October 2008 NOPR, DOE
proposed separate equipment classes
and accompanying standards for toploading and front-loading CCWs with
separate standards for each class. 73 FR
62034, 62036 (Oct. 17, 2008). Thus the
October 2008 NOPR represented a
change from the November 2007
ANOPR and from EPACT 2005 10, which
placed all CCWs into a single equipment
class with a single energy efficiency and
water efficiency standard. The October
2008 NOPR stated that DOE believes it
has the authority to establish additional
9 The EIA approves the use of the name NEMS to
describe only an AEO version of the model without
any modification to code or data. Because the
present analysis entails some minor code
modifications and runs the model under various
policy scenarios that deviate from AEO
assumptions, the name NEMS–BT refers to the
model as used here. (‘‘BT’’ stands for DOE’s
Building Technologies Program.) For more
information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA–0581 (98)
(Feb. 1998)(available at: https://tonto.eia.doe.gov/
FTPROOT/forecasting/058198.pdf).
10 42 U.S.C. 6313(e); codified at 10 CFR 431.156.
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equipment classes within an equipment
category, if warranted. DOE determined
in the October 2008 NOPR that two
equipment classes are warranted
because an amended standard would set
MEF for all CCWs at a level significantly
higher than what the max-tech for toploading machines can attain today, and
effectively eliminate top-loading CCWs
from the market. Id.
DOE explained the basis of its
authority to establish separate classes,
and noted that it had previously
established and used classes for
residential clothes washers (RCW) in
previous rulemakings and had cited the
likely elimination of one of these classes
as one of several reasons for denying the
California Energy Commission’s (CEC)
petition for waiver from Federal
preemption of its RCW regulation. DOE
then concluded that, ‘‘Given the
similarities in technologies and design
and operating characteristics between
RCWs and CCWs, * * * the axis of
access must be accorded similar
treatment in the context of the current
CCW rulemaking.’’ DOE also asserted
that, ‘‘If DOE were to propose an
amended standard for CCWs under the
statutory criteria set forth in EPCA
based upon a single product class, the
result would be a standard that would
effectively eliminate top-loading CCW’s
from the market * * *;’’
Alliance, GE, Whirlpool Corporation
(Whirlpool), and AHAM supported the
two equipment classes as proposed in
the October 2008 NOPR. (Alliance,
Public Meeting Transcript, No. 40.5 at p.
22; Alliance, No. 45 at p. 1; GE, Public
Meeting Transcript, No. 40.5 at p. 31;
GE, No. 48 at p. 4; Whirlpool, Public
Meeting Transcript, No. 40.5 at p. 28;
Whirlpool, No. 50 at pp. 2–3, AHAM,
Public Meeting Transcript, No. 40.5 at p.
26; AHAM, No. 47 at p. 4)
ASAP, American Council for an
Energy-Efficient Economy (ACEEE),
American Rivers, Natural Resources
Defense Council, Northeast Energy
Efficiency Partnerships, Northwest
Power and Conservation Council,
Southern California Edison, Southern
California Gas Company, and San Diego
Gas and Electric Company, jointly, (the
Joint Comment) and ASAP,
individually, stated that they dispute
DOE’s conclusion that two equipment
classes are required under the law to
preserve the availability of top-loading
machines. (Joint Comment, No. 44 at pp.
5–6; ASAP, Public Meeting Transcript,
No. 40.5 at p. 33) EarthJustice (EJ) noted
that a horizontal-axis CCW, like some
horizontal-axis residential models,
could be designed with top-loading
access through a hatch. (EJ, Public
Meeting Transcript, No. 40.5 at p. 26)
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The Joint Comment stated that the
ability to load a CCW from the front is
substantially the same as the ability to
load from the top. (Joint Comment, No.
44 at appendix A, pp. 1–4) Thus, the
unavailability of top-loading CCWs
would have no effect on equipment
utility.
In response to the EarthJustice, DOE
examined the potential use of toploading, horizontal-axis machines in the
CCW market. While a top-loading
horizontal-axis design can provide
access similar to traditional vertical-axis
clothes washers, the consumer utility of
a top-loading, horizontal-axis clothes
washer may not be sufficiently
comparable to that of a top-loading,
vertical-axis clothes washer, since users
of top-loading horizontal-axis units
must perform multiple actions to undo
and re-secure the hatch every time they
access the inside of the wash basket.
DOE research suggests that the added
complication in loading and unloading
such a clothes washer appears to be
more relevant in a shared laundry and
laundromat setting and less relevant in
an institutional setting due to consumer
education issues. In any case, DOE
knows of no top-loading, horizontal-axis
machines in the U.S. market for CCWs.
As discussed in the October 2008
NOPR, DOE concluded that the method
of ‘‘loading’’ clothes (i.e., the axis of
access) is a ‘‘feature’’ of RCWs within
the meaning of 42 U.S.C. 6295(o)(4).
Due to similarities in technologies and
in design and operating characteristics
between RCWs and CCWs, the axis of
access may also be considered a feature
in the context of this CCW rulemaking.
Therefore, DOE tentatively concludes
that top-loading, vertical-axis CCWs
provide unique utility, and that, as
determined in the October 2008 NOPR,
axis of access is a feature pursuant to
EPCA. Thus, DOE is retaining the two
proposed equipment classes from the
October 2008 NOPR in today’s SNOPR.
DOE seeks comment as to whether the
method of ‘‘loading’’ clothes washers, or
any other characteristic commonly
associated with traditional ‘‘toploading’’ or ‘‘front-loading’’ clothes
washers are ‘‘features’’ within the
meaning of 42 U.S.C. 6295(o)(4) in
EPCA and whether the availability of
such feature(s) would likely be affected
by eliminating the separate classes for
these equipment types previously
established by DOE. This is identified as
Issue 1 in section VII.E of today’s
supplemental notice (Issues on Which
DOE Seeks Comment.)
As noted above, in the October 2008
NOPR, DOE took the position that EPCA
does not permit adoption of a standard
that would eliminate top-loading CCWs
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because the method of loading is a
‘‘feature.’’ 73 FR 62034, 62049–50.
Furthermore, in DOE’s denial of the
CEC’s petition for waiver from Federal
preemption (71 FR 78157 (December 28,
2006)) and the ensuing litigation,
California Energy Commission v. DOE,
Case. No. 07–71576 (9th Cir.), DOE took
the position that it could not waive
Federal preemption, in part because the
proposed California regulation of
residential clothes washer water usage
would result in the unavailability of
top-loading residential clothes washers
in the California market, based on DOE’s
evaluation of the clothes washer market
in 2006.
DOE is willing to reconsider its
previous conclusions as part of this
rulemaking. More specifically, DOE is
soliciting public comments on whether
one or more of the characteristics
commonly associated with different
types of clothes washers, such as
method of loading, presence or absence
of agitators, ability to interrupt cycles,
and possibly others, provide consumer
utility that should, under existing law,
be recognized and protected by DOE
through the maintenance or
establishment of separate equipment
classes. DOE also seeks comments as to
whether, as a consequence of market
and technology developments, it should
maintain the same equipment classes for
commercial clothes washers as it does
for residential clothes washers.
DOE notes that, if warranted by the
public comments received and its
further consideration of this issue, it
were to establish a single equipment
class in setting standards for CCWs,
DOE intends to give considerable weight
to the potential adverse effects of a
single equipment class efficiency
standard on competition in the CCW
market. That is, DOE does not intend to
set a standard that would produce
significant adverse impacts on
competition in this market.
B. Technology Assessment
For the technology assessment in the
October 2008 NOPR analyses, DOE
considered all RCW and CCW
technology options that it is aware are
or have been incorporated into working
prototypes or commercially available
clothes washers at the time of the
analysis. ASAP stated that DOE should
give more serious consideration to
innovations currently in production on
the RCW market. (ASAP, Public Meeting
Transcript, No. 40.5 at pp. 33–34) DOE
did not receive information on specific
technologies for RCWs that it did not
consider. Further, DOE notes that it
considered as design options many
technologies that are found in both
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RCWs and CCWs. Of the technology
options screened out, only suds
saving 11 has appeared previously as a
feature in commercially available RCWs.
DOE research suggests that clothes
washers incorporating a suds-saving
feature have not been available on the
market since 2005, and further DOE
research suggests that suds saving
would be impractical to install in a
commercial setting for reasons such as
space limitations, questionable energy
savings, incompatibility with CCW
usage patterns, and lack of consumer
acceptance. Therefore, DOE concludes
that suds-savings is an RCW feature that
was appropriately screened out for the
CCW SNOPR analysis.
In addition, DOE has gathered and
analyzed data published by CEC, CEE,
and the ENERGY STAR Program to
provide an overview of the energy
efficiency levels achieved in today’s
CCWs and RCWs. Certain information
about technologies associated with highefficiency clothes washers can be
determined by evaluating the models in
these databases. DOE found that all
front-loading CCWs on the market today
are more efficient than top-loading CCW
models. No top-loading CCW listed in
these databases has an MEF greater than
1.76, whereas the majority of frontloading CCWs are listed as having MEFs
greater than 2.0. Similarly, no toploading CCW is rated as having a WF
below 8.0, whereas the majority of frontloading CCWs have rated WFs below
7.0. In contrast, DOE research suggests
that the most efficient vertical-axis
RCWs achieve efficiency levels
comparable to some horizontal-axis
CCWs on the market today.12 High
efficiency, vertical-axis platforms that
do not employ an agitator have been
sold into the RCW market for several
11 A suds-saving feature allows water from one
wash cycle to be reused in the next wash cycle.
After agitation, sudsy wash water is pumped into
a separate storage tub, remaining there until the
next wash cycle. While the water is stored, soil
settles to the bottom of the tub. During the next
wash cycle, all but an inch of the water is pumped
back into the washer tub for use again. Clothes
washers with the suds-saving feature must be larger
than typical clothes washers in order to
accommodate the additional storage tub.
12 Typically, vertical-axis clothes washers are
accessed from the top (also known as ‘‘toploaders’’), while horizontal-axis clothes washers are
accessed from the front (also known as ‘‘frontloaders’’). However, a limited number of residential
horizontal-axis clothes washers which are
accessible from the top (using a hatch in the wash
basket) are currently available, although DOE is
unaware of any such CCWs on the market. For the
purposes of this analysis, the terms ‘‘vertical-axis’’
and ‘‘top-loading’’ will be used interchangeably, as
will the terms ‘‘horizontal-axis’’ and ‘‘frontloading.’’ Additionally, clothes washers that have a
wash basket whose axis of rotation is tilted from
horizontal are considered to be horizontal-axis
machines.
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years, but have yet to be released in a
CCW form. DOE expects manufacturers
will continue to introduce new features
first in the higher-volume residential
markets before transitioning them to
commercial applications. At this time,
however, DOE is not aware of such
technologies being incorporated in
either commercially available CCWs or
working CCW prototypes, and therefore
did not consider them in the SNOPR
analyses.
Whirlpool stated that there are
considerable differences between RCWs
and CCWs, including, but not limited to
heavier duty components and a smaller
basket utilized in CCW’s. According to
Whirlpool, the smaller basket is
required by CCW customers, and it is
inherently more difficult to achieve high
efficiency with smaller baskets.
(Whirlpool, No. 50 at p. 3)
For these reasons, DOE believes it has
adequately considered RCW
technologies that may be applicable to
CCWs in its technology assessment. See
chapter 3 of the SNOPR TSD for more
information on the technologies
considered.
C. Engineering Analysis
The purpose of the engineering
analysis is to characterize the
relationship between the incremental
manufacturing cost and efficiency
improvements of CCWs. DOE used this
cost-efficiency relationship as input to
the PBP, LCC, and NES analyses.
To estimate incremental
manufacturing costs, DOE has identified
three basic methodologies: (1) The
design-option approach, which provides
the incremental costs of adding to a
baseline model design options that will
improve its efficiency; (2) the efficiencylevel approach, which provides the
incremental costs of moving to higher
energy efficiency levels, without regard
to the particular design option(s) used to
achieve such increases; and (3) the costassessment (or reverse-engineering)
approach, which provides ‘‘bottom-up’’
manufacturing cost assessments for
achieving various levels of increased
efficiency, based on detailed data on
costs for parts and material, labor,
shipping/packaging, and investment for
models that operate at particular
efficiency levels. DOE conducted the
engineering analysis for this rulemaking
using the efficiency-level approach. For
this analysis, DOE relied upon
efficiency data published in multiple
databases, including those published by
CEC, CEE and ENERGY STAR, which
were supplemented with limited
laboratory testing, data gained through
reverse-engineering analysis, and
primary and secondary research.
1. Efficiency Levels
The efficiency levels for CCWs are
defined by two factors normalized by
wash basket volume—MEF and WF.
These two variables are only directly
related to each other via the average hot
water usage by a clothes washer, as
measured by the DOE test procedure.
Other measured parameters affect only
one variable or the other. For example,
cold water consumption only affects the
WF, while remaining moisture content
(RMC) only affects the MEF. (See
chapter 5 of the SNOPR TSD for further
explanation.)
In the October 2008 NOPR, DOE
proposed the following efficiency levels
for CCWs.
TABLE III.1—COMMERCIAL CLOTHES WASHER EFFICIENCY LEVELS PROPOSED IN THE OCTOBER 2008 NOPR
Modified energy factor (ft3/kWh)/water
factor (gal/ft3)
Efficiency level
Top-loading
Baseline .......................................................................................................................................................
1 ...................................................................................................................................................................
2 ...................................................................................................................................................................
3 ...................................................................................................................................................................
4 ...................................................................................................................................................................
srobinson on DSKHWCL6B1PROD with PROPOSALS2
a. Revised Efficiency Levels
In response to the October 2008
NOPR, Alliance disputed DOE’s finding
that the proposed max-tech level for
top-loading CCWs is technically
feasible, based on Alliance’s internal
testing of one max-tech unit. Alliance
stated that there were numerous
inconsistencies related to the stated
efficiencies of the max-tech top-loading
CCW, the GE WNRD2050G, in databases
such as those published by the CEC and
ENERGY STAR. (Alliance, Public
Meeting Transcript, No. 40.5 at pp. 22–
24 and 90–92) According to Alliance, its
own tests for the same model did not
achieve the published efficiency levels
of 1.76 MEF/8.3 WF. Alliance suggested
that DOE should test and confirm the
max-tech model’s efficiency before
continuing to use it as the basis for the
max-tech efficiency levels proposed in
the October 2008 NOPR. (Alliance, No.
45 at Attachment 2, pp. 4–5)
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GE responded in its written comments
that there was indeed a transposition
error, which led to the inconsistencies
noted by Alliance. GE stated that the
equipment label indicated an energy
rating of 472 kWh per year, equaling
1.204 kWh per cycle, meaning that
consumers were getting a more efficient
product than the energy rating
contained on the label. GE stated that it
takes any labeling error very seriously,
and corrected the issue immediately
upon its discovery. (GE, No. 48 at pp.
4–5). DOE review of present and past
ENERGY STAR databases for CCWs
failed to find an entry for the
WNRD2050G. Based on market research
and the CEC addition of the unit in
December 2007, it appears that the
WNRD2050G was released into
production in December 2007. Thus,
because the model’s stated WF (8.3) was
above the cutoff for ENERGY STAR
eligibility (8.0) at that time, DOE
concludes that the WNRD2050G was
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never listed in the ENERGY STAR
database for CCWs.
In response to comments about the
validity of published CCW data, the
DOE rulemaking team purchased three
nominally identical max-tech toploading CCWs, and hired an
independent test facility to determine
their average efficiency rating per the
DOE test procedure.13 The test results
suggest that the max-tech CCW achieves
a 1.63 MEF/8.4 WF efficiency rating
instead of 1.76 MEF/8.3 WF as stated.
Even at this lower max-tech level, the
unit identified as the max-tech toploading CCW model for the October
2008 NOPR continues to be the max13 A minimum of three washers are required to be
tested per the DOE test procedure (10 CFR 430
subpart B, appendix J1) to give test results some
statistical certainty. If variability in the test results
for the three washers is too high, an additional three
units must be tested. For the DOE testing, no
additional test units were required because the
initial results had sufficiently low variability to be
statistically valid.
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tech top-loading CCW for the SNOPR
analyses. However, as the tested values
do not agree with the MEF and WF
ratings in the CEC database on which
the October 2008 NOPR analyses were
based, and because this model was the
only top-loading CCW stated to meet the
(1.76 MEF/8.3 WF) max-tech level
defined in the October 2008 NOPR, DOE
elected to eliminate that efficiency level
from the top-loading CCW analysis in
the SNOPR.
Accordingly, DOE is proposing (1.60
MEF/8.5 WF) for today’s max-tech level.
Originally included based upon the
CEE’s Tier 2 qualifying criteria for
CCWs effective between January 1,
2004, and January 1, 2007, 1.6 MEF/8.5
WF is an efficiency level for which DOE
had previously solicited feedback from
interested parties and which is also very
close to the tested results for the maxtech CCW. The max-tech model uses
many standard top-loader components
and materials; hence, DOE research
suggests that no CCW manufacturer
would suffer material harm since they
all should be able to produce toploading machines that meet the maxtech efficiency level without technical
difficulty.
ASAP stated that DOE should review
current and upcoming ENERGY STAR
efficiency levels for RCWs and
subsequently revise efficiency levels
under consideration for CCWs. ASAP
noted that there are vertical-axis RCWs
with agitators on the market that exceed
the max-tech CCW level (i.e., that
impeller-type clothes washers are not
necessary to exceed the current maxtech CCW efficiency level as implied by
some manufacturers). (ASAP, Public
Meeting Transcript, No. 40.5 at pp. 202–
203) DOE is aware of the clothes
washers referenced by ASAP and notes
that they are only sold into the RCW
market. Thus, it is not possible to assess
whether these washers would be able to
stand up to the rigors of operating in the
CCW market. DOE research suggests that
these washers are heavily patented,
possibly preventing competitors such as
the LVM from developing similar
appliances. DOE research also suggests
that some of the means by which these
washers achieve their high efficiency
levels (such as adaptive fill, a high
number of wash programs, etc.) would
yield few savings in a CCW setting,
where washers are typically only
washed with full loads and a limited
number of wash programs are desired to
limit consumer education needs. For
these reasons, DOE did not consider
these clothes washers in determining
revised efficiency levels for the CCW
analysis.
Thus, for today’s SNOPR, DOE has
proposed revised top-loading CCW
efficiency levels shown in Table III.2, in
which the max-tech top-loading level is
now efficiency level 2 (1.60 MEF/8.5
WF). No changes have been made to the
efficiency levels proposed in the
October 2008 NOPR for front-loading
CCWs in today’s supplemental notice.
TABLE III.2—COMMERCIAL CLOTHES WASHER EFFICIENCY LEVELS PROPOSED FOR THIS SNOPR
Modified energy factor (ft3/kWh)/
water factor (gal/ft3)
Efficiency level
Top-loading
Baseline .......................................................................................................................................................
1 ...................................................................................................................................................................
2 ...................................................................................................................................................................
3 ...................................................................................................................................................................
4 ...................................................................................................................................................................
srobinson on DSKHWCL6B1PROD with PROPOSALS2
DOE seeks comment on the revised
efficiency levels for top-loading CCWs.
This is identified as Issue 2 in section
VII.E of today’s supplemental notice
(Issues on Which DOE Seeks Comment).
b. Technological Feasibility of the
Revised Top-Loading Max-Tech Level
DOE also received numerous
comments regarding the viability in
commercial settings of the max-tech toploading CCW evaluated in the October
2008 NOPR. Alliance and GE
commented that the commercial
acceptance of the technology behind the
max-tech vertical-axis CCW is as yet
unknown because the GE model was
introduced only recently and because
the max-tech unit is currently only sold
into the on-premise laundry market
segment, where the frequency of user
abuse such as overloading is lower than
in other commercial segments
(laundromats, multi-family housing,
etc.). (Alliance, Public Meeting
Transcript, No. 40.5 at p. 23; GE, Public
Meeting Transcript, No. 40.5 at pp. 173–
174; GE, No. 48 at p.4;) Whirlpool
suggested that the practice of
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overloading impairs top-loading CCWs
more than front-loading machines, and,
thus, inherently limits the efficiency
levels that top-loading CCWs can
achieve. Whirlpool also stated that
CCWs are more prone to user abuse,
such as extreme overloading, than
RCWs. Whirlpool noted that certain
residential platforms are not able to
achieve proper clothes roll-over and,
hence, cleaning when overfilled.
(Whirlpool, No. 50 at pp. 2–3) The Joint
Comment stated that on-premise
laundry is served primarily by larger
capacity equipment than is covered by
this rulemaking. (Joint Comment, No. 44
at pp. 4–5) Conversely, Alliance stated
that the max-tech vertical-axis CCW is
based on a lightweight RCW platform
that is poorly suited to commercial
usage. (Alliance, No. 45 at Attachment
2, p. 7)
DOE recognizes that the max-tech toploading CCW is currently marketed only
to on-premise laundry facilities and is
not yet offered with a coin-box or smart
card reader option for laundromat or
multi-housing laundry use. DOE
research indicates that the max-tech
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1.72/8.0
1.80/7.5
2.00/5.5
2.20/5.1
2.35/4.4
CCW is based on a standard vertical-axis
RCW platform (i.e., one with an agitator)
with selective upgrades, including spray
rinse, four water-level settings,
additional low-temperature wash
programs, a low-standby power supply,
and an electronic control board/user
interface/drive system that is
customized for its intended use. No
proprietary technologies were observed,
and, thus, DOE believes that all CCW
manufacturers could market verticalaxis clothes washers with similar
performance in time for the effective
date of today’s proposed rule. The unit
shares many characteristics with CCWs
from the same manufacturer marketed
towards laundromat and multi-unit
housing applications, including an
industry-standard 25-minute wash
cycle. In its teardown analysis, DOE
observed that the max-tech top-loading
CCW appears to be built with similar
construction and components as similar
CCW models marketed to commercial
laundromats, which are also largely
based on an existing RCW platform.
Thus, DOE believes that the max-tech
CCW is equally rugged and durable as
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other units on the market. Further, DOE
believes that applicable payment-system
interfaces could be incorporated in time
for the effective date of today’s proposed
standards.
DOE research also suggests that
commercial acceptance depends on
wash performance. Multiple comments
from interested parties were received
concerning wash performance of highefficiency clothes washers. The MultiHousing Laundry Association (MLA)
and Alliance commented that the toploading CCW standard proposed in the
October 2008 NOPR could result in
reduced equipment quality and clothes
washing and rinsing performance.
Alliance stated that the required
reductions in water consumption and
and/or low wash temperature to meet
the standard proposed in the October
2008 NOPR would negatively affect
consumer utility. Alliance stated that
the max-tech vertical-axis CCW, when
used with common clothes washing
detergents, may not provide adequate
clothes washing performance. (Alliance,
Public Meeting Transcript, No. 40.5 at
pp. 23–24 and p. 202; Alliance No. 45
at p. 1 and Attachment 2, p. 14; MLA
No. 49 at pp. 3–4) DOE recognizes that
any amended energy efficiency standard
could result in a lessening of certain
equipment utility and hence interviews
interested parties to better understand
the potential impacts of energy
efficiency strategies that manufacturers
might employ in their equipment.
Although interested parties have
suggested that the max-tech model does
not provide acceptable washing and
rinsing performance targets, especially
when overloaded, they have yet to
submit evidence of such performance
degradation. Furthermore, DOE is not
aware of any widely accepted,
quantitative measures associated with
clothes washing performance. While
DOE research uncovered a rinseperformance standard that was
developed by Australian clothes washer
manufacturers, this rinse test has yet to
find acceptance in the U.S. market.
DOE also received comments on
whether the max-tech vertical-axis
efficiency level could be achieved by
multiple CCW models. Alliance stated
that it would be unwise to set a standard
close to the max-tech level, since it
could eliminate all but the max-tech
model from the market. (Alliance, No.
45 at Attachment 2, p. 13) Alliance
believes a properly functioning toploading CCW market requires a range of
models to serve all users. (Alliance, No.
45 at Attachment 2, p. 13) DOE notes
that the MEF/WF combination for
vertical-axis CCWs proposed in the
October 2008 NOPR as TSL 2 and
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currently proposed in today’s SNOPR as
the max-tech level is not based on either
the stated or the tested max-tech
vertical-axis unit. Rather, the
combination of MEF and WF proposed
is set at a level slightly below the
measured max-tech values, and is a
level for which DOE had previously
collected manufacturing, capital
expenditure, product development, and
other costs. For today’s supplemental
notice, DOE revised the max-tech level
to the values at TSL 2 proposed in the
October 2008 NOPR—1.60 MEF/8.5 WF
—based on its independent testing.
Compared to the top-loading max-tech
level and proposed standard of 1.76
MEF/8.3 WF published in the October
2008 NOPR, the revised level is slightly
less stringent (see section III.C.1 for a
complete discussion of this change) and
may allow manufacturers to field units
with higher tested efficiencies in the
future. For example, the max-tech unit
may be revised to achieve its stated
efficiency level. DOE believes that this
revision of the proposed max-tech level
for today’s SNOPR should help alleviate
some manufacturers’ concerns regarding
the technological feasibility and
commercial acceptance of a max-tech
top-loading CCW.
Alliance commented that frontloading CCWs with electric heaters have
an MEF of 1.96, which would not meet
the front-loading standards proposed in
the October 2008 NOPR. According to
Alliance, customers in some parts of the
northern United States need such
heaters to supplement their hot water
supply in order to maintain proper wash
temperatures despite very cold water
supply temperatures. (Alliance, Public
Meeting Transcript, No. 40.5 at p. 22)
DOE has received no data on the extent
or size of this impact or of the affected
population. Hence, DOE invites
comment, including population and
efficiency impact data, to describe this
issue.
DOE also invites further comment and
information on the technological
feasibility of the proposed max-tech
CCW, including washing and rinsing
performance measures for CCWs and
population data for water heating CCWs.
This is identified as Issue 3 in section
VII.E of today’s supplemental notice
(Issues on Which DOE Seeks Comment).
2. Manufacturing Costs
In the October 2008 NOPR, DOE
presented manufacturing cost estimates
based on the November 2007 ANOPR
analysis, revised in response to detailed
CCW manufacturer feedback obtained at
the NOPR stage for equipment at each
efficiency level. 73 FR 62034, 62055–
62056 (Oct. 17, 2008). These
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manufacturing costs were the basis of
inputs for a number of other analyses in
this rulemaking, including the LCC,
national impact, and GRIM analyses.
As described in the October 2008
NOPR, DOE found that a low-volume
manufacturer (LVM) operates in both
the residential and CCW markets. DOE
considers this manufacturer to be lowvolume because its annual shipments in
the combined RCW and CCW market are
significantly lower than those of its
larger competitors. However, unlike its
larger rivals, most of the LVM’s unit
shipments are in the CCW market,
where the LVM has significant market
share. Also unlike its diversified
competitors, this company exclusively
manufactures laundry equipment. A
review of the Securities and Exchange
Commission (SEC) 10–K documents
filed by the LVM revealed that, as of
2005, this company derived 22 percent
of its total revenue from the sale of
front- and top-loading clothes washers
and 87 percent of that income was from
the commercial market.14 As a result,
the LVM could be affected
disproportionately by any rulemaking
concerning CCWs compared to its
competitors, for whom CCWs represent
less than 2 percent of total clothes
washer sales. Alliance stated that it is
the LVM and that it has neither the
purchasing power nor the funding to
support wide-ranging research and
development programs like those of its
larger, more diverse rivals. (Alliance,
No. 45 at Attachment 2, p. 8) As a result,
the manufacturing costs for Alliance are
inherently higher compared to those of
its rivals. Alliance believes that the cost
of compliance with the top-loading
CCW standard proposed in the October
2008 NOPR would be especially high if
Alliance were required to introduce
non-traditional agitator designs to meet
it. (Alliance, Public Meeting Transcript,
No. 40.5 at p. 23 and p. 202) DOE
research suggests that this efficiency
level for vertical-axis clothes washers
can be met with conventional, nonproprietary technology that is on the
market today. Since the October 17,
2008 NOPR meeting, DOE has received
no further comments on the
manufacturing cost curves. Thus, for
today’s SNOPR, DOE has retained all
cost estimates presented in the October
2008 NOPR at the retained efficiency
levels, though each value was scaled by
the Producer Price Index (PPI)
multiplier for the commercial laundry
equipment industry (NAICS 333312)
14 SEC documents pertaining to the LVM are
available online at: https://sec.gov/cgi-bin/browseidea?action=getcompany&CIK=0001063697&owner
=exclude&count=40.
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between 2007 and 2008 to update the
costs in the October 2008 NOPR to
2008$.15 These are shown in Table III.3.
TABLE III.3—COMMERCIAL CLOTHES WASHER INCREMENTAL MANUFACTURING COSTS
Modified energy factor
(ft3/kWh)/water factor
(gal/ft3)
Efficiency level
Incremental cost
Top-loading
Top-loading
Baseline ...........................................................................................................
1 .......................................................................................................................
2 .......................................................................................................................
3 .......................................................................................................................
4 .......................................................................................................................
D. Life-Cycle Cost and Payback Period
Analysis
In response to the requirements of
section 325(o)(2)(B)(i) of the Act, DOE
conducted LCC and PBP analyses to
evaluate the economic impacts of
possible amended energy conservation
standards for owners of CCWs. This
section of the notice describes these
analyses. DOE conducted the analysis
using a spreadsheet model developed in
Microsoft (MS) Excel for Windows 2007.
(See the SNOPR TSD, chapter 8).
The LCC is the total consumer
expense over the life of the equipment,
including purchase and installation
expense and operating costs (energy and
water expenditures, repair costs, and
maintenance costs). The PBP is the
number of years it would take for the
consumer to recover the increased costs
of a higher-efficiency equipment
through energy savings. To calculate the
LCC, DOE discounted future operating
costs to the time of purchase and
1.26/9.5
1.42/9.5
1.60/8.5
N/A
N/A
summed them over the lifetime of the
equipment. DOE measured the change
in LCC and the change in PBP
associated with a given efficiency level
relative to a base case forecast of
equipment efficiency. The base case
forecast reflects the market in the
absence of amended mandatory energy
conservation standards. As part of the
LCC and PBP analyses, DOE developed
data that it used to establish equipment
prices, installation costs, annual energy
consumption, energy and water prices,
maintenance and repair costs,
equipment lifetime, and discount rates.
DOE was unable to develop a
consumer sample for CCWs because
EIA’s Commercial Building Energy
Consumption Survey (CBECS) does not
provide the necessary data to develop
one.16 Instead, DOE established the
variability and uncertainty in energy
and water use by defining the
uncertainty and variability in the use
(cycles per day) of the equipment. The
1.72/8.0
1.80/7.5
2.00/5.5
2.20/5.1
2.35/4.4
$0.00
77.60
134.99
N/A
N/A
Affecting Installed Costs:
Equipment Price ...........
Installation Cost ............
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Affecting Operating Costs:
Annual Energy and
Water Use.
October 2008 NOPR
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Changes for the SNOPR
Derived by multiplying manufacturer cost by manufacturer, distributor markups and sales tax.
Baseline cost updated with RS Means Mechanical Cost
Data, 2008.
Updated prices from 2006$ to 2008$.
Per-cycle energy and water use based on MEF and
WF levels. Disaggregated into per-cycle machine,
dryer, and water heating energy using data from
DOE’s 2000 TSD for residential clothes washers. Annual energy and water use determined from the annual usage (number of use cycles). Usage based on
several studies including research sponsored by
MLA 17 and the Coin Laundry Association 18 (CLA).
Different use cycles determined for multi-family and
laundromat equipment applications.
No change.
15 PPI data is maintained by the Bureau of Labor
Statistics and is available at https://www.bls.gov/ppi/
.
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Updated costs from 2006$ to 2008$.
16 Available online at: https://www.eia.doe.gov/
emeu/cbecs/.
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$0.00
0.00
14.21
39.34
66.16
variability in energy and water pricing
was characterized by regional
differences in energy and water prices.
DOE calculated the LCC associated with
a baseline CCW. To calculate the LCC
savings and PBP associated with
equipment meeting higher efficiency
standards, DOE substituted the baseline
unit with a more efficient design.
Table III.4 summarizes the approaches
and data DOE used to derive the inputs
to the LCC and PBP calculations for the
October 2008 NOPR, and the changes it
made for today’s SNOPR. DOE did not
introduce changes to the LCC and PBP
analyses methodology described in the
October 2008 NOPR. However, as the
following sections discuss in more
detail, DOE revised some of the inputs
to the analysis. Chapter 8 of the TSD
accompanying this notice contains
detailed discussion of the methodology
utilized for the LCC and PBP analyses
as well as the inputs developed for the
analyses.
TABLE III.4—SUMMARY OF INPUTS AND KEY ASSUMPTIONS IN THE LCC AND PBP ANALYSES
Inputs
Front-loading
Front-loading
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TABLE III.4—SUMMARY OF INPUTS AND KEY ASSUMPTIONS IN THE LCC AND PBP ANALYSES—Continued
Inputs
October 2008 NOPR
Changes for the SNOPR
Energy and Water/
Wastewater Prices.
Electricity: Updated using EIA’s 2006 Form 861 data ....
Natural Gas: Updated using EIA’s 2006 Natural Gas
Monthly.
Water/Wastewater: Updated using RFC/AWWA’s 2006
Water and Wastewater Survey.
Variability: Regional energy prices determined for 13
regions; regional water/wastewater price determined
for four regions.
Energy: Forecasts updated with EIA’s AEO 2008 ..........
Water/Wastewater: Linear extrapolation of 1970–2007
historical trends in national water price index.
Electricity: Updated using EIA’s 2007 Form 861 data.
Natural Gas: Updated using EIA’s 2007 Natural Gas
Monthly.
Water/Wastewater: No change.
Variability: No change.
Energy and Water/
Wastewater Price
Trends.
Repair and Maintenance
Costs.
Affecting Present Value of
Annual Operating Cost
Savings
Equipment Lifetime .......
Discount Rates .............
Affecting Installed and Operating Costs:
Effective Date of New
Standard.
Base-Case Efficiency
Distributions.
Estimated annualized repair costs for each efficiency
level based on half the equipment lifetime divided by
the equipment lifetime.
Based on data from various sources including the CLA.
Different lifetimes established for multi-family and
laundromat equipment applications. Variability and
uncertainty characterized with Weibull probability distributions.
Approach based on cost of capital of publicly traded
firms in the sectors that purchase CCWs. Primary
data source is Damodaran Online19.
Reference Case forecast updated with EIA’s AEO 2009
April Release. High-Growth and Low-Growth forecasts updated with EIA’s AEO 2009 March Release.
Water/Wastewater Prices: Updated to include historical
trend through 2008. For the four years after 2008,
fixed the annual price to the value in 2008 to prevent
a dip in the forecasted prices.
Updated costs from 2006$ to 2008$.
No change.
No change.
2012 ................................................................................
2013.
Analyzed as two equipment classes: top-loading and
front-loading. Distributions for both classes based on
the number of available models at the efficiency levels.
Top-Loading: 63.6% at 1.26 MEF/9.5 WF; 33.3% at
1.42 MEF/9.5 WF; 0% at 1.60 MEF/8.5 WF; 3.0% at
1.76 MEF/8.3 WF. Front-Loading: 7.4% at 1.72 MEF/
8.0 WF; 4.4% at 1.80 MEF/7.5 WF; 85.3% at 2.00
MEF/5.5 WF; 1.5% at 2.20 MEF/5.1 WF; 1.5% at
2.35 MEF/4.4 WF.
Updated to reflect the most recent distributions on the
number of available models at the efficiency levels.
Top-Loading: 64.8% at 1.26 MEF/9.5 WF; 33.8% at
1.42 MEF/9.5 WF; 1.4% at 1.60 MEF/8.5 WF; 1.76
MEF/8.3 WF removed as Max Tech.
Front-Loading: 3.5% at 1.72 MEF/8.0 WF; 0.0% at 1.80
MEF/7.5 WF; 73.7% at 2.00 MEF/5.5 WF; 22.8% at
2.20 MEF/5.1 WF; 0.0% at 2.35 MEF/4.4 WF.
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1. Equipment Prices
2. Installation Cost
To calculate the equipment prices
faced by CCW purchasers, DOE
multiplied the manufacturing costs
developed from the engineering analysis
by the supply chain markups it
developed (along with sales taxes). DOE
used the same supply chain markups for
today’s SNOPR that were developed for
the October 2008 NOPR. See chapter 7
of the TSD accompanying this notice for
additional information. To calculate the
final installed prices, DOE added
installation cost to the equipment
prices.
Installation costs include labor,
overhead, and any miscellaneous
materials and parts. For the October
2008 NOPR and today’s SNOPR, DOE
used data from the RS Means
Mechanical Cost Data, 2008 on labor
requirements to estimate installation
costs for CCWs.20 DOE estimates that
installation costs do not increase with
equipment efficiency.
17 Please see the following Web site for further
information: https://www.mla-online.com/.
18 Please see the following Web site for further
information: https://www.coinlaundry.org/.
19 Please see the following Web site for further
information: https://pages.stern.nyu.edu/
~adamodar/.
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provides a representative basis for rating
and estimating the per-cycle energy use
of CCWs. For today’s SNOPR, DOE
maintained the above approach.
4. Energy and Water Prices
a. Energy Prices
DOE determined the annual energy
and water consumption of CCWs by
multiplying the per-cycle energy and
water use by the estimated number of
cycles per year. In the October 2008
NOPR, DOE concluded that the use of
the existing RCW test procedure
DOE derived average electricity and
natural gas prices for 13 geographic
areas consisting of the nine U.S. Census
divisions, with four large States (New
York, Florida, Texas, and California)
treated separately.
DOE estimated commercial electricity
prices for each of the 13 geographic
areas based on data from EIA Form 861,
Annual Electric Power Industry
Report.21 DOE calculated an average
commercial electricity price by first
estimating an average commercial price
20 Available online at: https://www.rsmeans.com/
bookstore/.
21 Available online at: https://www.eia.doe.gov/
cneaf/electricity/page/eia861.html.
3. Annual Energy Consumption
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for each utility, and then calculated a
regional average price by weighting each
utility with customers in a region by the
number of commercial customers served
in that region. The calculations for
today’s SNOPR used the most recent
available data from 2007.
For the October 2008 NOPR, DOE
estimated average commercial natural
gas prices in each of the 13 geographic
areas based on 2006 data from the EIA
publication Natural Gas Monthly.22
DOE calculated an average natural gas
price for each area by first calculating
the average prices for each State, and
then calculating a regional price by
weighting each State in a region by its
population. For today’s SNOPR, DOE
used 2007 data from the same source.
To estimate the trends in electricity
and natural gas prices for the October
2008 NOPR, DOE used the price
forecasts in the AEO 2008.23 To arrive
at prices in future years, DOE multiplied
the average prices described above by
the forecast of annual average price
changes in AEO 2008. For today’s
supplemental notice, DOE updated its
energy price forecasts using those in the
AEO 2009 April Release. Because the
AEO forecasts prices only to 2030, DOE
followed past guidelines provided to the
Federal Energy Management Program by
EIA and used the average rate of change
during 2020–2030 to estimate the price
trends beyond 2030.
The spreadsheet tools used to conduct
the LCC and PBP analysis allow users to
select either the AEO’s high-growth case
or low-growth case price forecasts to
estimate the sensitivity of the LCC and
PBP to different energy price forecasts.
The AEO 2009 April Release provides
only forecasts for the Reference Case.
Therefore, for today’s supplemental
notice, DOE used the AEO 2009 March
Release high-growth case or low-growth
forecasts to estimate high-growth and
low-growth price trends.
DOE received comment regarding the
inputs into the energy price forecasts.
The Joint Comment recommended that
DOE conduct a sensitivity analysis
using a basket of other forecasts besides
the AEO. (Joint Comment, No. 44 at p.
11) As mentioned above, DOE
considered the AEO’s high-growth case
and low-growth case price forecasts to
estimate the sensitivity of the LCC and
PBP results to different energy price
forecasts. The AEO alternative forecasts
provide a suitable range to examine the
sensitivity of LCC and PBP results to
different energy price forecasts.
online at: https://www.eia.doe.gov/
oil_gas/natural_gas/data_publications/
natural_gas_monthly/ngm.html.
23 All AEO publications are available online at:
https://www.eia.doe.gov/oiaf/aeo/.
Interested parties also recommended
DOE consider pending legislation that
could influence future energy prices.
The Joint Comment stated that to
realistically depict energy prices in the
future, DOE must consider the impact of
carbon control legislation, since such
legislation is very likely. It also noted
that there are regional cap and trade
programs that are in effect in the
Northeast (Regional Greenhouse Gas
Initiative (RGG)) and the West (Western
Climate Initiative (WCI)) that will
impact the price of electricity and are
not reflected in the AEO energy price
forecasts. (Joint Comment, No. 44 at p.
12) EJ stated that caps will likely be in
place by the time new standards become
effective, so DOE should increase its
electricity prices to reflect the cost of
complying with emission caps. (EJ,
Public Meeting Transcript, No. 40.5 at
pp. 105–106) The shape of Federal
carbon control legislation, and the
ensuing cost of carbon mitigation to
electricity generators, is as yet too
uncertain to incorporate into the energy
price forecasts that DOE uses. The costs
of carbon mitigation to electricity
generators resulting from the regional
programs are also very uncertain over
the forecast period for this rulemaking.
Even so, EIA did include the effect of
the RGGI in its AEO 2009 April Release
energy price forecasts. (WCI did not
provide sufficient detail to EIA in order
for them to model the impact of the WCI
on energy price forecasts.) Therefore,
the energy price forecasts used in
today’s supplemental notice do include
the impact of one of the two regional
cap and trade programs in the United
States.
b. Water and Wastewater Prices
DOE obtained commercial water and
wastewater price data from the Water
and Wastewater Rate Survey conducted
by Raftelis Financial Consultants (RFC)
and the American Water Works
Association (AWWA). For the October
2008 NOPR and today’s SNOPR, DOE
used the 2006 Water and Wastewater
Rate Survey.24 The survey covers
approximately 300 water utilities and
200 wastewater utilities, with each
industry analyzed separately. DOE
calculated values at the Census region
level (Northeast, South, Midwest, and
West). Edison Electric Institute (EEI)
questioned why water and wastewater
prices were not developed at the Census
division level. (EEI, Public Meeting
Transcript, No. 40.5, p. 103 and p. 178)
22 Available
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17:24 Nov 06, 2009
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24 Raftelis Financial Consultants, Inc., 2006 RFC/
AWWA Water and Wastewater Rate Survey, 2006,
(2006). This document is available at: https://
www.raftelis.com/ratessurvey.html.
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The samples that DOE obtained of 200–
300 utilities are not large enough to
calculate regional prices for all U.S.
Census divisions and large States.
Hence, DOE was only able to capture
the variability of water and wastewater
prices at the Census region level.
To estimate the future trend for water
and wastewater prices, DOE used data
on the historic trend in the national
water price index (U.S. city average)
provided by the Bureau of Labor
Statistics (BLS). For the October 2008
NOPR, DOE extrapolated a future trend
based on the linear growth from 1970 to
2007. The Joint Comment stated that (1)
the trend line for water and wastewater
prices developed by DOE begins with an
anomalous dip of over seven percent in
costs for 2008, rather than the likely
increase of 2 percent or more; and (2)
DOE’s trend forecast understates the
future cost of water and wastewater
service by some ten percent. (Joint
Comment, No. 44 at pp. 3–4) For today’s
SNOPR, DOE modified its future trends
of water and wastewater prices based on
some of the Joint Comment’s
suggestions. DOE continued to the use
the BLS historical data, which now
provides data for the year 2008, and
extrapolated the future trend based on
the linear growth from 1970 to 2008. But
rather than use the extrapolated trend to
forecast the prices for the four years
after 2008, DOE pinned the annual price
to the value in 2008. Otherwise,
forecasted prices for this 4-year time
period would have been up to 8 percent
lower than the price in 2008. Estimating
prices in this manner is appropriate
because it is consistent with the
historical trend that demonstrates that
prices do not decrease over time.
Estimating prices in this manner also
prevents the anomalous dip noted by
the Joint Comment. Beyond the 4-year
time period, DOE used the extrapolated
trend to forecast prices out to the year
2043.
5. Repair and Maintenance Costs
Repair costs are associated with
repairing or replacing components that
have failed in the appliance, whereas
maintenance costs are associated with
maintaining the operation of the
equipment. For the October 2008 NOPR,
DOE included increased repair costs
based on an algorithm developed by
DOE for central air conditioners and
heat pumps and which was also used
for residential furnaces and boilers.25
25 U.S. Department of Energy, Technical Support
Document: Energy Efficiency Standards for
Consumer Products: Residential Central Air
Conditioners and Heat Pumps (May 2002) chapter
5. This document is available at: https://
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This algorithm calculates annualized
repair costs by dividing half of the
equipment retail price over the
equipment lifetime. Whirlpool agreed
with the assumptions DOE used to
estimate CCW repair costs in the
October 2008 NOPR. (Whirlpool, No. 50
at p. 3) MLA stated that more efficient
CCWs incur higher maintenance costs.
(MLA, No. 49 at p. 4) ASAP asked
whether DOE had gathered empirical
data to estimate CCW repair and
maintenance costs. (ASAP, Public
Meeting Transcript, No. 40.5 at pp. 110–
111) DOE was unable to gather any
empirical data specific to CCWs to
estimate repair and maintenance cost. In
the absence of better data, DOE retained
its approach from the October 2008
NOPR for today’s SNOPR.
6. Equipment Lifetime
For the October 2008 NOPR and
today’s SNOPR, DOE used a variety of
sources to establish low, average, and
high estimates for equipment lifetime.
The average CCW lifetime was 11.3
years for multi-family applications, and
7.1 years in laundromat applications.
DOE characterized CCW lifetimes with
Weibull probability distributions.
7. Discount Rates
To establish discount rates for CCWs
for the October 2008 NOPR and today’s
SNOPR, DOE estimated the cost of
capital of publicly traded firms in the
sectors that purchase CCWs as the
weighted average of the cost of equity
financing and the cost of debt financing.
DOE identified the following sectors
purchasing CCWs: (1) Educational
services; (2) hotels; (3) real estate
investment trusts; and (4) personal
services. DOE estimated the weightedaverage cost of capital (WACC) using the
respective shares of equity and debt
financing for each sector that purchases
CCWs. It calculated the real WACC by
adjusting the cost of capital by the
expected rate of inflation. To obtain an
average discount rate value, DOE used
additional data on the number of CCWs
in use in various sectors. DOE estimated
the average discount rate for companies
that purchase CCWs at 5.7 percent. DOE
received comment on the discount rates
from Alliance, who suggested that the
discount rates used in LCC and PBP
analyses should be updated to reflect
current financial market conditions.
(Alliance, Public Meeting Transcript,
No. 40.5 at pp. 115–116) DOE used the
most recent available data (from 2006)
from Damodaran Online and Ibbotson
Associates to estimate its discount rates
for CCWs. Damodaran Online is a
widely used source of information about
company debt and equity financing for
most types of firms. Ibbotson Associates
is a leading authority on asset allocation
with expertise in capital market
expectations and portfolio
implementation. DOE believes that the
data it used are representative of
conditions that may apply when the
first purchases impacted by standards
would be made. Therefore, DOE
continued to use these sources for
today’s SNOPR and will determine if
the data used from both sources needs
to be updated for the final rule.
8. Effective Date of the Amended
Standards
The compliance date is the future date
when parties subject to the requirements
of a new standard must begin
compliance. For the October 2008
NOPR, DOE assumed that any new
energy efficiency standards adopted in
this rulemaking would require
compliance in March 2012, 3 years after
the final rule was expected to be
published in the Federal Register. For
today’s SNOPR, DOE expects that the
final rule will be published by January
1, 2010, as required by EPACT 2005,
with compliance with new standards
required by January 1, 2013. DOE
calculated the LCC for the appliance
consumers as if they would purchase
new equipment in the year after the
standard takes effect.
9. Equipment Energy Efficiency in the
Base Case
For the LCC and PBP analysis, DOE
analyzes higher efficiency levels relative
to a baseline efficiency level. However,
some consumers may already purchase
equipment with efficiencies greater than
the baseline equipment levels. Thus, to
accurately estimate the percentage of
consumers that would be affected by a
particular standard level, DOE estimates
the distribution of equipment
efficiencies that consumers are expected
to purchase under the base case (i.e., the
case without new energy efficiency
standards). DOE refers to this
distribution of equipment energy
efficiencies as a base-case efficiency
distribution. As discussed previously in
section III.A, DOE decided to analyze
CCWs with two equipment classes—toploading CCWs and front-loading CCWs.
For the October 2008 NOPR and today’s
SNOPR, DOE used the number of
available models within each equipment
class to establish the base-case
efficiency distributions. Table III.5
presents the market shares of the
efficiency levels in the base case for
CCWs. See chapter 8 of the TSD
accompanying this notice for further
details on the development of CCW
base-case market shares.
TABLE III.5—COMMERCIAL CLOTHES WASHERS: BASE CASE MARKET SHARES
Top-loading
Standard level
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Baseline ............................
1 ........................................
2 ........................................
Front-loading
MEF
1.26
1.42
1.60
9.50
9.50
8.50
10. CCW Split Incentive
Under a split incentive situation, the
party purchasing more efficient and
presumably more expensive equipment
www.eere.energy.gov/buildings/
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17:24 Nov 06, 2009
Market
share
(percent)
WF
64.8
33.8
1.4
Standard level
MEF
Baseline ............................
1 ........................................
2 ........................................
3 ........................................
4 ........................................
(referred to as ‘‘consumers’’ in this
notice) may not realize the operating
cost savings from that equipment,
because another party may pay the
utility bill. For the October 2008 NOPR,
1.72
1.80
2.00
2.20
2.34
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8.00
7.50
5.50
5.10
4.40
3.5
0.0
73.7
22.8
0.0
DOE evaluated the ability of CCW
owners to pass on the higher purchase
costs of more expensive CCWs in return
for lower operational costs. DOE
concluded that few route operators
appliance_standards/residential/
ac_central_1000_r.html.
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Market
share
(percent)
WF
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would allow themselves to be held to a
lease agreement which would prevent
them from recovering the cost of more
efficient CCW equipment. The Joint
Comment stated that contracts between
route operators are multi-housing
property owners are subject to revision
and renewal, and that the division of
coin-box revenue may be negotiated as
a result of cost-effective efficiency
improvements in CCWs. (Joint
Comment, No. 44 at p. 6) Because DOE
received only supportive comments
regarding its assessment of the potential
of a split incentive in the CCW market,
DOE continues to conclude for today’s
SNOPR that new CCW efficiency
standards are unlikely to lead to split
incentives in the CCW market.
11. Rebound Effect
The rebound effect occurs when a
piece of equipment, made more efficient
and used more intensively, does not
yield the expected energy savings from
the efficiency improvement. In the case
of more efficient clothes washers,
limited research has been conducted to
show that there is no rebound effect for
home appliances, although the
consumer may choose to purchase larger
models with more features that would
result in higher energy use.26 DOE did
not receive any comments from
interested parties on the issue of the
rebound effect for CCWs. Based on the
limited research showing no rebound
effect for home appliances, DOE did not
include a rebound effect in its analysis
of CCW standards.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
12. Inputs to Payback Period Analysis
The PBP is the amount of time
(expressed in years) it takes the
consumer to recover the additional
installed cost of more efficient
equipment through operating cost
savings, compared to baseline
equipment. The simple PBP does not
account for changes in operating
expense over time or the time value of
money. The inputs to the PBP
calculation are the total installed cost of
the equipment to the customer for each
efficiency level and the annual (firstyear) operating expenditures for each
efficiency level. For the October 2008
NOPR and today’s SNOPR, the PBP
calculation uses the same inputs as the
LCC analysis, except that energy price
trends and discount rates are not
needed.
26 L.A. Greening, D.L. Greene, and C. Difiglio.
‘‘Energy efficiency and consumption—the rebound
effect—a survey.’’ Energy Policy 28 (2000) 389–401.
Available for purchase at https://www.elsevier.com/
locate/enpol.
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13. Rebuttable-Presumption Payback
Period
As noted above, EPCA, as amended
(42 U.S.C. 6295(o)(2)(B)(iii) and
6316(a)), establishes a rebuttable
presumption that a standard is
economically justified if the Secretary
finds that ‘‘the additional cost to the
consumer of purchasing a product
complying with an energy conservation
standard level will be less than three
times the value of the energy (and as
applicable, water) savings during the
first year that the consumer will receive
as a result of the standard,’’ as
calculated under the test procedure in
place for that standard. For each TSL,
DOE determined the value of the first
year’s energy savings by calculating the
quantity of those savings in accordance
with DOE’s test procedure, and
multiplying that amount by the average
energy price forecast for the year in
which a new standard would be first
effective—in this case, 2013.
DOE received comments addressing
the topic of using a rebuttable
presumption payback period to
establish the economic justification of
an energy conservation standard level.
The Joint Comment and EJ stated that
DOE’s view that consideration of a full
range of impacts is necessary because
the rebuttable presumption payback
period criterion is not sufficient for
determining economic justification does
not reflect the extent to which the
rebuttable presumption analysis
constrains DOE’s authority to reject
standards based on economic impacts.
(Joint Comment, No. 44 at appendix B,
p. 1; EJ, Public Meeting Transcript, No.
40.5 at p. 130) The Joint Comment
stated that in 42 U.S.C.
6295(o)(2)(B)(iii), Congress erected a
significant barrier to DOE’s rejection, on
the basis of economic justifiability, of
standard levels to which the rebuttable
presumption applies. Further, EJ and
the Joint Comment stated DOE
preference to proceed under the sevenfactor test contained in 42 U.S.C.
6295(o)(2)(B)(i) is not pertinent.
The Joint Comment agreed with DOE
that analysis under the seven-factor test
is necessary and has typically supported
standards with paybacks longer than 3
years. However, the Joint Comment
stated that DOE’s decision-making must
reflect the expressed intent of Congress
that the highest standard level resulting
in cost recovery within 3 years
constitutes the presumptive lowest
standard level that DOE must adopt.
(Joint Comment, No. 44 at appendix B,
pp. 1–2)
DOE does consider both the rebuttable
presumption payback criteria, as well as
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57755
a full analysis including all seven
relevant statutory criteria under 42
U.S.C. 6295(o)(2)(B)(i) when examining
potential standard levels. However, DOE
believes that the interested parties are
misinterpreting the statutory provision
in question. The Joint Comment and EJ
present one possible reading of an
ambiguous provision (i.e., that DOE
need not look beyond the results of the
rebuttable presumption inquiry), but
DOE believes that such an approach is
neither required nor appropriate,
because it would ask the agency to
potentially ignore other relevant
information that would bear on the
selection of the most stringent standard
level that meets all applicable statutory
criteria. The interested parties’
interpretation would essentially restrict
DOE from being able to rebut the
findings of the preliminary presumptive
analysis.
The statute contains no such
restriction, and such an approach would
hinder DOE’s efforts to base its
regulations on the best available
information. Similarly, DOE believes
that the Joint Comment misreads the
statute in calling for a level that meets
the rebuttable presumption test to serve
as a minimum level when setting the
final energy conservation standard. To
do so would not only eliminate the
‘‘rebuttable’’ aspect of the presumption
but would also lock in place a level that
may not be economically justified based
upon the full review of statutory
criteria. DOE is already obligated under
EPCA to select the most stringent
standard level that meets the applicable
statutory criteria, so there is no need to
tie the same requirement to the
rebuttable presumption.
E. National Impact Analysis—National
Energy Savings and Net Present Value
Analysis
1. General
DOE’s NIA assesses the national
energy savings, as well as the national
NPV of total consumer costs and
savings, expected to result from new
standards at specific efficiency levels.
DOE applied the NIA spreadsheet to
perform calculations of energy savings
and NPV, using the annual energy
consumption and total installed cost
data from the LCC analysis. DOE
forecasted the energy savings, energy
cost savings, equipment costs, and NPV
for each equipment class from 2013 to
2043. The forecasts provide annual and
cumulative values for all four
parameters. In addition, DOE
incorporated into its NIA spreadsheet
the capability to analyze sensitivity of
the results to forecasted energy prices
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
and equipment efficiency trends. Table
III.6 summarizes the approach and data
DOE used to derive the inputs to the
NES and NPV analyses for the October
2008 NOPR and the changes made in
the analyses for today’s SNOPR. A
discussion of the inputs and the changes
follows below. (See chapter 11 of the
SNOPR TSD for further details.)
TABLE III.6—APPROACH AND DATA USED TO DERIVE THE INPUTS TO THE NATIONAL ENERGY SAVINGS AND NPV
ANALYSES
Inputs
2008 NOPR description
Shipments ............................
Effective Date of Standard ...
Base-Case Forecasted Efficiencies.
Annual shipments from Shipments Model ......................
2012 ................................................................................
Shipment-weighted efficiency (SWEF) determined in
the year 2005. SWEF held constant over forecast period.
Analyzed as two equipment classes. For each equipment class, roll-up scenario used for determining
SWEF in the year that standards become effective
for each standards case. SWEF held constant over
forecast period.
Annual weighted-average values as a function of
SWEF.
Annual weighted-average values as a function of
SWEF.
Annual weighted-average values a function of the annual energy consumption per unit and energy (and
water) prices.
Incorporated changes in repair costs as a function of
efficiency.
Energy Prices: AEO 2008 forecasts (to 2030) extrapolation to 2042.
Water/Wastewater Prices: Linear extrapolation of 1970–
2007 historical trends in national water price index.
Standards-Case Forecasted
Efficiencies.
Annual Energy Consumption
per Unit.
Total Installed Cost per Unit
Energy and Water Cost per
Unit.
Repair Cost and Maintenance Cost per Unit.
Escalation of Energy and
Water/Wastewater Prices.
Energy Site-to-Source Conversion.
Effect of Standards on Energy Prices.
Discount Rate ......................
Present Year ........................
Conversion varies yearly and is generated by DOE/
EIA’s NEMS program (a time-series conversion factor; includes electric generation, transmission, and
distribution losses).
Determined but found not to be significant .....................
Three and seven percent real .........................................
Future expenses discounted to year 2007 .....................
srobinson on DSKHWCL6B1PROD with PROPOSALS2
2. Shipments
The shipments portion of the NIA
Spreadsheet is a Shipments Model that
uses historical data as a basis for
projecting future shipments of the
equipment that are the subject of this
rulemaking. In projecting CCW
shipments, DOE accounted for three
market segments: (1) New construction;
(2) existing buildings (i.e., replacing
failed equipment); and (3) retired units
not replaced. DOE used the nonreplacement market segment to calibrate
the Shipments Model to historical
shipments data. For purposes of
estimating the impacts of prospective
standards on equipment shipments (i.e.,
forecasting standards-case shipments)
DOE considered the combined effects of
changes in purchase price, annual
operating cost, and household income
on the magnitude of shipments.
VerDate Nov<24>2008
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Changes for the SNOPR
Jkt 022001
See Table III.7.
2013.
No change.
No change.
No change.
Updated costs from 2006$ to 2008$.
Updated costs from 2006$ to 2008$.
Updated costs from 2006$ to 2008$.
Energy Prices: Updated to AEO 2009 April Release
forecasts for the Reference Case. AEO 2009 April
Release does not provide High-Growth and LowGrowth forecasts; used AEO 2009 March Release
High-Growth and Low-Growth forecasts to estimate
high and low growth price trends.
Water/Wastewater Prices: Updated to include historical
trend through 2008. For the four years following 2013
fixed the annual price to the value in 2008 to prevent
a dip in the forecasted prices.
No change.
No change.
No change.
Future expenses discounted to year 2009.
Table III.7 summarizes the approach
and data DOE used to derive the inputs
to the shipments analysis for the
October 2008 NOPR, and the changes it
made for today’s SNOPR. The general
approach for forecasting CCW
shipments for today’s SNOPR remains
unchanged from the October 2008
NOPR. That is, all CCW shipments (for
both equipment classes) were estimated
for the new construction, replacement
and non-replacement markets. DOE then
allocated shipments to each of the two
equipment classes based on the market
share of each class. Based on data
provided by AHAM for the November
2007 ANOPR, DOE estimated that toploading washers comprise 80 percent of
the market while front-loading washers
comprise 20 percent. DOE estimated
that the equipment class market shares
would remain unchanged over the time
period 2005–2042. A discussion of the
inputs and the changes follows below.
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The Joint Comment suggested that
DOE update its equipment class market
shares to reflect the impacts of the 2006
Federal tax incentives for CCWs. (Joint
Comment, No. 44 at p. 5) The Joint
Comment noted that the increased
production of front-loading washers in
the base-case would in turn lead to
lower conversion costs for
manufacturers and, therefore, make it
less costly to meet higher CCW
efficiency standards. For today’s
supplemental notice, DOE reviewed the
SEC 10K report of the LVM of CCWs
and determined that manufacturer tax
credits in recent Federal legislation have
resulted in significantly increased sales
of the front-loading washers for the
LVM. When accounting for the LVM’s
market share, the increase in frontloading sales results in a current market
share of 30 percent for front-loading
washers. Although tax credits are set to
expire after 2010, DOE believes that the
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tax credits are impacting production
costs and manufacturing infrastructure
such that front-loading washers would
continue to comprise 30 percent of the
market over the entire forecast period.
57757
Table III.7 below shows the inputs
chosen for the Shipments Analysis in
today’s supplemental notice.
TABLE III.7 APPROACH AND DATA USED TO DERIVE THE INPUTS TO THE SHIPMENTS ANALYSIS
Inputs
October 2008 NOPR description
Changes for the SNOPR
Number of Equipment Classes.
Two equipment classes: top-loading washers and frontloading washers. Shipments forecasts established for
all CCWs and then disaggregated into the two equipment classes based on the market share of top- and
front-loading washers. Market share data provided by
AHAM; 80% top-loading and 20% frontloading.
Equipment class market shares held constant over
forecast period.
Determined by multiplying multi-housing forecasts by
forecasted saturation of CCWs for new multi-housing.
Multi-housing forecasts with AEO 2008 projections.
Verified frozen saturations with data from the U.S.
Census Bureau’s American Housing Survey (AHS)
for 1997–2005.
Determined by tracking total equipment stock by vintage and establishing the failure of the stock using
retirement functions from the LCC and PBP analysis.
Retirement functions revised to be based on Weibull
lifetime distributions.
Used to calibrate Shipments Model to historical shipments data. Froze the percentage of non-replacements at 15 percent for the period 2007ƒ2042 to account for the increased saturation rate of in-unit
washers in the multi-family stock between 1997 and
2005 timeframe shown by the AHS.
Data sources include AHAM data submittal, Appliance
Magazine, and U.S. Bureau of Economic Analysis’
quantity index data for commercial laundry.
Developed the ‘‘relative price’’ elasticity which accounts
for the purchase price and the present value of operating cost savings divided by household income.
Used purchase price and efficiency data specific to
residential refrigerators, clothes washers, and dishwashers between 1980 and 2002 to determine a
‘‘relative price’’ elasticity of demand, of ¥0.34.
Not applicable .................................................................
Updated, market share data based on SEC 10K report
of the LVM and tax credits claimed by the LVM for
producing high-efficiency CCWs. Market share determined to be: 70% top-loading and 30% front-loading.
Equipment class market shares held constant over
forecast period.
New Construction Shipments
Replacements ......................
Retired Units not Replaced
(i.e., non-replacements).
Historical Shipments ............
Purchase Price, Operating
Cost, and Household Income Impacts due to efficiency standards.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Fuel Switching ......................
DOE based its Shipments Model on
the following three assumptions: (1) All
equipment shipments for new
construction are driven by the new
multi-family housing market, (2) the
relative market shares of the two
equipment applications, laundromats
and common-area laundry facilities in
multi-family housing, are constant over
time at 15 and 85 percent, respectively,
and (3) the U.S. Census Bureau’s
quantity index data can be used to
validate the shipments trend observed
in the historical data. The Joint
Comment stated that DOE’s assumed 85
percent to 15 percent split between sales
for multi-family applications and sales
for laundromat applications is not based
on robust or current data. (Joint
Comment, No. 44 at p. 5) It cited
information from Alliance Laundry that
suggests that the ratio of multi-family to
laundromat shipments is about 36
percent to 64 percent. DOE based its
market information on a report from the
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No change in approach. Housing forecasts updated
with EIA AEO 2009 April Release forecasts for the
Reference Case. AEO 2009 March Release forecasts
used for the High-Growth Case and Low-Growth
Case.
No change.
Extended the time period out to 2043 to reflect an updated date of 2013 for when the standard becomes
effective.
No change.
No change.
No change.
CEE,27 which gathered information from
several sources. Therefore, DOE
concluded that this source is more
reliable than information from a single
manufacturer, and it continued to apply
the same multi-family/laundromat sales
split used in the October 2008 NOPR for
today’s SNOPR.
DOE received comments regarding the
impacts of impending amended energy
conservation standards for CCWs on
unit sales. Alliance suggested that
impacts to the CCW market would
encourage customers to stock up on less
efficient top-loading CCWs before the
implementation date, and keep older
machines in operation longer. These
effects would undermine the
effectiveness of the standards proposed
in the October 2008 NOPR. (Alliance,
No. 45 at Attachment 2, p. 10) As
27 Consortium for Energy Efficiency, Commercial
Family-Sized Washers: An Initiative Description of
the Consortium for Energy Efficiency (1998). This
document is available at: https://www.cee1.org/com/
cwsh/cwsh-main.php3.
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discussed below in section III.E.2.c,
DOE’s shipments model uses a
‘‘relative’’ purchase price elasticity to
determine the drop in shipments as a
function of increased purchase price
and operating cost savings. The model
does forecast a drop in new shipments
due to a high standard on top-loading
CCWs, which is expected to result in
purchase of used CCWs. DOE did not
have sufficient information to account
for possible stocking up on less efficient
top-loading CCWs before the
implementation date.
a. New Construction Shipments
To determine new construction
shipments, DOE used a forecast of new
housing coupled with equipment
market saturation data for new housing.
For new housing completions and
mobile home placements, DOE adopted
the projections from EIA’s AEO 2008
through 2030 for the October 2008
NOPR. For today’s SNOPR, DOE used
the projections from EIA’s AEO 2009
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April Release Reference Case. For
CCWs, DOE relied on new construction
market saturation data from the abovementioned CEE report.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
b. Replacements and Non-Replacements
DOE estimated replacements using
equipment retirement functions
developed from equipment lifetimes.
For the October 2008 NOPR and today’s
SNOPR, DOE used retirement functions
based on Weibull distributions. For the
October 2008 NOPR, DOE determined
that the growth of in-unit washer
saturations in the multi-family stock
over the last 10 years was likely caused
by conversions of rental property to
condominiums, resulting in the gradual
phase-out or non-replacement of failed
CCWs in common-area laundry
facilities. As a result, DOE used the
average percent of non-replacements
over the period between 1999 and 2005
(18 percent) and maintained it over the
entire forecast period (2006 to 2042 for
the October 2008 NOPR and 2007 to
2043 for today’s SNOPR). The effect of
maintaining non-replacements at 18
percent results in forecasted CCW
shipments staying relatively flat during
the forecast period.
Multiple interested parties
commented on the shipment forecasts
used by DOE in the October 2008 NOPR.
Alliance agreed with the relatively flat
shipment forecast. (Alliance, Public
Meeting Transcript, No. 40.5 at p. 22;
Alliance, No. 45 at p. 1) AHAM and
Whirlpool stated that the October 2008
NOPR estimates of future shipments for
CCWs were much more realistic than
those used in the November 2007
ANOPR. (AHAM, Public Meeting
Transcript, No. 40.5 at p. 27; AHAM,
No. 47 at p. 4; Whirlpool, Public
Meeting Transcript, No 40.5 at p. 28;
Whirlpool, No. 50 at p. 3) The Joint
Comment questioned DOE’s forecast of
reduced shipments for new and
replacement CCWs, citing Alliance’s
SEC filing which projected ‘‘modest
growth’’ in the installed base of
commercial laundry equipment,
estimated by Alliance to have grown at
0.9 percent annually since 1997. (Joint
Comment, No. 44 at p. 5) DOE believes
that the information it used to forecast
CCW shipments for the October 2008
NOPR is more reliable than the limited
information provided by the Joint
Comment on one manufacturer’s
statement in a single SEC filing; thus
DOE maintained the approach used in
the October 2008 NOPR for today’s
SNOPR.
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c. Purchase Price, Operating Cost, and
Income Impacts
To estimate the combined effects on
CCW shipments from increases in
equipment purchase price and decreases
in equipment operating costs due to
amended efficiency standards, DOE
conducted a literature review and a
statistical analysis on a limited set of
appliance price, efficiency, and
shipments data for the October 2008
NOPR. DOE used purchase price and
efficiency data specific to residential
refrigerators, clothes washers, and
dishwashers between 1980 and 2002 to
conduct regression analyses. DOE’s
analysis suggests that the ‘‘relative’’
short-run price elasticity of demand,
averaged over the three appliances, is
¥0.34. Because DOE’s forecast of
shipments and national impacts due to
standards spans over 30 years, DOE also
considered how the relative price
elasticity is affected once a new
standard takes effect. Past analyses of
consumer purchase decisions for
automobiles suggest that after the initial
purchase price change, price elasticity
becomes more inelastic over the years
until it reaches a terminal value. See
appendix 10A of the SNOPR TSD for
more details on the development of the
short-run price elasticity of demand and
the long-run effects on the elasticity.
For the October 2008 NOPR, DOE
incorporated a relative price elasticity
change that resulted in a terminal value
of approximately one-third of the shortrun elasticity. In other words, DOE
estimated that consumer purchase
decisions, in time, become less sensitive
to the initial change in the equipment’s
relative price. MLA commented that if
the standards result in a substantial
increase in the use of front-loading
CCWs and a reduction or elimination in
that of top-loading CCWs, consumers
would see resulting price increases
driven by higher purchase price and
higher maintenance, service, and
operating cost for front-loading CCWs
compared to top-loaders. (MLA, No. 49
at pp. 3–4) In addition, ASAP
questioned DOE’s conclusion that
standards more aggressive than the ones
proposed in the October 2008 NOPR for
front-loading CCWs could lead to
significant recapture of the CCW market
by top-loading machines. (ASAP, Public
Meeting Transcript, No. 40.5 at pp. 34–
35 and pp. 160–161) For its October
2008 NOPR as well as today’s SNOPR,
DOE estimated that price increases
would lead to reductions in unit
shipments for both top-loading and
front-loading CCWs. DOE analyzed the
impacts of increased purchase prices for
each equipment class independently of
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the other. DOE was not able to estimate
the cross price elasticity of demand
between the two equipment classes to
determine whether consumers would
switch from one type of CCW to the
other. But because the price impacts for
more efficient top-loaders are higher
than those for more efficient frontloaders, DOE estimated that top-loading
CCW sales would decrease more rapidly
than for front-loaders. As a result, DOE
estimated that front-loading CCWs
would gain an additional market share
of only about 2 percent. In addition,
DOE estimated that those consumers
forgoing the purchase of new toploading CCWs would instead purchase
used top-loading CCWs with efficiencies
equal to baseline top-loader levels. DOE
received no additional comments on its
analysis to estimate the combined
effects of increases in equipment
purchase price and decreases in
operating costs on CCW shipments and,
therefore, retained the approach for
today’s SNOPR.
Although DOE retained its approach
from the October 2008 NOPR to estimate
the impacts from changes in purchase
price and operating cost, DOE has
concerns over specific aspects of its
analysis. First, because purchase price
and efficiency data for residential
appliances were used to develop the
‘‘relative’’ short-run price elasticity of
demand, DOE is uncertain how
applicable the price elasticity is to the
commercial clothes washing market.
Second, because estimates of the longrun price elasticity of demand were
derived from consumer automobile
purchase decisions, DOE is uncertain
whether it can be inferred that the
initial CCW price elasticity of demand
would become more inelastic over time.
Third, although a cross price elasticity
of demand between top-loading and
front-loading CCWs could not be
developed due to the lack of specific
data, DOE still has concern over the
price interactions between the two types
of CCWs, especially under those
circumstances where the purchase price
increase for one CCW equipment class
is more significant than for the other.
Finally, DOE is concerned over its
assumption that consumers forgoing a
top-loader CCW purchase due to a price
increase caused by standards would
instead acquire used top-loading
washers. For example, those consumers
forgoing a top-loading CCW purchase
may instead purchase a new frontloading CCW. To understand the
interactions between the used CCW
market and the new front-loading CCW
market, the development of a cross price
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elasticity between these two markets
would be ideal.
Due to the lack of data and
information to develop both short- and
long-run price elasticities of demand
specific to CCWs as well as cross price
elasticities between top-loading and
front-loading CCWs and used and frontloading CCWs, DOE is seeking input
and any data from interested parties that
may assist in the development of price
elasiticies specific to any or all of the
items discussed above. This is identified
as Issue 4 in section VII.E of today’s
supplemental notice (Issues on Which
DOE Seeks Comment).
3. Other Inputs
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a. Base-Case Forecasted Efficiencies
A key input to the calculations of NES
and NPV are the energy efficiencies that
DOE forecasts for the base case (without
new standards). The forecasted
efficiencies represent the annual
shipment-weighted energy efficiency
(SWEF) of the equipment under
consideration over the forecast period
(i.e., from the estimated effective date of
a new standard to 30 years after that
date).
For the October 2008 NOPR, DOE first
determined the distribution of
equipment efficiencies currently in the
marketplace to develop a SWEF for each
equipment class for 2005. Using the
SWEF as a starting point, DOE
developed base-case efficiencies based
on estimates of future efficiency
increase. From 2005 to 2013 (2013 being
the estimated effective date of a new
standard), DOE estimated that there
would be no change in the SWEF (i.e.,
no change in the distribution of
equipment efficiencies). Because there
are no historical data to indicate how
equipment efficiencies have changed
over time, DOE estimated that
forecasted efficiencies would remain at
the 2013 level until the end of the
forecast period. DOE recognizes the
possibility that equipment efficiencies
may change over time (e.g., due to
voluntary efficiency programs such as
ENERGY STAR). But without historical
information, DOE had no basis for
estimating how much the equipment
efficiencies may change. For today’s
supplemental notice, DOE maintained
its estimate that the SWEF would
remain constant from 2005 through the
end of the forecast period.
b. Standards-Case Forecasted
Efficiencies
For its determination of each of the
cases with alternative standard levels
(‘‘standards cases’’), DOE used a ‘‘rollup’’ scenario in the October 2008 NOPR
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to establish the SWEF for 2013. In a rollup scenario, equipment efficiencies in
the base case which do not meet the
standard level under consideration are
projected to roll-up to meet the new
standard level. Further, all equipment
efficiencies in the base case that are
above the standard level under
consideration are not affected by the
standard. The same scenario is used for
the forecasted standards-case
efficiencies as for the base-case
efficiencies, namely, that forecasted
efficiencies remained at the 2013
efficiency level until the end of the
forecast period, as DOE has no data to
reasonably estimate how such efficiency
levels might change over the next 30
years. By maintaining the same rate of
increase for forecasted efficiencies in
the standards case as in the base case
(i.e., no change), DOE retained a
constant efficiency difference between
the two cases over the forecast period.
Although the no-change trends may not
reflect what would happen to base-case
and standards-case equipment
efficiencies in the future, DOE believes
that maintaining a constant efficiency
difference between the base case and
standards case provides a reasonable
estimate of the impact that standards
have on equipment efficiency. It is more
important to accurately estimate the
efficiency difference between the
standards case and base case, than to
accurately estimate the actual
equipment efficiencies in the standards
and base cases. DOE retained the
approach used in the October 2008
NOPR for today’s SNOPR. But because
the effective date of the standard is now
assumed to be 2013, DOE applied the
‘‘roll-up’’ scenario in the year 2013 to
establish the SWEF for each of the
standards cases.
c. Annual Energy Consumption
The annual energy consumption per
unit depends directly on equipment
efficiency. For the October 2008 NOPR
and today’s SNOPR, DOE used the
SWEFs associated with the base case
and each standards case, in combination
with the annual energy data, to estimate
the shipment-weighted average annual
per-unit energy consumption under the
base case and standards cases. The
national energy consumption is the
product of the annual energy
consumption per unit and the number
of units of each vintage, which depends
on shipments.
As noted above in section III.D, DOE
used a relative price elasticity to
estimate standards-case shipments for
CCWs. As a result, shipments forecasted
under the standards cases are lower
than under the base case. To avoid the
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57759
inclusion of energy savings from
reduced shipments, DOE used the
standards-case shipments projection
and the standards-case stock to calculate
the annual energy consumption in the
base case. For CCWs, any drop in
shipments caused by standards is
estimated to result in the purchase of
used machines. As a result, the
standards-case forecast explicitly
accounted for the energy and water
consumption of new standardcompliant CCWs and also used
machines coming into the market due to
the drop in new equipment shipments.
DOE retained the use of the base-case
shipments to determine the annual
energy consumption in the base case
and the approach used in the October
2008 NOPR for today’s SNOPR.
d. Site-to-Source Conversion
To estimate the national energy
savings expected from appliance
standards, DOE uses a multiplicative
factor to convert site energy
consumption (energy use at the location
where the appliance is operated) into
primary or source energy consumption
(the energy required to deliver the site
energy). For the October 2008 NOPR,
DOE used annual site-to-source
conversion factors based on the version
of NEMS that corresponds to AEO 2008.
For today’s SNOPR, DOE updated these
conversion factors based on the AEO
2009 March Release version of NEMS.
These conversion factors account for
natural gas losses from pipeline leakage
and natural gas used for pumping
energy and transportation fuel. For
electricity, the conversion factors vary
over time due to projected changes in
generation sources (i.e., the power plant
types projected to provide electricity to
the country). Since the AEO does not
provide energy forecasts that go beyond
2030, DOE used conversion factors that
remain constant at the 2030 values
throughout the remainder of the
forecast.
In response to a request from the DOE,
Office of Energy Efficiency and
Renewable Energy (EERE), the National
Research Council (NRC) appointed a
committee on ‘‘Point-of-Use and FullFuel-Cycle Measurement Approaches to
Energy Efficiency Standards’’ to conduct
a study called for in Section 1802 of
EPACT 2005.28 The fundamental task
before the committee was to evaluate
the methodology used for setting energy
28 The National Academies, Board on Energy and
Environmental Systems, Letter to Dr. John Mizroch,
Acting Assistant Secretary, U.S. DOE, Office of
EERE from James W. Dally, Chair, Committee on
Point-of-Use and Full-Fuel-Cycle Measurement
Approaches to Energy Efficiency Standards, May
15, 2009.
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efficiency standards and to comment on
whether site (point-of-use) or source
(full-fuel-cycle) measures of energy
efficiency better support rulemaking to
achieve energy conservation goals. The
NRC committee defined site (point-ofuse) energy consumption as reflecting
the use of electricity, natural gas,
propane, and/or fuel oil by an appliance
at the site where the appliance is
operated, based on specified test
procedures. Full-fuel-cycle energy
consumption was defined as including,
in addition to site energy use, the energy
consumed in the extraction, processing,
and transport of primary fuels such as
coal, oil, and natural gas; energy losses
in thermal combustion in powergeneration plants; and energy losses in
transmission and distribution to homes
and commercial buildings.
In evaluating the merits of using
point-of-use and full-fuel-cycle
measures, the NRC committee noted
that DOE uses what the committee
referred to as ‘‘extended site’’ energy
consumption to assess the impact of
energy use on the economy, energy
security, and environmental quality.
The extended site measure of energy
consumption includes the generation,
transmission, and distribution but,
unlike the full-fuel-cycle measure, does
not include the energy consumed in
extracting, processing, and transporting
primary fuels. A majority of members on
the NRC committee believe that
extended site energy consumption
understates the total energy consumed
to make an appliance operational at the
site. As a result, the NRC committee’s
primary general recommendation is for
DOE to consider moving over time to
use of a full-fuel-cycle measure of
energy consumption for assessment of
national and environmental impacts,
especially levels of greenhouse gas
emissions, and to providing more
comprehensive information to the
public through labels and other means,
such as an enhanced Web site. For those
appliances that use multiple fuels (e.g.,
water heaters), the NRC committee
believes that measuring full-fuel-cycle
energy consumption would provide a
more complete picture of energy used,
allowing comparison across many
different appliances as well as an
improved assessment of impacts. The
NRC committee also acknowledged the
complexities inherent in developing a
full-fuel-cycle measure of energy use
and stated that a majority of the
committee recommended a gradual
transition to that expanded measure and
eventual replacement of the currently
used extended site measure. To improve
consumers’ understanding, the
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committee recommended that DOE and
the Federal Trade Commission could
evaluate potential indices of energy use
and its impacts and could explore
various options for label design and
content using established consumer
research methods.
DOE acknowledges that its site-tosource conversion factors do not capture
the energy consumed in extracting,
processing, and transporting primary
fuels. DOE also agrees with the NRC
committee’s conclusion that developing
site-to-source conversion factors that
capture the energy associated with the
extraction, processing, and
transportation of primary fuels is
inherently complex and difficult. As a
result, DOE will evaluate whether
moving to a full-fuel-cycle measure will
enhance its ability to set energyefficiency standards.
DOE also notes that the NRC
committee’s recommendation to use a
full-fuel-cycle measure was especially
focused on appliances using multiple
fuels. For single-fuel appliances, the
committee recommended that the
current practice of basing energy
efficiency requirements on the site
measure of energy consumption should
be retained. Although CCWs utilize
heated water from both electric and
natural gas water heaters and are
credited with improved performance by
reducing the energy used in electric and
gas clothes dryers, the energy efficiency
metric with which they are regulated,
the MEF, is expressed in terms of
electrical energy usage (cubic feet per
kWh). As a result, for labeling and
enforcement purposes, CCWs are a
single-fuel appliance. Therefore,
although a full-fuel-cycle measure may
provide a better assessment of national
and environmental impacts, it is not
necessary for providing energy use
comparisons among CCW models.
e. Energy Used in Water and Wastewater
Treatment and Delivery
In the October 2008 NOPR, DOE did
not include the energy required for
water treatment and delivery. It stated
that EPCA defines ‘‘energy use’’ to be
‘‘the quantity of energy directly
consumed by a consumer product at
point of use, determined in accordance
with test procedures under section 6293
of [42 U.S.C.].’’ (42 U.S.C. 6291(4))
Based on the definition of ‘‘energy use,’’
DOE does not believe it has the
authority to consider embedded energy
(i.e., the energy required for water
treatment and delivery) in the analysis.
Furthermore, even if DOE had the
authority, it does not believe adequate
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analytical tools exist to conduct such an
evaluation.29
The Joint Comment stated that DOE’s
purported legal justification ignores that
EPCA not only provides ample authority
for DOE to consider this impact, but
actually commands its consideration in
weighing the economic justification for
efficiency standards. (Joint Comment,
No. 44, pp. 12–13) It said that DOE’s
position that it lacks the authority to
consider the energy embedded in water
is untenable in light of 42 U.S.C.
6295(o)(2)(B)(i)(VII), which provides
that in assessing the economic
justification for a standard, DOE may
consider any factors it concludes are
relevant. It added that 42 U.S.C.
6295(o)(2)(B)(i)(III) directs DOE to
consider, to the greatest extent
practicable, ‘‘the total projected amount
of energy * * * savings likely to result
directly from the imposition of such
standard.’’ It also stated that the plain
language of EPCA thus commands that
DOE assess the ‘‘energy saving’’
resulting from the standard, not simply
the ‘‘energy use’’ of the covered
products or equipment. Moreover,
though the statute concerns those
energy savings likely to ‘‘result directly’’
from the standard, that language merely
requires DOE to isolate the standard’s
impact from other energy saving
initiatives for purposes of the economic
justification analysis. (Joint Comment,
No. 44 at p. 12–13) Pacific Gas &
Electric Company (PG&E) stated that
because of the preciousness of water in
California and the embodied energy in
it, a higher standard for CCWs is
merited. (PG&E, Public Meeting
Transcript, No. 40.5 at pp. 136–137 and
p. 181) Furthermore, PG&E commented
that failing to consider energy in water
due to the lack of an analytical tool is
not acceptable. (PG&E, Public Meeting
Transcript, No. 40.5 at pp. 178–179 and
p. 183) Additional comments submitted
by EJ, ASAP, and ACEEE, suggested that
the energy embedded in the delivery
and treatment of water and wastewater
should be included in the determination
of national energy savings from the
standards proposed in the October 2008
NOPR. (EJ, Public Meeting Transcript,
29 An analytical tool equivalent to EIA’s NEMS
would be needed to properly account for embedded
energy impacts on a national scale, including the
embedded energy due to water and wastewater
savings. This new version of NEMS would need to
analyze spending and energy use in dozens, if not
hundreds, of economic sectors. This version of
NEMS also would need to account for shifts in
spending in these various sectors to account for the
marginal embedded energy differences among these
sectors. 72 FR 64432, 64498–99 (Nov. 15, 2007).
DOE does not have access to such a tool or other
means to accurately estimate the source energy
savings impacts of decreased water or wastewater
consumption and expenditures.
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No. 40.5 at pp. 140–141 and p. 180;
ASAP, Public Meeting Transcript, No.
40.5 at pp. 180–181; ACEEE, Public
Meeting Transcript, No. 40.5 at p. 182)
DOE continues to maintain that it
only has the authority to consider the
quantity of energy directly consumed by
the equipment at point of use, and the
energy consumed in production and
delivery of that energy, in determining
the total projected amount of energy
savings likely to result directly from the
imposition of a standard. Although DOE
does agree with the Joint Comment that
energy is consumed in providing water
and wastewater service, this energy is
not directly consumed by the equipment
or in production and delivery of the
energy. Inclusion of the embedded
energy associated with water and
wastewater service, would, for
completeness, also require inclusion of
the energy associated with all other
aspects of the installation and operation
of the equipment, e.g. the manufacture,
distribution, and installation of the
equipment. Furthermore, since water
districts charge all costs related to
transporting, treating, and distributing
water to their consumers, the embedded
energy is already accounted for in the
LCC analysis. Thus, while DOE could go
through the theoretical exercise of
disaggegrating energy costs from total
water costs, the LCC results would not
change since the total cost of operating
equipment would not change.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
f. Total Installed Costs and Operating
Costs
The increase in total annual installed
cost is equal to the difference in the perunit total installed cost between the
base case and standards case, multiplied
by the shipments forecasted in the
standards case. The annual operating
cost savings per unit includes changes
in energy, water, repair, and
maintenance costs. DOE forecasted
energy prices for the October 2008
NOPR based on AEO 2008; it updated
the forecasts for today’s SNOPR using
data from AEO 2009 April Release. For
today’s SNOPR, DOE maintained the
accounting system it used to develop
repair and maintenance costs for more
efficient CCWs in the October 2008
NOPR.
g. Discount Rates
DOE multiplies monetary values in
future years by the discount factor to
determine the present value. DOE
estimated national impacts using both a
3-percent and a 7-percent real discount
rate, in accordance with guidance
provided by the Office of Management
and Budget (OMB) to Federal agencies
on the development of regulatory
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analysis (OMB Circular A–4 (Sept.17,
2003), section E, ‘‘Identifying and
Measuring Benefits and Costs’’).30 The
Joint Comment stated that DOE should
use a 2 to 3 percent real discount rate
for national impact analyses. (Joint
Comment, No. 44 at p. 11) It noted that
societal discount rates are the subject of
extensive academic research, and the
weight of academic opinion is that the
appropriate societal discount rate is 3
percent or less. It urged DOE to give
primary weight to results based on the
lower of the discount rates
recommended by OMB. OMB Circular
A–4 references an earlier Circular A–94,
which states that a real discount rate of
7 percent should be used as a base case
for regulatory analysis. The 7 percent
rate is an estimate of the average beforetax rate of return to private capital in the
U.S. economy. It approximates the
opportunity cost of capital, and,
according to Circular A–94, it is the
appropriate discount rate whenever the
main effect of a regulation is to displace
or alter the use of capital in the private
sector. OMB later found that the average
rate of return to capital remains near the
7-percent rate estimated in 1992.
Circular A–4 also states that when
regulation primarily and directly affects
private consumption, a lower discount
rate is appropriate. ‘‘The alternative
most often used is sometimes called the
social rate of time preference * * * the
rate at which ‘‘society’’ discounts future
consumption flows to their present
value.’’ It suggests that the real rate of
return on long-term government debt
may provide a fair approximation of the
social rate of time preference, and states
that over the last 30 years, this rate has
averaged around 3 percent in real terms
on a pre-tax basis. It concludes that ‘‘for
regulatory analysis, [agencies] should
provide estimates of net benefits using
both 3 percent and 7 percent.’’
Consistent with OMB’s guidance, DOE
did not give primary weight to results
derived using a 3-percent discount rate.
DOE also received comments
regarding the discounting of emissions.
The Joint Comment stated that DOE
should not apply a discount rate to
physical units of measure, such as tons
of emissions or quads of energy. (Joint
Comment, No. 44 at p. 11) Consistent
with Executive Order 12866,
‘‘Regulatory Planning and Review,’’ 58
FR 51737 (Oct. 4, 1993), DOE follows
the guidance of OMB regarding
methodologies and procedures for
regulatory impact analysis that affect
more than one agency. Regarding energy
and environmental benefits from energy
30 OMB circulars are available online at: https://
www.whitehouse.gov/omb/circulars/.
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conservation standards, DOE reported
both discounted and undiscounted
values. DOE retained the approach used
in the October 2008 NOPR for today’s
SNOPR.
h. Effects of Standards on Energy Prices
For the October 2008 NOPR, DOE
conducted an analysis of the impact of
reduced energy demand associated with
possible standards on CCWs on prices of
natural gas and electricity. The Joint
Comment stated that the electricity
price mitigation effects of the standard
proposed in the October 2008 NOPR
should be documented and the value of
reduced electricity bills to all
consumers quantified as a benefit. (Joint
Comment, No. 44 at p. 11) The DOE
analysis found that gas and electric
demand reductions resulting from maxtech standards for CCWs would have no
detectable change on the U.S. average
wellhead natural gas price or the
average user price of electricity. DOE
concluded that CCW standards will not
provide additional economic benefits
resulting from lower energy prices.
Thus, for today’s SNOPR DOE has made
no change to its assumptions about the
effects of standards on energy prices.
See chapter 11 of the SNOPR TSD for
more details.
F. Consumer Subgroup Analysis
In the October 2008 NOPR, DOE
analyzed the potential effects of CCW
standards on two subgroups: (1)
Consumers not served by municipal
water and sewer providers, and (2)
small businesses. For consumers not
served by water and sewer, DOE
analyzed the potential impacts of
standards by conducting the analysis
with well and septic system prices,
rather than water and wastewater prices
based on RFC/AWWA data. For small
CCW businesses, DOE analyzed the
potential impacts of standards by
conducting the analysis with different
discount rates, because small businesses
do not have the same access to capital
as larger businesses. DOE estimated that
for businesses purchasing CCWs, the
average discount rate for small
companies is 3.5 percent higher than the
industry average. Due to the higher costs
of conducting business, as evidenced by
their higher discount rates, the benefits
of CCW standards for small businesses
will be lower than for the general
population of CCW owners. For today’s
SNOPR DOE has made no changes to its
assumptions about benefits of CCW
standards to small businesses.
DOE received comments regarding the
economic impacts of higher initial
clothes washer costs. Alliance and MLA
stated that the standards proposed in
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the October 2008 NOPR would result in
substantial price increases for customers
of central area laundry rooms, especially
for elderly, low-income, college
students, and disabled end-users. MLA
stated that a majority of the 35–50
million CCW customers are low- or lowto-middle income people, many of
whom are elderly or who suffer
disabilities. (Alliance, No. 45 at p. 1 and
Attachment 2, p. 12; MLA, No. 49 at pp.
1–4) PG&E commented that lowerincome consumers may pay higher
energy costs in laundry rooms using
older machines than those who have
access to new machines. (PG&E, Public
Meeting Transcript, No. 40.5 at p. 25)
DOE research suggests that the endusers of CCWs are unlikely to be the
owners of the equipment. Although lowincome end-users do utilize CCWs, it is
unknown to what affect more efficient
CCWs will impact their cost of using the
equipment. If the price of operating a
CCW to an end-user does increase, DOE
estimates that such an increase would
occur only if the CCW owner needed to
increase the price of operation to
recover or capture its increased costs of
providing more efficient equipment
while not benefitting from the lower
utility consumption. Although DOE
does recognize that this could occur, it
is equally likely that the price of
operation to end-users would not
increase as the increased expense to the
CCW owner of providing more efficient
CCWs is more than offset by lifetime
utility bill savings from the moreefficient CCW. More details on the
consumer subgroup analysis can be
found in chapter 12 of the SNOPR TSD.
G. Manufacturer Impact Analysis
DOE performed an MIA to estimate
the financial impact of amended energy
conservation standards on CCW
manufacturers, and to calculate the
impact of such standards on domestic
manufacturing employment and
capacity. The MIA has both quantitative
and qualitative aspects. The quantitative
part of the MIA primarily relies on the
GRIM—an industry-cash-flow model
customized for this rulemaking. The
GRIM inputs are data characterizing the
industry cost structure, shipments, and
revenues. The key output is the INPV.
Different sets of assumptions (scenarios)
will produce different results. The
qualitative part of the MIA addresses
factors such as equipment
characteristics, characteristics of
particular firms, and market and
equipment trends, and it also includes
an assessment of the impacts of
standards on subgroups of
manufacturers. DOE outlined its
methodology for the MIA in the October
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2008 NOPR. 73 FR 62034, 62075–81
(Oct. 17, 2008). The complete MIA for
the October 2008 NOPR is presented in
chapter 13 of the NOPR TSD.
For today’s supplemental notice, DOE
updated the MIA results based on
several changes to other analyses that
impact the MIA. The total shipments
and efficiency distributions were
updated using the new estimates
outlined in the SNOPR NIA. The MIA
also uses the new analysis period in the
NIA (2013–2043) and has updated the
base year to 2009. As discussed in
section III.C.2, DOE updated the
manufacturer production costs and the
capital and equipment conversion costs
to 2008$ using the producer price index
for commercial laundry equipment
manufacturing (NAICS 333312). DOE
updated the GRIM to allow the
inclusion of Federal production tax
credits. DOE discusses the assumptions
and methodology used to calculate the
Federal production tax in appendix 13C
and in the section below. For details of
the MIA, see chapter 13 of the SNOPR
TSD.
DOE also received a number of
comments from interested parties in
response to the MIA analysis presented
in the October 2008 NOPR. Alliance
stated that the top-loading CCW energy
conservation standard proposed in the
October 2008 NOPR would eliminate
Alliance from the CCW market, and
eliminate top-loading CCWs from the
market as well. (Alliance, No. 45 at
Attachment 2, p. 3) Alliance stated that,
if it were to exit the CCW market, the
CCW market would suffer significant
competitive harm. Alliance also stated
that more than 20 route operators and
the MLA are opposed to the standard
proposed in the October 2008 NOPR
because it would result in a loss of
competition. (Alliance, No. 45 at p. 1
and Attachment 2, pp. 6–12) Alliance
stated that the lower CCW market
competition could lead to price
increases from Alliance’s competitors,
such as the combined Whirlpool and
Maytag entities, which currently control
72 percent of the RCW market. Alliance
predicted that these manufacturers
would control about 90 percent of the
CCW market if Alliance were to stop
making CCWs. Alliance sees this
outcome as a monopoly for Whirlpool.
(Alliance, Public Meeting Transcript,
No. 40.5 at p. 24)
Alliance stated that it cannot justify
the investment necessary to develop the
technology required to reach the toploading energy conservation standard
proposed in the October 2008 NOPR.
Alliance cited a lack of resources as the
LVM to justify an investment in a ‘‘nontraditional’’ top-loader with unknown
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market acceptance (Alliance, No. 45 at
Attachment 2, p. 8). Alliance stated that
the top-loading standard proposed in
the October 2008 NOPR would likely
result in significant, detrimental
impacts to the LVM, as Alliance does
not have the resources for research and
development, re-configuring production
lines, or licensing the advanced
technology required to meet the
standard. (Alliance, Public Meeting
Transcript, pp. 23–24) Alliance believes
that a top-loading energy conservation
standard set at 1.42 MEF/9.5 WF would
lessen these impacts. Alliance suggested
that the top-loading CCW energy
conservation standard proposed in the
October 2008 NOPR would force
Alliance to cease production of CCWs
due to the high investment costs
required to design and manufacture the
technology to meet the standard.
(Alliance, Public Meeting Transcript,
No. 40.5 at pp. 22–24 and p. 202;
Alliance, No. 45 at Attachment 2, pp. 7–
8) Alliance estimates these costs based
on its belief that non-traditional
technology will be required to meet the
standard with wash performance that
would be acceptable for commercial
laundromat use.
MLA commented that the top-loading
CCW standard proposed in the October
2008 NOPR would most likely result in
the elimination of all but one
manufacturer of top-loading CCWs
(Whirlpool) as well as the elimination of
many route operators due to higher
equipment costs resulting from reduced
competition. (MLA, No. 49 at pp. 1–3)
Finally, EEI suggested that DOE create a
standard that will save energy and be
market neutral, such that multiple
manufacturers could meet it. (EEI, No.
56 at pp. 2–3)
EPCA directs DOE to consider any
lessening of competition that is likely to
result from standards. It directs the
Attorney General to determine the
impact, if any, of any lessening of
competition likely to result from a
proposed standard and to transmit such
determination to the Secretary, not later
than 60 days after the publication of a
proposed rule, together with an analysis
of the nature and extent of such impact.
(42 U.S.C. 6295(o)(2)(B)(i)(V) and
(B)(ii)). DOE received a response from
the Acting Assistant Attorney General
on December 16, 2008. The letter stated
that the Department of Justice (DOJ) is
not in a position to judge whether CCW
manufacturers will be able to meet the
standards proposed in the October 2008
NOPR. Nevertheless, DOJ found a ‘‘real
risk that one or more of these
manufacturers cannot meet the
proposed standard’’ for top-loading
CCWs published in the October 2008
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NOPR. (Attorney General, No. 53 at p.
2)
In the October 2008 NOPR, DOE
noted the concerns regarding the
proposed conservation standards for
top-loading CCWs in particular. 73 FR
62034, 62103–104 (Oct. 17, 2008). DOE
also included a section in chapter 13 of
the TSD that estimated likely financial
impacts for the LVM to meet the
efficiency standards proposed in the
2008 NOPR. DOE continues to offer a
sub-group assessment of the differential
impacts on the LVM in chapter 13.
In response to concerns raised by DOJ
and other concerns raised by interested
parties, DOE is proposing in today’s
SNOPR a 1.60 MEF/8.5 WF standard for
top-loading CCWs. DOE believes that
this proposed energy conservation
standard will greatly ease the
competitive concerns of Alliance, GE,
MLA, and DOJ. DOE research suggests
that today’s proposed standard is within
reach of all competitors in the market,
since the max-tech unit is based on a
standard RCW top-loading platform (i.e.
one with an agitator) and that no
proprietary technologies were used.
DOE research suggests that Alliance
currently produces a model with 1.5
MEF/8.8 WF that DOE believes can be
modified to meet today’s proposed
standard. As such, a dramatic decline in
competition in the CCW industry does
not seem likely since all manufacturers
should be able to release a washer with
similar technology at the present
efficiency level. DOE requests comment
on competitive concerns at today’s
proposed standard.
Alliance and GE commented that the
top-loading standard proposed in the
October 2008 NOPR would have a
detrimental impact on the CCW
industry and labor force. (Alliance,
Public Meeting Transcript, No. 40.5 at
pp. 23–24; Alliance, No. 45 at
Attachment 2, p. 3; GE, Public Meeting
Transcript, No. 40.5 at pp. 31–32)
Furthermore, Alliance stated that no
manufacturer will be willing to use an
unproven non-traditional design in the
commercial market, resulting in the
elimination of top-loading CCW
production. With manufacturers like
Alliance exiting the business, over 1,000
jobs would be lost. Alliance also stated
that there could be spillover harm
because Alliance could also exit other
laundry market segments. (Alliance, No.
45 at Attachment 2, p. 17)
For the October 2008 NOPR, DOE
calculated the direct employment
impacts using the GRIM and
information gathered from interviews
with manufacturers. In the October 2008
NOPR, DOE estimated that there would
be positive employment impacts among
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domestic commercial clothes washer
manufacturers for TSL 1 through TSL 5.
Because production labor expenditures
are assumed to be a fixed percentage of
the Cost of Goods Sold (COGS) and the
Manufacturing Product Costs (MPCs)
increase with more efficient equipment,
labor tracks the increased prices in the
GRIM. The GRIM predicts a steady level
of domestic employment after standards
at a level based on the increase in
relative price. Because the LVM had
previously stated it would be eliminated
from the commercial market, DOE also
specifically investigated the LVM
employment using its commercial
washer revenues and additional
employment estimates. DOE’s scenarios
included one in which the LVM ceased
to produce soft-mount washers or
standard dryers and a scenario with a
complete closure of the LVM’s domestic
manufacturing plant. DOE estimated
that the LVM’s ceasing to produce softmount dryers and CCWs would result in
292 lost production jobs and that a
complete closure of the facility would
result in the dismissal of approximately
600 factory employees. 73 FR 60234,
62102–3 (Oct. 17, 2008). DOE believes
that the energy conservation standard
proposed in today’s notice will allow
the LVM to continue to produce toploading CCWs, mitigating any potential
closure of its domestic manufacturing
facility. Further discussion of the LVM
and the potential impacts on direct
employment for the CCW industry is
presented in chapter 13 of the TSD.
DOE received comments on the likely
benefits of Federal producer tax credits
for which some CCW manufacturers
could be eligible. Such credits accrue to
manufacturers on the basis of appliance
or equipment efficiencies as well as
other eligibility requirements. The Joint
Comment stated that DOE did not
account for Federal production tax
credits for efficient appliances produced
after 2007 in the MIA and that the LVM
is likely to disproportionately benefit
from these Federal production tax
incentives. According to the Joint
Comment, the Federal production tax
credits should substantially off-set
conversion capital requirements and
equipment conversion expenses,
mitigating the financial impacts of
higher efficiency levels. (Joint
Comment, No. 44 at pp. 7–10)
For the October 2008 NOPR, DOE did
not fully account for the impacts of the
Federal production tax credits updated
by The Energy Improvement and
Extension Act of 2008 (Pub. L. 110–343;
EIEA 2008). However, DOE research
suggests that the Joint Comment
overstates the potential benefits that
CCW manufacturers would accumulate
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through the tax credits found in EIEA
2008. A key assumption in the Joint
Comment analysis is that all major CCW
manufacturers indentified for this
rulemaking would be able to benefit
from the tax credit (Joint Comment, No.
44 at pp. 8–9). According to the title III,
section 305 (b)(2) from EIEA 2008, and
title I section 1334 (c)(1)(B) from EPACT
2005, the tax credit is only awarded for
equipment produced in the United
States. Using market research and
interviews with manufacturers, DOE
believes that only the LVM produces
qualifying CCWs. Other manufacturers
offer washers that meet the MEFs and
WF requirements, but these washers are
either made outside the United States or
are sourced from other domestic
manufacturers, or are not sold in the
commercial market. See appendix 13C
of the SNOPR TSD for further
discussion of the Federal production tax
credit.
According to the Joint Comment, the
Federal production tax credit could be
used by the industry to offset the
conversion costs necessary to comply
with the energy conservation standards
proposed in the October 2008 NOPR.
(Joint Comment, No. 44 at p. 7) In its
analysis, the Joint Comment does not
account for any conversion costs
associated with a complete production
transfer of top-load to front-load
washers. The equipment conversion and
capital conversion cost shown in the
GRIM and chapter 13 take all existing
front-loading washers into
consideration, including those that
qualify for the Federal production tax
credit. In its calculation of the
equipment and capital conversion costs,
DOE considered that the LVM already
had qualifying washers at both 2.0 MEF/
6.0 WF and 2.2 MEF/4.5 WF levels;
hence, no additional product
development appeared necessary to
achieve these efficiency levels.
Therefore, DOE did not include any
capital or product conversion costs in
the GRIM for the LVM at a 2.0 MEF
level. However, DOE research suggested
that the LVM would have some capital
conversion costs if the front-loading
efficiency level were raised to 2.2 MEF,
because the production levels of such
washers would have to dramatically
increase from present shipment levels.
DOE acknowledges that the Federal
production tax credit could have
mitigating effects in lessening the
impacts due to energy conservation
standards. However, as described above
and in appendix 13C, DOE estimates the
benefits of Federal production tax
credits for CCW manufacturers will not
greatly mitigate the impacts due
amended energy conservation
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standards. In the GRIM, DOE accounts
for the Federal tax credit as a direct cash
benefit in the base and standards cases
that increases the INPV. This increase in
industry value lessens the impacts on
manufacturers due to amended energy
conservation standards. However,
because the benefit of the Federal
production tax credit is less significant
than calculated in the Joint Comment
and mostly occurs outside the analysis
period, the benefits do not substantially
impact the INPV calculated by DOE.
Because only the LVM produces
qualifying CCWs, DOE based its
estimates of the potential benefits to the
CCW industry by estimating the
potential Federal production tax credits
that the LVM could receive. Using
publically available information, recent
SEC filings, and the information
published in chapter 13 and appendix
13A of the October 2008 NOPR, DOE
estimated the LVM’s front-loading CCW
shipment projections to 2010. These
estimates suggest that the LVM could
collect $2.8 million in Federal
production tax credits from 2008–2010
from the provisions updated by EIEA
2008 and $4.1 million from the program
from 2007 to 2010. Based on its
calculations, the LVM received the
biggest benefit from the tax credit in
2008. According to the ENERGY STAR
database,31 the LVM released a model
that qualified for the $250 Federal
production tax credit on September 26,
2008, shortly before EIEA 2008 was
enacted. Because the higher tax credits
were retroactive for all of 2008, the LVM
received a $2.4 million Federal tax
credit in 2008 because it had
substantially increased production of
qualifying front-loading CCWs. Using
the LVM’s SEC Form 10–Q for the
quarter ending March 31, 2009,32 DOE
estimates that in 2009 the LVM will
receive $385,000 in Federal production
tax credits. DOE estimates that the LVM
is unlikely to qualify for any additional
Federal production tax credit in 2010
even if the volume of qualifying washers
increases. DOE has a more extensive
explanation of its calculations of the
Federal production tax credits in
appendix 13C of the SNOPR TSD.
The Joint Comment bases its analysis
on manufacturers completely shifting
production to front-loading washers.
However, DOE believes that it is
unlikely all manufacturers would shift
production to exclusively front-loading
31 ENERGY STAR Qualified Commercial Clothes
Washers. Available online at: https://
www.energystar.gov/index.cfm?fuseaction=
clotheswash.display_commercial_cw.
32 The Alliance 10–Q Form is available at https://
sec.gov/Archives/edgar/data/1063697/00011931
2509107306/d10q.htm.
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washers in response to the Federal
production tax credits or the energy
conservation standards proposed in
today’s rule. As discussed in section
III.E, in response to the Federal
production tax credit, DOE estimates
that the tax credits would permanently
transform the market so that frontloading washers would continue to
comprise 30 percent of the market over
the entire forecast period. This shift
towards front-loading washers has
mitigating effects on the impacts on
manufacturers due to energy
conservation standards. However, the
shift is not great enough to significantly
decrease the impacts as the Joint
Comment suggests. Using the same
assumptions used for calculations found
in appendix 13A, DOE estimates that
the LVM increased the production of
front-loading washers by approximately
10,000 washers in 2007 and 2008.
Though the estimates show that there
were significant increases in frontloading shipments for the LVM in 2007
and 2008, shipments for fiscal year 2009
are projected to decrease and hence
reduce the Federal production tax
credits.
The Joint Comment acknowledges but
does not account for factors that would
offset the benefits from the Federal
production tax credit that would accrue
to CCW manufacturers. In its LVM
analysis for the October 2008 NOPR,
DOE examined the capital costs that
would be required to create a frontloading washer facility for 100,000
annual unit shipments. DOE estimated
that a green-field facility with all
production equipment would cost the
LVM approximately $54 million. In that
same analysis, DOE estimated that the
total tooling required would cost
approximately $18 million. If the LVM
had to invest to exclusively offer frontloading washers, these investments
would more than offset the benefit
calculated in the Joint Comment for all
CCW manufacturers. In fact, the tooling
alone would more than eliminate the
benefit calculated for the entire CCW
industry in the Joint Comment. The
Joint Comment states that the LVM is in
a position to disproportionately benefit
from the Federal production tax credit.
(Joint Comment, No. 44 at p. 8) While
DOE acknowledges that the LVM is the
only manufacturer eligible to receive a
Federal production tax credit in the
CCW market, DOE research suggests that
the LVM would not disproportionately
benefit because the costs to upgrade its
production facilities for higher-volume
front-loading washer manufacturing, in
addition to necessary redesigns of its
existing front-loading washers, are
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estimated to be multiples of the tax
credit. For further information, see
appendix 13C of the SNOPR TSD. The
Joint Comment also states that part of
the Federal production tax credit will
need to be shared with distributors and
customers to stimulate growth. (Joint
Comment, No. 44 at p. 9) However, the
Joint Comment does not reduce the
benefit to the CCW industry that would
occur if manufacturers did not keep all
of the tax credit.
DOE received comment regarding its
characterization of CCW manufacturers
and the LVM in particular. The Joint
Comment argued that DOE should not
characterize Alliance as an LVM, as the
LVM reported revenues equivalent to
approximately half of the total CCW
revenue and claims to be the leading
manufacturer of stand-alone commercial
laundry equipment in North America.
(Joint Comment, No. 44 at p. 7) For the
October 2008 NOPR, DOE presented a
separate analysis of the LVM. 73 FR
62034, 62103–104 (Oct. 17, 2008).
Although DOE agrees with the Joint
Comment that the LVM has a significant
share of the CCW industry based on
revenues in reports filed with the SEC,
DOE believes that the LVM does not
have the same overall clothes washer
manufacturing scale as its competitors
(for both residential products and
commercial equipment) and should be
characterized as an LVM.
In the LVM analysis, DOE notes that
most CCWs on the market in the United
States are based largely on RCW
platforms that are upgraded selectively.
Some investments (such as the
controllers) are CCW-specific but only
make up part of the total unit cost. The
majority of capital expenditures related
to tooling, equipment, and other
machinery in a plant can usually be
applied to the residential as well as the
commercial market. Thus, overall (both
RCW and CCW) manufacturing scale has
a significant impact on the costeffectiveness of potential upgrades. A
manufacturer with a high-volume
residential line can cost justify much
more capital-intensive solutions if they
are applicable in both markets, in
contrast to an LVM which lacks the
scale to make the investments
worthwhile. Thus, an LVM may be
required to purchase upgrade options
from third-party vendors instead of
developing in-house solutions that
reduce costs at higher volumes. In the
clothes washer market, the most direct
CCW competitor has over 60 times the
overall shipment volumes of the LVM.
This scale difference also relates to
purchasing power. A large, diversified
appliance manufacturer can use its
production scale to achieve better prices
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for raw materials and commonly
purchased components like controllers,
motors, belts, switches, sensors, and
wiring harnesses. Even if a large
company purchases fewer items of a
certain component, its overall revenue
relationship with a supplier may still
enable it to achieve better pricing than
a smaller competitor, even if that
competitor buys certain components in
higher quantities. Lastly, high-volume
manufacturers benefit from being able to
source their components through
sophisticated supply chains on a
worldwide basis. A low-volume
manufacturer is unlikely to be able to
compete solely on manufacturing cost.
DOE seeks comment on the
determination of manufacturer impacts,
including the effects of manufacturer tax
credits and competitive concerns. This
is identified as Issue 5 in section VII.E
of today’s supplemental notice (Issues
on Which DOE Seeks Comment.)
H. Employment Impact Analysis
DOE considers employment impacts
in the domestic economy as one factor
in selecting a proposed standard.
Employment impacts include direct and
indirect impacts. Direct employment
impacts are changes in the number of
employees for manufacturers of
equipment subject to standards, their
suppliers, and related service firms. The
MIA addresses these impacts.
Indirect employment impacts from
standards consist of the net jobs created
or eliminated in the national economy,
other than in the manufacturing sector
being regulated, due to: (1) Reduced
spending by end users on energy
(electricity, gas (including liquefied
petroleum gas), and oil); (2) reduced
spending on new energy supply by the
utility industry; (3) increased spending
on the purchase price of new
equipment; and (4) the effects of those
three factors throughout the economy.
DOE expects the net monetary savings
from standards to be redirected to other
forms of economic activity. DOE also
expects these shifts in spending and
economic activity to affect the demand
for labor in the short term, as explained
below.
One method for assessing the possible
effects on the demand for labor of such
shifts in economic activity is to compare
sectoral employment statistics
developed by the BLS. The BLS
regularly publishes its estimates of the
number of jobs per million dollars of
economic activity in different sectors of
the economy, as well as the jobs created
elsewhere in the economy by this same
economic activity. Data from BLS
indicate that expenditures in the utility
sector generally create fewer jobs (both
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directly and indirectly) than
expenditures in other sectors of the
economy. There are many reasons for
these differences, including wage
differences and the fact that the utility
sector is more capital intensive and less
labor intensive than other sectors. (See
Bureau of Economic Analysis, Regional
Multipliers: A User Handbook for the
Regional Input-Output Modeling System
(RIMS II), Washington, DC, U.S.
Department of Commerce (1992).)
Efficiency standards have the effect of
reducing consumer utility bills. Because
reduced consumer expenditures for
energy likely lead to increased
expenditures in other sectors of the
economy, the general effect of efficiency
standards is to shift economic activity
from a less labor-intensive sector (i.e.,
the utility sector) to more laborintensive sectors (e.g., the retail and
manufacturing sectors). Thus, based on
the BLS data alone, DOE believes net
national employment will increase due
to shifts in economic activity resulting
from standards for CCWs.
In developing the October 2008 NOPR
and today’s SNOPR, DOE estimated
indirect national employment impacts
using an input/output model of the U.S.
economy called Impact of Sector Energy
Technologies (ImSET).33 ImSET is a
special-purpose version of the ‘‘U.S.
Benchmark National Input-Output’’
(I–O) model designed to estimate the
national employment and income
effects of energy-saving technologies.
The ImSET software includes a
computer-based I–O model with
structural coefficients to characterize
economic flows among 188 sectors most
relevant to industrial, commercial, and
residential building energy use. The
Joint Comment stated that DOE must
consider its projections that an increase
in employment will result from the
adoption of standards in weighing the
economic costs and benefits of strong
efficiency standards. (Joint Comment,
No. 44 at p. 13) As described in section
V.B.3 below, DOE takes into
consideration the indirect employment
impacts estimated using ImSET when
evaluating alternative standard levels.
Direct employment impacts on the
manufacturers that produce CCWs are
analyzed in the MIA, as discussed in
section III.G. For today’s SNOPR, DOE
has made no change to its method for
estimating employment impacts. For
further details, see chapter 15 of the
SNOPR TSD.
33 More information regarding ImSET is available
online at: https://www.pnl.gov/main/publications/
external/technical_reports/PNNL-15273.pdf.
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I. Utility Impact Analysis
The utility impact analysis estimates
the change in the forecasted power
generation capacity for the Nation,
which would be expected to result from
adoption of new standards. This
analysis separately determines the
changes to supply and demand as a
result of natural gas, fuel oil, liquefied
petroleum gas, or electricity residential
consumption savings due to the
standard. For the October 2008 NOPR
and today’s SNOPR, DOE calculated this
change using the NEMS–BT computer
model. NEMS–BT models certain policy
scenarios such as the effect of reduced
energy consumption per TSL by fuel
type. The analysis output provides a
forecast for the needed generation
capacities at each TSL. The estimated
net benefit of the standard for today’s
SNOPR is the difference between the
forecasted generation capacities by
NEMS–BT and the AEO 2009 April
Release Reference Case. DOE obtained
the energy savings inputs associated
with electricity and natural gas
consumption savings from the NIA.
These inputs reflect the effects of
efficiency improvement on CCW energy
consumption, both fuel (natural gas) and
electricity. Chapter 14 of the SNOPR
TSD presents results of the utility
impact analysis.
In its October 2008 NOPR, DOE did
not estimate impacts on water and
wastewater utilities because the water
and wastewater utility sector is more
complicated than either the electric
utility or gas utility sectors, with a high
degree of geographic variability
produced by a large diversity of water
resource availability, institutional
history, and regulatory context. 73 FR
62034, 62082 (Oct. 17, 2008). For
today’s SNOPR, for the reasons cited
above, DOE did not estimate impacts to
the water and wastewater utility sector.
J. Environmental Assessment
Pursuant to the National
Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321 et seq.) 42
U.S.C. 6295(o)(2)(B)(i)(VI), DOE
prepared a draft environmental
assessment (EA) of the potential impacts
of the proposed standards for CCWs it
considered for today’s supplemental
notice which it has included as chapter
16 of the TSD for the SNOPR. DOE
found the environmental effects
associated with the standards for CCWs
to be insignificant. Therefore, DOE is
issuing a Finding of No Significant
Impact (FONSI), pursuant to NEPA, the
regulations of the Council on
Environmental Quality (40 CFR parts
1500–1508), and DOE’s regulations for
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compliance with NEPA (10 CFR part
1021). The FONSI is available in the
docket for this rulemaking.
In the EA, DOE estimated the
reduction in power sector emissions of
CO2 and NOX using the NEMS–BT
computer model. DOE also calculated a
range of estimates for reduction in Hg
emissions using power sector emission
rates. The EA does not include the
estimated reduction in power sector
impacts of sulfur dioxide (SO2), because
DOE has determined that any such
reduction resulting from an energy
conservation standard would not affect
the overall level of SO2 emissions in the
United States due to the presence of
national caps on SO2 emissions. These
topics are addressed further below; see
chapter 16 of the TSD for additional
detail.
NEMS–BT is run similarly to the AEO
2009 April Release NEMS, except that
CCW energy use is reduced by the
amount of energy saved (by fuel type)
due to the TSLs. The inputs of national
energy savings come from the NIA
analysis. For the EA, the output is the
forecasted physical emissions. The net
benefit of a standard is the difference
between emissions estimated by NEMS–
BT and the AEO 2009 April Release
Reference Case. The NEMS–BT tracks
CO2 emissions using a detailed module
that provides results with broad
coverage of all sectors and inclusion of
interactive effects.
Title IV of the Clean Air Act sets an
annual emissions cap on SO2 for all
electric generating units. The attainment
of the emissions cap is flexible among
generators and is enforced through the
use of emissions allowances and
tradable permits. In other words, with or
without a standard, total cumulative
SO2 emissions will always be at or near
the ceiling, while there may be some
timing differences between year-by-year
forecast. Thus, it is unlikely that there
will be reduced SO2 emissions from
standards as long as there is
enforcement of the emissions ceilings.
Although there may not be an actual
reduction in SO2 emissions, there still
may be an economic benefit from
reduced demand for SO2 emission
allowances. Electricity savings decrease
the generation of SO2 emissions from
power production, which can lessen the
need to purchase SO2 emissions
allowance credits, and thereby decrease
the costs of complying with regulatory
caps on emissions.
NOX emissions from 28 eastern States
and the District of Columbia (D.C.) are
limited under the Clean Air Interstate
Rule (CAIR), published in the Federal
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Register on May 12, 2005.34 Although
CAIR has been remanded to EPA by the
U.S. Court of Appeals for the District of
Columbia Circuit (D.C. Circuit), it will
remain in effect until it is replaced by
a rule consistent with the Court’s July
11, 2008 opinion in North Carolina v.
EPA.35 Because all States covered by
CAIR opted to reduce NOX emissions
through participation in cap and trade
programs for electric generating units,
emissions from these sources are capped
across the CAIR region.
For the 28 eastern States and D.C.
where CAIR is in effect, no NOX
emissions reductions will occur due to
the permanent cap. Under caps,
physical emissions reductions in those
States would not result from the energy
conservation standards under
consideration by DOE, but standards
might have produced an
environmentally related economic
impact in the form of lower prices for
emissions allowance credits, if they
were large enough. However, DOE
determined that in the present case,
such standards would not produce an
environmentally related economic
impact in the form of lower prices for
emissions allowance credits, because
the estimated reduction in NOX
emissions or the corresponding
allowance credits in States covered by
the CAIR cap would be too small to
affect allowance prices for NOX under
the CAIR. In contrast, new or amended
energy conservation standards would
reduce NOX emissions in those 22 States
that are not affected by CAIR. As a
result, the NEMS–BT does forecast
emission reductions from the CCW
standards considered in today’s
supplemental notice.
In the October 2008 NOPR, however,
DOE provided a different estimate of
NOX reductions, because DOE assumed
that the CAIR had been vacated. 74 FR
16920, 17009–14 (April 13, 2009). This
is because the CAIR was vacated by the
D.C. Circuit in its July 11, 2008 decision
in North Carolina v. Environmental
Protection Agency. 531 F.3d 896 (D.C.
Cir. 2008). Thus, for the October 2008
NOPR, DOE established a range of NOX
reductions based on low and high
emissions rates (in kt of NOX emitted
per terawatt-hour (TWh) of electricity
generated) derived from the AEO 2008.
DOE anticipated that, in the absence of
the CAIR’s trading program, the new or
amended energy conservation standards
would reduce NOX emissions
nationwide, not just in 22 States.
34 70
FR 25162 (May 12, 2005).
F.3d 896 (D.C. Cir. 2008); see also North
Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008).
35 531
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Similar to SO2 and NOX, future
emissions of Hg would have been
subject to emissions caps under Clean
Air Mercury Rule (CAMR) [70 FR 28606
(May 18, 2005)], which would have
permanently capped emissions of Hg for
new and existing coal-fired plants in all
States by 2010, but the CAMR was
vacated by the D.C. Circuit in its
decision in New Jersey v. Environmental
Protection Agency prior to the
publication of the October 2008 NOPR.
517 F.3d 574 (D.C. Cir. 2008). However,
the NEMS–BT model DOE initially used
to estimate the changes in emissions for
the proposed rule assumed that Hg
emissions would be subject to CAMR
emission caps.
After CAMR was vacated, DOE was
unable to use the NEMS–BT model to
estimate any changes in the physical
quantity of Hg emissions (anywhere in
the country) that would result from
standard levels it considered in the
October 2008 NOPR. Instead, DOE used
an Hg emission rate (in metric tons of
Hg per energy produced) based on the
AEO 2008. Because virtually all Hg
emitted from electricity generation is
from coal-fired power plants, DOE based
the emission rate on the metric tons of
Hg emitted per TWh of coal-generated
electricity. To estimate the reduction in
Hg emissions, DOE multiplied the
emission rate by the reduction in coalgenerated electricity associated with
standards considered. Because the
CAMR is still vacated, DOE continued
to use the approach utilized for the
October 2008 NOPR, updated for the
AEO 2009 April Release to estimate the
Hg emission reductions due to
standards for today’s SNOPR.
In addition to electricity, the
operation of gas-fired CCWs results in
emissions of CO2 and NOX at the sites
where the appliances are used. NEMS–
BT provides no means for estimating
such emissions. Therefore, DOE
calculated separate estimates of the
effect of the potential standards on site
emissions of CO2 and NOX based on
emissions factors derived from the
literature. Because natural gas
combustion does not yield SO2
emissions, DOE did not report in either
the October 2008 NOPR or today’s
SNOPR the effect of the proposed
standards on site emissions of SO2.
K. Monetizing Carbon Dioxide and
Other Emissions Impacts
DOE also calculated the possible
monetary benefit of CO2, NOX, and Hg
reductions. Cumulative monetary
benefits were determined using
discount rates of 3 and 7 percent. DOE
monetized reductions in CO2 emissions
due to standards in this proposed rule
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based on a range of monetary values
drawn from studies that attempt to
estimate the present value of the
marginal economic benefits (based on
the avoided marginal social costs of
carbon) likely to result from reducing
greenhouse gas emissions. The marginal
social cost of carbon is an estimate of
the monetary value to society of the
environmental damages of CO2
emissions.
Several parties provided comments
regarding the economic valuation of CO2
for the October 2008 NOPR. Whirlpool
does not support an attempt to value
those emissions as part of this
rulemaking. (Whirlpool, No. 50 at p. 8)
EEI stated that utilities have embedded
the cost of complying with existing
environmental legislation in their price
for electricity, and a similar approach
may be reasonable for valuing reduced
CO2 emissions. (EEI, Public Meeting
Transcript, No. 40.5 at pp. 194–195) The
Joint Comment stated that DOE’s
valuation of avoided CO2 emissions
should utilize EIA’s analysis of the
Climate Security Act. The core scenario
of this analysis yields a $17 price per
ton of CO2, with an annual 7.4 percent
increase. (Joint Comment, No. 44 at p.
12) As discussed in section V.B.6, DOE
has updated the approach described in
the October 2008 NOPR (73 FR 62034,
62107 (Oct. 17, 2008)) for its
monetization of environmental
emissions reductions for today’s
SNOPR.
Although this rulemaking does not
affect SO2 emissions or NOX emissions
in the 28 eastern States and D.C. where
CAIR is in effect, there are markets for
SO2 and NOX emissions allowances.
The market clearing price of SO2 and
NOX emissions allowances is roughly
the marginal cost of meeting the
regulatory cap, not the marginal value of
the cap itself. Further, because national
SO2 and NOX emissions are regulated by
a cap and trade system, the cost of
meeting these caps is included in the
price of energy. Thus, the value of
energy savings already includes the
value of SO2 and NOX control for those
consumers experiencing energy savings.
The economic cost savings associated
with SO2 and NOX emissions caps is
approximately equal to the change in
the price of traded allowances resulting
from energy savings multiplied by the
number of allowances that would be
issued each year. That calculation is
uncertain because the energy savings
from new or amended standards for
CCWs would be so small relative to the
entire electricity generation market that
the resulting emissions savings would
have almost no impact on price
formation in the allowances market.
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These savings would most likely be
outweighed by uncertainties in the
marginal costs of compliance with SO2
and NOX emissions caps.
As reported above in section III.D.4.a,
the Joint Comment stated that to
realistically depict energy prices in the
future, DOE must consider the impact of
carbon control legislation, since such
legislation is very likely. The Joint
Comment also noted that there are
regional cap and trade programs that are
in effect in the Northeast (Regional
Greenhouse Gas Initiative (RGGI)) and
the West (Western Climate Initiative
(WCI)) that will impact the price of
electricity and are not reflected in the
AEO energy price forecasts. (Joint
Comment, No. 44 at p. 12) EJ stated that
caps will likely be in place by the time
new standards become effective, so DOE
should increase its electricity prices to
reflect the cost of complying with
emission caps. (EJ, Public Meeting
Transcript, No. 40.5 at pp. 105–106)
In response, DOE incorporated
current trends in its analysis, but
expressly did not include possible
future legislation in this rulemaking.
The current NEMS–BT model used in
projecting the environmental impacts
includes the CAIR rule, as described
above, which is projected to reduce SO2
and NOX emissions. NEMS–BT also
takes into account the current set of
State-level renewable portfolio
standards, the effect of the RGGI, and
utility investor reactions to the
possibility of future CO2 cap and trade
programs, all of which impact electricity
prices and reduce the projected carbon
intensity of generation. The most recent
Reference Case, AEO 2009, is available
at https://www.eia.doe.gov/oiaf/
servicerpt/stimulus/, and
documentation of the AEO 2009
assumptions is available at https://
www.eia.doe.gov/oiaf/aeo/assumption/
index.html.
In its October 2008 NOPR, DOE
conducted a separate analysis of
wastewater discharge impacts as part of
the environmental assessment for
commercial clothes washers. 73 FR
62034, 62112–3 (Oct. 17, 2008). For
today’s supplemental proposed rule,
DOE retained the same analysis method
for estimating wastewater discharge
impacts. The results are presented
below in section V.B.6.
DOE seeks comment on the
determination of environmental
impacts. This is identified as Issue 6 in
section VII.E of today’s supplemental
notice (Issues on Which DOE Seeks
Comment).
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IV. Discussion of Other Comments
A. Proposed TSLs for Commercial
Clothes Washers
For the October 2008 NOPR, DOE
based the TSLs on efficiency levels
explored in the November 2007 ANOPR,
and selected the TSLs on consideration
of economic factors and current market
conditions. ASAP suggested that DOE
set TSLs based upon industry
benchmarks such as current and
forthcoming ENERGY STAR
qualification levels and pending Federal
tax incentive performance levels.
(ASAP, Public Meeting Transcript, No.
40.5 at p. 33 and pp. 148–149) EIEA
2008 provided an Energy Efficient
Appliance Credit to manufacturers for
any RCW or CCW (front-loading or toploading) produced domestically through
2010 with an efficiency level of at least
2.0 MEF/6.0 WF, or a larger credit for
one that achieves 2.2 MEF/4.5 WF. The
legislation also provides a separate tax
credit for any top-loading RCW that
achieves an efficiency level of at least
1.72 MEF/8.0 WF or a larger credit for
one that exceeds 1.8 MEF/7.5 WF. DOE
considered the impacts of these tax
credits on the CCW industry in detail as
part of the MIA. DOE accounts for the
Federal tax credit as a direct cash
benefit in the base and standards cases
that increases the INPV. See section
III.G of today’s supplemental notice and
appendix 13C of the SNOPR TSD for
further discussion of this issue.
B. Proposed Standards for Commercial
Clothes Washers
For the October 2008 NOPR, DOE
made the preliminary determination
that the standards for top-loading and
front-loading CCWs listed in Table II.1
are technologically feasible and
economically justified, and invited
comment on these proposed standard
levels.
In response, Alliance stated that it
would likely exit the clothes washer
market if standards based on a single
CCW equipment class were enacted,
which would result in domestic job
losses, a CCW market disruption,
and/or loss of competition in the CCW
market. (Alliance, No. 45 at Attachment
2, pp. 6–12) Alliance and GE urged DOE
to consider TSL 1 from the October 2008
NOPR (1.42 MEF/9.5 WF) as the
appropriate standard for top-loading
CCWs. (Alliance, Public Meeting
Transcript, No. 40.5 at pp. 23–24; GE
No. 48 at p. 5) Alliance believes that
TSL 1 would result in energy savings
while being technically feasible and
economically justified. Alliance also
stated standards at TSL 1 would avoid
or lessen harm to Alliance and, hence,
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reduce significant consumer impacts
that would be associated with Alliance
likely ceasing production. (Alliance, No.
45 at Attachment 2, p. 18)
GE opposed the top-loading standard
proposed in the October 2008 NOPR
due to small market size (1.3 percent)
for coin-operated, top-loading CCWs
and the potential 31-percent decrease in
industry cash flows due to the proposed
standards. GE commented that adoption
of the standards would essentially
regulate the top-loading equipment class
out of the marketplace. GE also stated
that the max-tech level for top-loading
CCWs is not yet justified as being
sustainable in the harsher consumer
environment of laundromats, where
units are subject to much tougher
conditions such as overloading. GE
agreed with Alliance’s proposed
standards for top-loaders of TSL 1 from
the October 2008 NOPR (1.42 MEF/9.5
WF), which would also make the CCW
WF consistent with the EISA 2007
standards for RCWs. (GE, Public
Meeting Transcript, No. 40.5 at pp. 31–
32; GE, No. 48 at pp. 4–5) MLA opposed
the proposed October 2008 NOPR
standard for top-loading CCWs, because
there is currently no commercially
acceptable top-loading CCW that can
meet it. MLA believes the only way to
comply with the top-loading CCW
standard proposed in the October 2008
NOPR is to produce machines with poor
washing and rinsing performance, high
maintenance costs, and increased
manufacturing costs. (MLA, No. 49 at
pp.1 and 4)
Whirlpool commented that it supports
both the proposed top-loading and
front-loading standards in the October
2008 NOPR, though it acknowledged
industry support is not consistent. Both
standards, it said, are technologically
feasible and enable substantial water
and energy savings, although it agreed
with DOE that front-loading CCWs can
reach efficiency levels generally not
attainable by top-loaders. Whirlpool
stated that it has yet to field a toploading CCW that can meet the
proposed October 2008 NOPR standard,
but that it believes technology exists to
develop such equipment by early 2012
without violating intellectual property,
provided that engineering and capital
resources are available. (Whirlpool,
Public Meeting Transcript, No. 40.5 at p.
28; Whirlpool, No. 50 at pp. 2–3)
Whirlpool identified risks associated
with the standards proposed in the
October 2008 NOPR, including higher
unit, capital, and development costs;
lower reliability or perceived reliability
due to the complexity of the technology
needed to meet the standard; lack of
market acceptance for lid locks on top-
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loading CCWs using spray rinse
technology to meet the standard; and
durability and resistance to breakage
under overloading conditions.
(Whirlpool, No. 50 at p. 3)
PG&E and EJ stated that adopting a
single standard for all CCW classes
would result in the largest potential
savings for consumers. (EJ, Public
Meeting Transcript, No. 40.5 at p. 200;
PG&E, Public Meeting Transcript, No.
40.5 at p. 201) The Joint Comment
suggested that a single standard based
on efficiency achieved by front loaders
available in the market today would
achieve 32 percent more energy savings,
192 percent more water savings, and 78
percent more consumer savings in
present value terms than the standards
proposed in the October 2008 NOPR
that treat top-loading and front-loading
CCWs separately. (Joint Comment, No.
44 at p. 1)
ASAP commented that the previous
analyses leading up to the October 2008
NOPR [the analyses in the November
2007 ANOPR] clearly indicated that
there are tremendous life-cycle cost
savings presented by high-efficiency
CCWs, and those are available to all
sectors of the market. ASAP believes
that, for what appears to be a lack of a
relatively small amount of capital,
recognizing that amount of capital is
significant for one manufacturer,
hundreds of millions of dollars of
consumer savings are going to be
foregone. ASAP also commented that
DOE did not substantiate its concerns
about potential recapture of market
share by less efficient top-loaders when
reducing the proposed standard for
front-loading CCWs from the level that
would maximize life-cycle cost savings
to the standards proposed in the
October 2008 NOPR. (ASAP, Public
Meeting Transcript, No. 40.5 at pp. 34–
35)
In considering standards for today’s
supplemental notice, DOE first notes
that it has retained separate equipment
classes for top-loading and front-loading
CCWs, for reasons discussed in section
III.A. For top-loading CCW standards,
DOE has revised its analysis due to a reevaluation of the max-tech efficiency
level, which resulted in the max-tech
level from the October 2008 NOPR being
eliminated from consideration as an
efficiency level for today’s supplemental
notice (see section III.C.1.a.) DOE did
not change the engineering analysis for
front-loading CCWs from those
presented in the October 2008 NOPR.
DOE has thus evaluated standards for
both equipment classes, including
impacts to the consumer, manufacturer,
and Nation, based on the analyses
outlined in section III, and presents the
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approach and results for proposed
standard levels for today’s SNOPR in
section V.
V. Analytical Results
A. Trial Standard Levels
DOE analyzed the benefits and
burdens of a number of TSLs for the
CCWs that are the subject of today’s
supplemental proposed rule. As
discussed in section IV.A, for the
October 2008 NOPR, DOE based the
TSLs on efficiency levels explored in
the November 2007 ANOPR, and
selected the TSLs on consideration of
economic factors and current market
conditions. As also discussed
previously in section III.C.1.a, DOE
eliminated the maximum
technologically efficiency level of 1.76
MEF/8.3 WF for the top-loading
equipment class. Accordingly, for
today’s supplemental proposed rule,
DOE modified the TSLs it considered
for the October 2008 NOPR.
Table V.1 shows the TSLs for CCWs.
TSLs consist of a combination of MEF
and WF for each equipment class. In all,
DOE has considered five TSLs. TSL 1
corresponds to the first candidate
standard level from each equipment
class and represents the efficiency level
for each class with the least significant
design change. TSL 2 represents the
second candidate standard level for
front-loading washers while keeping
top-loading washers at its first candidate
standard level. Over 96 percent of the
front-loading CCW equipment Stock
Keeping Units (SKUs) currently on the
market either meets or exceeds the
second candidate standard level for
front-loading washers. In the case of the
second candidate standard level for toploading washers, a significant percent of
the market, over 35 percent, also meets
or exceeds this efficiency level.
Therefore, TSL 2 corresponds to the
candidate standard levels for each
equipment class that still represent a
significant share of the market. TSL 3
represents the second candidate
standard level for top-loading washers
(the maximum efficiency level for this
class), and keeps front-loading washers
at the second candidate standard level.
For TSL 3, front-loading washers were
held to the second candidate standard
level in order to minimize the
equipment price difference between the
two equipment classes. For TSL 4, toploading washers are retained at their
maximum efficiency level while frontloading washers are incremented to
their third candidate standard level.
Finally, TSL 5 corresponds to the
maximum technologically feasible level
for each equipment class. In progressing
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from TSL 1 to TSL 5, the LCC savings,
NES, and NPV all increase. TSL 5
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represents the level with the minimum
LCC and maximum NES and NPV.
TABLE V.1—TRIAL STANDARD LEVELS FOR COMMERCIAL CLOTHES WASHERS
TSL 1
Top-Loading:
MEF ....................................................................
WF ......................................................................
Front-Loading:
MEF ....................................................................
WF ......................................................................
B. Economic Justification and Energy
Savings
1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
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To evaluate the net economic impact
of standards on consumers, DOE
conducted LCC and PBP analyses for
each TSL. In general, higher efficiency
equipment would affect consumers in
two ways: (1) Annual operating expense
would decrease; and (2) purchase price
would increase. Section III.D of this
notice discusses the inputs DOE used
for calculating the LCC and PBP.
The key outputs of the LCC analysis
are a mean LCC savings relative to the
baseline equipment design, as well as a
probability distribution or likelihood of
LCC reduction or increase, for each TSL
and equipment class. The LCC analysis
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TSL 2
TSL 3
TSL 5
1.42
9.5
1.42
9.5
1.60
8.5
1.60
8.5
1.60
8.5
1.80
7.5
2.00
5.5
2.00
5.5
2.20
5.1
2.35
4.4
also estimates the fraction of consumers
for which the LCC will decrease (net
benefit), increase (net cost), or exhibit
no change (no impact) relative to the
base-case equipment forecast. No
impacts occur when the equipment
efficiencies of the base-case forecast
already equal or exceed the considered
TSL efficiency.
Table V.2 and Table V.3 show the
LCC and PBP results for both CCW
equipment applications for the toploading class while Table V.4 and Table
V.5 show the LCC and PPB results for
the front-loading equipment class. For
example, in the case of the multi-family
application for front-loading washers
(Table V.4), TSL 2 (2.00 MEF/5.50 WF)
shows an average LCC savings of $19.
Note that for TSL 2, 96.3 percent of
consumers in 2013 are assumed to
already be using a front-loading CCW in
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the base case at TSL 2 and, thus, have
zero savings due to the standard. If one
compares the LCC of the baseline at 1.72
MEF/8.00 WF ($4220) to TSL 2 ($3690),
then the difference in the LCCs is $530.
However, since the base case includes a
significant number of consumers that
are not impacted by the standard, the
average savings over all of the
consumers is actually $19, not $530.
DOE determined the median and
average values of the PBPs shown below
by excluding the percentage of
households not impacted by the
standard. For example, in the case of
TSL 2 for front-loading washers in a
multi-family application, 96.3 percent of
the consumers did not factor into the
calculation of the median and average
PBP.
BILLING CODE 6450–01–P
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b. Consumer Subgroup Analysis
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Using the LCC spreadsheet model,
DOE determined the impact of the
standards on the following CCW
consumer subgroups: small business
owners and consumers without
municipal water and sewer.
The results for consumers without
municipal water and sewer indicate that
the LCC impacts and payback periods
for this subgroup are similar to the LCC
impacts and payback periods on the full
sample of CCW consumers. But for
small business owners, the LCC impacts
and payback periods are different from
those associated with the general
population. For the top-loading
equipment class, Table V.6 and Table
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V.7 show the LCC impacts and payback
periods for small multi-family property
owners and small laundromats,
respectively, while Table V.8 and Table
V.9 show the same but for the frontloading equipment class. For all TSLs
for both equipment classes, both sets of
small business owners, on average,
realize LCC savings similar to the
general population. The difference
between the small business population
and the general population occurs in the
percentage of each population that
realizes LCC savings from standards.
With the exception of TSL 1 for toploading washers, an overwhelming
majority of the small business and
general populations benefit from
standards at each TSL. But for both
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equipment classes, a larger percentage
of the general population benefits from
standards than small business owners.
This occurs because small businesses do
not have the same access to capital as
larger businesses. As a result, smaller
businesses have a higher average
discount rate than the industry average.
Because of the higher discount rates,
smaller businesses do not value future
operating costs savings from more
efficient CCWs as much as the general
population. But to emphasize, in spite
of the higher discount rates, a majority
of small businesses still benefit from
higher CCW standards at all TSLs, with
the exception of TSL 1 for the toploading equipment class.
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BILLING CODE 6450–01–C
c. Rebuttable-Presumption Payback
As discussed above, EPCA establishes
a rebuttable presumption that an energy
conservation standard is economically
justified if the increased purchase cost
for equipment that meets the standard is
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less than three times the value of the
first-year energy savings resulting from
the standard. (42 U.S.C.
6295(o)(2)(B)(iii)) DOE calculated a
rebuttable-presumption payback period
for each TSL to determine whether DOE
could presume that a standard at that
level is economically justified. Table
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V.10 shows the rebuttable-presumption
payback periods for CCWs. Because
only a single, average value is necessary
for establishing the rebuttablepresumption payback period, rather
than using distributions for input
values, DOE used discrete values. As
required by EPCA, DOE based the
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calculation on the assumptions in the
DOE test procedures for CCWs. (42
U.S.C. 6295(o)(2)(B)(iii)) As a result,
DOE calculated a single rebuttablepresumption payback value, and not a
distribution of payback periods, for each
TSL.
TABLE V.10—REBUTTABLE-PRESUMPTION PAYBACK PERIODS FOR COMMERCIAL CLOTHES WASHERS
Payback period, years
Top-loading
TSL
Multi-family
application
1
2
3
4
5
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
With the exception of TSLs 1 to 3 for
front-loading CCWs, the TSLs in Table
V.10 do not have rebuttablepresumption payback periods of less
than 3 years. As stated above, in
addition to calculating the rebuttablepresumption payback period DOE
routinely conducts a thorough economic
analysis that considers the full range of
impacts, including those to consumers,
manufacturers, the Nation, and the
environment, as required under 42
U.S.C. 6295(o)(2)(B)(i). The results of
this full analysis serve as the basis for
DOE to definitively determine the
economic justification for a potential
standard level (thereby supporting or
rebutting the results of any preliminary
determination of economic
justification). Section V.C provides a
complete discussion of how DOE
considered the range of impacts to select
the standards proposed in today’s
SNOPR.
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2. Economic Impacts on Manufacturers
For the October 2008 NOPR, DOE
used the INPV in the MIA to compare
the financial impacts of different TSLs
on CCW manufacturers. 73 FR 62034,
62099–104 (Oct. 17, 2008). The INPV is
the sum of all net cash flows discounted
by the industry’s cost of capital
(discount rate). DOE used the GRIM to
compare the INPV of the base case (no
new energy conservation standards) to
that of each TSL for the CCW industry.
To evaluate the range of cash-flow
impacts on the CCW industry, DOE
constructed different scenarios using
different assumptions for shipments that
correspond to the range of anticipated
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a. Industry Cash-Flow Analysis Results
The major source of uncertainty
voiced by all manufacturers during MIA
interviews is the impact of higher
standards on the number of CCWs sold.
Future equipment sales are particularly
important considering the high capital
costs (particularly design, tooling, and
product verification costs) on the basis
of the low volumes of equipment sold.
In light of the concern over future
shipments, DOE modeled two MIA
scenarios, based on two shipment
projections from the NIA.
To assess the lower end of the range
of the potential impacts on the CCW
industry, DOE considered a scenario in
which total CCW shipments will not be
negatively impacted at higher energy
conservation standards; this scenario is
called the base-case shipments scenario.
To assess the higher end of the range of
potential impacts for the CCW industry,
DOE considered a scenario in which
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application
>100
>100
24.0
24.0
24.0
market responses. Each scenario results
in a unique set of cash flows and
corresponding industry value at each
TSL. These steps allowed DOE to
compare the potential impacts on the
industry as a function of TSLs in the
GRIM. The difference in INPV between
the base case and the standards case is
an estimate of the economic impacts
that implementing that standard level
would have on the entire industry. For
today’s supplemental notice, DOE
continues to use the above methodology
and presents the results in the
subsequent sections. See chapter 13 for
additional information on MIA
methodology and results.
Front-loading
>100
>100
>100
>100
>100
Multi-family
application
0
1.2
1.2
9.4
10.0
Laundromat
application
0
1.3
1.3
17.3
17.6
total industry shipments would
decrease due to the combined effects of
increases in purchase price and
decreases in operating costs due to new
energy conservation standards; this
scenario is called the price elasticity of
demand scenario. In both scenarios, it is
assumed that manufacturers will be able
maintain the same gross margins (as a
percentage of revenues) that are
currently obtained in the base case.
As discussed in section III.G of
today’s supplemental notice, DOE also
considered the impact of Federal
production tax credits on the CCW
industry. DOE does not include the
benefit of these tax credits in its results
shown below. DOE includes these
results in appendix 13C of the TSD.
DOE estimated that the total benefit of
these Federal production tax credits to
the CCW industry from 2007 through
2010 would be approximately $4.1
million. Because DOE discounts the
industry cash flows to the 2009 base
year, in this scenario the base case INPV
increases by approximately $400,000 if
the benefit from the Federal production
tax credits are included. As previously
stated, although the base-case and
standards-case INPV increase as a result
of Federal production tax credits, the
benefits do not significantly mitigate
possible impacts due to standards. For
additional information on the
assumptions and calculations of Federal
production tax credits for CCWs, see
appendix 13C of the TSD.
Table V.11 and Table V.12 show the
MIA results for each TSL using both
shipment scenarios described above for
CCW manufacturers.
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At TSL 1, the impact on INPV and
cash flow varies depending on the
manufacturers’ ability to maintain
revenues as shipments decrease due to
the price elasticity. DOE estimated the
impacts in INPV at TSL 1 to range from
positive $3.7 million to positive $2.8
million, or a change in INPV of 5.97
percent to 4.50 percent. At this level,
the industry cash flow does not decrease
from the base-case value of $3.8 million
in the year leading up to the standards.
Since all manufacturers currently make
or source top-loading and front-loading
CCWs with efficiency levels above this
level, DOE assumed that there would be
no equipment or capital conversion
costs.
At TSL 2, DOE estimated the impacts
in INPV to range from positive $1.4
million to positive $0.5 million, or a
change in INPV of 2.24 percent to 0.76
percent. At this level, the industry cash
flow decreases by approximately 27.7
percent, to $2.8 million, compared to
the base-case value of $3.8 million in
the year leading up to the standards.
Since all manufacturers of top-loading
washers already sell equipment that
exceeds the efficiency requirements
proposed at this TSL, DOE assumed that
there would be no equipment or capital
conversion costs for top-loading
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washers at this TSL. Over 95 percent of
all currently-sold front-loading CCW
SKUs have efficiency levels that achieve
or exceed this level and all
manufacturers sell front-loading
washers that achieve or exceed this
level. Accordingly, DOE estimated that
the industry would incur relatively
small equipment and capital conversion
costs at this TSL.
At TSL 3, DOE estimated the impacts
in INPV to range from ¥$4.8 million to
¥$7.0 million, or a change in INPV of
¥7.81 percent to ¥11.39 percent. At
this level, the industry cash flow
decreases by approximately 158 percent,
to ¥$2.2 million, compared to the base
case value of $3.8 million in the year
leading up to the standards. Only one
manufacturer currently markets a single
top-loading CCW SKU at this TSL. DOE
estimates that at least one manufacturer
will need to redesign and retool a line
of top-loading CCWs to meet the
efficiency requirements of TSL 3. For
top-loading CCWs, multiple
manufacturers stated that customers
could see a reduction in wash quality or
reject new designs based on a perceived
reduction in wash quality or rinse
performance at TSL 3. Over 95 percent
of currently-sold front-loading CCW
SKUs have efficiency ratings that meet
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57775
or exceed this level. Hence, DOE
estimated relatively small equipment
and capital conversion costs for these
washers.
At TSL 4, DOE estimated the impacts
in INPV at TSL 4 to range from ¥$7.8
million to ¥$10.2 million, or a change
in INPV of ¥12.73 percent to ¥16.57
percent. At this level, the industry cash
flow decreases by approximately 206
percent, to ¥$4.1 million, compared to
the base-case value of $3.8 million in
the year leading up to the standards. As
with TSL 3, the top-loading standard
remains at max-tech at TSL 4, and the
impacts previously stated for this
equipment class remain. Currently, 77
percent of front-loading washers
shipped do not meet TSL 4, resulting in
multiple manufacturers having to
redesign existing front-loading
equipment to conform cost-effectively to
the standard. The $8.4 million in
equipment and capital conversion costs
estimated for this TSL to redesign and
retool for the front-loading standard,
while not appearing substantial on a
nominal basis, are significant for
manufacturers due to low volumes of
front-loading washers. Adjusting for
shipment volumes, investing $8.4
million in front-loading washers is
equivalent to investing over $18.5
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million in top-loading washers. These
investment costs are also high compared
to the industry value of $29 million for
front-loading washers. Consequently, it
could be difficult for manufacturers to
justify the investments necessary to
reach TSL 4 for front-loading washers.
At TSL 5, DOE estimated the impacts
in INPV to range from ¥$20.4 million
to ¥$23.0 million, or a change in INPV
of ¥33.09 percent to ¥37.30 percent.
At this level, the industry cash flow
decreases by approximately 371 percent,
to ¥$10.3 million, compared to the
base-case value of $3.8 million in the
year leading up to the standards. The
top-loading standard remains at maxtech at TSL 5. DOE estimates for TSL 5
that manufacturers would have to invest
$24.4 million in front-loading washer in
an industry valued at $29 million. It
likely would be difficult for
manufacturers to justify the investments
necessary to reach max-tech for both
top-loading and front-loading washers.
b. Impacts on Employment
To quantitatively assess the impacts
of energy conservation standards on
CCW manufacturing employment, DOE
used the GRIM to estimate the domestic
labor expenditures and number of
employees in the base case and at each
TSL from 2009 through 2043 for the
CCW industry. DOE used statistical data
from the U.S. Census Bureau’s 2006
Annual Survey of Manufactures 36 (2006
ASM) and 2006 Current Industry
Report 37 (2006 CIR), the results of the
engineering analysis, and interviews
with manufacturers to estimate the
inputs necessary to calculate industrywide labor expenditures and domestic
employment levels. Labor expenditures
are a function of the labor intensity of
the equipment, the sales volume, and an
implicit assumption that wages remain
fixed in real terms over time. DOE notes
that the MIA’s analysis detailing
impacts on employment focuses
specifically on the production workers
manufacturing the covered products or
equipment, rather than a manufacturer’s
broader operations. Thus, the estimated
number of impacted employees in the
MIA is separate and distinct from the
total number of employees used to
determine whether a manufacturer is a
small business for purposes of analysis
under the Regulatory Flexibility Act.
The estimates of production workers
in this section only cover workers up to
and including the line-supervisor level
that are directly involved in fabricating
and assembling equipment within the
original equipment manufacturer (OEM)
facility. In addition, workers that
perform services that are closely
associated with production operations
are included. Employees above the
working-supervisor level are excluded
from the count of production workers.
Thus, the labor associated with nonproduction functions (e.g.,
advertisement, sales) is explicitly not
covered.38 In addition, DOE’s estimates
only account for production workers
that manufacture the specific equipment
covered by this rulemaking. For
example, a worker on a clothes dryer
production line would not be included
in the estimate of the number of CCW
production workers. Finally, this
analysis also does not factor in the
dependence by some manufacturers on
production volume to make their
operations viable. For example, should
a major line of business cease to operate
or move to a geographic region, a
production facility may no longer have
the manufacturing scale to obtain
volume discounts on its purchases nor
be able to justify maintaining major
capital equipment. Thus, the impact on
a manufacturing facility due to a line
closure may affect more employees than
just the production workers, but again
this analysis focuses on the production
workers directly impacted.
Using the GRIM, DOE calculates that
there are 188 U.S. production workers
in the CCW industry. Using the CIR
data, DOE estimates that approximately
81 percent of CCWs sold in the United
States are manufactured domestically.
Today’s supplemental notice estimates
the impacts on U.S. production workers
in the CCW industry impacted by
energy conservation standards as shown
in Table V.13.
TABLE V.13—CHANGE IN TOTAL NUMBER OF DOMESTIC PRODUCTION EMPLOYEES IN 2012 IN THE COMMERCIAL CLOTHES
WASHER INDUSTRY
Baseline
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Total Number of Domestic Production Workers in 2012 .............................................
Change in Total Number of Domestic Production Workers in 2012 ...........................
TSL 1
TSL 2
TSL 3
TSL 4
TSL 5
188
204
16
204
16
222
33
224
36
228
40
DOE expects that there would be
positive employment impacts among
domestic CCW manufacturers for TSL 1
through TSL 5. Because production
employment expenditures are assumed
to be a fixed percentage of COGS and
the MPCs increase with more efficient
equipment, labor tracks the increased
prices in the GRIM. The GRIM predicts
a steady level of domestic employment
after standards at a level based on the
increase in relative price.
DOE reached this conclusion
independent of the employment impacts
from the broader U.S. economy, which
are documented in chapter 15 of the
TSD accompanying this notice. The
employment conclusions do not account
for the possible relocation of domestic
jobs to lower-labor-cost countries
because the potential relocation of U.S.
jobs is uncertain and highly speculative.
The GRIM shows the employment levels
rising at higher TSLs. If all standardscompliant CCWs are produced in the
United States, the employment levels
would be expected to be reasonably
accurate, as more efficient washers are
more complex and require more labor.
The actual impacts on domestic
employment after standards depend on
whether any U.S. manufacturer decided
to shift more U.S. production to lowercost countries. Due to the uncertainty in
the business decisions of where to
manufacture washers after standards,
DOE presents a range of potential
employment impacts if the potential for
relocation is considered. Today’s
proposed standards could result in
adding 33 production workers (if all
manufacturers continue to produce
washers in their existing U.S. facilities)
to losing 188 production workers (if all
36 The 2006 Annual Survey of Manufactures is
available online at: https://www.census.gov/mcd/
asmhome.html.
37 The 2006 Current Industry Report is available
online at: https://www.census.gov/cir/www/
alpha.html.
38 The 2006 ASM provides the following
definition: ‘‘The ‘production workers’ number
includes workers (up through the line-supervisor
level) engaged in fabricating, processing,
assembling, inspecting, receiving, storing, handling,
packing, warehousing, shipping (but not
delivering), maintenance, repair, janitorial and
guard services, product development, auxiliary
production for plant’s own use (e.g., power plant),
recordkeeping, and other services closely associated
with these production operations at the
establishment covered by the report. Employees
above the working-supervisor level are excluded
from this item.’’
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U.S. manufacturers source or shift
standards-compliant washers
production abroad).
Based on the CCW revenues reported
in appendix 13A and using the
employment assumptions in section
III.H, DOE estimates there are
approximately 150 production workers
at the LVM manufacturing equipment
directly covered by this rulemaking.
DOE estimates that there are an
additional 20 non-production
employees attributable to CCWs at the
facility. The domestic facility also
manufactures residential top-loading
washers, standard dryers, front-loading
residential washers, washer-extractors,
and tumbler dryers. If the LVM decided
to no longer produce any soft-mount
washers or standard dryers at the
facility because it could not sell dryers
without selling washers, approximately
292 production and 40 non-production
jobs would be lost. Including all
production workers involved in covered
and non-covered equipment, the closure
of the LVM domestic manufacturing
plant would equate to a loss of
approximately 600 factory employees.
A further discussion of the LVM and
the potential impacts of relocation on
employment for the CCW industry at
other TSLs are presented in chapter 13
of the TSD.
c. Impacts on Manufacturing Capacity
According to the majority of CCW
manufacturers, new energy conservation
standards could potentially impact
manufacturers’ production capacity
depending on the efficiency level
required. Necessary redesigns of frontloading and top-loading CCWs will not
change the fundamental assembly of the
equipment or cause a drastic increase in
the volume requirements of frontloading washers. Thus, DOE believes
manufacturers will be able to maintain
manufacturing capacity levels and
continue to meet market demand under
new energy conservation standards as
long as manufacturers continue to offer
top-loading and front-loading washers.
However, a very high efficiency
standard for top-loading clothes washers
could potentially cause one or more
manufacturer(s) to abandon further
manufacture of top-loading clothes
washers after the effective date (due to
concerns about wash quality, for
example). Instead of manufacturing toploading clothes washers, manufacturers
could elect to switch their entire
production over to front-loading clothes
washers. Since top-loading and frontloading clothes washers share few, if
any parts, are built on completely
separate assembly lines, and are built at
very different production volumes, a
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manufacturer may not be able to make
a platform switch from top-loading to
front-loading washers without
significant impacts on equipment
development and capital expenses,
along with capacity constraints.
However, DOE believes that the energy
conservation standard proposed in
today’s supplemental notice for toploading CCWs mitigates much of that
risk.
Multiple manufacturers stated during
interviews that front-loading CCWs
represent a relatively small segment of
their total production volumes.
Depending on the manufacturer, frontloading production capacity may need
to be substantially expanded to meet the
demand that top-loading production
lines currently meet. This expansion
could possibly affect capacity until new
production lines come on-line to service
demand. In addition, manufacturers
stated that the higher prices of frontloading washers could lead to a
decrease in shipments. This could lead
to a permanently lower production
capacity as machines are repaired and
the equipment lifetime of existing
washers is extended. DOE research
suggests that the proposed efficiency
standards can be achieved by all
manufacturers using existing platforms
and technologies; hence, there appears
little reason for the market to wholly
transition to front-loading CCWs.
d. Impacts on Subgroups of
Manufacturers
Using average cost assumptions to
develop an industry cash flow estimate
is not adequate for assessing differential
impacts among subgroups of
manufacturers. Lower-volume
manufacturers, niche players, or
manufacturers exhibiting a cost
structure that differs significantly from
the industry average could be affected
differently than their competitors. DOE
used the results of the industry
characterization to group manufacturers
exhibiting similar characteristics.
As outlined earlier, an LVM that
concentrates on building laundry
equipment will be affected
disproportionately by any energy
efficiency regulation regarding CCWs.
This business is focused on the
commercial laundry market segment
and its total production volume is many
times lower than its diversified
competitors. Due to this combination of
market concentration and size, it is at
risk of material harm to its business,
depending on the TSL chosen.
The LVM indicated that it could not
manufacture top-loading CCWs above
an MEF of 1.42 (TSL 1). If DOE sets a
standard above TSL 1, the LVM would
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57777
be forced to design a new top-loading
washer, offer only front-loading
washers, or choose to exit the CCW
market altogether. Due to its small size,
the investment required for the LVM to
design a more efficient top-loading
washer would put the company at a
competitive disadvantage. If the LVM no
longer were to offer a top-loading
washer and would have to expand its
front-loading production lines, it would
likely cease CCW production altogether,
resulting in significant impacts to the
industry. Currently, the LVM’s toploading washers account for 70 percent
of its CCW shipments. Shifting all toploading CCWs to front-loading washers
at current production volumes would
require substantial investments that the
company may not be able to justify. In
addition, the LVM historically derived
over 85 percent of its total clothes
washer revenue from CCWs, so its sales
in the RCW market would be too low to
justify continuing any top-loading
clothes washer manufacturing. While
the LVM currently manufactures a frontloading clothes washer, it does so at a
cost disadvantage compared to its
competitors. The potential investment
and risk required to develop a costcompetitive clothes washer that deviates
significantly from its traditional toploader agitator design could be too great
for the LVM’s current owners. The LVM
could decide to exit the market rather
than take this risk, which could cause
employment impacts in the CCW
industry. As stated in section III.G, DOE
reevaluated the CCW energy
conservation standards proposed in the
October 2008 NOPR in response to
comments received from interested
parties. DOE believes that the energy
conservation standards proposed in
today’ supplemental notice greatly
lessens the potential disadvantages
faced by the LVM. Further details of the
separate analysis of the impacts on the
LVM are found in chapter 13 of the TSD
accompanying this supplemental notice.
3. National Impact Analysis
a. Significance of Energy Savings
To estimate the energy savings
through 2043 that would be expected to
result from amended energy
conservation standards, DOE compared
the energy consumption of equipment
under the base case to energy
consumption of this equipment under
the TSLs. Table V.14 shows the
forecasted national energy savings at
each TSL for CCWs. Summing the
energy savings for all equipment classes
across each TSL considered in this
rulemaking would result in significant
energy and water savings, with the
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amount of savings increasing with
higher efficiency standards. Chapter 11
of the TSD accompanying this
supplemental notice provides additional
details on the NES values reported
below, as well as discounted NES
results (and discounted national water
savings results) based on discount rates
of 3 and 7 percent. DOE reports both
undiscounted and discounted values of
energy savings. Discounted energy
savings represent a policy perspective
wherein energy savings farther in the
future are less significant than energy
savings closer to the present.39
TABLE V.14—SUMMARY OF CUMULATIVE NATIONAL ENERGY AND WATER SAVINGS FOR COMMERCIAL CLOTHES WASHERS
Top-loading
1
2
3
4
5
National
water
savings
(trillion
gallons)
National
energy
savings
(quads)
TSL
.......................................................................................
.......................................................................................
.......................................................................................
.......................................................................................
.......................................................................................
b. Net Present Value
The NPV analysis is a measure of the
cumulative benefit or cost of energy
conservation standards to the Nation. In
accordance with the OMB’s guidelines
on regulatory analysis (OMB Circular
A–4, section E, Sept. 17, 2003), DOE
calculated NPV using both a 7-percent
and a 3-percent real discount rate. The
7-percent rate is an estimate of the
average before-tax rate of return on
private capital in the U.S. economy, and
Front-loading
0.04
0.04
0.10
0.10
0.10
National
water
savings
(trillion
gallons)
National
energy
savings
(quads)
0.00
0.00
0.14
0.14
0.14
0.00
0.00
0.00
0.01
0.02
reflects the returns on real estate and
small business capital as well as
corporate capital. DOE used this
discount rate to approximate the
opportunity cost of capital in the private
sector, since recent OMB analysis has
found the average rate of return to
capital to be near this rate. DOE also
used the 3-percent rate to capture the
potential effects of standards on private
consumption (e.g., through higher prices
for equipment and the purchase of
Total
National
water
savings
(trillion
gallons)
National
energy
savings
(quads)
0.00
0.01
0.01
0.03
0.07
0.04
0.04
0.10
0.11
0.12
0.00
0.01
0.14
0.16
0.21
reduced amounts of energy). This rate
represents the rate at which society
discounts future consumption flows to
their present value. This rate can be
approximated by the real rate of return
on long-term government debt (i.e.,
yield on Treasury notes minus annual
rate of change in the Consumer Price
Index), which has averaged about 3
percent on a pre-tax basis for the last 30
years. Table V.15 shows the forecasted
NPV at each TSL for CCWs.
TABLE V.15—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR COMMERCIAL CLOTHES WASHERS
[Impacts for units sold from 2013 to 2043]
NPV (billion 2008$)
Top-loading
TSL
7%
Discount rate
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1
2
3
4
5
...................................................
...................................................
...................................................
...................................................
...................................................
Front-loading
3%
Discount rate
0.01
0.01
0.34
0.34
0.34
7%
Discount rate
0.07
0.07
0.86
0.86
0.86
3%
Discount rate
0.00
0.01
0.01
0.07
0.17
0.01
0.03
0.03
0.17
0.39
7%
Discount rate
Total
0.01
0.02
0.36
0.41
0.51
0.08
0.10
0.89
1.03
1.25
c. Impacts on Employment
In addition to considering the direct
employment impacts for the
manufacturers of equipment covered by
this rulemaking (discussed above), DOE
develops estimates of the indirect
employment impacts of proposed
standards in the economy in general. As
noted previously, DOE expects energy
conservation standards for equipment
subject of this rulemaking to reduce
energy bills for consumers, with the
resulting net savings being redirected to
other forms of economic activity. DOE
also realizes that these shifts in
spending and economic activity could
affect the demand for labor. To estimate
these effects, DOE used an input/output
model of the U.S. economy using BLS
data (described in section III.H). (See the
TSD accompanying this supplemental
notice, chapter 15.)
This input/output model suggests
today’s proposed standards are likely to
slightly increase the net demand for
labor in the economy. Neither the BLS
data nor the input/output model DOE
uses includes the quality or wage level
of the jobs. As Table V.16 shows, DOE
estimates that net indirect employment
impacts from today’s proposed
standards are likely to be small. The net
increase in jobs is so small that it would
be imperceptible in national labor
statistics and might be offset by other,
unanticipated effects on employment.
39 Consistent with Executive Order 12866,
‘‘Regulatory Planning and Review,’’ 58 FR 51735
(Oct. 4, 1993), DOE follows the guidance of OMB
regarding methodologies and procedures for
regulatory impact analysis that affect more than one
agency. In reporting energy and environmental
benefits from energy conservation standards, DOE
will report both discounted and undiscounted (i.e.,
zero discount-rate) values.
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TABLE V.16—NET NATIONAL CHANGE transmits this determination, along with
IN INDIRECT EMPLOYMENT AT COM- an analysis of the nature and extent of
MERCIAL CLOTHES WASHER MANU- the impact, to the Secretary of Energy.
FACTURERS
Net national
change in jobs in
2043 (thousands)
TSL
1
2
3
4
5
......................................
......................................
......................................
......................................
......................................
0.07
0.08
0.46
0.52
0.62
4. Impact on Utility or Performance of
Equipment
For the reasons stated above in
section II.G.1.d, DOE believes that for
purposes of 42 U.S.C.
6295(o)(2)(B)(i)(IV), none of the
efficiency levels considered in this
notice reduces the utility or
performance of equipment under
consideration in this rulemaking.
5. Impact of Any Lessening of
Competition
In weighing the promulgation of any
proposed standards, DOE is required to
consider any lessening of competition
that is likely to result from the adoption
of those standards. The determination of
the likely competitive impacts
stemming from a proposed standard is
made by the Attorney General, who
(See 42 U.S.C. 6295(o)(2)(B)(i)(VI) and
(B)(ii).)
DOE carefully considered the
determination received from DOJ in
response to the October 2008 NOPR,
and accordingly chose efficiency levels
for this SNOPR that appear achievable
by all CCW manufacturers using
existing equipment platforms and
technologies. As such, there should be
minimal impact on the CCW market and
hence its manufacturers. To assist the
Attorney General in making a
determination for this SNOPR, DOE has
provided DOJ with copies of this notice
and the TSD for review. DOE will
consider DOJ’s comments on today’s
SNOPR in preparing the final rule.
DOE notes that if, based on the public
comments received and its further
consideration of this issue, it were to
establish a single equipment class in
setting standards for CCWs, DOE
intends to give considerable weight to
the potential adverse effects of a single
equipment class efficiency standard on
competition in the CCW market. That is,
DOE does not intend to set a standard
that produced significant adverse
impacts on competition in this market.
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6. Need of the Nation To Conserve
Energy
Improving the energy efficiency of
CCWs, where economically justified,
would likely improve the security of the
Nation’s energy system by reducing
overall demand for energy. Reduced
electricity demand may also improve
the reliability of the electricity system.
As a measure of this reduced demand,
DOE expects the energy savings from
the adopted standards to eliminate the
need for approximately 0.010 gigawatts
(GW) of generating capacity by 2043.
Enhanced energy savings from higher
standards for CCWs also produces
environmental benefits in the form of
reduced emissions of air pollutants and
greenhouse gases associated with energy
production, and with building use of
fossil fuels at sites where CCWs are
used. Table V.17 provides DOE’s
estimate of cumulative CO2, NOX, and
Hg emissions reductions that would
result from the TSLs considered in this
rulemaking. The expected energy
savings from new standards for CCWs
may also reduce the cost of maintaining
nationwide emissions standards and
constraints. In the environmental
assessment (chapter 16 of the TSD
accompanying this supplemental
notice), DOE reports estimated annual
changes in CO2, NOX, and Hg emissions
attributable to each TSL.
TABLE V.17—SUMMARY OF EMISSIONS REDUCTIONS FOR COMMERCIAL CLOTHES WASHERS
[Cumulative for Equipment Sold from 2013 to 2043]
TSL
Emissions
1
CO2 (Mt) ...................................................................................................
NOX (kt) ...................................................................................................
Hg (t) ........................................................................................................
2
3
4
5
2.36
1.43
0–0.01
2.39
1.45
0–0.01
5.07
3.04
0–0.03
5.66
3.39
0–0.03
6.11
3.66
0–0.03
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Mt = million metric tons.
kt = thousand metric tons.
t = metric tons.
As discussed in section III.J of this
supplemental notice, DOE does not
report SO2 emissions reductions from
power plants because reductions from
an energy conservation standard would
not affect the overall level of SO2
emissions in the United States due to
the emissions caps for SO2.
NOX emissions from 28 eastern States
and D.C. are limited under CAIR,
Although CAIR has been remanded to
EPA by the D.C. Circuit, it will remain
in effect until it is replaced by a rule
consistent with the Court’s December
23, 2008, opinion in North Carolina v.
EPA. North Carolina v. EPA, 550 F.3d
1176 (D.C. Cir. 2008). Because all States
covered by CAIR opted to reduce NOX
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emissions through participation in cap
and trade programs for electric
generating units, emissions from these
sources are capped across the CAIR
region.
For the 28 eastern States and D.C.
where CAIR is in effect, no NOX
emissions reductions will occur due to
the permanent cap. Under caps,
physical emissions reductions in those
States would not result from the energy
conservation standards under
consideration by DOE, but standards
might have produced an
environmentally related economic
impact in the form of lower prices for
emissions allowance credits, if large
enough. However, DOE determined that
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in the present case, such standards
would not produce an environmentally
related economic impact in the form of
lower prices for emissions allowance
credits, because the estimated reduction
in NOX emissions or the corresponding
allowance credits in States covered by
the CAIR cap would be too small to
affect allowance prices for NOX under
the CAIR. In contrast, new or amended
energy conservation standards would
reduce NOX emissions in those 22 States
that are not affected by CAIR. As a
result, the NEMS–BT does forecast NOX
emissions reductions from energy
sources in those 22 States from the CCW
standards considered in today’s SNOPR.
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In the October 2008 NOPR, however,
DOE provided a different estimate of
NOX reductions because DOE assumed
that the CAIR rule had been vacated.
This is because the CAIR rule was
vacated by the D.C. Circuit in its July 11,
2008 decision in North Carolina v.
Environmental Protection Agency. 531
F.3d 896 (D.C. Cir. 2008). As noted
above, the D.C. Circuit, in a December
23, 2008, opinion, decided to allow the
CAIR rule to remain in effect until it is
replaced by a rule consistent with the
court’s earlier opinion, but this decision
came well after the publish date of the
October 2008 NOPR..Thus, for the
October 2008 NOPR, DOE established a
range of NOX reductions based on low
and high emission rates (in kt of NOX
emitted per TWh of electricity
generated) derived from the AEO 2008.
DOE anticipated that, in the absence of
the CAIR’s trading program, the new or
amended conservation standards would
reduce NOX emissions nationwide, not
just in 22 States.
As noted in section III.J, DOE was able
to estimate the changes in Hg emissions
associated with an energy conservation
standard as follows. DOE notes that the
NEMS–BT model used as an integral
part of today’s rulemaking does not
estimate Hg emissions reductions due to
new energy conservation standards, as it
assumed that Hg emissions would be
subject to EPA’s CAMR. 70 FR 28606
(May 18, 2005). CAMR would have
permanently capped emissions of
mercury for new and existing coal-fired
plants in all States by 2010. As with SO2
and NOX, DOE assumed that under such
a system, energy conservation standards
would have resulted in no physical
effect on these emissions, but might
have resulted in an environmentally
related economic benefit in the form of
a lower price for emissions allowance
credits if those credits were large
enough. DOE estimated that the change
in the Hg emissions from energy
conservation standards would not be
large enough to influence allowance
prices under CAMR.
On February 8, 2008, the D.C. Circuit
issued its decision in New Jersey v.
Environmental Protection Agency to
vacate CAMR. 517 F.3d 574 (D.C. Cir.
2008). In light of this development and
because the NEMS–BT model could not
be used to directly calculate Hg
emissions reductions, DOE used the Hg
emission rates discussed below to
calculate emissions reductions in the
October 2008 NOPR. This same
methodology is used for today’s SNOPR
as well due to the continued fluid
environment ‘‘* * * with many States
planning to enact new laws or make
existing laws more stringent.’’ EIA AEO
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2009 (March 2009), p. 18. The NEMS–
BT has only rough estimates of Hg
emissions, and it was felt that the range
of emissions used in the NOPR remain
appropriate given these circumstances.
Therefore, rather than using the
NEMS–BT model, DOE established a
range of Hg rates to estimate the Hg
emissions that could be reduced
through standards. DOE’s low estimate
assumed that future standards would
displace electrical generation only from
natural gas-fired power plants, thereby
resulting in an effective emission rate of
zero. (Under this scenario, coal-fired
power plant generation would remain
unaffected.) The low-end emission rate
is zero because natural gas-fired power
plants have virtually zero Hg emissions
associated with their operation.
DOE’s high estimate, which assumed
that standards would displace only coalfired power plants, was based on a
nationwide Hg emission rate from AEO
2008 for the October 2008 NOPR.
(Under this scenario, gas-fired power
plant generation would remain
unaffected and that no future reductions
in the rate of Hg emissions from such
sources would occur.) Because power
plant emission rates are a function of
local regulation, scrubbers, and the Hg
content of coal, it is extremely difficult
to identify a precise high-end emission
rate. Therefore, the most reasonable
estimate is based on the assumption that
all displaced coal generation would
have been emitting at the average
emission rate for coal generation as
specified by the April update to AEO
2009. As noted previously, because
virtually all Hg emitted from electricity
generation is from coal-fired power
plants, DOE based the emission rate on
the tons of Hg emitted per TWh of coalgenerated electricity. Based on the
emission rate for 2006, DOE derived a
high-end emission rate of 0.0255 tons
per TWh. To estimate the reduction in
Hg emissions, DOE multiplied the
emission rate by the reduction in coalgenerated electricity due to the
standards considered in the utility
impact analysis. These changes in Hg
emissions are extremely small, ranging
from 0.03 to 0.27 percent of the national
base-case emissions forecast by NEMS–
BT, depending on the TSL.
In the October 2008 NOPR, DOE
proposed accounting for the monetary
value of CO2 emission reductions
associated with standards. DOE
proposed to use the range $0 to $20 per
ton for reductions in the year 2007 in
2007$. 73 FR 62034, 62110 (Oct. 17,
2008). These estimates were intended to
represent the lower and upper bounds
of the costs and benefits likely to be
experienced in the United States. The
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lower bound was based on an
assumption of no benefit and the upper
bound was based on an estimate of the
mean value of worldwide impacts due
to climate change that was reported by
the Intergovernmental Panel on Climate
Change (IPCC) in its ‘‘Fourth
Assessment Report.’’
For today’s SNOPR, DOE is relying on
a new set of values recently developed
by an interagency process that
conducted a thorough review of existing
estimates of the social cost of carbon
(SCC). The SCC is intended to be a
monetary measure of the incremental
damage resulting from greenhouse gas
(GHG) emissions, including, but not
limited to, net agricultural productivity
loss, human health effects, property
damages from sea level rise, and
changes in ecosystem services. Any
effort to quantify and to monetize the
harms associated with climate change
will raise serious questions of science,
economics, and ethics. But with full
regard for the limits of both
quantification and monetization, the
SCC can be used to provide estimates of
the social benefits of reductions in GHG
emissions.
For at least three reasons, any single
estimate of the SCC will be contestable.
First, scientific and economic
knowledge about the impacts of climate
change continues to grow. With new
and better information about relevant
questions, including the cost, burdens,
and possibility of adaptation, current
estimates will inevitably change over
time. Second, some of the likely and
potential damages from climate
change—for example, the value society
places on adverse impacts on
endangered species—are not included
in all of the existing economic analyses.
These omissions may mean that the best
current estimates are too low. Third,
controversial ethical judgments,
including those involving the treatment
of future generations, play a role in
judgments about the SCC (see in
particular the discussion of the discount
rate, below).
To date, regulations have used a range
of values for the SCC. For example, a
regulation proposed by the U.S.
Department of Transportation (DOT) in
2008 assumed a value of $7 per ton CO2
(2006$) for 2011 emission reductions
(with a range of $0–14 for sensitivity
analysis). Regulation finalized by DOE
used a range of $0–$20 (2007$). Both of
these ranges were designed to reflect the
value of damages to the United States
resulting from carbon emissions, or the
‘‘domestic’’ SCC. In the final Model
Year 2011 Corporate Average Fuel
Economy rule, DOT used both a
domestic SCC value of $2/t CO2 and a
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global SCC value of $33/t CO2 (with
sensitivity analysis at $80/tCO2),
increasing at 2.4 percent per year
thereafter.
In recent months, a variety of agencies
have worked to develop an objective
methodology for selecting a range of
interim SCC estimates to use in
regulatory analyses until improved SCC
estimates are developed. The following
summary reflects the initial results of
these efforts and proposes ranges and
values for interim social costs of carbon
used in this rule. It should be
emphasized that the analysis described
below is preliminary. These complex
issues are of course undergoing a
process of continuing review. Relevant
agencies will be evaluating and seeking
comment on all of the scientific,
economic, and ethical issues before
establishing final estimates for use in
future rulemakings.
The interim judgments resulting from
the recent interagency review process
can be summarized as follows: (a) DOE
and other Federal agencies should
consider the global benefits associated
with the reductions of CO2 emissions
resulting from efficiency standards and
other similar rulemakings, rather
continuing the previous focus on
domestic benefits; (b) these global
benefits should be based on SCC
estimates (in 2007$) of $55, $33, $19,
$10, and $5 per ton of CO2 equivalent
emitted (or avoided) in 2007; (c) the
SCC value of emissions that occur (or
are avoided) in future years should be
escalated using an annual growth rate of
3 percent from the current values); and
(d) domestic benefits are estimated to be
approximately 6 percent of the global
values. These interim judgments are
based on the following considerations.
1. Global and domestic estimates of
SCC. Because of the distinctive nature of
the climate change problem, estimates
of both global and domestic SCC values
should be considered, but the global
measure should be ‘‘primary.’’ This
approach represents a departure from
past practices, which relied, for the
most part, on measures of only domestic
impacts. As a matter of law, both global
and domestic values are permissible; the
relevant statutory provisions are
ambiguous and allow the agency to
choose either measure. (It is true that
Federal statutes are presumed not to
have extraterritorial effect, in part to
ensure that the laws of the United States
respect the interests of foreign
sovereigns. But use of a global measure
for the SCC does not give extraterritorial
effect to Federal law and hence does not
intrude on such interests.)
It is true that under OMB guidance,
analysis from the domestic perspective
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is required, while analysis from the
international perspective is optional.
The domestic decisions of one nation
are not typically based on a judgment
about the effects of those decisions on
other nations. But the climate change
problem is highly unusual in the sense
that it involves (a) a global public good
in which (b) the emissions of one nation
may inflict significant damages on other
nations and (c) the United States is
actively engaged in promoting an
international agreement to reduce
worldwide emissions.
In these circumstances, the global
measure is preferred. Use of a global
measure reflects the reality of the
problem and is expected to contribute to
the continuing efforts of the United
States to ensure that emission
reductions occur in many nations.
Domestic SCC values are also
presented. The development of a
domestic SCC is greatly complicated by
the relatively few region- or countryspecific estimates of the SCC in the
literature. One potential estimate comes
from the DICE (Dynamic Integrated
Climate Economy, William Nordhaus)
model. In an unpublished paper,
Nordhaus (2007) produced
disaggregated SCC estimates using a
regional version of the DICE model. He
reported a U.S. estimate of $1/tCO2
(2007 value, 2007$), which is roughly
11 percent of the global value.
An alternative source of estimates
comes from a recent EPA modeling
effort using the FUND (Climate
Framework for Uncertainty, Negotiation
and Distribution, Center for Integrated
Study of the Human Dimensions of
Global Change) model. The resulting
estimates suggest that the ratio of
domestic to global benefits varies with
key parameter assumptions. With a 3percent discount rate, for example, the
U.S. benefit is about 6 percent of the
global benefit for the ‘‘central’’ (mean)
FUND results, while, for the
corresponding ‘‘high’’ estimates
associated with a higher climate
sensitivity and lower global economic
growth, the U.S. benefit is less than 4
percent of the global benefit. With a 2percent discount rate, the U.S. share is
about 2 to 5 percent of the global
estimate.
Based on this available evidence, a
domestic SCC value equal to 6 percent
of the global damages is used in this
rulemaking. This figure is in the middle
of the range of available estimates from
the literature. It is recognized that the 6
percent figure is approximate and
highly speculative and alternative
approaches will be explored before
establishing final values for future
rulemakings.
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2. Filtering existing analyses. There
are numerous SCC estimates in the
existing literature, and it is legitimate to
make use of those estimates to produce
a figure for current use. A reasonable
starting point is provided by the metaanalysis in Richard Tol, ‘‘The Social
Cost of Carbon: Trends, Outliers, and
Catastrophes, Economics: The OpenAccess, Open-Assessment E-Journal,’’
Vol. 2, 2008–25. https://www.economicsejournal.org/economics/journalarticles/
2008–25 (2008). With that starting point,
it is proposed to ‘‘filter’’ existing SCC
estimates by using those that (1) are
derived from peer-reviewed studies; (2)
do not weight the monetized damages to
one country more than those in other
countries; (3) use a ‘‘business as usual’’
climate scenario; and (4) are based on
the most recent published version of
each of the three major integrated
assessment models (IAMs): FUND, DICE
and PAGE (Policy Analysis of the
Greenhouse Effect).
Proposal (1) is based on the view that
those studies that have been subject to
peer review are more likely to be
reliable than those that have not been.
Proposal (2) is based on a principle of
neutrality and simplicity; it does not
treat the citizens of one nation
differently on the basis of speculative or
controversial considerations. Proposal
(3) stems from the judgment that as a
general rule, the proper way to assess a
policy decision is by comparing the
implementation of the policy against a
counterfactual state where the policy is
not implemented. A departure from this
approach would be to consider a more
dynamic setting in which other
countries might implement policies to
reduce GHG emissions at an unknown
future date, and the United States could
choose to implement such a policy now
or in the future.
Proposal (4) is based on three
complementary judgments. First, the
FUND, PAGE, and DICE models now
stand as the most comprehensive and
reliable efforts to measure the damages
from climate change. Second, the latest
versions of the three IAMs are likely to
reflect the most recent evidence and
learning, and hence they are presumed
to be superior to those that preceded
them. It is acknowledged that earlier
versions may contain information that is
missing from the latest versions. Third,
any effort to choose among them, or to
reject one in favor of the others, would
be difficult to defend at this time. In the
absence of a clear reason to choose
among them, it is reasonable to base the
SCC on all of them.
The agency is keenly aware that the
current IAMs fail to include all relevant
information about the likely impacts
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from greenhouse gas emissions. For
example, ecosystem impacts, including
species loss, do not appear to be
included in at least two of the models.
Some human health impacts, including
increases in food-borne illnesses and in
the quantity and toxicity of airborne
allergens, also appear to be excluded. In
addition, there has been considerable
recent discussion of the risk of
catastrophe and of how best to account
for worst-case scenarios. It is not clear
whether the three IAMs take adequate
account of these potential effects.
3. Use a model-weighted average of
the estimates at each discount rate. At
this time, there appears to be no
scientifically valid reason to prefer any
of the three major IAMs (FUND, PAGE,
and DICE). Consequently, the estimates
are based on an equal weighting of
estimates from each of the models.
Among estimates that remain after
applying the filter, the average of all
estimates within a model is derived.
The estimated SCC is then calculated as
the average of the three model-specific
averages. This approach ensures that the
interim estimate is not biased towards
specific models or more prolific authors.
4. Apply a 3-percent annual growth
rate to the chosen SCC values. SCC is
assumed to increase over time, because
future emissions are expected to
produce larger incremental damages as
physical and economic systems become
more stressed as the magnitude of
climate change increases. Indeed, an
implied growth rate in the SCC is
produced by most studies that estimate
economic damages caused by increased
GHG emissions in future years. But
neither the rate itself nor the
information necessary to derive its
implied value is commonly reported. In
light of the limited amount of debate
thus far about the appropriate growth
rate of the SCC, applying a rate of 3
percent per year seems appropriate at
this stage. This value is consistent with
the range recommended by IPCC (2007)
and close to the latest published
estimate (Hope, 2008).
For climate change, one of the most
complex issues involves the appropriate
discount rate. OMB’s current guidance
offers a detailed discussion of the
relevant issues and calls for discount
rates of 3 percent and 7 percent. It also
permits a sensitivity analysis with low
rates for intergenerational problems. (‘‘If
your rule will have important
intergenerational benefits or costs you
might consider a further sensitivity
analysis using a lower but positive
discount rate in addition to calculating
net benefits using discount rates of 3
and 7 percent.’’) The SCC is being
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developed within the general context of
the current guidance.
The choice of a discount rate,
especially over long periods of time,
raises highly contested and exceedingly
difficult questions of science,
economics, philosophy, and law. See,
e.g., William Nordhaus, ‘‘The Challenge
of Global Warming (2008); Nicholas
Stern, The Economics of Climate
Change’’ (2007); ‘‘Discounting and
Intergenerational Equity’’ (Paul Portney
and John Weyant, eds., 1999). Under
imaginable assumptions, decisions
based on cost-benefit analysis with high
discount rates might harm future
generations—at least if investments are
not made for the benefit of those
generations. (See Robert Lind, ‘‘Analysis
for Intergenerational Discounting,’’ id. at
173, 176–177.) At the same time, use of
low discount rates for particular projects
might itself harm future generations, by
ensuring that resources are not used in
a way that would greatly benefit them.
In the context of climate change,
questions of intergenerational equity are
especially important.
Reasonable arguments support the use
of a 3-percent discount rate. First, that
rate is among the two figures suggested
by OMB guidance, and hence it fits with
existing National policy. Second, it is
standard to base the discount rate on the
compensation that people receive for
delaying consumption, and the 3percent rate is close to the risk-free rate
of return, proxied by the return on long
term inflation-adjusted U.S. Treasury
Bonds. (In the context of climate
change, it is possible to object to this
standard method for deriving the
discount rate.) Although these rates are
currently closer to 2.5 percent, the use
of 3 percent provides an adjustment for
the liquidity premium that is reflected
in these bonds’ returns.
At the same time, other arguments
support use of a 5-percent discount rate.
First, that rate can also be justified by
reference to the level of compensation
for delaying consumption, because it fits
with market behavior with respect to
individuals’ willingness to trade off
consumption across periods as
measured by the estimated post-tax
average real returns to private
investment (e.g., the S&P 500). In the
climate setting, the 5-percent discount
rate may be preferable to the riskless
rate because it is based on risky
investments and the return to projects to
mitigate climate change is also risky. In
contrast, the 3-percent riskless rate may
be a more appropriate discount rate for
projects where the return is known with
a high degree of confidence (e.g.,
highway guardrails).
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Second, 5 percent, and not 3 percent,
is roughly consistent with estimates
implied by reasonable inputs to the
theoretically derived Ramsey equation,
which specifies the optimal time path
for consumption. That equation
specifies the optimal discount rate as
the sum of two components. The first
reflects the fact that consumption in the
future is likely to be higher than
consumption today (even accounting for
climate impacts), so diminishing
marginal utility implies that the same
monetary damage will cause a smaller
reduction of utility in the future.
Standard estimates of this term from the
economics literature are in the range of
3 to 5 percent. The second component
reflects the possibility that a lower
weight should be placed on utility in
the future, to account for social
impatience or extinction risk, which is
specified by a pure rate of time
preference (PRTP). A conventional
estimate of the PRTP is 2 percent. (Some
observers believe that a principle of
intergenerational equity suggests that
the PRTP should be close to zero.) It
follows that discount rate of 5 percent
is within the range of values which are
able to be derived from the Ramsey
equation, albeit at the low end of the
range of estimates usually associated
with Ramsey discounting.
It is recognized that the arguments
above—for use of market behavior and
the Ramsey equation—face objections in
the context of climate change, and of
course there are alternative approaches.
In light of climate change, it is possible
that consumption in the future will not
be higher than consumption today, and
if so, the Ramsey equation will suggest
a lower figure. Some people have
suggested that a very low discount rate,
below 3 percent, is justified in light of
the ethical considerations calling for a
principle of intergenerational neutrality.
See Nicholas Stern, ‘‘The Economics of
Climate Change’’ (2007); for contrary
views, see William Nordhaus, The A
Question of Balance (2008); Martin
Weitzman, ‘‘Review of the Stern Review
on the Economics of Climate Change.’’
Journal of Economic Literature, 45(3):
703–724 (2007). Additionally, some
analyses attempt to deal with
uncertainty with respect to interest rates
over time; a possible approach enabling
the consideration of such uncertainties
is discussed below. Richard Newell and
William Pizer, ‘‘Discounting the Distant
Future: How Much do Uncertain Rates
Increase Valuations?’’ J. Environ. Econ.
Manage. 46 (2003) 52–71.
The application of the methodology
outlined above yields estimates of the
SCC that are reported in Table V18.
These estimates are reported separately
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using 3-percent and 5-percent discount
rates. The cells are empty in rows 10
and 11 because these studies did not
report estimates of the SCC at a 3percent discount rate. The modelweighted means are reported in the final
or summary row; they are $33 per t CO2
at a 3-percent discount rate and $5 per
t CO2 with a 5-percent discount rate.
TABLE V.18—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/T CO2 IN 2007 (2006$)), BASED ON 3% AND 5%
DISCOUNT RATES*
Model
1
2
3
4
5
6
7
8
........................
........................
........................
........................
........................
........................
........................
........................
9 ........................
10 ......................
11 ......................
Study
Climate scenario
3%
....................
....................
....................
....................
....................
....................
....................
....................
Anthoff et al. 2009 .....................................
Anthoff et al. 2009 .....................................
Anthoff et al. 2009 .....................................
Link and Tol 2004 .....................................
Link and Tol 2004 .....................................
Guo et al. 2006 .........................................
Guo et al. 2006 .........................................
Guo et al. 2006 .........................................
PAGE ....................
PAGE ....................
DICE .....................
Wahba & Hope 2006 ................................
Hope 2006 .................................................
Nordhaus 2008 ..........................................
FUND default ............................................
SRES A1b .................................................
SRES A2 ...................................................
No THC .....................................................
THC continues ..........................................
Constant PRTP .........................................
Gollier discount 1 ......................................
Gollier discount 2 ......................................
FUND Mean ..............................................
A2-scen .....................................................
....................................................................
....................................................................
6
1
9
12
12
5
14
7
8.25
57
..........
..........
¥1
¥1
¥1
3
2
¥1
0
¥1
0
7
7
8
Model-weighted Mean ...............................
33
5
FUND
FUND
FUND
FUND
FUND
FUND
FUND
FUND
Summary
5%
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et
al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent annual growth
rate in the SCC, and adjusted for inflation using GDP deflator.
DOE has conducted analyses at $33
and $5 per ton as these represent the
estimates associated with the 3 percent
and 5 percent discount rates,
respectively. The 3 percent and 5
percent estimates have independent
appeal and at this time a clear
preference for one over the other is not
warranted. Thus, DOE has also
included—and centered its current
attention on—the average of the
estimates associated with these discount
rates, which is $19. (Based on the $19
global value, the domestic value would
be $1.14 per ton of CO2 equivalent.)
It is true that there is uncertainty
about interest rates over long time
horizons. Recognizing that point,
Newell and Pizer have made a careful
effort to adjust for that uncertainty. See
Newell and Pizer, supra. This is a
relatively recent contribution to the
literature.
There are several concerns with using
this approach in this context. First, it
would be a departure from current OMB
guidance. Second, an approach that
would average what emerges from
discount rates of 3 percent and 5
percent reflects uncertainty about the
discount rate, but based on a different
model of uncertainty. The Newell-Pizer
approach models discount rate
uncertainty as something that evolves
over time; in contrast, one alternative
approach would assume that there is a
single discount rate with equal
probability of 3 percent and 5 percent.
Table V.19 reports on the application
of the Newell-Pizer adjustments. The
precise numbers depend on the
assumptions about the data generating
process that governs interest rates.
Columns (1a) and (1b) assume that
‘‘random walk’’ model best describes
the data and uses 3-percent and 5percent discount rates, respectively.
Columns (2a) and (2b) repeat this,
except that it assumes a ‘‘meanreverting’’ process. As Newell and Pizer
report, there is stronger empirical
support for the random walk model.
TABLE V.19—GLOBAL SOCIAL COST OF CARBON ESTIMATES ($/T CO2 IN 2007 IN 2006$),* USING NEWELL & PIZER
ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY**
Model
Study
Climate scenario
Random-walk
model
Mean-reverting
model
1
2
3
4
5
6
7
8
.......................
.......................
.......................
.......................
.......................
.......................
.......................
.......................
9 .......................
10 .....................
11 .....................
VerDate Nov<24>2008
FUND
FUND
FUND
FUND
FUND
FUND
FUND
FUND
...................
...................
...................
...................
...................
...................
...................
...................
Anthoff et al. 2009 ....................
Anthoff et al. 2009 ....................
Anthoff et al. 2009 ....................
Link and Tol 2004 ....................
Link and Tol 2004 ....................
Guo et al. 2006 ........................
Guo et al. 2006 ........................
Guo et al. 2006 ........................
PAGE ...................
PAGE ...................
DICE ....................
Wahba & Hope 2006 ...............
Hope 2006 ................................
Nordhaus 2008 .........................
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FUND default ...........................
SRES A1b ................................
SRES A2 ..................................
No THC ....................................
THC continues .........................
Constant PRTP ........................
Gollier discount 1 .....................
Gollier discount 2 .....................
FUND Mean .............................
A2-scen ....................................
...................................................
...................................................
Sfmt 4702
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5%
3%
5%
(1a)
srobinson on DSKHWCL6B1PROD with PROPOSALS2
3%
(1b)
(2a)
(2b)
10
2
15
20
20
9
14
7
12
97
............
............
09NOP2
0
0
0
6
4
0
0
¥1
1
13
13
15
7
1
10
13
13
6
14
7
9
63
............
............
¥1
¥1
¥1
4
2
¥1
0
¥1
0
8
8
9
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
TABLE V.19—GLOBAL SOCIAL COST OF CARBON ESTIMATES ($/T CO2 IN 2007 IN 2006$),* USING NEWELL & PIZER
ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY**—Continued
Model
Study
Random-walk
model
Climate scenario
3%
Summary
Model-weighted Mean ..............
55
5%
Mean-reverting
model
3%
10
5%
36
6
* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et
al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3-percent annual growth
rate in the SCC, and adjusted for inflation using GDP deflator.
** Assumes a starting discount rate of 3 percent. Newell and Pizer (2003) based adjustment factors are not applied to estimates from Guo et
al. (2006) that use a different approach to account for discount rate uncertainty (rows 7–8).
The resulting estimates of the social
cost of carbon are necessarily greater.
When the adjustments from the random
walk model are applied, the estimates of
the social cost of carbon are $10 and
$55, with the 3 percent and 5 percent
discount rates, respectively. The
application of the mean-reverting
adjustment yields estimates of $6 and
$36. Since the random walk model has
greater support from the data, DOE also
conducted analyses with the value of
the SCC set at $10 and $55.
In summary, DOE considered in its
decision process for this notice of
proposed rulemaking the potential
global benefits resulting from reduced
CO2 emissions valued at $5, $10, $19,
$30 and $55 per metric ton, and has also
presented the domestic benefits derived
using a value of $1.14 per metric ton.
All of these unit values represent
emissions that are valued in 2007$. The
final net present values for cumulative
emissions reductions are reported in
2008$ so that they can be compared
with other rulemaking analyses in the
same dollar units.
Table V. and Table V.21 present the
resulting estimates of the potential range
of NPV benefits associated with
reducing CO2 emissions.
TABLE V.20—ESTIMATES OF VALUE OF CO2 EMISSIONS REDUCTIONS UNDER COMMERCIAL CLOTHES WASHER TRIAL
STANDARD LEVELS AT 7-PERCENT DISCOUNT RATE
Value of CO2 emission reductions (million 2008$)
Estimated cumulative CO2
emission reductions (Mt)
TSL
1
2
3
4
5
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
Domestic
Global
$1.14/ton
CO2
2.36
2.39
5.07
5.66
6.11
$5/ton CO2
$10/ton CO2
$19/ton CO2
$33/ton CO2
$55/ton CO2
6
6
13
14
15
12
12
25
28
31
22
23
48
54
58
39
40
84
93
101
65
66
140
156
168
1
1
3
3
3
TABLE V.21—ESTIMATES OF VALUE OF CO2 EMISSIONS REDUCTIONS UNDER COMMERCIAL CLOTHES WASHER TRIAL
STANDARD LEVELS AT 3-PERCENT DISCOUNT RATE
Value of CO2 emission reductions (million 2008$)
Estimated cumulative CO2
emission reductions (Mt)
TSL
srobinson on DSKHWCL6B1PROD with PROPOSALS2
1
2
3
4
5
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
17:24 Nov 06, 2009
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Global
$1.14/ton
CO2
2.36
2.39
5.07
5.66
6.11
DOE is well aware that scientific and
economic knowledge about the
contribution of CO2 and other GHG
emissions to changes in the future
global climate and the potential
resulting damages to the world economy
continues to evolve rapidly. Thus, any
value placed in this rulemaking on
VerDate Nov<24>2008
Domestic
$5/ton CO2
$10/ton CO2
$19/ton CO2
$33/ton CO2
$55/ton CO2
13
13
28
31
33
26
26
55
61
66
49
49
105
117
126
84
86
182
202
219
141
143
303
337
364
3
3
6
7
8
reducing CO2 emissions is subject to
likely change.
DOE, together with other Federal
agencies, is reviewing various
methodologies for estimating the
monetary value of reductions in CO2
and other GHG emissions. This review
will consider the comments on this
subject that are part of the public record
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Sfmt 4702
for this and other rulemakings, as well
as other methodological assumptions
and issues, such as whether the
appropriate values should represent
domestic U.S. benefits, as well as global
benefits (and costs). Given the
complexity of the many issues involved,
this review is ongoing. However,
consistent with DOE’s legal obligations,
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and taking into account the uncertainty
involved with this particular issue, DOE
has included in today’s SNOPR the most
recent values and analyses employed in
a rulemaking by another Federal agency.
DOE also investigated the potential
monetary benefit of reduced NOX and
Hg emissions from the TSLs it
considered. As previously stated, DOE’s
initial analysis assumed the presence of
nationwide emission caps on SO2 and
Hg, and caps on NOX emissions in the
28 States covered by CAIR. In the
presence of these caps, DOE concluded
that negligible physical reductions in
power sector emissions would occur,
but that the standards could put
downward pressure on the prices of
emissions allowances in cap and trade
markets. Estimating this effect is very
difficult because of factors such as
credit banking, which can change the
trajectory of prices. DOE has concluded
that the effect from energy conservation
standards on SO2 allowance prices is
likely to be negligible, based on runs of
the NEMS–BT model. See chapter 16 of
the SNOPR TSD for further details.
As noted above, standards would not
produce an economic impact in the
form of lower prices for NOX emissions
allowance credits in the 28 eastern
States and D.C. covered by the CAIR
cap. However, new or amended energy
conservation standards would reduce
NOX emissions in those 22 States that
are not affected by CAIR. DOE estimated
the monetized value of NOX emissions
reductions resulting from each of the
TSLs considered for today’s SNOPR
based on environmental damage
estimates from the literature. Available
estimates suggest a very wide range of
monetary values for NOX emissions,
ranging from $370 per ton to $3,800 per
ton of NOX from stationary sources,
measured in 2001$ (equivalent to a
range of $432 per ton to $4,441 per ton
in 2007$). Refer to the OMB, Office of
Information and Regulatory Affairs,
‘‘2006 Report to Congress on the Costs
and Benefits of Federal Regulations and
Unfunded Mandates on State, Local,
and Tribal Entities,’’ Washington, DC,
for additional information.
For Hg emissions reductions, DOE
estimated the national monetized values
resulting from the TSLs considered for
today’s SNOPR based on environmental
damage estimates from the literature.
DOE determined that the impact of Hg
emissions from power plants on humans
is considered highly uncertain.
However, DOE identified two estimates
of the environmental damage of Hg
based on two estimates of the adverse
impact of childhood exposure to methyl
mercury on IQ for American children,
and subsequent loss of lifetime
economic productivity resulting from
these IQ losses. The high-end estimate
is based on an estimate of the current
aggregate cost of the loss of IQ in
American children that results from
exposure to Hg of U.S. power plant
origin ($1.3 billion per year in year
2000$), which works out to $32.6
million per ton emitted per year
(2007$).40 The low-end estimate is $0.66
million per ton emitted (in 2004$) or
$0.73 million per ton in 2007$. DOE
derived this estimate from an evaluation
of mercury control that used different
methods and assumptions from the first
study but was also based on the present
value of the lifetime earnings of
children exposed.41
Table V.22 and Table V.23 present the
resulting estimates of the potential range
of present value benefits associated with
reduced national NOX and Hg emissions
from the TSLs DOE considered. The
final net present values for cumulative
emissions reductions are reported in
2008$ so that they can be compared
with other rulemaking analyses in the
same dollar units.
TABLE V.22—ESTIMATES OF VALUE OF REDUCTIONS OF HG AND NOX UNDER TRIAL STANDARD LEVELS AT A 7-PERCENT
DISCOUNT RATE
Estimated cumulative NOX emission reductions
(kt)
Commercial clothes washer TSL
1
2
3
4
5
........................................................................................................
........................................................................................................
........................................................................................................
........................................................................................................
........................................................................................................
1.43
1.45
3.04
3.39
3.66
Value of estimated NOX
emission
reductions
(million 2008$)
0.19
0.19
0.41
0.45
0.49
to
to
to
to
to
1.96
1.99
4.17
4.64
5.01
Estimated cumulative Hg emission reductions
(t)
......
......
......
......
......
Value of estimated Hg emission reductions
(million 2008$)
0
0
0
0
0
0
0
0
0
0
to
to
to
to
to
0.013
0.013
0.029
0.032
0.035
.........
.........
.........
.........
.........
to
to
to
to
to
0.12.
0.12.
0.27.
0.30.
0.33.
TABLE V.23—ESTIMATES OF VALUE OF REDUCTIONS OF HG AND NOX UNDER TRIAL STANDARD LEVELS AT A 3-PERCENT
DISCOUNT RATE
Estimated cumulative NOX emission reductions
(kt)
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Commercial clothes washer TSL
1
2
3
4
5
........................................................................................................
........................................................................................................
........................................................................................................
........................................................................................................
........................................................................................................
40 Trasande, L., et al., ‘‘Applying Cost Analyses to
Drive Policy that Protects Children,’’ 1076 Ann.
N.Y. Acad. Sci. 911 (2006).
VerDate Nov<24>2008
17:24 Nov 06, 2009
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1.43
1.45
3.04
3.39
3.66
Value of estimated NOX
emission
reductions
(million 2008$)
0.38
0.39
0.81
0.91
0.98
to
to
to
to
to
41 Ted Gayer and Robert Hahn, ‘‘Designing
Environmental Policy: Lessons from the Regulation
of Mercury Emissions,’’ Regulatory Analysis 05–01,
AEI-Brookings Joint Center for Regulatory Studies,
Washington, DC (2004). A version of this paper was
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Sfmt 4702
Estimated cumulative Hg emission reductions
(t)
3.92 ......
3.98 ......
8.36 ......
9.31 ......
10.04 ....
Value of estimated Hg emission reductions
(million 2008$)
0
0
0
0
0
0
0
0
0
0
to
to
to
to
to
0.013
0.013
0.029
0.032
0.035
.........
.........
.........
.........
.........
to
to
to
to
to
0.25.
0.26.
0.56.
0.63.
0.68.
published in the Journal of Regulatory Economics
in 2006. The estimate was derived by backcalculating the annual benefits per ton from the net
present value of benefits reported in the study.
E:\FR\FM\09NOP2.SGM
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TABLE V.24—ESTIMATES OF ADDING NPV OF CUSTOMER SAVINGS TO NPV OF LOW- AND HIGH-END GLOBAL MONETIZED
BENEFITS FROM CO2 NOX, AND HG EMISSIONS REDUCTIONS FOR ALL TSLS AT 3- AND 7-PERCENT DISCOUNT RATES
CO2 value of $5/metric ton
CO2* billion 2008$ and
low values for NOX and Hg**
7-percent
discount rate
TSL
1
2
3
4
5
CO2 value of $55/metric ton
CO2* billion 2008$ and
high values for NOX and Hg***
7-percent
discount rate
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
3-percent
discount rate
0.03
0.05
0.73
0.83
1.04
0.17
0.21
1.81
2.09
2.53
3-percent
discount rate
0.09
0.11
0.86
0.98
1.20
0.30
0.34
2.09
2.41
2.87
* These values per ton represent the global negative externalities of CO2. The unit values are in 2007$ while cumulative NPV is in 2008$.
** Low Value corresponds to a value of $432 per ton of NOX emissions in 2007$ and no effect on Hg emissions. The unit values are in 2007$
while cumulative NPV is in 2008$.
*** High Value corresponds to a value of $4,441 per ton of NOX emissions in 2007$ and $32.6 million per ton of Hg emissions in 2007$. The
unit values are in 2007$ while cumulative NPV is in 2008$.
TABLE V.25—ESTIMATES OF ADDING NPV OF CUSTOMER SAVINGS TO NPV OF LOW- AND HIGH-END MONETIZED
BENEFITS FROM CO2 EMISSIONS REDUCTIONS FOR ALL TSLS AT 3- AND 7-PERCENT DISCOUNT RATES
CO2 value of $5/metric ton
CO2* billion 2008$
CO2 value of $55/metric ton
CO2* billion 2008$
TSL
7-percent
discount rate
1
2
3
4
5
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
3-percent
discount rate
0.02
0.03
0.37
0.42
0.53
0.09
0.11
0.92
1.06
1.28
7-percent
discount rate
3-percent
discount rate
0.08
0.09
0.50
0.57
0.68
0.22
0.24
1.19
1.37
1.61
srobinson on DSKHWCL6B1PROD with PROPOSALS2
* These values per ton represent the global negative externalities of CO2. The unit values are in 2007$ while cumulative NPV is in 2008$.
The NPV of the monetized benefits
associated with emissions reductions
can be viewed as a complement to the
NPV of the consumer savings calculated
for each TSL considered in this
rulemaking. Table V.24 presents the
NPV values for CCWs that would result
if DOE were to apply the low- and highend estimates of the potential benefits
resulting from reduced CO2, NOX and
Hg emissions to the NPV of consumer
savings calculated for each TSL
considered in this rulemaking, at both a
7- and 3-percent discount rate. Table
V.24 presents the NPV values for CCWs
that would result if DOE were to apply
the low- and high-end estimates of the
potential global benefits resulting from
reduced CO2 emissions only to the NPV
of consumer savings calculated for each
TSL considered in this rulemaking, at
both a 7- and 3-percent discount rate.
For CO2, only the range of global benefit
values are used, $5 and $55 in 2007$,
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17:24 Nov 06, 2009
Jkt 022001
although the actual benefit estimates are
provided in 2008$.
Although comparing the value of
consumer savings to the values of
emission reductions provides a valuable
perspective, please note the following:
(1) The national consumer savings are
domestic U.S. consumer monetary
savings found in market transactions
while the values of emission reductions
are based on ranges of estimates of
imputed marginal social costs, which, in
the case of CO2, are meant to reflect
global benefits; and (2) the assessments
of consumer savings and emissionrelated benefits are performed with
different computer models, leading to
different time frames for the analyses.
The present value of national consumer
savings is measured for the period
2015–2065 (31 years from 2015 to 2045
inclusive, plus the longest lifetime of
the equipment shipped in the 31st year).
However, the timeframes of the benefits
associated with the emission reductions
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Fmt 4701
Sfmt 4702
differ. For example, the value of CO2
emission reductions is meant to reflect
the present value of all future climate
related impacts, even those beyond
2065.
DOE seeks comment on the above
presentation of NPV values and on the
consideration of GHG emissions in
future energy efficiency standards
rulemakings, including alternative
methodological approaches to including
GHG emissions in its analysis. More
specifically, DOE seeks comment on
both how it integrates monetized GHG
emissions or Social Cost of Carbon
values, as well as other monetized
benefits or costs, into its analysis and
models, and also on suggested
alternatives to the current approach.
Table V.26 presents the estimated
wastewater discharge reductions due to
the TSLs for CCWs. In chapter 16 of the
TSD accompanying this notice, DOE
reports annual changes in wastewater
discharge attributable to each TSL.
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Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 / Proposed Rules
TABLE V.26—SUMMARY OF WASTEWATER DISCHARGE REDUCTIONS
[Cumulative Reductions for Equipment Sold from 2013 to 2043]
TSL
1
Wastewater Discharge Reduction (trillion gallons) ..................................
C. Proposed Standards
1. Overview
srobinson on DSKHWCL6B1PROD with PROPOSALS2
Under 42 U.S.C. 6295(o)(2)(A) and
6316(a), EPCA requires that any new or
amended energy conservation standard
for any type (or class) of covered
product or equipment be designed to
achieve the maximum improvement in
energy efficiency that the Secretary
determines is technologically feasible
and economically justified. In
determining whether a standard is
economically justified, the Secretary
must determine whether the benefits of
the standard exceed its burdens to the
greatest extent practicable, in light of
the following seven factors:
(1) The economic impact of the
standard on manufacturers and
consumers of the products or equipment
subject to the standard;
(2) The savings in operating costs
throughout the estimated average life of
the covered products or equipment in
the type (or class) compared to any
increase in the price, initial charges, or
maintenance expenses for the covered
products or equipment that are likely to
result from the imposition of the
standard;
(3) The total projected amount of
energy (or, as applicable, water) savings
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17:24 Nov 06, 2009
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2
0.00
likely to result directly from the
imposition of the standard;
(4) Any lessening of the utility or the
performance of the covered products or
equipment 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
considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a))
The new or amended standard also
must ‘‘result in significant conservation
of energy.’’
(42 U.S.C. 6295(o)(3)(B) and 6316(a))
In selecting the proposed energy
conservation standards for CCWs for
consideration in today’s SNOPR, DOE
started by examining the maximum
technologically feasible levels, and
determined whether those levels were
economically justified. If DOE
determined that the maximum
technologically feasible level was not
justified, DOE then analyzed the next
lower TSL to determine whether that
level was economically justified. DOE
repeated this procedure until it
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3
0.01
4
0.14
5
0.16
0.21
identified an economically justified
TSL.
To aid the reader in understanding
the benefits and/or burdens of each TSL,
the following tables summarize the
quantitative analytical results for each
TSL, based on the assumptions and
methodology discussed above. These
tables present the results—or, in some
cases, a range of results—for each TSL.
The range of values reported in these
tables for industry impacts represents
the results for the different markup
scenarios that DOE used to estimate
manufacturer impacts.
In addition to the quantitative results,
DOE also considers other burdens and
benefits that affect economic
justification.
In sum, today’s proposed standard
levels for the equipment that is the
subject of this rulemaking reflect DOE’s
careful balancing of the relevant
statutory factors under EPCA. After
considering public comments on this
SNOPR, DOE will publish a final rule
that either adopts the proposed TSL,
one of the higher or lower TSLs, or some
value in between.
2. Conclusion
Table V.27 presents a summary of the
quantitative results for each CCW TSL.
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First, DOE considered TSL 5, the maxtech level. TSL 5 would likely save 0.12
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quads of energy and 0.21 trillion gallons
of water through 2043, an amount DOE
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considers significant. For the Nation as
a whole, DOE projects that TSL 5 would
result in a net increase of $0.51 billion
in NPV, using a discount rate of 7
percent. The emissions reductions at
TSL 5 are 6.11 Mt of CO2, 3.66 kt of
NOX, and 0 t to 0.03 t of Hg. At TSL 5,
the estimated benefit of reducing CO2
emissions based on global estimates of
the value of CO2 ranges from $15
million to $168 million at a 7-percent
discount rate and $33 million to $364
million at a 3-percent discount rate.
Total generating capacity in 2043 is
estimated to decrease compared to the
reference case by 0.012 GW under TSL
5.
At TSL 5, DOE projects that the
average top-loading CCW consumer
would experience a decrease in LCC of
$179 in multi-family applications and
$190 in laundromats. DOE also
estimates an LCC decrease for an
overwhelming majority of consumers in
the Nation that purchase top-loading
CCWs—85 percent of consumers in
multi-family applications and 96
percent of consumers in laundromats.
The median payback period of the
average consumer at TSL 5 in multifamily applications and in laundromats
is projected to be 4.6 years and 2.8
years, respectively.
At TSL 5, DOE projects that the
average front-loading CCW consumer
would experience a decrease in LCC of
$203 in multi-family applications and
$216 in laundromats. DOE also
estimates an LCC decrease for an
overwhelming majority of consumers
that purchase front-loading CCWs—99
percent of consumers in multi-family
applications and 100 percent of
consumers in laundromats. The median
payback period of the average consumer
at TSL 5 in multi-family applications
and in laundromats is projected to be
2.9 years and 1.6 years, respectively.
At TSL 5, DOE estimated the
projected change in INPV ranges from a
total decrease of $20.4 million for both
equipment classes to a total decrease of
$23.0 million. At TSL 5, DOE recognizes
the risk of very large negative impacts
if manufacturers’ expectations about
reduced shipments are realized. TSL 5
could result in a net loss as high as 37.3
percent in INPV to CCW manufacturers.
Also, DOE is especially sensitive to the
potentially severe impacts to the LVM of
CCWs. Because the LVM’s clothes
washer revenue is so dependent on
CCW sales, DOE is concerned that TSL
5 will cause material harm to the LVM.
Although DOE recognizes the
increased economic benefits that could
result from TSL 5, DOE has tentatively
concluded that the benefits of a Federal
standard at TSL 5 would be outweighed
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by the potential for disincentivizing
consumers from purchasing more
efficient front-loading CCWs. At TSL 5,
front-loading CCWs are highly efficient
but have a purchase price estimated to
be $497 more expensive than toploading CCWs. With such a large price
differential between the two types of
CCWs, and with less than 2 percent of
the front-loading market at TSL 5, DOE
is concerned that significant numbers of
potential consumers of front-loading
CCWs would choose to purchase a less
efficient top-loading unit.
As described in section III.E.2.c, DOE
did analyze the impacts of increased
purchase prices for each equipment
class but independently of the other.
Because the price impacts for more
efficient top-loaders are higher than
those for more efficient front-loaders,
DOE estimated that top-loading CCW
sales would decrease slightly more
rapidly than for front-loaders. But DOE
was not able to estimate the cross price
elasticity of demand between the two
equipment classes to determine whether
consumers of front-loading CCWs would
switch to less expensive top-loaders.
If potential front-loading CCW
consumers did decide to switch to less
expensive top-loading washers, the NES
and NPV realized from TSL 5 would be
diminished. DOE notes that in
developing the energy savings and water
savings estimates for TSL 5, the agency
effectively held constant the ratio of
front-loading to top-loading CCW
shipments across the various TSLs.
Particularly at TSL 3 to TSL 5, the
differences in these estimates are small,
especially at a 7-percent discount rate.
DOE requests comment as to whether it
should account for the cross price
elasticity of demand between the two
equipment classes when calculating the
anticipated energy and water savings at
the different TSLs. DOE also seeks
relevant data or other information on
this topic. DOE believes that the values
currently in Table V.27 represent the
high end of the potential energy and
water savings for these TSLs. Taking
into account price elasticity of demand
could affect the anticipated energy and
water savings of the various TSLs, and
it could potentially result in a change in
the TSL with the highest projected
energy/water savings level.
In addition, TSL 5 would adversely
impact manufacturers’ INPV to a
significant extent. Not only does the
industry face a potential, significant loss
in industry INPV, but manufacturers
would also need to make significant
capital investments for both types of
CCWs in order to produce both toploading and front-loading washers at the
maximum technologically feasible
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levels. After carefully considering the
analysis and weighing the benefits and
burdens of TSL 5, the Secretary has
reached the following initial conclusion:
At TSL 5, the benefits of energy savings,
economic benefit, and emissions
reductions would be outweighed by the
potential for giving consumers less
incentive to purchase high efficiency
front-loading CCWs and the large capital
conversion costs that could result in a
substantial reduction in INPV for
manufacturers.
Next, DOE considered TSL 4. TSL 4
would likely save 0.11 quads of energy
and 0.16 trillion gallons of water
through 2043, an amount DOE considers
significant. For the Nation as a whole,
DOE projects that TSL 4 would result in
a net increase of $0.41 billion in NPV,
using a discount rate of 7 percent. The
emissions reductions at TSL 4 are 5.66
Mt of CO2, 3.39 kt of NOX, and 0 t to
0.03 t of Hg. At TSL 4, the estimated
benefits of reducing CO2 emissions
based on global estimates of the value of
CO2 ranges from $14 million to $156
million at a 7-percent discount rate and
$31 million to $337 million at a 3percent discount rate. Total generating
capacity in 2043 is estimated to
decrease compared to the reference case
by 0.011 GW under TSL 4.
At TSL 4, top-loading CCWs have the
same efficiency as at TSL 5. Therefore,
top-loading CCW consumers will
experience the same LCC impacts and
payback periods as TSL 5. At TSL 4 for
front-loading CCWs, DOE projects that
the average front-loading CCW
consumer would experience a decrease
in LCC of $91 in multi-family
applications and $93 in laundromats.
DOE also estimates an LCC decrease for
an overwhelming majority of consumers
that purchase front-loading CCWs—76
percent of consumers in multi-family
applications and 77 percent of
consumers in laundromats. The median
payback period of the average consumer
at TSL 4 in multi-family applications
and in laundromats is projected to be
3.0 years and 1.8 years, respectively.
DOE estimated the projected change
in INPV ranges from a decrease of $7.8
million to a decrease of $10.2 million.
At TSL 4, DOE recognizes the risk of
very large negative impacts if
manufacturers’ expectations about
reduced shipments are realized. TSL 4
could result in a net loss as high as 16.6
percent in INPV to CCW manufacturers.
Also, DOE is especially sensitive to the
potentially severe impacts to the LVM.
Since the LVM’s clothes washer revenue
is so dependent on CCW sales, DOE is
concerned that TSL 4 will materially
harm the LVM.
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Although DOE recognizes the
increased economic benefits that could
result from TSL 4, DOE has the same
concerns regarding TSL 4 as for TSL 5.
Namely, DOE has concerns as to the
potential of TSL 4 to give consumers
less incentive to purchase more efficient
front-loading washers. At TSL 4, frontloading CCWs are highly efficient but
have a purchase price estimated to be
$454 more expensive than top-loading
washers. With such a price differential
between the two types of CCWs, and
with less than 4 percent of the frontloading market currently meeting TSL 4,
DOE is concerned that a significant
number of potential consumers of frontloading CCWs would be more likely
choose to purchase a top-loading CCW,
which is less efficient. If potential frontloading CCW consumers did decide to
switch to top-loading models, the NES
and NPV realized from TSL 4 would be
diminished. In addition, TSL 4 would
adversely impact manufacturers’ INPV
to a significant extent. Not only does the
industry face a potential loss in industry
INPV, but manufacturers would also
need to make significant capital
investments for both types of CCWs in
order to produce both top-loading
washers at the maximum
technologically feasible level and frontloading washers at a level which only 3
percent of the market currently meets.
After carefully considering the analysis
and weighing the benefits and burdens
of TSL 4, the Secretary has reached the
following initial conclusion: At TSL 4,
the benefits of energy savings, economic
benefit, and emissions reductions would
be outweighed by the potential for
giving consumers less incentive to
purchase high efficiency front-loading
CCWs and the large capital conversion
costs that could result in a substantial
reduction in INPV for manufacturers.
Next, DOE considered TSL 3. TSL 3
would likely save 0.10 quads of energy
and 0.14 trillion gallons of water
through 2043, an amount DOE considers
significant. For the Nation as a whole,
DOE projects that TSL 3 would result in
a net increase of $0.36 billion in NPV,
using a discount rate of 7 percent. The
emissions reductions at TSL 3 are 5.07
Mt of CO2, 3.04 kt of NOX, and 0 t to
0.03 t of Hg. The estimated benefits of
reducing CO2 emissions based on global
estimates of the value of CO2 ranges
from $13 million to $140 million at a 7percent discount rate and $28 million to
$303 million at a 3-percent discount
rate. Total generating capacity in 2043 is
estimated to decrease compared to the
reference case by 0.010 GW under TSL
3.
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At TSL 3, top-loading CCWs have the
same efficiency as at TSL 5. Therefore,
top-loading CCW consumers would
experience the same LCC impacts and
payback periods as TSL 5. At TSL 3 for
front-loading CCWs, DOE projects that
the average front-loading CCW
consumer would experience a decrease
in LCC of $19 in multi-family
applications and $22 in laundromats.
DOE also estimates an LCC decrease for
all consumers that do not already
purchase front-loading CCWs with an
efficiency meeting TSL 3. The median
payback period of the average consumer
at TSL 3 in multi-family applications
and in laundromats is projected to be
0.4 years and 0.2 years, respectively.
DOE estimated the projected change
in INPV ranges from a decrease of $4.8
million to a decrease of $7.0 million. At
TSL 3, DOE recognizes the risk of very
large negative impacts if manufacturers’
expectations about reduced shipments
are realized. In TSL 3 could result in a
net loss as high as 11.4 percent in INPV
to CCW manufacturers. Also, DOE is
especially sensitive to the potential
adverse impacts to the LVM. Since the
LVM’s clothes washer revenue is so
dependent on CCW sales, DOE is
concerned that TSL 3 could
disproportionately impact the LVM.
DOE recognizes the increased
economic benefits that could result from
TSL 3. DOE still has concerns of the
potential for giving consumers less
incentive to purchase more efficient
front-loading washers, but at TSL 3, the
price difference between front-loading
and top-loading CCWs drops to $414.
However, given that DOE projects that
the average front-loading CCW
consumer would experience an LCC
savings at TSL 3, DOE believes that
most front-loading CCW consumers not
already purchasing washers at TSL 3
would likely continue to purchase a
front-loading unit if standards are set at
TSL 3. DOE notes that TSL 3 adversely
impacts manufacturers’ INPV, but
because such a large percent of the
front-loading market is at TSL 3,
manufacturers would likely not need to
make significant capital investments for
front-loading CCWs. Product
development and conversion expenses
and capital investments would only be
required in order to produce higher
efficiency top-loading washers at TSL 3.
After considering the analysis and
weighing the benefits and the burdens,
DOE has tentatively concluded that the
benefits of a TSL 3 standard outweigh
the burdens. In particular, the Secretary
has tentatively concluded that TSL 3
saves a significant amount of energy and
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is technologically feasible and
economically justified. Therefore, DOE
today proposes to adopt the energy
conservation standards for CCWs at TSL
3. Table V.28 lists today’s proposed
energy conservation standards for
CCWs. DOE’s proposal to amend energy
conservation standards for CCWs at TSL
3 reflects its tentative conclusion that
this standard level would minimize the
potential adverse impacts on the LVM
and, therefore, would also minimize the
adverse impacts on CCW market
competition. However, DOE will
carefully consider DOJ’s review of
today’s proposed standards for CCWs
and any public comment received on
these impacts before issuing its final
rule for this equipment. It is DOE’s
intent to set a standard that will not
produce significant adverse impacts on
competition in this market. In proposing
the standards in today’s notice, DOE has
also taken into consideration DOJ’s
determination on the standards
proposed in the October 2008 NOPR.
TABLE V.28—PROPOSED ENERGY
CONSERVATION STANDARDS FOR
COMMERCIAL CLOTHES WASHERS
Equipment
class
Proposed energy conservation standards
Top-loading ....
1.60 Modified Energy Factor/
8.5 Water Factor.
2.00 Modified Energy Factor/
5.5 Water Factor.
Front-loading ..
DOE seeks comment on the proposed
standards. This is identified as Issue 7
in section VII.E of today’s supplemental
notice (Issues on Which DOE Seeks
Comment.)
DOE also calculated the annualized
values for certain benefits and costs at
the various TSLs. Table V.29 shows the
annualized values. DOE used a two-step
calculation process to convert the timeseries of costs and benefits into
annualized values. First, DOE calculated
a present value for the time-series of
costs and benefits using a discount rate
of either three or seven percent. From
the present value, DOE then calculated
the fixed annual payment over the
analysis time period (2013 to 2043) that
yielded the same present value. The
fixed annual payment is the annualized
value. Although DOE calculated
annualized values, this does not imply
that the time-series of cost and benefits
from which the annualized values were
determined are a steady stream of
payments.
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VI. Procedural Issues and Regulatory
Review
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A. Review Under Executive Order 12866
Today’s regulatory action has been
determined to be a ‘‘significant
regulatory action’’ under section 3(f)(1)
of Executive Order 12866, ‘‘Regulatory
Planning and Review.’’ 58 FR 51735
(Oct. 4, 1993). Accordingly, this action
was subject to review under the
Executive Order by the Office of
Information and Regulatory Affairs
(OIRA) in the Office of Management and
Budget.
The Executive Order requires each
agency to identify the problem the
agency intends to address that warrants
new agency action (including, where
applicable, the failures of private
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markets or public institutions), as well
as to assess the significance of that
problem in evaluating whether any new
regulation is warranted. E.O. 12866,
section 1(b)(1).
The October 2008 NOPR evaluated
the market failure that the proposed rule
would address. 73 FR 62034, 62122–23
(Oct. 17, 2008). DOE’s analysis for
CCWs explicitly quantifies and accounts
for the percentage of consumers that
already purchase more efficient
equipment and takes these consumers
into account when determining the
national energy savings associated with
various TSLs. The analysis suggests that
accounting for the market value of
energy savings alone (i.e., excluding any
possible additional ‘‘externality’’
benefits such as those noted below)
would produce enough benefits to yield
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net benefits across a wide array of
equipment and circumstances. In the
October 2008 NOPR, DOE requested
additional data (including the
percentage of consumers purchasing
more efficient CCWs and the extent to
which consumers will continue to
purchase more efficient equipment), in
order to test the existence and extent of
these consumer actions. 73 FR 62034,
62123 (Oct. 17, 2008). DOE received no
such data from interested parties in
response to the October 2008 NOPR.
DOE believes that there is a lack of
consumer information and/or
information processing capability about
energy efficiency opportunities in the
home appliance market. If this is the
case, DOE would expect the energy
efficiency for CCWs to be randomly
distributed across key variables such as
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energy prices and usage levels. DOE has
estimated the percentage of consumers
that already purchase more efficient
CCWs. However, DOE does not correlate
the consumer’s usage pattern and energy
price with the efficiency of the
purchased equipment. In the October
2008 NOPR, DOE sought data on the
efficiency levels of existing CCWs by
how often they are used (e.g., how many
times or hours the equipment is used)
and their associated energy prices (and/
or geographic regions of the country). Id.
DOE received no such data from
interested parties in response to the
October 2008 NOPR. Therefore, DOE
was unable to test for today’s
supplemental rule the extent to which
purchasers of CCWs behave as if they
are unaware of the costs associated with
their energy consumption.
A related issue is asymmetric
information (one party to a transaction
has more and better information than
the other) and/or high transactions costs
(costs of gathering information and
effecting exchanges of goods and
services). In many instances, the party
responsible for an appliance purchase
may not be the one who pays the cost
to operate it. For example, home
builders in large-scale developments
often make decisions about appliances
without input from home buyers and do
not offer options to upgrade those
appliances. Also, apartment owners
normally make decisions about
appliances, but renters often pay the
utility bills. If there were no
transactions costs, it would be in the
home builders’ and apartment owners’
interest to install appliances that buyers
and renters would choose. For example,
one would expect that a renter who
knowingly faces higher utility bills from
low efficiency appliances would be
willing to pay less in rent, and the
apartment owner would indirectly bear
the higher utility cost. However, this
information is not readily available, and
it may not be in the renter’s interest to
take the time to develop it, or, in the
case of the landlord who installs a high
efficiency appliance, to convey that
information to the renter.
To the extent that asymmetric
information and/or high transactions
costs are problems, one would expect to
find certain outcomes for appliance
energy efficiency. For example, all
things being equal, one would not
expect to see higher rents for apartments
with high efficiency appliances.
Conversely, if there were symmetric
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information, one would expect
appliances with higher energy efficiency
in rental units where the rent includes
utilities compared to those where the
renter pays the utility bills separately.
Similarly, for single-family homes, one
would expect higher energy efficiency
levels for replacement units than for
appliances installed in new
construction. Within the new
construction market, one would expect
to see appliances with higher energy
efficiency levels in custom-built homes
(where the buyer has more say in
appliance choices) than in comparable
homes built in large-scale
developments.
The above issues pertaining to
asymmetric information and/or high
transaction costs seem to be less
relevant to the CCW market. For
example, as discussed in section
III.D.10, DOE concluded that a split
incentive is unlikely between route
operators and multi-family property
owners. Because split incentives are
likely not applicable to the CCW market,
the probability that asymmetric
information exists where one party (e.g.,
a route operator) has more and better
information than the other (e.g., a multifamily property owner) is low. Further,
because DOE received no data from
interested parties in response to the
October 2008 NOPR on the issue of
asymmetric information and/or high
transactions costs, DOE was unable to
conclusively determine for today’s
supplemental notice the extent to which
asymmetric information and/or high
transaction costs are a market failure in
the CCW market.
In addition, this rulemaking is likely
to yield certain external benefits
resulting from improved energy
efficiency of CCWs that are not captured
by the users of such equipment. These
benefits include externalities related to
environmental protection and energy
security that are not reflected in energy
prices, such as reduced emissions of
greenhouse gases. The TSLs which DOE
evaluated resulted in CO2, NOX, and Hg
emissions reductions. DOE also
determined a range of possible monetary
benefits associated with the emissions
reductions. DOE considered both the
emissions reductions and their possible
monetary benefit in determining the
economic feasibility of the TSLs.
DOE conducted a regulatory impact
analysis (RIA) for review by the Office
of Information and Regulatory Affairs
(OIRA) at OMB. DOE presented to OIRA
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the draft supplemental notice and other
documents prepared for this
rulemaking, including the RIA, and has
included these documents in the
rulemaking record. They are available
for public review in the Resource Room
of the Building Technologies Program,
950 L’Enfant Plaza, SW., 6th Floor,
Washington, DC 20024, (202) 586–9127,
between 9:00 a.m. and 4:00 p.m.,
Monday through Friday, except Federal
holidays.
The RIA is contained as chapter 17 in
the TSD prepared for the rulemaking.
The RIA consists of (1) a statement of
the problem addressed by this
regulation, and the mandate for
government action; (2) a description and
analysis of the feasible policy
alternatives to this regulation; (3) a
quantitative comparison of the impacts
of the alternatives; and (4) the national
economic impacts of today’s proposed
standards. DOE performed an RIA solely
for CCWs for today’s supplemental
notice.
The RIA calculates the effects of
feasible policy alternatives to energy
conservation standards for CCWs and
provides a quantitative comparison of
the impacts of the alternatives. DOE
evaluated each alternative in terms of its
ability to achieve significant energy
savings at reasonable costs, and
compared it to the effectiveness of
today’s proposed standards. DOE
analyzed these alternatives using a
series of regulatory scenarios as input to
the NIA spreadsheets for the two
equipment classes, which it modified to
allow inputs for voluntary measures.
For more details on how DOE modified
the NIA spreadsheets to determine the
impacts due to the various nonregulatory alternatives to standards,
refer to chapter 17 of the TSD
accompanying this notice.
As shown in Table VI.1 below, DOE
identified the following major policy
alternatives for achieving increased
energy efficiency in conventional CCWs:
(1) No new regulatory action;
(2) Financial incentives;
(3) Consumer rebates;
(4) Consumer tax credits;
(5) Manufacturer tax credits;
(6) Voluntary energy efficiency
targets;
(7) Bulk government purchases;
(8) Early replacement; and
(9) Today’s proposed approach
(national performance and prescriptive
standards).
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TABLE VI.1—NON-REGULATORY ALTERNATIVES TO COMMERCIAL CLOTHES WASHER STANDARDS
Energy savings*
(quads)
Policy alternatives
Water savings
(trillion gallons)
0
0.06
0.01
0.00
0.02
0.01
0.00
0.10
Net present value**
(billion 2008$)
0
0.07
0.01
0.01
0.02
0.01
0.01
0.14
No new regulatory action .........................................................................
Consumer rebates ...................................................................................
Consumer tax credits ...............................................................................
Manufacturer tax credits ..........................................................................
Voluntary energy efficiency targets*** .....................................................
Early replacement ....................................................................................
Bulk government purchases*** ................................................................
Today’s standards at TSL 3 ....................................................................
7% Discount
rate
0
0.18
0.03
0.02
0.06
0.11
0.02
0.36
3% Discount
rate
0
0.47
0.08
0.06
0.15
0.17
0.04
0.89
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* Energy savings are in source quads.
** Net present value is the value in the present of a time series of costs and savings. DOE determined the net present value from 2013 to
2043 in billions of 2008 dollars.
*** Voluntary energy efficiency target and bulk government purchase alternatives are not considered for front-loading washers because the percentage of the market at TSL 3 (today’s proposed standard) is well over the market adoption target level that each alternative strives to attain.
The net present value amounts shown
in Table VI.1 refer to the NPV for
consumers. The costs to the government
of each policy (such as rebates or tax
credits) are not included in the costs for
the NPV since, on balance, consumers
would be both paying for (through
taxes) and receiving the benefits of the
payments. The following paragraphs
discuss each of the policy alternatives
listed in Table VI.1. (See the chapter 17
of the SNOPR TSD.)
No New Regulatory Action. The case
in which no regulatory action is taken
with regard to CCWs constitutes the
‘‘base case’’ (or ‘‘No Action’’) scenario.
In this case, between 2013 and 2043,
CCWs are expected to use 0.97 quads of
primary energy along with 2.2 trillion
gallons of water. Since this is the base
case, energy savings and NPV are zero
by definition.
Consumer Rebates. Consumer rebates
cover a portion of the incremental
installed cost difference between
equipment meeting baseline efficiency
levels and those meeting higher
efficiency levels, which generally result
in a higher percentage of consumers
purchasing more efficient models. DOE
utilized market penetration curves from
a study that analyzed the potential of
energy efficiency in California.42 The
penetration curves are a function of
benefit-cost ratio (i.e., lifetime operating
costs savings divided by increased total
installed costs) to estimate the increased
market share of more efficient
equipment given incentives by a rebate
program. Using specific rebate amounts,
DOE calculated, for the considered
equipment, the benefit-cost ratio of the
more efficient appliance with and
42 Rufo, M. and F. Coito, California’s Secret
Energy Surplus: The Potential for Energy Efficiency
(prepared for The Energy Foundation and The
Hewlett Foundation by Xenergy, Inc.) (2002).
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without the rebate to project the
increased market penetration of the
equipment due to a rebate program.
For CCWs meeting TSL 3, DOE
estimated that the percentage of
consumers purchasing the more
efficient equipment due to consumer
rebates would increase annually by 49.0
percent for top-loading washers and 4.0
percent for front-loading washers. DOE
selected the rebate amount using data
from rebate programs for CCWs
conducted by 24 gas, electric, and water
utilities and other agencies. DOE
estimated that the impact of this policy
would be to permanently transform the
market so that the increased market
share seen in the first year of the
program would be maintained
throughout the forecast period. At the
estimated participation rates, consumer
rebates would be expected to provide
0.06 quads of national energy savings,
74 billion gallons of national water
savings, and an NPV of $0.18 billion (at
a 7-percent discount rate).
Although DOE estimated that
consumer rebates would provide
national benefits for CCW consumers,
these benefits would be smaller than the
benefits resulting from national
performance standards at today’s
proposed levels. Thus, DOE rejected
consumer rebates as a policy alternative
to national performance standards.
Consumer Tax Credits. Consumer tax
credits cover a percentage of the
incremental installed cost difference
between equipment meeting baseline
efficiency levels and those with higher
efficiencies. Consumer tax credits are
considered a viable non-regulatory
market transformation program as
evidenced by the inclusion of Federal
consumer tax credits in EPACT 2005 for
various residential appliances. (Section
1333 of EPACT 2005; codified at 26
U.S.C. 25C) DOE reviewed the market
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impact of tax credits offered by the
Oregon Department of Energy (ODOE)
(ODOE, No. 35 at p. 1) and Montana
Department of Revenue (MDR) (MDR,
No. 36 at p. 1) to estimate the effect of
a national tax credit program. To help
estimate the impacts from such a
program, DOE also reviewed analyses
prepared for the California Public
Utilities Commission,43 the Northwest
Energy Efficiency Alliance,44 and the
Energy Foundation/Hewlett
Foundation.45 For each the equipment
considered for this rulemaking, DOE
estimated that the market effect of a tax
credit program would gradually increase
over a time period until it reached its
maximum impact. Once the tax credit
program attained its maximum effect,
DOE assumed the impact of the policy
would be to permanently transform the
market at this level.
For CCWs, DOE estimated that
consumer tax credits would induce an
increase of 1.3 percent in 2013 in the
purchase of equipment meeting TSL 3
and eventually increase to a maximum
of 5.8 percent in 2020 for both toploading and front-loading washers.46 At
the estimated participation rates,
consumer tax credits would be expected
to provide 0.01 quads of national energy
43 Itron and KEMA, 2004/2005 Statewide
Residential Retrofit Single-Family Energy Efficiency
Rebate Evaluation (prepared for the California
Public Utilities Commission, Pacific Gas And
Electric Company, San Diego Gas and Electric
Company, Southern California Edison, Southern
California Gas Company, CPUC–ID# 1115–04)
(2007).
44 KEMA, Consumer Product Market Progress
Evaluation Report 3 (prepared for Northwest Energy
Efficiency Alliance, Report #07–174) (2007).
45 Rufo, M., and F. Coito, op. cit.
46 Because DOE was not able to identify consumer
tax credit programs specific to CCWs, increased
market penetrations for residential clothes washers
were used to estimate the impact from a tax credit
program providing incentives for more efficient
CCWs.
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savings, 13 billion gallons of national
water savings, and an NPV of $0.03
billion (at a 7-percent discount rate).
DOE estimated that while consumer
tax credits would yield national benefits
for CCW consumers, these benefits
would be much smaller than the
benefits from today’s proposed national
performance standards. Thus, DOE
rejected consumer tax credits as a policy
alternative to national performance
standards.
Manufacturer Tax Credits.
Manufacturer tax credits are considered
a viable non-regulatory market
transformation program as evidenced by
the inclusion of Federal tax credits in
EPACT 2005 for manufacturers of
residential appliances. (Section 1334 of
EPACT 2005; codified at 26 U.S.C. 45M)
Similar to consumer tax credits,
manufacturer tax credits would
effectively result in lower equipment
prices to consumers by an amount that
covered part of the incremental price
difference between equipment meeting
baseline efficiency levels and those
meeting higher efficiency levels.
Because these tax credits go to
manufacturers instead of consumers,
research indicates that fewer consumers
would be affected by a manufacturer tax
credit program than by consumer tax
credits.47 48 Although consumers would
benefit from price reductions passed
through to them by the manufacturers,
research demonstrates that
approximately half the consumers who
would benefit from a consumer tax
credit program would be aware of the
economic benefits of more efficient
technologies included in an appliance
manufacturer tax credit program. In
other words, research estimates that half
of the effect from a consumer tax credit
program is due to publicly available
information or promotions announcing
the benefits of the program. This effect,
referred to as the ‘‘announcement
effect,’’ is not part of a manufacturer tax
credit program. Therefore, DOE
estimated that the effect of a
manufacturer tax credit program would
be only half of the maximum impact of
a consumer tax credit program.
As described earlier in section III.E.2
on the NIA, DOE analyzed the impact of
recent Federal manufacturer tax credits
on increased sales of high efficiency
47 K. Train, Customer Decision Study: Analysis of
Residential Customer Equipment Purchase
Decisions (prepared for Southern California Edison
by Cambridge Systematics, Pacific Consulting
Services, The Technology Applications Group, and
California Survey Research Services) (1994).
48 Lawrence Berkeley National Laboratory, EndUse Forecasting Group. Analysis of Tax Credits for
Efficient Equipment (1997). Available at https://
enduse.lbl.gov/Projects/TaxCredits.html. (Last
accessed April 24, 2008.)
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CCWs. DOE determined that the tax
credits have increased the market share
of front-loading washers from
approximately 20 percent in the year
2005 to its current market share of 30
percent. For purposes of conducting the
NIA, DOE estimated that the tax credits
would permanently transform the
market so that front-loading washers
would continue to comprise 30 percent
of the market over the entire forecast
period, even though the tax credits are
set to expire after 2010. For purposes of
analyzing the impact of manufacturer
tax credits for the RIA, DOE estimated
the percentage of consumers purchasing
equipment at TSL 3 would be expected
to increase by 2.9 percent for both toploading and front-loading washers. This
additional increase of 2.9 percent is
relative to the base case (i.e., the case
without new efficiency standards)
which is comprised of a 30 percent
market share of front-loading washers
and a 70 percent market share of toploading washers. DOE assumed that the
impact of the manufacturer tax credit
policy would be to permanently
transform the market so that the
increased market share seen in the first
year of the program would be
maintained throughout the forecast
period.
At the above estimated participation
rates, manufacturer tax credits would
provide 0.005 quads of national energy
savings, 9 billion gallons of national
water savings, and an NPV of $0.02
billion (at a 7-percent discount rate) for
CCWs.
DOE estimated that while
manufacturer tax credits would yield
national benefits for CCW consumers,
these benefits would be much smaller
than the benefits from national
performance standards. Thus, DOE
rejected manufacturer tax credits as a
policy alternative to today’s proposed
national performance standards.
Voluntary Energy Efficiency Targets.
DOE estimated the impact of voluntary
energy efficiency targets by reviewing
the historical and projected market
transformation performance of past and
current ENERGY STAR programs.
To estimate the impacts from a
voluntary energy efficiency program
targeting the adoption of top-loading
CCWs meeting TSL 3, DOE evaluated
the potential impacts of expanding the
Federal government’s existing ENERGY
STAR program for CCWs. DOE modeled
the voluntary efficiency program based
on the ENERGY STAR program’s
experience with RCWs.49 50 Over the
49 Data were not available on the market impacts
of the CCW program.
50 Sanchez et al., op. cit.
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period spanning 2007–2025, ENERGY
STAR projected that the market share of
RCWs meeting target efficiency levels
due to ENERGY STAR will increase to
a maximum of 28 percent. DOE
estimated that an expanded voluntary
program would increase their market
share by half of these projected annual
amounts for the existing ENERGY STAR
program, reaching a maximum of 14
percent increased market share. For
CCWs, DOE assumed that the impacts of
the existing ENERGY STAR program
were already incorporated in the base
case, and applied the same pattern of
market share increase from an expanded
voluntary program to CCWs beginning
in 2013. After attaining its maximum
market share of 14 percent in the year
2030, DOE’s analysis maintained that
market share throughout the remainder
of the forecast period. DOE estimated
that an expanded program of voluntary
energy efficiency targets would be
expected to provide 0.02 quads of
national energy savings, 24 billion
gallons of national water savings, and an
NPV of $0.06 billion (at a 7-percent
discount rate). Although this program
would provide national benefits, they
were estimated to be smaller than the
benefits resulting from today’s proposed
national performance standards. Thus,
DOE rejected the use of voluntary
energy efficiency targets as a policy
alternative to national performance
standards.
DOE did not analyze the potential
impacts of voluntary energy efficiency
targets for front-loading CCWs because a
vast majority of equipment already
meets today’s proposed standards. In
the case of front-loading CCWs, over 96
percent of the market meets TSL 3. The
ENERGY STAR program typically
targets equipment where a maximum of
approximately 25 percent of the existing
market meets the target efficiency
level.51 Since the market for frontloading CCWs is well above the 25
percent threshold, DOE did not consider
this approach for this equipment class.
Early Replacement. The early
replacement policy alternative envisions
a program to replace old, inefficient
units with models meeting efficiency
levels higher than baseline equipment.
Under an early replacement program,
State governments or electric and gas
utilities would provide financial
incentives to consumers to retire the
appliance early in order to hasten the
adoption of more efficient equipment.
For all of the considered equipment,
51 Sanchez, M. and A. Fanara, ‘‘New Product
Development: The Pipeline for Future ENERGY
STAR Growth,’’ Proceedings of the 2000 ACEEE
Summer Study on Energy Efficiency in Buildings
(2000) Vol 6, pp 343–354.
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DOE modeled this policy by applying a
4-percent increase in the replacement
rate above the natural rate of
replacement for failed equipment. DOE
based this percentage increase on
program experience with the early
replacement of appliances in the State
of Connecticut.52 DOE assumed the
program would continue for as long as
it would take to ensure that the eligible
existing stock in the year that the
program began (2013) was completely
replaced.
For CCWs, this policy alternative
would replace old, inefficient toploading and front-loading units with
models meeting the efficiency levels in
TSL 3. DOE estimated that such an early
replacement program would be
expected to provide 0.01 quads of
national energy savings, 9 billion
gallons of national water savings, and an
NPV of $0.11 billion (at a 7-percent
discount rate).
Although DOE estimated that the
above early replacement programs for
CCWs would provide national benefits,
they would be much smaller than the
benefits resulting from national
performance standards. Thus, DOE
rejected early replacement incentives as
a policy alternative to national
performance standards.
Bulk Government Purchases. Under
this policy alternative, the government
sector would be encouraged to shift
their purchases to equipment that meets
the target efficiency levels above
baseline levels. Aggregating public
sector demand could provide a market
signal to manufacturers and vendors
that some of their largest customers
sought suppliers with equipment that
met an efficiency target at favorable
prices. This program also could induce
‘‘market pull’’ impacts through
manufacturers and vendors achieving
economies of scale for high-efficiency
equipment. Under such a program, DOE
would assume that Federal, State, and
local government agencies would
administer it. At the Federal level, such
a program would add more efficient
equipment for which the Federal Energy
Management Program (FEMP) has
energy efficient procurement
specifications.
52 Nexus.and RLW Analytics, Impact, Process,
and Market Study of the Connecticut Appliance
Retirement Program: Overall Report, Final.
(Submitted to Northeast Utilities—Connecticut
Light and Power and the United Illuminating
Company by Nexus Market Research, Inc. and RLW
Analytics, Inc.) (2005).
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For CCWs, this program would
encourage the government sector to shift
its purchases to top-loading units that
meet the efficiency levels in TSL 3. DOE
estimated that this policy would apply
to multi-family buildings that are
government-owned. Based on a
technology review prepared for FEMP
by Pacific Northwest National
Laboratory (PNNL), approximately 7000
CCWs (representing a 3.2 percent
market share) were purchased in the
year 2000 for Federal buildings.53 Based
on research of the effectiveness of bulk
government purchasing programs, DOE
estimated that the market share of more
efficient CCWs in Federally owned
multi-family buildings would increase
at a rate of 8 percent per year over a 10year period (2013–2022) and remain at
the 2022 level for the remainder of the
forecast period. DOE estimated that bulk
government purchases would be
expected to provide 0.003 quads of
national energy savings, 7 billion
gallons of national water savings, and an
NPV of $0.02 billion (at a 7-percent
discount rate), benefits which would be
much smaller than those estimated for
today’s proposed national performance
standards. Thus, DOE rejected bulk
government purchases as a policy
alternative to national performance
standards.
DOE did not analyze the potential
impacts of bulk government purchases
for front-loading CCWs because the vast
majority of equipment already meets
today’s proposed standards. In the case
of front-loading CCWs, over 96 percent
of the market meets TSL 3. FEMP
procurement specifications typically
promote equipment in the top 25
percent of the existing equipment
offerings in terms of efficiency. Since
most of the front-loading CCWs sold in
the base case already comply with such
specifications, DOE was not able to
consider this program as a source of
data for top-loading CCWs.
National Performance Standards (TSL
3). As indicated in the paragraphs
above, none of the alternatives DOE
examined would save as much energy as
today’s proposed energy conservation
standards. Therefore, DOE will adopt
the efficiency levels listed in section
V.C.
53 Pacific Northwest National Laboratory,
Assessment of High-Performance, Family-Sized
Commercial Clothes Washers (DOE/EE–
0218)(2000).
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57797
B. Review Under the Regulatory
Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires preparation
of an initial regulatory flexibility
analysis for any rule that by law must
be proposed for public comment, unless
the agency certifies that the rule, if
promulgated, will not have a significant
economic impact on a substantial
number of small entities. As required by
Executive Order 13272, Proper
Consideration of Small Entities in
Agency Rulemaking, 67 FR 53461 (Aug.
16, 2002), DOE published procedures
and policies on February 19, 2003, to
ensure that the potential impacts of its
rules on small entities are properly
considered during the rulemaking
process. 68 FR 7990. DOE has made its
procedures and policies available on the
Office of General Counsel’s Web site:
https://www.gc.doe.gov.
DOE reviewed today’s supplemental
notice under the provisions of the
Regulatory Flexibility Act and the
procedures and policies published on
February 19, 2003. 68 FR 7990. A
regulatory flexibility analysis examines
the impact of the rule on small entities
and considers alternative ways of
reducing negative impacts. DOE
identified producers of all equipment
covered by this rulemaking that have
manufacturing facilities located within
the United States. DOE then looked at
publicly available data and contacted
manufacturers, where needed, to
determine if they meet the SBA’s
definition of a small manufacturing
facility.
For the manufacturers of equipment
covered by this rulemaking, the SBA has
set two size thresholds that define
which entities are ‘‘small businesses’’
for the purposes of the statute. See
https://www.sba.gov/idc/groups/public/
documents/sba_homepage/
serv_sstd_tablepdf. Because all CCW
manufacturers also produce RCWs,
limits for both categories are presented
in Table VI.2. DOE used these small
business definitions to determine
whether any small entities would be
required to comply with the rule. (65 FR
30836, 30848 (May 15, 2000), as
amended at 65 FR 53533, 53544
(September 5, 2000) and codified at 13
CFR part 121.) The size standards are
listed by NAICS code and industry
description.
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TABLE VI.2—SBA AND NAICS CLASSIFICATION OF SMALL BUSINESSES POTENTIALLY AFFECTED BY THIS RULE
Industry description
Revenue limit
Employee limit
N/A
N/A
1,000
500
Residential Laundry Equipment Manufacturing ...........................................................................
Commercial Laundry Equipment Manufacturing .........................................................................
The CCW industry consists of three
principal competitors that make up
almost 100 percent of the market share.
Two of them are high-volume,
diversified appliance manufacturers,
while the third is a focused laundry
equipment manufacturer. Before issuing
this SNOPR, DOE interviewed all major
CCW manufacturers. Because all CCW
manufacturers also make RCWs, DOE
also considered whether a CCW
manufacturer could be considered a
small business entity in that industry.
None of the CCW manufacturers fall
into any small business category. As a
result, DOE certifies that today’s SNOPR
would not have a significant impact on
a substantial number of small entities
and that a regulatory flexibility analysis
is not required.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
C. Review Under the Paperwork
Reduction Act
DOE stated in the October 2008 NOPR
that this rulemaking would impose no
new information and recordkeeping
requirements, and that OMB clearance
is not required under the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.).
73 FR 62034, 62130 (Oct. 17, 2008).
DOE received no comments on this in
response to the October 2008 NOPR.
Therefore, for today’s supplemental
notice DOE has concluded that Office of
Management and Budget clearance is
not required under the PRA.
D. Review Under the National
Environmental Policy Act
DOE has prepared a draft
environmental assessment (EA) of the
impacts of the supplemental notice
pursuant to the National Environmental
Policy Act of 1969 (42 U.S.C. 4321 et
seq.), the regulations of the Council on
Environmental Quality (40 CFR Parts
1500–1508), and DOE’s regulations for
compliance with the National
Environmental Policy Act (10 CFR part
1021). This assessment includes an
examination of the potential effects of
emission reductions likely to result from
the rule in the context of global climate
change, as well as other types of
environmental impacts. The draft EA
has been incorporated into the TSD; the
environmental impact analyses are
contained primarily in chapter 16 of
that document. Before issuing a final
rule for CCWs, DOE will consider public
comments and, as appropriate,
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determine whether to issue a finding of
no significant impact as part of a final
EA or to prepare an environmental
impact statement (EIS) for this
rulemaking.
E. Review Under Executive Order 13132
Executive Order 13132, ‘‘Federalism,’’
64 FR 43255 (Aug. 4, 1999) imposes
certain requirements on agencies
formulating and implementing policies
or regulations that preempt State law or
that have Federalism implications. The
Executive Order requires agencies to
examine the constitutional and statutory
authority supporting any action that
would limit the policymaking discretion
of the States and to carefully assess the
necessity for such actions. The
Executive Order also requires agencies
to have an accountable process to
ensure meaningful and timely input by
State and local officials in the
development of regulatory policies that
have Federalism implications. On
March 14, 2000, DOE published a
statement of policy describing the
intergovernmental consultation process
it will follow in the development of
such regulations. 65 FR 13735. DOE has
examined today’s supplemental notice
and has determined that it would not
have a substantial direct effect on the
States, on the relationship between the
national government and the States, or
on the distribution of power and
responsibilities among the various
levels of government. EPCA governs and
prescribes Federal preemption of State
regulations as to energy conservation for
the equipment that is the subject of
today’s supplemental notice. States can
petition DOE for exemption from such
preemption to the extent, and based on
criteria, set forth in EPCA. (42 U.S.C.
6297(d) and 6316(b)(2)(D)) No further
action is required by Executive Order
13132.
F. Review Under Executive Order 12988
With respect to the review of existing
regulations and the promulgation of
new regulations, section 3(a) of
Executive Order 12988, ‘‘Civil Justice
Reform’’ (61 FR 4729 (Feb. 7, 1996))
imposes on Federal agencies the general
duty to adhere to the following
requirements: (1) Eliminate drafting
errors and ambiguity; (2) write
regulations to minimize litigation; and
(3) provide a clear legal standard for
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NAICS
335224
333312
affected conduct rather than a general
standard and promote simplification
and burden reduction. Section 3(b) of
Executive Order 12988 specifically
requires that Executive agencies make
every reasonable effort to ensure that the
regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly
specifies any effect on existing Federal
law or regulation; (3) provides a clear
legal standard for affected conduct
while promoting simplification and
burden reduction; (4) specifies the
retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses
other important issues affecting clarity
and general draftsmanship under any
guidelines issued by the Attorney
General. Section 3(c) of Executive Order
12988 requires Executive agencies to
review regulations in light of applicable
standards in section 3(a) and section
3(b) to determine whether they are met
or it is unreasonable to meet one or
more of them. DOE has completed the
required review and determined that, to
the extent permitted by law, today’s
supplemental notice meets the relevant
standards of Executive Order 12988.
G. Review Under the Unfunded
Mandates Reform Act of 1995
DOE reviewed this regulatory action
under title II of the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104–4)
(UMRA), which requires each Federal
agency to assess the effects of Federal
regulatory actions on State, local and
Tribal governments and the private
sector. For a proposed regulatory action
likely to result in a rule that may cause
the expenditure by State, local, and
Tribal governments, in the aggregate, or
by the private sector of $100 million or
more in any one year (adjusted for
inflation), section 202 of UMRA requires
an agency to publish a written statement
assessing the costs, benefits, and other
effects of the rule on the national
economy. (2 U.S.C. 1532(a), (b)) The
UMRA also requires a Federal agency to
develop an effective process to permit
timely input by elected officers of State,
local, and Tribal governments on a
proposed ‘‘significant intergovernmental
mandate,’’ and requires an agency plan
for giving notice and opportunity for
timely input to potentially affected
small governments before establishing
any requirements that might
significantly or uniquely affect small
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governments. On March 18, 1997, DOE
published a statement of policy on its
process for intergovernmental
consultation under UMRA (62 FR
12820) (also available at https://
www.gc.doe.gov). Although today’s
supplemental notice does not contain a
Federal intergovernmental mandate, it
may impose expenditures of $100
million or more on the private sector,
although DOE believes such
expenditures are likely to be less than
$50 million.
Section 202 of UMRA authorizes an
agency to respond to the content
requirements of UMRA in any other
statement or analysis that accompanies
the supplemental notice. 2 U.S.C.
1532(c). The content requirements of
section 202(b) of UMRA relevant to a
private sector mandate substantially
overlap the economic analysis
requirements that apply under section
325(o) of EPCA and Executive Order
12866. The Supplementary Information
section of this supplemental notice and
the ‘‘Regulatory Impact Analysis’’
section of the SNOPR TSD respond to
those requirements.
Under section 205 of UMRA, DOE is
obligated to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule
for which a written statement under
section 202 is required. DOE is required
to select from those alternatives the
most cost-effective and least
burdensome alternative that achieves
the objectives of the rule unless DOE
publishes an explanation for doing
otherwise or the selection of such an
alternative is inconsistent with law. As
required by 42 U.S.C. 6295(h) and (o),
6313(e), and 6316(a), today’s
supplemental notice would establish
energy conservation standards for CCWs
that are designed to achieve the
maximum improvement in energy
efficiency that DOE has determined to
be both technologically feasible and
economically justified. A full discussion
of the alternatives considered by DOE is
presented in the ‘‘Regulatory Impact
Analysis’’ section of the TSD for today’s
supplemental notice.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
H. Review Under the Treasury and
General Government Appropriations
Act, 1999
DOE determined that, for this
rulemaking, it need not prepare a
Family Policymaking Assessment under
section 654 of the Treasury and General
Government Appropriations Act, 1999
(Pub. L. 105–277). Id. DOE received no
comments concerning section 654 in
response to the October 2008 NOPR,
and, therefore, takes no further action in
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today’s supplemental notice with
respect to this provision.
I. Review Under Executive Order 12630
DOE determined, under Executive
Order 12630, ‘‘Governmental Actions
and Interference with Constitutionally
Protected Property Rights,’’ 53 FR 8859
(March 18, 1988), that the October 2008
NOPR would not result in any takings
which might require compensation
under the Fifth Amendment to the U.S.
Constitution. 73 FR 62034, 62131 (Oct.
17, 2008). DOE received no comments
concerning Executive Order 12630 in
response to the October 2008 NOPR,
and, today’s supplemental notice, which
adopts no new requirements, also would
not result in any takings which might
require compensation under the Fifth
Amendment. Therefore, DOE takes no
further action in today’s supplemental
notice with respect to this Executive
Order.
J. Review Under the Treasury and
General Government Appropriations
Act, 2001
Section 515 of the Treasury and
General Government Appropriations
Act, 2001 (44 U.S.C. 3516 note) provides
for agencies to review most
disseminations of information to the
public under guidelines established by
each agency pursuant to general
guidelines issued by OMB. The OMB
guidelines were published at 67 FR
8452 (Feb. 22, 2002), and DOE’s
guidelines were published at 67 FR
62446 (Oct. 7, 2002). DOE has reviewed
this notice under the OMB and DOE
guidelines and has concluded that it is
consistent with applicable policies in
those guidelines.
K. Review Under Executive Order 13211
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use,’’ 66 FR 28355 (May
22, 2001) requires Federal agencies to
prepare and submit to the OIRA a
Statement of Energy Effects for any
significant energy action. For the
October 2008 NOPR, DOE determined
that the proposed rule, which set energy
conservation standards for commercial
clothes washers, was not a ‘‘significant
energy action’’ within the meaning of
Executive Order 13211. 73 FR 62034,
62132 (Oct. 17, 2008). The rule was also
not designated as such by OIRA.
Accordingly, it did not prepare a
Statement of Energy Effects on that
proposed rule. DOE received no
comments on this issue in response to
the October 2008 NOPR. As with the
October 2008 NOPR, DOE has
concluded that today’s supplemental
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57799
notice is not a significant energy action
within the meaning of Executive Order
13211, and OIRA has not designated the
rule as such. As a result, DOE has not
prepared a Statement of Energy Effects
on the rule.
L. Review Under the Information
Quality Bulletin for Peer Review
On December 16, 2004, the OMB, in
consultation with the Office of Science
and Technology, issued its Final
Information Quality Bulletin for Peer
Review (the Bulletin). 70 FR 2664 (Jan.
14, 2005). The purpose of the Bulletin
is to enhance the quality and credibility
of the Government’s scientific
information. The Bulletin establishes
that certain scientific information shall
be peer reviewed by qualified specialists
before it is disseminated by the Federal
Government. As indicated in the
October 2008 NOPR, this includes
influential scientific information related
to agency regulatory actions, such as the
analyses in this rulemaking. 73 FR
62034, 62132 (Oct. 17, 2008).
As more fully set forth in the October
2008 NOPR, DOE held formal inprogress peer reviews of the types of
analyses and processes that DOE has
used to develop the energy conservation
standards in today’s supplemental
notice, and issued a report on these peer
reviews. Id.
VII. Public Participation
A. Attendance at Public Meeting
DOE will hold a public meeting on
November 16, 2009 from 9 a.m. until 5
p.m., in Washington, DC. The public
meeting will be held at Room 1E–245.
To attend the public meeting, please
notify Ms. Brenda Edwards at (202)
586–2945 or
Brenda.Edwards@ee.doe.gov. As
explained in the ADDRESSES section,
foreign nationals visiting DOE
Headquarters are subject to advance
security screening procedures. Any
foreign national wishing to participate
in the meeting should advise DOE of
this fact as soon as possible by
contacting Ms. Brenda Edwards to
initiate the necessary procedures.
B. Procedure for Submitting Requests To
Speak
Any person who has an interest in
this notice, or who is a representative of
a group or class of persons that has an
interest in these issues, may request an
opportunity to make an oral
presentation. Such persons may handdeliver requests to speak, along with a
compact disc (CD) in WordPerfect,
Microsoft Word, PDF, or text (ASCII) file
format to the address shown in the
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section at the beginning of
this SNOPR between the hours of 9 a.m.
and 4 p.m., Monday through Friday,
except Federal holidays. Requests may
also be sent by mail or e-mail to:
Brenda.Edwards@ee.doe.gov.
Persons requesting to speak should
briefly describe the nature of their
interest in this rulemaking and provide
a telephone number for contact. DOE
requests persons scheduled to be heard
to submit an advance copy of their
statements at least two weeks before the
public meeting. At its discretion, DOE
may permit any person who cannot
supply an advance copy of their
statement to participate, if that person
has made advance alternative
arrangements with the Building
Technologies Program. The request to
give an oral presentation should ask for
such alternative arrangements.
srobinson on DSKHWCL6B1PROD with PROPOSALS2
ADDRESSES
C. Conduct of Public Meeting
DOE will designate a DOE official to
preside at the public meeting and may
also use a professional facilitator to aid
discussion. The meeting will not be a
judicial or evidentiary-type public
hearing, but DOE will conduct it in
accordance with section 336 of EPCA,
42 U.S.C. 6306. A court reporter will be
present to record the proceedings and
prepare a transcript. DOE reserves the
right to schedule the order of
presentations and to establish the
procedures governing the conduct of the
public meeting. After the public
meeting, interested parties may submit
further comments on the proceedings as
well as on any aspect of the rulemaking
until the end of the comment period.
The public meeting will be conducted
in an informal, conference style. DOE
will present summaries of comments
received before the public meeting,
allow time for presentations by
participants, and encourage all
interested parties to share their views on
issues affecting this rulemaking. Each
participant will be allowed to make a
prepared general statement (within time
limits determined by DOE), before the
discussion of specific topics. DOE will
permit other participants to comment
briefly on any general statements.
At the end of all prepared statements
on a topic, DOE will permit participants
to clarify their statements briefly and
comment on statements made by others.
Participants should be prepared to
answer questions by DOE and by other
participants concerning these issues.
DOE representatives may also ask
questions of participants concerning
other matters relevant to this
rulemaking. The official conducting the
public meeting will accept additional
comments or questions from those
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attending, as time permits. The
presiding official will announce any
further procedural rules or modification
of the above procedures that may be
needed for the proper conduct of the
public meeting.
DOE will make the entire record of
this proposed rulemaking, including the
transcript from the public meeting,
available for inspection at the U.S.
Department of Energy, Resource Room
of the Building Technologies Program,
950 L’Enfant Plaza, SW., Suite 600,
Washington, DC, 20024, (202) 586–2945,
between 9 a.m. and 4 p.m., Monday
through Friday, except Federal holidays.
Any person may buy a copy of the
transcript from the transcribing reporter.
D. Submission of Comments
DOE will accept comments, data, and
information regarding the proposed rule
before or after the public meeting, but
no later than the date provided at the
beginning of this SNOPR. Information
submitted should be identified by
docket number EE–2006–STD–0127
and/or RIN 1904–AB93. Comments,
data, and information submitted to
DOE’s e-mail address for this
rulemaking should be provided in
WordPerfect, Microsoft Word, PDF, or
text (ASCII) file format. Interested
parties should avoid the use of special
characters or any form of encryption
and, wherever possible, comments
should carry the electronic signature of
the author. Comments, data, and
information submitted to DOE via mail
or hand delivery/courier should include
one signed original paper copy. No
telefacsimiles (faxes) will be accepted.
Pursuant to 10 CFR 1004.11, any
person submitting information that he
or she believes to be confidential and
exempt by law from public disclosure
should submit two copies: One copy of
the document including all the
information believed to be confidential,
and one copy of the document with the
information believed to be confidential
deleted. DOE will make its own
determination about the confidential
status of the information and treat it
according to its determination.
Factors of interest to DOE when
evaluating requests to treat submitted
information as confidential include: (1)
A description of the items; (2) whether
and why such items are customarily
treated as confidential within the
industry; (3) whether the information is
generally known by or available from
other sources; (4) whether the
information has previously been made
available to others without obligation
concerning its confidentiality; (5) an
explanation of the competitive injury to
the submitting person which would
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result from public disclosure; (6) when
such information might lose its
confidential character due to the
passage of time; and (7) why disclosure
of the information would be contrary to
the public interest.
E. Issues on Which DOE Seeks Comment
DOE is particularly interested in
receiving comments and views of
interested parties concerning:
(1) Whether the method of ‘‘loading’’
clothes washers, or any other
characteristic commonly associated
with traditional ‘‘top-loading’’ or ‘‘frontloading’’ clothes washers, are ‘‘features’’
within the meaning of 42 U.S.C.
6295(o)(4) in EPCA and whether the
availability of such feature(s) would
likely be affected by eliminating the
separate classes for these equipment
types previously established by DOE;
(2) The revised efficiency levels,
including the revised max-tech level for
top-loading CCWs;
(3) Technological feasibility of the
proposed max-tech CCW, including
washing and rinsing performance
measures for CCWs and population data
for water heating CCWs;
(4) The determination of short- and
long-run price elasticities of demand
and cross price elasticities for toploading vs. front-loading CCWs and
used vs. front-loading CCWs;
(5) The determination of manufacturer
impacts, including the effects of
manufacturer tax credits and
competitive concerns;
(6) The determination of
environmental impacts; and
(7) The newly proposed energy
conservation standards.
VIII. Approval of the Office of the
Secretary
The Secretary of Energy has approved
publication of this proposed rule.
List of Subjects in 10 CFR Part 430
Administrative practice and
procedure, Energy conservation,
Household appliances.
Issued in Washington, DC, on October 27,
2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and
Renewable Energy.
For the reasons stated in the
preamble, chapter II, subchapter D, of
title 10 of the Code of Federal
Regulations, part 431 is proposed to be
amended to read as set forth below:
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§ 431.156 Energy and water conservation
standards and effective dates.
PART 431—ENERGY EFFICIENCY
PROGRAM FOR CERTAIN
COMMERCIAL AND INDUSTRIAL
EQUIPMENT
1. The authority citation for part 431
continues to read as follows:
Authority: 42 U.S.C. 6291–6317.
Each CCW manufactured on or after
[INSERT DATE 3 YEARS AFTER FINAL
RULE FEDERAL REGISTER
PUBLICATION], shall have a modified
energy factor no less than and a water
factor no greater than:
2. Section 431.156 of subpart I is
revised to read as follows:
Equipment class
Modified energy factor
(cu. ft./kWh/
cycle)
Water factor
(gal./cu. ft./
cycle)
1.60
2.00
8.5
5.5
Top-Loading ......
Front-Loading ...
[The following letter from the
Department of Justice will not appear in
the Code of Federal Regulations.]
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[FR Doc. E9–26544 Filed 11–2–09; 4:15 pm]
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]]>Agencies
[Federal Register Volume 74, Number 215 (Monday, November 9, 2009)]
[Proposed Rules]
[Pages 57738-57802]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-26544]
[[Page 57737]]
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Part II
Department of Energy
-----------------------------------------------------------------------
10 CFR Part 431
Energy Conservation Program: Energy Conservation Standards for Certain
Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens, and
Electric and Gas Kitchen Ranges and Ovens) and for Certain Commercial
and Industrial Equipment (Commercial Clothes Washers); Proposed Rule
Federal Register / Vol. 74, No. 215 / Monday, November 9, 2009 /
Proposed Rules
[[Page 57738]]
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DEPARTMENT OF ENERGY
10 CFR Part 431
[Docket Number EERE-2006-STD-0127]
RIN 1904-AB93
Energy Conservation Program: Energy Conservation Standards for
Certain Consumer Products (Dishwashers, Dehumidifiers, Microwave Ovens,
and Electric and Gas Kitchen Ranges and Ovens) and for Certain
Commercial and Industrial Equipment (Commercial Clothes Washers)
AGENCY: Office of Energy Efficiency and Renewable Energy, Department of
Energy.
ACTION: Supplemental notice of proposed rulemaking and notice of public
meeting.
-----------------------------------------------------------------------
SUMMARY: On October 17, 2008, the U.S. Department of Energy (DOE)
issued a notice of proposed rulemaking (NOPR) in which DOE proposed
amendments to the energy conservation standards for several residential
products and commercial equipment, including commercial clothes washers
(CCWs). DOE decided to conduct additional, supplemental rulemaking
analyses for CCWs to address certain alleged data problems. Today's
document details these supplemental analyses and proposes revised CCW
standard levels for consideration.
DATES: DOE will hold a public meeting on November 16, 2009, from 9 a.m.
to 5 p.m., in Washington, DC. DOE must receive requests to speak at the
public meeting and receive a signed original and an electronic copy of
statements to be given at the public meeting before 4 p.m., November
13, 2009.
DOE will accept comments, data, and information regarding the
supplemental notice of proposed rulemaking (SNOPR) received not later
than December 9, 2009. See section VII, ``Public Participation,'' of
today's supplemental notice for details.
ADDRESSES: The public meeting will be held at the U.S. Department of
Energy, Forrestal Building, 1E-245, 1000 Independence Avenue, SW.,
Washington, DC 20585. (Please note that foreign nationals visiting DOE
Headquarters are subject to advanced security screening procedures. If
you are a foreign national and wish to participate in the workshop,
please inform DOE of this fact as soon as possible by contacting Ms.
Brenda Edwards at (202) 586-2945 so that the necessary procedures can
be completed.)
Any comments submitted must identify the SNOPR for Energy
Conservation Standards for Home Appliance Products, and provide docket
number EERE-2006-STD-0127 and/or regulatory information number (RIN)
1904-AB93. Comments may be submitted using any of the following
methods:
1. Federal eRulemaking Portal: https://www.regulations.gov. Follow
the instructions for submitting comments.
2. E-mail: home_appliance.rulemaking@ee.doe.gov. Include docket
number EE-2006-STD-0127 and/or RIN number 1904-AB93 in the subject line
of the message.
3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy,
Building Technologies Program, Mailstop EE-2J, 1000 Independence
Avenue, SW., Washington, DC 20585-0121. Please submit one signed
original paper copy.
4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of
Energy, Building Technologies Program, Room 1J-018, 1000 Independence
Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-2945.
Please submit one signed original paper copy.
For detailed instructions on submitting comments and additional
information on the rulemaking process, see section VII, ``Public
Participation,'' of today's supplemental notice for details.
Docket: For access to the docket to read background documents or
comments received, visit the U.S. Department of Energy, Resource Room
of the Building Technologies Program, 950 L'Enfant Plaza, SW., Suite
600, Washington, DC 20585-0121, (202) 586-2945, between 9 a.m. and 4
p.m., Monday through Friday, except Federal holidays. Please call Ms.
Brenda Edwards at the above telephone number for additional information
regarding visiting the Resource Room.
FOR FURTHER INFORMATION CONTACT: Mr. Stephen Witkowski, U.S. Department
of Energy, Energy Efficiency and Renewable Energy, Building
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington,
DC 20585-0121. Telephone: (202) 586-7463. E-mail:
Stephen.Witkowski@ee.doe.gov.
Ms. Francine Pinto, Esq. or Ms. Betsy Kohl, Esq., U.S. Department
of Energy, Office of General Counsel, GC-71/72, 1000 Independence
Avenue, SW., Washington, DC 20585-0121. Telephone: (202) 586-5000. E-
mail: Francine.Pinto@hq.doe.gov, Elizabeth.Kohl@hq.doe.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Proposed Rule
II. Introduction
A. Consumer Overview
B. Authority
C. Background
1. Current Standards
2. History of Standards Rulemaking
D. Test Procedures
E. Technological Feasibility
1. General
2. Maximum Technologically Feasible Levels
F. Energy Savings
1. Determination of Savings
2. Significance of Savings
G. Economic Justification
1. Specific Criteria
a. Economic Impact on Manufacturers and Consumers
b. Life-Cycle Costs
c. Energy Savings
d. Lessening of Utility or Performance of Equipment
e. Impact of Any Lessening of Competition
f. Need of the Nation to Conserve Energy
g. Other Factors
2. Rebuttable Presumption
III. Methodology and Revisions to the Analyses Employed in the
October 2008 Proposed Rule
A. Equipment Classes
B. Technology Assessment
C. Engineering Analysis
1. Efficiency Levels
a. Revised Efficiency Levels
b. Technological Feasibility of the Revised Top-Loading Max-Tech
Level
2. Manufacturing Costs
D. Life-Cycle Cost and Payback Period Analysis
1. Equipment Prices
2. Installation Cost
3. Annual Energy Consumption
4. Energy and Water Prices
a. Energy Prices
b. Water and Wastewater Prices
5. Repair and Maintenance Costs
6. Equipment Lifetime
7. Discount Rates
8. Effective Date of the Amended Standards
9. Equipment Energy Efficiency in the Base Case
10. CCW Split Incentive
11. Rebound Effect
12. Inputs to Payback Period Analysis
13. Rebuttable-Presumption Payback Period
E. National Impact Analysis--National Energy Savings and Net
Present Value Analysis
1. General
2. Shipments
a. New Construction Shipments
b. Replacements and Non-replacements
c. Purchase Price, Operating Cost, and Income Impacts
3. Other Inputs
a. Base-Case Forecasted Efficiencies
b. Standards-Case Forecasted Efficiencies
c. Annual Energy Consumption
d. Site-to-Source Conversion
e. Energy Used in Water and Wastewater Treatment and Delivery
f. Total Installed Costs and Operating Costs
g. Discount Rates
[[Page 57739]]
h. Effects of Standards on Energy Prices
F. Consumer Subgroup Analysis
G. Manufacturer Impact Analysis
H. Employment Impact Analysis
I. Utility Impact Analysis
J. Environmental Assessment
K. Monetizing Carbon Dioxide and Other Emissions Impacts
IV. Discussion of Other Comments
A. Proposed TSLs for Commercial Clothes Washers
B. Proposed Standards for Commercial Clothes Washers
V. Analytical Results
A. Trial Standard Levels
B. Economic Justification and Energy Savings
1. Economic Impacts on Consumers
a. Life-Cycle Cost and Payback Period
b. Consumer Subgroup Analysis
c. Rebuttable-Presumption Payback
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
b. Impacts on Employment
c. Impacts on Manufacturing Capacity
d. Impacts on Subgroups of Manufacturers
3. National Impact Analysis
a. Significance of Energy Savings
b. Net Present Value
c. Impacts on Employment
4. Impact on Utility or Performance of Equipment
5. Impact of Any Lessening of Competition
6. Need of the Nation to Conserve Energy
C. Proposed Standards
1. Overview
2. Conclusion
VI. Procedural Issues and Regulatory Review
A. Review Under Executive Order 12866
B. Review Under the Regulatory Flexibility Act
C. Review Under the Paperwork Reduction Act
D. Review Under the National Environmental Policy Act
E. Review Under Executive Order 13132
F. Review Under Executive Order 12988
G. Review Under the Unfunded Mandates Reform Act of 1995
H. Review Under the Treasury and General Government
Appropriations Act, 1999
I. Review Under Executive Order 12630
J. Review Under the Treasury and General Government
Appropriations Act, 2001
K. Review Under Executive Order 13211
L. Review Under the Information Quality Bulletin for Peer Review
VII. 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 DOE Seeks Comment
VIII. Approval of the Office of the Secretary
I. Summary of the Proposed Rule
The Energy Policy and Conservation Act \1\ (EPCA), as amended,
provides that any amended energy conservation standard DOE prescribes,
including those for CCWs, shall be designed to ``achieve the maximum
improvement in energy efficiency * * * which the Secretary determines
is technologically feasible and economically justified.'' (42 U.S.C.
6295(o)(2)(A) and 6316(a)) Furthermore, any new or amended standard
must ``result in significant conservation of energy.'' (42 U.S.C.
6295(o)(3)(B) and 6316(a)) In accordance with these and other statutory
criteria discussed in this notice, DOE proposes in today's SNOPR to
amend the energy conservation standards for CCWs and raise efficiency
levels as shown in Table I.1. The standards would apply to all CCWs
manufactured in, or imported into, the United States 3 years after the
publication of the final rule in the Federal Register.
---------------------------------------------------------------------------
\1\ 42 U.S.C. 6291 et seq.
Table I.1--Existing and Proposed Energy Conservation Standards for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
Existing energy conservation standards (effective January 1, Proposed energy conservation standards
2007) -------------------------------------------------
---------------------------------------------------------------
Equipment class Standards Equipment class Standards
----------------------------------------------------------------------------------------------------------------
Commercial clothes washers........... 1.26 Modified Energy Top-loading commercial 1.6 Modified Energy
Factor/9.5 Water clothes washers. Factor/8.5 Water
Factor. Factor.
Front-loading 2.00 Modified Energy
commercial clothes Factor/5.5 Water
washers. Factor.
----------------------------------------------------------------------------------------------------------------
DOE estimates that the energy conservation standards proposed in
today's SNOPR would save a significant amount of energy--an estimated
0.10 quadrillion British thermal units (Btu), or quads, of cumulative
energy over 30 years (2013-2043). This amount is equivalent to 2 days
of U.S. gasoline use. In addition, today's proposed standards for CCWs
save over 143 billion gallons of cumulative water consumption over 30
years (2013-2043).
The cumulative national net present value (NPV) of total consumer
costs and savings of today's proposed standards from 2013 to 2043, in
2008 dollars (2008$), ranges from $0.4 billion (7-percent discount
rate) to $0.9 billion (3-percent discount rate). This is the estimated
total value of future operating-cost savings minus the estimated
increased equipment costs, discounted to the present year (2009). DOE
estimates the CCW industry net present value (INPV) to be approximately
$62 million in 2008$. If DOE adopts today's proposed standards,
manufacturers expect a decline of between 7.8 percent and 11.4 percent
of the INPV, which is approximately $5 to $7 million. However, the NPV
for consumers (at the 7-percent discount rate) would exceed industry
losses due to energy efficiency standards by at least 80 times.
DOE believes that the impacts of standards on consumers would be
positive for CCWs, even though the standards may increase some initial
costs. DOE estimates that today's proposed modified energy factor (MEF)
and water factor (WF) standards for CCWs would increase the retail
price by $214 per unit for top-loading washers and $23 for front-
loading washers, but the operating cost savings outweigh these price
increases, resulting in positive economic impacts to CCW consumers.
DOE's analyses indicate that the energy savings resulting from
today's proposed standards would have benefits to utilities and to the
environment. The energy saved is in the form of electricity and natural
gas, and DOE expects the energy savings from today's proposed standards
to eliminate the need for approximately 18 megawatts (MW) of generating
capacity by 2043. This result reflects DOE's use of energy price
projections from the U.S. Energy Information Administration (EIA)'s
April 2009 release of the Annual Energy Outlook 2009 (AEO 2009)
reflecting provisions of the American Recovery and Reinvestment Act of
2009 (ARRA 2009; Pub. L. 111-5). DOE intends to use the most recently
available version of EIA's AEO to generate the results for the final
rule.
In addition, today's proposed standards would have environmental
benefits, which would be estimated to result in cumulative
(undiscounted) greenhouse gas emission reductions of 5.1 million tons
(Mt) of carbon dioxide (CO2) from 2013 to 2043. DOE
estimates that the range of the monetized value of
[[Page 57740]]
CO2 emission reductions based on global estimates of the
value of CO2 is $13 million to $140 million at a 7-percent
discount rate and $28 million to $303 million at a 3-percent discount
rate. The standards for CCWs would also result in 3.04 kilotons (kt) of
nitrogen oxides (NOX) emissions reductions from 2013 to
2043. The standards for CCWs would also possibly result in power plant
mercury (Hg) emissions reductions of up to 0.03 t from 2013 to 2043.
The benefits and costs of today's proposed standards can also be
expressed in terms of annualized (2008$) values from 2013-2043.
Estimates of annualized values are shown in Table I.2. The annualized
monetary values are the sum of the annualized national economic value
of operating savings benefits (energy, maintenance and repair),
expressed in 2008$, plus the monetary values of the benefits of carbon
dioxide emission reductions, otherwise known as the Social Cost of
Carbon (SCC) expressed as $19 per metric ton of carbon dioxide, in
2007$. The $19 value is a central interim value from a recent
interagency process. Although this $19 value represents emissions that
are valued in 2007$, the monetary benefits of cumulative emissions
reductions are reported in 2008$ so that they can be compared with the
other costs and benefits in the same dollar units. The derivation of
this value is discussed in section V.B.6. Although summing the value of
operating savings to the values of CO2 reductions provides a
valuable perspective, please note the following: 1) the national
operating savings are domestic U.S. consumer monetary savings found in
market transactions while the CO2 value is based on a range
of estimates of imputed marginal social cost of carbon from $5 to $55
per metric ton (2007$), which are meant to reflect the global benefits
of carbon dioxide reductions; and 2) the assessments of operating
savings and CO2 savings are performed with different
computer models, leading to different time frames for analysis. The
present value of national operating savings is measured for the period
2013-2065 (31 years from 2013 to 2043 inclusive, plus the lifetime of
the longest-lived equipment shipped in the 31st year), then converted
the annualized equivalent for the 31 years. The value of
CO2, on the other hand is meant to reflect the present value
of all future climate related impacts, even those beyond 2065.
Using a 7-percent discount rate for the annualized cost analysis,
the combined cost of the standards established in today's notice for
CCWs is $23.4 million per year in increased equipment and installation
costs, while the annualized benefits are $60.6 million per year in
reduced equipment operating costs and $5.1 million in CO2
reductions, for a net benefit of $42.2 million per year. Using a 3-
percent discount rate, the cost of the standards established in today's
final rule is $22.7 million per year in increased equipment and
installation costs, while the benefits of today's standards are $72.8
million per year in reduced operating costs and $5.9 million in
CO2 reductions, for a net benefit of $56.0 million per year.
Table I.2--Annualized Benefits and Costs for Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
Units
Primary Low estimate High estimate --------------------------------
Category estimate (AEO (low growth (high growth Year Disc (in Period
reference case) case) case) dollars percent) covered
----------------------------------------------------------------------------------------------------------------
Benefits
----------------------------------------------------------------------------------------------------------------
Annualized Monetized........ 60.6........... 54.9........... 66.6........... 2008 7 31
(millions$/year)............ 72.8........... 65.3........... 80.4........... 2008 3 31
Annualized Quantified....... 0.14 CO2 (Mt).. 0.14 CO2 (Mt).. 0.14 CO2 (Mt).. NA 7 31
0.087 NOX (kt). 0.087 NOX (kt). 0.087 NOX (kt). NA 7 31
0.001 Hg (t)... 0.001 Hg (t)... 0.001 Hg (t)... NA 7 31
0.16 CO2 (Mt).. 0.16 CO2 (Mt).. 0.16 CO2 (Mt).. NA 3 31
0.094 NOX (kt). 0.094 NOX (kt). 0.094 NOX (kt). NA 3 31
0.001 Hg (t)... 0.001 Hg (t)... 0.001 Hg (t)... NA 3 31
CO2 Monetized Value (at $19/ 5.1............ 5.1............ 5.1............ 2008 7 31
Metric Ton, millions$/year).
5.9............ 5.9............ 5.9............ 2008 3 31
Total Monetary Benefits..... 65.7........... 59.9........... 71.6........... 2008 7 31
(millions$/year)*........... 78.7........... 71.2........... 86.3........... 2008 3 31
Qualitative.................
----------------------------------------------------------------------------------------------------------------
Costs
----------------------------------------------------------------------------------------------------------------
Annualized Monetized........ 23.4........... 21.9........... 24.6........... 2008 7 31
(millions$/year)............ 22.7........... 20.9........... 23.9........... 2008 3 31
Qualitative.................
----------------------------------------------------------------------------------------------------------------
Net Benefits/Costs
----------------------------------------------------------------------------------------------------------------
Annualized Monetized, 42.2........... 38.1........... 47.0........... 2008 7 31
including Carbon Benefits*
(million$/year).
56.0........... 50.3........... 62.4........... 2008 3 31
Qualitative.................
----------------------------------------------------------------------------------------------------------------
*Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$.
[[Page 57741]]
In sum, today's proposed standards represent the maximum
improvement in energy and water efficiency that is technologically
feasible and economically justified. DOE found that the benefits of
today's proposed standards (energy and water savings, consumer average
life-cycle cost (LCC) savings, national NPV increase, and emissions
reductions) outweigh the costs (loss of INPV and LCC increases for some
consumers). DOE has concluded that the standards proposed in today's
SNOPR are economically justified and technologically feasible,
particularly since units achieving these standard levels are already
commercially available. DOE notes that it considered higher efficiency
levels as trial standard levels (TSLs), and is still considering them
in this rulemaking; however, DOE tentatively believes that the burdens
of the higher efficiency levels (loss of INPV and LCC increases for
some consumers) outweigh the benefits (energy savings, LCC savings for
some consumers, national NPV increase, and emissions reductions). After
reviewing public comments on this SNOPR, DOE may ultimately decide to
adopt one of the other TSLs or another value in between.
II. Introduction
A. Consumer Overview
DOE is proposing in today's SNOPR energy conservation standard
levels for CCWs as shown in Table I.1 above. These proposed standards
would apply to equipment manufactured or imported 3 years after the
date the final rule is published in the Federal Register.\2\
---------------------------------------------------------------------------
\2\ DOE anticipates publishing a final rule for commercial
clothes washer energy conservation standards by January 1, 2010,
pursuant to the requirements of the Energy Policy Act of 2005 (EPACT
2005; Pub. L. 109-058), which would make any amended standards
effective on January 1, 2013.
---------------------------------------------------------------------------
DOE research suggests that commercial consumers will see benefits
from today's proposed standards even though DOE expects the purchase
price of the high efficiency CCWs to increase (by 2 to 28 percent) from
the average price of this equipment today. However, the energy
efficiency gains are expected to result in lower energy and water
costs, saving consumers $53 to $103 per year on their energy and water
bills, again depending on the equipment class. When these savings are
summed over the lifetime of the equipment, consumers are expected to
save an average of $20 to $190, depending on the equipment class,
utility costs, and other factors. DOE estimates that the payback period
for the more efficient, higher-priced equipment will range from 0.2 to
5.6 years, depending on the equipment class.
B. Authority
Title III of EPCA sets forth a variety of provisions designed to
improve energy efficiency. Part A-1 of Title III (42 U.S.C. 6311-6317)
establishes an energy conservation program for ``Certain Industrial
Equipment,'' which deals with a variety of commercial and industrial
equipment (referred to hereafter as ``covered equipment'') including
CCWs. (42 U.S.C. 6312; 6313(e)) EPCA sets both energy and water
efficiency standards for CCWs, and authorizes DOE to amend both. (42
U.S.C. 6313(e))
Section 136(a) and (e) of the Energy Policy Act of 2005 (EPACT
2005; Pub. L. 109-058) added CCWs as equipment covered under EPCA and
established standards for such equipment that is manufactured on or
after January 1, 2007.\3\ (42 U.S.C. 6311(1) and 6313(e)) These
amendments to EPCA also require 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)) If amended standards are
justified, they would become effective no later than January 1, 2013.
(Id.)
---------------------------------------------------------------------------
\3\ Under the statute, a CCW must have a modified energy factor
(MEF) of at least 1.26 and a water factor (WF) of not more than 9.5.
---------------------------------------------------------------------------
It is pursuant to the authority set forth above that DOE is
conducting the present rulemaking for CCWs. The following discusses
some of the key provisions of EPCA relevant to this standards-setting
rulemaking.
Under EPCA, the overall program consists of the following core
elements: (1) Testing; (2) labeling; and (3) Federal energy
conservation standards. The Federal Trade Commission (FTC) is
responsible for labeling equipment covered by part A, and DOE
implements the remainder of the program. Under 42 U.S.C. 6293 and 6314,
EPCA authorizes DOE, subject to certain criteria and conditions, to
develop test procedures to measure the energy efficiency, energy use,
or estimated annual operating cost of covered equipment. The test
procedures for CCWs appear at 10 CFR part 430, subpart B, appendix J1
(pursuant to 10 CFR 431.154).
EPCA provides criteria for prescribing new or amended standards for
covered products and equipment.\4\ As indicated above, any new or
amended standard must be designed to achieve the maximum improvement in
energy efficiency that is technologically feasible and economically
justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) The statute also
provides that, in deciding whether a standard is economically
justified, DOE must, after receiving comments on the proposed standard,
determine whether the benefits of the standard exceed its burdens by
considering, to the greatest extent practicable, the following seven
factors:
---------------------------------------------------------------------------
\4\ The EPCA provisions discussed in the remainder of this
subsection directly apply to covered products, and also apply to
certain covered equipment, such as CCWs, by virtue of 42 U.S.C.
6316(a). Note that the term ``product'' is used generally to refer
to consumer appliances, while ``equipment'' is used generally to
refer to commercial units.
---------------------------------------------------------------------------
(1) The economic impact of the standard on manufacturers and
consumers of the products or equipment subject to the standard;
(2) The savings in operating costs throughout the estimated average
life of the covered products or equipment in the type (or class)
compared to any increase in the price, initial charges, or maintenance
expenses for the covered products that 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 or equipment 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 considers relevant. (42 U.S.C.
6295(o)(2)(B)(i) and 6316(a))
Furthermore, EPCA contains what is commonly known as an ``anti-
backsliding'' provision. (42 U.S.C. 6295(o)(1)) This provision
prohibits the Secretary from prescribing any amended standard that
either increases the maximum allowable energy use or decreases the
minimum required energy efficiency of a covered product or equipment.
Also, the Secretary may not prescribe an amended or a new standard if
the Secretary finds that interested persons have established by a
preponderance of the evidence that the standard is likely to result in
the unavailability in the United States of any product type (or class)
with performance characteristics, features, sizes, capacities, and
volume that are substantially the same as those generally available in
the United States at the time of the Secretary's finding. (42 U.S.C.
6295(o)(4))
In addition, EPCA, as amended (42 U.S.C. 6295(o)(2)(B)(iii)),
establishes a
[[Page 57742]]
rebuttable presumption that a standard is economically justified if the
Secretary finds that ``the additional cost to the consumer of
purchasing a product complying with an energy conservation standard
level will be less than three times the value of the energy (and as
applicable, water) savings during the first year that the consumer will
receive as a result of the standard,'' as calculated under the test
procedure in place for that standard. (42 U.S.C. 6295(o)(2)(B)(iii))
See Section II.G.2.
In promulgating a standard for a type or class of covered product
or equipment that has two or more subcategories, DOE must specify a
different standard level from that which applies generally to such type
or class of products or equipment ``for any group of covered products
which have the same function or intended use, if * * * covered products
within such group--(A) consume a different kind of energy from that
consumed by other covered products within such type (or class); or (B)
have a capacity or other performance-related feature which other
products within such type (or class) do not have and such feature
justifies a higher or lower standard'' than applies or will apply to
the other products. (42 U.S.C. 6295(q)(1)) In determining whether a
performance-related feature justifies such a different standard for a
group of equipment, DOE must consider ``such factors as the utility to
the consumer of such a feature'' and other factors DOE deems
appropriate. Id. Any rule prescribing such a standard must include an
explanation of the basis on which such higher or lower level was
established. (42 U.S.C. 6295(q)(2))
Federal energy conservation requirements generally supersede State
laws or regulations concerning energy conservation testing, labeling,
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers
of Federal preemption for particular State laws or regulations, in
accordance with the procedures and other provisions of EPCA found in 42
U.S.C. 6297(d). Specifically, States that regulate an energy
conservation standard for a type of covered product for which there is
a Federal energy conservation standard may petition the Secretary for a
DOE rule that allows the State regulation to become effective with
respect to such covered product. (42 U.S.C. 6297(d)(1)(A)) DOE must
prescribe a rule granting the petition if the Secretary finds that the
State has established by a preponderance of the evidence that its
regulation is needed to meet ``unusual and compelling State or local
energy * * * interests.'' (42 U.S.C. 6297(d)(1)(B))
C. Background
1. Current Standards
EPCA, as amended by EPACT 2005, prescribes energy conservation
standards for CCWs manufactured on or after January 1, 2007. (42 U.S.C.
6313(e)) These standards require that CCWs have an MEF of at least 1.26
cubic feet of capacity (ft\3\) per kilowatt-hour (kWh) and a WF of not
more than 9.5 gallons of water (gal) per ft\3\. (Id.; 10 CFR 431.156)
2. History of Standards Rulemaking
To initiate the current rulemaking to consider energy conservation
standards, on March 15, 2006, DOE published on its Web site a document
titled, Rulemaking Framework for Commercial Clothes Washers and
Residential Dishwashers, Dehumidifiers, and Cooking Products (Framework
Document).\5\ 71 FR 15059 (March 27, 2006). The Framework Document
described the procedural and analytical approaches that DOE anticipated
using to evaluate energy conservation standards for these products, and
identified various issues to be resolved in conducting the rulemaking.
DOE held a public meeting on April 27, 2006, to present the Framework
Document, to describe the analyses it planned to conduct during the
rulemaking, to receive comments from interested parties, and to inform
and facilitate interested parties' involvement in the rulemaking. DOE
received 11 written comments in response to the Framework Document
after the public meeting.
---------------------------------------------------------------------------
\5\ This document is available on the DOE Web site at: https://www1.eere.energy.gov/buildings/appliance_standards/commercial/clothes_washers.html.
---------------------------------------------------------------------------
On December 4, 2006, DOE posted two spreadsheet tools for this
rulemaking on its Web site.\6\ The first tool calculates LCC and
payback periods (PBPs) and included spreadsheets for: (1) Dishwashers;
(2) dehumidifiers; (3) cooktops; (4) ovens; (5) microwave ovens; and
(6) CCWs. The second tool--the national impact analysis (NIA)
spreadsheets--calculate the impacts on shipments and the national
energy savings (NES) and NPV at various candidate standard levels for:
(1) Dishwashers; (2) dehumidifiers; (3) cooktops and ovens; (4)
microwave ovens; and (5) CCWs.
---------------------------------------------------------------------------
\6\ These spreadsheets are available on the DOE Web site at:
https://www1.eere.energy.gov/buildings/appliance_standards.
---------------------------------------------------------------------------
DOE published the advance notice of proposed rulemaking (ANOPR) for
this rulemaking on November 15, 2007 (November 2007 ANOPR) (72 FR
64432), and held a public meeting on December 13, 2007, to present and
seek comment on the November 2007 ANOPR analytical methodology and
results. The November 2007 ANOPR included background information on the
history and conduct of this rulemaking. 72 FR 64432, 64438-39 (Nov. 15,
2007) In the November 2007 ANOPR, DOE described and sought further
comment on the analytical framework, models, and tools (e.g., LCC and
NIA spreadsheets) it was using to analyze the impacts of energy
conservation standards for these products. In conjunction with the
November 2007 ANOPR, DOE also posted on its Web site the complete
November 2007 ANOPR technical support document (TSD). The TSD included
the results of a number of DOE's preliminary analyses, including: (1)
The market and technology assessment; (2) screening analysis; (3)
engineering analysis; (4) energy and water use determination; (5)
markups analysis to determine equipment price; (6) LCC and PBP
analyses; (7) shipments analysis; (8) NIA; and (9) manufacturer impact
analysis (MIA). In the November 2007 ANOPR and at the public meeting,
DOE invited comment in particular on the following issues concerning
CCWs: (1) Product classes; (2) horizontal-axis designs; (3)
technologies unable to be analyzed and exempted product classes,
including potential limitations of existing test procedures; (4) per-
cycle energy consumption; (5) consumer prices; (6) repair and
maintenance costs; (7) efficiency distributions in the base case; (8)
shipments forecasts; (9) base-case and standards-case forecasted
efficiencies; and (10) TSLs. 72 FR 64432, 64512-14 (Nov. 15, 2007).
On October 17, 2008, DOE published a NOPR (October 2008 NOPR) in
the Federal Register, in which it proposed amended energy conservation
standards for certain products and equipment, including CCWs. 73 FR
62034. The energy conservation standards proposed in the October 2008
NOPR for CCWs are shown in Table II.1.
[[Page 57743]]
Table II.1--Commercial Clothes Washer Energy Conservation Standards
Proposed in the October 2008 NOPR
------------------------------------------------------------------------
Modified energy Water factor,
Equipment factor, ft\3\/kWh gal/ft\3\
------------------------------------------------------------------------
Top-loading CCWs................... 1.76 8.3
Front-loading CCWs................. 2.0 5.5
------------------------------------------------------------------------
In the October 2008 NOPR, DOE described and sought further comment
on the analytical framework, models, and tools (e.g., LCC and NIA
spreadsheets) it was using to analyze the impacts of energy
conservation standards for this equipment. In conjunction with the
October 2008 NOPR, DOE also posted on its Web site the complete
technical support document (TSD), which along with the October 2008
NOPR, is available at https://www1.eere.energy.gov/buildings/appliance_standards/. The TSD included the results of a number of DOE's analyses,
including: (1) The market and technology assessment; (2) screening
analysis; (3) engineering analysis; (4) energy and water use
determination; (5) markups analysis to determine equipment price; (6)
LCC and PBP analyses; (7) shipments analysis; (8) NES and national
impact analyses; and (9) MIA. In the October 2008 NOPR and at the
public meeting held on November 13, 2008 (referred to as the ``November
2008 public meeting''), DOE invited comment in particular on the
following issues concerning CCWs: (1) The efficiency levels; (2) DOE's
determination of the maximum technologically feasible (max-tech)
efficiency levels for top-loading and front-loading CCWs; (3) the
magnitude of possible equipment class shifting to front-loading CCWs;
(4) the analysis and data relevant to the price elasticity of demand
for calculating the anticipated energy and water savings at different
TSLs; (5) the analysis of consumer knowledge of the Federal ENERGY STAR
program and its potential as a resource for increasing knowledge of the
availability and benefits of energy efficient appliances in the home
appliance consumer market; (6) discount rates other than 7 percent and
3 percent real to discount future emissions reductions; (7) data that
might enable DOE to test for market failures or other specific problems
for CCWs; and (8) the determination of anticipated environmental
impacts of the standards proposed in the October 2008 NOPR,
particularly with respect to the methods for valuing the expected
CO2 and NOX emissions savings. 73 FR 62034, 62133
(Oct. 17, 2008).
The October 2008 NOPR also included background information, in
addition to that set forth above, on the history and conduct of this
rulemaking. 73 FR 62034, 62040-62041 (Oct. 17, 2008). DOE presented the
methodologies and results for the October 2008 NOPR analyses at the
November 2008 public meeting. Comments presented by interested parties
during this meeting and submitted in response to the October 2008 NOPR
concerning the accuracy of the stated max-tech CCW efficiency level led
to a thorough investigation of CCW efficiencies and today's SNOPR. DOE
subsequently tested the max-tech unit at an independent test facility,
revised the max-tech level, updated the analysis, and is publishing the
SNOPR to allow interested parties to comment on the revised efficiency
level proposals.
DOE expects to issue a final rule in this rulemaking no later than
January 1, 2010, as required by EPCA, as amended by EPACT 2005 (42
U.S.C. 6313(e)). Based on this schedule, the estimated effective date
of any amended energy conservation standards for this equipment would
be January 1, 2013, 3 years after the final rule is published in the
Federal Register.
D. Test Procedures
EPCA directs DOE to use the same test procedures for CCWs as those
established by DOE for residential clothes washers (RCWs). (42 U.S.C.
6314(a)(8)) 73 FR 62034, 62043-62044 (Oct. 17, 2008). While DOE
believes commercial laundry practices likely differ from residential
practices,\7\ DOE concluded in the October 2008 NOPR that the existing
clothes washer test procedure (at 10 CFR part 430, subpart B, appendix
J1) adequately accounts for the efficiency rating of CCWs, and that
DOE's methods for characterizing energy and water use in the October
2008 NOPR analyses adequately accounted for the consumer usage patterns
specific to CCWs.
---------------------------------------------------------------------------
\7\ CCWs are typically used more frequently and filled with a
larger load than RCWs.
---------------------------------------------------------------------------
In response to the October 2008 NOPR, Alliance Laundry Systems
(Alliance), GE Consumer & Industrial (GE), and AHAM agreed with DOE's
conclusion that the DOE clothes washer test procedure is adequate for
rating CCWs. (Alliance, Public Meeting Transcript, No. 40.5 at p. 22;
Alliance, No. 45 at p. 1; GE, No. 48 at p. 4; AHAM, Public Meeting
Transcript, No. 40.5 at pp. 26-27; AHAM, No. 47 at p.4) \8\ DOE did not
receive any comments objecting to the use of the DOE clothes washer
test procedure for CCWs. Therefore DOE continues to consider the
existing DOE test procedure adequate to measure energy and water
consumption of CCWs.
---------------------------------------------------------------------------
\8\ A notation in the form ``Alliance, No. 45 at p. 1''
identifies a written comment (1) made by Alliance Laundry Systems
(Alliance), (2) recorded in document number 45 that is filed in the
docket of this rulemaking (Docket No. EE-2006-STD-0127), maintained
in the Resource Room of the Building Technologies Program, and (3)
which appears on page 1 of document number 45.
---------------------------------------------------------------------------
E. Technological Feasibility
1. General
DOE considers a design option to be technologically feasible if it
is in use by the respective industry or if research has progressed to
the development of a working prototype. Therefore, in each standards
rulemaking, DOE conducts a screening analysis, based on information it
has gathered regarding existing technology options and prototype
designs. In consultation with manufacturers, design engineers, and
other interested parties, DOE develops a list of design options for
consideration in the rulemaking. Once DOE has determined that a
particular design option is technologically feasible, it further
evaluates each design option in light of the following three additional
criteria: (a) Practicability to manufacture, install, and service; (b)
adverse impacts on product utility or availability; or (c) adverse
impacts on health or safety. 10 CFR part 430, subpart C, appendix A,
section 4(a)(3) and (4). All design options that pass these screening
criteria are candidates for further assessment in the engineering and
subsequent analyses in the NOPR (or SNOPR) stage.
DOE published a list of evaluated CCW technologies in the November
2007 ANOPR. 72 FR 64432, 64458 (Nov. 15, 2007). For the reasons
described in
[[Page 57744]]
the November 2007 ANOPR and in chapter 4 of the SNOPR TSD, DOE is not
considering the following design options, as they do not meet one or
more of the screening criteria: bubble action, electrolytic
disassociation of water, ozonated laundering, reduced thermal mass,
suds saving, and ultrasonic washing. In this supplemental notice, DOE
has not screened out any additional technology options that were
retained in the October 2008 NOPR analyses. No comments were received
objecting to the technology options which were screened out in the
October 2008 NOPR. 73 FR 62034, 62052 (Oct. 17, 2008).
Therefore, DOE believes all of the efficiency levels evaluated in
this notice, which are based upon the retained design options, are
technologically feasible. For more detail on DOE's method for
developing CCW technology options and the process for screening these
options, refer to the chapters 3 and 4 of the SNOPR TSD.
2. Maximum Technologically Feasible Levels
When DOE considers an amended or new standard for a type (or class)
of equipment such as front-loading or top-loading CCWs, it must
``determine the maximum improvement in energy efficiency or maximum
reduction in energy use that is technologically feasible'' for such
equipment. (42 U.S.C. 6295(p)(2) and 6316(a)) For the October 2008
NOPR, DOE determined the max-tech efficiency levels for front-loading
and top-loading CCWs in the engineering analysis, based on published
MEF and WF values of commercially available equipment. (See chapter 5
in the NOPR TSD.) In proposing these max-tech levels, DOE noted that
some CCWs exceed the max-tech MEF or WF levels, but not both. For
example, two front-loading models exceed the max-tech MEF--they are
rated at 2.45 and 2.68 MEF, respectively, in the Consortium for Energy
Efficiency (CEE) qualifying product list for its Commercial, Family-
Sized Washer Initiative--but don't achieve a max-tech WF level--they
are rated at 5.69 and 5.47 WF, respectively. In the California Energy
Commission (CEC) equipment database for CCWs, DOE found one top-loading
model that exceeds the max-tech WF--it is rated at 7.3 WF--but not the
max-tech MEF level--it is rated at 1.32 WF. This model has been
discontinued, as discussed in the November 2007 ANOPR and the October
2008 NOPR TSD. The max-tech efficiency levels proposed in the October
2008 NOPR were selected to represent the best available combinations of
high MEF and low WF for each equipment class.
For the October 2008 NOPR, DOE proposed the max-tech levels shown
in Table II.2. 73 FR 62034, 62036 (Oct. 17, 2008).
Table II.2--Commercial Clothes Washer Max-Tech Efficiency Levels
Proposed in the October 2008 NOPR
------------------------------------------------------------------------
Max-tech level
---------------------
Equipment class MEF, WF, gal/
ft\3\/kW ft\3\
------------------------------------------------------------------------
Top-Loading CCWs.................................. 1.76 8.3
Front-Loading CCWs................................ 2.35 4.4
------------------------------------------------------------------------
According to the CEE database, three front-loading CCWs rated at
the max-tech efficiency level are on the market in the United States.
One model listed in the database which exceeds the max-tech level is
rated at (2.84 MEF/3.68 WF), but DOE determined this CCW has yet to be
sold in the United States. The front-loading max-tech level was based
on a single model listed in the CEC database.
The max-tech top-loading CCW efficiency rating in the October 2008
NOPR was questioned by Alliance at the November 2008 NOPR meeting.
(Alliance, Public Meeting Transcript, No. 40.5 at pp. 90-92) In
response, DOE contracted an independent testing laboratory to verify
the performance ratings for the max-tech top-loading CCW. The
laboratory results (based on a 3-unit sample) suggest that the unit
achieves 1.63 MEF/8.4 WF. Based on this information, for the SNOPR
analysis, DOE revised the max-tech top-loading CCW level downward to
1.60 MEF/8.5 WF, a level proposed in the October 2008 NOPR as a ``gap-
fill'' level and one which DOE concludes is attainable by the max-tech
CCW model. For more details on this selection of max-tech levels for
the SNOPR, see section III.C.1 of today's supplemental notice.
In sum, Table II.3 lists the max-tech levels that DOE is proposing
for today's SNOPR. Today's proposed front-loading max-tech level is the
same as in the October 2008 NOPR, whereas today's proposed top-loading
max-tech level has been revised based on the independent test results.
Table II.3--Commercial Clothes Washer Max-Tech Efficiency Levels
Proposed for This SNOPR
------------------------------------------------------------------------
Max-tech level
---------------------
Equipment class MEF, WF, gal/
ft\3\/kW ft\3\
------------------------------------------------------------------------
Top-Loading CCWs.................................. 1.60 8.5
Front-Loading CCWs................................ 2.35 4.4
------------------------------------------------------------------------
F. Energy Savings
1. Determination of Savings
DOE used its NIA spreadsheet tool to estimate energy savings from
amended standards for CCWs. (Section III.E of today's supplemental
notice and chapter 11 of the SNOPR TSD describe the NIA spreadsheet
model.) DOE forecasted energy savings over the period of analysis
(beginning in 2013, the year that amended standards would go into
effect, and ending in 2043) for each TSL, relative to the base case,
which represents the forecast of energy consumption in the absence of
amended energy conservation standards. DOE quantified the energy
savings attributable to amended energy conservation standards as the
difference in energy consumption between the standards case and the
base case. The base case represents the forecast of energy consumption
in the absence of amended energy conservation standards. The base case
considers market demand for more efficient equipment.
The NIA spreadsheet tool calculates the electricity savings in
``site energy'' expressed in kWh. Site energy is the energy directly
consumed on location by an individual equipment. DOE reports national
energy savings on an annual basis in terms of the aggregated source
energy savings, which is the savings of energy that is used to generate
and transmit the energy consumed at the site. To convert site energy to
source energy, DOE derived conversion factors, which change with time,
from the March 2009 release of the AEO 2009. (See TSD chapter 11
accompanying today's supplemental notice for further details.)
2. Significance of Savings
EPCA, as amended, prohibits DOE from adopting a standard for a
product if that standard would not result in ``significant'' energy
savings. (42 U.S.C. 6295(o)(3)(B)) While the Act does not define the
term ``significant,'' the U.S. Court of Appeals for the District of
Columbia, in Natural Resources Defense Council v. Herrington, 768 F.2d
1355,
[[Page 57745]]
1373 (D.C. Cir. 1985), indicated that Congress intended ``significant''
energy savings in this context to be savings that were not ``genuinely
trivial.'' The energy savings for energy conservation standards at each
of the TSLs considered in this rulemaking are nontrivial, and,
therefore, DOE considers them ``significant'' within the meaning of 42
U.S.C. 6295(o)(3)(B).
G. Economic Justification
1. Specific Criteria
As noted earlier, EPCA provides seven factors to be evaluated in
determining whether an energy conservation standard is economically
justified. (42 U.S.C. 6295(o)(2)(B)). The following sections discuss
how DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
DOE uses an annual-cash-flow approach in determining the
quantitative impacts of a new or amended standard on manufacturers.
This includes both a short-term assessment, based on the cost and
capital requirements during the period between the announcement of a
regulation and the time when the regulation becomes effective, and a
long-term assessment. The impacts analyzed include INPV (which values
the industry on the basis of expected future cash flows), cash flows by
year, changes in revenue and income, and other measures of impact, as
appropriate. Second, DOE analyzes and reports the impacts on different
types of manufacturers, with particular attention to impacts on small
manufacturers. Third, DOE considers the impact of standards on domestic
manufacturer employment, manufacturing capacity, plant closures, and
loss of capital investment. DOE also takes into account cumulative
impacts of different regulations on manufacturers. For more details on
this analysis, see section III.G.
For commercial consumers, measures of economic impact include the
changes in LCC and payback period for the equipment at each TSL. Under
EPCA, the LCC is one of the seven factors to be considered in
determining economic justification. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It
is discussed in detail in the section below.
b. Life-Cycle Costs
The LCC is the sum of the purchase price of equipment (including
the installation) and the operating expense (including energy and
maintenance expenditures), discounted over the lifetime of the
equipment.
In this rulemaking, DOE calculated both LCC and LCC savings for
various CCW efficiency levels. DOE established the variability and
uncertainty in energy and water use by defining the uncertainty and
variability in the use (cycles per day) of the equipment. The
variability in energy and water pricing were characterized by regional
differences in energy and water prices. To account for uncertainty and
variability in other inputs, such as equipment lifetime and discount
rate, DOE used a distribution of values with probabilities attached to
each value. For each consumer with a CCW, DOE sampled the values of
these inputs from the probability distributions. As a result, the
analysis produced a range of LCCs. This approach permits DOE to
identify the percentage of consumers achieving LCC savings or attaining
certain payback values due to an increased energy conservation
standard, in addition to the average LCC savings or average payback for
that standard. DOE presents the LCC savings as a distribution, with a
mean value and a range. In the analysis prepared for the October 2008
NOPR, DOE assumed that the consumer will purchase the equipment in
2012. For today's SNOPR, that assumption has been changed to 2013 due
to the expected effective date of any amended standards. See section
III.D for more details on the analysis.
c. Energy Savings
While significant conservation of energy is a separate statutory
requirement for imposing an energy conservation standard, EPCA requires
DOE, in determining the economic justification of a proposed standard,
to consider the total projected energy savings that are expected to
result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As
in the October 2008 NOPR, DOE used the NIA spreadsheet results in its
consideration of total projected savings expected to be directly
attributable to the considered standard levels. See section III.E for
more details on this analysis.
d. Lessening of Utility or Performance of Equipment
In establishing classes of equipment, DOE considered whether the
evaluated design options would likely lessen the utility or performance
of CCWs. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) In the October 2008 NOPR, DOE
determined that none of the considered TSLs would reduce the utility or
performance of the equipment under consideration in the rulemaking.
Specifically, the standards proposed in the October 2008 NOPR would
maintain the consumer utility of washing clothes in a washer with
either top or front access. 73 FR 62034, 62047 (Oct. 17, 2008). This
conclusion remains the same for the proposed standards in today's
SNOPR. As in the October 2008 NOPR, the efficiency levels considered in
today's SNOPR for both equipment classes require no changes in
equipment design or unusual installation requirements that could reduce
the utility or performance of CCWs.
e. Impact of Any Lessening of Competition
EPCA directs DOE to consider any lessening of competition that is
likely to result from standards. It directs the Attorney General to
determine the impact, if any, of any lessening of competition likely to
result from a proposed standard and to transmit such determination to
the Secretary, not later than 60 days after the publication of a
proposed rule, together with an analysis of the nature and extent of
such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)). DOE received
the Attorney General's determination dated December 16, 2008. It is
discussed in section V.B.5 below, and is reprinted at the end of this
SNOPR. Impacts on manufacturers are also discussed in section III.G
below.
f. Need of the Nation To Conserve Energy
The non-monetary benefits of today's proposed standards are likely
to be reflected in improvements to the security and reliability of the
Nation's energy system-namely, reductions in the overall demand for
energy will result in reduced costs for maintaining reliability of the
Nation's electricity system. DOE conducts a utility impact analysis to
estimate how standards may impact the Nation's needed power generation
capacity. This analysis captures the effects of efficiency improvements
on electricity consumption by the equipment which is the subject of
this rulemaking.
Today's proposed standards also are likely to result in
improvements to the environment. In quantifying these improvements, DOE
has defined a range of primary energy conversion factors and associated
emissions reductions based on the estimated level of power generation
displaced by energy conservation standards. DOE reports the
environmental effects from each TSL in an environmental assessment in
chapter 16 of the SNOPR TSD. (42. U.S.C. 6295(o)(2)(B)(i)(VI) and
6316(a)) See section III.J for more details on this analysis.
[[Page 57746]]
g. Other Factors
The Secretary, in determining whether a standard is economically
justified, may consider other factors that the Secretary deems to be
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) In considering amended
standards for today's SNOPR, the Secretary found no relevant factors
other than those identified elsewhere in today's SNOPR.
2. Rebuttable Presumption
As set forth under 42 U.S.C. 6295(o)(2)(B)(iii), there is a
rebuttable presumption that an energy conservation standard is
economically justified if the increased installed cost for equipment
that meets the standard is less than three times the value of the
first-year energy savings resulting from the standard (and water
savings in the case of a water efficiency standard). DOE's LCC and PBP
analyses generate values that calculate the payback period for
consumers of equipment meeting potential energy conservation standards,
which includes, but is not limited to, the 3-year payback period
contemplated under the rebuttable presumption test discussed above.
(See chapter 8 of the TSD that accompanies this notice.) However, DOE
routinely conducts a full economic analysis that considers the full
range of impacts, including those to the consumer, manufacturer,
Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i).
The results of this analysis serve as the basis for DOE to definitively
evaluate the economic justification for a potential standard level
(thereby supporting or rebutting the results of any preliminary
determination of economic justification). Section III.D.13 of today's
supplemental notice addresses the rebuttable-presumption payback
calculation.
III. Methodology and Revisions to the Analyses Employed in the October
2008 Proposed Rule
DOE used economic models to estimate the impacts of the TSLs used
in weighing the benefits and burdens of amended standards for the
equipment that is the subject of this rulemaking. Specifically, DOE
developed the relationship between cost and efficiency for this
equipment, and calculated the simple payback period for the purposes of
addressing the rebuttable presumption that a standard with a payback
period of less than 3 years is economically justified. The LCC
spreadsheet calculates the consumer benefits and payback periods for
amended energy conservation standards. The NIA spreadsheet provides
shipments forecasts and then calculates NES and NPV impacts of
potential amended energy conservation standards. DOE also assessed
manufacturer impacts, largely through use of the Government Regulatory
Impact Model (GRIM).
Additionally, DOE estimated the impacts of energy conservation
standards due to equipment on utilities and the environment. DOE used a
version of EIA's National Energy Modeling System (NEMS) for the utility
and environmental analyses. The NEMS model simulates the energy economy
of the United States and has been developed over several years by the
EIA primarily for the purpose of preparing the AEO. The NEMS produces
forecasts for the United States that are available in the public
domain. The version of NEMS used for appliance standards analysis is
called NEMS-BT and is primarily based on the AEO 2009 April Release
with minor modifications.\9\ The NEMS-BT offers a sophisticated picture
of the effect of standards, since it accounts for the interactions
between the various energy supply and demand sectors and the economy as
a whole.
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\9\ The EIA approves the use of the name NEMS to describe only
an AEO version of the model without any modification to code or
data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name NEMS-BT refers to the model
as used here. (``BT'' stands for DOE's Building Technologies
Program.) For more information on NEMS, refer to The National Energy
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb.
1998)(available at: https://tonto.eia.doe.gov/ FTPROOT/forecasting/
058198.pdf).
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A. Equipment Classes
In general, when evaluating and establishing energy conservation
standards, DOE divides covered products or equipment into classes by
the type of energy used, capacity, or other performance-related
features that affect consumer utility and efficiency. (42 U.S.C.
6295(q); 6316(a)) Different energy conservation standards may apply to
different equipment classes. Id.
In the October 2008 NOPR, DOE proposed separate equipment classes
and accompanying standards for top-loading and front-loading CCWs with
separate standards for each class. 73 FR 62034, 62036 (Oct. 17, 2008).
Thus the October 2008 NOPR represented a change from the November 2007
ANOPR and from EPACT 2005 \10\, which placed all CCWs into a single
equipment class with a single energy efficiency and water efficiency
standard. The October 2008 NOPR stated that DOE believes it has the
authority to establish additional equipment classes within an equipment
category, if warranted. DOE determined in the October 2008 NOPR that
two equipment classes are warranted because an amended standard would
set MEF for all CCWs at a level significantly higher than what the max-
tech for top-
